ant. i'm a supporter of devan's bill asking for a clearer accounting. if you want to enjoy the tax expenditure of tax free bonds as a state or municipality, give us a clear accounting of your liabilities. they use discount rates of 8% in many states to measure the pension littles. >> yes, they do. >> that's not reality. a, let's get clear accounting, and b, we're having lat lots of hearings on this. we need to learn more about what states are in what situations what are the timing of these things, an what's the proper response. i've been working on something myself on what ini think is the proper response. we are not interested in a bailout. >> this is a flat no. you're not going to get a hearing. what if states say they are in danger of default?

>> they are already telling us that. >> so take it somewhere else. [laughter] >> should taxpayers in frugal states be bailing out taxpayers who are not? should wisconsin -- well we're now becoming a frugal state but we were not one or should people in indiana who had done their job fiscally be bailing out california's who have not? no, that's a moral has discard we are not interested in creating. >> okay. you probably heard democrats say in the repeal of the health care bill it's going to be give a big hilt to the deficit. what do you think of that argument, and why did you exempt repeal from the new budget rules that you put in that to make it impossible under the rules at least to increase deficit? >> because we're not interested in budget gimmicky into our

budget rules. the only reason why anybody suggests with anything close to a straight face that this things reduces the deficit is because the books have been severely cooked. >> at the congressional budget office? >> it's not the cbo, but the democrats who wrote the bill who gave that to the cbo. cbo scores what you put in front of them. if you put a bill in front of them that ignores the cost need to spend to run this new obama program that double accounts the medicare savings, that double counts the class act revenues double counts the social security revenues and does not include the dock fix, you add that up and edit it out, we with talking about a $701 billion hole deficit. if you do real accounting get away the mirrors and budget

gimmicks, this is a huge deficit increaser. we are not interested in endorsing and accepting all the budget gimmicks democrats used to cram this thing through law. mark my words, this thing will not reduce the deficit. i'm very confident in saying that. they have a paper from cbo that suggests it does, but that's not reality. >> are you seeking for a rescore? >> we got one yesterday or today or this morning. we got a score and it's about the same it was before at $145 billion. >> essentially you're ignoring cbo as you push for repeal? >> we're going to ignore the budget gimmicks and push repeal. the press has been hitting us on this and bringing it up under closed rule this week. we promised the american people we were going to do this. i just had a corny notion maybe because i'm from wisconsin, if you say you are going to do something in a campaign, you do it in office. in our pledge to america, we

said we would bring up a straight up or down vote to repeal this health care law. what are we doing? that's what we're doing in office. that is why we're doing it this week under these circumstances with these procedures because we don't think we should be paying for the repeal of a law that we believe will increase the budget deficit by a minimum of $700 billion over the next 10 years. i get a little animated in these things. >> fair enough. [laughter] you mentioned early on that you want to have a growth agenda. >> yes. >> yet a lot of things that are necessity that you have to do as a budgets chairman will -- budget chairman is cutting, reducing this and reducing that and the danger i suppose politically is that you become as a party, get the reputation for austerity. >> that's right, that's right.

>> and the president takes the high ground and says i'm the growth guy. they are cutting. we need this spending for investments, for growth and i'm the growth candidate, and you begin to look small and austere and we're the national accountants essentially. >> right right. >> how do you avoid that? obviously rhetoric is a part of it but apart from rhetoric on policy, how are you able to avoid that austerity label? >> this goes beyond the budget itself. let's focus on the foundations for economic growth. i'm not one who thinks you can grasp a bill that turns the economy around. let's focus on macroeconomic foundations. low tax rates is something we can do in a budget resolution. >> you can put a tax bill -- >> yeah in your budget resolution you assume whatever tax policy you have going forward. tax reform is number one.

now in this 21st century international competitive. we need regulations. that's not what you do in the budget but in all the other committees we have. we need regulatory certainty. we need businesses to understand what the rules of the road are, but we need fair regulations as well fair honest, official transparent, and accountable registrations. -- legislations. we also need sound money. that's not something you put in the fiscal policy document, but we need to be the authority of sound money. our money has to be honest, a reliable source of value, and we have to deal with the fact we have a federal reserve and a monetary policy that is anything but sound. >> but that suggests or implies that you are going to bring up chairman bernanke and talk about policy. >> absolutely. i'm sure ron paul has plans of his own. [laughter] >> are you going to push your bill for the single mandate from

the dual mandate for unemployment insurance? yes, i am. >> you're going to push that? >> i am. >> you're seeking a vote? >> yes, i'm pushing it. it's not my choice to decide, but i hope to do that, yes. >> okay. what else? >> we need to focus on foundations, sound money and things like tort reform. we need to do things that are important to get growth in the economy, get business certainty and make ourselves internationally competitive and trade as well. sound money sound regulations those are the building blocks we need to have an economic growth and prosperity agenda to be competitive. some of these things are within budget documents or other bills we have to pass. i tack on top of that an interview policy that creates jobs here at home, less dependent on foreign oil that lowers commodity prices, that lowers fuel prices. these are the kinds of things we need to do to have growth.

yes, we need to cut spending. but i can close with this. you're getting waved at. >> well, we want to open it up to questions. >> it's important we are the growth party and cutting spending now is really not pain in root canal. wait until we don't do that and what happens later. the question we have for ourselves in this country is do we reform government, reform our entitlement programs, get these programs that were written in the 20th century get to work in the 21st century and have progrowth policies for our businesses and make us internationally competitive. that's growth. what pain is is staying on the path we're on and raising taxes on the current economy to slow us down in managing decline. the question which we still can't answer is do we have a

pro-growth policy that gets us growing again because without economic growth, you can't fix the budget problem, or do we manage muddle, slow stagnant growth, tip over to a debt crisis, and manage our decline and dip further into a welfare state? the morality also has to be addressed. i know you want me to wind it down, but we are getting a country that's getting more and more takers than makers. if we have more takers we are denying people the ability to make the most of their lives. we don't want to place to be a ham mic that drains them of their intent to make the most of their lives and that's is the outcome of the policies we are discussing. >> okay. [applause] all right we want to open up the floor. first of all, we have mics so please wait for a mic and

identify yourself when you ask a question. the gentleman in the far corner. >> thanks, mr. chairman. john ward of the daily caller. on the issue of entitlements, you mentioned that is basically the biggest area you'd like to create a contrast with the obama administration. >> the budget itself i would say. the biggest area of contrast i would not say only entitlements, but all the budget, everything. >> entitlements is the biggest part of the problem. you also said you need to pass legislation to create the contrast, but judges from the last time i heard you talk about the road map in the budget versus now, it seems like less of a likelihood and there also seems to be less willingness to put budget cuts out there before the state of the union. are republicans backing off the wl willingness to go first on this?

>> we have a bill today and rescission bills on the floor. i can't speak to the timing of it before or after the state of the union but we are bringing cuts repeatedly all quarter long. i'm not suggesting the budget is one thing or another. i'm not trying to be evasive. i don't have a baseline yet. it's a process that's consensus driven, and we haven't gone through that yet or gone through the committee hearings and research we intend to do to formulate good public policy. it's not like we are in the majority and have everything figured out. both parties are to blame for this. we need to do oversights, get into policy, bring governors up, bring no innovative policymakers in. we want to preempt the debt crisis. we have not done that all yet

so it's impossible for me to tell you what the budget russ lesion is going to -- resolution is going to look like. >> [inaudible] >> his mic was off but do i want the road map in the budget? when i wrote that i never intended for that to the the platform for the republican party. what i intended on doing is creating a debate, creating a discussion getting in the pool and encouraging other people to jump in with me to discuss how to fix these fiscal problems in the country. what i wanted to show with the map is you can still have the morn dream, the american idea and keep our government limited and keep our economy free. it's not too late. i think i've achieved that and what i wanted to do is advance the discussion to an adult level. it's not quite yet there but it's getting closer. the commission helped but it's getting closer. when i wrote the road map, that was not me saying here's how to do it and the only way i'm going.

far from it. what i was trying to do was show here is one way of doing it and how i think it is a better way to go. i want other people to bring their ideas to get the best outcome, and now we're in the process of getting their ideas to the table to get the best outcome. we have not completed that process so that's why i can't tell you what it's going to look like. we just got sworn in yesterday. [laughter] >> we have a mic up here in front. >> thanks matt miller, "washington post". in the spirit of the adult conversation, the road map you had don't balance the budget until after 2050 and adds trillions of dollars to the debt in the interim. now that you're in the majority, what year do you think the budget should be balanced? >> i don't have a baseline yet. i don't know. >> you know it's around trillion -- >> i think it should be balanced

this year. >> you don't really. >> it's really -- >> the road map is considered a fiscally conservative aggressive plan has a 40 or 50 year plan to balance the budget. in the majority that can't suffice; right? >> this just shows you how awful the numbers have become. this just shows you how deep of a fiscal hole we've got. we're not measuring it in billions anymore, but trillions now. it also shows you the demographic shift occurring in this country. the baby boomers are now this year, starting to retire at full retirement, so what budget people call on the chart graph, it's the pig in the python. it's the big demographic bulge j moving numbers through the system preventing that blaps from occurring quickly. if you choose to father the grandparents which the road map does that does require more spending or borrowing to finance entitlements for people who are currently on them given more people are retiring because of

baby boomers so this just shows you how tough this is. this just shows you how you're not going to balance the budget in a couple years. what do i want to do? i want to balance the budget as quickly as possible. i can tell you one thing. it won't balance soon if we don't grow the economy, # get jobs and economic growth turned back on in the country we're not going to balance the budget any time soon. that's a key focus. cbo doesn't measure that. we need progrowth, economic prosperity. that combined with spending redorkses and spend -- reductions and spending reforms will help down the road. >> right in the middle there the woman. >> hi, -- >> we got, so we can hear it on c-span and other places, we would like to get the microphone if we could. right there. she has her hand up. >> thanks hi. i'm jennifer from the fiscal

times. you talked about the spending cuts to introduce. do you have specifics or anything tangible? are you considering a run for the senate in 2012 also? >> let's hope. gp>> i thought you'd ask me about the packers or something like that. [laughter] i tried not to do the upper creator's job. -- the opera creatoappropiators job. after the oversight hearings, we will come up with a list of spending cuts. i am not try to pass the buck. they will be doing the hearing and coming up with a list >> they have a lives of spending

limits needed that will be put in place and given back to the appropriations committee. as far as 2012 is concerned, i'm not thinking about it. right now i'm thinking about the budget and once we're through that, i'll think about other things. it's not on my mind. >> gentleman in the white shirt right here. >> sure, matt cover with cbs news.com. it's the elephant in the room here is funding for the health care reform law. you know, i think everybody expects that the repeal bill will pass the house and then either not pass the senate or certainly not get signed by the president. will in your budget, will there be any funding for that? >> obviously we plan on repealing it and our budget should reflect the repeal of the health care law. the real question you are trying to get at is defunding this

law. that occurs in the appropriations process, so what the budget does is send the numbers, the cap to the appropriators. they write the spending bills, and inside of those bills we plan on purr seeing -- pursuing other mechanisms to repeal this law. >> red shirt in the back here on the inside. that's john. >> john with dna. just to get back up what was brought up earlier about defense and the need for adult conversations. some of the groups note -- >> some what? >> deficit groups. they say nondefense plus va and homeland is 15% of overall federal spending. to what extent, you guys are focused on that, but what extent is a credible to make a decent sized dent in the budget without going after defense, da, and homeland?

>> because that category went up 24% over the past two years. that category of spending combining the stimulus package on top it's 84%. this was a gusher of spend k in this -- spending in this particular category of government, and we want to bring that gusher back. that's why. it got a huge increase that contributes to a much higher spending base. and by the way, all that spending was supposed to keep our unemployment rate from getting above 8%. it's around 10. it didn't work. those of us who were suggesting that at the time, but now we're about a trillion dollars out the door when it's all said and done with the barrowing cost and we have a big deficit hangover because of it. we want to take some of that spending back. >> second row, far corner there, there you go. >> mr. chairman, from george maison university. i hate to put you on the spot

for your party, but i'll do it any way. >> you always do. >> i know. [laughter] there's nothing really i mean i trust you entirely which is very natural for me -- [laughter] but there is nothing in the republican party that signals to me that all the mystics # of the past 10 years and big government mentality is gone, and can you reassure me? i have actually an easy question which is you're talking about, you know, lowering the budget caps but what are the budget reforms and the budget process reform that you're going to put in place in order to make sure that actually these budgets rule fight because right now they don't with emergency spending. >> to assure you the only thing we can do to assure you the republican majority won't go the way it did last time is define ourselves through our actions. look at the rules package out there yesterday. we have cutting spending to pay

for other spending if we're going to have other spenting. if you're going to actually cut spending in appropriations, we save that for deficit reduction. we've change the institutional bias against taxing and spending in favor of cutting spending. now we have to change the policy bias in favor of free limited government and promoting free enterprise. those are things to dominate our actions as this year and session goes on. the only thing i can tell you is you just have to watch us and hold us accountable. if you think that we believe that we were validated in this last election, that this was an election that gave republicans the majority we don't think that. we are humbled by what happened. this was a repudiation election. this was an election of a repudiation of the direction of the president took the country. this is not a validation of us. we have to earn this trust and support of the american people by being who we say we are and that's the mistake the last

majority made, the last republican majority. they said they were conservative they didn't govern like that. we have to make sure we don't do that. what kind of fiscal controls? we want real binding spending caps with real enforcement mechanisms. i call the is belt and suspenders. >> if you exceed the budget resolution limits you have an automatic slice and dice. >> yes, cutting across the board. the belt and suspenders approach. we have been toiling in the vineyards of budget process reforms for many many year and please know we fully intend on moving forward with these kinds of packages. >> sorry, last question, yes sir, you there in the brown shirt, i think. >> hi i'm mark from investment news and i'm wondering if you could elaborate a little bit on the tax expenditure gauntlet.

do you believe there's a republican majority in the house to eliminate items like the tax exclusion for retirement plans and for the tax deferred status for life insurance plans? >> i'm not getting into this or that tax expendture. i just can't answer the question. we'll start hearings on these things. the advocacy of tax reform, and what's the best way to go. do i believe that the majority, there's a majority within the majority for tax reform? yes, i do. we have to figure out how to best achieve that and i can't answer because we have not begun our research and hearings on that. >> are you going to run for senate in 2012? >> she just asked that. >> you dfnlt answer. [laughter] >> i have no plans at this time. when the budget season is over with, i'll think about those

things. >> a freudian slip on the president -- [laughter] >> well, you know -- >> thank you, congressman for being here. thanks to the manhattan institute and very lively session. thanks so much. [applause] [inaudible conversations] [inaudible conversations] >> i think news organizations have adapted.

>> now from the congressional hispanic caucus an event honoring hispanic members of the new congress. this is a half hour. >> hi, good evening, everyone.

what a voice, beautiful, mrs. virginia 2010. thank you, well done. well, i was told this is the group with the great party, so i had to be here tonight for this. good evening. so nice to be here among you. oh yay -- [speaking in spanish] i'm not keeping you from the drinks and mingling. it's a short program i promise you. on behalf of chci it's my pleasure to welcome you. what an honor to be here with the new 112th congress newly pinned today. chci were both founded by visionary members of congress and today they are two of the nations leading his tannic --

his panic portions that work to prepare young lives to be our future leaders. i knew this was going to be a tough room. you guys # just came back from the holidays, there's free booze. everybody wants to keep the party going. hi everybody. let's simmer down just a little bit. i promise i'll let you get back to mingling in just a little bit. let me tell you what chci is about. it was founded in 1978 with the vision of bringing the promise of the american dream to all latinos. i think we can all relate as so many of us are living that american dream. today, it's unique model of educational services and leadership development touches 1500 young latinos annually promotes college readiness and college attainment. in fact, some of the young

people that probably greeted you as you walked in the room are some of the recipients of the scholarships as well as some the fellows who are here tonight. they are the future leaders of this country through award winning leadership curriculum and direct access to the most powerful network of latino leadership in our nation. the chci's vision is an educated and civilly active hispanic community contributing at all levels of u.s. society, business and government, and today, there are over 5,000chci alumni across the country. that is amazing. [applause] that's right. [applause] now, chli there's a partnership now, was founded in 2003 with a commitment to fostering a broader awareness the diversity of thought heritage, interest and views of the americans of hispanic and portuguese

dissent. it works to strengthen the community by providing advancement of latinos in our sectors of the united states and the global economy. since 2004, chli focused its efforts on developing and strengthening tomorrow's leaders and has given more than $500,000 to leadership development and education programs. great, great job. both of these organizations are able to carry out these really important missions though with the generous support of really incredible partners and sponsorships. this even's sponsors to recognize are com cast. ..

to recognize our luck good leaders of the 112 congress come on whose soldiers arrest a tremendous opportunities and tremendous challenges as a dramatic growth in the latino population present. i know he's got the census results coming out very soon for 2010. we are eagerly awaiting those results. [cheers and applause] albright. you don't need me to tell you

what we already know that our hispanic community is very quickly becoming a majority and no longer a minority. [cheers and applause] that's right. we know already that latinos account for more than 50% of the total u.s. population growth since 2000. so i can only imagine if we get a sneak peek in the next week or so from row will what we are going to hear about that population has since exploded. lately the growth of the u.s. population overall is really as a direct result of the hispanic population's growth. of course, to those of you who have just been a lack good and are now in office, more than a half-million latinos voted in this past election. you need those votes to count, every single one.

[applause] so that's 8% of the overall vote. but you know as well as i do that that number is also going to increase incredibly. that helps elect a new hispanic senator. he's not here tonight because he's got his own party going on i've been told. it but also, five new house members, so congratulations. i know they're all here with us today. and they join the incumbent numbers that must work together to ensure that the american dream is acceptable to all latinos and to everyone in our country. i tell you, you guys have a tough job, especially this year in the coming years. so we're all counting on you because never has your voice and your leadership but more important and critically tied to the success of the hispanic community than it is today. our future is in nature and

future needs your leadership now more than ever. so we welcome you all. we celebrate you. we believe in you and the greatness of our nation. so with that said, it is my honor not to introduce today's distinguished speakers. first we have representative ros-lehtinen who many of you know and love. [applause] she is a pioneer. wow, is she ever. breaking down barriers through every step of her career. the first hispanic woman elected to the state house of representatives in 1982 and the florida senate in 1986. 1989, the first hispanic woman to serve in congress that she is currently beginning now her 12th term in office, representing florida's 18th congressional district. that pretty much says it all. but on top of that now, she's the chair of the house committee on foreign affairs in the 112th congress. so she's becoming the first

woman to ever leave that committee. [cheers and applause] that's a huge honor. ros-lehtinen is a chile board member who serves on the chci council after many years on the chci board. her involvement with these organizations carries on her lifelong commitment to the educational opportunity for all. and also to make him your going to be hearing from representative charles or charlie train to. [applause] the new chair of chci. you couldn't have picked better. and the congressional hispanic caucus. he's a leading voice on issues regarding the senses. he was the first elected to the u.s. house of representatives in 1998 representing texas is 20th congressional district and begins his 20 term in the 112 congress. he comes from a very strong and

politically active bloodline as his father was former representative henry gonzalez, representing district for 37 years and is one of the founding members of the congressional hispanic caucus in 1976. in the 111th congress, he served on the powerful house, energy and the house administration committee. so without further ado, after long introductions, please help me welcome representative ros-lehtinen and charles gonalez. [applause] [speaking in spanish] >> charlie and i would like to begin our brief remarks and they will be brief, asking if you could join us in a moment of silence, if we could all stand and say a silent prayer in

memory of all of our armed forces personnel who have perished and as we know a great many of them are from our latino community. please stand in prayer. amen. thank you. so let's keep that nice, quiet. i'd like to thank the congressional hispanic caucus institute and the congressional hispanic leadership institute for putting this event together. both chci and chile have helped so many young hispanics by giving them the tools necessary to succeed and make a difference. as a chile board member, i am proud of the opportunity that chile provides the hispanic youth to interact with leaders in the public and private yours.

its global leaders congressional internship program has helped so many hispanic students expand their professional horizons and enhanced their understanding of both government and business. this past november, americans witnessed an historic midterm election. however, much of the punditry that might've missed an even bigger story. and we know what it was in your wonderful emcees alluded to it. and that was the astounding victories of our hispanic candidates across the country the victory of senator marco rubio, governor of siena martinez of new mexico, ran sandoval of nevada as well as five five incoming hispanic house members are indeed proof of the remarkable progress that our community has made. and you know who those guys are. david rivera of florida keiko centeno, no forest of texas and jaime herrera butler of

washington state. let's give it a. so the ever-increasing political population of the hispanic community is highlighted by these victories. and we talked about the 2010 census. well if you know, it's going to predict that more than 45 million hispanics are living in the united states and more importantly the data is going to show that hispanics are increasingly moving to the interior of the united states, with the number has hispanics as the portion of the population has grown to nearly 50% in the last 10 years. that is amazing. and all of us have known these numbers for a long time. our community is part and parcel of the fabric of this great nation. i know of our contributions and not importance of our community will micro. i was the first hispanic elected to congress, but i'm inspired

hispanic women alike did -- and inspired by all the hispanic women and men who will be part of this new 112th congress. there were only 12 hispanics in congress when it came to washington during the civil war. [laughter] this new congress will have 23 hispanic members in the house and two in the senate. [cheers and applause] now, we may not always see eye to eye on all the issues and we may even been on opposite sides of the aisle, but we are all committed to ensuring that [speaking in spanish] continues to prosper. it is my honor to introduce [speaking in spanish] the new chair of chci, congressman charlie gonalez. [cheers and applause] >> thank you.

thank you. it's going to be a great year. thank you. and i too intent on being very very brief. and of course, to miss virginia and to not only common thank you very much for your presence in the contribution that you make in our effort into iliana, my dear friend who has always been very blunt when it comes to certain issues and tells me exactly that my vote was wrong. [laughter] with a smile. if you really think about it i want to touch on this at the beginning of my brief remarks because it really is all about what our organizations represent and why they even exist. first of all this is a joint reception and i think we should all rejoice and celebrate that we may be two different organizations, but that we share the same goal. and the goal is really to further the aspirations and dreams of latino youth.

why latino youth? well, the same reason we celebrate the weird between us and we're been elected iraqi united states is that latino just like latino communities and constituencies that we represent, maybe to have different challenges and different obstacles that really need to be acknowledged. in time maybe not my lifetime nobody would be giving a speech like this and i hope that we arrived there. the first hispanic woman to be elected in the united states congress, the first woman that is going to be chairing the community on foreign it shares. [cheers and applause] and by the way, while she was in congress, she decided to get a phd in education. the rest of us thought we had so much to recruit in "the new york times," "the wall street journal" and the post and she was working on a phd.

there is no way. stand up illeana. [cheers and applause] first of all people say about fill certain shoes. you're not going to picture me in those shoes no matter what you say. [laughter] but truly the first hispanic woman to chair a pool committee and that's an incredible accomplishment. and we should never forget that. [applause] but both illeana, the media, all of us here all our success, of course, to her own blood, sweat and tears, but somebody opened the door someone gave us some advice, someone mentored us. if there's anyone in this room is as i did it completely on my own, no one helped me, maybe you shouldn't even be in this room

because you've had way too much wine. i am telling you now and no one does it entirely on their own. we open doors. that's what chile does. that's what chci does. it's a joint endeavor. we may be two different organizations, but we are driven of course by the same goal and that is of course to help latino youth. and so thank you -- [applause] thank you for everything you do to allow us to accomplish the goal. stanley, if you'll come back up and nathalie is going to be introducing some very special gas. obviously we have some special guests and we want to acknowledge them as well as members of congress presidents and members of both chile and chci and grace us with their presents.

nathalie. [applause] >> if you will stand by this is a huge photo of opportunity as well. brooklyn to take advantage of a lot of you are in the room. it's my honor to invite hispanic members of the 112th congress to join if you're on the stage as they are to be recognized. when i call you names if you'll join us. we'll take a big photo here and representative joe bock from california. [applause] congressman hardier but share a a -- hardier becerra. converse men's francisco canseco. representative charles gonalez from texas. [applause] this is like the prom. representative hinojosa. congressman ben lujan.

[applause] present commissioner pedro luis e. [applause] with god illeana on stage. representative lucille by yard -- allard rather. [applause] representative velasquez -- [speaking in spanish] now, some who are here briefly come you probably saw them and mingled with them. we have lisa jackson, the epa administrator with your senator robert menendez also had to leave a little early. congressman martin heinrich as well had to leave. he's here? come on up here, martin. come on up please join us. i'm sorry. [applause] and i believe we have honorary

frank sanchez, secretary of commerce for international trade still with us, right click frank sanchez. jim green, are you here? country and debbie wasserman schultz also an honorary ben lujan senior, new mexico's speaker of the house, are you here too? and of course, last but not least, a very special guest from the secretary of labor. [cheers and applause] did i miss anyone? if i missed anyone, i'm so sorry, but come join us. [applause] i think everybody's here. [inaudible conversations]

[inaudible conversations] [applause] they are the ones who did the work. [inaudible conversations] let everybody see their welcome back. once again, congratulations to all of you, our newest members of the 112th congress. we are so proud of you.

i am privileged and honored to be here to welcome you back. we trust in you. we hopefully look forward to a better america under your leadership. so god speed because we need it. we also would like to recognize some other -- i guess we got out of our distinguished guests. but as we close, i do think it's important to remember our sponsors and their generosity who have been able to not only help us with this event tonight but most importantly the young people who have been able to help shape their futures. so once again to our sponsors. once again pouring go in behind, comcast, exxon peco energy [cheers and applause] the company guy is in the house. merck & co. pg&e, the coca-cola company and toyota. thank you all for joining us here tonight. i know it's a busy time in washington, so i appreciate all of you making the effort to be

here. enjoy the rest of the evening. now you can hit the bars and mingle. have a good night. happy new year. [inaudible conversations] [inaudible conversations]

>> i think news organizations have adapted. it's a great or were not -- that overall news organizations probably aren't doing much for news and doing domestic news? the public there's some responsibility here. the public bears responsibility of keeping themselves informed >> new york's new governor, andrew cuomo gave his state of the speech addressed this week. here's the powerpoint presentation to emphasize his key points, covering ethics spending and what he calls smarter government. the governor also spoke out in favor of same-sex marriage. this is 50 minute. >> like them either, this is a

time of change and renewal and eech w is open on her and a privilege to introduce to the podium for it is both his very first state of the state message. governor andrew cuomo. [applause] >> thank you. thank you very much. thank you. [applause] thank you very much. thank you.k you. thank you. thank you. well, good afternoon, new york. it is a better afternoon then die. 2200 people are here today to talk about their government and the way they never has before. afternoonnew yo good afternoon, new york.fternoon okay, first let me begin by me

acknowledging a truly extraordinary public servant. he was a great mayor of rochester. he is going to be -- that's rochester.going he is going to be a phenomenalg lieutenant governor. lieutenant governor, bob duffy. [applause] [cheers and applause] to my colleague and congratulations to the reelected controller, thomas dinapoli. [applause] two are brand-new, right out of the box attorney general eric the bo schneiderman. [applause] to majority leader, dean's fellows, thank you very much coming team. scal

assembly speakers sheldonheldon s silver. [applause] senate minority leader, john sands in. [applause] jo assembly minority leader, brian cole. [applause] to the judges of our great court of appeals, it's another to beg withes you. it's an honor to be with you and a special thank you to the young people behind me. these are high school students who represent new york's 62 counties. they are the future and the state that we are talking about preparing today is the state that we will leave them. we hope they do a good job and

we thank them for being with us. thank you! [ applause ] >> my friends i believe this state is at a crossroads and i believe there are two very different paths that this state may go down. certain factors are pushing us down one path. the national economic pressure and the costs of state govern iment that we're currently expanding and the function that the state government has been manifesting and the fact that people have lost trust in our government. they would dictate the state's course and there's an alternative. when you look at the assets of the state and when you look at the legacy of the tate and when you look at the 10 asset of our

people and when you look at the quality of our people. you have the very real sense that we can turn this crisis into an opportunity. what is the state of the state? this is a time of crisis for our state, a time when we must transform our government to once again become the progressive capital of the nation and to seize the moment of opportunity that is before us. what we do today, january 5, 2011, will determine the course of this state for decades to come. for new york it is time to change my friends and that is

what today is all about. this convening itself is a metaphor for change. this convening itself says that change is possible in albany. believe it or not, and i say amen because we need change in albany. [ applause ] >> this is the first time since governor al smith that the state of the state is not given into capital. it's the first time that the legislative leaders who were asked to participate in the presentation. it's the first time that technology is actually going to be used in the presentation, and it's the first time the most important participants have actually been invited to participate, the people of the state of new york.

and we say welcome new yorkers for being here today because this is your government and no one is better suited to be here to hear this message than you. thank you all for coming. the state of the state begins with an honest analysis of the crisis that we face. in government, as in life, you can never solve a problem if you refuse to acknowledge it. the economic recession has taken an especially hard hit on the state of new york. 2009 we had a 26-year high in unemployment. roughly 800,000 new yorkers are now unemployed, helpeds of thousands more are underemployed. we had the worst business tax

climate in the nation period. our taxes are 66% higher than the national average. upstate is truly an economic crisis. >> in real gdp from 2001 to 2006 upstate new york grew by 1.7% per year while the average in the nation was 2.7%. the costs are of pensions are exploding. 1.3 billion in 1998 and 1999 projected for 2013 6.2 billion a 476% increase and it's only getting worse. the state of new york spends too much money. it is that blunt and it is that simple. our spending has far exceeded the rate of inflation.

from 1994 to 2009 inflation was 2.7% per year. medicaid went up about 5% per year and education went up over 6% per year. we just can't afford those rates of increase. state spending actually outpaced income growth. state spending increased just over 6% and personal income growth are 2.8% and most damaging, our expenses in this state far exceed revenue. we've been focusing on this year and the deficit this year which is a very large deficit about $10 billion and it is a problem and it is a major problem. what's worse is it's want just about this year. next year the problem goes on

$14 billion. >> the year after the deficit goes on $17 billion. >> this is not a one-year problem, my friends. this is a fundamental economic re-alignment for the state of new york. you look at the chart and you look at the arrows and this is an unsustainable rate of growth and it has been for a long time. not only do we spend too much but we get too little in return. we spend more money on education than any state in the nation and we're number 34 in terms of results. we spent more money on medicaid than any state in the nation and we're number 21 in results. we spend about $1.6 billion per year in economic development and we're number 50 in terms of results. we're spending more and government is growing more. we now have over 600 executive branch agencies and it's not just state government.

the proliferation of local government and special districts all across the state now over 10,500 driving that property tax rate up all across the state, and the large government we have is all too often responsive to the special interests over the people of the state of new york. the proof is in the pudding and new yorkers are voting. with their feet. 2 million new yorkers have left the state over the past decade. what does this is a say? we need a radical reform and a new perspective and we need it now. >> we must use this moment to transform our government. we currently have a government

of disfunction, gridlock and corruption. we have to transform it to a government of performance, integrity and pride. it is time that we speak to these issues and actually get results for the people of the state and stop offering rhetorical solutions. and i am going to present the budget in several weeks but this year's budget discussion is not just about a budget exercise. that's what those numbers are saying. this is a fundamental re-alignment for this state. you can't make up these kinds of savings over this long a period of time through a budget cutting or trimming exercise. we'll have to reinvent government and we'll have to reorganize the agencies and

redesign our approach because the old way wasn't working anyway. let's be honest. [ applause ] we need literally a transformation plan for a new new york and we have new principles that will guide the new government. number one we want a government that pays for performance. no more blank checks. number two we want a government that actually gets results in realtime. number three, we want a government that puts the people first and not the special interests first. [ applause ] and number four, we want a government that is an icon for integrity where new yorkers can be proud of their government once again. >> we're going to start by

transforming new york's economy because what made new york the empire state was not a large government complex. it was a vibrant, private sector that was creating great jobs in the state of new york. that's what made us the empire state once and that's what will make us the empire state again. when you look at the beautiful state seal at the heart of the seal in the middle of the shield are two ships on the hudson river. those two ships were put there when the seal was designed to symbol iez symbolize intracoastal and international commerce that at the heart of this state is business and we have to re-learn the lesson our founders knew and we have to put up a sign that says new york is open for business. we get it and this will be a business-friendly state. [ applause ]

we're going to establish economic regional councils across the state. they're going to be chaired by a lieutenant governor bob duffy. the point -- these will be public private sector partnerships and the focus of which is to create jobs, jobs, jobs in those regions. it starts with the premise that there was no topdown template to create jobs and different regions in this state with different assets and different abilities and these plans will have to come from the bottom up and let them power the local communities to plan their future and help themselves. higher education will be the key economic driver and we look to partner with our great system especially across upstate new york in making this a reality.

they will be -- they will provide -- they will provide both intergovernmental and intragovernmental coordination and be one-stop shops and the local government will all be on one board and all of the state agency will be on that one board. if you need it to get something done in that region it's a one-stop shop and the government will actually cooperate with each other rather than conflict with each other. >> these councils will have two main functions. first, they'll coordinate all of the existing economic development money that goes into that region primarily through esdc, but second, they will be able to come up with job development plans and then compete against the other councils to compete for up to $200 million in funding.

competition works, let them come up with their best plans. compete against the other regions and we will fund the most creative plans. next we will have to confront the tax situation in our state. the property taxes in new york are killing new yorkers. 13 of the 16 highest tax counties are in new york when assessed by home value. in absolute dollars, westchester county the highest property taxes in the united states of america. nassau county, the second highest property taxes in the united states of america. it has to end. it has to end this year. we have to -- we have to hold the line on taxes for now and reduce taxes in the future.

new york has no future as the tax capital of the nation. our young people will not stay. our businesses will not come. this has to change! [ applause ] put it simply, the people of this state simply cannot afford to pay any more taxes period. i would like to introduce you to miss geraldine sullivan. miss geraldine sullivan is a resident of monroe county. she is 81 years young. she has -- she's been retired from bausch & lomb. geraldine lives alone on social security and owns her own home.

her own property value has gone down and her taxes have gone up. geraldine could no longer afford to make ends meet. what did geraldine do? so at 81 years old she went back to work as a lunch monitor at the local high school just to be able to stay in her home and just to be able to stay in the state of new york. geraldine, we understand your problems. help is on the way. we will pass a property tax cap, geraldine, once and for all and we -- [ applause ] >> and geraldine, we applaud your spirit, your strength and

tenacity. let's give geraldine a big new york round of applause. [ applause ] we must transform our state government. the last time the state government was reorganized was 1927 under governor al smith. 1938, a reform was passed and the constitutional amendment that said there could only be 20 executive departments, 20. so what has happened since then? well, we couldn't create any more departments, but the law didn't say anything about creating councils, advisory panels and working group facilities with sports and committee. so what do we now have? the department of health only

one department in compliance with the law, however there are 87 other organizations that had been added to the department of health and 46 councils and six committees and 17 boards and iks institutes and two tests and five facilities. it's time to organize the government and make it professional and make it efficient, make it it effective to undergo a comprehensive review. let's eliminate transfer and consolidate the funds, i propose setting upstage and the efficiency commission and it would be styled by the berger commission where they would come up with the report that was submitted to the legislature and the legislature has 30 days to reject it it, otherwise it's passed. the charge to the commission would be operational improvements metrics and targets, a reorganization plan due in six months and it would

consist of private sector experts who could come in and advise us on how to do it and incorporate members of the legislature. >> we need to transform our budget. we have to start with an emergency financial plan to stabilize our finances. we need to hold the line and we need to institute a wage freeze in the state of new york. we need to hold the line on taxes. we need a state spending cap and we need to close this $10 billion cap without any borrowing. [ applause ] we need to transform the budget process that we use in the state. the legislature is very familiar with the budget process, and we need to transform this process from partisan political theater which is what it is today to productive debate and compromise. right now, the budget process is

like ships passing in the night. wait a second, bring those ships back, i think i recognize someone. is that -- zoom in on that man on the battle ship. yes, it is. senate majority leader dean scalos. and, look! it's commander sheldon silver! oh, and there i am! and here are the special interest groups with the -- [ applause ]

you notice how all of the missiles from the special interest groups went into my battle ship. i would humbly suggest as the new governor that maybe, just maybe, we'll try doing it a different way this year. what do you say? we need to try a different approach and think of it this way. there are basically three flash points when it comes to the budget, the education-funded medicaid and state and local mandates mandates. we want to try a new approach. let's start with the medicaid program. the state of wisconsin actually used an interesting model. the governor had announced across the board cuts on the medicaid program. the industry said they couldn't live with the cuts and what wisconsin did was basically brought everyone in. it was a hybrid alternative dispute resolution meets binding

arbitration process. and it actually worked fairly well in wisconsin. the industry came in. they worked with the government and they arc accepted the budget target and redesigned the program to meet those targets. remember this is not going to be a budget cutting or trimming exercise. we need to redesign the medicaid program. i can also tell you this, as the attorney general i audited the medicaid program for four years even without this budget problem. the medicaid problem needs a desperate overhaul. it has -- it is dysfunctional on many, many lechls. so this process has to be done anyway. our suggestion is to take a crisis management approach and put together a medicaid redesign team. the medicaid redesign team will start on january 7th. it will commit to reinventing in time for the april 1st deadline

and it will assume the governor's budget target for the medicaid cut and the exercise will be to find alternative ways to reach that cut. if we institute a cut in the normal budget process it's basically through reducing the reimbursement rate. let's see if we can't actually find efficiencies in the program so we provide a better service for less money. the committee will include legislative executive and the state holders. dennis rivera from seiu mike grisham, ken rasky, dan cisco members of the legislature have agreed to participate in this process. we also have jason helgerson who is the former medicaid director who did this in wisconsin who is responsible for designing the

exercise. we have seduced him to come join us in the state of new york which was not a difficult sell obvious ly obviously and jim, who was a great veteran of state government and has done extraordinary work in health care and we asked to come back. let's welcome jason and jim. thank you very much, welcome aboard and welcome back, jim. we'll use the same approach when it comes to mandate relief. putting together a group that will start to january 7th and will have actions by the april 1 deadline and will propose eliminating any unnecessary state mandates and again we'll

include all our partners legislative executive and stakeholders and labor groups and that group will be run by larry schwartz who is senior adviser to me and many of you know he was secretary to governor paterson and he's done extraordinary work and he'll be excellent heading up this group. thank you very much, larry schwartz. >> when it comes to education funding as i mentioned earlier, we're number one in spending and number 34 in times of results. that has to change. the crept education funding has formula grants meaning there were no performance incentives in the grant process and the school district gets the numerical formula and that's what they're going to get whether they do a good job a bad job, it doesn't matter they get the same level of funding every year. the federal government is more innovative in this area and they're doing it now in the area

of education where they run competitions and for example, when they fund the state government if the state government wants to qualify for the federal money they have to win the competition. we know in new york how effective those competitions were in making the state government actually move and pass the piece of legislation authorizing charter schools so we could qualify to the race to the top money. competition works. when i was in the federal government ten years ago we moved from blocked grants to competitive grants and everything was performance grants because when they just give people cash with no results you take the incentives out of the system. our suggestion is when it comes to education, have two competitive funds that reward performance. one is the school performance fund which would have a $250 million competition fund for districts that increase

performance in the classroom. for example, improving grades of historically underperforming children. if there is a school district that does stellar work let them compete, let them be rewarded and let them be emulated. we would have a second competition for administrative efficiency. a $250 million competition for districts that confined administrative savings through efficiency, shared services et cetera. run those two competitions and actually incentivize performance and change the behavior through the funding mechanism. for those of you who are skeptical about performance and the ability to turn around to school. let me introduce brian rosenblum

and brian is now the principal of the technical career high school in manhattan. brian has been there for two years and has made a difference. in that time he's gone from 73% to 85% and listen to this the pass rate on the regions went from 31% to 89%. that performance is what we want to incentivize. that performance is what we want to model and that is what we want to applaud. congratulations, principal. thank you for being with us today.

i would also propose a consolidated congress. we've seen some progress. i think we added financial incentives to the governments that actually consolidate you would see acceleration in the consolidation process and have a bonus fund for local governments that consolidate, merge or share services with 50% of the bonus money going to direct property taxpayer relief for the people of that government. >> my friends, we have to transform the ethical environment and we have to clean up albany. we all have seen the headlines, headline after headline month after month year after year with no change.

every time there's another headline there's another cut on the body politics and a little more trust has bled out and this has gone on and on and on. i'm familiar with the situation because many of the cases that were in the headlines i was involved in. sometimes even in albany there is a black and white issue, and this issue, and this issue is black and white. there is no gray. the people of this state have lost trust in state government. this government has lost credibility with the people of the state. it is time to pass ethics reform and it is time to pass ethics reform now! we will propose a cleanup albany plan with real reform. this is not going to be a

situation where the people of this state would have suffered for years and lost trust and now we're going to give them a watered down or half-baked ethics reform bill. they're going to have real ethics reform. we're going to end pay to play and we'll have full disclosure of outside income and we'll have an independent monitor and we'll hear mayor ed koch who has gone all over the state and we applaud him talking about redistricting. congratulations, mr. mayor. and we need public financing of campaigns. >> we must also at the same time once again become the progressive capital of the nation. yes, we must deal with the fiscal realities and they are difficult and will be time

consuming, but at the same time we also have to continue to achieve social progress that made this date famous. when it -- you should applaud. >> i spent four years fighting wall street corruption, and i saw thousands and thousands of consumers victimized by the wall street corruption and the question was where was washington? where was washington? where was washington? where were all of the federal regulators? where was the sec and foato the whole alphabet soup of federal regulators? where are they? it was a good question. there was another question. where was albany? where was our banking department? where was our insurance department? where was our consumer protection agency and yes, i believe washington was primarily responsible, but i also believe new york could have done a better job frankly.

i believe our organization on eye believe our current organization is not effective because it is not organized the way wall street works anymore.believe our current organization is not effective because it is not organized the way wall street works anymore. these divisions of insurance don't exist in the marketplace and much of the activity is falling between the cracks of our regulatory entities. we can have a win-win. we can son sol date them into a department of financial regulation that better protects the consumer and the consolidation will save the taxpayer money by reducing the cost of three separate organizations. >> we've been talking about green jobs and i believe new york has a great future in green jobs.

we have a $100 million competitive grant program that will go to private sector partnerships that come up with the best plans to create green jobs reduce pollution and further environmental justice. let the private marketplace come in, let them work with the local governments and the local community groups to come up with the best plans. let's reward performance, let's incentivize performance and let competition run and let us fund the best. that's the green jobs proposealproposal. we believe in economic opportunity for all new yorkers, the minority in women-owned businesses and enterprise endeavor is a good one and it has a current goal of 10% of state business. i want to double that goal to 20% of state business. for those of us who are old

enough to remember willowbrook it brings back very bad memories. when we think about our current juvenile justice facilities, i believe there are echoes of what we dealt with in willowbrook. you have juvenile justice facilities today when you have young people who are incarcerated in these state programs, who are receiving help assistance program treatment that has already been proven to be ineffective. recidivism rate in the 90 percent i'll percentile. the cost to the tax payer is exorbitant. for one child over $200,000 per year. the reason we continue to keep these children in these programs

that aren't serving them but are bilking the taxpayers is because we don't want to lose the lose if we closed the facility. i understand. i understand the importance of keeping jobs. i understand the importance of keeping jobs especially in upstate new york. i also understand that that does not justify the burden on the taxpayer and the violation of civil rights of a young person who was in the program that they don't need where they're not being treated helpeds of miles from their home just to save state jobs. an incarceration program is not an employment program. if people need jobs, let's get people jobs. don't put other people in prison to get some people jobs. don't put other people in juf

juvenile justice facilities to give people jobs and that's what this is about and that has to end the session. [ applause ] we believe in justis for all and we must pass marriage equality this year once and for all. we will from pose a program called the urban green market program which will be a win/win. we will set up green markets in urban areas all across the state to give good food to inner city communities and these markets will be a host for the new york agricultural products.

last point, we must seize this moment of opportunity. new york is not alone in this situation. as a matter of fact, there are eight states with fiscal conditions that are worse than new york. this is going to be a time of national transition. this is really an economic recalibration for states all across the nation, and that's what's really happening. as the economy is retrenched, states now have to recalibrate. they have been other times in our history where there have been trapsition periods and agricultural transition and the industrial transition and high-tech transitions. in all those transitions, new york led e ew york ..first. why? because we were fast and we were faster and more sophisticated and we won in the transition.

we can win in the trapsition again. and we can make -- we can make january 5, 2011, the day that we seized the opportunity and the state of new york strikes back. i want to leave you -- i want to leave you with one personal point, if i may. as the new governor. to my colleagues in the legislature, at one point in my life i wanted to join the clinton administration. i was a life long new yorker and bill clinton took office, and i had the opportunity to join the federal government and i did. and it was a good experience. i needed it.

i was one of those people who thought the new yorker cartoon was the accurate depiction that the west coast was really new jersey. i was a real -- i was a real new yorker. so i went down in the beginning of the clinton administration, assistant secretary of the department of housing and urban development and i became a member of bill clinton's cabinet and it was a fascinating experience, and i got to work literally in every state in the nation. many times when you're in the president's cabinet your main utility is the president can't make an event, they scramble for a surrogate and they send someone from the cabinet to be a surrogate. that was actually a very tough duty by the way. >> can you imagine having to go out to kansas to substitute for president bill clinton and get before a group that was expecting to see the president

of the united states bill clinton and instead they get the secretary andrew cucomo? but it was -- it was a learning experience for me. and literally every state and i would be talking about every topic and almost invariably, somehow they would figure out that i was from new york. i'm not really sure how because i never told them but they would figure out i was from new york and at the end of the event they would come up to me and almost without exception whatever the topic they'd say what are you doing about this in new york? it could be health care. it could be immigration. it could be taxation. what do you do in new york? and their eyes would be opened wide.

what do you do about this in new york? why? because we are new york and because our history, our legacy was we took these difficult problems and we solved them first, and the rest of the nation learned from us. the other state governments look to new york and they learned from us. i was running hud, the housing economic development. most of the federal programs were modelled on state programs. why? programs. why? because the new york government was the best. we were the most sophisticated. the most complex. the problems developed here first and we resolved them here first and we had the most caliber in our government. we were the best and we were the model for the nation. that's the history and legacy of new york. this has been an aberration this recent past and the

dysfunction of albany. the gridlock of albany. this is not the true story of the new york state legislature. it's no who with we are. it's not what we do. it's not why we're here. the new york state legislature is the best legislature historically in the nation. the most talented people. that's who we are. that is who we are. and that's who we can be again. when i hear your leaders speaking about cooperation and a positive vision and change and doing things differently, i am so excited. because the people of this state desperately, desperately need it. they need the government to work

in a way they haven't needed the government to work in 20 years. they've seen the ugly and the gridlock. they've seen the corruption. let them see how beautiful the government can be when it cooperates and it's enlightened and it's functioning and it's performing and it's putting the people above the special interests. let this legislature be the legislature that stands up and says -- yes we're democrats but we're new yorkers first. yes, we're republicans but we're new yorkers first. yes, we're from down state but that matters most and we're here as new yorkers, not as democrats or republicans or not as in independents. we're here to help this state through the crisis.

let this 234th legislature stand up and write a new page in the history book of new york state government. let this 234th legislature solve these problems at a time of crisis and bring this state to a play that it's never been. we're not just going to build back. we're going to build back stronger and bigger than ever before. that's what we're going to do together. thank you and god bless you!

defense secretary robert gates travels to china next week

to discuss military cooperation between the two nations to read a preview of the trip now from deputy assistant defense secretary for east asia michael schiffer. this is 40 minutes. [inaudible conversations] >> thank you for coming. i am the executive director of the international institute for strategic studies you best. it is my pleasure to introduce today mr. michael schiffer the deputy assistant secretary of defense for asian and pacific security affairs east asia. before joining the office of the secretary defense mr. schiffer surface senior national security adviser and legislative director for senator dianne feinstein has a council on foreign relations

petacchi international affairs fellow in japan. this program officer responsible for the stanley foundation asia programs and as a center for asian and pacific studies with the university of iowa. i would be remiss if i didn't add that michael somehow found time during these years to manage a bed-and-breakfast in hawaii. i was pleased to work with michael when he was on senator feinstein's staff and i was foreign policy adviser to senator chuck hagel, his a petition on the hill as it is in the pentagon was distinguished by his good humor, bipartisan collegiality and extensive knowledge of asia and national security affairs. deputy assistant secretary shifrin is a graduate of georgetown university, the london school of economics and new york university, and i say with some pride a member of the international institute for strategic studies. he will speak on building cooperation in the u.s.-china

military to military relationship and we will have questions to follow. welcome. it is a pleasure to have you speak on this important subject. [applause] >> thank you. let me thank you all for joining us here this afternoon and offered a special thanks to aa double less and to andrew for all their hard work in pulling this together. i would note on the side that the dirty little secret of this event has nothing to do with security its upcoming trip but a desire to spend time with andrew because i haven't a chance to catch up with him in a couple of years since we've been off the hill. with that said i am happy to be here today and have the opportunity to talk about the work the obama administration and the department of defense are doing to develop a more sustained reliable and

continuous u.s.-china military relationship we believe it is a critical component of the broad u.s.-china relationship as well. as you know, secretary gates will be traveling to china next week where he will meet with the chinese defense minister and other chinese leaders. although there are some differences in interpretation and opinion between the united states and china about whether or not the relationship was suspended by china at the start of last year it was secretary gates trip i feel we can agree the military to military relationship has been once again restored so this represents a step forward an important one and we think and one we trust will allow us to establish a stronger foundation for substantive exchanges across the bilateral security relationships before i dive deeper into the intricacies of the u.s.-china military relationship i would like to take a few minutes to

discuss the broad context, in the broad context and the shifting regional power dynamics in the asia-pacific region and the complex multifaceted and devolving u.s.-china relationship. the rise of asia and this may be perhaps a bit of a cliche but i suppose it is a cliche for a reason. the rise of interest perhaps the salient in central geostrategic fact of the 21st century. indeed by most measures the region as the most important and most dynamic region in the world today and more likely to become so as the story continues to unfold. today the asia pacific region comprises over half the world's population trade between the united states and the asia-pacific economy as estimated over $1 trillion annually. the region is home to 15 of the world's 20 largest ports with nine of them located in china alone and china has become the largest trading partner of

japan, india, taiwan australia and south korea all allies are partners of the united states and the asia-pacific region is also home of five of the largest standing army is in the world in india, pakistan, the republic of korea, north korea and china, and that doesn't even include our own military force. so this extraordinary growth that we have witnessed and dynamism of the region and that of china and india and in particular has been made possible by 60 years of peace stability and prosperity. yes there have been some significant selections during this period but on balance it is a part with remarkable stability and prosperity and much in bed by the sec and openness of the global commons and the laws and institutions with much of that traced back to the presence in the region and engagement with allies and partners.

remarkable as that period of growth and transformation has been however history teaches without careful management during periods of the transition and what we are witnessing in asia today is a power transmission on scale of any that we have seen in the world's recent history often in been discord, uncertainty, instability or conflict. so the transformation holds great promise the future is far from certain. the size and complexity of the region and the ring devotees of the new patterns of the distribution of power in the region across virtually every dimension economic military, diplomatic political, cultural, you name it makes the course of regional defense in the decades to come far from certain. our principal task is to continue to develop the nurture of the norms, institutions infrastructure and the architecture that is that the security in the region. failure to do so could the real facts regions hard-earned

progress and could come as has all too often happened in the past lead to the type of zero some competitions that could undo much of the progress we've seen in recent decades. and not come i would note is decidedly in our interest of in china's interest or the interest of the region as a whole. in many ways many of them are too obvious to me in a married china has an important role to play in promoting asia-pacific peace and prosperity in the 21st century. the second largest economy in the world translating to increase the national power in other areas there can be no question the future of the asia-pacific region will benefit from the contributions from china. the u.s.-china relationship has been promised from its inception on a shared commitment to stability within their reach and the international security environment. psychiatry gates said in the past the u.s. welcomes a strong

response will and prosperous china plays a constructive role on the world's stage and we welcome and encourage the active and positive contributions to the stability of resilience and growth of the regional and international system. president obama has expressed the desire to build a bilateral relationship that is positive in tone, cooperative in nature and comprehensive in scope. as president obama has said our ability to partner is a prerequisite for progress on the most pressing global challenges. from climate change to nonproliferation it is easy to imagine the issues that are comprehensive u.s.-china partnership can help tackle and likewise the problems that threaten to fester such a mutually beneficial relationship fail to take root. the obama had been attrition policy towards china rests on three pillars. first, the sustained effort to strengthen and expand bilateral cooperation between the united states and china through such mechanisms as the u.s.-china strategic and economic dialogue. we've been supportive of greater

chinese it is pushing and multilateral institutions and of welcome to greater role in the imf and world bank. we have often worked -- we also work well with china on the u.n. security council and over the past couple of years on reviving the the global economy second, there's a regionwide commitment strengthening relations with allies and partners particularly within a functional problem solving regional architecture and placing our china policy within our broad asia policy. along with allies and partners we see greater cooperation in the region as it undergoes unprecedented change and particularly as china emerges as critical for the stability of the region and indeed the globe. there is a firm assistance in china abide by and hope to uphold the global norms and international rules that have been able to rise to greater prosperity and increase national power. we believe china has an interest in the stable and prosperous region and firmly rooted in the established norms and rules of the international system. and of course only china can or

will determine its own future the united states and others in the region must continue to work with china and into rigid to play a constructive role within the region and globally. a strong u.s.-china bilateral relationship and a strong relationship between china and its neighbors working in concert with china that observes international norms that please the common rules of the road and exercises its new-found national power's responsibly can be a significant force in tackling shared challenges. so what we may still have some distance to go before we achieve deep and genuine strategic understanding between the two nations, there are opportunities to build and improve on areas of bilateral cooperation. so, for the simple china increasing its involved in humanitarian disaster relief efforts and deploying more peacekeepers to even mentions is a positive indicator of the sort of china that we hope to see emerge in the years ahead. china demonstrate its willingness to join and deploy vessels of the gulf of aden and

work in concert with the international community to combat privacy. china is an actor for his opinion the regional architecture and china has shown its willingness to work for multilateral institutions and international organizations such as the united nations to address the proliferation threats emanating from both iran and north korea. all of these implements need a positive direction for the bilateral relationship and for china's role in the region and around the globe. however, much like the region itself a's future remains uncertain. this is a remarkably complex moment in the history and history for china as it acquires new capability and begins to play a greater role in the regional and global economic and security affairs. and it is a very uncertain about the future capabilities and intentions that makes the military component of the bilateral relationship so extraordinarily challenging and so extraordinarily important to get it right.

and it is the questions in fact we each have about each other because china certainly has questions about us just as we have questions about china and the underscore the importance of developing a deeper dialogue and more durable military security relationship between the two countries. in fact, this is an issue that we talk openly and frankly about with the chinese. we emphasize on our part while we understand that china is a growing economic power that is modernizing its military in ways the natural aspects of any country's development the lack of transparency about the nature of the chinese investments, its intent and its doctrine has caused disquiet in the united states region and it is therefore in both of the country's interest indeed in the interest of the region as a whole that we are able to have forthcoming and candid conversations about china's military modernization and in

particular about the antiaccess capabilities that we think we see in the pipeline but which we understand perfectly. and it is precisely because we seek to avoid the sort of uncertainty and security which is not managed properly can lead to dangerous on wanted security competition that we recognize the need to build a healthy military to military relationship. a healthy military to military relationship that as we like to say is sustained, reliable and continuous. this is in fact part of the logic of why both president obama and president hu seeking positive, cooperative and bayh bedle relationship. and they are clearly see the military to military component as an integral part of this comprehensive relationship. at the shangri-la conference last year, hosted by iiss kovacic brigade speed of the argument for having a stable and reliable military relationship between the united states and

china. secretary gates said the department of defense wants what both president obama and president hu mog, military content tall levels that can help reduce miscommunication misunderstanding and risk of miscalculation of it is the cost to military relations sick to regain its continued concluding an essential to the regional security is the brazilian u.s.-china bilateral relationship that is positive in tone, cooperative and nature and scope. sicced brigades comments and a shangri-la conference last year came during the period and the prc suspended the military relationship in response to the arms sales to taiwan. what we viewed with regret the decision to suspend the military to military relationship, our action response reflected our belief continuous military relationship between the united states and china is not a report doherty fever to the united states. it is an instrument that brings

mutual benefits that are in both of our interests. likewise, we did not and do not view a suspension of content as a punishment or a penalty. we will offer, however, that the on-again off-again cycle that is all too often characterized in the military relationship increase the risk and danger of an incident or accident that could be real the overall bilateral relationship and that that is a leader of our benefits. so we have made it clear that we stand ready whenever the pla is ready to engage in serious about getting on with the hard work, critical necessary work of building is substantive meaningful relationship. and without putting too fine of a point on it, there is reason to believe that the pla is aware of the danger that arises when the military's decide to cut off communication with one another. the chinese defense minister acknowledged recently in the chinese press there is indeed a possibility a mishap or accident might ignite regional conflict.

we have argued strongly that one way to prevent or limit this sort of possiblities through continuous dialogue based on open and substantive discussion of issues between the two militaries and the logic of such operational safety platforms is a military maritime consultative agreement, the mmca to address such a situation in which a mishap or miscommunication could metastasize the entire bilateral relationship. so we believe the fundamental purpose for the two countries in conducting the military relationship is to gain a better understanding how each side thinks about the rule and use of military power in achieving its national security objectives. in other words the fully functioning military relationship can help both sides develop a more acute awareness, more accurate awareness of the potential for the cooperation of the potential for the competition and can help each side find ways to take advantage of the opportunities that exist

to cooperate which are many. while the same time getting forces that might of the rest of competition. the defense counsel to the talks held in washington, d.c. just last month and shared by undersecretary defense missile flournoy on our side and the general on the chinese side both sides remark on the importance of moving beyond the on-again off-again cycle that is characterized in the military relationships for far too long and which is precluded a comprehensive military security dialogue that lives up to it's full potential. the purpose of continuous dialogue of course is to ensure we not only talk in the times are good but the strong context built during good times leave us with a robust and turtle and procrit platforms and channels of command occasions when the bilateral relationship encounters friction as inevitably and invariably it will. indeed it is precisely because we acknowledge they are still serious security concerns that sometimes to fight the two countries that we need to temper

them by building cooperative capacity. fostering greater institutional understanding and by developing as much as we can common views on the international security and fire met and related security challenges. we believe these are not just worthwhile goals to utter and speeches and talking points but that it is imperative we act together with the pla to build a structure that moves us beyond the on-again off-again relationship. we think one way to achieve the goals is to work to build a framework to guide the military relationship. at the recently convened defense counsel to the talks we presented a proposal to the pla for a free martelle wind for the relationship based on six guiding principles. the first is mutual respect, acknowledging both the u.s. and china differences as well as the need for the process to continue seeking common ground. second mutual trust allowing for greater openness and transparency in the relationship there, reciprocity, allowing us

to expend -- expand exchanges and build cooperation while seeking to balance the quantity and the quality location and pravachol arrangements for our business. next, a mutual interest, acknowledging points of convergence were discussing candidly those areas where the interests emerge. fifth, continuous dialogue. allowing us to stay in comprehensive dialogue including through periods of disagreement. and last, the principal of mutual risk reduction allowing us to develop and deploy new and existing tools and mechanisms to reduce the risk of misunderstanding in this calculation. through these principles we seek to achieve team goals in the military relationship which we believe are in the interest of both china and the united states. first to create opportunities for senior military defense leaders to have clear consistent lines of communication and to be able to have substantive exchanges on a full range of