government. the question of effective government -- can you address help the u.s. government is making itself more effective? >> i think you phrased it right. it is true in many parts of the world that commitments are unsustainable. when people say those commitments have to be brought back down to earth, they are completely right. what matters is the effectiveness with which governments do things that only government can do. there are basic things -- again, education, the restraints keep it on your financial system, what you do for basic science and research -- those are things that governments have to do. they have to do them better than they have been done in the past, not just in the united states, of course. it is about competent and

creativity and care >> and care and the capacity to act. and it trivializes the challenge to say it's about the math. >> thank you all very much. and special thanks to secretary of the treasury, tim geithner. >> thank you. [applause] >> in about an hour we'll take you live to the press briefing where he'll get questions about the antigovernment protests in egypt. that's live beginning at 1:00 pm eastern here on c-span2. the senate begins their work week today at 2:00 pm. on the schedule a bill reauthorizing the federal aviation administration. debate on that is expected to

begin today. also possible this week, a bill on small business programs. the senate is in live today beginning at 2:00 pm eastern. >> at strategies of favorable public perception of the health care law. we'll first hear from presidential advisor stephanie cutter who has been leading the obama's communications operations. and she was promoted to a leader policy role in the white house joining her at the forum was a democratic poll sister who also talks about messaging strategy and recent data of the loss provisions. they spoke at the group families usa. this is an hour and 20 minutes. >> we're delighted that you're all here.

we have a wonderful program this morning with two terrific guests. we're privileged to have them here this morning on bright and early on saturday. i'm going to introduce the two of them. we're going to -- the first half of the program we're going to hear mainly from stephanie cutter. i will introduce her here in a moment. stephanie has an important meeting at the white house at 10:00 so we're going to try to use her time as well as possible while she's here and then jeff will make presentations that i think you'll find very helpful. so let me just say, you know, one of the joys of working at families usa is we get a chance to meet some remarkable people.

i didn't actually have a long-standing relationship with stephanie and had a chance to do some work with her and it has been one of the great joys of this year that we've been able to watch her provide such important helpful leadership from the white house and for all of us in the process. jeff, whom i'll introduce in greater detail later has provided enormous helpful in terms of messaging guidance. and you'll get the benefits of that in this program. so it's a great delight to introduce stephanie is a very talented and a very special person. stephanie for many months has been the assistant president for special projects. she was just named i saw in

politico yesterday assistant to the president and deputy senior advisor. now, in her role as assistant to the president for special projects, she has been advising the president on key initiatives including the communications and out reach strategy for the affordable care act. stephanie has spent two decades in public service. she was an advisor to the first lady in the development and launch of the let's move initiative. and all of us have lost some weight in the process and we thank her. she's been advisor to the president in overseeing the communication strategy around the successful nomination of supreme court justice sonia sotomayor. she was counselor -- you can applaud. [applause]

>> she's been counselor to the treasury secretary helping to guide the strategy behind the development and implementation of the administration's financial stability plan. she has served as a senior strategist for some of the remarkable policy leaders, public leaders including our dear friend, ted kennedy, john kerry and harry reid. she was the chief spokesperson for the obama -- there'll be time for her to speak. >> i'm just looking at half the presentation. >> she was the chief spokesperson for the obama/biden campaign. she's here and give her a warm welcome. [applause]

>> so stephanie, i was wondering maybe you could open up and give us a sense of the lay of the land in terms of where we are today. >> sure. first let me say as ron mentioned, i worked for senator kennedy for many years that's when i became familiar with families usa and i just want to say thank you for all you do every day out there fighting for better health care and quality of life for the american people. it really does make a difference especially sitting here in washington and seeing what you do. so thank you. and that's when i first became familiar with ron pollack he was a legend in senator kennedy's office. if you wanted something done you caldron. so as soon as i got to the white house i caldron and it has worked out great. so i've been involved in president obama's white house on his campaign for some time. my most recent stint has been as ron mentioned assistant to the president for special projects

where i just oversee campaigns inside the white house. one of them is health care. you know this better than i do. getting health care passed was a long, hard fought struggle. and throughout that struggle there were many misperceptions about the law that actually passed. so after the law was passed and we began implementation, the president wanted to make sure that we were correcting those misperceptions and making sure people understood what was actually in the law so it could help them and take advantage of it. so for the last 10 months we've been working hard on implementation. the president wanted us to move quickly and responsibly to get the consumer protections out the door so people could start benefiting from them. we've done that. whether it's, you know, stopping insurance companies from dropping your coverage, capping your coverage, denying your coverage or giving small business small business tax credits to help them provide

coverage for their employees, we've gotten all of those provisions out the door. now it's time to ensure that people know about them so they can take advantage of them. as we were doing this and working with groups like families usa and many others that i see here in the audience, there was a continued campaign against the law. just since the law passed, $108 million was spent on advertising against the law. so we continue to battle uphill to just break through to educate the american people about what is in the law and what is is not in the law. to take some of the fear out of it. while we have not significantly moved public opinion, we have taken a lot of the intensity out of it. and i think we're at a place right now where public opinion is still split, favorable/unfavorable. for those who don't agree with the law and if you ask them

whether they want to repeal it, those numbers go way down and the intensity of opposition has gone down. now, that doesn't mean it's going to stay there. especially with what we're facing down here in washington on several fronts. first the house voted to repeal the law last week, not this past week, the week before. and the senate will eventually take a vote like that, too. that's just the beginning. we know that after they get that first repeal vote passed, that's when they're going to start chipping away at individual provisions in the law and we all know that once you start pulling apart pieces, then some of the cost-savings and most important protections and reforms in the marketplace to increase competition and availability of private insurance start to-witle away. the other thing that we're facing and ron may have mentioned this -- on monday we're expecting to get a decision in the florida lawsuit.

that will make the fourth decision in a district court so far. we've won two. we've lost one in virginia. and we're likely to lose a one in florida. i don't think that's any surprise. the question is, what that decision says and whether that judge issues a narrow opinion like the virginia judge did where he overturned the individual responsibility provision but allows implementation to continue. and, you know, we're working through the circuit courts now with that case and two other cases. we won't know what the florida judge is going to do, if it's an expansive opinion then we will face some implementation challenges. if it's a narrow opinion, we'll continue working our way through the court system. so that -- these cases are going to continue to come down. it's going to be a constant challenge. you know, our department of justice is doing a great job arguing it. and we've gotten dozens of cases already thrown out. but this is going to be a long thought process and at some

point it's going to reach the supreme court and we're confident that we will win on the constitutionality ground. the president was here yesterday. and i don't need to repeat what he said but he has made it clear that he has -- he's not going to allow this country to go backward in the delivery and affordibility of health care. and he's going to continue to implement the affordable care act vigorously. to ensure that people can get the protections as quickly as possible. you know, he made it clear in the state of the union and i think he repeated it yesterday that he's open to improving the law and making two weeks as we go along but he will not allow anything to happen to weaken protections or cost-savings. [applause] >> and we thank him for that.

[laughter] >> makes my life easier. but, you know, we are -- you know, we're ready on two fronts. we are continuing to implement and doing what the law entails and requires us to do. and we are working very hard to increase our education efforts so that the american people can really understand what's at stake. and we rely on people like you and organizations like families usa to help us talk to people on the ground about what's in the law, what's not in the law. what they can be taking advantage of and what could be at risk of being taken away from them. and those are real, you know, conversations that need to happen, on a ground level. you know, you all are the trusted messengers out there in the country. you know, quite often, the american people don't want to be hearing from their government. they want to hear from people on the ground who they trust and that's you all. so i want to thank you for all

you're doing to get the word out. and i just -- as i say to ron every day, if you hear some urgency in my voice, it's because you do. i feel very urgent about marketing and educating and helping people take advantage of what's already been implemented. so thank you. [applause] >> we invite you to write down your questions. there should be sheets of paper. they will be collected. let us know and we'll have runners around. meanwhile, i'm going to open up. stephanie, this is a pretty big law you. it's got lots of stuff in it. the public seems still not totally apprised by what's in the legislation. how do you think we best as we

try to -- what do you think works best in trying to help people understand given the complexity of the statute, how this really is going to benefit their lives? what would you recommend to advocates in this room in terms of how they talk about it? so it really connects with the american people? >> well, it is a huge law. it is comprehensive market reform, which includes, you know, many different, very complicated provisions. for folks who don't follow health care policy, it's a very difficult thing to break down but you have to break it down. much of the law was front-loaded with very popular consumer protections that once people know about them, they feel a lot better about the law. the one thing that has broken through is the preexisting

condition ban. most people know about that. they don't know exactly how it works. but they know about it. they don't know that an insurance company can't drop you when you're sick for an inadvertent mistake on your application. a lot of small businesses don't know about the tax credit and they don't know in a couple of years they are going to be able to pool their coverage to increase their cost and be on a level playing field with larger players. mothers need to know their children with preexisting conditions can now get covered and can't be discriminated against by insurance companies. these are all really popular provisions but we have to let people know about them. and through the course of those conversations, there's lots of things that you can correct out there. for instance, that it's not government health care. that it's not -- you know, there aren't death panels which i think we've been successful in knocking down, at least in the majority of the population. so breaking it down and using

real stories. you know, we're now at the stage where there are lots of stories of people benefiting and i'm sure you know lots of these people. tell those stories. the president told them in the state of the union. i think he referenced a couple of them yesterday. how it's changing people's lives where they no longer have to live in fear of going bankrupt because their insurance company has decided to drop them or their insurance company has capped their coverage. you know, the more we tell these stories and the more you help us collect these stories, i think, that we'll have an easier chance of breaking through. but it's a constant conversation. and, you know, we could -- there's lots of pieces of the law that we can talk about. but remember this law gets implemented in stages. let's talk about what's been implemented. and help people understand what's already benefiting them because i think once they understand that people feel a lot better about the law and the fear it's taken out of it. you know, it also depends, ron,

as i'm sure everybody experiences in this room -- it depends who you're talking to. and how you tailor those conversations. if you're talking to the small business it is the tax credit and pool your ability in a couple of years. it is these insurance protection that is increase the quality of the coverage that employers can offer their employees. and it is the ability to, you know, not have to go through brokers anymore and go to health care.gov and find the best options for you, for your small business, for your family. it gives the power to the consumer rather than the insurance company. as much as possible, i always to try to send people to health care.gov because it's the most basic consumer-focused website that really breezy down how the law benefits specific populations, whether you're a woman wonder whether you can pick your own doctor and not have to have the insurance company require one for you.

or if you're a small business and all those protections that i just went through or if you're, you know, an individual with a preexisting condition and want to know what your best options are, whether it's private insurance options or getting into the preexisting condition insurance pool or community health centers in your community. these are -- i consider this website to be revolutionary because it really does put all of the power in the hands of the consumer to figure out what their best options are and takes away that veil of confusion of private insurance that has existed for decades and allowed insurance companies to, you know, give the best deal to them and not the consumer. so -- >> so stephanie, you're pretty sure there's no death panels in the legislation? >> i'm pretty sure. i haven't found one. [laughter] >> some people were asking how they can get an appointment to one of the panelists. [laughter] >> so i guess one of the -- one

of the questions i wanted to ask you about relates to -- as you segment the population, one of the groups that clearly has had some fear about the legislation because of this myth about death panels is senior citizens. >> right. >> and they're worried government is going to take away their medicare. >> well, it might. look at some of the proposals that are being knocked around on the hill. privatization of medicare and turning it into a voucher system, those are real things that could be moving. >> so sort of a two-part question. one is, what do you think is the best way to communicate to seniors who still may be uneasy because of the myths they heard of the debate about reform. and what do you see of the relationship of the affordable care act and the debate that may be taking place in the few months lifting the debt ceiling and some of the efforts probably by republicans to try and change

the medicare program? >> uh-huh. well, for seniors, seniors, the provisions in the law that deal with medicare are really some of the most developed provisions. they're largely implemented and they are -- last year, if you hit the doughnut hole you got a $250 rebate, this year if you hit the doughnut hole you get a 150 discount on your drugs. and the next years the doughnut hole gets closed by 2020 it's completely closed. seniors also got free preventive care. they get a free annual wellness visit. there's increased protections in fraud which happens to be one of the most popular pieces of the law for seniors. all of these things are implemented. and, you know, part of helping older americans understand what is or is not in the law is just helping them live it. and see, there are no death

panels. nobody has come across one. no one is taking away your medicare, you know, they're all signed up for medicare for this coming year. and nothing has changed. premiums haven't gone up. people haven't lost their, you know, particular plan with the exception of just the normal turnover and private insurance companies offering medicare. so, you know, this is real life. and a lot of the things that people put the fear in god into seniors might happen to them didn't happen. so, you know, just like we're talking to any other population, you have to talk to seniors, help them understand the new benefits that are there for them so they're taking advantage of it. you know, free preventive care is an enormous saving for them and an enormous benefit in keeping them healthy but they need to know about it. same thing with the prescription drug doughnut hole.

they need to know they can go get that 50% discount. some people are planning their budgets for the entire year knowing everybody has a rough idea of when they're going to hit the doughnut hole. knowing they're going to get savings once they hit it helps them plan their budgets for the entire year. so helping them do that now is an important piece of it. what's going to happen, ron, with the debate over the debt ceiling or some of the budget cuts that we're going to face? you know, the president is going to put out his budget in two weeks, you know, there aren't any cuts to seniors in it. and we are constantly strengthening medicare. what happens in the debate over the -- right now, we don't have a federal budget for this current year. we're operating under a continuing resolution on march 4th that continuing resolution expires and congress has to pass another one. as we get closer and closer to march 4th, the debate will

increase over what type of budget cuts can be extracted as part of this year's budget in passing another continuing resolution or an actual budget for this year. we don't know where that's going to end up. you know, we see the same things that you do. that the new house majority in some members, republican members of the senate are talking about cutting as much as, you know, 20% off of the budget compared to the 2008 budget. you know, if that happens, 'cause we'll be halfway through the year for this budget so you're taking 20% a half a year's budget, those are deep cuts with real consequences. so, you know, i can't tell you exactly what's going to happen but this is something that we are working on and the president made clear in his state of the union that he wants to work in a bipartisan fashion to come to an agreement on this so that we can

continuing operating our government. and providing the services that we do, whether it's to seniors or veterans. and, you know, the other piece of this that ron mentioned is the debt ceiling. raising the debt ceiling is a very common thing the government does. there's been dozens of votes on it. these are bipartisan votes because having a debate around the debt ceiling can be a very dangerous thing to do for the full faith and credit of the united states. and if the debt ceiling isn't raised, there are very deep consequences for our economy. and it's not something that we believe we should be playing politics over. this is a bipartisan issue. it's always traditionally been a bipartisan issue and we should get it done in a bipartisan fashion this year. the debt ceiling has to be raised sometime in early spring.

and you don't want to wait to get to the last day to get to it because it can create some nervousness out there. so we're talking with the house and the senate to get it done. it's unclear what's going to happen. and whether or not that will be a debating point for additional budget cuts. but the president has said that he wants to work in bipartisanship to get it done. and, you know, the consequences of not getting it done are too great. whether either one of these debates impacts what happens with medicare, it's too early to tell. but i would just urge you to watch the debate and make sure that your voices are being heard and something you may care about and certainly none of us want to weaken the medicare program. so how is that for a nonanswer to the question? [laughter] >> stephanie, nathan from

lansing, michigan, has a question about labeling the legislation or naming the legislation obama-care. >> uh-huh. >> scary. the question he raised here is, at this point wouldn't having the president embrace the obama-care label be helpful? i guess he's really referring to in terms of how we talk about what's -- you know, the affordable care act. what would you suggest in terms of how we talk about this in a way that people can relate to and how should the advocates deal with the term "obama-care"? >> well, certainly opponents of the law use the word "obama-care" as a negative. and used to to denote that this was a big government takeover of

the health care system. we all know it's not. it actually strengthens the private insurance system and empowers the consumers and the private insurance system. you know, whether or not you all embrace obama-care or not, you know, we're going to continue to call it the affordable care acts because that is the law. [applause] >> and we are in charge of implementing the law and not renaming it. but, you know, i would leave to you all to decide whether to embrace the word obama-care. certainly this president is very popular with the american people. and has credibility on health care. if you all feel like that would help you in the course of what you do, then, you know, i would

encourage you to do it. but of all of the challenges that we face in implementing the law and helping people understand what's in it and what's at stake in the current debate through repeal or some of the challenges i don't consider obamacare to be one of those big challenges. >> i think when the president leaves the white house in six years i think all of us will cherish the term obamacare. [applause] >> that was a nonpartisan comment. [laughter] >> one of the questions that gets raised often obviously the court decision in virginia and in florida is going to focus on the individual responsibility provision. >> uh-huh. >> some people call it the individual mandate. i wonder if you could talk a little bit about what is the best way to express to the

american public why that is a significant part of the legislation? and i think everyone recognizes that the president during the early part of the campaign, the primary campaign -- that was not something he actually embraced. >> huh-uh. >> help us sort that through 'cause that's going to be very visible certainly in the next few days if it already has been? >> uh-huh. well, the individual responsibility provision often called the individual mandate is a -- probably a focal point for people and what they don't like about the law. and i think that's because most people don't understand what it actually is. but the word "mandate", you know, that's sort of anathema to us being americans, having the government require you to do something that's contrary to what most americans believe. so, you know, you're starting

from that vantage point and when you're using the term "mandate," that can, you know -- that obviously starts you from a negative perception. what it actually is -- you know, most americans have private insurance so if you already have private insurance, this doesn't impact you. for the roughly 17% who don't have insurance, they largely don't have insurance because they can't afford it. or because they've been locked out of the market because of a preexisting condition. now, the law takes care of both those things. it increases affordibility through tax credits and leveling the playing field he and increasing competition. and it takes care of people being locked out because of the ban on discrimination and all of the other provisions that prevent gender rating and age rating. and so when you consider all of those things that most people have private insurance and we're taking care of those who can't get it because they're sick or they can't afford it, you know,

you're talking about a very small population of people where you're actually requiring them to go do something. and of those people, you know, the key argument here is that they're not paying for their health care. they're not going and doing what you did and taking responsibility for your health care. they're just going to show up at the emergency room and require you to pay for their health care which increases your premiums on average $1,000 a year for a family premium. so this is about responsibility. and if you narrow down who this really applies to, it's a very small population of people who should go get insurance so that you don't have to pay for it. and it's really increasing the number of people in the insurance marketplace is really the only way that all americans can get lower premiums and better coverage. it's going to lower your premiums. it's going to lower my premiums.

it's going to help lower the cost of private insurance for everybody. so, you know, once you explain it to people and that it's like car insurance, you know, the person who explains this the best i have found is senator mccaskill. that it's a reasonable argument, you know, you don't wait to go get car insurance the day after you get an accident, you get into an accident and you certainly don't require other people to pay for your damages. it's the same thing in health care. and we know that health care is a marketplace in which choosing not to buy insurance is an act in that marketplace because it's not getting health care. we don't turn people away from emergency rooms in this country when they're sick or injured. somebody pays for it. so that is a participation in the marketplace. now, i'm a good 7 minutes into

my answer so this is a complicated thing to explain to people. but if you boil it down to say, look who this really applies to. it doesn't apply to you you already have insurance. it applies to a very small population of people who, you know, if they don't have insurance we're helping them afford it. if they don't have insurance because they've been locked out we're preventing discrimination and for those who are just showing up on the emergency room and counting on you to pay their bills, they need to go take responsibility just like you did. >> stephanie, as you know, some of the insurance companies are increasing premiums. that's been going on for quite a few years. we at families usa had a 30% premium increase and we know something about health care and we had a 30% increase and we had another double-digit insurance and now the insurance industry would have the public believe this is due to the affordable care act. >> uh-huh. >> how do you deal with that very important part of the debate where people say, well,

the law passed and so anything that happens in the health care system is because of the law? >> well, we knew this was going to happen. and there are a number of provisions that have been implemented that enforce some accountability in insurance premiums and how insurance companies set their rates and the amount of transparency into why they are setting their rates the way they are. and you know there's that piece and the other piece of what we've implemented, all the consumer protections we did our own as cost estimates and for everything that's been implemented, the increase in premiums is roughly 1 to 2%. anything on top of that is either, you know -- there was a cost trend in insurance that was on an escalating scale before the law was passed. that cost trend is not going to be broken for some number of years. but what we can do is start to

chip away at it. when, you know, an insurance company sends out an notice they are increasing premiums by 30%, it's important for people to know about that. and it's certainly important for that state insurance commissioner to know about it. and the department of hhs to know about it. and we've taken a number of steps to increase premium review on a state level to make sure that every state has the authority to review premiums and the resources. and it's already working. we all saw what happened in california. we saw what happened in connecticut, new jersey. the number of states where insurance companies are being held accountable for unreasonable rate increases is growing. the best thing to do if you get a notice like that is to, you know, ask why. why are these rates going up?

the best thing to do is contact your state insurance commissioner to make sure they understand what's in it because once you start to have some transparency into those rate increases, which is only going to increase over the course of the next several years, you know, you get a different answer. and you tend to be able to bring those rates down to a much more reasonable level. but, you know, this is going to continually happen as we continue to implement the law. it's a reality. and it's, you know, a free marketplace. and, you know, i think we could expect a private insurance company to do this because they don't want to tell you that they are raising their rates to, you know, to help pay for their administrative costs or to increase their profits. and in many cases that's not the reason why they're increasing their premiums. it's the cost of health care. but, you know, it's an easy way out to see it's the affordable

care act and that's the reason you're getting a higher premium. we have found, though, that when we open up the lines of communication with insurance companies, when they are raising rates, there is less blame on the affordable care act than there was even six months ago. and as long as those open lines of communication are open and we're talking to them, it's a much more -- you end up in a much more reasonable place. and that's something that the president has made clear that he wants to do. that he wants to work with everybody to implement this law. insurance companies are a big part of that. and, you know, so i guess i would just encourage you if you see a double-digit rate increase to ask questions. make sure -- if you know someone who's getting a notice of a double-digit premium increase, ask -- make sure they're asking why. and demand some transparency

into that because there are provisions now that hold -- that, you know, install some accountability into the marketplace. >> so stephanie, i'm being told that we have to cut this short so you don't miss your meeting. >> oh? >> so i just want to say on behalf of all of us, thank you. you really brought great professionalism and thoughtfulness and the white house caring in all this. we're really deeply appreciative of the work you do. thank you so much. >> thank you for what you do. [applause] >> we're going to turn the program now to jeff. and many of you may be familiar with jeff list already. he's a partner of the firm

ansalon, list which is a premier polling firm that helped to elect barack obama president. the firm regularly works with the democratic congressional campaign committee, the democratic senatorial campaign committee and the democratic governors association. jeff has over 10 years experience in polling. he has spent a substantial amount of time, thankfully, guiding message research for many organizations promoting and defending the affordable care act. most notably with his work with the herndon alliance that has worked with so many of us. so we're thrilled that jeff is here with us. he is going to share some of his research with the powerpoint presentation. so, jeff, i don't know if you want to just -- >> right, i think i should

probably go to the dais. thi i think the remote control is probably up there. all right. we have the deck? >> there we go. so thanks for having me back. i think that this is a significantly more exciting time to be at this conference than last year when i was here, which was immediately after the election of scott brown, when the future of the affordable care act was very much in doubt. i think that we're all a lot more hopeful this year. and i think the challenges that we face which are challenges of implementation are challenges that we'll all gladly take in exchange for having gotten this law passed. i want to talk a little bit about where we are now and about how we talk about the affordable care act. i'm going to run through a little bit on public opinion and then i'm going to run through

some of our own research on messaging. so as we heard from stephanie earlier, support for the affordable care act has remained stagnant over the past year. but at the same time, opposition has declined and if you look at the polling averages now, 44% are opposed to the act, 41% are in favor of the act. but that didn't happen in a vacuum. that happened at a time when opponents were spending over $100 million to try to brand this negatively. so i think that we should view the fact that opposition has, in fact, declined recently as a positive for us even if we haven't been able to increase the support for the act as much as we'd like. support for repeal also seems to be trending downward. you've got the most recent cbs "new york times" polls showing that the public prefers letting the act stand to repealing it by an 8-point margin, 48% to 40%. and the numbers are really different when you look at complete repeal versus giving

people the option of supporting, you know, repealing some provisions of the act. you really only got a little more than a quarter of the country that really wants to do away with the entire affordable care act. so what should we be talking about? well, i also -- i want to stress first that we've had a very hard time moving people's opinions with high flown rhetoric. and the converse is also true. the public tends to turn out the -- turn out the more dramatic rhetoric from opponents of the act as well. i think that there is still a great deal that we need to do informationally. i think that, you know -- as stephanie said, most people know that at this point you can't be denied coverage based on a preexisting condition or dropped from your insurance if you get sick. but that still remains the most popular benefit of the law and the primary benefit that we need to be stressing. something that people don't know as much about that we feel can

provide a lot of validation for the law is the requirement that members of congress get their health insurance the same way as millions of americans through the health care exchanges. i think that that is a benefit that most people don't know about and it's something that can provide a lot of validation to a law that people think is big and unwieldy and don't really understand what's in it. so in addition to re-enforcing the things that people know and like, we need to talk about a few other things. we heard from stephanie about seniors and some of the problems that we've got with seniors. one of the surprising things that we've seen is that seniors actually tend to respond more to the provisions of the affordable care act, the crackdown on waste, fraud and abuse in medicaid than they do to provisions like closing the doughnut hole. you know, that doesn't affect to be honest as many seniors when you look at the population as a whole. so let's look a little bit at where public opinion is right

now. this is the trendline from, let's see -- here's the trendline from pollster.com. you can see the red line is opposition to health care reform. you can see the blue line is support. and you can see the support line is relatively stagnant but you can also see the trendline is pretty good in terms of the decline in opposition. and what you get to at the very end of that line is 44% in opposition, 41% in support of the affordable care act. and that again is an average. here are the numbers on reform with intensity. the bad news in decline and opposition is that there's still -- there's more intensity in opposition to health care reform than there is intensity in support. and one of our goals is driving up the intensity in terms of support. so you can see that in the most recent abc news poll, 36% on the right are strongly opposed to

the affordable care act compared to 25% who are strongly in favor of it. so the fact that support and opposition are pretty close overall with 45% in support and 50% opposed is masking the fact there's this 11-point difference in opposition. and that's one of the things that we need to work on -- work on changing. so although you've got a plurality of americans who oppose the law in 44, 41. here's the cbs news with repeal with 48% saying let the act stand and 40% say repeal the act. you can see that the numbers in support are very good among democrats. 77% you can see -- you can see 73% of the republicans want to repeal the act and the good news here is that the independents who are in the middle over there by a 7-point margin, 45% to 38% want to let the act stand. but again, things get even more complicated when you present people with the opposition of only repealing a little bit of the act.

and letting some of it stand. so when you give people another option, you know, when you can say let it stand, repeal all of it, repeal certain parts, then you've got 48% who say let it stand. only 20% who say repeal all of it. another 18% who say repeal certain parts. so, you know, the fact that republicans have pushed for outright repeal i think is an overreaching on their part and it's ultimately going to help us with our messaging. let's talk about the desire for compromise and this is a big part because the optics of the repeal fight are so bad. despite the major gains for republicans in november, the public still believes that they should be pursuing compromise in congress rather than just sticking to their positions. so here you've got 72% overall who think the republicans in congress should be compromising, just 21% who think they should be sticking to their position. so it's a 51-point margin which is about as overwhelming as anything you're going to see in

public opinion research. the public clearly prefers compromise to partisanship. and they also see the president as more willing to compromise than the republicans in congress. so, you know, 59% think that the president is doing enough to work with republicans. so that's a much stronger number than, you know, the 68% who disagree that republicans are doing enough to work with the president. so again, the optics of an outright push for a repeal of the aca are extremely bad at a time when the voters want people to be working together in washington, not pursuing partisanship. so let's talk a little bit about messaging around this. so we've done a lot of testing of the benefits that are contained in the affordable care act and two things consistently rise to the top. requiring insurance companies to cover people with preexisting conditions and requiring that members of congress get their health coverage from the same plan as tens of millions of

americans. you know, the numbers that are over on the right-hand side are the percentage of those groups that say that they are much more likely to support the act after hearing these things or in one case the percentage who find these things very percent sidewaysive. again, you can see there's sort of a clearly defined top tier surrounding top tier conditions. we looked also a condensed list of these things, a list of only five items. and you saw the same things rising to the top among persuasion audiences. the purple are the independents and the lighter purples are the persuadables and who say which way they vote for congress depends. they don't have one party or the other. you can see ending denials or at the top and requiring members of

congress get their health insurance the same way as millions of americans. we did polling also among adults over age 55 because we know that there are a lot of anxieties out there among older americans about what the affordable care act is going to mean for them. surprisingly as you can see on the left, cracking down on waste, fraud and abuse in medicare is the benefit that rises to the top. the same thing second among them was the member of congress requirement followed by ending the practice of excision or denying coverage based on preexisting conditions. but when we do focus groups, we're always surprised by the number of seniors who complain about the amount of waste, fraud and abuse in medicare. there's a real belief out there that if we were just to go after waste, fraud and abuse in medicare, we could free up a lot of resources that could be used in a lot of ways that would be more productive and i think that we have some of those ways also in the affordable care act when you talk about preventive care and things like that, you know,

that help us make sort of the second half of that argument. i think part of the reason that it's so important to talk about the ways the affordable care act cracks down on waste, fraud and abuse in medicare is that it addresses a few core concerns. we know that people are extremely sensitive about the federal debt right now. and the amount of money that government is spending but also we know that there's a lot of anger out there about the ways in which wall street banks were bailed out. a lot of anger out there about the bailouts that went to automakers and so the idea that we're cutting waste, fraud and abuse but ending big handouts is powerful to help us knock back some of the fiscal arguments that people are making about the bill.

so this shows awareness of some of the provisions of the bill. stephanie referenced earlier the fact that most people already know that the bill is going to -- you know, is going to require insurance companies to cover people with preexisting conditions. 85% know that the bill is going to require people -- require insurance companies to cover people with preexisting conditions. i mean, very similar to the 86% who know that the bill is going to provide coverage to millions of americans who are currently uninsured. something like the member of congress provision. only 21% know that members of congress are going to be required to get their health insurance the same way as millions of americans. it's the sort of thing we need to increase awareness of. and you can also see that there's some misconceptions out there that we need to be batting back. you can see in red, creates a government-run health care program. 47% of americans believe that that's part of the law. you can see death panels. 28% of americans believe that the law creates death panels. so at this point, i'd like to

transition from talking about some of the numbers, talking about some of the language and how we get into messaging as we start to talk to people. first of all, it's opponents' turn to take the hit for focusing on health care rather than on jobs. as the affordable care act was winding its way through congress, opponents got to have their cake and eat it too. they got to -- they got to argue that this was a distraction and that it was taking too long at a time when we should have been focused on creating jobs. so then they still got to argue on the back end that the whole plan was rammed down their throats, you know, and went through too fast. at this point, as opponents are more focused on relitigating the partisan battles of the past than they are on creating jobs and helping middle class families who are struggling in a recession i think it's their turn to see how it feels. again, some of the language we would suggest -- instead of focusing on jobs and helping middle class families and small businesses, opponents are and we

can finish that sentence in a variety of ways. i also want to stress that even though the health care fight is defensive for us, our language can't be defensive. at this point, we've passed the affordable care act. we're trying to implement it. it's under assault in congress but just because we are defending something that we've done doesn't mean that our language should be defensive and that we should be arguing, no, no, no, wait look at all the good things we're trying to do. that's not exactly how we want to talk about it. we're going to have an easier time and a more believable time in many cases if we talk about what are opponents trying to take away from people if we talk about what we're trying to give people. so suggested languages. insurance companies want to drop people when they get sick and based on preexisting conditions and protect big handouts to the insurance companies instead of cracking down on waste, fraud and abuse on medicare. opponents are fighting for the insurance companies. we're fighting for the middle class and small business. but again, the language is all about what they're trying to to

take away from the people the more ownership people will take of some of these benefits. the more of your protection being dropped when you get sick becomes a right of yours. the more being protected against denials based on preexisting conditions becomes a right of yours. and again, these are things that our opponents are trying to take away from us. stephanie talked a little bit about the mandate. opponents are going to want to debate the affordable care act on a very narrow playing field. they're going to want to pick out least popular provisions and go after them piecemeal. and it's very important that we not fall into that trap. that we recognize that an attack on the mandate doesn't need to be met with a response that's defensive about the personal responsibility provision. that, in fact, what we should do is pivot back to the strongest benefits that we've got and talk again about how opponents want to take them away. their protection based upon preexisting conditions, your protections based being dropped if you get sick, the cutting of waste, fraud and abuse in medicare. and we want to hold them account

to wanting to end these things. we want to treat any piecemeal attempt at repeal is a wholesale attempt at repeal and then if they come back and argue that they want to keep all of the most popular provisions, then that's potentially a gateway to us talking about how these things are not really separatable and pointing out some of their hypocrisy. because most of the audience that we're going to be talking to is insured already, we don't want a public debate about whether or not health care is a right or a privilege. i want to talk about two very different uses of the word "fairness." i think that the fairness argument works very well for us if we're talking about how people have paid their premiums for years and then get dropped when they get sick and that's not fair. and i think that the language of fairness does not work as well as for us when we talk about how it's fairer for everybody to have insurance. i think the reality that we're

facing right now is that we're in a recession. it's squeezed a lot of people who are working very hard, who have health insurance and who to be frank are more concerned with how they're going to make their own ends meet than with how we're going to help uninsured americans. and i think that again as we try to build support for the act in general, it's important for us to remember that most of the people who we're talking to and who we're trying to build support with already have -- already have insurance. we need to be talking about members of congress getting their health care the same way of millions of americans. when you say health care reform, that doesn't just mean the affordable care act in a lot of people's minds. that's become a catch-all for a lot of complaints that people have with the way the process works in washington, with the partisan, with the bickering and the bills being too long. spending. it's tied up with a whole lot of other things. and one of the perceptions that's penetrated in the process is that the the bill is so big that nobody knows in it.

well, in the absence of being able to know everything that's in it, one of the most important ways that we can provide validation that this is not, in fact, harming people is to let them know that members of congress are in the same boat under this law. now, this is still a difficult argument to make because as with a lot of things in the affordable care act there's a credibility threshold and people are going to have a hard time believing that members of congress have put themselves into the same boat but this is another case where flipping the language around and being a little more offensive as opposed to being defensive can work very well for us. opponents of the law want to give members of congress special treatment. they don't want members of congress to have to get their health care the same way as millions of americans. let's see. let's move one more. we need to be telling stories about real people and real small businesses. especially at the local level. we need real people carrying the message about this.

we need people to see that the people who are getting helped by the affordable care act are their friends their neighbors somebody who looks like them. it's not a bill for somebody else who may be insured. it's about a neighbor who can't start a small business because he can't leave his current job because he needs the health coverage he's got. you know, it's the story of a parent who you might know from down the street whose kid who has a preexisting condition who could get cover when he couldn't before. in this era, the people have their detectors turned up very high and messages that come out of washington have very little credibility. i was doing a focus group in which we were -- we were looking at who could provide validation on the affordable care act. who would people trust to give them information. well, there is no walter cronkite out there right now. you can ask them about various groups and you can ask them

about various people. and we were sitting in this focus group and asking people who they trusted and finally one guy said you know who i trust? i trust him. and he pointed at the guy who had a half hour ago who was a complete stranger who was sitting next to himth to him in the focus group and was just another participant. and i think that that's extremely instructive for us as we put together our message going forward. the next frontier is lowering costs for middle class families. i think that even among people who support the affordable care act there's an acknowledgement that it's not perfect. i think that we can fall into a trap of defending the affordable care act as though it's perfect. and i think we need also to be the party of continuing to make improvements to it, continuing to do more. because i think that as supporters we are universally focused on defending on what we got and opponents are the ones who are talking about making it better and doing something better than we're going to be in real trouble. i think the next frontier for

that is lowering costs for middle class families who are already insured. .. >> and that we want to do more to crack down on big rate increases and hold insurance companies accountable. so that's sort of a brief overview. ron, should we do a little q&a?

>> let's give him a round of applause. [applause] so we have some questions. again, those of you who have questions, please, write them down on card. we'll try and get as many of them asked as possible. just i want to open up the questions with a conundrum that i think a number of people in this audience feel. the reality is many people who are here at this conference in front of you care very deeply about those who have been left out of america's health system. people who are low income, people who are uninsured, and you've provided some caution about how the american public views the word fairness and in

what context it works. other context doesn't work. and you talked about people like to hear and respond better to those people who are like themselves rather than others who may be uninsured because they may not be able to relate to. but there is an issue of conscious and something so many of us care deeply about, so it seems like there's a messaging conundrum in terms of that. what is -- how can we navigate that conundrum? >> well, it's a difficult, it's a difficult question. i think that it's important to know your audience. i think that, you know, as you're, as you're out there, you know, if you're talking to a state legislator, you know, you may be able to make a different case about the long-term savings, you know, if uninsured are covered and aren't just, you know, using the emergency room for their health care, you know,

that you wouldn't necessarily want to make if you were talking to somebody in the rank and file. i think that we have a few advantages in this, in this. i think that public confusion over of the difference between medicare and medicaid is something that to some extent works for us. i think it's an important reminder. i mean, the people in this room are very knowledgeable about these issues, but to the average voter medicare and medicaid sound a lot alike and, in fact, end up getting confused in the public mind a lot. so the optics of big cuts to medicaid may not be that much better than the optics of big cuts to medicare. and i think that if we're defending something like medicaid, for example, a good place to start is with the things that medicaid does for older adults. you know, in terms of some of the long-term care provisions. and i think that, you know, if

we encourage conflating the two, that's not necessarily a bad thing in terms of how we talk about things. [laughter] >> all right. so the next question i had is kind of flipside of what you said has worked about people wanting to get the same benefits that members of congress have and that the legislation does that. i'll just -- i remember in 1994 during the closing period of the clinton health reform debate we were doing these, a lot of us did bus trips. we were trying to rally people to get the legislation passed, and we were meeting a bunch of counterdemonstrators. i remember in idaho, and there were counterdemonstrators, and

they all had these wonderful signs. and we started in the rally, we started talking about we wanted to have what members of congress did. and we went through, you know, congress gets three-quarters of its premiums paid for by the american taxpayer. we want help o -- help so that we can afford coverage. and the counterdemonstrators, yeah, yeah, yeah. [laughter] and, of course, their leaders, put the signs down. [laughter] so i want to ask you the reverse of that. now you've got members of congress that want to repeal the legislation. and while they want to take away certain benefits and rights that are in the affordable care act for the american public, they don't seem quite as eager to take those same benefits and rights away from themselves. how would you talk about that aspect of the repeal effort by those who are leading the charge?

>> well, i don't think it's a stretch to convince the american people that there's a lot of hypocrisy in congress right now. [laughter] and i think that one of the things that we need to do in our messaging is look for places where the things that we want to talk about intersect with perceptions that are already very deeply held among the american people, and the member of congress requirement is one of those areas. so there are a few aspects to this. number i -- number one, there's the idea that members of congress shouldn't get special treatment, and that has almost a punitive aspect to it. and sort of harnesses a lot of the hostility that's out there towards the, towards congress. number two, there's sort of the other side of this which is that if this is good enough for members of congress, it's probably good enough for average americans. and that's one of the biggest hurdles that we've got in convincing people that this is an act that's going to do something for them.

you know, it's convincing them that, you know, this bill which they're probably not going to read in its entirety and, you know, probably not even going to skim that, you know, health care.gov or the kaiser family foundation web site actually has a lot in it for them. so we're looking for shorthand. and the members of congress requirement is good shorthand. now, there's a pretty high threshold of credibility, as i mentioned earlier. we're going to have a hard time convincing people that the act, as passed, is going to force members of congress to get the same health care as millions of americans. i don't think that that's language we should abandon. i think that's something that people don't know about that's in the bill. i think that as we keep moving forward, you know, we're going to have to have some new things to talk about, and i think that that's an important one. but i also think that in the short term it's going to be easier for us to talk about how opponents and people who support repeal want to give members of

congress special treatment. because right now the law is that when the exchanges come online, members of congress stop getting special treatment. what you want to do if you're repealing the law is you want to give members of congress special treatment. you want to take away the requirement that they go into the same boat as millions of americans. so, again, this is something that hasn't gotten a lot of attention, but every time we poll it pops up as one of the top two benefits in the new law. and as we struggle with how to increase our credibility, you know, i think it's the sort of thing that it's a kind of shorthand. i just can't think of another example of it. jeff, we have a question -- >> jeff, we have a question from mary in grand rapids, michigan, that kind of builds off one of the slides you, you were at one point you said know your audience. and she asked the question, what are the messaging differences

that you can help us think about considering differences by region, gender, faith? what can you tell us about that? >> i can actually tell you that one of the encouraging things about this is that there are fewer differences than you would think. it's not like people in the, you know, northeast like the protection against pre-existing conditions while people in the south like the competition in the exchanges. you see pretty consistent numbers across the country for the top two benefits which are, you know, the preventing insurance companies from denying coverage based on pre-existing conditions or dropping people when they get sick, and the member of congress requirement, there are not a lot of demographic or geographic distinctions there. i think with seniors it's especially important to be talking about the ways in which we're going to cut waste, fraud and abuse in medicare and that we're going to be able to offer them better care because we're going to crack down on waste, fraud and abuse in be medicare.

i think that our audience tends to be politically unaffiliated in terms of party. i think that our audience tends to be disproportionately female since in many cases women are making health care decisions in their families. and it's not just, it's not just, it's not just women who are older, but the women who are middle age and even slightly younger are facing a lot of health care decisions that involve their aging parents. and so i think that they're an important audience because they've also internalized a lot of the, a lot of the anxiety over what's going to happen to seniors under the, under the new law. i think that, you know, our audience is generally a middle-income audience, but there's not a lot of segmentation in terms of messaging. you know, i think that it's important to understand as i said on a panel yesterday that

the concerns that animate red state america are not so different from the concerns that animate blue state america. you know? red state america there's a lot of economic anxiety, and there are concerns about what this law is going to mean for them personally, financially. there's a lot of anger over bailouts and government spending which is why talking about waste, fraud and abuse in medicare is such a powerful argument. for us. so there's just, there's not a ton of difference. and i think, ultimately, that's a good thing for us because it enables us to have more of a unified message as we go forward. >> so, jeff, here's a question from mark from new york city. he asks, how should we combat opponents' messaging about job killing and budget busting? by the way, this is not, obviously, just a messaging question. i mean, you know, this stuff about job killing and budget busting is an absolute myth.

and we know that, and there are a lot of studies that demonstrate that. but many in the public may believe those accusations, and so how would you, how would you respond to that in a way that the public would have, you know, be more receptive from listening to the various facts and studies and analyses? >> right. well, let's take those in reverse order. let's start with budget bust withing. we've done a lot of research to try to see how we can move people on some of these budget arguments. and what we've found is that right now it's extraordinarily difficult, verging on impossible to convince people that a bill that costs nearly a trillion dollars is going to save money. that's just -- it's a very, very difficult argument to make. and so i generally oppose going right into the teeth of the budget argument and arguing that, in fact, this is going to save money. you end up getting into a lot of

partisan sort of he said/she said over, you know, which numbers you should trust and what the cost of the bill is going to be. i prefer addressing the budget concerns by talking about the cuts that we're making in waste, fraud and abuse in medicare and talking about ending wasteful handouts to big insurance companies. i think that that way of getting at it is a little better for us or has a better chance of success than going right into the teeth of the ideas and staying deficit neutral or even revenue i positive over the next ten years. as far as job killing goes, i mean, i think that the opponents of reform understand that the optics of pursuing this partisan battle are very bad at a time when people want bipartisanship and a focus on creating jobs. so they thought, well, we'll just argue that the aca is killing jobs. i think that, you know, i'm not sure that that's got a lot of credibility. i think it's, you know, i

understand why it sounded like a good idea at the time, but we need to position ourselves as the defenders of small businesses. because this is a law that delivers a lot for small businesses. now, we've actually found that what stephanie was mentioning earlier, the ability of small businesses to pool together to get better rates the same as big corporations tends to do a little better in research than the tax credits we're giving to small businesses to help them afford health care for their employees. so as you talk about small businesses, that's one thing to keep in mind. but, again, we're at a time when there are so many layoffs happening so frequently that large corporations don't have much credibility as job creators. in fact, the only group that has real credibility in creating jobs right now is small business. and i think that one of the things that works for us is arguing that opponents of reform are on the side of large corporations like health insurance companieses and that we're trying to help small businesses. and i think that's how we address the jobs argument.

because small businesses are very much like the middle class. they're viewed very much like the middle class. and so defending them fits very neatly with the frame of defending the middle class which, i think, is also an important part of pushing the aca. >> our friend, bob christenden from seattle l asks the question, what is the strongest argument supporting the individual mandate, personal responsibility? and i guess i want to add a friendly proviso to bob's question. a lot of the opponents of individual mandate talk about freedom and liberty, they want the freedom and liberty not to be required to purchase insurance coverage. on the other hand, a number of us who purchase coverage or have, you know, we want the freedom and liberty not to have to pay for somebody else's costs who have decided not to purchase insurance if they could afford it. now, you seem to suggest that

the pivot goes to the various key rights that people care about that go together. so i wonder maybe if you could amplify with bob's question your comments about the individual mandate. >> well, i mean, i can tell you some things that don't work on the individual mandate. it doesn't work particularly well to argue that we make everybody get car insurance and that this is no difference because people think of health care differently. i think that we have looked at a lot of arguments in favor of the mandate. i think stephanie's language works better which is that you can't wait until your house is on fire to get fire insurance. but at the same time i'm not convinced that we want to be -- first of all, i don't want to be fighting this battle on the individual mandate. i think if somebody talks about the individual mandate, our response is you want to let the insurance companies drop people when they get sick or deny coverage based on pre-existing conditions. i think they'll then come back

and say, no, no, we want to keep all those things, those things are good. then we can get into an honest debate about whether or not those are two separable issues. because the fact is that they aren't. the insurance companies are never going to allow there to be a law that requires them to cover everybody with a pre-existing condition while not requiring everyone to come into the system in order to give them a big enough pool of healthy people that they can afford to pay for everybody. it destroys their business model. this sort of more grown-up discussion about whether or not the protection based on pre-existing conditions is separable from the mandate is a second-level discussion. so, first, we want to go back at them and talk about how they want to take away these protections that are important for people. then if they argue ha they want to -- that they want to keep those protections, we can make the argument that they're hypocrites. and the proof point is that they know you can't have one without the other. i think that the pivot on this has to come back to the most

popular benefits because they're the only cover we've got on the personal responsibility provision. >> i want to turn to -- we're hearing that stephanie indicated possibly as early as monday the federal district court in florida in many pensacola -- in pensacola may be issuing its decision, the challenge that was initiated by various attorneys general. and a number of us were in the courtroom, and this, clearly, the judge had antipathy to the individual responsibility provision was clear, i think, that he's going to strike it. the key question appears, you know, will he just strike that, or will he strike further, and the attorneys general said strike the whole statute. you know, in fact, at one point the judge said something like, you know, i've been told that if you have a watch and one wheel on the watch doesn't work, the

whole watch doesn't work. so you've clearly got the inclination of, his inclinations of what he wants to do. and the attorneys general clearly did some form shopping. why would this case be filed in pensacola where you only had three republican judges? this is a reagan appointee. so if decision comes as many of us think it might with, you know, one might be just the individual responsibility provision does not have a constitutional basis or something broader than that which is, clearly, what he seems to want to do, how would you suggest that folks respond to this? >> well, i don't think that we're served in any way by getting into a procedural argument about what's going on in the courts. i think that we can say it thiss an issue that's ultimately going to be decided by the supreme court. at this point we've had 14

rulings in favor of the law, and this would be the second one. again, you know, we can also say that there were, you know, there were judges who thought that social security was unconstitutional. ultimately, you know, it was upheld by the supreme court. i just, i don't want us to get bogged down in the, bogged down in this because it's going to be a lot of process stories. there are going to be rulings that go both ways, you know? i think that although this is a clear case of judicial activism, you know, and we can say that we think that judges should defer to people's elected representatives, you know, ultimately we want to be talking about the benefits that we're delivering, you know, for middle class families. and even if we're talking about a court case, i think that, you know, we're serving ourselves ill if we don't make sure that we mention the benefits that are accruing to middle class families because of the aca. >> we have time for, i think, one more question.

i'll just say with respect to this issue, you know, i used to be a law school dean. i tell the story a number of times, i used to have this sign behind my desk. it was a quotation from chico marx, and the quotation is, "if you have a problem, get a lawyer. then you've got a bigger problem, but at least you've got a lawyer." [laughter] i guess the last question i want to ask you is validate. who are, as we try to reach out to the public to explain what's in the legislation and how people will be affected by it, who are the best validators who would be trusted to express that? who -- i know that, i know that the line of, you know, i'm from washington, and i'm here to help you probably doesn't go over that well.

but what would you suggest? [laughter] >> yeah. well, i think when you show up and you say i'm from washington and i'm here to help you, people hear you like you're harpo marx. [laughter] so, again, i think that, i think that your -- you're looking for stories in your community. there are a lot of, there are a lot of people here who have experience, greater experience than mine in how you go out and find those stories from a practical standpoint. but you need to be telling those stories not, not -- in a variety of forums. you know, those stories need to be appearing in op-eds. we heard yesterday in a panel that i was in that in some ways the decline of the newspaper industry can work for us because they have fewer reporters, they're more likely to print a press release that you send them. [laughter] you know, without editing it

than they were when they had, you know, an actual staff. but, again, it's, it's all about finding people who look like your target audience. the people out there need to know that this is not a bill for somebody else. this is a bill for themselves, this is a bill for the hard working people in the middle in america. people who are not at the top end of the income scale. people who are not at the bottom end of the income scale but who are worried about falling off that edge and losing the middle class life that they thought was guaranteed to them. and they need to be hearing these stories from people in their own words. and not in our words. you know, we as activists and advocates are going to have a lot of information, a lot of statistics at our fingertips about, you know, the 129 million people with pre-existing conditions and, you know, the various benefits that are included in the law. and none of that is ever going to be as powerful as somebody

telling a story about their kid. >> so i want to, i want to thank jeff. i want to thank you not just for being here today and sharing your wisdom with us, but for your ongoing advice and counsel to us, the terrific work you've been doing with the herndon alliance organization that many of us have relied on for messaging help. so thank you so very much and, please, give jeff -- [applause] >> the u.s. senate comes back into session today at 2 p.m. eastern. on the schedule, a bill reauthorizing the federal aviation administration.

>> in the meantime, a look at remoney -- republican and president obama's plans to jump-start the economy and create jobs. from this morning's "washington journal." >> mark zandi, chief of economist with moody's.com joining us here this morning to talk about the state of our u.s. economy. let met just show our viewers t front page of "the washington times" this morning with the gdp record, economy is back. analysts see job growth on horizon. what's your prediction? >> r well, the economy is improving, growth is accelerating, and i think we will see more job creation. just to give you a number, last year in 2010 we created 1.35 million private sector jobs, and i am hopeful that in 2011 we will double that. and that will be enough to start bringing down unemployment which, of course, is very important to everyone. >> host: okay. so what could turn this headlinw on its, on its head here, and what could reverse this?

>> guest: well, there are many things to worry about. you know, i just heard your previous conversation about the turmoil in egypt and, obviously, thats to could have significant negative implications if it wert to spread to the rest of the middle east and effect oil prices. oil is very key to our economy.e if that price, if price for oil were to rise significantly, that would be a problem. europe's situation is still very unsettled. their debt crisis has not beener nailed down. chinese are trying to slow their economy, they may not get that just right. and, of course, we've got a slew of problems here. state and local governments are cutting back, and that's a risk. and the foreclosure crisis isst ongoing, so we'll probably see more house prices decline. i could go on, but there are agn long list of things to still be very nervous about. >> host: "baltimore sun" this morning has the headline, boehner, daley spar on debt,

cuts, economy. the debate here in washington whether you cut and grow or invest and grow. what's your take? inv >> guest: well, you know, we'red going to have to do both.inve in the longer run, we are going to have to cut government spending. we have a very significant fiscal problem. our deficits are large, and they're not going to get small enough unless we make some big changes.em. and that's going to require some spending cuts. it'll also require some tax increases, but i think it woulde be prudent to focus on spending cuts. i don't think you want to startd that cutting in 2011 because of all the things i mentioned that i'm nervous about, the economy1, needs to be off and runnings i before we start to engage ins ab some real significant cutting. but we're going to have to do that. but when we think about the spending cuts that we do engage in, we have to think about it in the context of our globale competitiveness, and we don't want to cut pack on those things that -- back on those things that make our economy really tick, those investments that ars

really important. our investment in our people in the form of education spending and infrastructure as well ism very important. so we're going to have to cut, l but we have to be very prudent at how we do that so that we, don't undermine our economy which is, obviously, key to addressing our long-term fiscaln problems. >> host: so what year do you i begin cutting? >> guest: i think by 2012 we will be in a good enough placeho to digest the spending cuts thab we need to engage in a reasonably graceful way. i don't think i'd start it in 2011, you know, it's only couple years since the great recession. unemployment is still 9.4%. things are still fragile. the collective psyche is still very, very fragile. so i don't think i'd start it this year. but by 2012 and certainly by 2013 i think we'll be in a position to do that. s and at that point we should be very aggressive in those cuts. >> host: does that mean social security, medicare, medicaid inl 2012, 2013, that they should bew

on the table? or do you wait longer to address those programs? >> guest: well, i think that, i think medicare and medicaid will be a tough, tough thing toid w attack at least in that time frame. number one, we're going to have to come back to it because, ultimately, our longer-terming budget problems are centered around the rising cost of healtr care and the cost of those a programs, so we're going to have to come back to that. i don't think we need to or can really given the political environment address thoseut i programs, medicare, medicaid, in the next couple, three years. social security i think we can begin to tackle. i think that's a more manageable problem with some very clear solutions, and i think that that should be part of the discussion on how to rein in government spending over the next couple, three years. >> host: where do you come down on the economic impact of repealing the new health care law and replacing it or leavingc it as is? >> guest: yeah.nd i, i don't think the health carr

law has a very significant impact on the economy in terms of jobs.ar certainly not in the near term, the next couple, three, four, five years. i think that the, the impact of the health care reform is that it has insured a large number of the uninsured and has paid for that, roughly paid for it. we don't know precisely if it's going to get it just right in terms of paying for the costs, but i think it's going to be pretty close. get i don't think it would make aloe lot of sense at this point to backtrack significantly on that. atake least from an economic perspective. you know, i think that at this point it's important to nail down what we have done and clarity to businesses and people so that they can gete on with their, their business and let the economy move forward. the one major disappointment i had with the health care reform again, from an economic

perspective is that i don't really think it addressed theha long-term growth in health caree costs. i mean, ultimately, we have to get the growth in the health care costs to slow, and i don'te see anything in the reform that convinces me that that will happen. so, thus, we're going to have to come back to this at some pointl when, when we're, when the political environment is right for it. >> host: and finally before we get to this first phone call, unemployment numbers for january will come out on friday. what are you, what are you expecting, what's your do prediction? >> guest: well, i'm hopeful. i think we'll probably see a gain of about 150,000 private sector jobs, and that's not bad. we're going to need more than that on a consistent basis to n bring down unemployment, but that's pretty good. and i think, i think unemployment probably will tick up.ne as you know,mp greta, unemploymt fell very sharply in december. that was, in part, related to some statistical issues that are going to unwind in this data, ss we're going to see unemployment

move up a little bit. it was 9.4% in december, i expect it'll be 9.6% in january. just to give you a benchmark, we need to create 150,000 jobs per month just to maintain a stable rate of unemployment. so we're going to have to seeab job growth that's measurably better than that to start bringing down unemployment. i'm hopeful and i'm confident that that will happen, but at this point that's still a t forecast. >> host: all right. let's go to mark, an independent in cape cod, massachusetts. you're on the air with mark zandi. >> caller: yeah, thank you, greta and mr. zandi. thanks for your insight, youight brought up so many points already. but i just wanted to touch on the health care reform that you talked about, and, you know -- >> guest: sure. >> caller: being from massachusetts, i think they're modeling their system, basically, after us which isn'te perfect, but i think the cost brought up is something that nobody really wants to, i guess, the 800-pound gorilla is how

they say it. t personally, i did have an operation last year, and i did have insurance, but i it was a laparoscopic hernia surgery, and it ended up being in-patient, you know, a one-hour procedure, and it ended up costing a totalr of $30,000, you know, for one hour's work. if somebody could tell me how, you know, it would cost me $30,000 for one hour's worth ofe work, it would help me out. but anyways -- >> host: yeah, let's get mark zandi's perspective on that. >> guest: well, you put yourive finger right on our most significant long-term economic and fiscal problem. it is the very high cost of care and the fact that the cost of health care continues to increase each ande every year very, very quickly. so overall health care inflation is running almost double overall inflation.unni and, you know, that can't continue. if you do the arithmetic, it'lle make health care such a large

share of the economy, and the cost of government so significant that it'll break. so that is exactly the problemic that we need to address. now, the way to address that, ultimately, at the end of the day is going to require that tha costs of health care are going to have to be borne more directly by you and i asst consumers of health care. so if we feel the pain of those higher health care costs, then a think we're going to become much more judicious in our use of health care and, therefore, that'll slow the growth with health carer us costs. but i don't think we did very much in the health care reform bill to o adopt that principle. and so, therefore, we're going toe he have of to come back to s at some point and redesign the health care system again. >> host: and what's your perspective on how to bring the cost curve down? how do you do it? >> guest: well, there are a number of ways. one key way is to reduce the tax benefit employers have in

providing health care to their employees.the so particularly for high-incomee employees. so take me, for example, i have a very good health care plan. and when i get sick or my family gets sick, i can go shopping fos healthic care, and i really dont think about the cost, or i'm not very careful -- not careful, as i should be in shopping for healthe care. now, if we reduce the tax benefit that employers get from from providing health benefits to high-income employees like lk myself, then the burden will start falling on me to start shopping more carefully for health care. and once people like me start shopping more carefully, that'l. have a big impact on the growth in long-term health care costs. >> host: so you get rid of theg- third party insurance relationship? or i would reduce the insurance that goes to high-income households.

or, better put, i would makeseho them bear the cost of that, those gold-plaited health insurance plans that they would have to pay more to get those plans. >> host: okay.lth let's go to illinois. john, democratic line. we're talking about the outlook for the u.s. economy with mark zandi. - you're on the air. >> caller: yes. i just wanted to comment on why we trust moody's and all these other rating agencies considering that theyrust exacerbated the downfall of theh economy?ex >> host: mark zandi? >> guest: yeah. you should know that i am the chief economist of moody's analytics. moody's analytics is an independent subsidiary of the moody's corporation. the other subsidiary is a rating agency. i am not part of the rating agency, i have nothing to do with it. and just a little bit of personal information, i started a consulting firm almost 20 years ago, grew it into a

company of 125 employees and sold it to the moody's corporation about five years ago. so i've been a start-up, a entrepreneur and now part of a multi-national corporation. but just so you know, i'm not part of the rating agency. >> host: and given that, though, i just wanted to get your analysis, your economic analysis on this headline from last week, moody's credit ratings of states to factor in unfunded pensions. that whether they're funding or not -- funded orbit those pension obligations are going to be on the books when you look ab ao state's debts. >> guest: well, and i think that's appropriate, right? the state governments have provided significant pension benefits to their employees ando have not really paid for them.he so when you're trying to assess the credit creditworthiness of e government, i think you need to consider those liabilities, those unfunded pension liabilities. and i think the rating agencies including moody's are recognizing that more explicitly in the ratings that they do.

it's an obligation of the state, and it effect bees their ability to make future debt payments, ie effects the creditworthiness of the state and, therefore, it should be considered. >> host: florida on the republican line, keith, good morning. >> caller: a quick question, and then i have a follow up. do you know of any business that's in existence and why we don't teach it in be school, any does any business pay taxes orxt do they pass it along to their customer? >> guest: yeah, they do pay taxes. you know, the statutory corporate income tax rate is about 35%. the effective tax rate after they're able to take advantage of different tax deductions and expenditures, loopholes is more like 25%. and that includes both federal and state and local income tax.h now, many businesses that's a cost of doing business and will try to drive that through to their consumers, but, you know, some of them can in some industries where there'sless

competition or the margins are higher, but in many industriesi they bear the burden of that. and, of course, i'm talkingf about s chapter corporations, not c corp.s. and the income of a business in an s corp. flows down to the individual income tax return as people pay their individual tax rate on that, that income. that's a -- it's not a corporation, it's not a c corp., it's an s corp., but it is profits that are being taxed. so, yeah, i think businesses pay taxes, and they're not able to pass all of that through to their customers. >> host: mr. zandi, the corporate tax rate was an issue thathost was brought up by the president during the state ofas the union address, and he said in exchange for lowering that tax rate he wants to close loopholes, tax loopholes used by corporations. what if you don't close those loopholes and you were to thenlo lower the corporate tax rate? whaten happens?

>> guest: well, you lose revenue and, of course, we have, as we've been discussing, a very significant fiscal problem, large budget deficits. so we -- it would be prudent to reduce those loopholes, those corporate tax expenditures. that would raise enough revenue to allow for a reduction in the marginal tax rates that businesses a pay. so put another way, you broaden tax base so that you can lower the tax rate.roug so that will allow u.s. businesses to compete more effectively globally. right now u.s. corporate income tax rates are relatively high, vis-a-vis our competitors in be many countries. -- in many countries. so eliminating or at least reducing loopholes, broadening the race, generating enough revenue, i think, would be very prudent. it would, it would incent u.s. businesses to hire, invest moren here in the united states andcee expand and grow our economy. h so i think that's the idea,s that's the principle. i think it has pretty prod-based

support -- broad-based support in the administration and congress and, hopefully, we're able to -- they're able to execute on that. >> host: we're talking with mac zandi, chief economist andre t co-founder of moody's.com. joining us this morning to talk about the outlook for our economy.s to and as we do that, just want to keep updating you about the to situation in egypt. from the associated press wire, egyptian president hosni mubarat swore in a new cabinet today replacing one dissolved as a concession to anti-government protest, the ap's reporting. it's saying the interior minister who has internal security forces was replaced. however, his replacement is widely despised by protesters for brutality shown by security forces.prot long island, new york, joe. independent question about the economy? >> guest: mr. zandi, i'm very angry this morning. i just changed channels, and onn the other channel they're saying

wall street's about to hand out its big bonuses. one guy in particular is getting $5 billion. a and i'm watching my fellow americans lose their jobs, theit homes, their retirements, people trying to scuffle to get a job for $9 an hour, and these guys on wall street are handing out billion dollar bonuses.s is there a total disconnect on wall street? and the second question is, should we be out in the street like the egyptians are? i'm sorry for being sarcastic, but that's my question. [laughter]i >> guest: no, not at all. yeah, it does seem to be a disconnect, yes. so after three years after the great recession and financial de panic and after hundreds of billions of dollars that were put forward by u.s. taxpayers tl support the global financialrd system and wall street, yous to know, wall street is back doing quite well and compensation is now rising. now, that $5 billion number you refer today, i -- referred to, i

think that's with regard to one of the hedge fund managers. and he's done quite well as ahe trader, and, you know, he didn't get a government bailout, and he's just doing what he's always done, and he's quite successful at it and making a lot of money. and i'm not sure we should begrudge him that. a so, but the broader point is, you know, i do think it would be prudent if wall street were, were more restrained in the compensation packages that they provide.rain and more importantly than that in the longer run, hopefully, one of the reforms that comes out of this is a closer look at the way compensation is made on wall street so that the incentives are right, so that rg people have the incentive through their compensation packages to do the right thing,n that their incentives are linedg up with their investors. i think it's clear that that wasn't the case, and that's one of the reasons we got into thise mess and, hopefully, throughea financial regulatory reform,

through regulatory reform we see -- broader regulatory reform we will see those compensation packages better designed and compensation on wall street more aligned to investor interests. but, you know, i sympathize wito what you're saying. it is a bitter pill. you know, after, just only three years after the recession for these compensation packages to be so large already. >> host: on the democratic line, ari is joining us from northern california. morning. >> caller: hello, are you therem >> host: we're here, we're listening. goood ahead. >> caller: hi. thanks for this report. i'm a green party democrat which is like a green tea party democrat. we want to reclaim the democratic party just like the democrats have lost their left-wing base. i really appreciate what mr. zandi is talking about. the thing he hasn't mentioned yet which is the last caller

sort of alluded to is that we used our tax money to bail out the banks which were criminally fraudulent against people and have damaged our society, but now when it's time to bail out state governments which haven't been particularly fraudulent, oh, we have no money to do that. but the banks should be require to bail out our state governments at zero interest, and i also think we need a jailout along with that bailout. >> host: mark zandi, let's take his point about whether or not to bail out states or let them file bankruptcy.no what's the economic impact? if. >> guest: well, first, let me say that state governments have received a significant amount oa help from the federal government throughout this recession. i think if you add it all up if you look at the recovery actth money which was the big stimulus package and some of the t other benefits provided, that it comes close to $175 billion. that's $175 billion has gone

through the federal government to state government for various things; police, fire, education, the medicaid program. so the states have received a significant amount of help. the problem, though, is that money from the federalhat government to the stateral government runs out at the end of the state's current fiscal year which is june of 2011. after that they get no more is money, and, of course, their revenues, tax revenues are still quite low because of theuit recession. their expenditures are stillr quite high in large part because of the recession, so they have a big budget gap, and without any federal a money, they've got to close it, and that means their cutting back workers, cutting programs which means the loss of private sector jobs. w some states are raising taxes. for example, illinois' in the midst of trying to raiseilli marginal tax rates on individuals.se m and this is major drag on the economy, and this is if you think back to the early part of our discussion, this was one of the risks that i pointed oute

that's the cutbacks at state and local governments. it ou is a significant headwindo the economyck and one thing i do worry about. now, there is a fair amount of concern that states won't be able to manage their budgets and will actually begin to default on their debt.l be for states i think the odds of that are close to zero. i just don't see that happening. most states are doing what's appropriate and what's necessary. tha they're going to get their fiscal situations in order. i don't see that at all. one could argue that we'll see more defaults for very small bonds, for small municipalities, and in many cases that's likely due to mismanagement or perhaps even fraud. o but i don't, i don't think that we're going to see enough of those kinds of problems that ite becomes a broader economic issue. so, you know, it's a reason to be nervous, but i don't think at this point it's something that's going to overwhelm us.

i think we're going to be able to manage what needs to be done, and the states are going to solve their problems. >> host: mark zandi is joining us from westchester,nd pennsylvania, at moody's analytics where he is an economist there. we're talking about the latest economic data.sylv here it is from the bureau of economic analysis. the gdp, 3.2%. unemployment, 9.4% in december. potential income up 4.1 -- personal income up 4.1%. consumn expenditures 4.4%. the consumer price index is also >> host: mark zandi, what's your reaction to those numbers? >> guest: well, we're moving iny the rightou direction. we are a year and a half out from the recession, and we're now starting to get somehave meaningful growth. if you have gdp growth, gdp is the value of all the things that we produce, that's growing above 3% on a consistent basis. then you're going to start creating enough jobs, start bringing down unemployment.

soou w we're just about there. and as i mentioned earlier, i am hopeful and increasingly confident that we are going to get even better growth in 2011. and b the most fundamental reasn for optimism is that american businesses are doing quite well. they are profitable. i mean, in fact, you could pick any economic statistic you want, gdp, jobs, retail sales, they're all still well below pre-recession peaks. the only rule of exception is corporate profits. so businesses are in good shape, and, historically, when businesses are doing this well, it's only a matter of time before they decide, you know, i've got to go out, and i've got to expand my operations, i've got to invest more, and mostt importantly for most people, they've got to hire more. so i do think we are going to see hiring pick up in a meaningful way in coming months, and by the end of this year -- and certainly by this time next year -- i think we're going to be creating enough jobs that

we're all going to feel betterwt about things. we're not going to feel greatng because it's going to take years to bring unemployment down in al substantive way, but i think we're going to feel a lot better about things.ill >> host: john, a republican inhg l.a., you're on the air. >> caller: one number that hasn't recovered nearly -- or at all, it's the yield that the average person can get on savings. i mean, it's lucky these days if you can get over 1% from a bank. some of us are getting close to retirement and don't feel it's appropriate to take on the risks of the stock market. yet with people being able to get 1% or less for their savings, it seems to me like you're going to be pushing a lo, of them into higher-risk investments just so that they can make a decent return.- is there anyone giving anyn thought to bailing us out?t? >> guest: well, you make an excellent point that lowering

interest rates on net is ate positive for the economy, but there are negatives, and one of the most obvious negatives is that it hurts savers, particularly people who are a little bit older or a little more risk of of-averse and have -- risk-averse and have put their money in cds where you're getting, essentially, nothing on short-term cds. it isn't a slam dunk positiveons when you lower rates. there are negatives. but, you know, to some degree as you nicely put, one of the as reasons for lowering rates is to try to convince people to takeei on more risk, that don't keep your money in cash, startt ke investing in higher-yielding assets, you know, maybe municipal bonds or other kinds of fixed income assets depending on your situation and your risk tolerance, perhaps even stocks. so that's part of the idea of

getting the economy movinger forward.ange >> host: mark zandi, here's a tweet from a viewer who wants to know how much of currentttin unemployment is cyclical versus structural? >> guest: well, a very good question, and it's a matter of great debate in the economics community. the unemployment rate today is 9.4%. if you had asked most economists before the recession what full unemployment was, they'd say 5%. that would be where you wouldy need to be to have as wh fully-employed economy. my sense is that the full unemployment rate today is probably closer to 6%. 6% so we have a 9.4% unemployment rate, so that means 3.4ploy percentage points is cyclical. we should be able to generate a strong enough economy to generate enough jobs to get them unemployment rate down to at least 6%. >> host: mark zandi, why don't we go to a call so you can get a

drink of water here. mike, independent in monterey, california. go ahead. >> caller: good morning and thank you for c-span. actually, the last caller i addressed one of my points which is the low rate for savers, and i also wanted to address the topic that mark raised a moment ago when he was talking about the inflation rate and the coste of health care. we all know that health care is going up at two to three times the inflation rate, but for elderly probably a much larger percentage of their income goes towards health care. so these people have really lost ground in the last three years with very low rate of return on their savings and the fact that they've had no social securityn increase now for two years butle have seen their health care costs continue to go upen dramatically. >> guest: yeah, good point. greta, thanks for that. i'm getting over a cold, and so i thought i was over it but,d obviously, i'm not.

>> host: no worries, no worries. go ahead. >> guest: excellent point. older households, retiree households have been under tremendous financial pressure in this environment. just one point of clarification, you're right that the increase of the cost of living adjustments in social securitycl has -- there have been none inas the last two years, but to compensate for that in some of the stimulus packages there'se been checks cut to retirees to try to give them a little bit of the benefit to make up for the fact that they're not getting a cost of living adjustment because of inflation. but nonetheless, you know, evenn accounting for that older households are under tremendous pressure. but at the end of the day the only thing that is going to help all of us, and that includes retirees and older households, is if we get this economy moving, get businesses creating jobs again so that they cansine

create tax revenue, and this c economy can start movinghe forward. and one of the key ways of doing that is keeping interest rates low. so on net lower rates are a plus i for the economy. they, ultimately, always lift the economy. i think that'll happen again this go around. it's just a matter of time but, you know, while you're in thea middle of that process, it's noo very comfortable particularly for those older households that are seeing the interest rates on their cds go down to nothing. >> host: let's go to stanford, florida.: alan, democratic line. good morning. >> caller: good morning. can you hear me okay? >> host: we can. >> caller: okay. i wanted to go back to healthi care for a minute and askminu mr. zandi a few things. i would think one of the problems is the lack of people being insured. if someone's uninsured, youred. know, they get sick and then people who with aren't insured end up paying more because thesr hospital has to make up more for it. and the problem of if someone has a catastrophic condition,

you know, requires some kind of ongoing, ongoing treatment they end up, you know, getting possibly put in economic -- [inaudible] i thought a few years ago a couple of women who had diabetes were having their debts passed oneard to a collection agency ad the rates were going up, and they couldn't pay it and so forth. i just wonder if, perhaps, mayb not now because i understand the economy's pretty shaky and we have a lot of problems with debt and things like that, if mr. zandi wouldn't mind doing something, you know, expanding medicare, medicaid to cover kids so that we can get them immune from a lot of diseases and cover, as i say, catastrophic conditions, things, you know, that might require things for people that are, you know, onono lower income. because it seems to me that thae is part of the problem as well. >> host: mark zandi. >> guest: well, you know, i think the big success of the health care reform that was s

passed last year was that it has insured most of population, that -- and it did that by roughly paying for it. so we do still have somel uninsured people, but for the most part or i think ourost population -- part, i think our population remains roughlytact intact will be insured and willy roughly, pay for it. now, that was the success of it. now, the caller's right, there are some holes in this, and not everyone may be getting the coverage that, you know, we may feel would be appropriate. i thinkdly speaking, that was a success of the plan. the failure of the plan, again from an economic perspective, was that it didn't really do anything to address the growth in long-term health care costs. it didn't implement any

mechanisms for trying to get those costs growing at a slower rate in the future, and that's our big problem in the long run, and that's why we're going to have to come back and readdress it, and perhaps in the context of doing that we can also address some of the holes thatng are still in the cub board for -- cub board for people. for i think wiewl get a sense for what those are once this health care plan is implemented more fully, assuming that it is implemented. >> host: mr. zandi, on the housing market here's "the wall street journal" headline this morning. home prices sink forward. declines reported in all major 28 metropolitan areas, unsold inventory piles up. and then i want to show our leaders the most recentnito christian science healthline monitor. we: where the is market --gu question: where is the market headed? >> guest: well, the list of mo concerns that i enumerated at the top of our conversation i would put at the very top of the

list of concerns what's going on in the foreclosure crisis. we still have millions of people in the foreclosure process. to be precise, there are 2.3 million homeowners in foreclosure and another couple million who are very delinquent on their own and likely to go into foreclosure. so four million households, roughly, are in this predicament -- >> we leave this program to take you live to the floor of the u.s. senate returning from a break to take up morning business. they could take up debate, also, on reauthorization of the federal aviation administration. this is live coverage of the u.s. senate here on c-span2.

the presiding officer: the senate will come to order. the morning's prayer will be offered by chaplain barry black. the chaplain: let us pray. o god, our father, in mo whom we live and move and have our being, use our senators to bring help to others, credit to

themselves, and honor to you. give them the wisdom to be cheerful when things seem to go wrong, to persevere when things seem difficult, and to stay serene when things seem to irritate. lord, guide them to be at peace with themselves, with others, and with you. may their highest motive be to earn your divine approval. give them a strong faith to believe that though your will may be hindered and obstructed by human folly and failure, it must, in the end, be triumphant.

we pray in your great name. amen. the presiding officer: the i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington, d.c., january 31, 2011. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable

harry reid, a senator from the state of neveda, to perform the duties of the chair. signed: daniel k. inouye, president pro tempore. the presiding officer: in my capacity as senator from the state of nevada, i suggest the absence of a quorum. quorum call:

the presiding officer: without objection. mr. reid: followi leader remarks the senate will turn to a period of morning business with sen permitted to speak up to 10 minutes each. i'm confident that we will move to the federal aviation administration bill very quickly. there will be no roll call votes today. i note the absence of a quorum. the presiding officer: the clerk will call the roll.

quorum call:

quorum call: quorum call:

quorum call:

quorum call:

quorum call:

is the presiding officer: the

nator from arizona. mr. kyl: thank you, mr. president. i ask unanimous consent that further proceedings under the quorum call be dispensed with. the presiding officer: without objection, so ordered. mr. kyl: thank you, mr. president. i ask unanimous consent that i may speak for as much time as i consume. the presiding officer: without objection, so ordered. under the previous order, the leadership time is reserved. under the previous order, there will be morning business with senators permitted to speak for up to ten minutes each. mr. kyl: subject, mr. president, to the consent request that i asked a moment ago to it exceed the ten-minute limit. the presiding officer: that is correct. mr. kyl: thank you very much, mr. president. mr. president, as some of us predicted, problems are arising from the senate's ratification of the new start treaty last december. the russians ratified it and their interpretation of its meaning and obligation is different from ours. that's going to cause problems. i will also discuss this afternoon the president's fiscal year 2012 budget in the areas of

nuclear modernization and missile defense, both of which were tied to the senate appellate court of the new start treaty. the russian state duma and the federation council, their counterpart to the senate, last week passed it federal law on the new start treaty. that's the russian equivalent to our resolution of ratification. that document demonstrates that there is a significant divergence of views between the two countries on several key provisions and core principles of the new start treaty. for example, russian officials continue to assert, despite statements from the obama administration and despite the senate's legally binding positions to the contrary, that various treaty provisions, including in the preamble, constrain u.s. military options regarding missile defense and conventional prompt global strike. far from supporting the touted

reset in its relations, this lack of meeting of the minds is a ticking time bomb for disruption of our relations. first regarding missile defense, the senate unanimously adopted an amendment to the resolution of ratification providing that the new start preamble does not impose a legal obligation on the parties. the senate's principal concern, rationale for this provision was the language in the preamble linking offensive forces to missile defenses, a clear attempt by the russians to forego future qualitative improvements to u.s. missile defense capabilities. contrary to the u.s. position, russian officials have recently declared that the preamble is an integral part of the treaty and; thus, binding on the parties. russian foreign minister sergey lavrov has stated -- and i quote -- "there are a few problems. one of the minimum ones -- main

ones being the assertion contained in the senate floor statement that the correlation between strategic offensive and defensive weapons reflected in the treaty not legally binding for the u.s. and russia because it is stipulated in the preamble. this thesis, he say, cannot be defended by lawyers." end of quote. contradicting president obama's december 18 letter on missile defense to senators reid and mcconnell and the senate's resolution of ratification, foreign minister lavrov further contends -- and i quote -- "the content of the treaty unequivocally points to the correlation between strategic offensive weapons and missile defense. it is set out in the preamble whereas the text of the treaty contains an article that allows either party to withdraw in the event of an emergency. we are convinced that the implementation of the full-scale global missile defense by the u.s. will be precisely such an emergency." end of quotation. mr. president, these statements stand in apparent contradiction

to the resolution of ratification adopted by the senate. on the point concerning the legality of the preamble which includes the unfortunate linkage between offensive arms and missile defense, the russian federal law on the new start ratification highlights the importance that russia attaches to the preamble and this linkage between missile defense and strategic offensive arms. and it introduces a new issue: the possibility of understandings between the party not revealed to the u.s. senate. here's what article 4, paragraph 1, of the russian law says -- quote -- "the provisions of the preamble of the new start treaty shall have indisputable significance for the understanding of the parties' intentions upon its signature, including the content of the terms agreed to between them and the understandings without which the new start treaty would not

have been concluded. in this connection, they must be considered in toto by the parties in the course of implementing the new start treaty." end of quote. because of these terms and understandings, article 4 goes ton state that the russian federation shall exercise its right to withdraw from the treaty in the case of extraordinary events, including -- and i'm quoting -- "the deployment by the united states of america, another group or a group of states of a missile defense system capable of significantly reducing the effectiveness of the russian federation's strategic nuclear forces." end of quote. now the russian parliament is clearly on record that the deployment of u.s. national missile defenses or missile defense deployments in conjunction with our nato allies could be cause for russian withdrawal from the treaty. since russia opposed the deployment of ten ground based interceptor in poland it is likely to oppose the land based

sm-3 missiles in romania and poland capable of intercepting iranian icbm's. this provision in the law is fundamentally incompatible with the u.s. understanding of the treaty and current u.s. plans to deploy these missile defense system in europe and deny these defenses as the president affirmed to us in his december 18 letter. the administration should immediately work to resolve this dispute with the russians. otherwise the u.s. would be willfully perpetrating a collision course between russia and the united states. i'm sending a letter to the assistant secretary of the united states which raises this issue and asks for clarification of the assertion that there were understandings between the negotiators not reflected in the public record. the president will have to decide whether the to exchange the instrument with the

ratification. i'm not aware of a bilateral treaty that is entered into force where such a divergence of views existed. perhaps there's clarification on these matters in some secret cable or in another part of the classified negotiating record. the administration's refusal to share these records with the senate has denied senators the answer. part of the corker-lieberman amendment to the treaty also requires the administration to communicate to russia at the time of the exchange of instruments of ratification. that it is the policy of the united states to continue development and deployment of u.s. missile defense systems, including qualitative and quantative improvements to such systems. i urge the administration to consult with the senate to ensure that our intent s&l accurate -- is accurately conveyed before exchanging this policy statement and the instruments of ratification. the resolution of ratification also makes clear that missile defense will not be on the table

in any future treaty. understanding number one makes clear that no limits on u.s. missile defenses can be achieved through the new start treaty, including the bilateral consultative commission which it creates, without the advice and consent of the senate. which if i have anything to say about it, will not be forthcoming. there is also declaration number one which states further limitations on the missile defense capabilities of the united states are not in the national security interest of the united states. end of quote. and the lemieux amendment which made it the policy of the united states not to include defensive missile systems in any negotiations with russia on tactical nuclear weapons. the administration might have created the impression with russia that the united states would discuss missile defense whether in the tauscher-ribicoff track of secret side negotiations, the full extent of which the administration is hiding from congress, or by

agreeing to the preamble language or article 5, section 3, in contra sepbgs of -- contravention of section 1251 of the fiscal year 2010 defense authorization bill. without -- excuse me -- with regard to under secretary tauscher's side negotiations, i note that the russians know more about the u.s. position in these negotiations than the u.s. senate does, which brings to mind again article 4 of the russian federal law on ratification which state that -- quoting again -- "the provisions of the rabble of the new start treaty -- of the preamble of the new start treaty shall have insignificant difference of the party's intentions including the understandings without which the new start treaty would not have been concluded." what understandings are these? is this referring to something beyond the text of the treaty and the preamble? unfortunately, the senate is unaware of such understandings

because we've been denied access to the negotiating record. there is the potential here for a major confrontation between the senate and the administration if the administration does not immediately make a full disclosure to the senate on these matters. the senate's action in the resolution of ratification should also make clear that it will not accept any further linkage between offensive nuclear reductions. i'm pleased to note a recent product of the arms control association, called strategic missile defense a threat to future nuclear arms reductions that seems to agree with my point. in its recent analysis, this group correctly observed that the united states will continue to require exempting strategic missile defense from treaties. while the arms control association seems to believe this is a mistake, i'm pleased that the senate sent a message so unmistakable that even the arms control community comprehended it. the administration will have an opportunity to prove whether its

statements of support for missile defense, including the president's december 18 letter, were mere rhetoric or actual policy, beginning when it submits the fiscal year 2012 budget request. initial press reports hint that the defense department is anticipating yet another reduction in funding for missile defense programs over the next five years. despite funding plans that are already about $4 billion below what was envisioned by the last administration for the fiscal years 2010-2013. this is inconceivable given the funding shortfalls increasingly apparent in the president's own plans for improving u.s. missile defenses as well as four phases of the phased adaptive approach to missile defense in europe. it appears that elements of the administration's phased adaptive approach for missile defense are already falling behind. and and the president's budget has element gain teed the objects

less ens of the only national defense system we have now. if these reports are accurate, it would belie the president's commitment to -- and suggest the senate was misled during its consideration of the treaty. now with regard to conventional, prompt global strike. remember this is the concept where u.s. intercontinental range missles can substitute a conventional warhead for nuclear warhead for prompt delivery for -- prompt delivery far away in the -- on the globe the senator's concerns were not limited to missle defenses, as i said. we talked about the prompt global strike issue in connection with the start treaty. referencing this capability foreign minister lavrov told the russian duma and i quote -- "the u.s. senate resolution claims that the treaty does not apply to new kinds of nonnuclear

stratigic weapons that could be developed in the future. this is not true." end of quote. then he stated, we find unacceptable the unilateral american interpretation of the treaty according to which future stratigic range systems not meeting the parameters stated in the treaty shall not be regarded as new types of stratigic weapons covered by the treaty. end of quote. likewise russian federal law states in article 2 paragraph 7, that the new strati treaty to any kind of new -- new kind of stratigic range offensive arms should be resolved within the framework of the bilateral consultative commission prior to the deployment of such new kind of stratigic arms. hence russia is rejecting the on the stratigic nonnuclear weapon systems contained in the resolution which states and i quote nothing in the new start

treaty prohibits deployment of stratigic range nonnuclear weapons systems. end of quote. in other words conventional prompt global strike. the president must make this fact plain to both russia and the senate when he provides the report on the prompt global strike systems to the senate prior to entry into force of the treaty. it mocks the very idea of the u.s.-russian arms control pact if such a disagreement, russian's rejection of a formally adopted understanding. in response to senators who raised concerns about the inadequacy of the verification and tell -- teletriup to five tests per year. this could have been expected when the administration capitulated to russian demands. the russian federal law prohibits -- quote -- "providing

to the united states of america tel emetric new types of submarine ballistic missles. this is what treaty opponents predicted. as a result, we will know less about new russian systems than under the previous start verification regime. at the very least russia's action in its federal law to deny the u.s. telemtry will place greater burdens on our national technical means. the denial of telemtry from new delivery systems poses a risk by aiding russia's potential for breakout to the treaty limits which is a central concern of the senate in conditions number 2 and number 4 of the resolution of ratification. finally, the russian foreign minister seems to have taken aim at the position that negotiations begin within a year

of tactical weapons between russia and the united states. in noting the balance of the conventional forces, plans to deploy weapons in space and u.s. global missle plans, russian minister lavrov stated, it is possible to hold future negotiations only with due account of all these factors and after the fulfillment of the new start. end of quote. clearly russia is not interested in beginning such negotiations any time soon. the foreign minister has proven correct those senators who cautioned that after this treaty was ratified the u.s. would lose whatever leverage it had to address nonstratigic nuclear weapons. assistant secretary gottemiller appears to take seriously the senate's instruction in this regard even referring to it as her marching orders. i trust she would use equally the senate's marching orders that a subsequent treaty not deal with u.s. missile defenses.

mr. president, i am got aware of an example when the united states has ratified a bilateral treaty in the face of clear evidence that there is no meeting of the minds on key treaty terms. while new start was under senate consideration administration officials continually spoke about how critical the treaty was to reset relations with russia and how the completed treaty manifested improved relations between the two countries. this can be the case, however, only if the parties actually agree on the fundamentals of the treaty's meaning. now, let me speak to the anticipated 2012 budget for nuclear modernization. the senate in condition 9 of the resolution linked its support for the new start treaty on a clear commitment to ensuring the safety, reliability and performance of its nuclear forces. this commitment requires full funding to ensure a robust

stockpile stewardship program, a modernization nuclear weapons production capability and the development of new nuclear delivery systems to replace the aging nuclear triad of bombers and submarines. if funding fails to meet the 10-year plan or required levels of resources are greater than the 10-year plan, the president is conditioned by a -- or required by condition 9 to submit a report on how the administration will remedy the shortfall, the project requiring funds and the level as required, the impact of the shortfall of nuclear readiness and whether it is in the national interest to remain a party to the treaty. we must codify the requirement to prior an annual update to section 1251 requiring the administration to provide an updated assessment of the levels of funding required to maintain and modernize the stockpile and the administration has agreed that this is necessary. as it currently stands the administration's proposed 10-year budget for nuclear

weapons activity as promised in the update to the section 1251 reports takes a critical first step toward nuclear weapons sustainment and mordernization. it proposes an $85 billion budget for weapons activities from 2011 to 2020. and describes the critical near-term requirements of near nearly $7 billion in 2011 and $6.00 -- 7.6 billion in 2012. to be successful the program must have the complete backing of the president, the armed services committee and the appropriations committee as well as the full house and senate. these budget requests will allow the laboratories and class responsible for nuclear weapons to begin a slow recovery from the neglect that has been crippling the ability of the real issues as the current stockpile ages. the administration must continue to review of the modernization program and follow through on its commitment to obtain this funding from the congress. this modernization program must

address the past, the present and the future of our nuclear weapon complex. for example, the stockpile surveillance program evaluates the current condition of the nuclear weapons stockpile. this program has been seriously understunnedded -- underfunded. this isn't my assessment. but rather the assessment of some of the premier authorities on the nuclear weapons, the director of the nuclear weapons laboratories. it is likewise the conclusion of the bipartisan commission on the u.s. stratigic posture. likewise budget requests must allow for the current life extension programs including the w-76 which is currently in production. the b-61, which is rapidly nearing its end of life, but continues to be required for both stratigic and tactical roles. and the w-70, which will require very extensive and challenging life extension to correct aging

issues and incorporate higher standards for safety and security. these three planned programs will not likely be completed until the end of the 2020 decade. as it stands, there does not appear to be capacity in the complex to insert the long-range stripe -- strike option warhead production of the next decade which will be needed to replace our current w-80 warheads and air-launched crews missles. we are the only nuclear weapons state without a nuclear weapon production capability. restoring the health of our current weapons is critically important. finally, the balanced program must prepare us for the future by improving the quality of our facilities, many of which are manhattan project era facilities. design and engineering development of the replacement nuclear facility and uranium processing facility should be accelerated to the extent

possible. instruction -- construction estimates should be properly evaluated and completion of these facilities should be aggressively pursued for their completion by 2020. this is another so-called marching order for the administration. it's difficult to overstate the importance of these facilities to our future national security. the opportunity exists to push these programs forward, for example, the recent exchange of letters between the senate appropriation leaders and the president shows that the commitment must be bipartisan and must include both congress and the administration. notably the senate appropriations committee leaders, senator inouye and cochran, and the energy and water subcommittee leader, senator feinstein and alexander, stated on september 16, 2010, and i quote -- "funding for the nuclear modernization and national nuclear agency budgets should be considered defense spending as it is critical to

national security. " they state this represents a long-term commitment by each of us as modernization of nuclear arsenal will require a sustained effort. the president responded on september 20, 2010, to support the budget and also committed to an annual update to the section 1251 report. and here's what he said, ig recognize that nuclear modernization requires investment for the long term, in addition to this one-year budget increase, that is my commitment to congress. end of quote. it must be our commitment to hold the president to his word and to be likewise -- and, likewise, to provide our full support for nuclear weapons modernization. finally, mr. president, on -- on nuclear delivery systems and the president's commitment to missle defense. first, we expect to see significant funding for the next generation of nuclear ballistic submarine and follow-on heavy

bomber which the administration seems to support though it hasn't yet confirmed that the u.s. intends the bomber to be capable of a nuclear standoff mission as well as a final decision that the follow-on t to -- will be nuclear capable. we expect to see greater clarity to maintain the icbm leg of the triad after the minutemen 3 reaches the end of its life. i would expect the administration's commitment to these delivered platforms to become increasingly evident in the 2012 budget request as promised request as an update. modernization to the platforms must parallel the commitment to the nuclear weapons to continue to use mrs. gottemiller's formulation, this is another marching order from the senate to the administration. the president made clear his commitment to missle defense during the course of the senate's consideration of the new start treaty, as mentioned before, in his december 18,

letter to senators reid and mcconnell he wrote and i quote -- "as long as i am president and congress provides the necessary funding, the united states will continue to develop and deploy effective missile defenses to protect the united states, our deployed forces, and our allies and partners." the president reiterated what the president made clear, that the new start treaty places no limitations on the development and deployment of our missle defense programs. and he stated that he will take every action available to me to support the deployment of all four phases of the planned missle defense deployments in europe. the secretary of defense also indicated during a senate arms services committee hearing on december 17, that the department was looking at an increased missle defense funding for the fiscal year 2012. as i said before, however, initial press rorts hint that

the -- reports hint that the department of defense is anticipating a reduction in missle defense over the next five years. any cut to the missle defense budget would be especially shocking in light of president obama's commitments to the senate. likewise it would be absolutely indefensible in view of secretary gates' comment that north korea was within five years of being able to strike the united states with an intercontinental ballistic missle and with north korea's development of nuclear weapons, north korea is becoming a direct threat to the united states. indeed the recent discovery of the nuclear enrichment site in north korea raises concern about our ability to estimate the pace at which that country is developing nuclear and ballistic defense painties. it should -- capabilities. it should make us think about iranian ballistic missle capabilities. the commander of u.s. forces in

the pacific and the director for naval intelligence suggesting that china's antiship ballistic missles designed to target u.s. aircraft carriers are now nearly operational. this new antiship ballistic missile combined with beijing's current and growing arsenal of short and medium-range ballistic missiles threatens to alter the strategic balance in asia by potentially grounding pacific-based u.s. air forces and sinking u.s. ships out to a range of 1,000 nautical miles, not to mention the ability to strike u.s. allies and friends in the region. mr. president, in conclusion, the russian parliament provided its interpretation of the treaty and preamble in its federal law on ratification, and it is clearly at odds with the senate's resolution of ratification in several key respects, including missile defense and conventional prompt global strike. to say that their interpretation is not legally binding on the

united states is to miss the point, which is as many of us said during the debate on new start that because there is no meeting of the minds on these matters, the potential for disputes and increasing tension between the two sides is likely. what was to serve as a vehicle for reset may, in fact, serve to promote increasing discord. in fact, the first indication of this may have occurred last week when the u.s. and its nato partners met with russia to find common ground on missile defense cooperation. in advance of that meeting, the russian parliament threatened either we agree to certain principles with nato -- and i'm quoting now -- or we fail to agree and then in the future we are forced to adopt an entire series of unpleasant decisions concerning the deployment of an offensive nuclear missile group, end of quote. if this is the language of reset, i wonder what the tone might have been had we not agreed to new start. as it turns out, russia appears to have rejected the nato

approach. so, mr. president, we will watch carefully to ensure that the administration fulfills what we have requested and fulfills the ten-year commitment to nuclear modernization, starting in the 2012 budget request and that nuclear reductions called for under the new start treaty do not outpace the commitments to modernization. we must make certain, too, that the administration modernizes our national missile defense system, to stay ahead of increasing threats, and it provides the necessary direction and funding to ensure full, timely deployment of missile defense assets in europe to address the growing uranium threat and directs the missile defense agency to develop defensive countermeasures to the antiship ballistic missile capability of china. and finally, we must resurrect the reagan vision of defense -- defensive missile defense capabilities based in space, which is the only true effective means for protecting the nation and its deployed forces.

mr. sessions: mr. president? the presiding officer: the senator from alabama. mr. sessions: mr. president, i would like to ask consent that i be allowed to speak for up to 15 minutes. the presiding officer: without objection. mr. sessions: mr. president, i first would like to thank my colleague, senator kyl, who is, i think this body's premier student of the nuclear strategic posture of the united states. i served and have served as chairman of that subcommittee of armed services, and i share his concerns. i am thankful that he's here, that he's keeping up with these matters year after year, and most of us would rather not talk about them, but they represent serious responsibilities of a great nation who must be able to

defend itself to be able to live freely and prosperously. so i thank the senator for sharing those remarks and i value his friendship and enjoy following his leadership. mr. president, last week, the congressional budget office issued a report that our congressional budget office, the leadership selected by the majority in the congress, the democratic majority, and that report showed that our deficit for this year that will end september 30 will be be $1.5 trillion. that's the largest deficit the nation has ever had. the last two years have been been $1.3 trillion, been $1.3 trillion, $1.2 trillio n, and this is projected to come in at $1.5 trillion.

we have complained, i have complained that president bush cement more money than he should, but his highest deficit was one-third of that, that, $450 billion. so we are at unprecedented levels of annual deficit and debt. our gross debt, the total debt of the united states, internal and external, will equal by the end of the year 100% of g.d.p. annual interest payments, we borrow money, people loan us their money, we give them treasury bills and bonds in exchange, and we pay them interest on the debt. our interest, the amount of interest we pay will rise to to $750 billion by the end of this decade. meaning that a one-year interest payment will cost us nearly as much as 20 years of current

highway construction spending. we spend about $40 billion a year, for example, on federal highway expenditures. we're talking about a debt going from $170 billion or so -- interest payment of $170 billion or so a couple of years ago to to $750 because our debt will triple in that time, from $5 trillion to over over $15 trillion. the total amount of interest we expect to pay between now and the end of the decade is is $5.5 trillion in interest, enough money to fund our entire government for 18 months. the situation is so serious that former federal reserve chairman alan greenspan warned very recently that we may face a bond market crisis in the next two to

three years. he said it's a little better than a 50-50 chance that won't happen, but not much better was his current. c.b.o. director doug elmendorf testified last week before the budget committee where i'm ranking member that we were entering -- quote -- "unfamiliar territory for all developed nations over the last several decades." close quote. unfamiliar territory. talking about financial debt is what he's talking about. andists with the standard and poor's stated that -- quote -- "absent a credible plan, the rating on the u.s. government will come under pressure." close quote. in other words, the rating on our debt, will it cease to be aaa? and if that happens, won't our interest rates that i have just been suggesting are threatening us, those interest rates will go up because of our -- if our

ratings go down, people will demand a higher interest before they will loan us money. and the international monetary fund urged the united states to take much stronger action. this is the "washington post" business page just a few days ago." u.s. must reduce deficit, i.m.f. warns." must reduce deficit, i.m.f. warns. they claim to be -- they're not perfect, of course. they claim to be the conscience of the world and warn profligate nations to get their houses in order before it creates systemic problems for other nations and themselves. this article says -- quote -- "european countries have begun a pointed dialogue with their residents about what government can and cannot afford.

moves to cut public salaries, trim services and curb public pensions have touched off strikes and protests but also put the deficits of those countries on what seems to be a securely downward path, "the i.m.f. said. "those are the choices the united states has been hesitant to make." close quote. two prominent economists, professor carmen reinhardt who has testified before our committee i think more than once and dr. kenneth rogof, issued a paper explaining the negative impact of excessive debt on economic growth. actually wrote a book. this time, it's different. they studied in the last 200 years the countries that have had their economies collapse as a result of debt. a lot of south american countries have had it various

times and others. they caution there is a point beyond which you do not want to go, and that point is when -- when your debt equals 90% of your economy, 90% of g.d.p. it's a very respected study. the first time anyone has ever studied economies have -- that have had economic collapse. this is a key factor in that. we're now at 94% of g.d.p., and by the end of the year, the c.b.o. projects we will be at 100% of g.d.p. our debt will equal 100% of the entire goods and services produced in this economy. so our nation is on a dangerous and as everybody that we have had who have testified before the committee and virtually anybody that's expressed themselves, they call it an unsustainable path.

the president has said we're on an unsustainable path. so we need strong leadership from our president. the day before his state of the union, i wrote an op-ed, published in "the washington post." i called on him to present a broad vision for reducing spending. i said that -- quote -- "his proposals cannot be timid" -- close quote and that this was -- quote -- "a defining moment for his presidency." i have to say he did not rise to that occasion. instead of a bold vision, he put forward a meek plan to continue spending at current levels for five more years, calling that a freeze, but we have had a surge in spending the last two years. freezing at that level cannot be acceptable. these are the levels that produce the $1.5 trillion deficit. so the president's speech, i must say, was disconnected.

i say from reality. he nowhere in that speech entered into a dialogue with the american people about the severity of the crisis we face or made any attempt to call on them in a serious way to understand why it is that we can't continue at this level of spending. he failed to present a credible plan. so this is what "the washington post" said in an editorial yesterday. they weren't mean-spirited about it, but you could tell they were very disappointed. they said this -- quote -- "in his state of the union address tuesday night, president obama failed to present a credible plan for long-term debt reduction. it's no secret we think he made a big mistake. if america can't get a handle on its finances, everything else is

at risk." but not only has the president failed to lead with ideas, he has set about to thwart, to block others from taking action. this is concerning to me. this sunday on one of the big news programs, his new chief of staff, bill daley, balked at a republican plan to cut spending for the rest of the year. daley said any budget cuts must be paired with new spending, quote, investments -- close quote -- as he and the president called them. he taunted the republicans, i think, with where's the beef? let's see the cuts they're talking about, close quote. so the president refuses to lead and then sends his emissaries to attack any republican who makes a serious program, i assume as

being heartless, wanting to throw children in the streets and so forth. for instance, the president's chief economic advisor, austin gould, he lashed out at republicans for wanting to reduce discretionary spending before we raise the debt ceiling. i mean, we have to have some sort of bipartisan agreement before we agree to raise this debt ceiling that we're going to reduce some of the spending. clip back on the credit card a little bit, something significant. the president's only secretary of treasury, tim geithner, recently argued that it was too early to begin cutting the deficits. it's unsustainable, it's unsustainable, but it's too early to start cutting now. maybe 2012. after that maybe. geithner's comments ring all too similar to those of his

predecessor, hank paulson, secretary of treasury under president bush, who said that the housing downturn was under control before the wall street firms began falling like dominoes, but ignoreing the -- ignoring the reality of our situation does not change it. the money simply isn't there to support the president's spending agenda, he announced at the state of the union. we don't have the money. our nation cannot afford another era of big government. in two weeks on february 14, just two weeks from now, the president will submit a new budget to congress. it will go to our committee, the budget committee. this may be -- and i say this seriously -- his last chance to get it right, for the president to be a credible voice in this debate. and he must put forward a budget

that significantly lowers spending levels. he cannot present congress with the same unserious plan he presented last tuesday night. three years into his term, i think this budget that he'll be submitting is a defining act of what he views and how he views the debt we face. i think if this budget fails to meet the necessary demands for curtailing spending, we will know pretty conclusively where the president is. you know, numbers count. you can have rhetoric and we can disagree, but at some point, you have to put out your budget that says what you're going to do, how much you're going to spend, and where you're going to get

the money. in this case, where -- how much are we going to borrow to clear the -- to carry on the government at that time? and so we're going to see whether the president is moving with the american people to fiscal and economic sanity or whether or not he will continue his ideological commitment to big government. i think that's it. i think we'll know in two weeks. this is a serious matter. so i think we need to turn back from the cliff toward which we are heading and get on a new road. we need to reduce both the size of the deficit and we'll have to reduce the size of the government somewhat. we're not going to sink into the ocean. we go back to 2008, 2006 levels of federal spending, will the country collapse? give me a break. certainly it's not going to collapse. but it will put us on a road to

fiscal sanity. it will restore not only public confidence in our economy but it will really restore the foundations of american prosperity. i truly believe one of the clouds over the american economy is the perception, unfortunately too true, that we're spending at a reckless rate, that we are irresponsibly running up debt that could cause us to inflate the value of our currency, that could cause a debt crisis, as mr. greenspan said was almost a 50/50 hans in the next two to three years. and -- 50/50 chance in the next two to three years. and if you've got money to invest, what does that say now? maybe you better sit back and see a little bit more until we get this debt that's spiraling out of control under control, heading on a downward path toward a balanced budget, we're

not going to see the economic growth that's possible. i don't know how -- i think that's where we should be heading. so strong, sustained reductions in spending will not be easy. it will take us down a tough road but it's the only road, the only course that will lead to a better financial future for ourselves and our children and preserve the integrity of the united states economy in a way that is necessary for growth to occur. i thank the chair and would yield the floor and note the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

quorum call:

quorum call:

quorum call:

quorum call:

a senator: mr. president, i ask that the quorum call be rescinded. the presiding officer: without objection, so ordered. mr. akaka: mr. president, i rise to speak in morning business. mr. president, this past friday marked the annual earned income tax credit awareness day. i rise today to recognize the success and importance of this vital tax benefit for hard-working americans. as our country continues its

steady recovery from the worst economic conditions that hard-working american men and women have faced since the great depression, families need financial relief and many people need jobs. as we renew our efforts to promote job creation, increase access to credit for small businesses and restore confidence and stability to markets, we should not forget that we already have what one president once called, and i quote -- "the best antipoverty, the best pro-family, the best job creation measure to come out of congress." unquote. president reagan was talking

about the earned income tax credit. since 1975, the eitc has helped to offset the impact of social security taxes for low and moderate income individuals. nearly 26 million taxpayers across the country received the eitc when they filed their tax returns last year. in hawaii alone, over 100,000 low and middle-income workers received an average of nearly nearly $2,000 for this tremendous tax benefit. these vital eitc resources helped families pay for essentials like food, housing, clothing, transportation