within our spectrum, that we expect that and it will also have the radio focus too, to make sure radio has a place in the digital platforms of the future too. so we are very excited about it and think it will be successful. >> host: we did not talk about the radio issue, the performance rights issue. is that going to move forward and in a larger context senator, given everything that is going on up on capitol hill, the budget, the war and issues, and do you see a chance of major telecom legislation happening in this congress? >> guest: they're a size a chance but i mean what i tell my members is that you look at the broad firmament of issues out there and as important as these are, these issues are to us and our viewers, the american peoplp against the national debt, the national defense, the weighty

issues they are wrestling with, we are not at the top of the list, and usually after an election like this we have divided governments coming up to a presidential election. pretty much anything that is going to pass on its own boards policy merits it has to happen before the august recess because the window closes and everything after that the passes is either passing out of political necessity or to keep the government running. so it will be all politics all the time pretty much after labor day. ..

on radio first. >> gordon smith former senator from oregon and since november 1st, 2009 president and ceo of the national association of broadcasters as always we appreciate your coming on the communicators. jonathan as well assistant managing editor of communications daily. thank you.

next, a forum on congressional politics and the federal budget. the national association for business economics heard from former va representative tom davis and stewart rothenberg editor and publisher of the rothenberg political report. this is 45 minutes. >> our next session is coming up. i want to once again thank the peterson foundation for their strong support of the educational initiative at this conference and this session is sponsored by ms. reeder financial. speed adolfo laurenti will moderate the session. adolfo? >> thank you. first of all, the president is

not with the stand she apologized. unfortunately she has to be in california at the passing of her father-in-law. i am adolfo laurenti, the deputy chief economist and have the privilege of starting our public finance situation with a speaker that allows it to say no needs introductions but for the benefit of those who, like me, come from distant land, let me say tom davis served for seven terms in congress representing district among my alma maters george mason university so a

plug for the next week's tournament. [laughter] >> during his tenure in the house he was the chairman of the governmental reform and oversight committee. several distinguished accomplishments during those years and he's now the director for the federal government affairs. our second speaker, stuart rothenberg, editor and publisher of the rothenberg political report, columnist on the local and several years of experience in monitoring the politics and policy making in our national capitals. they have been published from all the major not including the journal, "the new york times," "the washington post" and is one of the most respected political interpreters of what's going on

in washington, d.c.. with no further hesitation, just before i would proceed further a housekeeping noted again on the question on our staff, so and again with no further hesitation, i will let tom do our introduction remarks. >> thank you. >> the most important part of my resume is a left converse undefeated and unindicted. [laughter] i was also chairman of the house republican campaign committee for two cycles sweeping a political perspective. i'm going to start turning over the good news doug elmendorf gave you on the budget. the first chart talks about how federal government growth has grown. if you look at the chart for 2010, 24% of the gdp is now federal government. if you end state and local governments into that 30% of gdp is now government and if you get

the current projections if we stay on the current line by 2014, 39% of the gdp will be the federal government alone, it's almost up to 50%. that's the direction that we are going. doug had a chart that was similar to this but i like this pie chart because it shows how over the last 40 years the spending priorities of government has shifted. the point of fact defense which was over 60% spending in the 1950's is now 20% and that is with the two wars going on but the money has shifted over to the entitlement programs, medicare and medicaid and social security. social security this year for the first time instead of generating surpluses will be $50 billion out of the budget. another way to look at this federal debt burden, i like this chart because it hasn't just debt owned by the public, but it has other debt the government owns to the social security

trust fund and the like that is payable as you take a look at that the percentage of gdp is higher than the figure that they give for just debt held by the public. it's a cbe number. again, the current course is unsustainable and i think if there is one point all of us want to make today is the major changes are coming, how they occurred, when they occur and what political context, that is the unknown and we are going to talk about the political ramifications in the current pressures bringing about those changes. the u.s. government debt is the dominant issue of the time. i know the last campaign was all about the economy but with the growth of the tea party and other groups we are seeing a new focus on the debt recalibrating by both parties. again, the debt will be equal to 100% of gdp by 2020 under the current wave of we are going. 20% by 2013 unless major changes are made.

states we don't talk about this there is a brief trading dog showed you at the same time we have the state's many of them in big trouble right now. illinois, california and some others coming to gifts with the issues as well. one of the things federal government has done is they have faced financial pressures as the of passed mandates on down to the states, unfunded mandates and the state, the health care bill, i know in my own state of virginia another bill, $2 billion a year just looked over in the mandate set down by the federal government putting added pressure on the states along with their pensions and other items they are trying to cope with. that has been manifested in some ways in cuts and education and other areas but most states right now are under tremendous budget pressures and not just from the economic growth or the lack of economic growth but some structural pressures some of them brought on by washington. comparative debt burdens there's a chart on this. i've got one that i think illustrates us along with greece

and a class by itself but if you get portugal, ireland, spain, other countries we are not much different when you look at that except we are the united states reputation has been a little bit stronger but if you look at it by the numbers we are in the same boat and projected to get even worse. there's a bipartisan problem by the we. this isn't one party. i'm no longer a member of congress. i don't have to go over the talking points. both parties are the problem. this illustrates what happens with republican congress and democratic congress and what happens to federal debt, and it doesn't seem to make much difference. the best illustration of this is there was a bill in the house that last time is going to set up the federal debt commission. it lost in the senate and in the house because members of the co-sponsored a bill decided they were not going to vote for it after pressure from the tax group saying this would be scored as a pro tax vote that would be hurting the voting records and as we will talk

about taking a very strong role in the budgetary debate and putting some of the options they are able to consider. i love this in december 2010 for president and congress both went up. we had a bipartisan kumbaya all coming together and cooperation, the extension of the bush tax cuts and the adjustments, state tax adjustments, tax extenders, unemployment insurance and everything else, another $108 billion added to the deficit. that's the easy way to get the bipartisan cooperation. the tough stuff is yet to come. the current political climate basically for the last i would say for a dozen years you had the political establishment giving no good news to american voters. going back 9/11 you can go back to the two wars that haven't gone according to plan. we can debate about the

efficacy, katrina an economic meltdown. basically the political establishment is given no good news and you have seen basically the revolt at the grassroots. in 2006 the fire the republican congress and flipped it to the democratic side after 12 years of republican domination. in 2008 they went further and wouldn't give -- the fired the republicans from the white house and the democrats complete control, 20 seat gain for the democrats in the house. another nationalized election. we went through 12 years of basically localized elections were all the politics are local. that hasn't been true the last three cycles and this last time under the high year them at least in the house, 63 c to gain in the house, the largest might turn gained since 1930. voters were angry. republicans didn't take the senate because if you look at the number of seats it just wasn't there for them. it's a combination of not having the right seats up, having the dysfunctional campaign's along

the line, but they made major strides in the various as well and the discipline factors on the party's right now are as follows. the parties are now ideologically sorted. this is a first. it used to be we had a solid liberals and conservatives would fight it out in the primaries and the northeast you had the same thing. today parties are pretty archaeologically sorted. the recent study by the national journal shows the most conservative democratic senate is more liberal than the most liberal republic. this is the first time in over a generation it's going to be that way in the house. most of the blue dog moderate democrats were just wiped out as the selection become nationalized. there were voting records that became irrelevant. they were called up with their party branding and you now have a very, very liberal democratic party in the house of representatives and a very conservative republican base in the house where the most liberal republicans are more

conservative than the most conservative democrats. the parties are ought logically sorted but the point is a lot of the issues that were always there in congress in the debates are now partisan in their nature. second, the last election was the last election or the first election where you had actually more money spent by interest groups than by the parties and candidates. the campaign finance reform, citizens united case, the campaign finance took money away from the parties. restricted ha candidates could raise their money. it didn't take the interest groups, part of that is because the case of bulkeley versus some other free speech cases, but in shrinking the ability of the parties and candidates to get money, this money didn't disappear from the process. it went out to the wings so it's there with the club for growth and the move on.org and the tea party express and we have seen many now wonder the citizens united large chunks of money don't even have to be disclosed.

and so the effect on members as you take a look at what happened to lisa murkowski and robert bennett and mike castle in their primaries on the republican side just to start with is your frozen. you don't want to antagonize these groups or you may not get your seat back. the democrats have a similar problem that was more pronounced on the republican side this last time. that's a very disciplined factor in terms of their ability to tackle these issues and take off the votes at this point and thereby cut the new media with the growth of the internet now with the blogs. we have msnbc and fox if you've ever watched them on the same might it's like two different planets. they are also a major influence on the voter opinions and political opinions, the republican members you get your foxx, democrats, msnbc, talking to the base. and finally, i would add we have a lot more to talk about. the republican gains the last time more the result of people

turning back. this was just the voters trying to put some balance back in the government suite of balanced government, divided government, this is the norm. almost two-thirds of the time as the chart shows we've had divided government. it can bring gridlock, impeachments, government shutdowns come under bill clinton also the balanced budget depending on how the parties act. right now it's much different than 1994. 1994 and was elected to congress by voters wanted to protect themselves from bill clinton and the elected me, two years later they elected bill clinton to protect from me. it's one of the things they don't trust either party at this point. they're kind of dancing and still have a totally dissatisfied electorate but you have interest groups and outside media influences that are far stronger than they were in 1994.

>> thanks, tom. after that he's covered the entire landscape i should just take questions now but i have to say something. a pleasure to be here. okay. so you already figured out we are doing the politics, which means we aren't talking about what should happen, when you would like to happen, what needs to happen, we don't deal with that stuff, we deal with what could possibly happen, and given what we do and what goes on in capitol hill and what could possibly have in the alternatives are extremely narrow, somewhere between not much and nothing. [laughter] if you think back to how difficult it was for the democrats to get health care reform through, it gives you an inkling of how difficult i probably would say impossible. i will see whether tom would quibble with that it is to deal with dealing with these fundamental questions of

spending and entitlements. the democrats had a 60 seat majority from january, 2009 when arlen specter switched parties until the middle of january, 2010 when the special election massachusetts elected republican scott brown. throughout that time they couldn't even get health care done even though they had 60 seats in the senate and a 70 or 80 seat majority in the house. and the party's president. he would have thought that would be an environment likely for the party to do its premiere issue. but the only were able to do it after they lost the senate race in massachusetts but before brown was seated in a frenzy of trying to get something done. now we've had an election in the meantime in november of 2010. we now have divided government, and we have a party with -- to parties with fundamentally different values, priorities, assumptions, the leafs,

fundamentally different. this double we have been in in december and january, first the result of the frenzy of congressional activity in the lame duck they said well, congress can actually do something and then we have the horrendous shooting in tucson and arizona and the president cannot not as a policymaker but as a figure of unity and represented the national purpose and the national sympathy and we all felt good and now suddenly what's happening again? we are talking about the budget and spending and we are back to politics. and you're going to see those numbers change again as the battle lines are drawn all the we have had these three dramatic swings in 2006 it looks like there were lots of democrats and very few republicans. in 2008 lots of democrats and you republicans and 2010, lots of republicans and few democrats. that's not the case at all. we still have a divided country

which reacts on the basis of short-term events and make it look as though we have the slightest wings, but the country is still divided. one of the things i do is to meet and talk to candidates for congress. i know we are not supposed to do research in order to have opinions. if you are a political commentator you were just supposed to show up on a television show and tell people what they are supposed to think. so why sit and interview candidates in the house and the senate for about an hour. the date of birth, what do your folks do for a living, where did you grow up, where did you go to school, what's your education, employment background, political background, get a sense of who these people are, and some of the naturally when. this time a whole bunch of them when, and a lot of conservatives were elected describe the tea party folks sometimes the arty

party folks and sometimes they are not but they are lumped together. they are an interesting group but i remember we started asking one question to these kind of candidates about midway through the cycle and whether it was bobby shelling in the northwestern illinois we didn't know if he would win. he owns st giuseppe is heavenly pizza i believe it is an moly and illinois or one of those districts or paul those are an arizona dentist who had never run for office or been enacted in politics, regardless of the candidates we started saying how are you different if you win how will you be different than the class of '94? remember the republican class of '94 they can in the revolution there was going to change washington and they said the same things. really interesting and we didn't know how much attention or how much weight to give because we didn't know if these people were going to run and many of them

one. they all said the same thing. if we have the same value, the same goals, the same beliefs as the class of '94 there's only one way that we are different, and we are different in that when they got to washington they cave to the establishment. they became a part of the establishment. they fell in line with the leadership. we are not going to do that. we are not going to compromise. and in fact, for many in the two-party and many in the kind of anti-tax movement on the republican side this also goes for the liberal wing of the democratic side. compromise has become a dirty word. they don't acknowledge compromise anymore. did any of you see speaker boehner did an interview i think it might have been a 60 minutes interview where he was asked about his leadership and his party. he refused to use the word compromise. the interviewer asked a number

of times and said why are you skirting around compromise? because that has become a dirty word for outsiders, political outsiders on the left and the right and for all those of us that follow politics and i shouldn't speak for, but we can ask him right away he thinks compromise is a dirty word. i would be shocked if he said it was. for many of us it is the kind of art of politics. it's how you achieve some sort of legislative output rather than sitting there and after two years not getting anything done because nobody can get exactly what they want. but i think if you think of that, think about how difficult it is to address questions of taxes and spending and particularly entitlements if you have an increasingly vocal element on both ends of the party, both parties, both ends of each party that thinks that compromise is itself a sellout, it's difficult it makes it more difficult for the leadership.

i think tom is exactly right about how the parties changes and the party system make it more difficult to achieve compromise and consensus. if your body schilling and you know that the folks, i don't want to pick on bobby schilling if he's watching, if you know that t. purdy folks back in your district are watching you and each of your votes they are not going to give you any play, they aren't in to give you any freedom it was significantly more pressure on the member. the party was raising money for you. the party leadership was important. and now you have this kind of decentralize control and outlets for candidates and for members of congress to go on rachel matt out and ed schultz and chris matthews and sean hannity and

glen back and rush limbaugh and appeal to their folks and raise money from their people and we don't have the common language and the common thwarts the assumption of thing we once had. i want to turn a little bit to the survey data before we open up for the q&a. doug elmendorf mentioned the survey data and the numbers make it harder for candidates to compromise to find some sort of middle ground which most people in washington seem to think would be a combination of some additional tax revenue and some significant, more significant cuts in entitlement spending. the numbers don't make it easy for politicians to do that. so there's any number of surveys i can look at, the most recent one and one of my favorites, i

don't know if this will get me anything it's not like i'm attempting proctor and gamble product like i'm going to get diapers tomorrow, but one of my favorite surveys is the nbc news will street journal. i liked it, the numbers don't bounce around a lot, i think they take great care, not that others don't this is one of my favorites. and there's a recent one that just was out to be very 20 fourth 3,281,000 adults. thinking about yourself and your family, when you think about our federal budget problems including our growing federal budget deficit and our increasing national debt a case of a fleet it out. think about the deficit, think about the debt. how much does this concern you personally in terms of how it impacts you and your family future, how much does it impact you? think about the deficit and the debt, how much does it impact you? 48% said a great deal. 32% said quite a bit.

so 80% of americans said a great deal and quite a bit. that would seem to suggest they are worried about this, that the internalized it, the understand and they are ready and prepared to act. on that question it sounds like wow, here we go. than two questions later. you think it will be necessary to cut spending on medicare. the federal government health care program for seniors in order to significantly reduce the federal budget deficits. do you think it will be necessary? these people come 80% of the people think it's going to affect them and their family a great deal or quite a bit will be necessary to cut medicare? yes, 18, no, 54. next question will be necessary to cut out social security in order to significantly reduce the federal budget deficit. yes it will be necessary to cut social security. 22%, no, 49%.

here's the question whether they said okay here are three options if the deficit can't be eliminated by cutting wasteful federal spending, if it can't be, let's do wasteful federal spending. that's the easy one. if it can't be done by cutting the spending which would you favor more, then it gives three alternatives they repeat to make sure people aren't answering the first alternative for the last alternative, but they are cutting important programs, raising taxes or postponing the elimination of the debt. the responses are almost even. 35% say we better cut the important programs, 33% savings taxes, 26% say proposed postponing the elimination of the debt. there is not an inherent consensus for quick immediate action. finally, and then i will stop and i would be happy to take

questions, comments, arguments, what ever. again, doug mentioned the survey showed the people often don't want to cut individual programs but then he said there may be surveys out there that if you ask the question in a little different way whether certain things are acceptable or unacceptable i don't know if you recall that but he used those words, maybe they show a greater willingness to cutting entitlements. well fortunately nbc news will street journal used those words in a question, question 25, and let me read you a number of programs that could be cut significantly to raise the current federal budget deficit. for each one, please tell me if you think significantly cutting funding for the program is totally acceptable, mostly acceptable? mostly unacceptable, totally unacceptable.

so there were four were at least 50% of the public said that the cuts were totally acceptable or were mostly acceptable. the one with the biggest support, 57% say to plan acceptable or mostly acceptable. subsidies to build nuclear power plants. that's one that's going to balance the budget tomorrow. [laughter] number two, 52% said the next one was acceptable either most completely or mostly acceptable to read only 45 said mostly on acceptable or totally acceptable. cutting federal assistance to the state government. in other words, just past the problem of long. i'm sure that's going to take. it's not cling to help tax the overall problem of the funding program. how about social security? and collapsing the acceptable

and unacceptable. it's acceptable to cut social security. 22% unacceptable, 77. k-12 education, acceptable. 22 acceptable, 77 as well. medicare, the federal law from health care, 23% acceptable, 76% on taxable. medicaid, the federal the from a health care program for the poor, 32 acceptable, 67% unacceptable. and 52% of people said it was totally unacceptable, totally unacceptable to cut social security. the didn't even say it's mostly on acceptable. now if you are a politician, sure, if you are an activist and want to balance the budget say it's the poll numbers distorting. they don't get what people think. if people know how serious the problem, make them say okay the alternative is bankruptcy or cutting social security and you might get into the seat cut social security. maybe. a lot of people ask these

questions and ask them in different language, but overall we have the same resistance. now put yourself -- pure the politician, you make yourself a liberal democrat, conservative two-party republican, i don't care, make yourself a moderate. even worse, make yourself a moderate and you get these kind of numbers and see ads on television from the interest groups attacking you no matter what to do and turn on the tv and the cable news and won't even mention the internet. it's so offensive. you see how difficult this is. when somebody like me comes up here and says how do we address this and deal with these problems and our immediate reaction is i don't know. it just seems as though we have to reach some sort of point, to the point where all of a sudden everybody throws their hands up and says it's greece we better do something tomorrow. i think we are still a little too far from the edge of the

cliff. we are getting closer to the cliff but i don't know if folks are looking down over the edge and saying we better do something to avoid that. one of these days i hope will happen. thank you. [applause] >> thank you. let me go first asking a question it is my perception policymaking in washington has really been driven by the crisis over the last ten years. i'm thinking sarbanes-oxley, even dodd-frank to some extent, clearly there will be some crisis that we change those attitudes and might prompt action in terms of our public finances and of course we hope it won't be a crisis of great nature but something we still hope to rally.

what that might be, do you envision something happening that may change the perception in the public opinion, in the political spectrum or we need to wait to become greece before something is done. >> i will take the first shot. t.a.r.p. was a crisis. congress generally waits for the crisis and permission. basically from the voters to act in a decisive manner. you go back and look at the crisis that is when you have seen a proliferation of the legislation after it was kind of things. there's very little reward in the political business for getting out in front of an issue. clinton on health care back in the 90's when they try to get in front of it and got punished so i think it will take a crisis and there's a lot of this debt its short-term debt, not long-term debt when you look what's out there. so it wouldn't take a trigger a

crisis just one day to decide the aren't going to buy the interest rates and they start going up and that could precipitate something. i was in the house for the t.a.r.p. code and i supported it. both times in the house and it took two votes to get it through. there was a reluctance on the right and left and if you look at that as a legacy vote it is not a political winner for members who voted for that. at this point it's like albatrosses where the members vote for that particularly in the republican primaries. >> i agree completely. if you look at the end of any session you have this frenzy of activity in the final couple of days. look at the sea are. the lid drag on till the end when they pass something. it's kind of the nature of capitol hill at the moment. it's hard to put together coalitions on the most controversial bills. maybe naming a post office is easy if you can find something

to the top particularly controversial but when you're talking about making big choices in terms of spending and winners and losers and the interest group activity on the hell no. i'm opposed of it, but it makes it very difficult to get the majority in the can you add the fact leadership has less clout with the members and the increased democratization in terms of political power, yes i think it will take a crisis. as long as that continues to be the incentive that is the way that they get that, it's predictable. >> how do you rate the newly electricity party members from congress in terms of their understanding of economics and the complexity of the federal budget. >> i don't know how you read some of the veterans on that issue besides my first year under the capitol dome as somebody came from a mother who brought up five kids and a full

scholarship to an hearse law school but how someone like me ever got there and then for about six months you look around and wonder how everybody else got there. when you start taking a look at the way that it works there's a lot of education that needs to be done. you have your committee chairman and budget chairman have a good grass-roots program but your constituencies are fuming a lot of this and this is difficult to come together with because even members to understand it represent certain constituencies and compromise is terri difficult in this political environment. >> i would simply add that members, particularly freshman know more about economics than foreign policy but it's a different problem. in terms of economics, they don't know, most of them don't know the feeling, they don't know the end of knowledge, the idea of economics they run their business, they from their family households this is the way we did in my house and my town, why

can't we do this the same way? is that an extensive sophisticated knowledge of economics? no but they come in with some instincts and some opinions may be the are right or wrong, but they have ideas on the economics said the come out on the foreign policy and they are just absolutely blank slates they don't want to talk about jobs and spending and things like that. >> before we pick on the freshman the didn't create this problem. the came as a result of the problems created by the predecessors. so in the one sense they're focusing on an issue that hasn't been focused on for a long time. it may not be policy wonks at this time, but they are reflecting a constituency that recognizes something is very wrong in the direction we are spending. >> i don't want to be seen as beating up on them but they didn't want to compromise, i

think compromise is important, on the other hand it is refreshing amazingly refreshing to have politicians coming to washington to say i said this on the campaign trail, to actually do come to them the size of the government deficit spending, these are huge issue is particularly to the freshman class, this is what motivated them, the size of government, some of this is philosophy, the size of government, but candidates over and over would say we decided to run because we saw how big the government was getting the first three months of the presidency, the amount of spending. 787 billion twist and it was in the automobile industry and the bailout and that frightened us about whether we could afford this as our country and they did lookit here up and made a connection and it's not an unreasonable connection that was

made. >> the 1 million-dollar question. given the major influence of the political contribution in the power of both parties, what changes should be made of the political structures? and what do you expect? >> i voted against mccain-feingold. i said that time all you're doing is eliminating the money the parties can raise and to look at the history of this country political parties have been a center for some, not a polarizing force in american politics and it's done exactly what we were afraid, it moved money to the extremes and a star of the parties at this point. you have two problems. one is the case of bulkeley that makes political contribution, free speech and individuals to spend as much money on their own behalf as they want and now that's been extended under the citizens united. we've run up against the first amendment. i like the virginia law where everything is disclosed. today you have millions of dollars of attack ads and we

don't even know who's paying for them. in virginia we allow everybody to contribute, in the income, corporations and devotee but you know who it is scandalous to convert to the voters and say look who's behind this person, now you can't even do that these are independent ads coming to campaigns where the candidates don't control their own campaigns. interest groups to. so it's gone away off the cliff at this point and i think conduct a full disclosure is probably the best way to go. i have nothing to add except a kind of feel like the genie's out of the bottle cry is that what comes out of the bottle? the genie is out of a bottle and it's hard to put back together again. how do we make this? how we make our conversations more civil, eliminate half of cable television and the internet. it's just not coming to happen so i agree with tom completely. making the parties stronger,

given the parties and candidates more control and more responsibility would be helpful but i want the decree to happen. >> on the political reforms would you favor having an independent commission redistricting for congress so that we no longer have the state's republican and democrat district and are more open to compromise? >> we have an argument in the political science community about what is redistricting and gerrymandering. is this a cause or a manifestation of the political polarization but it runs up against to things, one man one vote and the voting rights act which means you can't -- you have to pack minorities so they can do representation. what's translated to cpac minorities and democrats and so what's happened is you few have districts particularly in the south and urban areas degette

pact one-way by pecking minorities you make them less competitive. and from a partisan point of view so it is a very difficult situation. i was a great plan where they draw the lines you have the redistricting commissions and i don't know i would want to make recommendations in terms of how you do it best, in my case of virginia when the lines were drawn in 2002 my wife was chairman of the state committee that drew the lines and troup fire lines so i kind of like that system. [laughter] >> let me just add that the redistricting is inherently political, there is no right way to draw a line so i was always somewhat skeptical of the nonpartisan commissions. i naturally changing my mind and warming to them because of the ridiculous abuses in drawling

the ofs herd districts, and i think a requirement of contiguous districts would help things, but frankly i would like to try and fight scene political scientists are due to have open primaries and to keep voters who are soft partisans and independent to pick. that might help candidates in the center but we do have a problem in terms of where people are living now increasingly and i think a couple of years ago they had a piece on this people were kind of living within their own kind of folks so it's not surprising you have red areas and a blue areas and it may be hard to get anything those districts. tom, what do you think? >> i like the open primary. i've always liked getting more people in the primary. why cannot the caucus and had to

fight my way through a republican caucus which was tough for me but managed to do. so i think california has interesting numbers. it's kind of like a jungle primary or the top people go to the general it could be to democrats, to republicans instead of having to cater to the nativist in the party just to get nominated now. what's happened the last couple decades is moderates in both parties and have become independent. the largest registration group is independent, not republicans or democrats but haven't picked up market share. independence picked up and allow them to vote and participate in the primary process which in many cases means the election, would be the best thing you could do. >> suggest to give a quick example or to the last election you have evan bayh retire, you

have judd gregg, i consider him a pragmatist who know more about the budget than most republicans and this time kent conrad, joe lieberman retiring, lugar who was likely to face a very, very i don't know if i used enough to be difficult primary so low of the guys that tend to be in the middle who are defeated if blanche lincoln and the general election and tom talked about the party sorting out it is proving to be a problem. it's hard to compromise when you don't have anybody in the middle. >> unfortunately we are out of time that please join me in thanking the speakers today. [applause]

the national association for business economics also heard from dennis lockhart president of the federal reserve bank of atlanta. this is 45 minutes. >> welcome to the spring policy conference, my name is richard, associate dean at the school of business at university colorado, and i'm proud to be serving as the president of naep this year. i want to thank you for attending the conference. i think we are going to have an outstanding conference and have an opportunity to hear wonderful speakers. i second we want to thank the association for the university business economics research for coasting the conference who appreciate their support. there are cards on the seats for

asking questions, comment cards so guilaume if you to ask a question we found this to be much more efficient way to get questions at the end of the session so we are going to be doing that at the plenary sessions, not at the breakout sessions with the plenary session as we go through so please prepare your questions as the comments are going on. it is indeed my privilege to introduce dennis lockhart, president and chief executive officer of the federal reserve bank of atlanta, his district includes florida, georgia, alabama and parts of tennessee, mississippi and louisiana. as a voting member of the fomc this year he brings a business person perspective. early in his career he was with citibank for 18 years spending much of his time overseas although he was in atlanta for ten years serving as the senior corporate officer in the southeast. so obviously he brings to the fomc a deep understanding of the openings of finance and banking, how banks work, how successful

deals are structured, the difference between good loans and bad loans. it's a good thing, too, this experience because he joined the atlanta fed in march, 2007, six months before the greatest financial crisis since the great depression began. he also worked at heller international and management and before joining the fed he was teaching at georgetown university's law school of foreign service. he's a native of california, graduated from stanford university with a b.a. in economics and political science and has a master's degree in international studies from johns hopkins. mr. lockhart certainly brings a wealth of experience as a purpose and in the global financial markets and now as a public policy maker. ladies and gentlemen, please welcome dennis lockhart. [applause] >> thank you very much for that

introduction, mostly accurate which is the best you can expect. early on monday morning i want to thank naep for the opportunity to address such a distinguished group of economists. today i will offer my views on the current state of the economy and the outlook. i will comment on the appropriateness of the current stance of policy, monetary policy for this outlook and the range of possible scenarios around my outlook. and i will end by discussing the policy had a strategic level and offer my thoughts on a policy framework for the near and medium term. i know you are all aware of my need to issue a disclaimer. i am not speaking for the federal reserve or the federal open market committee. my remarks today reflect my personal thinking and may not be

shared by my colleagues on the fomc or the federal reserve system. today is likely the last day you will hear from the fomc policy makers for a few days. fomc participants generally refrain from speaking publicly about the macroeconomic outlook and the near-term monetary policy the week before meetings, and the next meeting is a week from tomorrow. since you might say i'm getting in the last word here, i also want to emphasize i have a few more workdays ahead of me involving the data review and collections, collection of the opinions of my staff, directors of the federal reserve bank of alaska and business contacts. all of this is to finalize the point of view that i will take to the committee next week. i don't go to the committee with an absolutely rigid position and

i find my views are often influenced by the rigorous discussion at table. please take that as a second caveat. it's also worth mentioning my staff and i don't rely exclusively on the data to form our opinions. because the sixth federal reserve district is a pretty significant portion of the national economy and resembles the national economy in an industry composition, we go to great lengths to generate grass-roots economic intelligence that supplement our analysis of the incoming data. so to the economy, my assessment of the state of the economy and the outlook is pretty mainstream in terms of gdp, gross domestic product growth, the economy is demonstrating moderate strength and the pace of growth is accelerating somewhat. the spending components of gdp

heart-rending positively. personal consumption overall is growing briskly even while the savings rate continues at a healthy level and households continue to deliver it. retail sales including although are growing at a solid pace just a little below the total retail sales including auto. and importantly, consumer confidence appears to be gaining strength. industry activity, industrial activity has been strong in recent months. industrial purchasing managers reported accelerated activity in february. the proportion of managers reporting improved borders is at its highest level in more than six years. anecdotal accounts of manufacturers in my region of the country in the southeast confirmed this picture.

business investment on equipment and software, a bright spot for most of last year slowed in the fourth quarter. but the january orders for the capitol goods were consistent with forecasts for another year of solid growth in business spending. exports which expanded strongly in the fourth quarter should also be a significant contributor to final demand in 2011. the housing sector unfortunately remains a soft part of the picture of the otherwise encouraging picture. house sales are still recovering and the inventories although down from the peak relative to the sales remain elevated. prices of homes are still falling at the year end and may still be seeking the bottom. residential construction picked up little in january but remains

very weak. in sizing up the likelihood of sustained growth, it's useful i think to compare early 2011 with early 2010. it is true that gdp growth was slower at the end of 2010 than at the end of 2009 and will likely be somewhat slower and the fourth quarter of this year relative to last year. despite that, i have more confidence in the fundamental strength of the economy than i did a year ago. a year ago the handoff between public sector stimulus and private demand didn't occur as smoothly as anticipated and some of the growth in the early part of the year was clearly borrowed from leader in the year. in addition, the gdp statistics at the end of 2009 and the

beginning of 2010 were dominated by changes of inventory. in contrast as 2010 ended, changes in the inventory exerted the significant drag on gdp growth. unlike the beginning of last year recent gdp growth has been dominated by strong growth in the private final demand. the stronger growth in consumption and investment by households and businesses along with a stronger demand for exports gives me more confidence that in the sustainability of economic activity than i had at this time last year. my view on inflation also fall on what i would argue is the tendency of economists and professional forecasters. but of course on this element of the economic picture there's more divergence of opinion.

here's the situation as i see at. there has been some acceleration of headline consumer inflation over the past three months mostly coming from food and energy prices, the core inflation has also firmed. in my opinion is not on designer. it puts the recent trend in a zone around 2% or all little less that most federal policymakers consider in of line with our congressional mandate for price stability and maximum deployment. policymakers generally don't like to see inflation dipping too close to the zone of the deflationary that is declining prices and wages. today in reaction to the rise in the headline inflation there is considerable public concern that this recent rise just represents chapter 1 and consumer inflation

will accelerate from here. i do not expect that to happen. the producer price inflation is on the minds of many in the business community. throughout the fall, we were not hearing business contacts claim much if any pricing power. now however we are hearing some of our business contacts expressed conviction that they can push through price increases and plan to try to do so over the course of the year. that said my sense of the moment is there still is concerned and the demand is fragile and pricing power to limited for most markets to take extensive price increases. to recap, one can't help but notice rising inflation in society among the business community as well as consumers

based on recent experience highly visible and highly publicized commodity prices. so for the society has not translated to the loosening of the inflation expectations. readings of the treasury inflation protected securities market indicate the longer-term inflation expectations are holding steady. but my concern is broad inflation worries even if in reaction to what are probably temporary what if price movements could shift and cut loose inflation expectations. ..

wage accommodation of rising prices has the effect of institutionalizing and embedding inflation, however, i do not at the moment see widespread wage pressures developing at any time soon in the circumstances of upwards of 20 million people either out of work or working part time for economic reasons. as you know, inflation is one part of the federal reserve's dual mandate. employment is the second element of the mandate. certainly, friday's jobs report

was encouraging particularly considering the january report that involved so much noise, but in my opinion, it is premature to declare a jobs recovery firmly established. i continue to hold to the view that achieving something close to full employment will take some time. last week, i spoke in tallahassee, florida on the subject of the nature of the unemployment problem. if my base case view of the future plays out, accumulating demand will favorably impact demand sensitive job generation, but i also think there will remain what i called a harder nut of unemployment that will come down only gradually, so to summarize my outlook, i expect a sustained pace of growth in the

range of 3%-4%. inflation firming to a trend rate around 2%, and gradual employment growth, and as i said, this is a pretty mainstream view of the future. where my views might depart a little from the mainstream is on the question of the range of plausible economic scenarios from this juncture. in thinking about an appropriate balance policy for at least the near term, it seems to me a critical question is whether the range of plausible scenarios is narrowing, that is certainty is growing or widening, that is uncertainty is growing. my view is that the range has widened. not a lot, not dramatically, but somewhat. for some time, my list of head winds and risks have encompassed

european sovereign debt, our own federal, municipal, and state fiscal challenges, house prices, and checial real estate. my sense of the balance of risk has shifted with the addition of unrest in the middle east and north africa. i began my banking career as rich mentioned over seas in the middle east in the 70s, and spent over six years in the region, so i have some predispositions as i watch events unfold. chief among these is an appreciation of how complex and unpredictable the situation is. i also constantly remind myself that seemingly distant developments can connect via unforeseen linkages and form a

downside trend. however, my forecast sees continuing improvement, but i admit to concern about growth downsides and price upsides. with the economic information i have today, my first inclination is to be very cautious about expanding asset purchases after june. given the emergence of new risks, however, i prefer a posture of flexibility as regards policy options. i will continue to evaluate the incoming information as much as possible with fresh eyes as ai approach each meeting and each decision. i would like to add i'm not one to nay-say the contribution of the large scale asset purchase

program two in getting the economy to its current encouraging position. i supported the decision to undertake lsap2. i viewed it largely as a defensive measure to avert a double dip, take any inflation prospects off the table, and reverse the direction of what were at the time falling inflation expectations. it's hard to claim causation, of course, but i think the policy helped achieve a favorable positioning of the economy for sustained expansion. let me now offer some thoughts on a framework for policy decisions in the near to medium term. as background, i'll explain the technical rational of my reserve bank in supporting the scope of lsap2 last november. through the summer and into the

fall of last year, our internal forecasts at the atlanta fed were calling into question whether the policy stands at the time assured progress toward the committee's growth and price stability objectives. in more normal times, these circumstances would have prompted a cut in the c target for the federal funds rate. this would or would have been the prescription of the so-called tailor rule which relates policy rate moves to forecast misses on the fed's sustainable growth and stable inflation objectives. cutting the policy rate is obviously not feasible when the federal funds rate is already as low as it effectively can go. we did, of course, have in hand the experience of lsap1 and at

least some evidence of how those purchases affected longer term market rates. the research suggested $600 billion purchase program would equate to about a 75 basis point reduction in the federal funds rate. such a policy move to me was an appropriate response to the clear weakening of forecasted progress toward the objectives. i want to highlight the analysis character in practical effect of traditional monetary policy using interest rates and the less familiar asset purchases tools that we've employed since the federal funds rate hit its lower bounds. i believe we have operated for at least a decade with a consistent and fairly well understood rules based

framework. it is within this framework that i will think about the desirability of lsap 3 and the inevitable exit to a less accommodative policy stance. a year ago, the exit plan was a focus of much discussion, but a soft patch in the middle of the year put it on the back burner. even though i personally am not expecting an immediate need to implement an exit, i think it's fully appropriate to revisit the implementation assumptions and tools readiness. as i con tim plait -- contemplate an exit, two obvious questions come to mind. when will it be appropriate to undertake an exit, and how to implement the exit? judgments regarding when to change the direction of policy are difficult, and a lot of thought and energy is devoted to

getting it right. by employing a forward-looking tailor rule framework, when to exit is not particularly bewildering as a problem. con -- upward surprises in gdp growth, unemployment growth, and inflation would certainly argue for implementing exit strategies sooner rather than later. it would be nice if we were to find ourselves in circumstances in which the large buildup of the federal reserve's balance sheet could be unwound passively over time. passive unwinding would be accomplished as the securities of the first and second purchase asset programs mature. as i said, it would be nice, but

i think it highly unlikely such circumstances will prevail. in balance sheet terms, it would resemble something like the current policy posture for several years. since i consider passive unwinding probably not feasible, we will have to decide when to implement an exit strategy. though the answer to the question may be clear in concept, the timing of when to execute an exit plan is not completely straightforward in practice. flags in the effect of monetary policy mean that action generally needs to be taken in advance of definitive changes in the path of economic activity and prices. that is why the policy framework i'm describing emphasises a forward-looking construct that the fomc would simply react.

this depends on forecasts which by nature are shaped with a somewhat shady crystal ball. and and my staff will be scanning for signs that -- and i'll state this in positive terms -- our growth projections are remaining on track, and resee consistent progress in the area of employment growth and falling unemployment, and first and foremost, we will be looking for signs of price pressures that are likely to build in the absence of some tightening of monetary conditions. what will those signs be particularly with respect to inflation? we will certainly continue to monitor the usual forward-looking indicators. among these indicators, my staff and i especially watch the more

refined measures of core inflation. for example, we'll monitor the median or trimmed mean measures that have shown to be better predictors of headline inflation over medium term horizons. we will certainly want to look at measures of inflation expectations particularly those based on market bets such as forward break even rates derived from tips yields. and we will certainly continue to monitor the measures of basic cost structures that businesses confront such as movements in labor costs adjusted for productivity growth, but we have started thinking a bit outside the box as well. at the atlanta fed, we begun monitoring a so-called sticky price index derived from subsets of consumer prices that change relatively and frequently. the idea is that businesses

which only periodically change prices have a big incentive to make pricing decisions that incorporate their best guesses of how prices will move until their next opportunity to adjust prices. like tips based measures, the sticky price index will give us a measure of inflation expectations derived from people making real decisions in markets. unlike tips based measures, the sticky price inadvocacy focuses on -- index focuses on signals from the product markets that we ultimately care most about. now, as to how to exit. there's been a great deal of work on the tools for the exit strategy since the beginning of last year, and those preparations have been well-documented in fomc minutes and other fed communications.

briefly, the implementation of the exit strategy would involve a combination in some order of increases in the federal funds target rate supported by increases in the interest rate paid in excess bank reserves. the locking up of reserve balances through term deposit arrangements with banks, and open market reverse repurchase operations, and finally, at some point, outright sales of assets currently held by the federal reserve banks. it's the right time now to review and refresh those plans particularly now that we are in the latter stages of lsap2, but i think that the general approach remains workable. finally, as an element of a framework for the near term, i want to push the notion of

renewed focus on monetary and credit aggregates. the anxiety about the large size of the fed's balance sheet revolves around fear on balance sheets that are idle coming on the sidelines. if those balances get in the game faster than the economy can ob cosh them -- absorb them, there's consequences. i find it hard to imagine circumstances in which the credit channel would heat up so fast and in such volume that broad money creation gets away from the fed's capability to drain liquidity, but precautionary monitoring is certainly warranted. in recent history, there has not been much attention put on monetary aggregates. i would argue this is not because economists and

policymakers have boppedded belief -- abandoned belief in the long term relationship of money and inflation. instead, monetary measures have not phak -- have not factored into policy discussions for quite some time because fluxuations and money milt pliers and velocity made money measurements illusive. it's been such a force that forecasting methodology based on money price level growth connection came to be viewed as unreliable for policymaking. it's worth remembering, however, it was paul's return to a focus on money growth that led the way to defeating the great inflation. the vulker's success led to a

period of controlled inflation reaching through decades. one closing thought, he took extraordinary measures in response to extraordinary times. he was able to do so because the bedrock principle of central bank inexcellence in the formulation of monetary policy was respected. the event issue unwinding of the necessary, but historically up precedented monetary accommodation of the last three years combined with the requirements of fiscal adjustment make for a new and quite extraordinary circumstances. fed independence on monetary policy remains an essential future of sound economic policymaking now as before. with that, i thank you for your attention, and i'll be happy to answer some of the questions. [applause]

>> our first question. we have the mic up. the first question is from wells fargo bank from dan van dyke. the reading of the data is working and excess reserves have risen less than the balance sheet. would you agree? >> did everybody hear the question? i'm not sure that the mic is working, but the question is from wells fargo bank. our reading of the data that qe2 is working and excess reserves are growing less than the growth of the balance sheet. was that the question? >> correct. >> the excess reserves have risen less than the expansion of the fed's balance sheet. would you agree? >> well, the balance sheet has

been growing with the recent lsap purchases add a kind of moderate pace from the $2.3 trillion that it reached after lsap 1, and i actually haven't looked at the relationship of the growth of reserves specifically to the growth of the balance sheet. there may be some reserves shrinking occurring as the economy picks up, so i have no reason to argue with that point of view, but i'd have to look at the data specifically. >> thank you. can you give an example of a sticky price and say why it might deserve more attention than a change in other prices over the same time period? >> good question. an example of a sticky price that might deserve more attention. a lot of services and service contracts are built on a fixed price, even sometimes in a very

inform mall aspects of the economy, and because there's a service relationship often reluctance to raise those prices, so i would look at the category of service contracts particularly that only periodically get adjusted for underlying costs. >> some members of congress proposed narrowing the mandate to a single focus on price stability. do you have a view on this proposal? >> well, the question, of course, relates to whether the dual mandate should become a single mandate, and there's obviously, there are other central banks that operate under that kind of regime. you know, i'm really agnostic on this subject. i don't think the dual mandate involves certainly over any extended period of time a conflict between objectives and

we essentially -- we do what the congress tells us to do in terms of objectives, so i'm not pushing for a change nor am i necessarily one who would argue against the change. >> the last time the gasoline prices were below a dollar a gallon was in march 1999. prices are up 270% from then. it just so happens the monetary base is also up 270% over the same time period. is this merely a coincidence or is money a dominant factor in price inflation? >> i don't hold that monetary policy has been a dominant factor. i think much of the commodity price inflation if not the great majority of it is based on fundamentals, supply and demand phak ors, or as we've seen in oil prices, based upon the

geopolitical developments that have a tendency to drive prices when there are concerns about the future flow of oil, particularly out of the middle east and north africa, so i was told the commodity prices as i said in the armyier remarks that we have been concerned with recently are largely driven by fundamentals. >> thank you. you listed four exit strategies in order, fed funds rate, ect., repossession of assets, ect., is there an order in your mind in >> that's a good question. is there a chronological order? i don't have a fixed chronological order, although i think we'll have to be doing rate moves and some of the more

temporary immobilization of reserves before we get into a longer term process of asset sales, so i would see asset sales coming later rather than earlier. >> thank you very much. is the appropriate monetary response to a further oil price surge a tightening, easing, or no change? >> did everybody hear the question? [laughter] i was hoping you didn't hear the question. [laughter] give me a little more time to think about it. [laughter] >> want to take a pass for another question? there's lots of questions. >> in my mind it depend on how oil price surge plays through to the broad economy. if it plays through the broad economy, and i think there's quite good research on this, in a way that portends a recession, then i would probably take the

position that we would respond with some loosening or some easing. >> okay. just a little bit longer question. given the risks of geopolitical eruptions will not be resolved soon and entry prices remain high, this will make investors skiddish. the question is with qe2 ending in june, do you think there's enough private liquidity purchases cmbs's and so on in terms of what's in the marketplace? >> well, that's a question we'll evaluate closer to june, but i think the trend line is encouraging and gives me confidence that we'll be able to make the transition to a private demand and for that matter, liquidity in the markets being sufficient that the economy will be able to continue on a

sustained basis with a moderate level of growth without any further action, so i see a situation developing. now, admittedly as i said in my remarks, that's a narrow review based pretty much on looking at the economic data and the performance of the economy recently and much of really a domestic framework, and there are see yo political -- geopolitical risks that points to that i think are wild cards, and i call them wild cards because i can't predict how they'll play out and maybe affect the economy. as i say, i have a wider rather than narrower range of plausible scenarios that could affect the economy, and i think we sort of have to remain flexible and

vigilant to be able to deal with those. >> thank you. financial speculations seem to be at the base of the system. do you think this low interest rate policy is currently creating financial speculation? >> well, one person's speculator is another person's investor. i think low interest rates clearly are funding cost advantage to investors. the global cost of capital when you take all the major currencies is relatively low. i think that certainly makes money cheap for investors who are looking for some kind of an arbitrage or whether that be great arbitrage or currency arbitrage, but whether that is feeding some of the broad concerns related to prices, as i said earlier, i don't think it

is the dominant contributor. >> thank you. this is a related question. in terms of monitoring the situation, with the fmoc be looking at the asset prices in the stock market going guard? >> we monitor all prices as part of the regular normal process of watching the economy and clearly, equity prices are among the prices, among the financial instrument prices that we have to follow. >> okay. what do you think the feds should do about pricing the large amount of mortgage related securities on its ambulance sheet? -- balance sheet? >> well, the agency notes, of course, when we did that was unprecedented. it roadway mains deremains a significant and declining factor

on the balance sheet, declining now with passive terms and maturities, and ultimately, sooner or later down the road some process of divesting of those as set -- assets has to take place as part of a broader asset. >> with the naming of john williams as the new president of federal reserve bank of san fransisco, you, mr. lockhart, are one of the few with experience in the private sector. what are the business views on the economy? >> depends on whether you speak to someone with an academic background or someone -- [laughter] first, let me say i got an e-mail from john williams this morning in response to my congratstory e-mail over the weekend, and he pointed out, john's of course a ph.d. economist and has a different

background than mine. two people born in the valley of california are on the fomc. this is unprecedented. i want you to know. [laughter] all the people should be proud that two of us have made it. [laughter] if you are from that part of the world, you know why we should be part; right? [laughter] i think it's healthy to have a mix on the fomc. we have -- i have, you know, i have in colleagues who are ph.d. economists who pursued their careers largely in the economics professions or in the academic world or in the federal reserve, and they, of course, bring perspectives to the table that i don't have or at least not deeply embedded in my mind, and i think the few of us who have business experience try hard to bring perspectives that

are supplementary to those, and one of the things i do across the southeast is i talk to a lot of business people. admittedly this is all apt dotal -- ant doal in terms of input, but it provides texture and immediacy to the views of what's going on in the economy, and i think that background helps. i also have international background which relatively few have, and everyone once in awhile there's something i can contribute that might not be so obvious to someone else, so i think it's healthy to have a mix, and there are, i'd say five -- four or five of us, i think, who are not economists and bring that background. >> squeezing in one last question relating to jr. international -- your international experience. how close do you think the situation of the u.s. economy is to japan's case?

>> the thrust of the question is how close are we to a downgrade, is that basically the question? >> that's what they were asking, yes. >> obviously, i'm not commenting on that. that's for the rating agencies to determine. what i will say is we -- i feel we should not assume things that have historically been viewed as unthinkable are not possible, and that means that we really have to, i think, focus on the country's financial affairs and ensure that the treasury remains the aaa asset that it is. >> rich, thank you very much. [applause]

>> in a few moments, the counsel for public affairs hears from white house senior adviser, valerie jarrett. in a half hour, senate floor discussions on cutting federal spending. after that, part of a news conference with the chinese foreign minister. later, a forum on politics and the federal budget. gr president obama's fy12 pujt -

>> the jewish counsel is holding their national conference in washington. they heard from senior adviser, valerie jarrett. this is a half hour. >> thank you. thank you. [inaudible conversations] it is rather amazing the members of the group are increasingly

better behaved. [laughter] it takes far less to quiet people who are felt to often wish to be heard which certainly is something that characterizes all of this in this room. our session of the view from the white house is anticipated by everybody in this room. we are pleased to have with us today valerie jarrett, senior adviser, very young senior adviser to our president, and before i introduce those who are going to introduce her -- [laughter] two things of note. one, the jcpa leadership has had an incredibly warm welcoming and important relationship with this

white house. the lines of communication could not have been any better than they have been, and i think that all of you should know that because that's very important to us and to the agenda of jcpa. [applause] this second, and perhaps more importantly, when i say go blue, valerie jarrett knows what i mean. [applause] [laughter] she came to the university of michigan as a law student, graduated with a degree, and we know the rest is a brilliant history, but to introduce her, i have to my right, susan who as you know is cochair of this and has done a marvelous job. we probably should give her

another round of applause. [applause] a member of our executive committee. our executive committee is a finite group of people, but we have the most recent addition to that committee, and one who i know is going to be incredibly contributory, and that is to my left, mark stanley who is from dallas and also chair of a legal committee. a round of applause for him -- [applause] notable that each of these people have special relationships with valerie jarrett, and therefore, i turn the microphone and the podium over to each of them. >> thank you. thank you, conrad, and before i do that, i want to recognize danielle bourn. she's at the white house and works with the president and does a tremendous job in supporting all of us with jewish

outreach at the white house. danielle bourn, thank you so much. [applause] thank you. it's really a special privilege to introduce valerie jarrett, and it's really difficult because you see her on tv, read about her, and you know so much about her. officially, she's the senior adviser and assistant to the president for intergovernment affairs and public engagement. beyond this title, however, the description of what her job encompasses is staggering. the items on her daily to do list involves a head spinning range of highly complex and diverse issues from the sweeping changes in the middle east that threaten the u.s. and is reality, to the challenges of the budget where the future of our economy and the current well-being of our country hang in the balance. in her work on the campaign which is actually where i first met her and in the white house,

she has been a compelling voice and a strong advocate for women and minorities in policy considerations informed by her years of experience as a female business leader. i'd like to bring up mark who is going to tell you a little bit more about our guest, valerie jarrett. [applause] >> i got to tell you a very important lesson i learned. in trying to decide who goes first in introducing valerie jarrett, and in negotiating with susan, never, ever agree to arm wrestle. [laughter] , particularly a left-handed arm wrestle. [laughter] valerie, i'm not going wikileaks, but i will use

wikipedia. she was brn in iran to my surprise. her broad knowledge of what's going on in the world was not just recent. you heard she's a graduate university of law school and stanford undergrad. she's very capable and qualified senior adviser. with so many issues of tremendous consequence happening right now, president obama's fortunate to have such an able and trusting adviser constantly by his side, and we're fortunate to have her here this afternoon. if i was a spy, and i wanted to find out who is the person to best channel barak obama, who is the person who could tell you exactly what the president's thinking, who is the best person to come from the white house to talk to the jewish community to tell us the truth about what's going on, it would be valerie jarrett. >> thank you. [applause]

>> thank you. well, thank you so much. good afternoon, everybody. it is a pressure for me to be with you this afternoon. i want to thank about susan and mark for that lovely dual introduction. you never know when your friends introduce you what they might say, and for my new best friend saying i was young, and to my other new friend, thank you for your leadership and the phenomenal job you're doing leading this terrific organization, and also to josh who i just met and i understand did all the work in getting everything organized, and he should probably get a round of applause for all of his hard work. [applause] i am just honored to stand here just as you have stood with president obama over his time in office particularly in the challenging times, and i thank

you for the bottom of my heart for your efforts. your hard work has helped the president do so much. for example, your efforts helped us repeal don't ask, don't temperature, the policy that deprived patriotic americans the right to serve the country to -- they love because of who they love, and we appreciate your efforts in that. [applause] you have brought much attention to childhood nutrition hosting 40 communities last year. at a time when 30% of our children are overweight and children in more than a half a million american families went without the food they need, you have brought a life of jewish values dating back to leviticus where farmers were encouraged to leave their fields to serve the

hungry to have the food that they need. [applause] president obama shares this value as well and it's with your help, last december he signed into law the healthy hungry free kids act of 2010 which including significant improvements to provide children with healthier and more nutritious food options, educate children about making healthy food choices and teach our children the healthy habits to last them a lifetime. this happened because of you. [applause] this issue is, of course, very near and dear to the first lady's heart as well, and her let's move initiative sets goal of ending childhood obesity in the next generation. we have also reaffirmed our commitment to end hunger in america in 2015. as many of you know, this is women's history month.

we were just talking about this before we came in, and just last week, the obama administration released a new report called "women in america, and it's the first report on the status of women since the commission of the status of women established by president kennedy and shared by elenor roosevelt in 1963, and i said it's time for another one, and we did one last week. [applause] we had a lot to say. the president understands the issues facing women today are not just women's issues, but issues for the entire family. the president's commitment to women was shaped by growing up watching his single mother who often had to struggle to make ends meet trying to balance the demands of a very busy career with the needs of her children. his grandmother who also helped to raise him hit a glass ceiling

while working at the bank, and his president supported the first lady throughout her career, and he is looking forward to watching his two daughters grow up in a world where they will be able to compete on an even playing field with all of the men. now, with two-thirds of all families depending on two working parents, when women make less than men for the same work or when women go into low paying jobs, it affects the whole family. when employers don't offer family leave or flexible hours, it affects the entire family. when families don't have access to affordable childcare and children end up with second rate care or spend afternoons watching the television alone, that affects the entire family, and every parent knows that they can't be productive at work if they are worrying about our children because, of course, that affects the entire family. our report on women shows us how the lives of women have changed

since 1963 giving us the evidence-based data we need to adopt programs to improve the quality of lives of women and girls, and we look forward to working with you as we put that empirical data into action shaping our programs going forward. i encourage you all to read the report, and we look forward to working with you in the months and years ahead as we improve the lives of women and girls. thank you for highlighting the need for civility in our public discourse. you and your civility statement signed by more than 1500 religious leaders across the country representing over 1,000 different jewish communities and organizations, part of a long tradition of jewish leadership on this issue from louis to ellie who had a the opportunity to meet in germany. as the president said in tucson after the tragic shooting, at a

time our discourse is so sharply polarized, at a time we are far too eager to lay the blame of all the errors of the world, it's important for us to pause for a moment and make sure that we're talking to each other in the ways that heal, not in the ways that wound. we look forward to the continued advocacy and working with you on the issue of civil discourse. it's clear from partnerships that we have forged to tackle so many challenges that our relationship is expansive and rooted in common values. these values extend to our steadfast support for the nation of israel which i know -- [applause] which i know is a particular concern during this period of upheaval throughout the middle east. just last week, i atepidded the

meeting between -- i attended the meeting of president obama and major jewish organizations. i had the pleasure of sitting with steve who asked the president a very thoughtful question about our efforts to bring democracy to the region. it was, i think it was a session among friends, among family, as we said, and we appreciated the open and frank dialogue. at the meeting, the president made it clear throughout this period of unrest, we have been consistent in rejecting violence, calling for respect of universal rights, and advocating on behalf of a process of meaningful reform that is responsive to the needs of the people. these are universal values, and the president will withhold them everywhere as he's done from egypt to teheran to libya. he'll ensure that the process of transition is orderly and stable

and that the region evolves in a way that advances american's interests including peace between israel and her arab neighbors. the president has also made clear that while the region evolves, some things will never change. among them is his unshakable support for israel's security. [applause] his opposition to take any efforts to delegitimize her or to not secure the future for arabs and israelis alike. [applause] we know that the status quo in the arab world is not sustainable, and either is the status quo in the search for peace in the middle east.

we need to find a way to ensure that direct negotiations have credibility and purpose because this is the only way to resolve the conflict. the jcpa has been an important partner with the administration in these efforts, and we're going to continue to need your support in the weeks ahead as the united states continues to explore how to move forward with our israeli, palestinian, and other partners in the region to let us continue to work together closely to ensure a future for israel that is secure, prosperous, and peaceful. [applause] now, on a whole range of topics, it's clear we share common values, and through those values, we also share common goals. one of the most important is the jewish notion of padora, generation to generation.

the idea that each generation has an obligation to make life better for the next generation. the president describes this as winning the future for our children, and to do this, he has explained how we have to outinnovate, outeducate, and outbuild the rest of the world. these three goals are essential to growing our economy. over the next several years and keeping our country competitive in an increasingly global market place. i want to take some time to discuss each pillar of innovation, education, and infrastructure with you. first, innovation. to ensure growth, we must continue to innovate to create the jobs and industries of the future by doing what america has also done best. investing in the creativity and imagination of our people to create jobs and industries of the future. this is our generation's sputnik

moment, and the president is calls for the highest level of investment for research and development since president kennedy launched the space race. one of the most exciting areas of innovation is in clean technology, and you have been leaders on this issue for some time. thousands of you work to engage the members of congress on energy reform, and president obama has set the goal that 80% of all electricity will come from clean energy sources by 2035. the president is also challenging american scientists and engineers to invent new technologies to ensure that the united states is the country to put a million electric vehicles on the road by 2015 and make solar power as cheap as electricity by the end of the decade. we thank you for your efforts in that as well. education. one of my favorites because i come from a family of educators. i know education is a core

jewish value, and we're going to need your help to make sure that we give our children the best possible chance to succeed. this is an essential part of sustained growth in our country because we know that over the next five years, nearly # 0% of -- 90% of jobs require more than a high school diploma and a quarter of our nation's children are not even finishing high school. to win the race to educate our children, the president wants to expand race to the top, a successful program he began with arne duncan and employee teachers in engineering, science, technology, and math and make permanent the american opportunity tax credit worth $10,000 for college. we also know there's bipartisan support for this approach. just last friday, the president visited miami central high school in florida, accompanied

by former jeb bush where they highlighted the benefits of investment in education that can make not just one school or one community good, but for the whole nation, and tomorrow the president will be traveling to boston to visit tech boston academy where he's joined by me linda gates to prepare the next generation of young people to compete globally. as it relates to fostering college going effectiveness for students, teacher reforms, and dliffing curriculum that innovates technology across all subjects. infrastructure or building as we like to say. it's clear that innovation and education are essential for our future growth, but we also know that attracting new investments by business depends on whether

we have the fastest and most reliable way to move people, goods, and information from roads and airports to high-speed internet, so we must also put more americans to work rebuilding our roads and bridges and transit, and we need to do it by encouraging competition and leveraging private resources instead of trademark -- instead of the tray additional earmark process. we need to have 98% of wireless to all americans, and exciting new initiative the president recently announced in michigan. the president is commits to getting the federal deficit under control, something we hear a great deal debated in the news today. [applause] good. we have to cut spending, and those cuts are inevitably going to be painful and challenging particularly as the fragile economy is just coming back. as well, he proposed a freeze on

domestic spending for the next five years and a freeze on federal pay for the next two years allowing us to reduce the deficit by over $400 billion over 10 years. these changes alone will bring discretionary spending to the lowest level since the eisenhower administration. however, that's still not enough, and we'll continue to work with congressional leaders on both sides of the aisle to try to tackle our deficit, but while it's important for the government to live within its means, what we cannot do is sacrifice our economic recovery in the process or jeopardize the future of our children by gutting innovation, education, and infrastructure investments that are so necessary to keep us competitive. [applause] we need to remember what's important, and we need to prior advertise. as the president as said, this is something that families all

across america and those of you in this room have to do every day as we try to do more with less, maybe we don't eat out as much or go on vacations that were as great as before, but we still have to invest in our children's education accounts. we can't sacrifice the future in tightening our belts. that's what our government must do as well. the president is thankful for all of your hard work these last several years, and as we reflect on the important changes we've made together, let's also look forward as we ensure our nation's future will remain bright. the partnership in developing sound public policy is not the only way that we're reminded of the important work left for us all to complete. next month, jewish families all across the country will gather around dinner tables to mark passover, the period when we reflect on jewish people exiting

from egypt. families gather with their loved ones and read the lines discovering how each generation should feel as though we, ourselves, were slaves in the land of egypt. as an african-american, this lesson is particularly meaningful to me. the passover dinner has a unique lore in my family. many, many years ago -- many, many, many years ago because i'm not as young as conrad said i am -- [laughter] my parents hosted a dinner for my jewish friends. my father told me my great grandfather was jewer. what a wonderful surprise for my friend and for me. i had no idea. [laughter] passover has been a special holiday for me from that point on. it's a holiday that's important to the president as well. one of my favorite stories from the president's campaign took place in the spring of 2008.

a group of young aids traveled with then senator obama, a group of young aides traveled with him, and went to a basement of a hotel in pennsylvania. i salespeople to remember there was -- i seem to remember there was a cheerleader convention going on at the same time. [laughter] away from home, some of the aides for the first time, they marked the holiday as best they could with makeshift plates, and it was quite something. when the then senator learned of the gathering, he decided to participate, and i joined as well. he, too, had attended many dinners back home in chicago and was very familiar with the passover story. even though we were all exhausted and wondered if a campaign would ever, ever end, that evening turned out to be so much fun and so special. we sank. we had some wine.

[laughter] and we took a moment rest from the campaign. the president invited the staff to share stories about their family traditions, and we learned so much about one another, and we formed a very special bond that evening with each other. there was also a very serious lesson underlying that dinner. the same lesson each of you celebrate with your families, the idea that a better tomorrow awaits, a belief that the future can be better if we work at it whether it's the israelites fleeing egypt or praying or peace or struggling to make ends meet since the worst recession since the great depression. ..

course the president included the first lady and their daughter said he could share the traditional this family as well. we now enjoy to in the white house and are looking forward to this year. it remains one of my most cherished evenings of the year. so as we all gather around the table next month let's remember to keep the teaching expert this close to part. let us reflect on all the important dillinger is that we've tackled together and

commit ourselves to in the future for the next generation. thank you for inviting me today and now let's get to work. [applause] [applause] >> you can sit for a second. you don't have actually get to sit. [laughter] you mentioned that this is an honor of the child nutrition but we aren't going to stop the story because this year we're going to do on behalf of hunger in america everywhere, and we thank you for moving forward. i want to tell you we love you

to begin with but now that we know that you're part of the extended family this is amazing. [laughter] >> i told them i had a surprise. [laughter] >> this is a big revelation and will probably be in the headlines of the new york times. more than that, you talked about from generation to generation. but what's really important is what is passed on generation to generation and we passed on many things probably most important something we called justice, and you reflected in the words and the life and very meaning of the justice and on behalf of the entire group today, we have something we keep in our homes. it's called the and by the way it's more than just -- its more than just more than charity,

being a whole person yourself and in jewish families around the country and around the world, people put money in this to give to charities said they are able to sweep wanted you to have this so you can do this with your family and presented to valerie jaret. [applause] >> thank you so much. [applause] >> this concludes the program. [laughter] [inaudible conversations]

there's a new way to get a concise review of the day's events, it's washington today on c-span radio. every weekday we will take you to capitol hill, the white house and anywhere news is happening. we will also talk with the experts, the politicians and the journalists as we put the defense into perspective. the stories that matter to you the most, every weekday from five to seven eastern time on c-span radio. you can listen in the washington baltimore area at 90.1 fm and

nationwide on xm satellite radio channel 132, or go online at c-span.org. it's also available as an iphone app and you can download the program every evening as a c-span podcast. senate majority leader harry reid is looking to have test votes on several spending bills early this week. one is the house passed republican spending bill cutting more than $60 billion through september. the other would also cut spending for this fiscal year by about $50 billion. over the next 45 minutes some of today's for discussion on the plans. >> ing don't think the spending proposed by the house is going to cause them on stateg government to.g states are making far more reductions in spending and that. the language, the majority

leader is using seems like to ma recall the old language of 1994 reckless republican spendinghe cuts and people thrown into the streets and that sort of thing but what happened in '94, and 94 the american people through thee newly elected congress balanced the budget in four years. they balanced the budget when people said it couldn't be done. they said that the spending reductions were going to destroy america and its growth and prosperity and everyone else they could imagine that they didn't have been. they have to create a period of. outstanding growth.e'red, tuesday we are told we will havy a key vote. it it's a very important vote because it deals with the levelt of spending this country is going to participate in and it's going to make an national

decision that's important.resota we passed a two week continuing resolution that reduced spendins by $4 billion over that period,e keeping us on track and made the house passed a goal of a y 61 billion-dollar reduction and spending this fiscal year. but there was a good small firse step, but the big step is coming upin i suppose a week from this friday. and we when the cr we just passed will. re