around pre-existing conditions and ensuring we end discrimination based on pre-existing conditions. the most popular element of the legislation, one of the areas there have been some bipartisan support but experts from across the range believe you can actually have a system of eliminating discrimination based on pre-existing conditions without an individual mandate because it essentially unless you have a system -- unless insurers have a large enough pool of people to be in the health-care system what happens is only the sticker people come in and basically destroy the full rates, prices for everyone and destroy the pool and so there have been supports for an individual mandate because of the importance to having pre-existing conditions requirements and create and many americans have felt that it is

wrong that we have pre-existing conditions that there is not a system of protection in all insurance markets to appraise the same conditions and so individual mandate was part of the reason this was put in which was to do that and i think that is one of the reasons why the act itself is conditional. people feel the argument is that it is the federal government has a role in creating protection, insurance protection in the insurance market to regulate extensively to expand this regulation to further the regulation to provide protection for consumers in every corner of the country exist pre-existing conditions with the need for an individual mandate which affected that insurance system and that is one of the reasons

why it is properly constitutional looking at the necessary proper clout at the foundation for the constitutionality of the commerce clause constitutionality of the law itself. .. >> decided to come in and say that when you are sick, you have a right to health care. they basically created a system where once people go to the emergency room and use health care, other people who have

health insurance pay for that. now currently both people and the private sector pay for that as well as people pay for that through their taxpayer dollars when their hospitals are reimbursed from the federal government. but that system is cost efficient. right now, if you choose not to get, you make purchases in other markets it doesn't really affect me ultimately. i mean, you know, it doesn't directly affect me. i don't end up paying for your health care. or for your purchase, your purchasing decision. what differentiates health care of other arenas is the fact that the federal government has chosen to regulate it in such a model, and the in these instances we have establish a right as health care actually, and that does create a different kind of role, that

differentiates it from other arenas. >> and obviously while this is significant is because of course as a constitution sets up his unique structure of government where congress has only limited powers, and the rest is reserved for the states. one of those powers that congress has is the power to regulate commerce. so this issue that we're talking about now, really the crux of it is, does congress in this case, does congress if it has the power to regulate commerce and economic activity which it clearly does, doesn't have the power to regulate economic inactivity? someone's decision not to buy health insurance, someone to stay out of the marketplace. the challengers of this law, particularly in florida, all of the other cases make the argument that no, congress can't regulate that passive economic inactivity, the supreme court

has never ruled on the case exactly like this. that's what you hear people saying its opponents of this law saying if congress can make us buy health insurance, they can make us buy broccoli. and what neera is saying and what the government argues is that this is different. this is not really a decision that people are making not to participate in the economy, to sit this out, to not spend money on health insurance because at the end of the day that's really not a real decision. everyone is going to need health insurance. so sure, while you may never need to eat broccoli come at some point in your life you will need health insurance. so that's how they're trying to distinguish this case and say that's unique. that's significant. that could well be what the future of health care reform turns on. so that little primer, roger, if you want to talk about the individual mandate is really, what the heart of this case is, but i'm also curious about your thoughts on whether or not and

you touched on this, whether or not how you would feel if the court just said let's just cut that out. we will sever the individual mandate and we will preserve the rest of this litigation. in the panel before us, it was suggested he would be okay with that and maybe you can respond to that, to come at some point. the judges split on that and the lower court. roger, thank you. >> if that's the way the court were to decide it would be all right with me because without the individual mandate, the rest would collapse and that's just fine by me. now, one of the reasons i wanted to speak from the podium is because i'm perhaps appropriately for the conference on health care just coming off a week of bronchitis. so i hope that i don't cost too much during the course of my remarks, and that my voice holds

up to the conclusion of my remarks. in any event, the legal battle over obamacare is not really about health care, or even health insurance. it's about freedom, about the right that each of us has to plan and live his own life free from the hand of government coercion. obamacare is the most far-reaching integration on that freedom that has come before the kind of nation in our lifetime. because it reaches every american in the most intimate aspects of our lives, and the decisions we make about our health care, turning those decisions over effectively to a vast sea of faceless bureaucrats in washington, and our states and in our local communities, bureaucrats or even as we meet here today are busy making out the regulations that will determine whether we will or

will not get the care that we and our families may want and need in the future. that's why so many constitutional challenges have been brought against this scheme, which was passed not with the wide support of the american people, but by closely divided partisan congress, resorting to the emphasis "cornhusker kickback," the louisiana purchase and other such shenanigans. and in the fourth of overwhelming public opposition that has only grown in the meantime as evidenced by the elections last november, the only poll that ultimately matters in our system of government. and as i turn then to that system of government, and to the document through which it was authorized, the constitution, it's no accident that we've heard so much about the constitution over the past few years. because those years, those years

have seen a massive growth of government at all levels, and nothing except perhaps a financial bailout has symbolized that growth more clearly than this scheme that has can come to be told obamacare because it completed, it will take over more than one-sixth of our economy. how is that possible? americans are increasingly asking. under a constitution that we designed for limited government, the constitution's principal author, after all, james madison, wrote in federalist 45 the powers of the new government would be few and defined. how can a monstrous scheme like obamacare arise legitimately under such a constitution? the answer is it can't. but it has and so the troubling question is, how has that happened? and the answer is that it's because we no longer live under the constitution, but rather under something called modern

constitutional law. not to be confused with the constitution itself. and the theory of the transition plays a crucial role in the devastating opinion that judge roger vincent handed down nearly two months ago when he found that obamacare was unconstitutional in florida, -- in florida v. hhs rob i know for the 26 days, to private individuals and the national federation of independent business which represents small businesses all across the country. i'll turn to that opinion in just a moment but first i want to develop very creepy the point i just made that we live today largely under something called constitutional law, not the constitution. in his opening address before this conference, david rivkin gave a something of an analytical account of that transition your gun going to offer more of a historical account. to do that, however, we have to

start not with the constitution but with a declaration of independence because that's what the american vision of limited government begins. in the declaration jefferson begins by placing us in the natural law tradition, the tradition that stretches all the way back to antiquity running through the roman law, cicerone in seneca, through the 500 year evolution of the common law, through the writings of john locke's second treatise, montesquieu's discussion of separation of powers, all of which jefferson drew upon when he drafted the declaration. in a vision that emerges declaration, it was one of limited government to secure our equal rights to life, liberty and the pursuit of happiness. it could be stated no more simply than that. each of us has a right to pursue happiness as he works his way through life, with government there to secure that right and do a few other things with authorized it to do. and that's the vision they took

with him in heaven years later when they drafted a new constitution to create a more perfect order. and we see that right from the preamble which places us right back in the state of nature tradition that locke wrote in a jefferson wrote the declaration, and framers invoked in the preamble when they started we the people for the purposes listed to ordain and establish this constitution. in other words, all power starts with the people. they give the government certain of those powers. the rest they retain. and then you look at the body of the constitution itself, and you will see the strategies that madison had. to once authorize come institute, empower and then limit the government that was created through the document once ratified. he began first of all by dividing time between the federal and state governments with most power left with the states, dual sovereignty as david rivkin refer to earlier today. he then separated power between

the three branches, each branch defined functionally, provided for a bicameral legislature, and independent judiciary, a unitary executive, provision for periodic elections to fill the office is set forth in the document. but the main restraint on overweening government, and remember, they had just fought a revolution to rid themselves of overweening government, took the form of the doctrine of enumerated powers. and i focused on this because it is at the core of the argument against obamacare. the doctrine of enumerated powers can be stated no more simply than this. if you want to limit power don't give it in the first place. you see it in the very first sentence of article one, all legislative powers herein granted shall be vested into congress. by application, not all power was herein granted. look at article 1, section 8 and you will see the 18 powers that were given to congress.

the power to tax, the power to borrow, the power to regulate interstate and international congress, and so forth. culminating in the 18th power, the necessary and proper clause which afforded congress means to secure those other ends or powers. and then you look at the last document from the founding period, the 10th amendment, and you see this doctrine of enumerated powers made express, the powers not delegated to the united states by the constitution nor prohibited by the states are reserved to the states respectively, or to the people. in other words, the constitution establishes a government delegated, enumerated and thus limited powers. and the ninth amendment makes that clear where as the 10th speaks of powers, the ninth speaks of rights. and it reads the powers -- the enumeration in the constitution of certain rights shall not be construed to deny or disparage

others retained by the people. and so we have both enumerated and i'm enumerated rights. remember the bill of rights was an afterthought. it was added to years later. does this mean we had no rights? vis-à-vis the federal government? during the first two years? of course not. the reason we had rights because the federal government had no power, and whether there is no power there is by definition a right. indeed this came up in the very rationale for the ninth amendment during the ratification debate. because it became clear during those debates in the states that the constitution would not be ratified and less a bill of rights were added. but there were objections, tuning objection. the bill of rights would be unnecessary, and dangers they said. unnecessary said wilson, hamilton and others because why declare that there is freedom of speech, for example, when no power is given with which to violate the freedom of speech. notice the doctrine of

enumerated powers again was the centerpiece of the constitution. moreover, they said a bill of rights would be dangers. why? because there are an infinite number of rights you can't enumerate them all in the constitution, by ordinary principles of legal construction of the failure to do so will be construed as being those that are enumerated are meant to be protected from those that are not. so that's what the ninth amendment was added. and so the vision that emerges from the constitution is the same one that emerges from the declaration. it's a world in which each of us is free to pursue happiness, by his own values, as he works his way through life, living life almost entirely in the private sector with government there to secure those rights and a few other things that we have authorized it to do under the doctrine of enumerated powers. and we lived under that more or less for 150 years, was a perfect to be sure. there was the doctor was openly recognition of slavery, the

framers wrestled with it. they thought it would wither away in time but it didn't. it took a civil war and the passage of the civil war amendments which for the first time provided federal remedies against state violations of our rights. that still it was essentially a limited government, including in the last decade, and early decades of the 20th century. the great watershed of course comes with the progressive era. at the end of the 19th century and beginning of the 20th century, from which such institutions and the one that neera serves, take their cue. the progressive era whereby there was a fundamental shift in the conception of government. the progressives rejected a vision of the founders and subsequent generations. their idea was not the government was a necessary evil. rather, it was an engine of good and instrument in which to solve all manner of social and economic problems. it was to be if i may paraphrase

the dupont ad from several years ago, better living through bigger government. and, indeed, they were looking to german schools of good government, bismarck social security schemes. they were looking to british utilitarianism which provided that law, policy et cetera was to be justified not with reference to whether it secured our rights but rather whether it provide the greatest good for the greatest number. notice the policy rationale as distinct from the principled rationale. not to secure right but rather to provide various goods and services. of course, the only thing that stood before the progressive agenda was the constitution and the willingness of the courts to enforce it, which they did for the most part during the early decades of the 20th century. but, of course, things came to a head during the new deal when the focus of the progress is now called liberals, shifted from activism, political activism, at the state level to political

activism at the federal level. and during the first administration of franklin d. roosevelt, after the court had found one policy after another to be unconstitutional because beyond the authority of congress to enact, roosevelt after the landslide election of 1936 unveiled his infamous court packing scheme, his threat to pack the court with six new members of his own choosing. there followed the famous switch in time, the court got the message and begin rewriting the constitution not the way the civil war generation had done it, through the article five procedures to amend the constitution, but rather by turning it on its head. and it did it into main steps. in 1937, it is rated the docket of enumerated powers. the very centerpiece of the constitution. and and 38, it bifurcated the bill of rights and gave us a bifurcated theory of judicial review. and with that the floodgates

were open to the modern regulatory state. i'll focus of it on the commerce clause because that's what's at issue here. the jones and loughlin case in 1937, the court held effectively that congress had the power to regulate anything that affected interstate commerce. of course, there's nothing that is at not levels affect interstate commerce and so now the floodgates were open to the modern regulatory state. congress however could not deal with all the legislation that was brought before it, and so in 1943 we had the third leg of the modern executive state when the court began to delegate to the executive branch the various legislative functions, that properly belong under article one section one, sense one, of the constitution. namely, all legislative powers herein granted shall be vested in a congress. they began delegating with the decision of 1943, does the

non-delegation doctrine. and we now have a modern executive state that we know and love so well today. with the agency's exercise legislative executive and judicial powers all in one branch, contrary to the instructions of montesquieu who was consulted more than anyone else as the framers tell us. and so we've essentially turns the constitution on its head, and that's how we have got to where we are today. but here's the crucial point that judge vinson makes as he outlined this history. that as far as we have gone in permitting the federal government to regulate all manner of activity, that might in the aggregate have some effect on interstate commerce, never has the supreme court taken that last step and sanctioned the government's regulation of inactivity. never has the high court said that the commerce power reaches

near mental activity. the decision to not act, yet that precisely is what judge kessler of the u.s. district court, the district of columbia have since done in her decision a month ago in another obamacare challenge. when she held that congress under its commerce power can regulate the mental activity, her words, deciding not to do something like buy health insurance, all without a shred of supreme court precedent to guide her, much less constitutional authority, which she admits, and that is how step-by-step we have abandoned our constitution in favor of modern constitutional law. crafted by judges, often under the political pressures of the day. well, judge vinson and before him, judge henry hudson of the eastern district of virginia, had stood their ground and they

are to be commended for it. they both said in their separate ways that their job is to apply the law. in this case, the law of the constitution. and as that law has been mangled over the years, as far as it has been stretched, it has never been stretched this far. to enable congress under its power to regulate interstate commerce to compel individuals to buy a product from a private as lopez and morrison, two casee clear, there are limits on the scope of the commerce power. nor will the necessary and proper clause help because that clause is parasitic upon congress his other powers. it affords congress the means to carry into execution those other powers or ends. it doesn't afford congress

additional ins. moreover, it affords only those means that are necessary and proper. and that was appointed judge vinson drove home repeatedly. a reading of the commerce clause in conjunction with the necessary and proper clause that renders congress' power effectively limitless cannot be proper, he said, because he issued a very structure and purpose of the constitution to limit the government that was brought into being through it. and so i return to where i began. this case is about liberty. it is only incidental about health care and health insurance. because obamacare individual mandate extend wishes the last break on limited government, the simple right to be left alone to do nothing. it must fail. failing which limited constitutional government itself will be extinguished.

thank you. [applause] >> thank you roger for the really quite detailed historical overview. and as roger makes a point, neera, we have a supreme court that really beginning in 1937, 42, really 50 years everyone pretty much assumed that congress could pass almost any legislation, that everything affects its commerce. and then as roger mentioned in the 1995 decision in the lopez case where the court in a 5-4 vote struck down a law that prohibited guns near schools on the same it's got to be will act -- economic activity than that and the morrison case in 2000. but you argue and the government argues this case obviously is highly significant to commerce. it's not guns into schools on.

its decisions on health care, taken the effect on economy, everyone will have to at some point have health insurance. so do you see this supreme court, i mean, i kind of what to look forward here, because this is a case of first impression. do you see this supreme court seeing this economic activity coming individual mandate is kind of a seamless look of congressional power? or do you think like roger does, that this is, in fact, -- i assume roger, we'll ask you that later. i will ask what think. >> first in terms of the supreme court, i do think that there are sort of a mix of conservative elements, and there's some conflicts in conservative thought in terms of how the supreme court will rule. i don't know how the court will rule. i always find it fascinating

that people discuss in detail how they think this court will rule. >> like pittsburgh was going to win the ncaa tournament speak of that's true. i find it easier to call it election than it is to call supreme court. and i actually like to believe that they are people who transcended their political constraints, though sometimes they challenge me in my theory. but i would say that there's two strings. there's a winning that has a sense of, you know, sort of limited government kind of perspective to the court, and then there's those that have shown a degree of deference to executive and congressional action. and i think that those issues are a little bit in conflict in this case. and we will see how the court rules. i don't presume to judge how

they will rule. there's obvious a language and raich that will point to one sector and if it was consistent with that language, it shows they congressional deference in these kinds of situation, then i would say we probably be free and clear. obviously, lopez and the more recent decisions make a distinction about using the commerce clause for all the economic activity. obviously, there will be i believe and a vomit administration is arguing -- the obama administration is arguing that such tremendous amount of economic activity is economic. so i think that the conflict. i would like to just take on a few are just address a few things that roger roberts. and i would say that i deeply respect the historical view he

has, the constitution, and the perspective of the constitution. but i would say that this argument around the 1930s lochner court, what i found very sort of interesting about this perspective on the exceedingly limited role that government has and how and adherent to a regionalism would find much of the modern economic state would be and regulations thereof as a modern economic state would be unconstitutional. i would say that we have now live with, unicom and my reckoning about 30 to 40 years of a conservative supreme court. we've had we've had nominees who are named from the conservativ conservatives, from conservative

presidents. one can argue that some of them may not adhere to rogers vision, but they are conservatives. and these courts for decades have chosen not to upend the lochner air decision-making. and in many of them adhere to a sense of a regionalism. and so i think that, that vision of the constitution, rogers vision of the constitution is one that is deeply, deeply in contrast and has been in contrast for hundreds of years. it's like the argument about america that is at the heart of this. now he can argue that progressives and i do come from the senate, i do work for the center of american progress, have an extra constitutional vision of the system of laws, constitutional decision-making

that argued that we have a living constitution that should to some degree acknowledge the realities of the world we live in today, and that the reason why the constitution speaks in broader language and it's not as restrictive and statute because our founders recognized that they could not determine what america would be 200, 250, 300 years from the time that a libyan. and so that those who argued for a broader constitutional perspective obviously limited by the text, and having some strong adheres to the text, but still to the degree that we recognize the fact the way people live is not the vision that is not respectful of liberty.

we define liberty, we may have a different vision of what that liberty means. for example, i myself personally believe that it is not respectful of someone's liberty interests that we argue that we live in a world where people, a person who is stricken by cancer, nothing, they did nothing, had nothing to do with them, they are just unlucky. they get stricken by cancer. they can never get insurance again. i believe it is not in that process liberty interest, or at whim of the market. and that when we lived together in a country we can make decisions that as a country, that is not right. and it is in the liberty interest as each and every american to say that we can band together and say it's wrong for insurance companies to do that. and, therefore, i believe it is,

in my view, it's affordable care act and protections within it, and protection for preexisting conditions are actually absolutely in the liberty interest of the american people. and what i find disconcerting about the conservative argument around us, and there are many conservatives who adhere to roger's vision of the constitution which is one frame, but there are others who have argued in other contexts against judicial activism, against the judges, unelected judges making decisions against those who are elected. and i find it, i find it surprising that that group, which again, i to rogers has held his views consistently, but there are a string of conservatives who have argued for a judicial deference towards

congress in many arenas, and have chosen that in this case that deference should go out the window. >> could have responded to some of -- >> just a minute, roger. >> just a minute because she gets to respond because you did kind of layout that you of the constitution that she doesn't share. but before you do, for those of you who don't really follow the intricacies of the supreme court commerce clause, jurisprudence, just to give you so you have something to hold onto while we're talking about this, the supreme court has undergone tremendous change since 2005. when it was headed by william rehnquist one of his great passions really was scaling back congressional powers. he thought it had gone too far. rehnquist really cared about this. federal powers vis-à-vis the states. so that's what we had that lopez decision in 1995 that blew the lid. people couldn't believe it. for 50 years without congress could do anything. then on com's lopez and just

changes everything. the chest boards -- chessboard pieces change. william rehnquist leading the court and sandra day o'connor at his side. she also care deeply. she's a former state legislator. she care deeply about those issues, too. we have an entirely -- who to say how they would rule on this? my guess was they would strike us. they would strike at that i feel almost confident. we have an entirely new system in court now. we don't know if john roberts cares about congressional power, the commerce clause like achieve justice can his predecessor did. we don't know how the justices alito will rule. we don't that justice kennedy, he is the swing vote liberal. we don't know how justice scalia will rule. you would think when you think of ritualism you think antonin scalia. talking about this. but in the medical marijuana case, and roger, i want you to respond to this, justice scalia

allowed federal power and was highly criticized by conservatives for abandoning originalism and conservatives said the only true originalism is clarence thomas. who would not have allowed the federal powers. so this is not i think, you know, mr. rivkin says he's optimistic and he thinks the court will strike us down. and maybe your optimistic they will uphold it. -this is just one of those that we have no idea what the supreme court is going to do. and they may well not know but i don't know. i know you out to respond to neera but i also want to get your thoughts on whether or not you see any clues what you make of justice scalia's concurring opinion in their raich? does that by tim? he goes into necessary proper clause in that decision and justice kennedy was also on the majority in the raich? do you see any clues on how this court to approach these issues

and come out? please answer that. i know you have speeded i don't see any clues because since the raich the roberts court has not had any enumerated powers? that is on all fours with morrison. and so we haven't had any true? that will give us an insight into that. the closest perhaps we can do that is the big campaign finance case in which the conservatives on the court held their own, drawing a blank on the name of it now. citizens united of course. and there of course they didn't stand the ground even is a popular way that came from congress and from mccain-feingold. i will just respond to two of the points that neera made in

her -- personal, she said that we have lived with 30 or 40 years of conservative supreme court, and they haven't done much to upset what she called the loughner era court. well, that is because the jurisprudence of the right has evolved for the last four years. it was initially a reaction by people like atkins can you to the judicial activism of the warren and burger courts of the late '50s, the '60s and '70s. but that reaction was only tepid. it went after the rights activism that the conservatives sometimes rightly, sometimes wrongly saw on the part of the warren and burger courts. it did not go back to the first principles of the matter, name of the doctrine of enumerated powers which had been lost in 37.

and so when i ruled from the justice department to the cato institute in 1988, one of my main goals was to establish the center for constitutional studies to address this. even before that a conference at cato held a 1984, on economic liberty and judiciary which i was even at the time serving in the reagan administration and spoke as well, we had a spirited debate between the two camps, the libertarian or classical liberal camp which obviously i come from, which was represented by richard epstein in a spirited debate with then judge antonin scalia, a d.c. circuit on economic. they both came out afterwards on that and it was a classic battle between the two sides. but that's an issue that i myself have been working on a long with bernie segan as early as the mid to late '70s when i was doing my doctorate at the university of chicago. and so there has been just

struggle all along, and since the early 90s when we here at cato, especially when other joints -- others joined us along the way started with the revival of the doctrine of enumerated powers, not simply the attack on liberal judicial activism, we have seen this yet on the jurisprudence of the right. there are many more people today who are calling for this fundamental return to first principles. and to the idea of reviving the doctrine of enumerated powers on one hand, and securing rights both enumerated and unenumerated on the other. so this is why you haven't seen the changes yet in the supreme court, except for outliers like lopez and morrison. but i predict that we will see more of this, justice thomas as a chance it is the closest thing we've got to that, and yet to see that all you need to do is read his concurrence in the lopez decision. the second point that neera made which i want to address is a

point that is more relevant to this discussion today, and, indeed, she states, and she and her colleagues in the response to judge vinson decision when she speaks of, and i quote, one of the insurance industries most abusive practices denying coverage to patients with preexisting conditions, abusive. that is simply an exercise of the insurance principle. you don't ensure known risks. you can't wait until your house catches on fire and then go out and buy an insurance policy. the very idea of insurance is to protect against unknown, unforeseen risks. not risks that are manifest. and so the reason that the company doesn't injure people with preexisting conditions, or if they do, charge them a premium for doing so, is because they are at greater risk than

those who don't have those preexisting conditions. and so we are not talking here about any abuse at all, unless you believe that people have a right to insurance at a rate that they think is appropriate for them as opposed to a rate that the actuarial tables will require the insurance company to charge in order to stay in business. and so, the idea that you can order a company to ensure that standard rates people with preexisting conditions simply undermines the insurance principle. i daresay neera wouldn't say that you should be able to go out and buy an insurance policy on your home once it catches fire. yet it's the same exact principle. here you can't go out and buy an insurance policy once you've got a preexisting condition at the standard rate.

this is simply undermines the insurance principle. now she was a but that's precisely why we must have the individual mandate. that gets us back to a constitutional issue. we are no longer talking policy anymore. we are talking the constitutional issue, and there i put forth the argument that will not wash, not at least as long as we have a constitution for limited government that prohibits government from ordering people to buy products from private vendors. >> just briefly. i guess what i am arguing is that it is proper for the federal government to say, because so many people have demanded it and it is obviously something that has, again has had bipartisan support, that it is, that people who have preexisting conditions should be able to get insurance. not at a rate set by the

government. not by a percentage, we aren't talking about for example, president nixon's wage and hours law. we are actually saying that they should be, they should not be substantially priced out of the market and that is the basis of modified community rating which has existed in the states. so what that means is that insurance rates go higher so that they can take into account the basic -- the fact they have a pool that conditions, that has people with preexisting conditions in it, but that we also believe that in a system where not everyone has health care provided by the government, for example, we don't have a single-payer system, in a system where private insurance that we allow, that we ensure that those people are not subject to the big reasons in the market and basically allowed not have health insurance, but they have health insurance. that is the decision i am

making. i'm not saying that we should regulate the prices. i'm just saying that it is a legitimate act of the government to ensure that those regulations are permitted. >> all right. obviously, start competing views of the constitution. stark views of the future of this law. we're going to open this up to questions from the audience, while they're coming up to the microphone let me just get your brief response on this. a woman in the audience, i don't know if she is still here, in the first panel asked the question, how could we have this law, this massive law? how could congress -- basically how could congress have passed this and the president signed it if it's unconstitutional? didn't they think about these things? obviously not a bad point. then another person on the panel said partisan laws generally

which is what of course make bad policy, so i guess my question to both of you while we are getting the microphone for the audience is, here we have a law that now it seems is headed to the supreme court closely divided 5-4 with one justice off in the middle, a key swing vote. what would that mean i think for the supreme court for political discourse is the future of health care came down to, let's say, justice kennedy, one vote, this entire legislation comes down to one justice on the supreme court. anyway, i'm going to sit down and we'll take questions from the audience. >> i think, just on, just on the issue of this, which i think what's unfortunate so far that the courts have basically split on partisan lines. and i think that's kind of an

unfortunate thing for those who care about seeing the courts as a political actors. we have judges have been named by republicans. basically finding against the law. and we have judges named by democrats fighting on behalf of the law. some of argued that these issues really don't even have standing at this point. so in some sense from one vantage point people are finding -- kind of reaching to make that decision. so i think that, i would say one thing to respond to something roger said earlier, which is what's at stake in the decision is the individual mandate. there are nine titles to this law, eight of them do not touch the individual mandate. ipod is a plea the individual mandate is constitutional, that in terms of when we are to have conservative principles of

severability you could find the law, you should find the individual mandate unconstitutional and still hold that most of the law will stand. and in addition to that, while roger believes the whole plot will fall apart, and i think it will be undermined by the lack of individual mandate, even experts, you know, even a strong proponent of the individual mandate believe that if you get rid of the mandate by itself you will lose coverage for people, some estimate as high as 10 million. but you will still have a bill that covers 20-259 americans at the same can't. >> roger, describe what a 5-4 decision would mean. >> it may very well come down to one vote. but didn't the vote in congress do that also?

and, indeed, it was passed by one party as against the other. we have since had a referendum, and the referendum was overwhelming. so, if that's what it comes to, that's what it comes to. but i don't think we have heard the of this because this is, after all, let's be candid. there were a number of people who did say this is nothing more than a trojan horse. a stalking horse, for single-payer. because there is no way the insurance company are going to be able to operate under this system without becoming caramelized. that's exactly the history of the progressive movement. all of these fine sounding laws were passed during the progressive era ultimately resulted in part allies and whole industries.

read richard epstein's how progressives we wrote the constitution which we published in 2006. and you see the sordid history of that. this is just one more example of it. it will, if it survives, come to pass. and eventually we will have either a transit insurance industry which is nothing more than state capitalism, or we will have single-payer like the europeans, and when that happens, you will not have the choices that you have today. i will give you just one example. we have miracle drugs available in this country because we have a relatively free market, relative to the rest of the world. in research and development. it takes about 15 years and some billion dollars to bring to market every new miracle drug. and most of medicine today is pharmacology. those drugs are not available in

europe because the countries of their will not pay the price that is necessary to acquire those drugs. so where as we have third generation drugs, they are still operating under second generation drugs. that's just one example of the kind of thing that lies ahead if this bill survives. >> all right. thank you roger. thank you karen one. you had your hand up first. >> it's a pretty simple question. will members of congress have the right to exclude themselves from the exchanges and keep their own health coverage plans for which the american taxpayer already pays 70% of health care? >> so, as was passed in the bill, members of congress are in the exchanges. they are actually in the exchange. there's a question about their staff committees but the members of congress themselves are

actually in the exchanges themselves. that was part of the bill that passed ultimately. so the question is, and it isn't question about some of their staff, but they themselves are actually in the exchanges, which i'm happy to go and find the pieces of the bill itself. unless something changes, unless they pass an amendment or something to do that, and then that would be a problem. so one thing i would just, just respond very briefly to roger's remarks about socialism, i would say the irony of this, this whole debate is that it is around purely private insurance and regulations around purely private insurance are obviously mini supportive public option. the public option did not pass any democratic congress. so i myself think it might be hard to get to socialism during an offer of a public option would not entertain by

democrats. and ironically enough if we had a system which offered, which demanded that everyone have single-payer like medicare for all, the constitutional argument around it would even operate. that is just an irony that we deal with. because we are obviously championed that public -- the private insurance system that was developed. but it remains true nonetheless. >> neera, socialism is merely a label that covers a variety of arrangements, including highly regulated industries such as the proposed under obamacare. when you transfer rights from one party to another you socialize with celebrities that are at issue. you don't have to take over whole companies and put them under government control to have socialism. socialism has many degrees, and this is one variation of the term. >> i'm happy to note that we

live in an official list society now that i didn't recognize that in my everyday discourse. >> i haven't for some reason recognized it. >> my name is terrence byrne. i'm unaffiliated. i heard of neera insert and ms. crawford repeat at least twice, that health care is different from all other products that this gives it a different, unique standing, a unique standing before the courts. because health insurance, health insurance is a product that everyone, every single american will sooner or later need. if the constitutionality of the mandate in the afford will health care law hangs on this principle, it will indeed fail. because i can easily name several people off the top of my

head who have no need and will never need health insurance. bill gates, donald trump, oprah winfrey. these people don't need interest. they can pay for their own care. >> just so there is not any mistake, our impression here, i was characterizing what the government argument has been in these cases for why health care is different. that's not what i said my view necessary was there. >> actually that's one of the reasons why i made a different argument than what the government has argued, although -- [inaudible] >> we have to and assume. let me just state that very quickly. one of the differences between health care and other arenas is not simply, let me say, that you have, someone needs health care,

or health insurance at any given time. what is different is that we have a situation in which the government has mandated that people have an absolute right to care by private actors. and when the government decided to do that, they decided that meant that those people, those peoples costs are shifted onto other people. and that is one of the challenges in the health care system which unless you have a system that brings everybody into health insurance, you always deal with that. and i'm happy to speak his roger want to say something. >> the gentleman is absolutely right. there are lots of people that do not necessarily, the financial resources of bill gates or warren buffett, who would prefer to buy, say, a very high

deductible insurance policy. you know, 10, $20,000 deductib deductible, and then pay for their regular medical expenses out of their pocket. because the administrative costs of first dollar coverage are tremendous. >> isn't that, roger, some of the plaintiffs in the d.c. case, that's what a group of them are arguing. >> absolutely. i mean, because let's be honest. what we've got to do is not so much health insurance. its prepaid medical care is what it is. this is nothing like what insurance is designed to be, but you can't buy those high deductible policies under obamacare, and it will play out. and the reason is because it will cost a lot less. and, therefore, you will not have the money contributing to the pool that will be necessary to pay the cost of all those people who are going to be able

to be insured with preexisting conditions, who don't take it on their health, don't exercise, don't eat right, smoke and to all the other unhealthy things that lead them to be drains upon the public risk. >> clive crook from the financial times. i wonder if neera could take this question. during a confirmation hearing, it was asked whether a law required people to eat broccoli and go to the gym twice a week would be constitutional. she said that would be a dumb law, as though one could not imagine congress have or passing a dumb law. [laughter] >> she would be wrong on whether it was constitutional. would such a law be constitutional? and then a corresponding question to roger. is medicare constitutional? >> do you want me to go first?

so, i hope people use her views of a lot more than nine. my view of that is that there are strong distinctions between the requirements that people purchase brockton and the requirement that people in the health insurance system are regulated. so actually think it's totally fine to say it would be wrong to require people to have health insurance -- to purchase broccoli but not wrong to say that. [inaudible] >> i think they are distinctions. my own view of it is that people who want to attack the law should actually be attacking in pollock. it is wrong for people for private actors, require the private actors take care of people when they are sick. but i think this is a puzzle discussion for the president. ..

housing food, clothing et cetera. except for children from their parents and what have you. because if there were a right to goods and services there would be a obligation to provide those. that would be intrusion on freedom to plan and live your own life. the fundamental freedom is

to the freedom to be left alone. if you want to get rights to goods and services you do that through contract, not between strangers, forced to come to the aid of others. i'm talking about the good samaritan principle which is the welfare sit writ small. the good samaritan if you remember the bibles the case you came to the aid of someone in need because it was the right thing to do. it was voluntary. it no, sir not because you were forced to do it. there is no virtue in forced charity. and so to get back to the general point, if this law were eliminated, people would then have every right to join together to provide for the insurance or the care, of those who are indigent and could not provide for themselves. the americans are very generous people and they

would do so but they hate forced charity. that is the first point i would make. the second point i would make in response to the question -- >> i want to know -- >> is, whether medicaid or medicare are unconstitutional. of course they are. you, did you expect me to say anything except that? in fact, good, you have now heard me say it. but, having said that, once you have created this network of dependencies, people have paid into the social security system all their lives and now they are retired, you can not then take it out from under them at this point. that's why we have to gradually work our way out of this various cluster of socialized arrangements that we have created. and we're going to have to do it over a period of time, with social security for example, the way out, is to allow younger people to have private accounts that are

portable, unconnected with their jobs, that they can take with them, and this is the way it is done in many countries around the world. our own jose pinero, distinguished fellow here at cato was once instituted chilean plan which is far more efficient than our own social security system which of course is a ponzi scheme that is going broke. so the answer to your question, very simply is that, yes these are unconstitutional but just as in the fall after the fall of the wall in eastern europe, getting into social system very easy. getting out of it is a slow arduous process. >> so we've got a yes. you got two yes. >> two yes. >> i think we have time for one more question. and you had your hand up, from the beginning so. >> that's all right. questions change as, conversation goes on. but i would like to know

whether, well i guess mr. pilon, whether a tax in lieu of a mandate would be constitutional? not desirable but constitutional, and, perhaps from a whether other schemes for achieving the same result of avoiding cost-shifting were considered during the legislative process, perhaps, a tax, as much of a bugaboo as the word has been, the last couple years. >> into your answer time. three minutes. >> and whether, let me bleed in the street, which i think mr. pilon would prefer. >> we have three minutes, roger. a minute and a half. >> very quick. first of all every court that has considered the tax angle of obamacare has found it to be not a tax. it is a regulatory penalty.

so that issue seems to me is not going to go anywhere. >> he had a different question i think. >> yeah. you asked me whether a tax -- whether you could tax --. >> [inaudible]. >> sure. in other words if you had something like single payor under the commerce clause and you just taxed for the purpose of providing health insurance what you're saying. >> doesn't have to be single-payer. could be subsidy situation. could take first $500 from your social security tax. >> under current law, under current reading of the constitution that would be constitutional in my judgement. >> it would be? >> but the problem is with current reading of the constitution. with the post 37 reading. >> we can have that conversation later. >> yes, there were absolutely other ways to do this. as you know, many of, many, i made, i worked in the

primary, the presidential cycle. the president had not support ad individual mandate. the reason why he moved to support an individual mandate, he has himself articulated because it was most effective way, to bring in more people, at the sort of, cheapest price in some sense. so, and, you know, originally, for a long time, we had bipartisan support for the issue and lots of, this is, you will notice a lot of letters went to the president from the republican leadership, none of them mentioned this issue. it wasn't a issue, that any of the republican leaders had mentioned for a very long time. so that was, there was strong support in the congress for it. so i would say, that we did look at things like automatic enrollment. other arenas where people could opt out of having health insurance. and just quickly the problems with those, you know, they could be feasible

options in the future. the props with -- problems with those you basically, you basically pay the same amount of money, if not more amount of money from the federal government's perspective and you just cover fewer people. so it was less cost effective then having an individual mandate, i should make this point, really clear about the individual mandate, 86% of the americans have health insurance today, so individual mandate does not touch those people who already have coverage and they're not required to really do anything as part of the individual mandate. so, but, you know, other options were looked at and those options may be looking at again in future. >> well, i just want to say, thank you. this concludes this afternoon of discussion. thank you for roger, and nera. we will have a reception afterward, if you want to continue the discussion, thank you very much.

[inaudible conversations] [inaudible conversations]

>> live pictures this morning from the america's promise summit in washington today. focused on reducing high school dropout rates in the nation's school. according to america's promise report one out of every four students will drop out of high school before graduation. shortly we expect remarks from vice president joe biden. he is set to release a college selection tool kit with seven approaches for state governors to consider supporting higher graduation rates. we understand the vice president is running a little bit behind. we will have live coverage when he arrives on c-span2.

president obama's tour of latin america shifts to el salavador today. he will deal with immigration, narc kick it is wars and gun trafficking. he will meet with the el salvador's president. it was one. highest immigration rates especially to the united states. 2.8 million salvadorian immigrants live in the united states sending home $3.5 billion last year. the canadian parliament receives the administration's budget proposal today. we'll have live coverage as finance minister jim flaherty explains the report to parliament that starts this afternoon at 4:00 eastern on c-span. tonight, prime time here on c-span2, former senator trent lott on reforming the u.s. senate. he is joined by historian richard baker and "wall street journal's" janet hook. they will talk about whether the senate is dysfunctional. that is tonight at 8:00 eastern here on c-span2.

>> once again we are expecting remarks from vice president joe biden this morning. he is appearing at the america's promise summit here in washington which is focused on reducing high school dropout rates in the nation's schools. vice president biden coming up shortly. we'll have him live here on c-span2. until then our guest on this morning's "washington journal" talked about a settlement with u.s. banks related to mortgage and foreclosure abuses. >> host: joining us from tulsa, oklahoma.

scott pruitt, republican attorney general in that state. mr. pruitt, the discussion is that this investigation into possible foreclosure fraud that many people heard about last year. robo-signing of hundreds of documents. can you, go back to that point when, that was discovered and what led to this investigation? >> guest: greta, as you described, last year, 50 states joined together to initiate a working group, investigating the foreclosure process across the country and you mentioned the robo-signing. the notary practices used and abused during that time frame. that working group began and saw many things they were concerned with. the dual track foreclosures where banks were reaching out to consumers and mortgage-holders, and saying that, we'll modify your loan but at the same time they were seeking to foreclose. that was a problem. there were account verification issues. also, consumers were having

a very difficult time finding that information from their banks. so there are many aspects with respect to what started the process last year, that were continuing to look at right now. last, actually two weeks ago in washington, d.c., the national association of attorneys general joined together. we received a briefing from general miller in iowa. there is a 13-state coalition that formed the executive committee that negotiated discussing the terms of this investigation with the five lien service holders in the country. when we received briefing there was concern about perhaps what had began as investigation into consumer issues related to dual track foreclosures and the rest, turned into a situation where the, where we were seeking to force principle reduction, loan modification reductions on banks morphed larger and bigger than it began last summer that is

concern many ags, last year, excuse me, last week, reported to the executive committee. >> host: there was reported a settlement deal put forth sent to the banks involved in some of this. some of this, the big five you mentioned. bank of america, jpmorgan chase, citigroup, wells fargo and allied financial. where does the deal stand right now? >> guest: you're right. it is a 27-page draft document forwarded by the attorneys general that are involved in the negotiations with the banks that you mentioned. and, they're in the process of discussion and negotiation around that term sheet. i think, get at that -- get tax the concern among some ags some of the terms included that document, that draft document, included issues i'm simply not for, and i think others are simply not for. the principle and loan modification components. there are damages being sought, roughly 20 to $25 billion that would be used

to modify existing loans and principle reductions across the country in various states that is problematic. that is the cramdown process rejected by congress last year. it was north worthy of beginning process last summer. i think where we are right now ags across the country communicating to the executive committee, let's get back to basic what is this was all about. bill track foreclosure process. notary abuses. deceitful actions they were engaged. hold the servicers accountable engaged into the practice. let's not morph into something bigger how we regulate the entire mortgage industry and how we do loans in this country. >> host: you and two other attorneys general, john bruning of a alaska, luther strange of alabama, penned a letter to tom miller who is leading the attorney generals on this, outlining your concerns sent on march 16th. i'm wondering if we can talk a little bit more about the

dollar figure that you mentioned. 20 to 25 billion. how is that figure arrived upon. can you explain more what that money would do? >> great question. and, that was, many of the questions that were asked at the closed session with the ags. centered around the amount of money that was being sought and we really didn't get much information about what the basis of the 20 to 25 billion whatever the number might be, what the, formed the basis of that number. secondly, i think the loan modification, and principle reduction discussion was linked directly to that number. in all 50 states, obviously we are participating in this process. that is concern, when we look at principle and loan modification of the term sheet, it is a concern to me from the attorney general perspective because it violates many aspects of our state law. in one respect the term sheet said if you violate the terms of the term sleet, it is considered a deceptive practice and gives claims at the state leveled. that is a concern.

secondly you're seeking to modify those that own the paper. the lien holders, if you come in and have principle and loan modification you're violating those mortgage agreements that have been agreed to in the marketplace. that is a concern. so, we sent the letters you have described greta, to general miller, commending him and his leadership and the other 12 states joining him to look into these practices that involve, i think abusive practices that we saw last year, but at the same time, communicated we have a concern that perhaps it is getting into much bigger situation that is 20 to $25 billion principle write-downs that concern many of us from the state law perspective. >> host: we're talking with scott pruitt, oklahoma attorney general, he is joining us from tulsa. the topic is investigation into foreclosure fraud. we have a special line set aside for those who have had experience or having experience with foreclosure. that is 202-68d 28-0184. want to hear from you as

well. mr. pruitt, what in this march 3rd draft deal to you like? >> well i think the addressing the dual track foreclosures is a very important component. when you have a bank communicating to a consumer saying that, let's try to work out your problem. you're behind on your payments. let us try to address that either through some type of modification to the terms, whether principle or otherwise. then at the same time engaging in foreclosure. that's a problem. that sends a dual message, to that consumer. it is not working through the process in meaningful way. that is properly addressed in the agreement. i think practice of a notary, robo-signing with the notaries is obviously abusive practice is it. it was administrative, substantively affected consumers and needs to be addressed. i think there are terms that are really favorable and important and meaningful to consumers. because we want banks. obviously these are the five

largest servicers in the country. they are working with homeowners across this country, we have a situation where obviously the valuation of homes has been depreciated quite a bit in the last two plus years. so there are issues. some states face that much more strongly than others. oklahoma has not had same degree of problems or perhaps california or florida or texas or other states have had. it is still an issue here. we need to make sure the consumer and banks are working together to address those, those inequities in the marketplace. i think most of those deal with dual track foreclosures, notary practices and rest. >> host: scott pruitt, to the point you were just making. here is headline in "usa today" this morning, home prices lowest in nearly nine years. almost 40% of sales last month were foreclosures or low-cost short sales. two questions, what happens next in these negotiations and in this investigation. and whatever deal two sides come to, will it stop the

foreclosure crisis? >> well, i think in the first question, it's very premature to know where it is headed. with the briefing that we received in d.c. couple weeks ago, the communication that we in nebraska and alabama, have kmaun indicated to the executive committee, along with other states. we're not alone in that communication. we actually were on a conference call last week with probably 10 to 12 states with similar concerns to ours and they're communicating to the executive committee formally or informnally as the case may be. it is premature to know where it is heading. i think discussions will continue obviously. i get the impression both the servicers, the loan servicers as well as ags are intent on addressing at core these areas that were abusive and, the dual track process and the notary process. but i think the big sticking point will be are the ags, the 50-state coalition, is it going to stay together to

seek 20 to $25 billion in order to engage in loan and principle reductions, cram-down type of modifications to existing mortgages across the country. i don't see that kind of coalition staying together. i know we in oklahoma. i as attorney general of oklahoma would not want to be a part of that kind of process. i think it is wrong approach. i think it is bad message. there are many across the country, many folks are doing their best, to keep up with their mortgage. they're working day in, day out and going through tough economic times. their commitment to the bank to keep up with the terms of their mortgage. to come in and take 20 to $25 billion and reward those, in my estimation, perhaps, are taking advantage of that sends a wrong message in the marketplace, both to those who are holding mortgages as well as those granted those. it is a situation where i don't think that the 50-state coalition would stay together on that type of process. >> host: real quickly, if you could, address the second question. would this stop the

situation that we're seeing with foreclosures, the headline? many almost 40% of sales last month, foreclosures? >> it is interesting, the question is very interesting because the term sheet actually forces upon nonjudicial foreclosure states judicial foreclosure. that is one of the big aspects of the problems of the terrell sheet. there are some states across the country that don't even have judicial foreclosure as a recourse on mortgages but this forces that upon them. i'm not sure if it would address the problem overall. in fact in some respects it would depress home values even further because when you have massive foreclosures, you have massive principle reductions. i'm not sure that will help valuations across the country in various states facing that. >> host: we'll go to troy in bronson, michigan. you're up first, troy. how. >> caller: how are you today. i appreciate c-span and i watch it all the time. my personal situation, i was with a mortgage lender the federal government come in took into receivership

because of the lending practices they had. that was taylor whittaker out of florida. my loan landed with bank of america. now i contacted bank of america for almost seven months and nobody knew nothing. nobody could tell me anything. nobody could tell me where my loan was going. where my payment was going. next thing i know i'm in foreclosure in my county. so i get me an attorney. i get me an attorney. and i stopped the foreclosure proceedings. now bank of america held my note for seven months and denied that they had my note. >> host: scott pruitt. >> guest: greta, i think that is a great question. that is something that was part and is part of the current term sheet. a lot of homeowners across the country don't know where the mortgage really is. i mean, you have the buy and sell in the paper. in fact, fannie and freddie mac, one. loan servicers, that we've talked to, 80% of the paper that they service is owned by fannie and freddie. whether the homeowner knows that, i'm not sure.

and so this gentleman's question, really goes to the heart of one of the problems that we've seen in the mortgage industry, that they get a mortgage with their local community bank and someone that is local. that paper is sold, perhaps one and two other times. when it comes time to for questions about the terms of that agreement and amortizationization schedule, mayoff schedule or fees, what have you they don't know where to go to find information. that's wrong. that needs to be addressed. as consumer, someone that owns the mortgage. they need to have ability to communicate someone with answers how do i get this thing paid off. how do i address issues of the terms of this agreement. that is fair and something we need to address and part of the original motive behind our, impetus last year to join the 50 states together to investigate loan practices. so that is a very important component that we need to continue at the center of the discussions. >> host: we'll hear from charles, a democrat in st. petersburg, florida. >> caller: this is the deal.

no jobs, no income. no income, no home sales. no taxes. now, these mortgage problems the government has a lot of programs, none of which work. they haven't made a dent into the problem. bernanke keeps throwing this money at the banks that is, done well to pump up the stock market but none of which has helped the person because if you don't have a job, you can't make a payment. you can't buy a house. now, c-span has become a phoney program. let me tell you why. you've had three consecutive fridays with susan talking about bashing social security. never has it been mentioned how much average social security retiree receives. why not? because they don't want to tell the truth. now, the way to, the way i would like to approach this gentleman is this. let's take a $200,000 mortgage. it is in default. tell us the process?

i understand the legal process to bring this default mortgage back to the original owner, or the can be as much as one half of the mortgage. >> host: mr. pruitt? >> guest: charles i think is expressing something that is very real. we talk about the depreciation, devaluation of homes across the country. the other component that contributes to that problem is the job market that we're in, lower wages, ability of folks to meet loans they engaged in couple years ago, three, four, whenever they entered into the purchase of the home. i think it is wrong answer to come in and say however, that principle owed by this individual consumer should be reduced arbitrarily by some third party. one of the questions asked of general miller and it is a question i've had consistently, let's assume

hypothetically for a second we engage in this process of getting 20 to $25 billion whatever the number would be from these five servicers. who will be custodian of those monies? how are we going to determine what states actually engage in this more aggressively? florida had more of a challenge than oklahoma with respect to the process. devaluation in florida in home sales is greater than oklahoma. so how are we going to engage in this process of actually addressing principle write-downs and loan modification? it is a problem. third parties are doing that. the bigger question for me, greta, what is consequence of that in the marketplace? i don't think that helps home valuation. it may address a particular problem for a particular consumer but from a market approach it is not i think the best course, and lastly when you look at the legal problems with that, you're talking about someone that has got a security interest in a home. these, are just servicers of notes. these five institutions we're talking about, they

service the notes. they don't own the notes. they are not the lienholder. someone they're doing on behalf of. if you come in and write the note down from 200,000, from 100,000, you have secured interest being devalued without any kind of recourse. that is the problem. that is not good for the marketplace. >> host: scott pruitt, proponents of this idea say it is good for the marketplace because it would help keep the homeowner in the house and help keep the value of that mortgage for investors. it would retain more value than it would in foreclosure. >> there is a process for that. it is foreclosure. that is what the process is. most servicers and most owners the paper in my estimation don't want a vacant home. we're kind of assuming that perhaps the only answer is for some third party to come in and extract money from these providers somehow act as arbiter on choosing which loans are addressed and then making that decision. i happen to think that it is best for the consumer and

that bank to make that decision on a case-by-case basis. they will make the best decision for that consumer and that bank in that process, ones that own the paper. i think having a mass review of this, actually could send shockwaves through the mortgage industry and hurt the valuation of homes substantially across the country, particularly in those states going through difficult situations. >> host: red land, california, renee on the republican line. you're up next. >> caller: good morning. >> good morning. >> caller: you're supposed to represent the people. not the bank or the foreclosure -- fraud is against the law and how, those seem that have been defrauded and foreclosed on their homes, how are they redeemed? what do they get out of it? >> host: let's get an answer to that question. scott pruitt. >> guest: well, listen, the defrauding that you're speaking of, deceitful practices i mentioned many of those earlier in the program, that if there were processes taken by a bank to engage in dual track

foreclosure, where they were seeking to remedy a default by a homeowner and also seeking foreclosure, they had documents signed in improper fashion, note at thatries, obtained in improper fashion need this be held accountable. there is no one, that is reason 50 states joined together last summer to say, you know what, those kind of practices to be addressed. and servicers engaged in those practices need to be held accountable. that is not what we're talking about right now. what we're talking about right now, the biggest part of this discussion is this 50-state coalition being used to leverage servicers to extract money out of the process to engage in loan modification. that, there are consequences to that are problematic for everyone across this country. that we need to be on guard against. from an oklahoma perspective, we look at laws that would abridge, i'm very concerned on behalf of consumers and the community banks across our state.

>> host: ken, independent caller, rochester, new york, on the air with scott fruit pruitt go ahead. >> caller: good morning c-span and good morning, mr. pruitt. thank you for taking my call. >> guest: good morning to you. >> caller: i have to disagree with you and let you know unfortunately the process is still taking place. the new game for the dual track process because i'm a recipient of it, once you start negotiating a modification agreement for your loan, and you have a tentative agreement established with that modification agreement, what the lender is still doing is then, doing a three-month preliminary payment with that new modification. meantime they're at a 90-day period, still continuing with foreclosure process. the reason they're doing that is so they don't miss out on 90-day window in new york state for foreclosure. this happens to be a bank that is out of the top five you're working with. my real question is does your agreement go beyond

that top five lender group with all lenders in all states? >> that is a great question. right now the discussion is with those five servicers. however i can tell you, whatever is agreed to, probably in this term sheet, if there is an agreement, obviously will affect those other servicers across the country. talking about setting standards, in this agreement that would address situations that you described. to say that type of dual track process is problematic. it needs to be addressed. it needs to be prohibited, and enforcement mechanism to make sure that doesn't happen. and so, whether, just because it is these five servicers doesn't mean, this would not apply to others in the marketplace. you're talking about a regulatory framework to certain degree that would affect all folks that are servicing notes across the country. >> host: five banks we're talking about, bank of america, jpmorgan chase, citigroup, wells fargo, and alley financial. -- ally financial.

>> guest: get tax real quick? >> host: sure. >> guest: one thing that is important. there has been no litigation filed. these are allegations being made with respect to these five servicers. some may be more egregious and bad actors than others. we really don't know yet. part of the process we are investigating to learn, this is what the gentleman shared. i had not heard that before, that is what this 13-state coalition that makes up executive committee. 50 states joined together. that is the kind of information we're trying to address and seek out in order to make decisions and form decisions. there hasn't been a proven liability with all five of these servicers they have all engaged in these practices consistently across the board. i think that is important. this is preemptive, proactive role and approach by 50 state attorneys general, to join together to look at most egregious acts that affect consumers in harmful way, learning from what we saw in 2010 and

address that on go forth basis. i think concern i articulated, that is good place to begin. i think to continue to investigate. we kind of have started there, unless that, point and gone to something far more, i think, harmful to the marketplace, overall, with the loan and principle reduction issue we talked about. i do think it is important to note there has not been litigation. there has not been liability and there has not been a lawsuit, if you will, multi-state lawsuit that has proven this across the board for all the servicers. >> host: so the investigation is ongoing. if so when will it end? >> i think that is great question. we don't know. that is process that is fluid, and i think now the executive committee is, of the a. abouts is receiving information, from the various a. abouts across the country to say, we like this. perhaps this is something we don't like. take this back to the negotiating table. speak to the loan servicers. find out what their thoughts are and address the issues

in collaborative and comprehensive way. hopefully the executive committee hearing that and taking that into consideration and with loan servicers. where it is headed greta, is very difficult there is nothing that forces the parties honestly to come together to engage in this discussion other than the threat of lawsuit. and i will say to you, that when you get into principle and loan modification, that, abridges state law as i talked about, that encourages nonjudicial foreclosure states to engage in judicial foreclosures, and these other issues that i have already articulated, that is where you start losing the momentum dealing with these very basic and fundamental consumer related issues that affect consumers day in, day out i think needs to be part of the discussion. >> host: scott pruitt, finally will the executive committee looking into this, will they put out a report at end of what they found and who did what? >> guest: you know i think

the goal of process is get a settlement. get an agreement. get a collaborative document that articulates from the servicers and the a. abouts to say we find these practices to be inconsistent what we need on behalf of consumers and as a person in california articulated, part of my responsibility as ag in oklahoma and other ags across the country is represent interest of consumers. i think that is the right discussion. and effort should be focused upon that i think if we stay there, you will see, i think momentum of last summer, 50 states joining together in those practices. think if you start seeing focus on 20 to $25 billion in damages, whatever the number is. it is not the number as much as what are you going to do with the money? are you using the money to modify existing mortgages to reduce the loan and principal. if you're going to do that, with that money that is problematic for many of us across the country. that is bigger question.

where it has morphed into last couple weeks. that is why many of us are expressing concern. >> host: hear from sharon who had experience with foreclosure in pennsylvania. sharon, what is your situation? >> caller: this is about 10 years ago, but this went on long before this is going on now. i had my home with it&t financial services and they, you have to excuse me, i'm nervous, they closed up shop and, i had to find out from a friend that they closed up shop. i tried finding out where they were. i never found out where they went. it took me months to find out where my mortgage went. and first it went to pittsburgh where i never got an answer from anybody in that place. i got musak from hours on end. then it went to wisconsin where they insisted pay them with western union notes.

then it went to georgia. and in all that moving around, they lost my payments and i was dumb enough not to keep one western union payment. i had all the others. and they foreclosed on my house. >> host: scott pruitt, your thoughts on your situation? >> well, i think she is articulating something very similar to what the gentleman earlier articulated, that is not knowing where your mortgage is held. and that is something that needs to be addressed because of buying and selling of paper that we see in this industry and consumers need to know, again, what is the status -- not just, with respect to dealing with foreclosure situation, i think as consumer they need to know how am i doing on my payments? how much principle am i reducing? what is amortization schedule? what if i make extra payment and want to get ahead? good practice for consumer what is status of my note and how much progress i'm making. also good for the bank on

that communication. i think what we've seen with buying and selling of paper, consumers not knowing who actually owns it. we need to do a better job and need to incorporate these discussions how we fix that as far as communication. other aspect of greta -- >> see the rest of this discussion online at our website, c-span.org. vice president joe biden is featured speaker this morning on conference on increasing the graduation rate in the nation's school systems. the vice president is releasing a report today addressing the college dropout rate. this is co-hosted by the america's promise alliance. [applause] >> thank you very much. you all know why we're really fortunate. we're fortunate to have alma and secretary powell helping to lead this effort. [applause] i was saying to alma and michael that the only guy who would accept the excuse i have today for keeping you waiting was general powell.

and move this back down, the only guy and i'm looking at them right now. is, secretary powell, because, folks, when the president calls you from air force one you take the call. [laughter] and we had a little conference on, with the security team on libya and so that's why i was late. i truly, truly apologize. but it is no the because of the work that you are about and that alma is about not as important to our nation's future. you, alma and general powell have been partners in making a real difference in the communities all across our country. you know, i think general powell, is still probably the most single popular figure in america, his standing up and putting so much energy into this effort, has made a great deal of difference and our nation is lucky to have two

such prominent people to devoting so much of their time. [applause] i know you already heard from the superstars in our administration, arne and melody. about our attempt to support your work and i don't have to tell anybody in this room that, high school diploma, is no longer a ticket to the middle class. as a matter of fact, i would argue that, without a high school diploma it is pretty much a dead end for awful lot of young women and men in america. more than half of all the new, i know i'm preaching to the choir. but more than half of all the new jobs created over the next 10 years are going to require a post-secondary degree, and that is why you're here. that is why i'm here. for the past two decades, workers with master's degrees have been half as likely to unemployed as

workers with high school degrees. just look at this recent god awful recession we're climbing out of now. on average, americans with associate degree earned $8,000 a year more than those with a high school diploma and considerably more than that with those without a high school diploma. those with a four-year bachelor's degree, earned nearly $20,000 a year more than a high school graduate. i know focus has been, dealing with the dropout rate in high school. and that's critically important but, what i'm here to talk about today, is this post-secondary degree that will make a difference in the quality of life of our young people and quite frankly, quite frankly, is going to make a difference to determine whether or not we're going to be able to lead the world in the 21st century. it is not only going to make a difference in the lives of individuals but life of this nation. and it is as important to america, as it is to these individual students. and we've got along wray to

go. america used to lead the world. you know, if i told some of you closer to my age back 20 years ago that we would at one time be tied with, tied with four nations for 9th in the world, in the percent of students with, percent of population we graduate from college, you would have looked at me like i was crazy but that's exactly where we are. it is unacceptable. america used to lead the world in the proportion of young adults with college degrees. as i said, now we're in a four-way tie for 9th. where i come from, that means there is likely to be 13th as 9th. and that is unacceptable. you know i know we have a number of business leaders in this room and i've spoken to you over the years and come from the state of business and state of delaware, i will spoken to the leaders in the business community in my state over the last couple of decades, i hear a lot of legitimate

concerns and complaints about taxes, about corporate taxes, about environmental regulations. about the deficit. about the ability to depreciate equipment. but the thing i have heard most consistently, not just in the last five years, but the last 15 years, is that most of you, need more skilled workers. remember when i was chairman of the judiciary committee, with h-1b visas, 12 years ago, there were close to 375,000 jobs for computer, computer programmers and computer, people with college degrees in computer science that paid an average, an average of $90,000 a year and we didn't have the bodies to fill those slots. imagine what we could do if we took 400,000, $90,000 a year jobs and were able to

sprinkle them by using fairy dust in every inner-city in america, automatically giving people in that community the capacity to do that job? it could be transformative. it could be transformative. so, i know you don't have to take my word for this. . . >> that we change this circumstance. that's why the president and i have set a clear goal.

by 2020 america once again will have the highest proportion of college graduates in the world. we have no other choice. [applause] >> folks, this can not merely be an aspiration. this is a necessity. this is a necessity. my wife who at this very moment is teaching part of her 15 credits she teaches every semester at northern virginia community college has a great expression. she said any nation that outeducates us will outcompete us. what do we think? how do we think it's possible to lead the world in the 21st century as we did in the 20th without a significant change? right now about 40% of our young adults have a college degree. in order to meet that goal by 2020 of being number one in the world we have to raise that to 60% of young adults having completed a college degree.

that's a significant task. and we should not stop there once we met that goal. the bottom line is that in the next eight years, we need to produce eight million more college graduates. eight million more than we're producing now. an additional a million a year in order to meet the goal of 2020. we expect up to 5 million of these to be community college graduates. and that's why we're investing to increase in community college and help them get there, the students. but increase the quality of the education that they get at community college. the curricula at community college. this ain't your father's community college anymore. it's a different deal. it's a different deal. and it's the best buy in america. as i said, if you doubt that, just ask my wife. she will tell you.

[laughter] >> look, let's get something else straight. the single best predictor of successful college completion, notwithstanding the myths out there, is not -- is not family income, is not parental education. it is not race. although you can trace it back to high school, you could arguably on that, what is it? it's how academically rigorous a student's high school curricula is. and one of the things i hope we're finally by -- i hope we're finally by this notion of dumbing down -- dumbing down what we think the most challenged neighborhoods, the most challenged students are capable of doing. i remember all the way back to 1985 when i was doing work in the senate on this. and they did a study of those who dropped out of school in watts. they limited it to watts.

it was from 19, i think, '74. don't hold me exactly, it's close. '74 i think to '84. and they went back and they interviewed all those folks -- not all those folks. a cadre who dropped out of school, in high school, in watts and they asked what is the one thing that would have made the most difference. and overwhelmingly the answer was, if i'd been challenged more. if they expected more of me. my mother had an expression, god rest her soul, that i think has proven to be true. i heard her say it to her friends when i was in grade school and high school. and i heard her say it to me when she was over 80 years old. children tend to become that what you expect of them. children tend to become that what you expect of them.

we should expect more but deliver more as you are fighting to do. to get high school curricula to the point where people are literally equipped to graduate. i was at a high school yesterday in wilmington, delaware, with arne duncan, delaware won the grant for race to the top. and i was at a historic black high school, the first black high school in 1867 in my state. and you walked into the classrooms and these kids from disadvantaged neighborhoods were learning about quantum physics. they have the capacity. they have the capacity to learn. if, in fact, they have the personnel to teach them and the will to persist. arnie and melanie and the preds and i believe the best way to give our chance regardless of academic circumstance is to challenge them the most. i'm not going to take your time to talk about it today but

that's why we're so focused as i said on race to the top to increase not only opportunity for our children but also the academic rigor in the schools in which they attend. but there's another problem you all know we need to face. and you all know it clearly. we need to make college more financially accessible and more affordable. [applause] >> i like some of you are one of those kids that almost didn't get to college because we couldn't afford to go. we couldn't afford to borrow from the bank. we were able to get at those days you'd get a summer job you could actually make money at a minimum wage to pay for what was then $40 a credit at the university of delaware. try to meet the credit requirements, you know, per credit at any private institution in america. you'd have to be selling something other than ice cream.

[laughter] >> so we need to do more. that's why we eliminated it. there wasn't any antibank bias. that's why i eliminated $60 billion over 10 years in subsidies that private lenders are being subsidized to make student loans. we took the bulk of that money and we increased pell grants. there are now 9 million -- [applause] >> this is just being very practical. there are now 9 million working class kids getting pell grants to help them pay for college. 9 million. but, unfortunately, the republicans and the house are working to eviscerate the pell grant program and we're going to do every single solitary thing in our power to stop this. too much is at stake and we need your help. [applause] >> too much is at stake. [applause] >> in addition to that, we created a thing that i wish was around even when my kids were

going to college. american opportunity tax credit. simply put, a family making up to 160,000 bucks can now write $2,500 off their bottom line of their taxes per child per year. if, in fact, they are, in fact, spending enough money to send their kids to college. that covers tuition fees and textbook expenses. that's big deal. that's a big, big deal for families. we also know -- we knew we had another problem. incredible college debt taking on by two-thirds of our students. i'll bet there's not a one of you out there -- i bet there's a few of you out there with kids in college where they didn't graduate in debt with a greater debt than the mortgage on your first house. seriously. it's an incredible burden. that's why we're also -- we've

capped monthly federal student loan payments of 10% of income so the borrowers don't have to worry about being crushed by the debt after they graduate. [applause] >> and we locked these things in. [applause] >> they are at least there for the last couple of years. we locked these things in the tax deal we made during the lame duck session. so we're doing a lot to make sure that cost isn't a barrier to america's advancement. but our commitment doesn't stop there. as important as it is to get our kids to college, we need them to complete their studies going back to being prepared. right now more than 70% of the high school graduates receive some kind of advanced degree within two years but less -- less than half of these students earn a certificate or a degree within six years of enrolling. we've got an education system that works more like a funnel than it does like a pipeline. and we set a goal. as i said, the highest

percentage of college graduates by 2020. today we're releasing a strategy that will allow us to meet that goal. we call it the college completion toolkit. we worked very hard with a lot of you and a lot of experts all across america on this so-called toolkit. president obama and i are calling on each governor, each governor in america, all 50, to hold college completion summits to implement some of these strategies or ones we haven't thought of. secretary duncan and our entire education system are ready to go -- get in the plane and go to the individual summits that governors hold to be any help that we can possibly be. this toolkit, this toolkit lays out seven no-cost and low cost suggestions to get this job done. let me just give you a couple of examples of these strategies that are going to work here and

that have worked. align high schools exit standards with college expectations. it sounds simple. but align the standards it requires to graduate from those schools, exit standards, with the minimum college standards that exist in that state to get to a university, to get to a community college. 40% of college students shouldn't have to take remedial classes in college. 40% take remedial classes in college. and how many of you, when you do the interview to hire someone, administer a writing test and are astounded by the inability of folks to write? it shouldn't be. because it makes college more expensive? because it takes more time to finish? it increases the likelihood the

students will drop out of college? look, make it easier, another strategy -- make it easier for students to transfer. 2 out of 3 students transfer at least once. arizona, for example, helps ensure transfer students don't fall through the cracks by making sure introductory course credits transfer fully among all the public colleges in that state. that means you have to have a minimum standard. follow the lead of tennessee and indiana and ohio and link state higher education funding to levels of improvement in college completion. it's about product. right now colleges get funded based on enrollment numbers, not on success numbers. individual universities must also innovate and to encourage them to do so we're also announce today a separate program, a grant program that will reward those colleges and universities to make innovative changes like -- they can propose summer academic boot camps

between high school and college. they can embrace online learning so students can learn anytime anywhere. they can use emergency financial aid because a lot of kids end up dropping out because their car breaks down as they commute or something happens at the home, to help students complete college. and these grants will be awarded this year. i don't expect them to solve all the problems. we want to encourage innovation. in our budget, for 2012, we're also proposing to create what we call a college completion incentive grants. i love all these names. they confuse all the people who lived in the neighborhood i lived in. let me translate it to simple language. we want to reward states, we want to reward individual universities and colleges that demonstrates success in increasing completion rates. and one more thing, because

community college is so critical to meeting our goals and they're the best buy out there, we're going to award grants to community colleges that come forward with specific plans to boost completion. we're also getting this money with no new taxes we're getting this money for the $60 billion we saved but not subsidizing student loans through banks. [applause] >> look, folks -- [applause] >> look, folks, we have to increase college completion rates. it's as simple as that. it's not real complicated, hard to do but the concept is not complicated to grasp. when president obama talk and i talk about the leading the world of percentage college graduates. it isn't about winning bragging rights. it's about ensure that every child in this country has the ability to reach his or her potential and that's the only way, the only way america is going to reach its potential.

what do we think the rest of the world is doing? what do we think the rest of the world is doing? do we think they're cutting back on access like our republican friends want? do they think that they're not investing more? do they think that china and india and every other competitor we have doesn't understand that is the key to their success to be able to compete? if we don't do this, kiss goodbye leading the 21st century. if we give every child, no matter where they are, where they live, no matter what -- who their parents are, the opportunity and set high goals and give the resources to accomplish it, then everything is going to fall in line. i say it like it's easy. you know how difficult it is. their dreams and their skills are going to lead to allowing you to be able to produce new industries, spawn new

businesses, create new jobs and create an economic future this nation needs. so i'm basically here to say thank you. you're among the most informed people in the country. you're the people who know who makes this economy run. you know the free enterprise, the oxygen in the companies of the fuel is the intellectual resource that this nation provides. and it has to be higher octane fuel. it has to be higher octane. you know how the system works. you know what you need. make it clear to everybody back in your states and your cities and your towns. make it clear that the democrats and republicans, that this good business. this is good business. this is good, good for america's security. this is good in -- there's nothing more critical.

so, folks, again, i just want to say thank you. may god bless you and may god protect our troops. thank you very much. and thank you, alma. i appreciate it. [applause] [applause] >> we'll be back live with the americas promise alliance summit at high school dropoutlates at 12:30 eastern. governors from virginia and maryland and mayors from across the country will join in on a discussion what they're doing from keeping high school students from dropping out. again live 12:30.

>> and i kept trying to figure out what is the rules here. is it robert's rules of order. they don't make any sense. finally i went to the parliamentarian of the senate. i got a rules background and he said what are the rules in the senate. he said oh, there's only two rules in the senate. what is that? i'm going to get the inside word. exhaustion and unanimous consent. [laughter] >> and if you get the senators exhausted enough, they will unanimously agree to anything. and i said i've it got. >> watch the woodrow wilson's panel on senate reform tonight

at 8:00 pm eastern on c-span2. >> live look now at how communication has changed with the presence of the internet, mobile devices and social networking. officials from microsoft and verizon also cover online privacy. the consumer federation of america is the host of this event. it's an hour 20 minutes. [inaudible conversations]

>> good morning, everyone. i think we're going to get started for this morning's panel, which is entitled: the future of consumer -- excuse me, the future of consumer communications. i'm glad to see you all here on a friday morning. i'm sure there's no place better to be here than here for our esteemed panel to talk about this issue. as most of you know in recent years we've seen an explosion and growth in the devices that consumers use and the way that they use these devices whether it's through facebook, twitter, video, more and more consumers are using their devices in different ways to access information, to send information, whether it's email -- by sending email on their laptop, watching video on their ipod or ipad or tweeting on their mobile devices. consumers more and more are using devices in different ways to not only receive information but also to send information. and so what does all this mean

for the future of consumer communications? we have four great speakers to discuss this. their bios are in your packet so i won't read through all their bios so we'll give you the highlights and bullet points who we have talking about this issue today. first we'll have lee rainie, he's the director of pew internet and american life project. lee -- the pew research center is a nonprofit nonpartisan fact thank that studies the social impact of the internet and lee has been there since december 1999, working on these issues. after him we'll have link hoewing who is the vice president of internet and technology, policy at verizon communications. following link we'll have elizabeth grossman, who is a member of the technology strategy and policy group at microsoft corporation. and finally, cleaning up the panel, our batting cleanup --

[laughter] >> will be dr. mark cooper, who you all know well and love from cfa. lee? >> thanks, i love that image of mark, you know, the leadoff hitter just needs to get on base and then the cleanup hitter drives them in. so i like that relationship, and it's an honor to be here and to be part of this wonderful panel. i thought i would really quickly run through the three revolutions that have taken place on our watch at the pew internet project. we started doing survey work in march of 2000. since then we've seen three big things happen in the technology space and we're about to see a fourth revolution occurring and then i'll talk a little bit about the consumer environment in the context of that. first revolution we saw was the internet and broadband revolution. our first survey in march, 2000 showed that 46% of americans were on the internet at that point. now it's 79% of adults.

it grew from 73% of teenagers in 2000 to 93% of teenagers now. broadband is part of that story. and we watched the switch from the dial-up environment to the broadband environment and people became different kinds of internet users as they transitioned always on higher speed experience. they got more out of the internet. they did more on the internet. they spent more time on the internet. they reported better outcomes and the biggest part of the story was they became content creators. there was something about that fast connection that empowered people to tell their stories, share the things that they knew, create culture on their own, become broadcasters and publishers without paying any of the necessary fees or doing some of the legal work that those people in the legacy industries did in those spheres. so the spirit of commenting, the spirit of rating, the spirit of

creating content was intigreat deal to the broadband experience. depending on how you use it and we use a variety of measures at pew, one create content in one form shape or another. 75% of teenagers create content so there's this expectation now that people as they go through experiences will share them with others. the second revolution was the mobile revolution. it started in about 2002, 2003 as far as we were concerned right now 85% of americans own cell phones and 57% of americans so more than half connect to the internet wirelessly. either through their smart phone or through the mobile card in their laptop. so a majority of americans now get their information, have their communications at the ready essentially in their pocket in their purse or in the satchel that they carry with them. the big change that that brought into people's life is that they, you know, real time information, real time research, real time

communication became an expected part of life and the apps culture is now really important. we in our survey last april that we're going to repeat it this april -- we saw the 35% of americans have apps on their mobile devices now. but only 24% use those apps. so a lot of people are buying smart devices with apps loaded on them but not everyone is capable of or want to use the apps on their mobile devices. still, it's going to be a big part of the information story that unfolds, you know, you might remember the wonderful cover story in "wired" magazine in the fall of 2009 that said the -- the web is dead, long live the internet. well, the rise of apps culture particularly in the mobile environment is part of that story now where people are potentially moving to an environment where trusted relationships with information and media sources are coming back into the picture in a way that they hadn't been part of

the picture in the web-based browser-based wild west of the worldwide web. the third revolution -- so it's internet, broadband, mobile, the third revolution is the social networking revolution which tracked really with the mobile revolution. right now 48% of all americans use social networking sites. 62% of internet users use social networking sites. the fastest growing cohort is people over age 50. so it's not just a domain now for young people who are really tech savvy and have all of their friends as part of the network. now their parents are trying to friend them which is freaking a lot of kids out and it's great for a social researcher to be understanding those family tensions but it's really an important part of the story because one of the core ways that people are responding to this more challenging information environment with the velocity, the volume, the variety of the information is increasing in their lives.

they're falling back on their social networks in three ways that we see in our data. the first way their social networks are becoming a really important sentries or tip seniors. people launch their facebook pages or read twitter in the morning to find out what their friends are reading, what important stories their taking place in the parts of the world that they care about and it's essentially using it as a gate-keeping way traditionally news sources used to keep gatekeeping sources in things they need to learn so absorbing networks are centuried and they're valid sources of information when people are encountering information that they want to understand more deeply or that confuse them or just sort of disrupts the world as they think it -- as they saw it operated, one of the things they ping the smarter people in their social networks and ask two questions, first of all, do you believe it. is it true? the second question is, if you believe it's true, what weight should i assign it as i try to understand the world?

is it a richter 1 type of fact or is it a richter 10 type of fact? is it something that's going to change the way i think or a little way i think. credibility assessment and just information assessment is now taking place in social networks in ways that it didn't use to take place. the thing it serves as an audience for their content creation. now a lot of people are preaching to their friends broadly understood. they think of people in their social networks as people to evangelize or people from whom to collect evangelizing but they are now in this content creation environment thinking they've got an audience for the things that they want to say and by god they're going to say it. so those are the three revolutions that have occurred on our watch and they're all going to amplify even more. the new things that we're looking at relate to location-based services and we're having a real hard time at pew internet asking phone survey questions that gets at this. one version of the question we got 4% of internet users are using location-based services

now as of like november. we changed the world a little bit and got 17% a month later. so we're still trying to figure out what's going on with four square and mapping services but it's clearly now part of the mobile experience that people are, you know, having with their smart phones, checking in with places, sharing the information they know, checking in where their friends are. the second big thing that's sort of on our radar now is what we call consumer cartels. you know, the groupon social experience of shopping, empowering consumers, you know, it's changing the relationship between some businesses and some consumers and the relationship that they have about pricing and access to information. so we're going to pay attention to that. and i'm not going to tricep step on other people's stories here but just a flag that you all -- would confirm what others on the panel would say. longer term the rise of the

internet of things. of smart systems is going to be a really important part of the story because our environment itself is going to be feeding data back to us. sometimes it will be feeding machines and we won't probably be in the middle of those communications and even the algorithms that are making decisions on it but a lot of times we will be in the middle of that. and as more and more devices and more and more things get linked together, that's going to be a major part of the consumer story. so the hallmarks of this new era that we are looking at are blended experiences. it's not like everybody is doing everything on their mobile phone or the internet or with printed products or face-to-face. they're doing all kinds of research in all kinds of ways that are, you know, allocating some elements of research to the internet or their mobile device but they're turning to their friends, they're turning to salespeople in stores to get other information. so it's blended that way. there are more and more people, of course, who want augmented reality.

they want to check on pricing comparisons when they are literally at the point of purchase. they're also reading sort of private or stranger consumer reviews of products. now, it's a much more common thing now these people are getting to the end stage of making the decision particularly for an expensive purchase of theirs. they are reading consumer reviews and giving weight to them. and the final thing i'll leave you with that we study a lot but we don't yet understand what it might mean in consumer spaces in part because it's changing the critical unknown about the future is what's going to happen to privacy and identity. i know probably mark will be speaking more to some of these issues. but it's a very rapidly changing environment. there's now talk about a privacy bill of rights coming out of the administration. it will be interesting to see how much of that space is allocated to sort of the private sector. how much is allocated to the public sector. from our data, what we see is that people are in their own

engagements both social and commercial, the sort of new terms of their engagement is reputation management. what they're not so much -- they're sort of taking it as a given sharing brings benefits with them, with their friends, with the communities, sometimes with their purchasing behavior. so in many cases particularly young people quite comfortable disclosing a bunch of stuff about themselves and sharing what they know but they're very conscious now particularly younger people of how they present themselves. or how they are represented online. so they're monitoring themselves with alerts and googles, checks and all sorts of stuff like that. and they are asking, mostly their friends, to adjust, you know, the tags that they put on pictures or the way that they are representing people online because people know that at the first level for young people, college admission offices are now looking into stuff, future employees are looking into

tough, significant others are looking at this stuff so that's the sort of new sensibility that is being brought to the marketplace. that's sort of the panoramic view from pew internet and i'll be happy to answer questions later. thanks. [applause] >> so a famous quote that i like a lot because i think it keeps especially when you're talking about the future -- keeps you humble and i think you have to be when you're looking at the future is the future is not what it used to be. and i like that because what it really means although we can get a snapshot and get a sense of what these trends might mean we're not prescient what they are when they arrive. i want to keep in mind as i go through this that these are some of my thoughts where we, i think, we are headed in our industry and what kinds of things will be demanded by consumers and what they're doing with it. but it may, in fact, turn out to be totally differently because we don't know how consumers will, in fact, use these.

a lot what happens in our industry is driven by what the consumers decide to do with those products. so we sometimes don't know that until they actually start using them. so quickly what i will be covering and i'm not going to go all of these in the same depth but the two that are really important that we ignore a lot of times when we look at trends is the demographics issue. how society is changing demographically. that has a big impact on consumer demand and use. and also advances and interfaces batteries, affordibility and power. those are sometimes ignored and i think they are really critical in our industry. they made a big change already not in the mobile aspects which lee talked about what you can actually do when you're going mobile. so demographics. the american people are becoming at least the trends suggest more southern and western, more suburban more hispanic and asian, more digital age than industrial age. and this is really, i think, some of the trends that suggests to me are that youth minorities, young adults and lee already

talked about it are going to be more and more connected. over time more and more people are just naturally know this is the world they operate in. another aspect of it though, in notice generation, i'm 57 the baby boomers are becoming older. i think you'll see a lot of applications in the home especially that use our technology to help especially in the areas, for example, of health care. i have a 97-year-old mother-in-law who lived for me for a long time and unfortunately she passed away three years ago and i would have loved video connections with my daughter and we didn't have it and i think that will change as the baby boomers get older. adoption and use demonstrates diversity in markets. and you look at the technology and not just what the technologies are sending and receiving text messages, for example, and also things like getting maps or directions. these kinds of things are being done a lot more. and more importantly they're not

just being done by the majority population today, the whites, it's also blacks and hispanics are heavily using the technology. it's in the mobile space in many cases but it is happening a lot. a lot more than we actually understand today. so i think that's a real big driver of this -- of these industries because it's going to change how people interact with each other as they become more exposed to other populations through twitter and other kinds of technologies. mobile as we already talked about, lee talked about is a big part of this story and it's not just mobile. but it's also now mobile devices are more capable than ever. now, video is really possible on mobile devices and it's going to be even more possible going forward because the networks are getting more capable. we're deploying a network today, for example, that's going to have -- it already has as we deployed it to 100 million people today and we reach all of the population we serve which is pretty much the whole u.s. by the end of 2013, 2014. and those networks actually are faster than the -- the fastest dsl networking today and

probably will 123 megabits up and 3 megabits down and they can do video quite well which wasn't possible a few years ago. that changes a lot how people use the technology and you look at the amount of traffic people going over these networks is mind-boggling and it's what lee said. people are creating content stereo they are not just looking at it. they are sending it the other direction and in many cases doing two-way video and two-way communication. those are also content by the way. we shouldn't ignore the fact when lee talks about creating content, it's not just creating things you put on youtube. it's also content between two people, video conversations and so forth. that's content, too. communications is content. it's not just about watching movies. one of the other drivers, too, is the devices in the home that will be connected more and more. and as you look back in 1966, in those days you didn't have many options if you wanted to use different kinds of media. newspapers, broadcast tv, magazines. pretty much all of them were analog. many cases paper-based.

they really couldn't connect or send information. basically they were stand-alone types of applications. if you go up that chart here you see at the top you not only have more devices in the home and more applications many of them are digital if not more of them. many of these devices are actually connected through home networks where you can take a usb device and connect it to another one. you can share the data back and forth. it really changes a lot what you can do with the technology and it contributes to what lee was talking about and the more things you can do with it that with them and the more applications that you'll be using. another big driver as lee said is the internet of things. and we -- i think when we talk about this it almost sounds like it's personal but it really isn't. in many ways it can enhance life dramatically. for example, people talk about sensors and devices and you probably heard the idea that maybe you'll have a little device on your refrigerator telling you to get milk. to me that's not the kind of uses that will be most

important. one example is in homeless you could have sensor devices on your electric system so that it can telling you when shorts are happening you don't have fires and it predicts when it's happening and you can send information either to your repair people or you can get it on your cell phone and it says, hey, there's something happening with your electric system you need to have somebody check it. that kind of stuff is actually quite valuable. we just had a demonstration, too, at the consumer electronics show in las vegas of a car that's outfitted with the latest generation of onstar technology. it has an amazing array of capabilities but one of them just a real simple idea is a camera that's mounted in the back of the war car and one in the front. if somebody backs into you in a parking lot it takes a picture of your license plate and sends to cower cell phone. [laughter] >> i think that's pretty neat. there's this old story in a parking lot. they hit somebody else. they look up everybody is watching them. i'll write a note and they write a note and put it on the windshield and when you go over and look at the note, everybody is watching me i'm supposed to leave a note so here's your

note. that won't happen with this technology. so there's some real utility to these functions. really important to me, too, is the way that these devices interface with humans. they're designed for humans and until the last few years they haven't been as human-centric as they should be so if you look down this chart here, the kinds of ways we can now interface with and use the devices that's changing dramatically. just a few years ago all we could do was keyboards and mouse and now you're doing tinkers being touchscreen technologies and technologies that allow to you translate real time so that voice technology and voice commands are much more possible. and think about the capabilities of these technologies for disabled people in particular. i mean, these kinds of technologies are transforming. so it's really advanced a lot and to me one of the biggest advances has been battery power. not only battery power getting improved so that now you have devices that can pretty much run all day and these are computers. tablets. they're not just smart phones which are good and of

themselves. but they also have remote charging technology that are beginning to advance. so you may at some time in the future be able to swipe your device over some wireless device that will actually recharge your phone or your tablet at least for a short amount of time. so we're talking about being able to be connected almost anywhere and never running out of power or at least not running out very rapidly. and as lee said, how we communicate has changed a lot. a lot of the is becoming more social, more interconnected with other friends and other people that you want to communicate with on a regular basis. if you look on the left side of this, this is the number of global users of social networking that's past the number of email users for the first time in history. and if you look on the right that's the amount of usage on social networks on email. email has been static in terms of growth lately but not social networks. now, they are sending emails to each other and text messages on social networks but they're doing it within the context of a social environment that actually is much more identifiable and they actually know who the other people are they're communicating a lot more readily. so it's a different way to

communicate. and the technology is being driven by a number of underlying technology aspects that had made our industry more and more capable of doing things. computing power, of course, everybody knows about. but storage power is a big, big part of this. storage power now, is really increasing dramatically and it's getting cheaper all the time. the power of the communications networks is doubling every 20 months or so. so we've gone from 768 kilobits per second in 2000 to networks to today -- we're delivering 150 megabits right now to people's homes. so it's really increased dramatically and we'll continue going that direction especially on the mobile side which is as we get more spectrum and more ability to use it, we're going to see even more power on the mobile side. and the way we actually do communicate with each other and communicate through computing devices has also changed a lot. if you look in the lower part 1960s we're talking about mainframe technologies which were basically centralized. you really couldn't do a lot on your desktop. all the way up to basically

everything is a service which mainly is in the cloud in the web but it's also something we're allowed more sharing more ready access to information. so it's changed dramatically how people use the technology. and every time we go through one of these cycles you see in a dramatic increase in people using this technology. it just makes it more consumer friendly and more democratic in a sense that everybody can access the technologies and use them. so one of the things that's really changed about our interest -- because all of these trends, the consumer demand trends, the way the consumers use the technology, the device capability, is that we have competition and choice now that is much more available than it ever was before. we tended to think of competition in the broadband sector especially as being between land land carriers or between wireless carriers and sometimes between wireless and wire line carriers. at the ces show a few weeks ago that it really can't be done by one company any longer. today you have to collaborate

with other providers because we don't make application software. we don't make the operating systems. we don't make the device. those are actually made by other companies and in many cases what's driving the consumer to buy our services is an iphone. not our network. many cases they like our network better than somebody else's but that may not be the driver. it may be the application. it may be the operating system. there's a lot of factors that go into the consumer demand today that make competition much more complex and much more vibrant that it often gets depicted in some of the analyses of our industry. and this to me actually symbolizes it pretty dramatically. they were single purpose networks and they couldn't do much beyond what they were designed to do. even the telephone network which did allow internet access in the early days it was strained to be able to do access to the internet and was very low capacity. all of that is dramatically changed now. so today when a consumer looks at the choices they have, it's not only in the applications and

the communication services but also the networks. they've got a lot more choices today. and in many cases, we have to work with other companies in a collaborative basis to offer products that they want. so they want to buy our service but they're buying it because of other things like the apps or because of the device. so consumers are really a lot more in charge. they actually have a lot more -- they're actually driving the markets a lot more than there ever was in the past. so again i said at the beginning i wouldn't want to predict the future but i did want to look at some trends and where we've gone. it's nice to look at the way things have evolve. if you look on the left-hand side, if you look at the kinds of networks were the kinds of services that people used, some of these things don't even resonate with people anymore. you remember portals were like the wave of the future at one time. portals are not even discussed much. the way that we actually access these services has changed a lot. to me, if you look at some of the trends, too, that are interesting, we don't tend to think of them as actually having implications for other industries but they do. for example, search engines. apps today are really

competition for search engines in many ways. basically, they're easy to use, access to different kinds of services you want. you don't to have search for what anterior looking for. it's on your phone already so it does compete with search. it also competes with our services. so skype, for example, which is an app on many phones today is actually a voice service that competes with our voice service on mobile. we have text messages and we have apps. another option they don't have to buy our text message if they don't to. the way the industry has looked if you look at the last chart there is pretty dramatic and i think we're leading much more to an environment where consumers can personalize things much more. they're going to be mobilely accessing these things a lot more. and i think most importantly, they're going to be increasingly driving what a lot of the content is. twitter in many ways -- and i access it every morning and night just to see what is going on in the different sites that i really -- discussion groups i like to be on. is really another form of

search, too. so instead of putting something on google and searching it out you send it out to your friends i'm really looking for a good place to eat tonight. i'm in washington, d.c., what would you recommend? you literally would get five or six recommendations within a few minutes and they're usually quite good. so it's a different form of access and it's really about the social networking trends that lee was talking about. and thank you and i look forward to the discussion. [applause] >> hi. good morning, everyone. i'm just going to tilt this down a little bit. can people see me. i'm really short. [laughter] >> let's get that out front. i'll stand on my toes.

i'm from microsoft. this is a very nice order. i'm going to build on what the two previous speakers have said before 'cause i'm actually -- i'm here in d.c. but i'm from microsoft research. so the disclaimer that link made about not predicting the future, that's my every day hazard. you get used to being wrong every now and then but i'm going to talk about things that are a little bit further out that may or may not be true. but are at least going to be interesting and hopefully a little bit thought provoking. so again everybody can have their favorite future quote. mine and my boss's tomorrow looks like day but the day after tomorrow looks nothing like the past. and that gives me an excuse to talk for about 30 seconds about the past so that we can talk about the future. and i'm going to talk about the past in a very narrow sense in terms of the past of computing. so if you look at computing which actually started in the 1940s compared to, let's say, physics it's a relatively new

science. one of the things that characterized the first three or four maybe even five decades of computing was scarcity. okay. and we've heard about this. it used to be that computing power was very expensive. and computing storage was very expensive. and communicating between computers was really hard and so you spent a lot -- computer scientists spent a lot of their time thinking about how do we do things a little more efficiently? can we -- can we think really hard about what information needs to be stored and then how are we going to access it? and so the computer scientists spent all their time tackling this problem. computer scientists are very smart and hard-working and all that work on those problems was described by the previous two speakers where all of a sudden the price of storage has gone down, not only the efficiency of computing powers gone down but the size of computers has gotten smaller and smaller and smaller and all of a sudden we've gone from this era of scarcity to

basically an age of plenty. so, you know, congratulations now we have more computing power than we know what to do with. more storage than what we know to do this and this goes back to the content creation. more information than we know what to do with. so in one sense, age of plenty but in another sense, oh, my god what are we going to do next? so that's the past and now i've gotten us to the future. and so i think this is a slide as i said it builds on what has been said before which is basically that the internet of things is coming. so what that means is not only can all of us in this room have a computer, not only can all of this room have multiple computers, your car can have multiple computers, your fridge, your stove, your television can have computers but also your dog can have a computer -- okay, your dog collar can have a computer and let's go further own your contact lenses can have a computer.

this is going to change the way with we have to deal with all these computers. not only do we have computers all those computers are talking to each other. so what this means is that there's another revolution. not only are we going from scarcity to plenty but we're also going to have to have a transition for how we interact with computers. so again, i'm going to refer to the past. and that past takes us actually right up to today. the way that we interact with computers is that we poke them. poke. you know, we've gotten pretty advanced in how -- i mean, it used to be when my mother programmed computers we had these punch card things and we've gone beyond this elegant flick of the wrist as our finger runs over a screen. but let's not fool ourselves. that is still poking the computer. so the question is, what comes

next? and the idea of next is moving from a computer that works on your command to a computer that works on your behalf. okay? i'm going to talk a little bit. we've already touched on that to a certain extent with the ideas of the sensors in your house looking for the electric shorts, et cetera, or getting your dinner information from your friends. but let's take that -- let's take that dinner example and take it sort of to another level, right? you're ready to the point where your phone has a gps and if you type in restaurants, poking it, it will tell you, wait, wait, oh, it will talk to the satellite. it will discover you're in washington, d.c. and it will give you restaurants in washington, d.c. so that's a little bit of working on your behalf but let's take it a step further and think about, well, what if the phone was tracking and sensing your behavior over time? and the pattern recognition?

so, for example, my phone might know that my home base is washington, d.c. this is where i live. this is where i eat dinner and so if one day, you know, it checked in with a satellite and discovered that me and my phone were in seattle, washington, or redmond, washington, where i go regularly, it could, in fact, look around and say, huh it's about 5:30 local time and she's not where she usually is, she might want dinner recommendations. and then it could go and it could look at my calendar and it could say, you know, the last time she was in redmond she had indian food and, in fact, she eats asian food a lot. maybe what i'll do i'll send her some recommendations for some asian restaurants. she ate indian last time maybe i'll do vietnamese and chinese and i'll look and see which ones have good recommendations from trusted reviewers, you know, maybe tom from the "washington post" card from seattle. i really trust tom. and then maybe i'll check what

has reservations. okay. and then it might send me a little note saying here's some ideas. and so that's -- that's one sort of a vision. but it can apply to a lot of other things. just to pick another example from another example, it can apply to the health care situation. so imagine you have -- you have elderly people living alone in a home. everybody has seen the ads for the buttons they can wear around their neck and if they fall then they can press the button. okay. so that's a great example of an on/off thing. either nobody presses it or you press it or you get 911. so let's get new ones. that's what this new kind of technology allows you to do. so you have an array of possible sensors. you can have motion sensors to determine which rooms people are in. you can have sensors, you know, going back to computers and contact lenses that provide information about things like blood sugar level again, i'm looking into the future.

this is not happening tomorrow. although there are people putting computers in contact lenses so i'm not as kooke as you think i am. and you can build on past patterns of behavior to figure out if something is wrong and then you can determine how wrong is it? is it sort of like something that makes you uneasy so you might have the phone ring just to see the person is there answering the phone or does it seem a crisis in which way do you want to call 911 or do you have a range in the middle? so these sorts of ability to use this network of communications in a nuanced way and i've talked about home and the individual but there's similar things, for example, for the power grid. so these are the sorts of things that working on our behalf means. as i say, this sort of thing which is totally focused on getting the right information to the right person at the right time. that is the core of this idea of

computers working on your behalf. and so obviously that has implications for a lot of things that are important to us in this society, education, national security, health, et cetera. this is my last slide because i was told to bring it around to some of the policy questions. and so what i really want to talk about just on this slide for a minute is that this idea of computers working on your behalf and these ideas of what technologies can do when they connect together, that's an important one but the technology is actually part -- well, either a virtuous or sinful cycle probably depending whether you're a optimist or pessimist is my guess. but technology can constrain what we can and can't do, you know, when networks overload and can't make certain phone calls, et cetera, the technology sometimes doesn't always do what we want it to do. on the other hand, it also enables lots of things we want

to like catching the guy who dinged our bumper in a parking lot or controlling the programmable thermostat in our house. and so, you know, technology is both an enabler and a constraint but people and then by extension our policies, our legislators, our governments, et cetera are also the enabler in constraints of technology. and the reason that i spent this time talking about where technology is going is that in order to decide what we want, these computers as they get smaller and smaller and smaller could do, we have to have a conversation about what's important. we, you know, consumers, companies, governments have to decide what's important to us and what nuanced choices we want to make because it turns out, you know, we talked about computers handling huge amounts of data, you know, your programmable they remember constant taking it to the nth degree where it recognizes the patterns of your behavior and heats your house in a much more nuanced way knowing if you left work early to go to the gym

you're going to be home from work earlier, you know, and starting to recognize those sorts of things. so computers can make a lot of decisions and seductions but they can't make choices about values and so that conversation is the one that consumers and companies need to be having early, early, early on and that goes back to the privacy and the identity thing and i'll talk more about those later in the q & a. thank you. [applause] >> this is a test now. wait, i want to do it this way. all right. at the end of that wonderful discussion of technology, my job is to stir things up a little

bit. i was told not too much. it's early in the morning. and i actually am going to be pretty positive about most of this stuff. so i was going to start by asking everybody who has a cell phone to raise their right hand. keep them up. keep them up. we need exercise in the morning, you know. and if you access the internet through a laptop, raise your left hand. and i don't want to embarrass the people in the room who don't have both hands up. you folks who have both hands up and say hallelujah and put them both down. you have participated in the greatest communications revolution in the history of the species. bar none. more important than the alphabet, than the printing press, the telegraph, the telephone, the tv, or the radio. now, in a certain sense this revolution built on those but it is infinitely more important than any of those revolutions

for a simple reason and link use the word. it's democratic. the previous revolutions have typically allowed a small sliver of a literate wealthy elite to communicate better or at best when it was mass it was one way, radio and tv. this is a two-way revolution available to everybody. and the united states -- living in the united states, we don't appreciate that aspect of the revolution enough. so i want to talk about this global revolution. of course, everybody in the u.s. has this stuff. well, not everybody. but most everybody. it's the rest of the world where this is a dramatic revolution. and so here are global numbers. and these numbers are really important because i'm also going to talk about the problems. i was told to be positive but there are some dark clouds on the horizon.

if you look at this, this is -- it took about 125 years on the planet to get to 20 telephones per 100 people. that meant approximately 80% of the people on the planet did not have a telephone. it took only 15 years to get the 75% of the people having a cell phone. that's the revolution. everybody else can talk to everybody else. the second part of the revolution you heard about is broadband. right? because it's not only voice but it's video and data. and that is really important. and you will observe that there are more people on the planet with a broadband connection than a telephone. that is a remarkable revolution. but remember, we're still down here at 20%. or 20 per 100. the question is, we cannot wait

a century for the rest of the people on this planet to get the access to the full plate of communications we want. in the united states we call that universal service. and it turns out that as lee said 79% use the internet but only two-thirds have it at home. so one-third of americans still are not participating in the key aspect of this revolution. that is a social problem. that is an important policy problem. the first of them. we have to make sure that we get this number to there in a lot less than a century. there's a wonderful revolution, no doubt about it, but we have to keep it spreading. now, i want to quickly talk about why we had this revolution. and then the three policy challenges. i've mentioned the first one, which is universal service. the second one is going be cost,

who pays? and the third one is going to be control. people have mentioned it. and i have picture slides -- i've discovered pictures are worth 1,000 words. i don't use any words on my slides except for title. and i frequently chastised my fellow panelists that they had too many words and not enough pictures on their slides. 'cause if it's a word, you can speak it. you don't have to see it. so one of the big issues about -- is cost. it turns out that mobile communications are inexpensive in low density areas. which is why it's spread in the rest of the world. because, of course, it cost a fortune to put wires and they never did. and you know what? they never will. if you live in a place without a wire today, they're never going to pull a wire. they're going to build a tower and do it with wireless. and that's not a bad thing. that's a good thing.

'cause a lot more people will get service a lot quicker. second reason, i think, is functionality and this is very controversial. it turns out that those broadband networks that we love in america, those 100 megabit pipes that we want to get to our homes provide us with an excess of bandwidth way beyond the capacity we need, the functionality we need. it turns out that people are really good at cramming a lot of stuff into a little capacity. that's what they spend all their time trying to do. and so it turns out in my opinion, and this is -- i don't need 100 megabit pipe. certainly not -- if i don't have a wire, i'm never going to need 100 megabit pipe. i'll be just fine with a 10 or 12 megabit system. especially if i get 3 up which let's me say more things that more than anybody needs to say. so i think the declining value of bandwidth -- declining margin utility of bandwidth as the

economists will say to confuse people is really important. the third thing that's really important is the value of mobility. it turns out that mobility is the thing that we value most. mobility is the essence of the modern world. i give this speech write talk about -- if you think about feudalism, the most important thing for the feudal society to do was to keep people in their place. nobody move, either physically or through the social hierarchy. and the last 500 years has been to break down those barriers to mobility and let people move. and so people value mobility immensely. and someone used the term real time connectivity. it turns out that real time connectivity is about what i can

do when i'm moving around. so for those reasons, we have this tremendous revolution. but now let me talk about the problems and now i'm going to go from that global sense back to the u.s. for a minute. when we designed the universal service program in the 20th century, to make sure everyone had a telephone, we said we would tax long distance calls to pay for basic service. and that was a good idea. we consumer advocates, if we were being honest, admitted that consumers were going to pay anyway. the consumer always pays. but we felt that the toll calls were discretionary. and the basic plain old telephone service was a necessity. so we were willing to allow the price of toll to bear some more of the burden. the problem, of course, is that toll doesn't matter anymore. it has evaporated in terms of

its revenue. why? because these other usages have replaced the long distance call. people send emails, they use their cell phones. and so the toll revenues have disappeared and, of course, we're still subsidizing plain old telephone service when we need to be subsidizing broadband. we need to have a complete transformation of our universal service program and the federal communications commission has a series of notices out and i encourage you all to get involved. but i will also encourage you to remember this model. this always gets me in trouble. if we have to find some way to pay for it, to make sure that the one-third who don't have it get it, then we ought to think about discretionary goods as the place to raise the funds. we can't tax toll calls anymore. but maybe we ought to raise the price a little bit for people who want to download 150 movies

a month. now, that is a very controversial statement. right? but that central principle of raising funds from discretionary goods to support basic good. the second problem is cost. and on-communication networks, costs are driven by flows. by the peak hour of congestion. costs are not driven by the total quantity or the volume you use. and at&t this week announced that they were putting a volume cap. and they explained it and justified it by saying we got this congestion problem. well, volume caps have nothing to do with congestion. if congestion is a problem, it's the wrong way to solve the problem. and i put this little example up here, which shows two customers and i misspelled customer the second time but i always do

that. everybody works with me knows typos are not my thing -- or they are my thing. [laughter] >> i just don't see them. two customers. customer a uses five units we might say megabits or whatever we want, every day, you know, constant rate. customer b uses 15 megabits at a moment in time creating this massive peak. now, customer a has two-thirds of the usage or half -- or two-thirds of the usage but it charges only one quarter of the cost because they're not there at the peak. if you institute a volume cap of, say, 15, customer a who causes only one quarter of the cost pays 100% of the price 'cause they're the ones who exceed the cap when this is the fellow who has caused the cost.

so we have to be really careful about cost recovery. now, at&t doesn't really care about this congestion problem. well, if it does, it's going to do something else. this is a scheme to attack the people who aren't causing the costs. we fought about that on the telephone network. we'll fight about it on this network. the last set of problems and again, this is a word problem, so i don't have a slide for it, is this question of control. the simple fact of the matter is that on these networks, we do not have good control over the flow of information. in the past, when we made a phone call, we clearly had control of that. and we had the belief that no one was listening. we learned they cheat sometimes although actually when we shift it to cell phones, it says the law could listen to our cell

phone. the expectation of privacy was not there. and we're working hard to restore that. but on the internet, we've got a real problem. the average person goes out on the internet and does not know and cannot control what people are doing with that information. now, on the one hand, they don't practice very good digital hygiene. and that's a term that mike powell used a few years ago notwithstanding who he is, it's a really bright term. we haven't taught people about digital hygiene, right? he used the example whenever you go to the doctors your mother says change your underwear, right? that was digital hygiene. when we go out on the internet, we have not taught people to practice digital hygiene. at the same time, the opportunity to practice digital hygiene is not well developed. the people who run these networks have not made it easy

for us to practice digital hygiene, right? they snoop, they hide. they give us privacy statements that are incomprehensible to 99% of the average people. and 60% of the average lawyers on the planet, right? they have not given us the tools. and we're about to have a big debate about who should control that information. at the same time, there are some things that we ought not allow to happen. and i like to use the issue in the video space of subliminal messages. way back -- when tv became -- was becoming a dominant medium, advertisers discovered they could put in little blips of information that spoke to the subconscious of the viewer. the viewer never saw it consciously but it would influence their decision by putting in a few frames. it was a subliminal message. and we as a society decided that

that was an inherently unfair practice because it defeated the consumer defense mechanism. it was intended to defeat and there was nothing the average consumer could do about it. as technology gets more and more complex, we need to admit that there are some things that should not be allowed. just flat-out banned because the structure cannot allow the consumer to exercise choice. and the final great danger is the following. the internet and the exchange of information is based on trust. and you've heard about people going into social networks so that they can -- because they now feel more comfortable. they trust the people on the network, although they still need to exercise a lot more digital hygiene in those rooms. if we destroy trust, if we erode trust, people w s