that we're not wasting public resources in the next few years. i'd like to end -- i'll give way to you. >> can i thank the honorable gentleman for giving me just enough concern that nothing has been said in the budget today about the centerpiece of the government's growth strategy? in other words, the holiday on national insurance for small companies outside of london and the southeast. shouldn't we know more about how that is going and whether it's being in any way a success? >> that's an interesting point and, of course, as he notes, we'll be holding hearings next week on this. and we'll have an opportunity to take evidence on exactly that point. i'd like to draw my remarks to a close by just observing the growth and the deficit reduction strategy, the two issues that i've been discussing today, will be one and the same thing. if a reduction in the size of

the government -- of government allows room for the private sector to grow. i know that it's not something on which agreement will be reached across the house and it's a -- and i hope members on the other side of the house will permit me to end with a personal view. even if there was no deficit, i believe we should still reduce public spending. at close to 50% of gdp, public spending is too high. >> here, here. >> it reduces choice and freedom for millions of individuals, and it firms burdens enterprises with unacceptable taxation. during the 13 years of the last government, public spending averaged around 40% of gdp. i support the government's plans to reduce it back to that level again. >> here, here. >> can i just say to honorable members there's a lot of members who want to get in today and quite rightly want to get in as many as people.

there's no time limit on speeches but brevity will be helpful to other people. stewart bell. >> i'm grateful, mr. deputy speaker, for the opportunity of speaking early and also following the honorable member for chichester. he made three points which i would like to take up. the reduction of the deficit over the next four five years. and he said that he thought that this would give grave concern in the future and bring grave pressure to governments not to continue with the program. in this sense he's perfectly right. 146 billion reduced to 122 billion. reduced to 70 billion reduced to 26 billion for the years 2015 and '16. that is a massive drop, a massive and deep strom and it will have consequences for the public sector which in the end he acknowledged. in the budget speech of the chancellor he did not make any mention to the welfare state nor did he mention the point which

the honorable member on chichester mentioned. there's a very clear imbalance that we're going to see in the public and the private and whether the public sector can shed jobs and whether they can go into the private sector. that is an interesting point, and we will follow it with great interest. in the northeast of england where we have something like 47% in the public sector, then you can see, mr. deputy speaker, the difficulties and the dangers of moving quickly and rapidly with such a massive debt reduction over 45 years. howard wilson once said one man's pay rise is another man ticket. actually, the deficit reduction we're talking about today is one man's job passing from the public sector. and i have to tell the honorable member since he made the point he must remember that those who actually work in the public sector are producers. they pay taxes. they consume.

and to remove them from that sector by such a drastic and rapid reduction in the deficit will not actually add to the prosperity or the standard of living of our people. >> mr. secretary, i'm very grateful for the honorable gentleman for getting under. the chancellor has announced over a five-year period of this government, they plan to borrow an additional 485 billion pounds or a 50% increase in official state debt. they're not paying down the deficit. they're not paying off the debt. they're just trying to borrow a little bit less each year, but it's still adding a huge amount to the national mortgage. >> well, i'm grateful to the honorable gentleman. i was much amused when the statement was made when the debt was paid and how much the labour government had to borrow. they borrowed 11 billion pounds from what it borrowed just 8 billion pounds and the honorable gentleman is perfectly right

that we have mixed up this deficit with the overall deficit but public spending will continue to go up. but there's a certain sleight of hand i have to say from the chancellor of the exchequer when he made his budget speech. >> i'm very grateful for my right honorable friend giving way. would else agree with me that cutting public sector jobs we agree that by the durham university which shows the northeast some 50,000 jobs will go because of public sector costs. 20,000 of those will be in the private sector. >> i'm grateful to my honorable friend. i have seen that particular study. i've also seen the study of the pricewaterhousecooper on the impact on the northeast of the various deficit reduction plans that we have seen. may i congratulate without being

sicofantic but he hits every nail on the head that needed to be head. growth down, growth is down. no one else knows. we ended nasier growth in the last confer. where is growth going this year? 1.7% of the year? how does that compare with germany? 3% growth? >> could the honorable gentleman just enlighten the house from any recovery from any asset-base growth has returned even a 5 or 7-year period? one thinks of the 1930s which wasn't -- there was no return for growth until the end of that decade. one thinks of japan where there was no return of growth until the beginning of this decade. how could you possibly attribute to the government as you do? >> i'm grateful for the honorable gentleman's point we have argued consistently and so has the international community

that we had a financial crisis from 2008 and 2009. and out of that crisis without making references to tsunamis and earthquakes there are many after-shocks and it takes much time to actually get over that. so i certainly agree with that point. but it was not us who said that we were going to raise growth in last year. it was the conservative government. and the honorable member from chichester when he pointed out that under a labour government we had 40% debt in relation to gross domestic product. my recollection in some years it was 37%. it was the financial crisis that pushed it up to where it was. >> i'm very grateful from my honorable friend giving way. would he also say that's particularly startling after all the motions we've heard from the chancellor and the budget, the growth forecast is actually after the effect of those so

actually how bad would the growth forecast have been without these measures, which it's still drastically down what he was actually suggested when he delivered this budget nine, ten months ago. >> i'm grateful to the right honorable friend that's the point the opposition made and i was reminded by the front bench i hadn't gotten that far in my speech. but when growth is down, inflation is up, inflation is up, the point is made, i think, the chancellor by the quality prices going up. france has 2%. where we have higher inflation is because of the policy of the government. we decrease the rate over the a period of time the value by 25%. weed our exports but we increased our inports. we are now importing inflation. the definite between the french inflation of 2% and our inflation which is going to run between 3.5% and 5% and we're

importing it and we're importing it because of government policy. so unemployment -- that's the point. unemployment is going up. 17 years high. the chancellor made a great thing about 3,000 jobs in the manufacturing sector. he didn't refer to all of those jobs. but how many more jobs will be lost when we move into the actual cutbacks starting april the first on local councils? how will the council cope with a 20% deficit reduction. how you will the natural resource cope? we know we will lose at least 1,000 jobs in middlesboro and that's the basis on the unemployment of my constituency which is disgracefully high. we're the fourth highest unemployment rate in the country. that is wrong. and that happened under a labour government and happened under a tory government but the cutbacks that are being announced and have come back to this massive deficit reduction program announced by the chancellor in

his last budget would actually pushes further down, further down and there was no reference made as i said to the welfare state. what happened to the welfare state? what happened to the balance between the public and the private sector? what happened to those who are not able to look after themselves? where was all that in today's budget? >> honorable members talked about what's happening in the northeast and the northwest over the last 10 years. we've seen public sector jobs increase by 100,000. between 1999 and 2009. in the private sector, we've seen growth of just about 10,000 jobs. that is completely unsustainable. what do you propose is going to address that situation? how are they going to do that? >> well, that may be a figure -- i'm grateful to the honorable gentleman but that may be a figure in his particular world but that may not be a figure in another part of the world but may i get back to the point. we created a balance between the public sector and the private sector. and we believe that balance is the right balance for our country.

and certainly in terms of the northeast of england when we lost manufacturing jobs, we lost coal jobs, we lost ship building jobs, we absolved in the public sector those who worked in the public sector created careers for themselves and in relation to the point my honorable friend made, there was a relationship between the public and the private sector. they work together. i think the honorable gentleman had one fight in this particular one, i'm not sure i should give another one. >> i thank my right honorable gentleman who has been most generous. can he explain why the government was running a structural deficit several years before the financial crisis? >> we had no difficulty with the structural deficit because we believed in infrastructure projects. we believed in private/public of initiatives and balanced finance which is exactly the same what the germans brought. it was a fine way of doing it and it's still a fine way of

doing 'cause in my constituency, we got the first public/private initiative which was to change university hospitals. so we have nothing to regret on what is now called the structural deficit. and what i would say to the honorable gentleman i would say earlier. the structural deficit is like any other deficit. it's part and parcel of the fullest objective. and the chairman who made the point earlier it's perfectly right why this particular deficit public expenditure in other areas is going up. so get your balance right, mr. deputy speaker, and what we're not getting right is the balance here. the chancellor made a great play of competitiveness. he said that we were -- we moved from fourth in the league of competitiveness to 12. he made big thing about competitiveness. he did not mention the eurozone, not surprisingly. he didn't motion -- mention in the conference where seventeen members of the euro zone will

create a competitiveness pact and why are they doing it. they wish to increase their exports and we're in competition with them. we're in competition with germany. we are in competition with france and we will be in competition with these other countries and when the chancellor of exchequer talked about greece and talked about portugal and talked about spain. why is it that the fourth largest economy in the world has to compare itself with greece? with 150% deficit, not the 60% or the 50%. we're talking about 150% debt against the gross domestic products. how come that our nation states the fourth largest in the world has to be compared with a small country like greece? and on the basis of that we go into the 67 billion deficit on the budget and the chancellor today -- he was very gracious having already taking all this

money out of the economy is now saying i won't take any more out. i'll be giving you all a favor and hit you on the head with one big hammer and i'm not coming back with another one. how gracious of him? how gracious of him to destabilize within the space of nine months our economy? and that is what he's done. that's what he continues to do. he will certainly rebalance the economy. it will be away from the welfare state. it will be away from the public sector. it will be away from the work force of our country. and he will weaken the fabric of our country and weaken the standard of living of all our people. >> it's actually not the chancellor who's associated this economy with those of portugal, ireland, greece and spain but it is national markets. when we had -- when we had the governor of the bank of england in front of the treasury select committee two weeks ago, he and his team confirmed that without a package of fiscal austerity measures this country would be borrowing in the international markets at a rate 3% higher than we are at the moment. that is the official position of

the bank of england. and that is the reason why these difficult measures have been taken. >> well, i'm not going to go down the route which i think the shadow chancellor of the exchequer might have done at the one time in attacking or criticizing the governor of the bank of england. that would not be appropriate for me. but the advice that we've given to the government when it became a government was good advice comparing us -- when the honorable gentleman makes an interesting point. at what point in our history should we turn over our economy to the ratings agencies? .. to the ratings agencies? at what point did we say to ourselves, it's only a rating agencies when the rating agencies call you, and they all have a fix -- they have a panic. you're not to reduce our ratings, are you? mr. speaker, why would -- why did we as a nation state give our economy over to a ratings

agency to moody's, to standard & poor's? where was the chancellor of the exchequer who said, no, i'm not going to do that. and in relation to the ratings agencies. the ratings agencies accepted the deficit reduction plan of a labour government. they were happy with the four-year program. it was this particular government who fell back to the age of the noble lords and to the -- john major referred to my right honorable member. it's not working. it's not -- [laughter] >> it's not working. and that was the two points. the honorable gentleman gave away one i'm not sure i should give away to a second time. >> would you not agree with when john major left office in the last government? >> that is it not true. could not possibly be true.

i just made the reference the facte we borrowed 11 billion in the month of february alone. so if one takes every aspect of this government's policy in relation to competitiveness, in relation to growth, in relation to unemployment, in relation to inflation, what one does see,i that is the point i want to make in relation to the lord lamont and john major. this government is falling back to way it was from '79 to '83 and then into '90 tw twod'92. public sector doesn't count very much. welfare state doesn't count i very much. what the counts, is balancing the budget. say that in five years, maybe we will be adopting a german proposal of balancing the budget completely in that time. so i don't want to hold they house up much longer. i would like to make some reference to my constituency

and to say to the chancellor we're very grateful we have enterprise zone. we're very grateful we have local enterprise partnership. we will work closely with e the government on both ofhi those. we have seen the not bawling of steel mills. we have a -- mothballing. we have we will look to this budget, we will look to the local enterprise partnership. we will look to the newte enterprise zone and we look to the new steel mill thatnd will create jobs, bring in t 600 million in investment i and from my part of then world, notwithstanding thet cutbacks, notwithstanding impact on local coin sills for future is bright and i'm very happy to be confident with that notwithstandingt all the blows we will takel over the next four years. >> john repert.u, >> thank you, mr. speaker.

remind the house i do offer industrial businesses right h to a swedish international industrial group and investment advice to a british investment company. deputy speaker, members have expressed disdispleasuregger ec. and i'm pleased to say at the moment we have a better-managed economy than the case in greets agrees, spain portugal. our public deficit was larger even than theirs as a proportion of our national income when the big deficit reduction program started. and i would like to praise my right honorable friend the counsel of the exchequer for overseeing his central task day in and day out, month in and month out our five-year burden all of us in this house is to

get that deficit down before it kills our public finances and our economy. >> here here. >> if anyone thinks there is no risk, i would invite them to go visit greece portugal or ireland and see what happens when you ignore a deficit for the best of reasons. when you say, i do want to spend a little bit more on a good public cause and so i will borrow it so spend it. of course, we've all got great causes we would like to spend more money on. borrow somethi borrowing is something so often and when you're borrowing too much it destroys your general economy it doesn't provide too big of a burden on those who have to pay the taxes and the interest charges but in the end brings down the public sector as well with far bigger cuts and far less favorable choices than we have trying to take matters into our own hands by planning a steady deficit reduction. it is particularly poignant,

mr. deputy speaker, that we are debating in this relatively civilized atmosphere in a relatively sane and sensible way an economy position about which there are strong agreements but no overall disagreements about the imperative to avoid big rises in bond rates, interest rates and the imperative to get on with some kind of deficit reduction. on exactly the same day that the portuguese parliament is meeting to discuss not their first, not their second, not their third but their fourth package of emergency damaging public spending cuts and unaffordable tax increases because such is the plight their economy is being driven into by reckless overspending and too much borrowing and by of course being within the euro area. >> i thank my right honorable friend for giving way. would he agree in answer to the gentleman's question when the ratings agencies took over. they will go no further back in 1949 when we had a run on the forge exchange markets --

foreign change markets and we had the foreign exchange markets under labour government in 1976 to '9 where we had a run on the foreign exchange markets under a labour government? >> mr. deputy speaker, my right honorable friend is quite right. the labour party has pointed out there was one or two examples under conservative governments too so i don't want to be drawn too far down the historical path. i think we can see what we need to see by looking at the modern reality where we see that as my right honorable friend the chancellor rightly said, currently and fortunately, british bond rates, the rate we have to pay to borrow money for public purposes are much closer to germany's than they are to many other countries in europe. and they are on the half the level they are in trouble of portugal at the moment. portuguese 10-year moment went through 8% today just to stress to those beleaguered portuguese

parliamentans whether aem election might be an answer to their problems. if they don't take dire immediate action their country can't borrow at any affordable rate of interest and so they can't go on spending the extra 10% of national income that we are currently spending which is borrowed to tie us through and to get us through better managed times. mr. deputy speaker, i think my right honorable friend the chancellor is right that having tackled the deficit and set out a pathway for doing it, he should then turn to the question of how he can accelerate growth. the truth of the 5-year deficit program is very simple. that we need well above average growth for the last three or four years of the program period in order to deliver the numbers in the redbook today, which is very similar to the numbers in the redbook we saw in the first edition of this chancellor last summer. and just to remind the house,

the scale of the task, the government's plan is to be spending 70 billion a year more in the fifth year of the plan, 2014, '15 than the last labour year. an increase of 70 billion in cash terms, not a big increase. there will be pressures because of it. but it is an increase of 70 billion a year. and to get the deficit down, by increasing the amount of tax revenue collected by an eye watering 175 billion pounds extra in the last year of the plan compared with the last labour year. we believe that we've seen all the important tax rate rises that the chancellor thinks are needed to do that. the rest depends upon that above-average growth that is still there in the official forecast at the office of budget responsibility. so the -- i give way. >> can i thank the right honorable gentleman for giving way your laying out the keys as

i understand it for why we need to have credible reduction in our deficit because of the likely market reaction but does the honorable gentleman also be concerned about the impact any austairity program might have and even a limited impact so far in the united kingdom and greece and likely in ireland that maybe too much too soon? >> i think he's absolutely right. i think the policies that ireland, greece and potter goal are being driven to may well not work because they are excessive. but that is the result if you go into the euro and then follow the market pressures inevitably produces. i see some labour members trying to see it's nothing to do them and they're looking away i remember being a lonely figure when i said we would not join the euro. i'm very pleased my party seems

to be of that view. >> here here. >> i now believe the other two principal parties in this house have come around to the view that we certainly shouldn't join the euro any time yet. we have still to receive the apologies from them because surely they must accept now that if britain is being driven into the euro in the way that they thought, we would have broken the euro and broken ourselves. the euro could scarce contain small economies the size of greece, portugal and ireland that were around that amount of debt. it couldn't contain britain comfortably with that amount of debt that britain started to incur and the british banks just as it's finding spanish banks difficult to tackle. i give way. >> i'm glad he added the words "anytime yet" in relation to the euro because it's inevitable over many, many years we will join the euro. oh, yes. can i tell the honorable gentleman that tomorrow and the next day 17 euro states will get

together and put forward a proper plan for the euro and for the first time in our history, united kingdom is excluded. >> mr. deputy speaker, if they come up with good ideas we can adopt them. if they come up with bad ideas, we will be very wise to side-step them which is exactly the freedom that i and others have argued passionately in this house over the years and which we now has a government wishes to enjoy if all goes well. but the honorable gentleman has said that these reductions could -- now, as a member of parliament believe it or not i didn't come here to have teachers sacked from my schools or doctors sacked from my surgeries. i want them to be well paid for, well funded and for there to be sensible growth in numbers where we have extra demand. where all of that view and it's quite misleading the party opposite suggest some of us don't appreciate that is well for our constituents. but it has to be affordable. it has to be within the power of

the free enterprise economy to pay for out of reasonable taxation in a way which doesn't damage our growth, which is why it's so important. now, what is so crucial as the government has managed to find an extra 70 billion of cash spending for the fifth year of the plan compared with the start year, it is crucial that we keep public sector costs down so that the maximum amount of that money can go to improving service quality and in some cases improving the amount of service and the minimum amount of it goes in extra costs and extra inefficiencies. and now all parties will say in office that they wish to have more efficiently run public services that they not only have to will the end but they have to will the means. that is why the reforms that this government is embarking on are so important. crucial that the government should listen. crucial that sensible criticisms are taken on board. but the public services had to be reformed so that we can say

to people in five years' time, you are getting more for that extra 70 billion. we haven't had to cut things that really matter because we managed it better and we found a bit of extra money. >> i'm very grateful for my right honorable friend once again for giving way. is he aware of the enormous interests that exists among the purified economy for reform of it itself. i have had a successive group of gentlemen saying why can't we be allowed to save money and the reason is because of this enormously expensive procurement process. in the case of schools, not a single school has been built recently which does not have an atrium and the reason is because it's been decided that schools which have not to do with corporations, nothing could be sillier or resistant to good government spending. >> i think my right honorable friend is quite right. improving the quality and cost-effectiveness of our purchasing is crucial in

government. and there are many opportunities. and they provide some good examples but so does general purchase. i think it would be a good idea to speed the deficit reduction if there could be a stronger moratorium on purchasing items and supplies where there are already stocks in any company undertaking that radical turn-around this country is trying to do would immediately freeze all unnecessary purchases and make people run the stocks down so that we could save some money. we see that the current rate of natural wastage of staff in the corps departments where i've got answers to questions is running about 6% per annum. we have 4% in the first 8 months. quite a number of those posts have been filled by taking on new people from our side. i would urge my ministerial friends on the front bench because the easiest way to reduce the administrative head on the scale, the least painful

way for their staff who need to have their morale up is not to replace people who leave and not to make other people redundant. we can't afford the redundants and if we make great use of natural wastages. ministers can say to their save it means better opportunities for promotion. better opportunities for a change of job. if it's not an essential one you remove the post. if it is a essential one you appoint someone from the inside and remove some other less important post. that surely is the civilized and sensible way to tackle the very necessary task of cutting the administrative overhead. if the government can cut its administrative overhead by the very large percent he's talking about it takes the pressure off in the cuts in the areas none of us which to see in the schools, in the hospitals and the front line services that matter so much. the question i was about to ask before the intervention was, what is the international context going to be like? how easy is it going to be for

these government to have three or four years of above-average growth? and here i must warn the front bench that i fear that the world background is going to get more difficult going into 2012 and 2013 than it is at the moment. we had a very prolonged boom in the emerging market world and we now see china and india and brazil lifting their rates at very high levels and they are desperately trying to squeeze inflation out of their system and we must anticipate some falloff in demand on spending and growth rates in those big emerging market economies. the united states' economy is going to have a very good year by the looks of it on the back of a lot of money printing very low interest rates and other matters. that comes to an end in the middle of this year so i think by next year, we will be seeing a slower rate of growth in the united states of america as well. a worthy situation in the middle

east to get worse and for the damage from oil fields outside of libya and we may have another shock on the oil price which could serve to impede the growth of the economy. so the conclusion i take from this is that the world economy doesn't know if it's going to go back into another deep recession. we're not going to have another impossible situation but the world economy is not going to provide the impetus that it's currently providing. it may not feel that great but it is providing quite a bit of impetus at the moment. it will be providing less impetus next year and beyond. that means that the chancellor has to intensify his pursuit of measures which make the u.k. that much more competitive and that much more successful. >> thank you, mr. deputy speaker. and would my right honorable friend also comment on the importance of improving our import positions vis-a-vis the

countries brazil, russia, china and what important part that could play in our recovery? .. larger companies go into india and china ansett up factories of their own there, so service local markets for variety of reasons. easier to serviceness markets in that way for reasons we need not go into in detail today. i agree with the right honorable friend would be good to invest more and help small or medium-sized enterprises who don't have capability to set up factors on the other side of the

world to export in their terms. devaluation, which happened, over a year ago now, has given us one nasty result, which is much higher inflation rate than comparable economies but given us one very pleasant result which is very easy to export out the british states now because british industry is much more competitive at current level of the pound. we should have that on our side. paradoxically quite a bit of british business in the manufacturing sector is very close up to capacity. so they are tending to put the prices up a bit to collect a bit more revenue and improve their balance sheets because it is not that easy to expand. that is things he is talking about are vital and needs to be done speed i willly. this country needs to put up factors and get into more use more quickly. it needs to find skilled engineers and other skilled individuals who want to work

in industrial background rather than advisory are city background and expand capability of their countries as a result. modern manufacturing require as very high degree of skills input, very talented people, good management. it doesn't require so many people to operate machines because really good manufacturing now is very highly automated t needs precision of very expensive machinery. indeed the easiest way to compete with german states is highly automated costs so your labor costs are rather unimportant of the industrial costs but important skill content and plant and equipment content is. higher but it is affordable with a quality program. >> may i ask you a question? i'm grateful to my right honorable friend a director from jrb evidence to the select committee yesterday he had 57 vacancies for

engineers he can not fill so j.c. b products can be remain competitive that unfortunately legacy of too many years we haven't delivered technical, vocational being practical education as required. he is inthousand attic about the government taking forward from the review and supporting lord baker with his university technical colleges. >> mr. speaker, i'm very happy with those proposals. so what i wish to stress is government is clearly on the right lines and i hope it is going to be with cross party agreements we need to raise our game ad skills and training and education particularly in engineering and pharmaceuticals and chemistry and so forth where we have an advantage, can have much bigger advantage if we do more. yes we need to review how easy it is to buy or build a factory and how easy it is to equip it. anything that can be done to lower the effective tax rate on business is going to make britain a much more

attractive place to be. those members of commons will know i do take the view if you set lower rates you normally collect a lot more revenue. if you want those growth rates, lower the rate you set, realistic rate, more revenue growth and more overall growth you're going to have. it would be a great tragedy to abort the recovery in certain sectors because the tax rate was too high. see the progress on corporation tax. need to see details on individual tax screams. need to see how carbon tax rebate would work. if we went ahead as trailblazers in britain to set a higher carbon price we send business out of britain because of less clean, less acceptable venue. very important that the rebates and discounts are properly thought through so that at a time when the government is trying to promote more industry it is not taxing it too heavily. >> coming up today, a look at iran and its regional

influence with former journalist barbara slavin she is with the atlantic council and she wrote a brief that is the centerpiece of this forum. joining her are the council's task force leaders, stuart eizenstat and former senator chuck hagel. live coverage 2:30 p.m. eastern on c-span2.

>> at a conference on housing yesterday, vice president biden's economic adviser said the housing market remains fragile and is neither hurting nor helping the economy. hosted by the atlantic magazine and "national journal". jared bernstein is followed by a panel of plans to gradually dissolve fannie mae and freddie mac. and effects on low-wage earners looking for home loans. this is just over two hours. >> thank you very, very much. this is one of those great subjects we're all sitting here thinking about ourselves and where we sit on these scales and these

answers. before our interview with jared bernstein, let me bring to the microphone and introduce our partner in these affairs, tom wilson, of all state insurance. john joined allstate in 1995. he became ceo in 2007. he serves as vice chairman of the chicago federal reserve. he is active in business roundtable and financial services roundtable as well as number of other groups. we've been fortunate enough to do a number of events and partnerships with allstate really over the last eight years. this one in particular over the last two. so we're very pleased to be partnering with them. all of you have been, many of you have been touched by allstate in your lifetime or know of them. they have 70,000 employees, 33,000 agency owners and have 17 million customers. so if there is a company that is surely in touch with many of the american public they are. tom is regularly on cnbc and

seen increasingly i hear going in and out of the white house and treasury department. so we have someone who is a player in this community. and, tom, we welcome your partnership in this. >> well, good morning. thank you all for coming and joining us today. we know you have lots of things to do with your time but we're glad you're here to share some thoughts have a good deal log. i would also like to thank jared bernstein who is here with us. he is economic policy advisor of vice president biden. we're pleased to have his support as well. it has been two years since we started those polls. and our goal has been to give the american middle class a voice that's heard above the idealogical and political rhetoric. and to let their view be heard as to what needs to be done in america. so we've had great team work with the "national journal".

we raised a lot of good issues and raids new issues in this poll which is very interesting material ed went through but i would like to share some of our own views. there are several very interesting themes i think show up in this poll but showed up in all the other ones as well. first americans are optimistic and they believe in self-determination. so belief in the american dream is arrive live and well and that is a very good thing. we saw it with the millenials in our 5th poll where we looked at that particular segment. population. this generation is swamped with having hard time getting a job. they have student debt. many of them live with their parents. they're still optimistic in the face of all that that they can live the american dream. we saw it in our sixth poll and if this poll 60% of the people believe their own skills and hard work can help them realize the american dream and it is achievable. what was very interesting to us about this poll was that homeownership remains a critical part of that dream. so, of course 73% of the

people saying that owning a home helps them achieve the american dream. that's despite the fact in our prior polls they said a number of things. they said this recession is different. it is a game-changer. they said they were more risk-averse. they said they are saving more and spending less. 27% of americans we know outside the poll are underwater on their homes or mortgages are worth more than their homes. trillions of dollars of wealth have been lost. yet 70% of americans would still recommend to a friend or family member they should buy a house. 89% of them would make the same decision to buy a house if they owned one today. there are a couple of questions like, why? and what are the implications? what do people know that we don't know when we look at data in total? well, it makes sense because the underlying fundamental demand, consumer demand for housing has not changed. it is still part of the american dream. americans still want to own homes. so, if you have that

underlying demand has not changed, then, the what you have today is a current supply and demand imbalance. there is temporary imbalance. it is worse in some states, sun and sand states then it is in places like new york but you have a temporary supply and demand imbalance, not a permanent shift in consumer demand. so now you could ask, there's a legitimate question to be asked what about the studies that show owning a home is not a good deal? it is 1% real rate of return. not as good as everything else? by a margin in the poll of four to one, people prefer to own a house than to buy a stock. what these studies don't capture i believe is the number one rule of investing which americans know, which is buy what you know. don't buy what you don't know. and so, at allstate we have $100 billion portfolio. we try to buy what we know. if as a consumer you can know your local real estate market. you can know the houses. you can know your neighbors

better than you can know what stock to pick. second, there is less downside in buying a house. because you can always live in it, right? it is part of the american dream. in this poll you saw a number of people wanted to buy it for financial reasons but a bunch of other people said, you know, where my family combs. i can have memories here. so some returns come in dollars. that's what the economists measure. some returns come in memories. americans are willing to invest their money to get that american dream, some of which is economic while some of which is their person well-being. and then there's of course always a forced savings component to buying a house which helps people. now while lot's of economic wealth has been wiped out, most people in america, are either in the money or close to being in the money on their house. so, other people who are underwater, if you look at population total, about 10% of homeowners are really underwater. they make up about 450 billion of the $750 billion

of under the water. everybody else is reasonably close. so a couple of years of inflation should be able to bring you back to where you want to to. lastly, there's high transaction costs. if you want to get out of a house, not like buying a stock where you call schwab or somebody and pay 9 cents a share. you have to pay somewhere 5, 6% commissions. you have to pay legal fees. if you choose to default the costs are even higher. when you want to get back in, nobody will want to lend you money to buy it. it makes perfect sense why americans are not rushing out to sell their homes and staying in their homes. demand continues to be very strong. so as a result, my personal view then is, what we have is a housing oversupply is temporary, and that owning a home continues to be a good financial decision. so the question for most customerses, consumers today, is not, if they should buy a house, when they should buy a house. and, so, now, i've said

supply and demand balance is temporary, that means it is not permanent. permanence is long time. anything short of forever becomes temporary. nobody really knows how long it will take to work through this bubble but particularly in some of those states that have been harder hit. but today the negatives still outweigh the positives which is why you don't see a number of people rushing in to buy, even though there is this demand there. let me go through a few stats not in the poll. first there is about two year's worth of supply on the marketplace if you add in homes over 90 days delinquent. so there's a fair amount of supply out there. plenty of opportunity to buy. people don't see it. there is the no reason to have to rush to buy because there is plenty of stuff available and will be for some time. secondly, a lot of uncertainty in america. all of our polls show consumers are concerned about their job. ron described this as the blast radius of the recession. like 70% of the people have a friend or family member

who lost a job. so there is this uncertainty of, will i still have a job. as a result, they're spending less money. there is also uncertainty over the near-term direction of prices. why buy today if you think the price is going to go down five or 10% in the next year? might as well wait a little while. no incentive to keep buying. household formation rates dropped in this recession. some is due to the economic problems we have. so you don't have the a bunch of new houses. new people needing to buy houses. average income has been flat for over a decade. what will eventually drive long-term housing prices will be average incomes go up. if average incomes won't go up, it won't drive housing prices up. affordability relative to income is certainly better today than it is in last four or five years. and it is about to where its average is. secondly, housing costs, buying a house today is actually cheaper than building a house today in

many markets. so cheaper than replacement costs. lastly, interest rates are low. so, nobody can predict exactly how long it will take but i do believe this is a temporary shift and that you, because the underlying demand and desire to own a house has not changed. let's shift though our focus from housing to trust in the role of government and business. and as in our prior polls we continue to see that business and government are not trusted and americans want people to continue to work together. they think democrats are not working republicans, business not working with government and they're sort of watching idealogical and petty fights. my view is idealogical fundamental system out. it is no longer popular and we, they want us to get on with it. so one of the interesting things in this poll which ed talked about is that the lack of belief in how this is actually helping them. so let's go through that in

a couple of ways. trust deficit is bigger than our fiscal deficit and growing faster and more dangerous than our fiscal deficit because of our democracy is based on the fact that people trust their institutions. unless we fix this trust deficit working together show we can make changes won't matter how much money we're in debt because people won't believe in our system. you also see what's interesting in this poll they don't think that the policies being enacted are benefiting them. so, as it relates to housing as ed talked about, 3/4 don't believe they benefit government policy promoting homeownership. amazing to me. 70% of the people get mortgage deduction don't think it works. people say not that many people pay taxes and it is a minimum amount. so it is not worth it. 70% of the people who get a deduction don't believe it is of value. that is consistent with our other polls, i think our

fourth poll, only 2/3 of americans did not believe that the policies being enacted were going to be of help to them. they thought, that the things people were working on was not what they were interested in. that it was basically to help special interests and rich people. i think you continue to see that as it relates here. this poll shows the current programs aren't valued. and, or you could ask a question whether would be valued if they go away. sometimes absence makes the heart grow fonder. you also see the country about evenly split between whether we should continue to support or not. so americans believe they're doing their part. this concept of self-determination i can make it happen, i'm doing everything i can, i'm changing my spending habits. i'm saving more money, they just don't feel government and are recipro rating. they're pleading for people to, get your act together, do something together. focus on things we're

focused on, jobs, primary and secondary education and economic competitiveness of america. let me close with just a request of you. two years later what have these voices told us? they have told us that americans are optimistic. that they are not naive. that they know that there are tough decision decisions that have to be made. significant sacrifices lie ahead. they are willing to work hard and to make compromises to make america stronger. and what they are demanding is that we as leaders do the same. so i want to go back to the purpose here of what the heartland monitor was, let their voices be heard. i have the opportunity and the privilege to be a leader of what is a great american company. with that privilege is a responsibility a responsibility to speak out and let other people's voices be heard. that is what we're trying to do with this poll. everybody in this the room is leader in your own way. some are thought leaders. you're leaders of organizations. you have people who read

your writing who follow what you do. as leaders we need you to step up and let voices be heard as well. if we don't eliminate the trust deficit we never get economy back on pace and won't be able to help all the people achieve the american dream. thank you very much. have a great morning. [applause] >> good morning. i'm jim tankersley. economics correspondent for "national journal". thanks for joining us. i hope will be lively and interesting discussion today. that is mostly up to jared, not me. i like to introduce jared bernstein and chief economist and economic

advisor for vice president biden. on the middle class tax force which has done a lot of work. deep dison questions of employment, economy and whole idea what it means to be middle class. that is jared's work a long time. sort of a running theme of his distinguished economic career which includes stints prolific book-writing and op-ed writing. i can tell you he owns one of less mediocre jump shots of entire obama administration. thank you for joining us. jared, start with a kind of can you give us an overview. what is going on with housing now? >> first of all, there are many basketball players in this administration who are much, much better than me. let's correct that for the record. i play with the president a couple of times and he can get around me with absolutely no problem. but he is a lot younger than i am. i would say, of, i'm just

going to speak broadly as jim asked for a few minutes. we'll have a discussion. i know we're going to have time for your questions as well. of all the issues i deal with at the white house, homeownership is one that evokes some of the strongest emotions and i think you can feel some of that if you read, i thought very readable supplement that the "national journal" did on this issue. obviously unemployment does too but they're intimately related. a primary cause of the great recession and elevated unemployment rate was the housing bubble, a massive asset bubble inflated by a massive failure of the system of housing finance both private and public. and yet if you read the supplement, the "national journal" supplement, you get a strong sense and i heard in some of tom's comments and others, a very strong sense there is more than dollar and cent underwriting, securitization, gses, et cetera, feeding this

question of the role of homeownership in the economy and in the lives of americans. there are strong emotions at play here too. and i think if you want to bring the best policy thinking to the issue you better take these feelings, these sentments into account. you've got to use your brain and your heart to think this one through. let me be a little self-referential. for years i was single, mobile person living in expensive housing markets in the northeast. i did economics and concluded renting was a much better deal. even after the wife and kids showed up i still argued for renting. i should disclose our children came along that the economist dean baker who was way ahead of anyone on this started showing me graphs of home prices diverging sharply from rentals and middle class incomes, i.e., as the bubble was inflating. but, both my wife and our accountant, who happens to be my wife's sister, so i'm not sure that qualifies as an independent view, were

pushing for homeownership. now we live in this lovely, leaky, somewhat funky house on a cul-de-sac. in fact i had somewhat peculiar experience writing these comments last night while running downstairs putting buckets underneath leaks. kind of forcing you to think about homeownership in a very personal way. but in recent days with spring in the air and daylight savings change i can sometimes get home from while my white house job to see all the kids playing in cul-de-sac. old cat sleeping on porch. i get aer boo and sit out there watch the kids play. full disclosure i'm checking my blackberry every five seconds. you get the picture, it is a nice picture. at the same time i'm working for government supporting about 90% of all new home loans and nobody believes that's good. housing market is a lot more stable than it was but it remains fragile. if anything, is quote,

bumping along the bottom as goldman sachs research note mentioned just the other day. and the bubble and bust that got us into this mess was a classic market failure firing on just about every cylinder. top officials egged on by dense in both senses of the word theorizing rationality of markets argued government regulation was unnecessary because the markets would self-correct. potential homeowners signed on deals only made sense if they suspended belief in the law of gravity as it applied to home prices. of course they were egged on by shoddy underwriting working with securitizers who had little reason under an originate to distribute model to worry about loan quality. and as we forthrightly stress in our white paper on gse reform, fannie and freddie got into the game too. late in the game, more chasing the market down than up but no one is blameless in this drama. my simple point before we get into the discussion there are a lot of sides to this question of housing.

i don't question at all that it is a piece of the american dream but that dream can not come true if homeownership is unsustainable. as my colleague on our housing team jim parrot says, homeownership done right can be a ladder into the middle class. done badly can be a slide out of it. like many in this room we've been thinking a lot about how to do right. . . right considering owning and renting, the structure of housing finance, the role of the federal government. we don't have all the answers, and we'll keep working with policymakers of all stripes to find the best policy architecture to support affordable housing options, liquid mortgage market consistent with prudent pricing of risk and protections for taxpayers and consumers. and once we get that figured out, you're all invited over for a beer on my front porch. [laughter] jim, over to you. >> okay. so let's start, you touched on a lot that i want to dive into, i but let's start with the issue

of the market and the recovery. >> sure. >> the recovery is not bumping along the bottom, it's starting to pick up maybe here, but housing remains, clearly, the dangerous drag. >> >> yeah. >> how bad is the market, and how much is it holding back recovery? >> um, i was able to come up with a couple of slides that i think show, shed some light to couple of slides that should shed some light on that. i think the answer to your question is that while the housing market was -- and the bubble and the ensuing bust and the market itself, the housing market itself was, obviously, a key factor leading us into a deep recession. at this point, housing is not bringing the macroeconomy down but neither is it lifting it up. if you look at this slide -- okay, i see it here. yeah, there's screens over there. if you look at the slide, i'm

colorblind but i think it's the red line. is a contribution to gdp growth of residential investment so this is -- this is housing, its contribution to the growth in gdp. and you can see that huge gap as housing investment tanked, became a huge reason for the recession. and you can see how deep that was. but as jim pointed out gdp has been growing for six quarters at an average rate of 6%, employment which was a huge negative in the private sector has now been growing for 12 months, 1.5 million jobs. and what you can see is housing -- the contribution of housing to gdp growth in the slide is about zero. it went from being a huge negative to being a zero. if you look back on the earlier numbers there on the expansion of the 2000, you can see it was

an important contributor. so certainly housing investment is not contributing to economic growth and often coming out of a deep recession that's precisely what you want to see. you want to see that contribution and we're not seeing that so i'm not saying that it's -- that we're out of the woods and everything is all better. but what i am saying what was a negative in this case is more of a zero. one more slide on this and i'll get to your next question. one of the reasons that's true it's actually an interesting point that is somewhat underappreciated. this slide shows residential investment. so that same factor we were looking at the last slide in its contribution to gdp. this is a residential investment as a share to gdp. and what you can see it just tanked, of course, as investments fell. it tanked as a share of the economy. it went from its historical norm of around i don't know in the 4 or 5% range down to -- down to 2. now, it's thumping near a post-war low. this is a share of the economy and it's bound by zero. it can't go below zero. and so in a sense what this

shows is that, you know -- the correction, while not complete, while frustratingly slow is largely completed by this kind of a metrics. >> let me follow up on that. but gdp is one metric and jobs is the metric that the voters vote the prose and on gdp, a lack of mobility for people who can't get out of their homes. they have problems not being able to create new construction jobs as clearly construction has a big lag here. how are you wondering about the employment effects now of the market? >> i worry about everything every day. so when people ask me how much i worry about stuff like this, the answer is a lot because unemployment is way too high. and job growth, while positive is too slow. there's a lot of feedback in

the -- in the dynamic relationship you just described. it's, obviously, a lot harder for people to service their mortgage debt if their employment situation is less secure. if their wages are not rising at pace. and particularly, of course, if they're unemployed. in fact, part of our modification program targets the unemployed and the long-term unemployed in particular. so i think there's feedback both ways. there are -- i just happen to have another slide on this. if you -- this is from a bureau of labor statistics paper that just kind of looked at all the different jobs associated with employment -- i'm sorry, associated with real estate including construction but also including financing and real estate and you can see not only just a huge loss there through the fourth quarter. i think these are quarter numbers. through the fourth quarter of 2010 but you also see you're talking about, you know,

something like 7, 8 million jobs here. this is out of a private sector job market of 110 million jobs or so, 108, you know, this is a big sector. so it definitely weighs on our concerns. and that's one of the reasons why you're happy to see the toxins getting out of the system and the correction well underway but the fact that, you know, you're bumping along the bottom more than you're increasing and contributing is still problematic. at the same time, we do have a consistent trend now in private sector employment growth. and that's a positive. but when you make your list of the things that you worry about in today's economy, state and local budget cuts, obviously, some things that are going on in other parts of the globe, the housing market is on the list. >> and clearly when you talk about the housing market you talk about employment and how they're related. one of the problems here is that if you don't have a job you can't pay your mortgage. this is related to the foreclosure problems and the foreclosure problem is holding back the clear of the market. so as we -- as we look at that,

are you doing enough to attack the root of all which is the employment problem? i mean, has the president -- have your policies done enough and do we need to do more to bring down unemployment to help the housing market? >> i think so. i mean, i think -- let me start with another picture just because i think it's interesting and links up directly to what you're talking about. this just plots foreclosures against the private sector employment. both are indexed to 100 and it looks like 2007. i can't see anything without my glasses. i can't see anything without my glasses and i can't see colors so i'm fine. [laughter] >> i think this is a useful picture is that certainly the employment was arrested back in january of 2009 we began to see more consistent -- i'm sorry, january 2010 we started to see more consistent employment growth. while foreclosures just kept tracking up.

and as i mentioned, 1.5 million jobs over the past 12 months. that's not enough. the unemployment rate at 8.9% is way too high but it's come down considerably over the past few months so i would argue that the president's agenda is one that's very important to our office as well as the vice president with the chief of the recovery act has been integral to offsetting some, not all -- offsetting some of the damage of the greatest recession of our lifetimes and particularly in a job market sense. i mean, we were losing 750,000 jobs a month when we -- when we came into office. and if you -- and if you look -- if you simply plot out the trajectory in jobs or gdp against policies that were targeting those problems, you actually can see some good traction. i understand that the recovery

act has taken, you know, a lot of negative hits in the media, you know, in various analyses. but i have no doubt that -- that stimulus recovery accomplished what it set out to do including the saving or creating of 3.5 million jobs which is by no means a trivial accomplishment and very much in tandem with policies by the federal reserve and housing policies we can talk about. but i think when you have a to realize is that the recession that greeted us and i described it in my opening comments was far greater than any conceivable stimulus or housing relief program we could fully offset. have our measures arrested the downfall and created the conditions for growth in the private sector economy? absolutely. you can see some of that happening but the damage was immense and it's taking time to correct it.

>> one of the critiques of the housing policies that you put in place, things like the home buyer tax credit which is now expired is that they have, in fact, in cushioning the blow maybe postponed a little bit the clearing of the market? and how -- how clear is that criticism? >> i don't -- i don't think -- there's something to it but i generally don't think that's a fair critique. if you think about a reasonable policy for an administration in the midst of the greatest recession since the great depression that has at its root a housing bubble inflated by a financial mess -- if you think that the policy solution to that was to just kind of -- what was

the name of the guy, the creative destruction guy? if you think that this was for shumpter liquidate, liquidate, i think it was hoover shumpter. [laughter] >> i think that's completely wrong. and i think to have done that would have squandered hugely valuable resources, not just -- not least of which in terms of jobs in reference to my last question but also in terms of people's homes. but i think there has to be a balance. if you go into this thinking -- if you go into your policies thinking that every single potential foreclosure must be stopped, then absolutely. you will prevent the market from carving out a bottom. but if you implement a set of policies that are targeted at the middle class, are trying to figure out who are the people that with a loan modification

can get out of this, you know, very deep and unfortunate bubble and bust situation and you try to give them the time to get back on their feet so that they can sustain their mortgages, then i think you're ultimately creating a floor on the -- on the housing market and the economy that is critically important from keeping things from getting a whole lot worse than they got. >> i'd like to get back to our pole at the all start heartland monitor pole here. 46% of americans say that they support what the government is doing to promote homeownership. 46% say that the policies go too far and cost too much. a simple question, which side is this administration on? >> i actually think that we answer that question in our white paper that we did on gse

reform. and what we said is that there is a role for government in the housing market. we come up at the end of the paper with three options. a very targeted role at the low and moderate end of the market through the federal housing administration. you know, that plus back-stop in case of emergency. and a somewhat larger role involving reassurance and backstop of -- broader backstop of the market and those are three options. and so in answer to your question, every one of those options has some role for government but a theme throughout that paper and particularly targeting fannie and freddie and the absolute necessity to wind down the gse's is that the government's role in the housing market got -- was part of the problem.

and got way out of hand. and that needs to be corrected. now, in our view, one of the most important parts of that correction, putting that -- putting that role back into its proper size and perspective is the winding down of the gse's and that's going to take some time because as i mentioned in my comments, the gse's and the fha and the jenny and -- all the different housing policies are now supporting over 90% of current loans because the private market has just been on the side for a while now. but that's going to start to come back and as that comes back we have to pull it down. so i think it's actually very ininstructive that the poles show it's sort of half and half thing because i think they're both right. there is a role for government but it's about to be one that supports sustainable homeownership, not the kind we

had. i will say one thing about this. that maybe is somewhat underappreciated. the role for the government in the housing market is by no means simply housing policy at hud. it has a lot to do with financial market oversight. and if you just get to the very bottom of this thing, certainly one of the primary causes was just terrible underwriting and a securitization -- securitization phenomenon that lacked transparency, that lacked any kind of responsible risk retention. and these kinds of policies are very much embodied in dodd frank financial reform. so when you're thinking about housing policy you have to think about housing finance, of course. and about proper oversight. you know, when you hear tim geithner talk about this, every two paragraphs he talks about making sure banks have adequate

capital to support their liabilities. that didn't happen in the financial bust. and so that's a key part of this, too. >> so let's drill down on that just for a second. dodd-frank, one of the critiques of dodd-frank, it's going to make it too hard for people who would otherwise be good borrowers to get a loan. and it's going to make it too hard for potential home builders to get credit particularly if the market clears a little bit more. could these regulations be too onus, in fact, for the credit that is needed to move the market? >> well, it's always a balancing act. i guess when i look at that time, my gut reaction would be no. next question, no. [laughter] >> no, great, all right. we got some more. >> no. i think that -- you know, thinking -- to me the most meaningful economic analysis of what happened that got us into this mess was the underpricing of risk. and, yes, i am a more left-ledge

progressive economist. but i still believe that, and always will, when you screw up prices, all hell breaks loose. and if you screw up the price of risk, you're asking for it. and we asked for it and by "we" i don't mean any stretch of the imagination of the public sector of the gse. this was -- this was initially very much a risk underpricing that you could see all throughout the private sector financial markets. so it's absolutely appropriate that financial regulation does the kinds of things that i mentioned in my last answer that has risk retention and securitization. that has a larger capital backstop supporting the liabilities that banks and lenders hold on their balance sheet that has consumer

protections. that has a financial oversight for it. all of that is critically important and, in fact, there's -- i would probably twist your question around and say, we obviously -- the policy obviously went way too far in the other direction in terms of deregulation and lack of oversight and all based, as i said in my comments -- you know, all backed up by a very, i think, toxic economic philosophy that argued that don't -- there's no need to regulate because markets will self-correct. the mechanisms to perform the kind of oversight that dodd-frank has in it are not needed because they're built into the system. well, no, they're not. and such -- such oversight is very much needed. there's an interesting set of work by a great economist who came back into vogue during this because he thought exactly about this problem and he talked about the -- he didn't but people then talked about the minsky moment where the economy -- where economic players, particularly in financial markets, go from being a heavily -- a hugely

underpricing risk to overpricing risk. they become hugely risk averse and there is some of that but, frankly, i see much more of it as a deleveraging and one more slide and then i'll -- i think this is a really underappreciated picture i'm about to show you. well, maybe i'm not. and this is -- this is a simple -- you can get this with two mouse clicks if you go to your friendly federal reserve board website. but it's really an important picture that hasn't been touted enough. this is household debt service as a share of disposal income. it's the fed debt service ratio. and what this is take all the money that people are spending to service their debt and divide that by, you know, all the disposable income in the economy. and if this goes way up, you tend to think people are, you know, highly leveraged and as it starts to come down, you can see there's just a very big sliding down the deleverage scale there.

a lot of that as tom pointed out is true. my deputy tobin marcus always makes this point. a lot of that delev randall something right writeoffs, chargeoffs it may not be -- this isn't pristine everybody paying off their debts the way you want them to. but that's part of of the deleveraging as well. the debt servicing is back to prerecessionary levels and that suggests you're back in a situation where, you know, the deleveraging cycle is working itself out and that's good for the economy. >> i'm so glad you brought up risk because i just wrote a big story about this about the moral hazards that remain in our economy and there's a large school of thought that says so long the government guarantees some of the housing market and the fdic guarantees with the banks and put out mortgages that will always engender too much risk in the market. could that -- could that be the case? could we still even after this crash be looking at the

possibility of another housing bubble sometime soon that could tank the economy? >> you know, people who take the long view -- robert schiller wrote an article about that very same question that was very good a few weeks ago and i commend that to you where -- i mean, he probably is the most scholarly person in terms of the long view of that kind of question and he said this is kind of 100 years' thing and he doesn't -- and he doesn't think it's going to happen again soon. you know, from my perspective as a government economist we can't operate, you know, based on -- on that. we have to set -- we have to set up the policy architecture such that risk is appropriately balanced. so we can't go too far one way or the other. and i think that's very much in the spirit of president obama's view on this, is that moral hazard is something that has to

instruct the policy like the loan modifications. you have to try to target people who need help and not target people who don't or people who won't be able to pay their loans off even with help. so you always have to be cognizant to moral hazard but the thing i would say -- so i would say i think -- i think we have the balance right but that the thing i would say to those who would -- to those who would argue, you know, you're creating -- by any kind of a government backstop, whether if even option 1 in our white paper which is an fha for lower end and moderate marketed that any backstop is going to engender a -- you know, another bubble and bust, what those people have to square themselves with the question of, do you really believe that the government -- i'm not talking about our administration. i'm talking about the administrations, you know, years to come. let's hope robert schiller is right. we're not back where we were for many decades. that the government at that time

is simply going to sit on the sidelines and let things crash? you know, there's just no advanced economy that's ever done that. so if you believe that then there's always an implicit guarantee. and i think that has to be considered. >> you've mentioned the foreclosure modification several times now. it's a program that has just not lived up to expectations. the hemp program. what's wrong and can you at this point do anything to fix it? >> well, it's a program that i would argue is working a lot better now than when it started. but the fundamental core of your question is, of course, valid and important to us. but, you know, i think -- and i'll try to speak to that. we're always thinking about how to make, you know, our programs and particularly these work better. and we have some thoughts. but i think that -- i think that to some extent, the h.e.m.p.

program has an undeservedly -- a bad rap at this point in time. you're absolutely right regarding expectations and numbers of mods that we thought would be permanent now and i can speak a little bit to why those expectations haven't been met. but let's just talk about some facts that are worth considering. you know, more than 600,000 permanent modifications have begun since the programs have been put in place and there's about another 25, 30,000 signing on every month. and at this point, nearly about 1.5 million homeowners have entered trial mods since the program began. one of the statistics that i find really important about the program is that the -- that the median annual income of people who have been helped by h.e.m.p. is about 50,000 which is about the median household income.

and the median mortgage is about 230,000 which is the median home price. this is the program that is targeting the middle class and its executive director task force director finds that important. by the way, the median monthly savings for those 600,000 people in the permanent mods are 540 bucks a month, and that's -- you know, that's real money and so that's really making a difference. you know, h.e.m.p. has also changed and it's improved the way mortgage mods are done at the industry. at the middle class mods task force we looked at this and so one of the things that's happening is people are coming into -- are applying for h.e.m.p. and findings themselves in proprietary mods so it's depressed artificially by that

point. one of the things we did at the middle class task force i think folks might want to go take a look at it -- we worked with the department of justice and hud to look at modification programs, counseling programs, ways that homeowners could find help throughout the country. and we published a document of those best practices. and that's something i would encourage people to look at if they're interested in this. in terms of making the program work better, we adjusted it along the way. i think one reason it hasn't met the expectations that you correctly pointed out haven't been met has to do with this balance in the moral hazard problem i mentioned earlier. we felt we couldn't build a credit box that kind of included an eligibility boxes that let in, quote, too many -- too many folks. folks that either couldn't pass what we call -- what the industry calls a net positive presence values test. you want to make sure you're

helping people who can with help, ultimately pay the loan, and not throwing good money after bad. but let's face it, there are people who got into loans that they simply can't sustain and all you're doing, if you offer them a modification is sustaining the inevitable at the cost of the taxpayer. but we made sure that the h.e.m.p. program did not apply to the jumbos above 130,000 so we wanted to target it to middle class which you can see from the numbers we have, it doesn't apply to vacation homes or vacant residences. so, you know, we had -- we felt given this problem of trying to reach the right people we had to draw a box around it. now, i think there have been problems with documentation, with some of the servicing. and we are -- we're working on ideas to improve that. there's a task force now with 11 different agencies. there is, of course, the settlement discussions underway. i'm not going to speak to those but that's a project of the state attorneys working with the

department of justice. so there are -- i think there are -- i think with a greater attention to ways in which servers can make sure that they are thoroughly evaluating people for modifications we can do better, but i think we still have to tread that balance between doing as best we can, trying to hit the numbers that were ambitious, no question about it, but without providing modifications to folks who either don't need them or ultimately won't be helped by them. >> well, back to the middle class and back to our heartland monitor poll. it's interesting to see just how much americans associate homeownership with the middle class. they associate it more with the middle class, and the middle class lifestyle this going to college and accumulating wealth and even having a secure retirement ahead of them, a comfortable retirement. so clearly, this is in the american psyche a really big deal. but i wonder is it a symptom of

the middle class or is it a driver? should we be trying to push people into the middle class? should we be promoting homeownership or should we be doing things to address the income stagnation of the middle class, other areas, and allow homeownership to flow with that? >> it's a really important question and i like the way you put it. i think we should -- as i said in my opening comments -- and i think this comes very strongly out of the supplement. i really -- i really believe that homeownership is a part of the american dream for a lot of people. and i think you have to start from that place. but it's got to be sustainable. that dream can become a nightmare if it's unsustainable. and as i mentioned, both the public and private were essentially doing too much to significantly underprice the risk of housing finance.

and that, you know, creates as much a slide out of the middle class as a ladder into it as my colleague jim parrot likes to say. so i think there's a role and i talk a lot about what that role should be and our white paper offers a set of options. and i think what i've tried to do is talk about a balanced role. but you raised something in your question that hasn't been discussed enough and i happen to have a slide on it, which is a connection between actual middle class living standards, the ability of middle class families to get ahead as they work harder, as they -- as they contribute to the nation's productivity and growth and their ability to climb into the middle class and stay there. part of that for many people is going to be owning a home. we haven't talked much about renting by the way which we

stress in our white papers is also an important and viable option. and an area where policy could do more help, i think. but stick with your question a minute and let's stick on this point. it's probably one of the more february points on my personal view on this as someone who has paid a lot of attention to middle class well-being over my career is an economist. what you see there and again, i think it's a blue line is real -- the bottom line is real median family income, which rises throughout the '90s at a pretty good clip and it's completely flat in the 2000's. now, the 2000's, the business cycle expansion of the 2000's was the first expansion in the history of this data going back to the mid-1940s where the middle class median family income ended that extension no higher than when it started. poverty rates were higher at the end of the 2000 expansion than they were at the beginning. and households and family median income was about the same or even maybe a little bit lower in

real terms. so -- >> we'll leave this discussion on homeownership for a special state department on libya. we expect the regular daily briefing to follow. [inaudible] [inaudible] >> no. 2010, you all know the circumstances under which i left. i'm not here to discuss these circumstances. i'm here to discuss the situation in libya today. and what the united states and its coalition partners are doing to stop the brutality and

bloodshed of the gadhafi regime bent on denying its people their rights that is the birthright of everywhere. my team was evacuated from libya on february 23rd and has been reconstituted in washington. they're playing an active role in providing information, analysis and assistance based on the experience. at best we're trying to find clarity about a place that in the best of times can only be described as opaque. now what is more difficult as you all know, including your own personal experiences, to get the kind of precise information that we would like. let's discuss how we got here. on february 17th, a brave group of libyan citizens decided that they no longer wanted to live under a repressive regime which denied them their most basic human rights for over 40 years. in response to the libyan

people, peacefully protesting for their universal rights, the gadhafi regime unleashed a bloody wave of violence and oppression, slaughtering its own citizens. the consequences of those barbaric actions was the exodus of tens of thousands of libyans and foreigners. and we in the international community rushed at first instincts to with assistance. we have worked with humanitarian assistance and we continued to provide humanitarian assistance to the people of libya. the libyan people -- the libyan people appealed to the world to help stop these barbaric attacks and the international community spoke with one voice to condemn them and to respond. the arab league and the gcc called for urgent action and the u.n. security council mandated

necessary marshes including a no-fly zone. we implemented, we the united states our own unilateral response including sanctions to the gadhafi regime's atrocities. it became clear that gadhafi and his henchman had no intention of ceasing the violence and bloodshed and as the secretary said last night, we faced the prospect of an imminent humanitarian catastrophe in benghazi. by his words, by his actions and certainly by his past deeds, we had to take gadhafi at his word when he threatened to go house to house and to wreak revenge against the people of benghazi. the international coalition was compelled to act. the coalition's effort over the past week garnered the support and the active participation of nations who recognized the significance of coming together in the international community to address the situation in libya. the libyan people must be allowed to have a voice. ultimately, it is the libyan

people themselves who will forge the path forward for libya. our immediate goal is to ensure we provide the humanitarian assistance and protection they need in order to achieve that i ever aspirations. thank you. >> bring us up-to-date on your contacts or other u.s. officials' contacts with the opposition since the -- that first meeting in paris between the secretary and mr. jabril. and tell us if you are at all closer to making a decision on whether to follow the lead that france so helpfully started out a couple weeks and recognizing them a legitimate government. >> since the start of the crisis, when we saw that the council had constituted itself as some kind of temporary governing body, i and certainly members of my staff recognized that some of those people were people that we had dealt with during our tenures in libya.

and so right from the start, i had been reaching out to the leaders of the council. and since that time, since the embassy was reconstituted here as i said, we had extensive dealings and contacts through our various programs, especially educational programs, with the people of the east. i had a very active public affairs section in libya, and they were always communicating with the -- with the doctors and jurists and people who, in fact, now are part of the council. so we had a good in to those people. since the secretary's -- we've been gradually stepping up our contacts with them on a daily basis and certainly you're all aware the secretary in paris last week met with mahmoud jabril a very prominent former official in libya, he was the head of the national economic

development board, a think tank as it were which was in the forefront of trying to institute, recommend economic reform in libya, and he has since been named as the -- one of the two cocoordinators of the council to the -- to the international community. so we have been, as i said, in contact with them constantly. i would say that just in terms of my own contacts with them as well, if you look what they have done from the start, i think they have been -- they moved in a very positive direction. from the beginning of the crisis, they organized local groups in the various cities freed from gadhafi's regime. in fact, it was a grassroots movement. they organized people at the start to, for example, take care of the garbage, take care of electricity, take care of water in those various cities. and then from a grassroots

movement, they then elected their representatives to the main council, a body of 31, which now calls itself the transitional national council. they appealed for humanitarian aid. they appointed representatives right from the start because they knew that they had to deal with the international community, and they appointed mr. jabril as well as the former ambassador to india. in addition to that, they have -- they've been very careful about trying to get the right messaging across to the international community. i hope that some of you have seen at least some of the documents that they have produced over the past several days. basically welcoming the coalition efforts on their behalf to protect them from the ravages from the gadhafi onslaught. secondly, they were talking about the disparaging of the

claims by the gadhafi regime in the beginning that the coalition efforts and bombings were resulting in casualties and third, they caused others from the international community to help them. also they published several documents, one of which which i think was about three days ago talking about their vision of what a future libya would look like. and it had all the right elements in it in terms of human rights in terms of women's rights in terms of equal participation. it was really a very, very good document. so i think from what we know and what we've seen over the past month, i think they're off to a good start. that's not to say that we know everything about them. we don't. and we have to be very careful about, you know, who might be included in the future and how they go about forming a government if, in fact, they have that opportunity. so we're not pollyannish in

saying that we know everything about who we're dealing with but i can say based on the experience that we've had so far, they are off to a good start in word and deed and do not seem to be in the statements and the actions that they've taken in any way incompatible with the kind of ideals that we would be advocating, you know, in that situation. >> can you address in the recognition of whether you're closer to making a decision on that. >> we're still dealing with the recognition question. there's elements of legality involved, there's elements of international law but that has not stopped us from taking some very important steps as you know our embassy in tripoli, when our staff left we did not break relations with the regime. we asked the libyan embassy to take the same step of suspending operations. we named a special envoy who we

hope will be able to get to benghazi sometime when the security situation allows itself over the next several days. and i said -- the secretary stepped up the level of representation in terms of our discussions with the opposition so i think we're, without getting into the issue of whether recognition is a critical factor now, or not. i think we've taken some steps our support for the opposition. >> and one other thing, beyond humanitarian assistance, what, if any, tangible assistance is the u.s. government giving the opposition? are you, for example, reaching out to try to help them think about how they might form ministries or how they might seek to govern some part of libya or perhaps ultimately all of libya? are you doing any of that kind of work? >> we have basically been -- another ray of options with respect to how we can help the council is being discussed in

washington. nothing is off the table right now. we have made -- i have made, you know, and several others from my team have made kind of informal proposals to the council that as it moves forward, should it require help in terms of shaping the constitution, in terms of any kind of assistance in the transformation of this kind of situation to a democracy or whatever we'll say might emerge out of this, we are willing to offer any kind of assistance they'd like but we're going to -- we're going to make the offer and then we'll wait and see exactly what they would like us to do and then we'll determine that. >> ambassador, can i ask you to take that a bit further? the rebel -- the opposition said they are looking for that kind of political, you know, obviously, the recognition but political support that, you

know, after the no-fly zone is set up you could have a protracted situation where, you know, these people are in the east and trying to -- trying to develop themselves. so they're asking for this type of political support for you. do you have a plan for that? is that something that chris stevens is going to be working? and then also because just to finish that point. i mean, you've said that the -- although the military operation is not to get rid of gadhafi, the president and the secretary have said, you know, your political goal would be that he steps down from power. so how do you -- how do you achieve that goal? and then there's talk, obviously, about an indictment possibly for colonel gadhafi in the international criminal court. knowing what you do about the regime, do you see any situation where colonel gadhafi would step down from power and turn himself over to the hague? and have you had any contacts, any further contacts, with his

inner circle? thank you. >> with respect to what are the potential needs of the council as they move forward in this transition period, look, we've done a lot of discussions and we've done a lot of -- begun to do some planning here under various scenarios that might emerge from the current situation. and certainly in several of those scenarios the idea that we might be able to help with some kind of political training, political offers, legal advice is part of that and we would make ourselves available with the full array of the different programs and the different departments that we have available throughout the u.s. government to them should they request that. the question of the icc, i know that -- i think the icc has begun an investigation. i'll leave it to them it off determine what the case is against gadhafi.

i'm not going to speculate on what colonel gadhafi's intentions are with respect to staying in power or stepping down as a result of any of these actions. i mean, if two years of living in libya taught us anything, it's not to speculate on the -- on the potential actions of any member of the regime, much less colonel gadhafi. with respect to my own contacts, i have had some limited contact with some of the regime members. some have contacted me. i have contacted some of them. basically, with the sole purpose and this was during the last week of ensuring that they had seen the president's comments last friday. and to make sure that they understood what was at stake, not only for the international community but for themselves. and that they should look to the comments that the president made

as a kind of not look for whom the bell tolls, it tolls for thee warning. and just to make sure that they understood what the full import of the president's message was. >> the other day the secretary spoke about members of the inner circle who are reaching out trying to find a way out of the country. i'm curious what you could tell us about any efforts to encourage members of his family, of his cabinet to break ranks with him and how you're helping that process go along? >> i think someone mentioned there have been several reachout -- contacts between members of the regime to assistant secretary feltman last week. it's clear that the regime is reaching out to several possible mediators, interlocutors to try to get a message across. i'm not exactly sure what the message is, but it clearly

indicates, i think, at least some kind of desperation, i think, at this point. but i can't get into the we haven't really been involved in those kind of discussions up until now. >> yesterday, the libyan -- the former libyan ambassador to the united states said that the opposition fighters need training. they need weapons. they need ammunition. they need -- you basically made a case that the no-fly zone will come to nothing if they can't -- if they can't give these rebels enough material to take gadhafi out somehow. and -- i mean, i mean, obviously the opposition members are students and professors. they're not trained fighters. and you made that case very forcefully. seven members of the council are university professors, only three are generals. you're making a powerful point

about the need for military support in addition to the no-fly zone. where do we stand on that? >> well, i'm not going to get into internal discussions we're having about whether we will provide arms or whether we won't provide arms. i can just say that the full gambit of potential assistance we might offer on the nonlethal and the lethal side is a subject of discussion within the u.s. government but there's been no final decisions made on any aspect of that yet. >> do you agree with his assessment, though, that if -- essentially the no-fly zone could just create a stalemate? >> you know, as i said before, we are -- there are several scenarios that are playing out. this is a very fluid situation. it's very difficult to know which scenario is going to be playing out. is it possible that it could -- it could result in a stalemate? that is one of the possibilities. there's several others as well but i don't think with this particular point anybody has any good insight especially given how fluid the situation is with

respect to how this is actually going to turn out. >> just a couple of questions and then mark. [inaudible] >> as i said before, i think that it's -- it's under advisement here. we are considering the issue of recognitions. but it runs into several legal questions, several questions of international law. you know, we are -- there are other things that countries can do short of recognition at this particular point and it's not prevented us from doing the things that we need to do with respect to showing our very, very strong support for the council. >> mark? >> there's been some reporting that suggests that as rebels

have cleared out towns, they've actually put loyalists, gadhafi loyalists into the same jails that gadhafi was using for his -- you know, that he threw opposition people into. and i wonder whether notwithstanding what you said earlier about the good start the council is off to, are you troubled by anything you've seen on the part of the rebels in terms of their own behavior in the towns and cities that they've gone into? and then i guess to address -- to put it in a broader term, a lot of analysts will continue to say, we don't know anything about the rebels. do you think that's a wrong statement? >> with respect to the allegations of potential rebel atrocities, i guess, you would call them, i really -- i don't have any information about that. we are very in our consultations with them like i said, we have been very strong in telling them you need to be careful with your

messaging. who are you, because this is part of their ability to influence international community. i would hope certainly that those kinds of things that you spoke about are not taking place. but i think we'll have to -- i think we'll in time we'll to have wait and see if, in fact, they are and then we'll have to deal with it. preponderance with respect to the opposition, i'm sorry, the question was -- >> the question was, is it wrong when people say we don't know anything about who the rebels are? >> you know, i think for the american people at large, the international community at large, let's face it, the information about libya, you know, has not been widely disseminated. i mean, i was in libya as of the end of december and i still had very prominent businessmen calling me and asking if we still had sanctions on them. so i think -- if that -- at that kind of level if information about libya is not clear, i

don't think it's surprising that the average individual or even the individuals in this room or individuals in governments throughout the world would have questions about who these people are. like i said in the beginning, we know some of them. we're trying to get know more of them but i don't think we're at a point where we can make a judgment that this is 100% kosher so to speak group but like i said, the personalities that we're dealing with, the actions that they're taking, the statements they have made have all led to us conclude at least at this beginning stage that they are a positive force and ones that we should be engaged with at this point. >> can you talk a little bit about an algeria-based group in its most recent coalition called it an islamic magreb and what influence have they last in the past couple months and what

concerns do you have about their infiltration as we move forward? >> well, it's clear the aqim is a danger to the region. certainly, we have worked closely with our fellow governments in the region to stop and to gather information about them. and to stop any potential operation that is they might carry out. from the start, when i first met with the representatives of council, i said, you know, they told me that they were aware that there could be a problem with aqim trying to take advantage of the situation. after all, we don't know what the situation at the borders are. and it's possible in a situation like this that you could have some advantage -- you know, taking advantage. and, in fact, they told me at the very first week of the crisis, that there had been an effort by some aqim members to infiltrate but the council, in fact, had caught them. but it was maybe three or four

at the time. so they're very aware of the problem. obviously, you know, colonel gadhafi has used the aqim card, in fact, to say -- and this is in all the discussions that we've had. there has been an unrelenting litany ad nauseam this is aqim. this is not a home grown, you know, protest movement as a way to discredit and disparage the opposition. it's clearly a card that he thinks he might be able to get some benefits of. it's patently ridiculous. but do we have concerns about aqim? certainly we do. but i think the council is also aware of that as well. >> one last question. >> two things. you said that you offered the opposition rebels all the help -- or any help that they might wish. have they asked you for anything specifically? and secondly, have they been invited to take part on the meeting on tuesday in london?

>> since the beginning of the crisis, they have been clear that they would like recognition certainly from the united states, from the international community. they have made requests for arms. they have made requests for a whole range of things. and on each of those issues we have said that we would -- we would consider that and, in fact, have provided some humanitarian support. and as i said, the other issues are still being discussed. nothing is off the table at this particular point. with respect to whether they have been invited, that will be a question for our british folks. i'm not sure -- >> i'll ask them but do you know? >> i do not know, no. >> thank you. >> thank you. >> can you give us 5, 10 minutes? >> absolutely. >> thank you. >> does everybody need 5 or 10

minutes? >> no, i don't. [inaudible conversations] >> sorry, nicole. that's right. very good. i'm happy to answer any questions you might have but quickly at the top, just a few things to note. first of all, special representative for afghanistan and pakistan's ambassador grossman, mark grossman, departed thursday march 24th for travel to brussels and moscow as part of secretary clinton's outreach to afghanistan's neighbors, allies and partners to further the diplomatic surge that she outlined in her february 18 remarks at the asia society in new york. in brussels, mr. grossman will meet at the brussels forum entitled bridging the trust deficit with pakistan. in moscow, ambassador grossman

is scheduled to meet with deputy foreign minister, the director of the federal drug control service as well as special presidential representative to afghanistan to discuss a range of issues related to afghanistan, including counternarcotics cooperation to ensure mutually re-enforcing efforts. following president karzai's march 22nd announcement of the start of the transition, close coordination between u.s. -- between the u.s., our allies and partners is even more essential as we begin to realign our civilian and military resources to support the afghan government's increasing responsibility for security and essential service delivery for its citizens. this morning at the u.n. security council there were consultations held on a draft resolution which will put additional pressure on lauren bago to step aside. we strongly support this draft

resolution and also today the united nations human rights council in geneva adopted an important resolution by consensus. we welcome the establishment of a commission of inquiry from the u.n. human rights council. as we've said repeatedly, the president of the area and mr. bago must respect the will of the people, step aside immediately and allow the president to carry out his agenda for peace and reconciliation. the international community, the au, and the un has made clear that bago cannot cling to power through intimidation and attacks of the people. that's all i have. i'll take your questions. >> just going back to libya just for a second. >> sure. >> what is your understanding of where things stand in nato right now? >> sure. many of you, i think, on greater clarity to get a background call last night on the topic -- >> yeah.

i think there would be a lot of people who would say, clarity was not forthcoming. >> well, i'll take a stab. [laughter] >> essentially what nato agreed to was to assume command and control of the no-fly zone from the coalition starting immediately and has already assumed -- and i'm sorry. had already previously assumed responsibility for enforcing the arms embargo. ..

>> why not do it all in one fell swoop? >> it's partly the process that occurs at nato. like any international body, it's got its own standard procedures. >> could you be more specific about what the problem was? >> as i said, there's agreement for allies -- or the military committee to begin planning and for military authorities to develop an operations plan regarding the civilian protection side of it. once the north atlantic council gets that they will reach a decision.

>> of a quarter to six, 5:30 p.m. yesterday, this building was under the impression that nato would announce the whole thing all at once. that did not happen. >> again -- >> why did not have been? >> again, it was an agreement in principle, but now it just to the military committee to develop a plan of action. they already had the plan for the no-fly zone but they're looking at, and they're going to decide -- >> why wasn't the plan for the civilian -- >> you have to ask nato about that. i don't know. >> but you do know. why aren't you telling us? there are certain countries or countries or members, that is, a member of nato had problems with this. why can't you say -- >> i'm sorry, your question is -- >> i am trying to tease out on the record what most of us, all of us know to be the case, about the turks.

>> again, i mean, look, the dialogue and consensus building that takes place in a north atlantic council takes place in there and is confidential. you'll have to ask the turkish government if you want an answer on their stand and a position. what i can tell you is what was agreed upon yesterday. decision to move forward with command and control, no-fly zone. and a decision to begin planning for the other broader supply protection aspects of it. they will make a decision on sunday or monday. go ahead. demetri, sorry i didn't get to you. >> perhaps you could address, if not ambassador. the issue of the representation that the u.n. had in your. both ambassadors, and his deputy during the evolution, as far as i understand, the current

government of libya nominated the new ambassador. now, in one of those what ambassador cretz just sit and despite your obligations as a host nation of the u.n. headquarters, are you going to issue him a decent? >> well, again, i don't have any information about whether his visa has been issued or not. but i think we are pretty clear that we suspended operation of the libyan embassy here in light of our suspension of operation in libya. by don't have any further details on the u.n. mission. >> mark, the serious situation is really getting out of hand. a statement yesterday, are you

doing anything else of? >> well, it's a fair question and obviously we did condemn and are very much concerned by the syrian government and the repression of the demonstrations and the violence and killings at the hands of serious security forces. again, this is something that we are actively discussing a. we're marking the situation closely. we've been obviously using, having our ambassador in damascus make clear our position, and urged the syrian government to stop all violence against peaceful of testers but don't have anything beyond that. >> have you had any contact with the opposition in serious? >> i can imagine they have a range of contacts, like they would anywhere and is in touch with all sides in all parties. again, our message would be with, you know, a peaceful expression of what we call a

universal expression of people's aspirations. but we recall for the answer you as well. our strong message to the government is they need to let these demonstrators peacefully express themselves. >> will oppression by the syrian government reached the point where façade is no longer a legitimate leader of? >> look, we feel right now that the government of syria to needs in the violence against its people and needs to allow them to express those universal rights. but i don't -- >> at one point, but you made that judgment with gadhafi when he turned -- >> and every day, and every day you're picking another country you're trying to apply the same standard. >> that's because -- >> and i say every day that [talking over each other] speaker will be going to see a

no-fly zone for syria? [laughter] >> again, you're trying to apply this one size fits all approach, matt, and, in fact, you know, there is a wave of change sweeping the region, but what happened, it's happening in libya, frankly stands apart. that said, any violence anywhere against peaceful demonstrators is unacceptable and we call on that to desist. >> so the situation in syria you don't see yet as a telling and up to intervene with libyan? >> we are obviously concerned about it, and we're concerned about the violence and we've been clear in our public and private comments about that concert. but what you had happen in libya is, again, it's a different size and scope. you at the international community recognizing that we are on the verge of --

ambassador cretz said, a catastrophic humanitarian crisis and we acted to stop it. >> but you have syrian security forces opened fire and killing dozens and dozens and dozens of people, potentially more than the people have been killed in libya. >> i'm aware of the situation, it is again, we strongly condemn the violence in both our private and public statements. we been quite clear that the syrian government needs to stop the violence and respect people's rights. >> i will stop after this. but you also said, you also said that same thing to the libyan leader. >> we did. >> in syria -- >> i sorely hope not. >> where the international community is compelled as it was in libya to respond and to intervene militarily? >> what we want to see in syria is the government of syria to

allow the people of syria to peacefully demonstrate and express their free will and express their universal rights and back away from violence. >> and if they don't, can the fassad regime expect to see the international community the same way it has against libyan? >> i think they need to respect the rights of its people. >> if they don't which you consider sanctions at least? >> we are discussing the situation, monitoring the situation quite closely but i don't have anything to announce. go ahead. >> you talked about the deficit with pakistan. can you give a sense of what it is? in your opening remarks you talked about the deficits in pakistan. [inaudible] >> right, right. >> and how are you addressing a? >> sure. i don't have his remarks so i can't really speak to what he's going to say specifically. i would refer you to him.

obviously, our relationship with pakistan is geared towards building a stronger, a political process, building stronger institutions so that pakistan is better able to cope with both the threat of terrorism in its midst as well as be a cooperative partner moving forward, which is how we envision the relationship. but clearly, as many have noted, we've had some bumps in the road. in that partnership. and i think he's going to speak to that. yes, sean? [inaudible] >> i don't. i can get a readout for you. you know, beyond the periodic exchange on the bilateral relationship. if it's more than that i will let you know. >> reports that the president

would like to strike some deal, step down over the next few days in yemen? >> ds -- >> i know i'm going on. >> you right. it was an eventful day in yemen. we saw the president has publicly expressed his willingness to engage in a peaceful transition of power, and the timing and the form of this transition should be identified we believe through dialogue and negotiation. this includes genuine participation by all sides in an open and transparent process that addresses the legitimate concerns of many people. go ahead. [inaudible] >> are you satisfied with his promises? >> i think he's obviously, he's obviously reached out to the you many people. but obviously we're also waiting for further action. on both sides but as i spoke

about the other day, i think that both sides, both the government and to demonstrate me to come together and decide for the best way forward for yemen. >> secretary gates on his recent trip said there was virtually no planning in the come at that stage, about for five days ago, for both president saleh, yemen. has that planning now begun? >> i'm not sure to what in fact he was referring to. i haven't read his remarks in detail. we have been engaged with the yemeni government, and when i was asked about the other day i talked about our cooperation with the counterterrorism front. that goes beyond anything. [inaudible] >> is that going to increase the speed with which you finish your own determination? >> it's still ongoing but i don't have anything to announce.

>> let me back you up to libya for a second. first of all, is it fair to say from what you said about nato, the decision there that there are some nato members who are not yet sold on the idea of nato conducting airstrikes and ground targets? >> again, it's not really for me to characterize what nato allies may or may not -- but -- >> unanimous support as required in nato for the idea of nato planes striking ground targets? >> well again, what came out of yesterday was the decision to move toward on the planning for such an operation, to protect civilians on the ground. >> is there an agreement or is there not yet unanimity on that? >> well, that's a fair question. what it does is, there's a political decision that's been made. now go to the nato planners to

develop the plan of action. then they need to digest the and to make a final decision. we believe it's going to be a positive outcome. >> second question, the ambassador referred to the legal obstacles in recognition, you may have topped about this in the past, can you give us any idea of what those are? >> there's always legal obstacles, but really i'm not, i would have to get a little expert to inform me. i mean, it's always, i think what his point was is that it is not as easy as saying we recognize the opposition of the legitimate government. there's a legal process that you need to go to. i will definitely look into it. that's a fair question. [inaudible] >> i can't speak to the french system. [inaudible] >> sure. >> secretary gates today, is there anything new with -- >> you sit secretary gates? i'm not aware of anything that came out of that meeting.

[inaudible] >> would i be aware of -- >> it just happen. you don't speak to the pentagon. >> precisely. [inaudible] >> perhaps there is a new -- >> of course there's coordination. i don't know that there's any specific action coming out of this, but we always remain in close contact with our partners across the river. and obviously our goal remains to see both get back to the negotiating table. >> on libya, i understand the british are our guys and the conference, and it's not you, but do you think it's going to be the coalition of the countries meeting, you want others as opposed to this operation? >> i don't want to speak because this is obviously a british event. obviously, the close allies and

partners have been implementing u.s. -- u.n. security council resolution, we will be there. >> thank you. >> coming up at 2:30 p.m. we'll go live to discussion on u.s. policy toward iran. j. >> host: wrote to us on twitter and says a collar nail the prom with libby intervention at the president president thought international approval but not u.s. approval.wier.

we will be speaking with members of congress later on in the hous to get their take on what's on happening ppening. an interesting story in that "new york *." a north korean statement said it had made it vulnerable to intervention by the west and was seen as an ominous reinforcement. those are some other international implications of what is happening now. aol news takes a look at the french. the french down one of gaddafi's planes six days after the french president pulled the trigger and they want the no-fly zone.

a professor of international relations in paris is saying that all of a sudden, it is the americans that look prudent. he says that nicolas sarkozy is the one who seemed not to be afraid, but it is the americans who have the image of being more reserved now. what do you think of that? caller: i am a little nervous. i am a first-time caller. i am very proud of what the president and secretary of state and our defense have done. the president essentially followed the same template of george bush, the father, and obtained a u.n. resolution. we have nato now transitioning into a leadership role. i think he has done a tremendous job with this. he has averted a massacre that

would have happened in libya if gaddafi had followed through on his promise to show no mercy. i know we have seized or frozen libyan funds. i wonder whether we have an opportunity to use a portion of those funds to pay for our intervention. i do recall during the iraq war, thoseon or iraq or in the new conservative movement stated that the war would pay for itself. it did not. i wonder if there is an opportunity for that to happen. i am proud of what the president has done. host: let's take a look at the

"washington post" on another matter. they have failed to properly tell regulators about defects. that is according to reports by the nuclear regulatory inspector general. operators are supposed to tell the nrc when there are defects that could create a substantial safety hazard. let's look at the latest news from japan. the prime minister has addressed the nation and the fa -- apologized to farmers and business owners for the damage caused. he says the situation of the plant remains grave and serious. he says he still cannot express optimism about efforts to control the plant. coming of on c-span2, we will broadcast japanese nuclear plant crisis event. this will be moderated by

friends of the earth, live from the national press club. let's get to fairfax, virginia. iran is on the republican line -- ron is on the republican line. caller: i support the people of northern africa and what they're doing. i did have a friend killed in the pan am flight over lockerbie, scotland. i am very interested in what happens. i would like to see gaddafi go for both of those reasons. my concern is that the way things are presented in the media is that we're supporting a no-fly zone. it seems we are doing more than that. i think we should be -- i hope the media would be more honest in describing it for what it really is. i do not know exactly what it is. it seems like it is more of an

effort beyond a no-fly zone. our allies are involved in targeting ground forces and so on and so forth better not necessarily involved in the no- fly zone. that is all i have. host: let's go to john in albuquerque on the democrats' line. caller: i am glad the president finally acted on libya. a few weeks ago when they had plenty of people who could overthrow gaddafi, we sat on our hands and did nothing. a professor of law had to go through the u.n. to have the will of the world to do something against gaddafi. i do not understand why we did not arm the insurgents with inexpensive handguns and give them an opportunity to defend themselves and take back their country. it all falls on the u.s. taxpayer.

as far as getting gaddafi's money, it is not going to happen. corporations are behind the scenes deciding who will get the money. it will not be the u.s. taxpayer. i am glad we're trying to get gaddafi out of there. it is a good thing against a bad man who has been a horrible dictator. however, we are in debt to the chinese for trillions. we give $10 billion to pakistan last year. another $1 billion because of the flood. i doubt the federal government will give millions of dollars to my home state of new mexico. i am looking at a beautiful golf course. i am in a home with a mortgage that i cannot sell because neither fha or conventional will act on it. is that a depression or recession? thank you for your time.

byt: we're joined by phone congressman larsen. should the president had gone to you and your colleagues before deciding what action to take in libya? guest: i think so, given the nature of the mission. we understand the cautions the president exhibited. i commend him and the secretary of state for the action they took to make sure that they had the united nations, the security council, the resolution, the arab league -- to make sure they have all of that in hand before they acted. while they were doing that, i think it would have been better had he briefed the congress. classified briefings would have been fine. i think members would have felt

better about it now. the president did brief the leaders of last thursday of the respective committees and some of the top leaders in congress that were there. that is not briefing the entire congress. members were home during the work period trying to do with the issue on the fly. there is a long history of this. congress is an equal branch of government and needs to be informed. host: let's take some calls for congressman larson. david joins us on the independent line. caller: and the disabled, a decorated world war ii veteran.

i lived through the depression when we have the great leadership of fdr. i was fortunate enough to serve overseas from near the end of world war ii. that was with china, japan, korea, etc. i come from a family that has always had a part in military service and politics. and was very disappointed by the bush administration's unspeakable war in iraq. i am registered independent. in my opinion, it was a war of a corporate state against the country that had already been defeated in the gulf war. anybody knew it would only be a matter of time before saddam

and his apparatus would be dismissed and a big change would come in iraq. instead, we lost 5000 of our precious young people. everyone of them was a volunteer. remiss handled -- we mishandled the entire iraqi situation. this was indescribable. we're now involved in a war and afghanistan. i see the casualty list every day on the news when i watched national public television. i am deeply disturbed by the way the president who live voted for -- the way he and his a ministration have handled our foreign affairs in the middle

east. host: let's get a comment from congressman larson. guest: thank you for your service to the country. i have the utmost respect for our president. since vietnam, and this has been a very tender issue, so to speak. it is tender from this perspective. the constitution clearly lays out that congress is an equal partner in declaring war. the war powers act also lays out the process by which we would go to war. underlining that our core concepts. does libya represent an imminent threat to the united states of america? i think you could argue that point. if it represents an imminent

threat, what is our mission? what is our exit strategy? how long will we be there? what will it cost? the other thing that is somewhat disturbing is that there was a lack of information. there will be a briefing this wednesday, a joint briefing between the house and senate with secretary of state clinton and secretary gates and other personnel. a lot of the other persisting questions have to do with whether we're getting involved in a civil war. should there have been more of a briefing for members of congress? i come down on the side that there should have been briefings that would have allowed the membership to make up their minds and be informed

on the decision of the administration. i further recognize the president was in a difficult spot gaddafi was about to possibly exterminate the people of benghazi. we were the nation forwardly deployed. we had a unique assets. he felt from the humanitarian perspective they had to strike and hopefully stabilize the situation and then have the other nations move in and takeover. i believe nato will do that in the ensuing days. that is where we stand. you lived through the gulf of tonkin. that is the issue here for members of congress. it is an age-old tension between the executive and legislative branch, having to act on something in a timely basis with

all its urgency, and the need to be informed -- the need when you are committing troops and dollars for the congress to be informed. host: congressman larso representn a connecticut district. let's look at the comment on twitter. we have this on email. newt congress said he would go to the no-fly zone and then changed his mind. orleans,e from new joe, republican. good morning. caller: 200 years we have been in libya, the marines first landed there. we are still there.

i believe we should go back to being an isolationist country. we should have let the arab league handle it, just like we're letting the african league handled their stuff in the middle of africa and the southern part of its. what are we spending billions of dollars a year for, for all these other countries to use nato? let nato handle it or we need to make other countries pay their part of nato and we need to get out of it. this is a joke. congressman larson, i cannot believe half the stuff he said. what do you expect from a president who says we should be civil, respectable, and all that other stuff and does not respect congress enough to least make a phone call to the heads of the branches and say, "i am fixing

to push a button"? host: next up, san diego. caller: thank you for taking my call. i do not know your name. host: libby. what is your point about libya? caller: gaddafi decided to share the oil profits with the people of libya. the last time he did that was during ronald reagan's presidency. shortly before ronald reagan bombed gaddafi's compound killing one of his daughters, a bunch of servicemen in germany were killed. it was traced back to a radio transmitter out of libya that the orders for the bombing took place.

we sent you in bombers over there to take care of the problem. it turns out the transmitter was planted by israelis. the orders to do any damage in germany obviously came through israelis. why did ronald reagan not bomb to leave -- tel aviv? it was good enough for gaddafi, why not tel aviv? i want to say something about president obama. he is not qualified. host: paul is on the democrats' line. caller: this is my first time talking to c-span. i have three points. it seems this president is

not.d if he does or does he did go before the u.n. and try to get world consensus. he was asked by the arab league to get involved. look how long it has taken to get a budget through congress. these people might have been exterminated waiting for congress. host: let's go on to new jersey where mike is calling in on the independent line. caller: let's understand that middle class america should be outraged at what is going on. we are not a democracy any longer. we are in aristocracy. what president obama did not go to the congress is because none of the politicians take orders from congress who is correct. we've witnessed filthy amounts of money to represent these aristocracies all over the

world. we are broke. we have no money. middle-class america has unaffordable education and health care. look at the prototype of egypt. $1.5 billion is being given to countries around the world who are despots. it is all over the world. we have taken over the world, the aristocrats. the federal budget we are supporting represents that. that is going to go on for years. what we see around the world is going to continue. you will pay for it, middle- class america, until you stand up and start taking action against a corrupt congress. you cannot find their campaigns. what they provide is in the election is people they had hand selected two will represent their interests to maintain

control of the world or takeover. host: let's leave it there and go to twitter. richard is in new jersey, a republican caller. caller: the last caller from my state of new jersey said everything i could think of. i do have one issue with libya and tell the president -- and how the president handled the humane business. i have to go back to george bush. i want to go back to the reasons for invading iraq. people forget that saddam insein gassed the kurds

the north. that was weapons of mass destruction as far as i am concerned. they have them and used them. where is the humane problem with that? that is all i really had to say about that. what our president now is doing, i see no difference. thank you. host: let's go to a member congress. >> we are going live now to a discussion on u.s. policy toward iran. "the atlantic" council this afternoon is releasing a new report looking at iran's relations with other middle east countries and what the political unrest in the region means for the country and the united states. we expect remarks and former senator chuck hagel and former ambassador stuart eizenstat. this is live coverage on c-span2. it is just beginning. >> and arab nations across the

persian gulf. most notably given the recent events in recent months they consider the impact of unsettled air politics on iran and, of course, the invitations on u.s.-iran relations and u.s. european engagement elsewhere in the region. this atlantic council iran task force was launched a year ago under the chairmanship of senator chuck hagel, ambassador stuart eizenstat with mark brzezinski serving as its executive director. it was launched with the goal of understanding u.s.-iran relations, iran's role in the region and its internal political and economic dynamics within the country. since its launch last spring the task force has four working sessions with key experts and released a previous issue brief on the iran stalemate, the need for strategic patience. when the council undertook this project, we, of course, had no idea the events that were about to ensue across the region. but the of people in the middle east makes the work i believe all that more important understanding iran.

questions the task force will be facing, similar uprisings have a chance of succeeding, what are the implications of unrest, is there a regional role for iran as this unfolds? these are all critical questions that need to be addressed by u.s. and global policymakers as they determine what their next strategic steps are in the region. before passing the mic your co-chair i would like to take a moment to thank the fine which is funded this important project. with that i want to turn it over to our chairman, senator chuck hagel who has served as co-chair of this iran task force but also chairman of "the atlantic" council drawing on his time from senate foreign relations committee where he oversaw foreign policy in the middle east at a very historic and critical moment. senator hagel. >> thank you. welcome. we are pleased you were here. we appreciate you spending time with this today, recognizing this is a friday afternoon.

and so we know the supreme sacrifice that you have made. i think over the next hour and a half we will have an opportunity for some substantive exchange based on a great deal the task force has learned over the last few months. that effort has already been noted by damon, barbara and mark. we have been fortunate to have the wise and experienced counsel of many, many individuals who have had years of experience with the iranian and american issue, as the entire region. damon noted that when we started this effort, as is probably the only one clear constant about the world today, that is the great uncertainty about the

world. and that really plays into much of a theme i think in this relationship between iran and the united states, the great uncertainty. when you really put a scope on this and you look at the very significant part, beginning in north africa, what happened there beginning in north africa 60 days ago, what is currently underway, and you take that arc all the way across the middle east, the caspian and into central asia, east asia, it covers a tremendous amount of interests for the world. when you look at the geopolitical dynamics of this, the energy interests, you can't extrapolate out -- you can extrapolate out from that region, from the large arc and everything that comprises inside that arc, and you quickly come

to a lease the realization, if not the conclusion that this is a vital, vital part of the world, certainly for the united states interest. iran plays a significant part in this. their role, not just where they are located, their size and culture, their history, they are a very significant part of this scenario that has yet to put out. we are, in fact, seeing a new border until -- order in this part of the world across the globe. a new world order is under way. and this general region is a great manifestation, a clear manifestation of what's happening around the world. i don't think there is any question among all who know about this area, although they may have varying opinions about how we deal with this part of

the world, little question about whether we're ever going to see a world again like we have seen the last few years, especially within this large arc. we won't. what is underway is going to transform how we do business, relationships, geopolitical relationships, and the common interest that anchor those relationships that always have anchored those relationships. arbor will get into some detail on this. it is i think much of the centerpiece of what this task force has tried to grapple with and work along those lines. i know stupas had a lot to say about this as well but it has been my opinion over the years, if nations forsake the opportunities and the possibilities to anchor relationships, their own sovereign national interests and

every nation will respond in their own sovereign national interest, but if you defer the common interest that must anchor relationships, those parallel common interests, then there's very little likelihood that anything positive will come from that because you will never get to the differences. you will never the able to even close in on the boundaries trying to resolve differences or living with each other, or living with those differences. ..

>> was going to be formative for this whole region and, indeed, for world peace. we have focused on various aspects over the last year or so which says specific papers that have reflected the best views of experts inside and outside the government with whom we've met extensively. we've had papers on the nuclear program and where it's going and ways in which to potentially stop it. we've looked at their internal political forces, and here we're trying to take a look at the regional role that we want to play and that we think iran wants to play. we saw three goals for the united states which barbara slavin who has done an excellent job and will be our main presenter will elucidate. one is to stabilize the region in a sustainable way. the second is to prepare for a

eventual 2014 withdrawal of at least most combat troops from the united states, may toe and afghanistan -- nato in afghanistan. and third is to encourage iran to be less confrontational toward the united states and our allies in the region. the balance that we've dealt with in this excellent presentation that you'll hear from barbara is how, on the one hand, to keep maximum pressure and, if anything in my opinion, the need for enhanced pressure as iran finds ways in which to avoid a fourth round of u.n. sanks and the unilateral sanctions that have followed it, how to keep pressure on the iranian nuclear program so it does not develop further into a weaponnized program, on the one hand. and on the other, to try to find areas regionally -- particularly with respect to afghanistan -- in which there may be a coincidence of interests and

which we can cooperate. and one of the tensions, again, that we've struggled with is that as we try to find those areas whether or not iran is interested in engaging or not, there is always the risk that you send a signal with respect to the nuclear program that somehow you're letting up the pressure. that is certainly not our intention, quite the contrary. and as we mentioned in the paper, certainly precedent for that is that for decades we had a very strong confrontational relationship with the soviet union with its expansionist role throughout the globe, with its own nuclear program while at the same time we did try to find areas of cooperation on arms control and in other areas where there happened to be a coincidence of interests without in any way sending a false signal to our allies or to the world that we were letting up on the confrontation. and that's the effort we're trying to reach here. we think that this comes at a

very opportune time because of the upheavals in the middle east. which initially, i think, iran felt somehow were to its liking because some of the pro-western regimes were toppling. but as we've seen, democratic forces assert themselves many tunisia -- in tunisia and egypt is elsewhere, the whole iranian autocratic model may itself be a victim. so they may recognize that they're not necessarily playing from a position of strength and that cooperation in some of these regional areas, again particularly afghanistan, may be opportune at this time and may fit the interests of both the united states and iran. so with that as an introduction, barbara, again, has done really a superb job with this. we appreciate everything you've done, and i think we'll let barbara talk. but first, mark has really

pulled this whole effort together for a year. he's been the one that's found the experts all around the world, and we really have searched all around the world to get the best views. and he has been the glue that's really held this entire project together. and i know i speak for the senator when i say that, mark, we're much in your debt. we appreciate the tremendous intellectual efforts you've put into this and the time effort, and i think it shows in some of the papers that we've had including this one today. so let me turn it to you, and you can turn -- speak and turn it over to barbara. >> we should also note that he has just arrived from mongolia, korea, china -- [laughter] yellow sea, wherever else you've been. so we really do appreciate you've come, truly, right from the airport to do this. >> thank you, senator. thank you, ambassador. let me join the co-chairs in welcoming everyone to this rollout of the iran task force's

second issues brief, this one focusing on iran and the region. it's obvious that things are fluid with respect to iran, and a number of uncertainties are going to influence how things turn out. as stated, the upheavals across the middle east. and i should note that the protests are now spreading into syria, an iranian ally. but also developments in afghanistan. the israeli/palestinian situation. the future of iraq. and, of course, developments we don't yet know of. these are all going to influence direction when it comes to america's relationship with iran. i've just come -- as stated, i've just come back from china and korea, and there's a strong perspective there, correct or not, that with the upheavals in the middle east iran is gaining influence in the region. i definitely picked up the sense that the populist, that the populist regimes emerging in the arab states will be less

accommodating to the united states. they won't be pro-iranian, but what's driving the upheavals is a sense of emancipation, that this is the process of finally ending colonialism. that's hue folks i met with in -- how folks i met with in korea and china read the situation. this considers what kind of regional role the iranian leadership is seeking, how that role fits with the aspirations of the emerging leadership of the arab states in the gulf, and how american interests are affected. and to talk about this, we have the principle author of the issues brief, barbara slavin. barbara has been to iran seven times. she's a journalist and author most recently of the book "bitter friends, abuse similar enemies -- bosom enemies." she's also the author of the u.s. institute of peace's report on iranian regional influence, how iran exerts its influence in the middle east.

we will hear from barbara for the next 20 minutes or so, and then we'll take q&a from the audience. so without further ado, barbara slain. >> thank you. thank you, everybody. thank you, everybody, senator hagel, ambassador, mark, i want to also thank alex belay who did the excellent map and chart which you will find at the end of the issue brief and maybe will give you a better sense of how iran fits, literally, in the middle of this region between the middle east, the central asia and south asia, and, of course, the indian ocean. so a very pivotal country. we are, of course, clairvoyant here at the atlantic council. we decided to do this brief long before ben ali and mubarak fell. but, of course, i think it's much more timely now given the events. and because all of these are in train, this is very much a

snapshot of where we are now. we can't give you the whole movie. still, i think the narrative that one hears most prominently from tehran, but from others that iran is necessarily the victor in this all of these uprisings is far too simplistic. instead, i think what we really are seeing is a continuation of a pattern that goes back to the beginnings of the islamic republic in which iran takes advantage of opportunities presented by external events. and at the same time, remains what author charine hunter has called a strategically lonely nation. before the 1979 revolution, iran was the u.s.-backed hegemon in the persian gulf. it had terrific relations with the united states, western powers, major arab countries such as egypt and saudi arabia and even ties with israel. since 1979 iran has had its most

successful relationship with a non-state actor; hezbollah. for years iran's closest relations with a neighbor were with arkansas mean ya -- armenia which is a strategically not very important country. until, over the past three decades iran has not become a member of any major defense alliance. there is no major country that would go to war on iran's behalf. iran has observer status in the shanghai cooperation council which groups russia, china and four asian stands. this is a relatively recent development. but last year when iran tried to become a member, full-fledged, of this council, its membership application was rejected because the rules forbid any country that has been sanked by the -- sanctioned by the u.n. security council from becoming a member, and iran has been sanctioned repeatedly because of its

nuclear program. now, in the brief there is detail about iran's ties with iraq and afghanistan which has certainly improved over the last decade because of the actions of others, primarily the united states. but these relationships are far from trouble-free. there's also a section on iran in lebanon, iran and the arabs across the persian gulf, and also the blowback of arab enty fad das on the movement. i always have trouble making recommendations. as a journalist, i don't like to give advice, but since i'm now a semi-pundit, we have a few modest recommendations that involve afghanistan which is the one country where the united states and iran do have overlapping interests to some degree. i'll give just a brief overview. i'm not going to go into all the topics in depth. you have the report in front of you and online. looking first at afghanistan, iran has clearly benefited from the u.s. regime change. since 2001 iranian exports to

afghanistan have gone up 20 fold. the city of ha rad in the western part of the country is now the most peaceful and prosperous in afghanistan, primarily because of the actions of iranian businessmen who have set up shop there. iran is benefiting from new transit corridors from central asia and afghanistan that go through iran to a port on the gulf of oman, this is a port that the indians helped to construct. although iran could do much better if not for sanctions. sanctions are still an impediment, particularly to energy trade, going through iran. but at the same time there are irritants in this relationship. they stem from history. the two peoples were both part of the same persian empire for centuries, and both afghans and iranians see themselves as the origins of high persian culture. afghans resent being treated as second-class citizens. millions of afghans have fled to iran over the last 20, 30 years as refugees and often not met

with very good treatment there. there have been more recent irritants. it's a pattern with iran that when it goes into a country, it tends to try to put bets on too many different forces. this is translated in afghanistan to aid and even cash payments if we're to believe "the new york times" to hamid karzai and members of his cabinet, but also some elements of the taliban. even reports that some taliban have been brought into iran for training. this winter iran held up 2,500 fuel trucks that were bound for afghanistan with fuel from iraq. the motivation for this still remains somewhat mysterious. i've heard a lot of different accounts. some say that iran thought the fuel was bound for nato forces, which isn't true. some say it was purely a mercenary decision to jack up the price. others say it was a message to hamid karzai not to ignore iran as he begins a peace process with the taliban. the result was a 70% increase in

fuel prices in afghanistan, and demonstrations against iran in front of iranian missions in kabul and ha rat. when we look at iraq, we see a similar pattern. iran has obviously benefited from the toppling of saddam hussein. iraq was the biggest threat to the islamic republic, and that threat is not going to be there for the foreseeable future. iran is the most powerful foreign actor in iraq no matter what the obama administration says, and it's going to become even more powerful as the remaining u.s. troops leave the country. but once again, iran has shot itself in the foot repeatedly with its support for a variety of factions. it had an initial proxy, the supreme council for the islamic revolution in iraq which was a group that was formed in iran of iraqi exiles in the early 1980s, it's since changed its name to the islamic supreme council of iraq. but when this group became entrenched in the iraqi government, then the iranians

started supporting mac tad al-sadr and then splinter groups from sadr's army, so-called special groups which attacked sunnis, other shiites and, of course, american too troops. sadr is an interesting point, is he a made man as some have argued, or not? he spent years studying supposedly to be an ayatollah. he returned briefly to iraq in january but then left after 15 days, reportedly after he was the object of assassination threats from the league of the righteous which is another one of these iranian-backed factions. more recently, he came back, he appeared alongsidal awe law by who is a sec tar shiite and foe of iran, and sadr threatened to remove his support from prime minister maliki if public services don't improve within the next six months. so is he -- maybe iran is renting him, but will he stay

bought? that's, i think, an important question. we also have to ask some questions about this relationship. if iran/iraq ties are so close, why is there still no peace treaty for the 1980-'88 iran/iraq war? why hasn't iran paid reparations to this war which iraq started? why are they hanging on to some aging iraqi fighter jets that were flown into iran in the 1991 gulf war? why is iran dumping consumer goods on iraq and hurting iraqi production? one of the complaints i heard from iraqis is that if you go to a butcher in iran, particularly in the south, the butcher will ask you whether you want a sunni chicken or a shiite chicken. [laughter] and the shiite chicken comes from iran, and it's blessed by an ayatollah. [laughter] so this is quite a racquet for the iranians. nevertheless, desweet these -- despite these obvious irritants

within the relationship, we have seen a panic spread through the sunni arab world about iran's rising profile in iraq. and be this panic about the shia wave has only gotten worse with the events particularly in bahrain and also in eastern saudi arabia in the last weeks and months. but if we look at iran's relations with these, with these arab shia in these countries, i think it's cynical and incorrect to say that iran is somehow the instigator of these intifadas. we know very well there are long standing grievances particularly on the part of the shia, and they've historically been discriminated against by the sunni monarchy. it's interesting, also, given the, again, the hysteria of some of the saudi propaganda we see, that until last week iranian state media, persian media was barely devoting any attention to the events in bahrain.

some of you may know a good iran scholar who brought this to my attention recently, it was only the arabic-language media that was paying attention, not the state media. this changed after the saudis and other gcc members sent troops into bahrain recently. then iranian state media suddenly picked up the cause. but the way in which they've done it is, i don't know if it's terribly helpful to the people in bahrain. the head of the guardian council which is a body that supervises iranian elections, he's also the chief friday prayer leader right now in if tehran, he gave a sermon the other week in which he said that bahrainis should, quote, resist against the enemy until you die or win, unquote. and this is the iranian pattern. they are perfectly happy to fight to the last arab. but they will not put their own lives on the line unless iran is directly attacked. so this is a cheap propaganda

victory for them. i'm not sure it's really anything more. when we look at iran's relations with the arab gulf, we see -- sorry, with the arab nations across the persian gulf, please. i would never call it the arab gulf. i apologize to all my iranian friends. when we look at these relations, we see there's a fair amount of variation. while iran has long had very tense relations with saudi arabia and more recently, now, with bahrain, it actually has quite good ties with qatar with which it shares a gas field and also with oman which has mediated between iran and the united states on several occasions, most recently they helped get one of the american hikers that's in jail in iran, sarah shourd, got her freed from jail in iran. iran also historically has had good ties with dubai which has a large iranian expatriot population. and the uae is still the largest source of iranian imports.

in 2009 it was about $9 billion worth. that figure is coming down a bit. turkey is now taking over a lot of the re-export trade. but it's still substantial, i think it's about $6 billion worth of re-exports from the uae to iran just this last year. is iran the winner from all of these intifadas? obviously, iran is benefiting from the increase in oil prices. this is a tremendous boon. it allows it to pay off its loyal supporters, its revolutionary guard corps. but it's still far too soon to say that iran is somehow the great victor of this. in the brief i compare iran to a porcupine which tries to project an image of bristling strength in large part to hide the internal vulnerabilities, the soft inner core of the country. the protests in the arab world have boomeranged back to iran. we don't see much of this in the media in part because there's so

few foreign correspondents now, and those who are working there are under tremendous restrictions. but there have been demonstrations in iran every week now since february the 14th. and the new slogan is, quote, ben ali, mubarak, now it's save quidally's turn, the supreme leader of iran. so the green movement, you know, it never died. it was dormant, perhaps, for a year, but it is very much there. and iranians are extremely well aware of what's happening in the rest of the region, and the government is so terrified of this movement that they have been executing people at a record rate. they recently hauled off the two nominal leaders of the green movement into detention at an undisclosed location with their wives, and in a further sort of cannibalization of the iranian political elite, they have now removed after seven janney, the

former president, the pillar of the revolution, from a very important post of a body that's supposed to choose the next supreme leader. these actions narrow the base of support for the government. and as scholars of iran -- and there are several in this room -- know the, the more one faction appears to consolidate power in the country, the more it splinters and the more opposition it eventually faces. i think we should look forward to a lot of in-fighting as we approach parliamentary elections next year and also presidential elections in 2013. i would watch out, also, for rafsanjani who has now been completely forced off the fence and definitively, really, into the opposition. and he could have been a mediator between ahmadinejad and khomeini and the reformist opposition. now i doubt that that is going to happen. in the terms of winners and

losers, this isn't in the brief, but i thought i would mention it because we are seeing new developments in the region. i think israel is a bit of a loser. clearly, it is now going to have to be more careful in terms of its behavior because, as mark mentioned, these new governments that are going to be coming into power in egypt, tunisia and elsewhere are not going to be as accommodating to israel if it tries to mount massive attacks on palestinians or lebanese, and this puts israel in quite a quandary as it tries to deal with new terrorist attacks which have happened just recently. still, i think in the longer term we should be optimistic. a more democratic egypt is likely to be a more reliable peace partner than mubarak was. remember, he went to israel once, and that was only for rabin's funeral. a more democratic egypt will be a more self-confident egypt, it can reassume leadership role in the region which it has largely given up under mubarak. it may be in a better position

to mediate arab/israeli peace or to mediate between palestinian factions. and in talking about winners and losers, i think mark mentioned syria where we're seeing growing disturbances. obviously, if regime is destabilized, that is not a win for iran which counts on syria as its conduit to hezbollah in lebanon. the only real winner i see right now from all of this is turkey which is truly the indispensable nation. it has good ties, or at least ties, with everyone in the region, and internationally as well. and just recently got four new york times journalists out of captivity in libya. so it's playing a very important role in this. and i would expect that it will continue to. now, when it comes to dealing with the united states, all of this uncertainty is likely to make iran even more risk averse. this is the unfortunate pattern that we've seen over the last

few months and, actually, last few years. iran was unable to complete a confidence-building nuclear deal with the united states back in 2009, i think, because of the domestic opposition to ahmadinejad. that was a major reason for it. but there's still one area, afghanistan, where there are some overlapping interests and where i think the united states can be more proactive than it has been. you know, obama has really pivoted entirely from engagement now to containment and sanctions, and i think the u.s. can be a little bit more creative in this area. iran has four main goals in afghanistan. one is to keep the taliban from completely taking over again even though it plays a double or triple gain and gives some support to taliban. it doesn't want taliban in control of the country again. second is to stem the flow of drugs which has made iran one of the most addicted countries in the world. a third is to do something about the sunni militancy in the baa

liewch areas of afghanistan and pakistan which feeds a sunni intifada in iran's own beliewch area. and finally, iran wants the united states to withdraw it troops from afghanistan although i think they would be prepared to accept some limited continues american military presence provided there was assurance that this would not be used as a base from which the united states could attack iran. now, some of these issues are already being explored. there was a recent meeting in sweden that had american and iranian representatives. and the iranian participants said they wanted to see an increased role for the united nations, and the establishment of a core group to discuss afghanistan. similar to the bond groups that helped set up the first government in afghanistan after the overthrow of the taliban and also the six plus two meetings that were held in the 1990s among iran's neighbors plus

russia and the united states. i think it's also worth remembering that these types of discussions provided cover for bilateral u.s./iran talks when ha tammy was the president of iran. the top u.n. representative in afghanistan has convened ambassadors from the united states, and other regional players in the what he calls the silk road initiative. he did in this year. there have been a couple of meetings. these are the first such meetings in the kabul of ambassadors since 2005. and the first time the american representative in the kabul has sat in the same room with the iranian diplomat in kabul. the minister spoke in washington earlier the this week, and he says that he hopes to continue this, and he'd like to have a meeting in istanbul -- turkey again -- later this year, and then there's supposed to be a meeting in bonn to mark the tenth anniversary of the bonn conference which gave us the

karzai government. the u.n. is also facilitating talks among afghans by karzai's high peace council. and these are all good initiatives. finally, i will just mention there's a new report that's come out from the century fund on negotiations for afghanistan, the way forward, and in addition to recommending the selection of a, of an international facilitator for peace talks among afghans, it also recommends regional diplomacy and bilateral u.s./iran dialogue on afghanistan. if iran is going to be playing a more constructive role in afghanistan, it's going to expect something in return, and this is the tricky part that the ambassador mentioned. can the united states continue to put pressure on iran over its nuclear program and still offer iran something to behave in a more constructive manner in afghanistan? i think one of the answers is transit trade through iran from

afghanistan and central asia. this should be encouraged. it shouldn't be discouraged. and there's also the question of energy pipelines through iran. this is a controversial topic in afghanistan, something -- in washington, this is something that's been discouraged, but if we want to help central asian countries, turkmenistan, afghanistan, it would seem that the more routes from central asia to the sea, the more ways in which trade can go to india, thailand, other countries, the better. and this is a dilemma the united states is going to have to deal with, it's going to have to reconcile. pakistan right now is far more unstable than iran is, and if you want to benefit the central asians, i think you should keep that in mind. as ambassador eisenstadt mentioned, we are in a somewhat similar situation as to the relationship we had with the old soviet union. invasion doesn't have to be a zero-sum game on every issue

with iran. iran will change. if there's anything we've learned in the middle east is that government can change. and i think it's important to begin to lay the groundwork for a better relationship with iran because iran will change. and if we can make some progress on this issue of afghanistan, it may be easier to talk to iran about the nuclear issue, about human rights, about other issues that we care about in the region. so i will stop there, and we will be happy to take your questions. >> thank you, barbara. that was excellent. and let's now open up to questions from the awd crens. and let me kind of exercise the moderator's prerogative by asking the first question. based on what's happening now in libya and implications for what's happening in libya for iran, i would think that the regionally-backed nato operations would give iran pause. is that a pair assessment? >> you know, this is an interesting case because with iran actually has had a relationship with ghadafi. most people probably don't remember this, but when, when

libya brought down pan-am 103, there was a theory ha this was actually -- that this was actually a hit against the united states in retaliation for bringing down the iranian airliner during the, the iran/iraq war with the loss of many iranian lives. originally, the iranians asked a palestinian faction to do it, and they were discovered by the germans. i believe it was the pflpgc, so it was then subcontracted to moammar ghadafi, that great lover of all terrorist groups. so iran and ghadafi have had a relationship over time. i think this cuts both ways. they're, obviously, not happy to see a nato-led intervention against a dictator in the middle east. this is a frightening prospect for them. at the same time, i'm afraid, it may make them redouble their efforts to get nuclear weapons. there's been a lot of commentary

recently, the north koreans most prominently saying ghadafi was a fool to give up his nukes in 2003 because, of course, that's made him vulnerable now. i think that goes a bit far. i don't think ghadafi could ever have put together a bomb. when those nuclear materials were turned over, they were still in their crates, you know? they hadn't even figured out how to take them out of the box. but there is a point there. so it's part of an unsettled picture that has to make the iranians, you know, worry should we -- i mean, if it comes out well, if ghadafi is overthrown and peace is restored, i think it actually works to the u.s. and the western advantage, and it may help those in iran who would like to see a negotiated resolution differences with the united states and the international community. >> okay, thank you. yes, sir. >> thank you very much, mark, for the task force. thank you very much, also, for an update on this evolving situation. probably perfect to have a

journalist doing it. you've got deadlines week by week, i would think, in the region. my question relates to a conclusion that the task force drew in the first paper which i think was in november? >> uh-huh. >> and it was that iran might have the best chance in the region to be a durable democracy. i'm wondering if you could provide a little color, barbara, or any of the task force, on that. what led to those conclusions or that conclusion? >> uh-huh. actually, i just came from an event at the carnegie endowment where the iranian ambassador in -- i'm sorry, the italian ambassador in iran for five years spoke and also an iranian dissident. and they both pointed this out. iran, yes, you know, when the day comes that the regime changes in iran, i think iran will be much better positioned, frankly, to become a stable democracy than a lot of the arab

countries where we're seeing regime change right now. why do i say that? it's because of the educational level of the country. more than 80% literacy. which far exceeds that, certainly, in egypt. it's a history of seeking representative democracy ha goes back more than 100 years. iran had a constitutional revolution in 1906 that brought about the first parliament in the middle east. the revolution in 1979 had a lot of democratic elements, but it was hijacked by the religious extremists, and many iranians certainly would like to see a change in that. we've also had the fact that we've had this sort of democratic revolution. if you look at iran, the evolution of civil society in that country really began after khomeini died in 1989.

all of these different interesting philosophers, i mentioned one, in the is the 90s -- 1990s who were putting forth very interesting documents on reconciling islam and democracy. we had the upset election in 1997. he eased the hand of the state on the iranian people. and what we've seen really since 2005 and especially since 2009 has been a reversion to, to a more authoritarian kind of system. and i just don't think it's sustainable in iran. so, yes, democracy, i think, could work in the iran perhaps better than anywhere else in the region. >> thank you. >> yes, sir. >> thank you. [inaudible] senator hagel, great panel to see you. my question is that now -- i just came from the press briefing from the state department and white house. and a lot of things going on, as you know, senator, in the white house and state department.

the tsunami and earthquake going on in the middle east. where do you think it's going to stop? do you think it's going to go towards china? because china's people are also waiting for the waves of this tsunami to reach on their homeland for a better life and human rights and rule of law and democracy, religious freedom, so on. and, of course, press freedom. also nato is now going to play a role in libya, and now they are fighting in afghanistan. can they do this without humans on the ground, or the forces on the ground in libya? >> thank you. >> well, i will begin and hand it off very quickly. i think your question, your last question about, essentially, boots on the ground is an area that to some extent secretary

gates covered two weeks ago in testimony on capitol hill. but i would go back to a more basic question than that, what's the objective? what's the point? what's the purpose? overflight? okay. then with ghadafi still in power or with him out of power? there seems to be some confusion about that. "the washington post" led with a headline today about clarity. clarity is a pretty critical dimension for any democracy when you commit troops and, essentially, as secretary gates said in his testimony, we are engaged in an act of war. not just the united states, but the nations who have participated in nato with us are engaged in war. now, and what is the essential objective of that? is it regime change? is it to live with gaffe by? is it to -- ghadafi? is it to divide libya?

and i think that's where you have to start before you can get to the next set of questions. you mentioned china. and i'll let professor brzezinski handle that since he has just arrived fresh from an analysis, and he noted a couple of observations about that. and i know the ambassador will probably have a comment or two and barbara, so if it's okay, let me ask mark to respond and then anyone else -- >> can i suggest that not diverge into china? we've got a very clear focus. let's spend the time on this, otherwise we'll end up -- >> well, but i think, though, that it does connect into what you were saying about china thinking thoughts that they have about what's going on. i agree that this is about iran. but i think that your question is relevant -- >> and as stu said, i'll with very quick and brief here. i would say china's worried about two things. first of all, any kind of contagion in the form of popular upheaval transferring from the middle east to china, and you

can see stories in the papers showing the steps the chinese government is taking to control any step toward popular dissent. but secondly, and what i picked up both in china and korea, is that there's a real worry about an explosion in the middle east. not so much because from what i heard there is a deep care over in china and korea about the democratic movement in the middle east, but it's because where they get their energy resources. iran is the third largest supplier of oil to china. and that's the concern. they want a continuity in terms of their own economy, and they want stability in the global economy. >> barbara. >> i think i'll pass on that and just stick to iran. >> [inaudible] >> one quick, quick question, yeah. >> secretary gates saying the same thing, something different what you said, but also

president clinton and president obama said today and yesterday and ever since that mr. ghadafi must leave. >> well, i think as the ambassador noted, we're here to talk about iran and not ghadafi. i mean, how he fits into the larger scope is okay, but i think we should go on to some other questions. >> okay. yes, sir, right there. >> my name is walter,. [inaudible] chuck hagel, senator hagel, you mentioned very important word which is that understanding the difference. and apparently, we have the problem. to the friends become tomorrow enemy because of misunderstanding of the difference. in ordering diplomatic order anyway, the -- [inaudible] able to turn your friends into -- i mean to turn enemies to your friends. and i read very interesting book

which father of mark wrote it. between two ages. this book, if anybody can read, it really give you the idea what is the problem in the world with. it is fascinating book to read. explanation the situation between communist and free market economy -- >> walter? walter, we have many questions, so we'll need a question. >> is there a question? yeah. >> the question is what can be done so we can understand differences between culture, religion and political, between iran and united states? [laughter] >> small question. i think i could be an entire issue brief on its own. i think we have a lot of affinities with iran. it's one of the reasons i wrote a book about it. and anybody who's gone to the country knows that americans are more popular there than they are anywhere else in the middle east

or probably south asia because of those affinities. iran is a deeply religious country, spiritual country, but it's not a very theocratic one. 32 years of religious rule has made most iranians quite sick of theocratic government. and there is, as i mentioned, this real base for democracy. i didn't mention the women's movement which has been very strong there, you know, women have been at the forefront of a lot of these demonstrations and of civil society. it is absolutely primed to go in a different direction. but the two governments, you know, have been fighting each other for 32 years. and, unfortunately, the current government appears to see enmity with the united states as a pillar of its survival. it has to have an enemy, it has to have a scapegoat. and that is a big problem. it's going to be very, very difficult to overcome. >> thank you. yeah, right next to -- yep.

>> thank you very much. my name's mark, i came from poland. just today i realized that there is a meeting, so thank you very much, i'm very glad to be here and to listen to this wonderful presentation. i've got two very brief questions regarding iran. first one is that you've mentioned about the possible spreading of the revolutions in the middle east to iran, but when i think about what i call or maybe somebody called before me the facebook revolutions and youtube revolutions they, indeed, in fact, they started in iran after the last elections. so do you think we should find the beginning of those revolutions in this, in this protest during the last presidential elections in iran? and the second question is concerned with the change in balance of power in the arab league. do you think that those revolutions that take place now in the, in the region, they will

effect the balance of power in the arab league and their attitude towards iran in the future? thank you very much. >> very good questions, both of them. yeah, i have written, actually, that 2009 and the demonstrations that took place after the disputed presidential elections in iran really, if you want to trace back, that's the beginning. the iranian government tries to say that all these intifadas are 1979 all over again which is ridiculous. 2009 was facebook, it was cell phone cameras, you know, catching the demonstrators and people being beaten and killed on the streets of tehran. and, in fact, some of the organizers of the demonstrations in the tunisia and egypt have said that they communicated through facebook with iranians and learned some techniques from them in terms of how to organize facebook pages and so on to get some of these intifadas started, so you're absolutely right. i hadn't thought, really, about the realignment in the arab league, but it will be

interesting to see. this has really not been a very strong organization for years. it's been kind of a joke. if you have more democratic, stronger governments, that could mean a more vigorous arab league. i was really surprised, actually, that they all agreed on this intervention in libya. i thought that was really something because you might not have seen that in the past. and in terms of relationships with iran, this is, again, you know, some people are very worried about egypt. egypt may restore diplomatic relations with iran. well, that's possible. egypt let two iranian ships go through the suez canal for the first time in the 30 years. a lot of concern on the israeli side that there'll be more smuggling through sinai of weapons into gaza. and these are certainly legitimate concerns. at the same time, we have the saudi and gcc intervention in bahrain. so there's no way they're going to let iran spread its influence across the persian gulf.

we have the fifth fleet, we have the united states with all its myriad military installations. the u.s. is not retreating east of suez like the british did. so i think, basically, the arab countries are going to remain oriented toward the west for the foreseeable future. i don't think we should be concerned that iran is suddenly going to have great friends in the region. wethe sunni/shia divide, the arab/persian divide, so i think that's an exaggerated concern. >> david. >> yes. one comment and one question. the comment is that i believe that iran is going to be the loser in all of this turmoil. primarily because of egypt. egypt has sort of not existed on the international scene for 30 years, and that's not going to be the case no matter who with is involved -- who is involved in the running the government there. if it's at all representative,

it also will provide an alternative place to focus discontent in the sense that they did it, they got there, we don't want to go like the iranians did to get mullahs. that's the comment. question is, we just completed a study of the opposition in iran. and what emerges is that it's an indelible part of society. it is, in fact, part of the social structure and goes back all the way to the revolution where there were democrats, and they were urban and all the rest. that's not going to go away. at the same time, they're not going to be strong enough to overthrow the government. and any real change that takes place has got to come from some insider who can reach out to them. and i'd be interested in your comment on that. >> well, i certainly agree with the fact that the opposition has been a permanent feature of iran, not to say the islamic republic, for a very long time.

i'm not so sure how the change will come. i think there's a tremendous power in the green movement, and the fact that it is, in a sense, leaderless because you can't decapitate it. every iranian is potentially a member of the green movement. a lot will depend on whether the members of the military, particularly the irgc and the besiege remain loyal to the regime. there are going to be transition points. there will be a new president, there will be a new supreme leader at some point. a lot of people had tremendous hopes invested in ha thatny, but it was really the supreme leader who prevented him from becoming an ayatollah gorbachev. you need an ayatollah gorbachev, perhaps, and that could come with the next supreme leader. i just think that given the demographics, 70% of the population under the age of 30, they don't remember the shah, given the educational level and so on, eventually, you know, this is just going to have to e

evolve. for iranians' sake, i hope it can be peaceful. i think it probably will be. but this regime is not going to remain in power for another 20 years. i would venture that within the next 5-10 years you will see a change. >> yes, sir. actually, the man in front of you. and then we'll to to you, yeah. >> thank you. barbara, i particularly enjoyed your comments, but i have to take issue. as someone who was summoned back to washington by my then-boss, bill richardson, for being misquoted at chat ham house by an iranian stringer who said that the united states' government wanted pipelines to go through iran, i take issue with the idea that we should encourage multiple pipeline routes through iran. i really think that that attitude has not changed. i'm giving a talk next week on

turkey as an energy bridge -- >> uh-huh. >> -- and the need to reduce pence on rush -- dependence on russia is the key to the pipelines going through turkey, for example. i'd be interested in your reaction. >> yeah. we've been through this back in the '90s, and i go with hunter on this. she's written a really excellent book that i recommend to everybody on iranian foreign policy. recent foreign policy. and if you want a country not to be an outlier in the international system, you have to give them assets that they're loathe to jeopardize. i believe that u.s. administrations, successive administrations -- democratic and republican -- have made a big mistake by giving iran no assets to jeopardize. if united states had been willing to allow iran to have pipelines back in the 1990s, if united states had been willing to allow conoco to take that deal with iran back in the 1990s, i don't think we would

have the hostile relationship we have with iran today. so should we continue this pattern because of the nuclear issue? if we want to end the russian monopoly, if we want central asia to be prosperous, i think we do have to end this, this policy of blocking iran from having pipelines, trying to discourage transit trade. you know, the late richard holbrooke was so proud of the fact that he'd gotten a transit agreement that goes from afghanistan through pakistan to india. well, there should be routes that go from iran to pakistan to india. it's in the everybody's interests. and i would refer people to fred starr at johns hopkins who's written extensively about the silk road, the old silk road. everybody can benefit. turkey can benefit, all of the countries along the silk road. >> i have to say this is one area --

>> where we disagree. >> -- the task force is not unanimous. [laughter] i have great respect for barbara and the work she's done here. i think this would be absolutely the wrong time to send that signal. iran is doing everything it can now to try to find ways around the increasingly effective sanctions that are starting to bite. this is where, as i said in my opening remarks, there's a tension between the need to engage with iran, find areas of cooperation like afghanistan and still keep up a very strong front. i think if we were to send a signal now that we want to encourage pipelines to iran, it would send exactly the wrong signal -- >> [inaudible] >> no, no, i'm not talking about encouraging, i'm just talking about no longer blocking others from doing this. you know, india, for example, pakistan. obviously, the united states, we have laws that -- >> right. >> -- that forbid it now, very, very strict laws on the books.

but we should stop, you know -- >> i just think we can't have it both ways on the nuclear issue. you know, we really, in my opinion, are facing -- and i think the opinion of others -- a real crossroads. the question of whether or not the sanctions will be effective enough and send a strong enough signal and hurt enough to deter iran from progressing on its program. you know, we face a potential threat then of either accepting a nuclear program and going to a deterrent mode, or having a military confrontation with either ourselves or the israelis. i think between now and whenever that time is we have to hopefully avoid that or face it, we need to have the strongest front possible with our allies, with other countries, with india be others who are finding ways in which to engage on oil and get around some of the sanctions. so, again, maybe this is a good long-term policy, but until we

have, you know, a more definitive, cooperative relationship on imposing sanctions and seeing if they work, i guess i'm sorry for i would in be one area disagree. >> i would just offer one additional point on this. i'm not sure that we should be stuck in an either/or kind of situation here. i don't know really -- i speak only for myself, obviously, here -- but i don't know when we've had real strategic thinking in our united states government foreign policy. now, that may sound a little harsh for some, but why aren't we proddenning the framework -- broadening the framework here of options and creativity and taking advantage of the realities as they are? i think one of the possibilities that could fall out of this new dynamic in the north africa/middle east/central asia

that's occurring which, by the way, i think is a very clear early 21st century example of manifestation of great power limitations. i mean, if it isn't happening now, i don't know when it's ever happened in history. great powers have limitations, and this is a pretty good example. something's going to happen here. it's happening now. and there will be fallout here, and there will start to be some stabilizing at some point here. won't be perfect, won't be everywhere. we should be creative in our thinking and our strategic interests in connecting different ways, different thinking that maybe we haven't thought about. and i think we do a great disservice to our country, our people, who we are. because i think we're better than this. when we lock ourselves down into either this or either this. and i don't think the world's that simple today. i don't know if it ever has been. but the world is complicated, interconnected, combustible, and i think adjustments are going to be required like never before in

human history. >> uh-huh. >> yeah. yes, sir. >> i'm joel rayburn from national defense university. barbara, concerning the, your thought about perhaps overlapping interests between u.s. and iran in the afghanistan, you know, before 2007 there were a lot of analysts in this city who used to talk about our perceived overlapping of interests in iraq and lahrly in be iraq -- particularly in iraq instability. on the ground in 2008 we found out that, actually, the iranians' goal of expelling us from iraq trumped all over interests -- other interests. in fact, they were willing to risk instability in iraq in order to accomplish that and to break up shia unity. so i'm wondering now as i look at your list of four iranian interests in afghanistan, it seems to me in having just come recently from being on the ground in afghanistan that, again, their interest in expelling us from afghanistan trump these other three and

trump them quite dramatically. so why would we think then that we could come to some sort of meeting of the minds on these other three when they are, it seems to me, on the track again of wanting to back a militant faction for the purpose of expelling us. >> joe, thanks very much for that question. look, the united states wants to get out of afghanistan. in this, in july if president obama is to be believed, we're going to start bringing back some of the combat troops that were part of the surge. there is a process. this is a year for a diplomatic surge as well. secretary of state clinton has said so. there are going, there's going to be a political settlement among afghans, and there is going to be a wider regional and international framework for that settlement. so, yes, the iranians will do, will always remind us that they can do a great deal of harm, but i think in a sense they're pushing on an open door. the united states doesn't want to keep 100,000 troops in

afghanistan forever any more than it wanted to keep 100,000 troops in iraq forever. so i think it is possible to work with them on this. and some of these other goals are important. i would note that the u.s. hasn't been doing much on the counternarcotics front lately, and the iranians are very resentful of that because that's where a lot of the drugs are winding up. so i would see -- and also we mentioned, i mentioned balochistan. i would say there's some quid pro quos there if united states is willing to be a little bit creative. we have all these demands that we always place on iran. it's always iran's fault, and we never look at our own actions. we are now surrounding iran. we have toppled two governments. we have american troops on either side of them. we have american troops in the persian gulf, and, you know, we act as though iran is not associationed to be alarmed or concerns or to do anything to hedge its bets. i think we need too look a

little bit through their eyes as well, and if we want a relatively stable afghanistan, if we want to be able to get out of there, then we need to address iranian interests also. >> yes. in the way back. >> hi. hello? i'm ash jane with the washington institute. i also have a question ant the recommendation -- about the relation regarding engaging the iranians in a discussion about afghanistan, for you, barbara. with the green movement just how hoping to benefit from these uprisings, what do you have to say about the timing of trying to engage the iranians in some kind of diplomatic initiative on afghanistan? wouldn't that run the risk of undermining the movement which, you know, we're trying to encourage? >> yeah. thanks for the question. i don't think so at all. i mean w the -- with the old soviet union, you know, president reagan met with dissidents. he called to bring down the berlin wall and all the rest. and we negotiated at the same time with are constitutions

over -- with the russians over arms control. absolutely not. what we have to do at the same time and what obama and clinton are doing is we have to stress human rights constantly in regard to iran. i think that's more important than the nuclear issue because iran is not going to give up its nuclear program probably, but you can really make some embarrassed -- the u.n. has now named a special representative on human rights which is terrific. president obama gave a message to iranians in which he named political prisoners by name and talked about human rights. we can walk and chew gum at the same time, there's absolutely no problem in doing both. >> let me also add another dimension to this which is a dimension of reality. you all saw the latest gallup poll on where the american people are in afghanistan. i don't think that's going to be reversed. i think those numbers are going to continue to go in the direction of get out. for a lot of reasons; budget, so on. it seems to me that we're going to have of to continue to play

all these factors in to the reality of what we want focusing on our strengths, focusing on where we have something to use as diplomatic leverage, factoring all our instruments of power into some common purpose. allies, relationships, the political reality of budgets, what we've done to our force structure in the pentagon over ten years of war, so on and so on. now, regardless of what your position is, did we go in, was it the right thing to go into iraq or not, that's passed. the reality is we are where we are, and the only question is, where do we go from here? just like in libya or anywhere else. and i think within the context of all this there are some real possibilities, some new possibility that's going to force us into some new areas of thinking. last point i'd make here, and this is a raging debate always,

and it should be debated. but i've always believed that engagement is not appeasement. engagement is not weakness. how else are you going to get to, again, what's the objective? you want to go to war with iran? that's certainly an option. i'm not so sure how much stoppage the american people have -- stomach the american people have for that or our allies. it may be that's the only resolution, i mean, i don't know. but it seems to me we've got to think down the road. what happens next? the what happens next? whatwhere are we going? can't we be a little smarter in how we're doing some of these things? and we've got to go back and frame every past reference point in dealing with the iranians or any of these issues. and, again, i don't see that as a weakness where a lot of people do. the political reality is going to dictate a certain amount of this, a certain amount of it. and anyone really believes that the republican nomination for

president, those debates that are actually starting now -- you saw what haley barbour said the other day and mitch daniels, that this is not going to be a central piece of the republican presidential primary. it isn't going to be budgets. what candidate disagrees about the budget? let's cut spending, let's get this deficit under control, let's have a smaller government. yes, yes, yes. but where the differences are is foreign policy. and we're going to get a very thorough airing of this. and we haven't had that in this country for a long time. we've got to get out in front of this, and we have the capacity to do that. of. >> yes. >> greg, arms control association. gaining nuclear capability has been a central aspiration of the iranians for a long time, also before the '79 revolution. do you have an impression, barbara, about how news of japan -- [laughter]

sinks in to one of the most seismically active countries in the world? >> yeah, a good question. a lot of my iranian friends have been afraid about the bushehr reactor opening up. one friend told me it's such a hodgepodge of technologies. the germans started it in the '70s, and you have chinese bits, russian bits, they're afraid if you finally plug it in, the whole thing's going to blow up anyway, and now we have japan. i think it's a very cautionary tale for the iranians. you note that bushehr has not opened. there was a problem with the fuel rods, some people suggest there's been sabotage at the pumps. i would bet that it's going to be a while before that reactor starts up, if it ever does. and, of course, if they don't have a functioning nuclear power plant, what do they need all this enriched uranium for? so i think that's definitely a point in favor as well as all the other things that have gone on, the other problems that they've had in the terms of the

stuxnet worm and the assassinations of nuclear scientists and so on. it definitely could be a factor in suggesting that they might, might slow down. i don't think they're going to give up their determination, though, to have a program and to say that they have a right to the program. that's a nationalistic issue. that's not going to go away. >> but that's a lesson not just for iran, but for the entire middle east, the discussion on proliferation of civilian nuclear activity. >> it could really be a great counterproliferation. i mean, it's a horrible cost and one feels terrible for the japanese, but it could be really good in terms of all these other countries that supposedly want nuclear power. >> yeah. there was a question -- yes, sir. right there. yes. >> yes. my question is for you, ms. slavin. with afghanistan being a majority pashtun population versus the tajiks and the has rahs from the western side, don't you think pakistan would have more influence in

afghanistan versus iran, and iran being more sympathetic to palestinian causes, wouldn't iran have more support in those areas -- syria, lebanon, palestine -- than, say, gulf countries? even though they're both arab? >> yes. definitely i would say pakistan has more of an influence certainly over the taliban. they have given safe haven to the taliban. something like 20% of afghans speak dari which is a version of farsi. you have a substantial shia population in iran as well. a lot of cultural links. and even among the pashtuns. i mean, this goes all the way through pakistan and india, you know, the poets that one thinks of as native somehow, even all the way to turkey really. afghans of all stripes, pakistanis will quote to you.

so i think that they do have an important influence. and, of course, as joel rayburn pointed out, the spoiler role. you know? iran has historically been a spoiler. that's how it gets back at the rest of the world for isolating it since the revolution, and you want to minimize their motivation to play the spoiler in afghanistan. in terms of the palestinian issue, you know, the gulf states also, certainly, they give lip service to the palestinian cause, sometimes more than that. no, again, this is iran's way of exerting asymmetric power. part of it is through the co- religionist ties, but it's a way to show you can't ignore iran. they're going to get back at you through hezbollah in lebanon, through their support for hamas. if arab states now become more supportive of the palestinians, egypt in particular, then perhaps iran will become less

relevant to the palestinian cause. that's another way to look at it because i don't think hamas -- this is a true marriage of convenience. hamas is sunni, they don't love iran. no arabs love iran. but they take its money. they use each other, you know? and, i mean, that's just natural. >> well, barbara, following up on that given what you just said about iran's role in the neighborhood, could you talk a little bit more about how what's happening in bahrain intersects with the iranians? because, of course, there you have a popular movement on the shiite island of bahrain being repressed by the saudis which is helping the bahraini ruling family. if you could talk a little bit more about what's happening there, that would be great. >> yeah. you know, in the '80s there were definite iranian efforts to subvert the situation in bahrain, in kuwait, eastern saudi arabia. iran was still very much in a revolutionary mode and it was also a way to get back at these

countries because of the iran/iraq war since all of the arabs were supporting saddam hussein. but in more recent years that hasn't been the case, and i think the bahraini shias have gone out of their way to insist that they are, they are patriotic bahrainis. they don't want iran on their side. they don't want an iranian system. they want democracy. they want a parliament that functions, that represents their views. and it is absolutely cynical for the bahrainis and the saudis and others to call this somehow an iranian plot. will iran take advantage of it now? yes, of course. but i mentioned the sermon of one, he'll encourage the bahrainis to die, you know, if they can't win. but you're not going to see a single iranian soldier. you'll see iranian intelligence agents perhaps. there is a very big divide between the arab shia and the persian shia. people should understand that

this is a, this is an ethnic clash that goes back centuries. and if you've ever met arabs in iran and asked them about their treatment, do you know there are no sunni mosques in iran? it's not allowed? if you talk to the shia arabs in iran, if you talk to the ethnic arabs, they are treated very poorly. so it's, this is a, this is not a relationship that is made in heaven by any chance, even though there may be some shia who follow some ayatollahs who are based -- most bahraini follow the ethnic persian who, of course, has been in iraq for more than 50 years. >> and we'll take one more question. there was, if there is one from the audience. and let me close with this, with this final question. the administration is wrestling with how to channel the popular will that's been expressed in the middle east in a democratic

direction. and in certain ways despite the reference to models elsewhere in the world, it really is a case of first impression. what's, what advice would you offer the administration as it wrestles with that question and to -- how should it develop policies that is consistent with that goal and our goals in terms of change in iran? >> wow. in terms of iran, again, i mentioned human rights, emphasize human rights very, very strongly. but also continue to reach out to the iranian government over the nuclear issue, over afghanistan. put the onus on iran to reject negotiations. don't, you know, totally pivot to sanctions and containment. we've done very well on that front. but i think the u.s. should also be constantly looking for possible avenues for dialogue

with iran especially as we see all of these developments in the region. there are going to be people in the iranian government who will be looking for if not a resolution of the differences with the united states, to lay the groundwork for the day when that regime changes. and it will change. >> thank you. thank you, barbara. that was excellent. and thank you, senator hagel and ambassador eisenstadt, for your leadership. [applause] [inaudible conversations] [inaudible conversations]

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>> now do it for them on

reducing high school dropout rates. former florida governor jeb bush and white house domestic policy melody barnes take part in the first portion. in 45 minutes governors from maryland and virginia jury in oklahoma city, sharing ideas to keep kids in school. posted by america's promise alliance and is just under 50 minutes. >> ladies and gentlemen, please welcome back mrs. olive powell and michael powell. ♪ c-an2. ♪ >> good morning, everybody. everybody has your coffee and you're all wide awake and ready to get to work.re we well, here we are. and once again i want to say hot happy we are that you are here for the first annual hosting off

greenpeace and senate summit. i had the pleasure of seeing many of you last night when we were joined by secretary duncan, but today we get busy and get to work. we've got a full day in store with lots of sessions. we have talked about this before, and we will talk about it throughout these today's that days that we are together. we are here as partners in the movement that is gaining momentum. people are coming to understand that we have a problem when a student drops out every six seconds. people are coming to understand that we have to turn that around. there's all kinds of chatter and all kinds of talk about it, and we see more and more news articles about it. the other day i got a letter from a man who said, did you know that another student dropped out of school every 26 seconds? you all at america's promise need to get behind this issue and do something.

he obviously has heard the message. now, some people might think that a letter like that is discouraging, if we not let people know what we're doing? it really gets me very excited because it means that we have helped to raise awareness to the point that people not only know there's a crisis, they are repeating the very statistics that we talk about. when john prepared this landmark study several years ago, the dropout crisis really was a silent epidemic. but it's no longer silent, and that's just one measure of the progress that we are making. as we learn from our progress report last fall, the national graduation rate has risen three percentage point. that's not nearly enough. [applause] >> its progress.

when we begin this campaign, we said our focus would be on 2000 low performing high schools. today, we have to revise that target because a number of so-called dropout factories has fallen to less than 1700. [applause] >> not enough, but its progress. in some of our largest cities like new york and philadelphia, we are seeing double-digit increases in graduation rates. great progress, not enough yet. guess what else we learned? the cities where we are saying some of the greatest progress are the same cities where cross sector collaboration has been especially strong. and that's no coincidence. what we are doing is making a

difference, but we also know, and that's why you're here, that there is a lot of work to do. and so while this summit is about progress, even more it is about how we build on that progress. where do we go from here? we now add america's promise alliance have increased our allies to over 400 national partners and their local affiliate, and they are all actively engaged in this movement. and if you're one of our new partners, thank you for coming on board. but we need to recruit more to join us, and you all can help with that. we need to continue to support education reform, for school districts and states to be accountable for raising graduation rates and preparing students for success in college and work. for the implementation of common core standards that ensure rigor and relevance. and we need to hold ourselves

accountable, too. to measure our progress and improve where we need to get better. now, that's something that you have asked for, and as a result, we've refrained our work over the past several years. this summit is an annual event. every year we will come back and measure our progress and make ourselves accountable for the results. we can't say this enough, the government cannot do it alone, schools cannot do it alone. what we can do is a national movement. and that is what we are building. a movement that has the power to bring real and lasting change. i learned something about the power of the mississippi river when i read that you can find fresh water 100 miles out into the gulf of mexico.

that's a measure of the river's amazing power. of when you think about it, that power doesn't come from the mississippi itself? instead, the river is a conduit we're the true power comes from the tributaries across our great heartland. it starts in the mountain streams of colorado and montana, and in lakes in minnesota and wisconsin, an appellation creaks in pennsylvania and west virginia and tennessee. last less tha.. that's the power we are sending together. the power to sweep back the tides of the difference. [applause] push aside the tides of the difference in failure and

transform the landscape so that we may be a great nation. so today as we get started on her meetings, let's dedicate ourselves to that goal and let's roll up our sleeves and get to work. now it is my great pleasure to introduce to you the cochair, my firstborn, and i'm very proud of him, michael powell. [applause] >> well, good morning. i'm the cochair of the rightm so nation campaign. i'm so excited so many of you could be with us today. we need to start getting readyn to work so let's get ready to stand. if you're an educator in the audience, standout. go ahead.

if you are a policymaker of the audience, standout. if you're a business leader, stand up. l if you work for a nonprofit or community-based organization, please stand. if you are a community leader, please stand.mu and if you are from a foundation ord are a funder of this great effort, please rise. [applause] [applause] you see the extraordinary diversity that has come together and it takes a collaboration effort to make prectss to protect and preserve our a community preserve our community. the next day is about building a graduation nation. we know the challenge ahead of us and we know we can build a successful movement where we focus public attention on the challenge and show people how to

come together in ways that contribute to higher graduation rates and better readiness for success in college and work. today we are going to roll up our sleeves and get to work. we have a day in store with sessions you will find exciting and informative. we ask three things of each of you today. first, let us hear your voice. these are not passive sessions. the fed dialogues and we need your active participation. second, take full advantage of the fact that we have brought so many people here for united and common purpose, talk to as many people as you can. we want you to meet today with a new set of allies. people and organizations you can collaborate with on new initiatives and effort you already have in place.

and third, as these sessions unfold, think about what is next for you and your organization. how will you integrate read nation goals and strategies more deeply into your work and your organization? how can you get others involved? as you leave here today have a plan in mind. we will be reaching out to you to see the kinds of progress being made in your community and we hope you will let us know how it is going. thank you for being here and we look forward to a great day. thank you. [applause] [applause] change in plan. that is with getting it right is all about. flexibility. we are privileged to have with us today someone who has been at

the front lines of championing bose mentoring and education reform. first as a state governor, now as founder and chairman of a not-for-profit foundation. during his two terms as governor of florida raise its academic standards, require accountability in public school and created the most ambitious school choice program in the nation. florida students began making measurable progress with improvements in graduation rates and in the number of students scoring above grade level and reading. , math and science. and with third through tenth graders in other states in reading and math. he also was a strong supporter of the florida men during a project. now he serves as chairman and president of the foundation for excellence and education which

he founded, jeb bush is working state-by-state and across the nation. we are proud to consider him a partner in our work. ladies and gentlemen, governor jeb bush. ♪ >> good morning. thank you very much. it is a delight to be here. and thanks for the entire whole family for its commitment to the next generation of americans. i want to make two points about this summit and would you focus on each and every day. the first is that expectations truly matter. in 1998 as a candidate for governor undecided as i was driving up by 95 to go to one of my conversation campaign events, it would be a lot more fun to visit a school saw visit 100

schools beckoned the day when campaign handlers didn't run the campaign completely so i decided to visit 100 schools to listen and learn and that mission turned into in an 200 school mission which turned into a 250 school mission during the course of my campaign and i learned a lot and listen the lot and have a treasure trove of stories and experiences that will last a lifetime. one of the saddest stories occurred when i visited the remediation lab at stanford high-school in central florida where students were preparing for the florida case collects exam. looking over a kid at shoulder i saw him struggling with the following question. a baseball game starts at 3:00 and ends at 4:30. how long is the game? this young man was probably 16 or 17 years old and couldn't answer that question. he struggled. i could tell he really wanted to

but he had an incredible difference to the -- difficult time answering that question. this was back when we required students to take their course is basically, show up, take their courses and pass and eighth grade level exit test to graduate and less than 60% did. so we need to raise expectations for every student and not excuse away functional illiteracy as we do in quiet ways and subtle ways all across this country. as 16-year-old moving into the world we live in today full of opportunities and great challenges should be able to comprehend the question and answer took an hour-and-a-half at the baseball game and comprehend much much more. in florida we created an accountability system that raised expectations for every student. we eliminated social promotion in third grade.

we graded schools a, b, c, d and f 100% based on student learning and raise the level of aptitude required at high-school graduation tests. the results have been pretty impressive but there's so much more than needs to be done. florida students went from 29 out of 31 states in 1997 to 6 of 50 in 2009. florida's graduation rate has gone up in the last 12 years every year from below 60% to a little below 80%. florida and every other state needs to raise expectations, not excuse away why students don't achieve lower ones. the second point of like to make is things of national purpose require involvement by everyone. if we were honest with ourselves

today in a common core standards that were set up eloquently for an honest conversation about where we are as it relates to the next generation, if we were honest with ourselves we would admit that 1-third of our students graduate from high school ready for a career or college. and additional one third graduate with a diploma but have to take remedial courses if they go to college at all and one third of our young people don't graduate from high school at all. to me this is shameful and i know it is to you. it is dangerous as well for our great nation. transforming our education system should be national priority and will only become one if everyone is involved. more volunteers in schools, more community and faith based groups actively engaged. more business involvement. more enriched after-school programs. more mentors and much more parental involvement.

in florida, let's give it up for the parents. in florida, an attempt to make rising student achievement decor value of our nation we created as racial bowl of 200,000 mentor's involved with our kids with a focus on reading in our schools and one of the things i would suggest is secure release sincere you need to benchmark it so we did a survey and found at the time that we have 16,000 men force doing just that and with the help of general powell we announced our goal and went to work. state workers got more hours a month against schools with pay. businesses did the same. we that business leaders to adopt schools and funded an expanded network of mentoring programs all across the state. we created a high-school mentoring program that helps struggling third grade readers with their work and develop

leadership skills for the high-school mentors. we surveyed again after several years and found we had 205,000 endorse it engaged with our students. i know for a fact that it had an impact on the impressive learning game florida students have seen. today and tomorrow you will explore how to make rising graduation rates a national priority. my belief is we need engagement across the board. not another program. today is a good day to start. i wish you well and god bless you all. [applause] ♪ >> thank you for being with us. our relationship with the alliance and the corporation for national community service is as old as the alliance itself. embodies what american promise is all about. serving in ways that build up

the community. we are excited and privileged to have patrick covington with us today. patrick became the ceo in february of last year but his whole professional life has been devoted to serving others and empowering communities. ever since he began his career as it case manager, worker with migrant farm workers, patrick is a recognized expert on non profit sector leadership, bird and volunteerism. prior to joining the corporation he served as the anti 80 foundation as a senior associate foundation focused on issues related to a leadership development and capacity. he served as executive director of the innovation network, and nonprofit devoted to building evaluation capacity of the non-profit sector and as a policy researcher at the urban institute.

ladies and gentlemen, please welcome patrick covington. [applause] >> thank you. good morning lead to civil everyone. good morning, everyone. is great to be here. i want to give a special thanks to marguerite kondracke and the powells. this is one of the most important pieces of work that we do. ensuring that every student has the opportunity to finish high-school is critical to this nation's success and critical for us to win the future. we also know that national

service has a role to play. thank you. [applause] secretary duncan has said that national service -- there's no more true thing. americorps members and visiting members, senior corps, are out every day in schools ensuring that students have a caring, capable adult taking them through this trajectory, taking them through their young adult lives to graduation. i have seen this traveling the country. as governor bush said, and liu see these things on the ground you can fully appreciate them. in san antonio and milwaukee, of

birmingham, you see americorps members foster grandparents, working with kids who are troubled or struggling to get through, offering a beacon of hope, a path of one life into another. nothing is more touching. nothing is more inspirational. to see a young person working with high school students eager turtle saying you can do this. you can imagine a future for yourself that no one else sees. that is the role the national service plans. it provides a vision and opportunity for young people in this country whose dreams have

been shattered. to see themselves walking that long walk across the stage for high-school graduation. see themselves taking those first steps onto a college campus. to sit in a classroom with piers they never saw that would fit next to. americorps members, foster grandparents, every single day in communities across this country, holding the hands, holding the hearts of young people as they make this path towards college. we are very fortunate at this time to have national service on the national agenda. to see everywhere the difference we can make. there is no more important thing that we can do.

as we look around here today, as michael said earlier, educators -- we have members of philanthropy, policymakers. it is a okay to take a moment to pat ourselves on the back. most of us here are people of search accomplishments. it is okay to feel proud. at this moment in history, there is no more important thing that we can give our lives to, our energy to, our hearts to than ensuring that every student has the opportunity to successfully complete high-school and move on to college. it is now my distinct pleasure and my honor to introduce our

next speaker. melody barnes needs no introduction but i will bore you with the effects. melody was chosen by president barack obama to serve as director of the domestic policy council for his administration. the president served on the member of 2008 and previous to that she was executive vice president for american progress where she led progressive policy initiatives. she joined the obama campaign. there are some things -- she is a member of the new york state bar association, graduate of the university of michigan law school and university of north carolina where she graduated with honors. previous to that she spent ten years working for senator kennedy as counsel for the senate judiciary committee.

but more than that, ability has been and continues to be an extraordinarily leader, steward and driver of domestic policy agenda. she leads with intellect, with grace and with heart. it is my distinct pleasure and honor to introduce my friend melody barnes. [applause] >> good morning. i am happy to see you here first of all because you are going to help me win a bet with my parents. i was having a conversation with my parents last night, they were asking me about my schedule for the week and i told them i was going to be speaking with you this morning and they asked me and we were chatting and just before we were about to hang up my dad said what time is your

speech? have to get to bed early and i said it is at 7:3 and without this in a beat he said is anybody going to be there? i assured him there would be people because i know how deeply committed all of you are to this issue that you would get up at 7:30 in the morning and salinas. those preceding me said it is the important work that is to come. i would also like to thank the business partners for the summit. at&t, pearson and pepsico as well as general powell, michael powell, the 400 plus partners of america's promise alliance and the other three convene ears of the summit civic enterprises, alliance for education and hopkins's everyone graduate center. i am so appreciative the organizers are going to give me this wonderful opportunity to kick off a very important day focused on one of the most

pressing issues of our time. we are all here today because in order to give our children the bright future they deserve we have to build the grad nation that helps them succeed. our economy is growing more competitive and more connected than ever before. over the next ten years nearly half of all new jobs will require more than a high-school diploma. half of today's fastest-growing job opportunities require a four year college deee. >> in order to out educate and out compete the world, we must prepare students to complete high school, complete college -- that's complete college -- and go on to pursue careers. but unfortunately, too many students aren't getting the world-class education that they deserve. as many as 1/4 of america's students are dropping out of high school. that's a fact that we know and are far too familiar with us.

the quality of our math and science education lags far behind many other nations. i remember the scores came out earlier, talking to so many people, reporters, journalist, people who are constantly engaged in information, and finding out people had stunned how far behind we had dropped in math and science, and people are constantly stunned when they hear that 7,000 children are dropping out of high school every day. and on top of that, and, in fact, probably because of that, america has fallen to 9th in the world in proportion of the young people that we have with a college degree. turning this around is the right thing to do for our kids. and it's the right thing to do for our long-term economic success. the best jobs program is a good education. so for the sake of our children, our economy, and america's future, we have to do a better job educating our sons and

daughters. that's why we believe that timely education reform is so vital. and not just top-down reforms. we believe that parents, teachers, students, and business leaders all have a role to play in making our education system a great one. and i say that not -- these aren't just words on a paper. these just aren't issues that we know about, or i understand because of research, i say this because this is something that i've witnessed with my own eyes. you know, in the past life, preadministration life, i was on the board for a local charter school. and the students that attended our school were students that so many others had just either forgetten or had given up on. most of them had in some way touched the juvenile justice system, but for some reason, a parent, a grandparent, a cousin, or maybe even someone who was involved in the legal system had

pointed that particular child in the direction of the school. and what i saw, what i witnessed year after year after year are students who weren't going to school, barely going to school at all, students who were making as all of the sudden making cs and bs. students that said they hated schools coming to school every day, not just for a short school day, but for that extended school day. getting all of the wrap around services that they needed. students who had one point had no vision, had no sense they could finish high school talking about going on to college, saying i want to be a lawyer, i want to be a doctor, and i'm fortunate enough to see some of those schools complete -- some of those students complete high school and see them go on to college and make good grades there. in other words, those lives being turned around by education. and by all of the people in the community who had surrounded

them and supported them and those students starting to believe in themselves. and similarly, just a couple of weeks egg, -- weeks ago, i traveled with the president, secretary duncan, and governor bush who was just here to visit miami central senior high school where they have implemented a number of different turn around strategies even before they received one dime of federal dollars. because of their great work, they have raised the schools scores on the states report card from an f to a c, and they are now expanding their efforts and already starting to see the results. the schools climate is improving. students suspension are decreasing, and in community engagement is going up. they have even started parent academy classes to increase family involvement and student success. there are other schools like that. take forest high school in oregon. they have also shown what's

possible. at forest grove, a new principal set high expectations for student achievement and with targeted professional development for teachers and a close look at student data to focus their effort, they have increased student achievement, reduced achievement gaps, and reduced their drop out rate from 7.7% in 2002, to 2% in 2008. our goal is to build on these success stories across america. and we have done that in part through race to the top. for less than 1% of what america spends on education, raise to the top has spurred more change, more collaboration, and more positive and productive activity than almost any other education program that we've known. race to the top provides an incentive to states that are serious about reform and willing to advance comprehensive plans to raise expectations for

schools and for students. it also focuses on developing great teachers and principals, fostering innovation in schools, and taking on challenge -- the challenge of transforming our lowest performing schools. with the fraction of what our country spends on education every year, raise to -- race toe top has led over 40 states to raise their standards for teaching, learns, and student achievement. it's also brought together parents and teachers, teachers and administrators, reformers and local officials. and we are starting to witness the results across the country. delaware and tennessee were the first two states to be named winners and receive funding last summer. in delaware, for example, parents and students and teachers and administrators and other leaders worked together to adopt core standards, launch an innovative residency program to train stem teachers, and place

specialist in schools to work with teachers to improve the use of data and fostering comprehensive and collaborative planning around instruction. that's the kind of collaboration and partnership that race to the top incentivizing and it's the kind of collaboration that will ensure that education reform is long lasting. as part of its race to the top plan, delaware also instituted a new partnership zone to transform under performing schools by providing additional time for learning, leadership, and staffing changes, and new flexibility in decision making. the vice president just visited one of those innovative schools earlier this week to mark their commitment to improving students academic success in preparing for them for the future. i'm sure he's going to be excited to tell you more about that when he visits with you later this morning. race to the top fosters the kind of bottom up change that we need at the ground level in order to

move the needle on education. but we need to do more at the federal level. a lot -- a whole lot more. this month, and we're calling it education month around the white house, we often have a day or week. but we decided that it was important enough that we were going to focus the attention of the white house and the really valuable real estate of the president's schedule to talking about education week after week after week. and this is only the beginning. so i've been traveling with the president and with secretary duncan as he talks about education around the country. and what i've heard on the road is consistent with what i've heard from teachers and family members and friends and even at the grocery store. and i'm not joking about that. i can be standing on an aisle at whole foods and have people come up to me and say let me tell you what needs to be fixed with no child left behind. i can stand in a clothing store

and try on a dress and have someone come up to me and say, hey, you know what, i know you work for president obama. i need to talk to you about education reform. i'm not exaggerating. and what people are saying over and over and over again is that no child left behind needs to be fixed. that doesn't mean that everything everything -- [applause] [applause] >> that doesn't mean that everything with no child left behind was wrong. we have to set high accountability standards. but at the same time, we also have to address those issues that are pulling our education system down, as opposed to lifting every child up. today, according to the no child left behind metrics, 37% of america's schools are not meeting their annual targets. and according to new estimates from the u.s. department of education, more than 80% of our schools maybe labeled failing in the coming year.

that includes schools like kenmore middle school that's just a few miles away from the hotel. now i was recently with the president and secretary duncan at kenmore. i'm here to tell you kenmore middle school is not a failing school. it's an arts, communications, and technology-focused middle school with a 21st century curriculum. one the inspiring teachers that we met just about ten days ago is a history teachers named lilo stevens who was using duke ellington's life to teach her kids about the historic implications blues and rag time music. she was assessing with pen and paper, as well as portfolios and multimedia presentations and video and visual and performing arts work. it was a great example of how our schools can better prepare students for the rigors of

college and tomorrow's careers in the most engaging ways. the progress being made at kenmore cannot be deemed a failure. and similarly, we know that eight in ten schools in this country aren't failing. we need to focus resources on the schools that truly need the help the most and those that need a robust plan to close the achievement gap. that's why last week the president outlined his plan to reauthorize no child left behind. to reauthorize the elementary and secondary education act, and fix the problems that must be fixed. in short, we have to make sure that we're graduating students who are ready for college and career. i heard governor bush talking about this just a few minutes ago. too many of our students are leaving high school, those that

are leaving our high schools and need remedial education. that means that there's a job that has been left undone. we also have to make sure that we are putting outstanding teachers, like lilo stevens in every classrooms, that we are putting outstanding leaders and principals in front of every school. and we have to give those teachers and leaders the pay and the support that they deserve. and finally -- [applause] [applause] >> and finally, we need to not only hold failing schools accountable, but we need to help turn those schools around. [applause] [applause] >> as the president has said, in the 21st century, it's not enough to leave no child behind, we have to ensure that every child gets ahead and they will only get ahead with an excellent

education. that has to be america's promise to every child, an excellent education that preparing them for the rigors of world they should be ready to face. a world that they should be ready and able to tackle and enjoy and in which to succeed and raise a family and lead a happy and healthy life. that's why our administration is committed to working with the republicans and democrats in congress to fix no child left behind. so reshape our federal role in education and make college and career readiness a reality for all students. that means first, fixing no child left behind's accountability system, and building on a new system predicated on a more challenging set of standards and better assessments. advancing a new framework that's resulted oriented and focused on areas that will generate the greatest impact for students.

that means rewarding excellence through more competition across the states, it also means reforming and consolidating our existing investment in education from 38 programs to 11 funding streams that will function more effectively for states and school districts. third, it means preparing, developing, and rewarding effective teachers, including measuring teacher effectiveness through new evaluation systems and states and districts that are willing to take on comprehensive changes in how they develop, support, and reward successful teachers and principals. fourth, bringing new energy and bold strategies to turn around our lowest performing schools. promoting successful conditions for innovation and effective charter schools. and six, providing more well rounded education by funding the development and scale up of effective programs in additional subjects. foreign languages, history,

civics, geography, the art, economic and financial literacy, for example, and by supporting the safe, successful, and healthy development of students inside and outside of school. many of these are reforms that democrats and republicans have worked on together for many, many years. and for which there is a great deal of common ground. and already we have seen great examples of reform and action around the country. after this trip to miami central senior high school, the president went to tech boston academy. a school within the boston public school system. that puts innovation into practice and really taps into a strong community willing to share responsibility for the success of its students. at tech boston, students are required to take more math, science, and technology classes, go to school during the summer, and have shorter classes that enable teachers to receive the

training and support they need, and collaborate so that they can support students in a holistic manner. with the help of the gates foundation and major companies like ibm, cyst oh, -- cisco, and others, it establishes business leaders that provides the students with the powerful education program that they need. tech boston is a great example of parents, businesses, fill philanthropist, and others all demonstrating a shared responsibility for the education of young people. and the results are phenomenal. tech boston's graduation rate is 20 points higher than the rest of the city's graduation rate. 20 points higher. 94% of the most recent graduating class went to college, and 85% of those

students were the first in their family to go to college. this can be done. [applause] >> this can be done. [applause] [applause] >> we can't take it when people say to us there are all of these factors that are going to prevent our students from going to college, that prevent -- that are going to hold our students back, that are reasons for our students dropping out. those aren't reasons. those are excuses. you know it, i know it, and we all know that we can do something about it, and we are going to do something about it opinion -- about it. we have to have a national education policy that incentivized these kinds of partnerships, that incentivizing these kinds of high standards, and makes sure that we can replicate stories like tech boston all other the country. every child deserves it, and we're going to make sure that every child has it. [applause] [applause]

>> building a grad nation requires all of us getting to work and fast. we know that education is no longer just a pathway to opportunity, it's a prerequisite. we need to face the challenges in our schools and to make the hard choices and investments necessary to ensure that all of our children are prepared to succeed. the american people are looking for smart solutions, and the president is prepared to work with parents, teachers, governors, the private sector, congress, republicans, democrats, independents, anyone, every one to make sure that we do it and to ensure that we have a bright future for our children and that they are able to compete and to win. so that is our commit to you, and most importantly, that is our commitment to our children and we look forward to working with you every day, every week,

every month until we get this done. thank you for what you were doing with us. we look forward to your partnership, and enjoy the rest of your conference. thank you so very much. [applause] [applause] ♪ ♪ >> enjoy the panel. >> we were supposed to joined by corybooker, -- cory booker, the mayor of new york. he's not going to be able here. i was dying to ask him how everybody can get money from mark zuckerberg. we'll have to make. governor o'malley, i know you are proud that maryland rates number one in education. [crowd cheering] >> none of them.

>> an 80% graduation rate, but you have 27 drop out factory schools in your state. what are you doing about that? what are you going to do to try to raise the graduation rate in those places? >> there's a number of strategies that are implemented with the local education agencies, associations. some of the most important thing that is we did in baltimore city was to take some of the larger high schools and split them up into smaller schools. and also being able to create beams in some of the high schools for a career path, job and -- career and college readiness. those were very important. and another thing that we've done over the last few years is to expand the number of career and technical education offerings. we've gone from 30 to 38 to the extent that we're better able to match up the cte with the places

that we have the greatest drop out drops, i think we realize a lot more of the goal of graduating more of our kids. those are some of the thing that is we do. all of them come down to leadership. whether you want to call it reconstitute, innovate, the most important thing for turning around is having a great principal. that's not something -- the training pipeline for new principals is not something that we've done as well as we need to. this was part of our race to the top application. we are hopeful with john hopkins and the university of maryland, we will be able to reinvigorate so we get the best leaders into our high schools that have had the greatest challenges and therefore the greatest opportunities for progress. >> ordinarily we would start with the governors, then the mayors. but i want to mix it up. we have a lot of smarts up here on the panel. i'm going to turn to mayor

ballard, mayor of indianapolis. according to our numbers, your drop out rate is quite high. 49% of your high school graduates actually graduate. now there are eight drop out factories in indianapolis. i want you to use that as a leaping off point that you identify as the challenges that you face as a mayor as many cities have education challenges and what you see as the opportunity. >> i believe the number that you are talking about is the number for one of our school districts, the largest school districts. in indianapolis, we have 11 school districts. we do have a difficult school system as others do in the largest cities across the nation. what we have done in indianapolis, we have the chamber of commerce that has come together to start the program called a common goal. just a few years ago, across the city of indianapolis, not just

the one particular district, the graduation rate was around 68 to 69%. now it's at 80. within that district, the urban district if you will, that graduation rate is now at 56%. what we're done is put graduation coaching into the schools. kind of like communities and schools, we put people into the communities to work very, very hard to make sure they have resources and teachers. >> you call them graduation coaches? >> graduation coaches that the chamber of commerce has put in there, supported by united way, which has been a partner in indianapolis. so many companies have come together. it was like the community coming into the school to help out. the numbers certainly in the last three years we've seen an increase. >> so governor mcdoll -- mcdonnell, you have 25% graduation rate, and 25 drop out

schools. where is your crisis on your agenda? >> well, it's high. obviously finishing high school and hopefully going on to either a good job or a college education is really access to the american dream. so i think that it's going to take a concerned parent and motivated teacher really to solve the problem. secondly is to be able to tie education to economic development and job creation. kids have to see where it's going, not just the green itself, but access to a good job and thus their dreams for the future. we have employed a couple of strategies in drop out prevention and intervention program. we have turn around specials that are going into the schools with the high drop out rate and those that are not fully accredited and doing very intense work with teachers particularly and principals and others to turn it around.

secondly we had some reform that is we passed to try to create composition within the schools, carter schools, college labs, virtual schools, not all kids learn better not classroom. some learn better through the virtual environment. >> i think all of those are part of the solution. i don't think there's one particular answer. creating schools where people want to come, want to learn, and see it's the tick tote a -- ticket to a well paying job in the future. >> that begs a lot of questions about responsibility. i would like to mayor cornett to weigh in. in oklahoma city, 63% graduation rate, seven drop out factories. not only how high, but what do you do about it once it's up there? >> i think the graduation rate in the city reflects the state average. we have one the 24 districts that has issues. one program that we have is a

truancy program. we have our police department involved. the most that the kid starts showing a tendency to be truant, we have police officer on the house. if we can engage the parent on the front end, we'll probably have a better chance of creating a drop out problem. >> can i ask you a question? how do you have the resources to put a officer on the front porch? >> if we don't, we're going to be dealing with the kid six months later. we're going to use the police officer then or later. we got to keep them in school. you let them drop out of school, the idea that he's going to run into a police officer is almost guaranteed. >> my question is that your education program is focused on rebuilding all of the schools in the city. >> right. >> now how does that link up to applying resources to drop outs. >> we had a one cent penny on the dollar sales tax for seven years to rebuild every building. all 75 buildings are either

built new or refurbished. the idea being if a kid had a better environment, the kid is more likely to want to be in school, and a parent is more likely to want to be there. those capital needs were at the point of an emergency. we're in the final stages of building that. the new high high schools, we're working on the grade schools. by the end of this year, we'll have virtually all 75 of the buildings. the capital needs were fundamental and something the city could provide. the programming is not under the jurisdiction of the mayor. it's more difficult for us. we are rolling up our sleeves and getting as involved as the district will allow us. we are seeing more and more cooperation. >> did you have to have a bond issue or referendum to get your tax? >> we did. we had to go to the voters. keep in mind we had 24 victim districts. -- 24 districts. the people that voted yes didn't

live in the district. we had to get them to buy into it was important to their quality of life. we passed in november of 2001, and collected the dollar and some of the money went to the suburban, but the bulk went to the one inner city district that had no many referred maintenance issues it was never going to work it's way out alone. >> governor o'malley, can you imagine that working in maryland? >> i can. we have increased our sales tax by a penny. over the last two difficult years, we've had two years in a row of the highest amount that we've invested in public education. we have increased by 1.1 billion just over the last four or five years. we're at a time in our country right now where everybody wants to eat cake and lose weight. we all want great schoolss -- [applause] >> we all want great schools, but too often we want meters that tell us. >> you feel like they are all

eating cake right now. >> right. i mean we have to be honest. we all want great schools, but at the same time, many of us want leaders that tell us what solves of our nation's problem is another tax cut or lower taxes. there's no way to build schools without paying for them. and that's why -- [applause] [applause] >> you know, that's why i lean forward when i heard the mayor talking about what he was able to do to do that throughout your whole city. we need to -- >> we're one of only 17 state that is does anything on school district. most states don't put any dollars towards school construction. in our state we do. over the last four years, we have funded even with 5.6, $6.6 billion in cuts and reductions. we funded the all time high in school renovation and school construction in our state. we ar