sure everybody has access to the internet. we can do all of those things while still bringing down the deficit medium term. now, there's one last component of this. and i know this is a long answer, but i wanted to make sure everybody had the basic foundations for it. even if we get this $4 trillion, we do still have a long-term problem with medicare and medicaid. because health care costs, the inflation goes up so much faster than wages and salaries. and this is where there's another big philosophical debate with the republicans. because what i've said the best way for us to change it is to build on the health reform that we had last year and start getting a better bang for our health care dollar. we waste so much on health care. we spend about 20% more than any other country on earth, and we have worse outcomes. because we end up having

multiple tests when we could just do one test and have it shared among physicians on facebook, for example. we could focus on the chronically ill; 20% of the patients account for 80% of the costs. so doing something simple like reimbursing hospitals and doctors for reducing their readmissions rate, and managing somebody with a chronic illness like diabetes so that they are taking mare meds on a regular basis, so that they don't come to the emergency room, that gaves huges amounts of money. so that's what health care reform was about last year, or a year and a half ago, and what we want to do is build on that and continue to improve the system. what the republicans right now are saying is, number one, they can't agree to any increases in taxes, which means we'd have to cut out of

that $4 trillion, all of it would come from education, transportation, areas that i think are critical for our long-term future. so, for example, they proposed 70% cuts in clean energy. well, i don't know how we free ourselves from dependence on foreign oil -- and anybody who's paying gas prices knows there's an economic component as well as an environmental component to it -- if we're not investing in the basic research and technology that allows solar, wind, and others to thrive and develop. at the same time, what they've said is let's make medicare into a voucher program so that retirees, instead of knows they are always going to have health care, they are going to get a voucher that covers part of the cost. and whatever health care inflation comes up is all going to be on them. and if the health insurance companies don't sell you a policy that covers your illnesses, you are out of luck.

i think it is very important for us to have a basic social safety net for farms with kids with disabilities, for seniors, for folks who are in nursing homes, and i think it's important for us to invest in the basic research. we can do all of those things, but we're only going to be able to do it by taking a balanced approach. and that's what the big debate is about -- all about right now. all right? >> all right. so -- sorry, don't mean to cut off the applause. president obama: no, no. [applause] president obama: no. they were -- they were stunned by the length of that answer. [laughter] president obama: but it's complicated stuff. >> so the next question is from someone watching facebook live. jay aptinel from williamsburg, virginia writes in and asks: the housing crisis will not go away. the mortgage financing

for new home buyers with low to moderate income is becoming very difficult. as president, what can you do to relax the policies that the disqualifying qualified home buyers from owning their first home? how can you assure the low to moderate home buyers that they will have the opportunity to own their first home? president obama: well, it's a good question. i'll be honest with you, this is probably the biggest drag on the economy, along with gas prices. what we've really seen is a housing market which was a bubble had greetly over-inflated in all regions of the country. and i know i probably don't get a lot of sympathy about that here because i can only imagine what rents and mortgages you guys are paying. it's a real drag in all sorts of way. people, first of all, still feel poorer even if they have a home, because the mortgage is what they call

underwater. the mortgage is more than the home is worth. if you feel like your most important asset is now worth less than your debt, that's going to constrain how you spend. people who want to move have a great deal of trouble selling. people who want to buy, as you pointed out, are seeing terms a lot more restrictive. we've put in place a bunch of programs to try to see if we can speed along the process of reaching a new equilibrium. for example, what we did was we went to the mortgage lender and said why don't you renegotiate with your mortgage -- with the person with the mortgage. renegotiate the terms of their mortgage so that their principal is a little bit lower, they can afford the payments, that ways homes don't get foreclosured on,

fewer homes on the market, that'll raise prices and be good for everybody. we've seen some significant process on that front. the challenge that we still has, as the questioner properly points out, a lot of people who brought a first home when credit was easy now are finding that credit is tough. we've got to strike a balance. frankly, there's some folks who are probably better off renting. and what we don't want to do is return to a situation where people are putting no money down, and they've got very easy payment terms at the front end, and then it turns out five years from now because they've got adjustment rate mortgage that they couldn't afford it and they lose their home. i think the regulators are trying to get that balance right. there are certain communities with high foreclosure rates where what we are trying to do, can we help state and local government take over them and convert them and provide favorable terms to

first-time home buyers? but frankly, i think we've got to understand that the days where it was really easy to buy a house without any money down is probably over. and what we -- what i'm really concerned about is making sure that the housing market overall recovering enough that it's not such a huge drag on the economy because if it isn't, then people will have more confidence, they will spend more, more people will get hired, and overall, the economy will improve. but i recognize for a lot of folks who want to be first time home buyers, it's still tough out there. it's getting better in certain areas, but in some places, particularly where there was a big housing bubble, it's not. >> so i think the next question is from a facebook employee in the room today. so lauren hale has a question. lauren, where are you from? >> hi, over here.

president obama: hey, lauren. >> mr. president, thank you for joining us. i'm originally from detroit, michigan. and now i'm out here working at facebook. me question is at the beginning of the term you talked about job creation and on the road to economic recovery. one the ways to do that was to substantially increase federal investment in various areas as a way to fill the void from consumer spending. since then we've seen it shift from that of job creation and economic recovery to that of spending cuts and the deficit. i would love to know your thoughts on how you are going to balance them going forward or even potentially shift the conversation back. president obama: well, you are exactly right. when i first came into office, our number one job was preventing us from getting into another great depression. and that was what the recovery act was all about. so we helped states make

sure they could minimize some of the layoff and difficult budget choices that they faced. we made sure they had infrastructure spending all around the country. and, in fact, we made the biggest investment in infrastructure since dwight eisenhower built the highway system. we made the largest investment in the history in clean energy research. it's really paying off. for example, when i came into office, we had about 2% of the advanced battery manufacturing here in america. and as everybody here knows, what's really holding us back from my goal of a million electric vehicles on the road is that battery technology is still tough. it's clunky; it's heavy; it's expensive. and if we can make significant improvements in battery technology, then, i think, the

opportunities for electric vehicles, alternative vehicles that are much cheaper, you know, our opportunities are limitless. so those were all investments that we've made in the first two years. now the economy is now growing. it's not growing quite as fast as we would like. because after the financial crisis, typically, there's a bigger drag on the economy for a longer period of time. but it is growing. over the last year and a half, we've seen almost two million jobs created in the private sector. because this recession came at a time when we were already deeply in debt and it made the debt worse, if we don't have a serious plan to tackle the debt and the deficit, that could actually end up being a bigger drag on the economy than anything else. if the markets start feeling that we're not serious about the problem, and if you start seeing investors feel uncertain about the

future, then they could pull back right at the time when the economy is taking off. so you are right that it's tricky. folks around here are used to the hills in san francisco, and if you've driven -- i don't know if they still have clutch cars around here. anybody ever driven a clutch car? [laughter] president obama: you know, you got to sort of tap and -- well, that's sort of what we faced in terms of the economy; right? we've got to hit the accelerator, but we've got to also make sure that we don't gun it and we can't let the car slip backwards. so what we are trying to do then is put together a debt and deficit plan that doesn't slash spending so drastically that we can't still make investments in education, that we can't still make investments in infrastructure, all of which would help the economy grow. in december, we passed a

targeted tax cut for business investment, as well as the payroll tax that has a stimulus effect that helps to grow the economy. we can do those things and still grow the economy while having a plan in place to reduce the deficit, first by 2015, and then over the long term. i think we can do both. but it does require the balanced approach that i was talking about. if all we're doing is spending cuts, and we're not discriminating about it. if we're using a machete instead of a scalpel, the deficit could get worse because we could slip back into another recession. obviously, for folks in detroit where you are from, they know that our investments can make a difference. because we essentially saved the u.s. auto industry. we know have three auto companies here in america that are all turning a profit, gm just announced it's

hiring back all of the workers that it was planning to lay off. and gm just put a new standard on cars for the first time in 30 years. so it can be done. but it takes a balanced approach. [applause] >> all right. we have a question from the university of florida. where in february, you launched the initiative at whitehouse.gov, there's 100 youth roundtables across the country. a bunch of them are watching live. cesar and elisa are participating. prosecute, in your deficit reduction speech last week, you spoke of the need to not only reduce government spending but also increase federal revenue. in light of the nation's budge channels, will your administration consider a policy such

as the d.r.e.a.m. act which will reduce the deaf is the by $1.4 billion, and increase the revenue by $2.3 billion over the next ten years? president obama: let me talk about d.r.e.a.m. act, but immigration policy in general. sheryl sandberg actually participated in a discussion yesterday. bringing together business leaders and government officials and faith leaders, a broad cross-section of americans together to talk about how do we finally fix an immigration system that's fundamental broken? for those of you who aren't familiar, the d.r.e.a.m. act is -- it deals with a particular portion of the population, kids who were brought here when they were young by their parents; their parents might have come here illegally -- the kids didn't do anything.

they were just doing what kids do. which is follow their parents. they've grown up as americans. they went to school with us. or with our kids. they think of themselves as americans, but many of them still don't have a legal status. and so what we've said is, especially for these people who are our neighbors, our friends, our children's friends, if they are of good character and going to school or joining our military, they want to be part of the american family, why wouldn't we want to embrace them? why wouldn't we want to make sure that -- [applause] president obama: why wouldn't we want to make sure they are contributing to our future? that's the d.r.e.a.m. act. but that's just a small part of a broader challenge that we have. immigration in this

country has always been complicated. the truth of the matter is that we are both a nation of immigrants and a nation of laws. sometimes the laws haven't been fair. sometimes the laws have been restrictive to certain ethnic groups. there have been quotas. sometimes our immigration policies have been arbitrary and have been determined by whether industry at a particular time was willing to bring in workers on the cheap. but what's undenial is america is a nation of immigrants. that's our history and that's what makes us stronger. because we've ambitious people from all around the world who come here because they've got a new idea and they want to create the next big thing. or they just want a better future for their kids or their family. and that dynamism is part of what's propelled our progress and kept us

young. now i think most americans understand that and most americans agree with that. at the same time, i think most americans feel there should be an orderly process to do it. people shouldn't just be coming here and cutting in front of the line, essentially, and staying without having gone through the proper channels. so what we've said is let's fix the whole system. first the all, let's make the legal immigration system more fair than it is and more efficient than it is. and that includes, by the way, something i know that is of great concern here in silicon valley. if we've got smart people who want to come here and start businesses and are phds in math and science and computer science and -- why don't we want them to stay? i mean why we would want

to send them some place else? [applause] president obama: those are potential job creators. those are job generators. you know, i think about somebody like an andy grove of intel. we want more andy grove's here in the united states. we don't want them starting companies and intel in china, or starting it in france. we want them starting it here. so there's a lot that we can do for making sure that high skilled immigrants who come here study. we've paid for their college degrees. we've given them scholarships, we've given them training. let's make sure that if they want to reinvest and make their future here in america. that's point number one.

point number two is you also have a lot of unskilled workers who are now here who are living in the shadows. they are contributing to our economy in all sorts of ways. they are working in the agriculture sector. they are in restaurants, and they are, you know, in communities all across the country looking after children and helping to build america. but they are scared. and they feel as if they are locked out of their surroundings. and what i've said is they did break the law. they came here. they have to take responsibility for that. they should pay a fine. they should learn english. they should go to the back of the line so they don't automatically get citizenship. but there should be a pathway for them to get legalized in our society so they don't fear for

themselves or their families so that families aren't separated. at the same time, let's make sure we have a secure border so that folks aren't wardening through the desert, let's make the legal immigration more efficient and more effective. this is all part of what we call comprehensive immigration reform. and there's no reason why we shouldn't be able to achieve a system that is fair, is equitable, is an economic engine for america that helps the people who are already here get a acculture rated. as i mentioned, i can't solve the problem by myself. nancy pelosi is a big champion. the democratic caucus in the house is prepareded --

majority of them -- are prepared. we're doing to have to have bipartisan support. all of you have to make sure your voices are heard saying this is a priority, this is something important. because if politicians don't hear from you, then it probably won't happen. i can't do it by myself. we're going to have to change laws in congress. i'm confidence that we can make it happen. -- i'm confident that we can make it happen. [applause] >> got it. next one is facebook employee leo -- abraham. where are you from? >> originally from san jose, california. the 2012 budget plan proposed by paul ryan has been praised by many in the media as bold or

brave. do you see this as a time that calls for boldness? do you think the plan you outlined last week demonstrates sufficient boldness? or is this just a media creation? president obama: no, it's a great question. look, here's what i'd say. the republican budget that was put forward i would say is fairly radical. i wouldn't call it particularly courageous. i do think mr. ryan is sincere, i think he's a patriot, i think he wants to solve a real problem which is our long-term deficit. but i think that what he and the other republicans in the house of representatives also want to do is change our social compact in a pretty fundamental way. their basic view is that no matter how successful

i am no matter how much i've taken from this country, you know, i wasn't born wealthy. i was raised by a single mom and my grandparents. i went to college on scholarships. there was a time when my mom was trying to get her phd where for a short time, she had to take food stamps. my grandparents relied on medicare and social security to help supplement their income when they got old. so their notion, despite the fact that i've benefited from all of the investment, my grandfather benefited from the g. i. bill after he fought in world war ii. somehow i now have no obligation to people who are less fortunate than me, and no real

obligation to future generations to make investments so they have a better future. what the budget proposal does is not only holds income tax flat, he actually wants to further reduce taxes for the wealthy, further reduce taxes for corporations, not pay for those, and in order to make his numbers work, cut 70% out of our clean energy budget. cut 25% out of our education budget. cut transportation budgets by 1/3. i guess you could call that bold. i would call it short sided. [applause] president obama: and then as i said, there's a fundamental difference between how the republicans and i think about medicare and medicaid and our

health care system. their basic theory is that if we just turn medicare into a voucher program, and turn medicaid into block grant programs, then now you medicare recipient, will go out and you'll shop for the best insurance that you've got -- that you can find -- and that you're going to control costs because you're going to say to the insurance company, this is all i can afford. that will control costs, expect if you get sick and the policy that you bought doesn't cover what you've got. then either you're going to mortgage your house, or you're going to go to the emergency room. in which case, i who do have insurance, are going to have to pay for it indirectly, because the hospital is going to have uncompensated care. so they don't really want to make the health care system more efficient and cheaper.

what they want to do is to push the costs of health care inflation on to you. and then you'll be on your own trying to figure out in the marketplace how to make health care cheaper. the problem is you are just one person. now, you work at facebook, it's a big enough company. facebook can probably negotiate with insurance companies and providers to you get you a good deal. but if you are a startup company, if you are an entrepreneur out there in the back of your garage, blue-collar trying to get insurance on your own. you can't do it. if you are somebody who's older, and has a preexisting condition, insurance companies won't take you. so what we've said is, let's make sure instead of just pushing the costs off on to people who individually are not going to have any negotiating power or ability to change how providers operate, or hospitals or doctors

operate, how insurance companies operate, let's make sure we have a system both for medicare and also for people who currently don't have health insurance where they can be part of a big pool, they can negotiate for changes in how the health care system works, so that it's more efficient. so that it's more effective. so you get better care, fewer infection rates, for example, in hospitals. there are fewer readmission, so that we are caring for the chronically ill more effectively, so we are caring for the fewer tests. the government will save money, but you will also save money. we think that's a better way. that'll never work. it's government imposed, and bureaucracy, it's government take over. there are death penalties. you know, i still don't understand the whole death panel concept.

i guess what they are saying, some remote bureaucrat will be deciding your health care for you. all we're saying, if we have health care experts, doctors and nurses and consumers who are helping to design how medicare works more intelligently, then we don't have to radically change medicare. yes, i think it's fair to say that their vision is radical. no, i don't think it's particularly courageous. because the last point i'll make is this. nothing is easier than solving a problem on the backs of people who are poor, or people who are powerless, or don't have lobbyist, or don't have clout. i don't think that's particularly courageous. [applause] [cheers and applause] >> all right. next one is from the well.

we've got a question from kwami from orlando, florida. i strongly believe that education is the greatest equalizer. with so many problems in the current system, is it possible to examine a complete overhaul of the system so that it addresses the needs of the modern students? >> before you jump in, i want to say that the race to the top stuff that you guys have done is one the most underappreciated and most important things that your administration has done. [applause] president obama: i appreciate that. [applause] president obama: this is an area where actually i think you've seen the parties come together. there's some good bipartisan work being done. it used to be that the argument around education always involved around the left saying we just need more money and the right

saying we should just blow up the system. because public schools aren't doing a good job. and what we are now saying is people recognizing we need both money and reform. it's not an either or proposition, it's a both and proposition. :

every state every school district could apply, and you have to show us that you have a good plan to retrain teachers and recruit and do good or additional developments that we have the best teachers possible. you had have to have accountability. if you had to show us you direction and making progress in the schools and that you were measuring through data the improvements that were being made. that you were reaching into the schools that were hardest to reach, because there are about 2000 schools around the country that account for the majority of dropouts in our country. they are like dropout factories. so show us a plan to go into those schools and really make a big difference. and, what has happened is that over 40 states and the process of competing for this extra money and it up in initiating probably the most meaningful reforms that we have seen in a

generation. and, so it is made a huge difference, even those states it didn't end up winning the competition still made changes that are improving the potential for good outcomes in the schools. so that is the kind of creative approach that you have seen some democrats and some republicans embrace and their hope is we can build on that. a couple of things that we know work. the most important thing to a good education is making sure we have a good teacher in front of the classroom, and so providing more support for teachers, recruiting the best of the brightest into teaching, making sure that they are compensated but also making sure they are performing. that is hugely important. the other thing is good data so that there is a constant feedback. not just a bunch of standardized tests that go into a drawer or that people may gain an order not to get penalized. that is what happened under no child left behind, but instead real good data that you can present to the teacher while

they are still teaching that child and say you know what? this child is falling behind in math. here are some ways to do it, to improve their performance. so we are starting to see real progress on the ground and i'm optimistic that we can actually, before the 2012 election, potentially have a federal education law that will embody some of the best information we have about how to initiate good school reform. the last point i will make on this. government alone can't do it. one of the things come every time i come to silicon valley that i'm inspired by but i'm also frustrated by is how many smart people are here but also frustrated that i always hear stories about how we can find enough engineers, we can't find enough computer programmers. you know what? that means our education system is not working the way it

should. and that has got to start early and that is why we are emphasizing math and science. that is why we are emphasizing teaching girls math and science. [applause] that is why we are emphasizing emphasizing -- [applause] making sure that black and hispanic kids are getting math and science. [applause] we have got to do such a better job when it comes to stem education and that is one of the reasons by the way that we had our first science fair at the white house since a very long time just because we want to start making science cool. i want everybody to feel the same way that they did -- [applause] i want people to feel the same way about the next big energy breakthrough or the next big internet breakthrough. i want people to feel the same way they felt about them and

watch, but that is how we are going to stay competitive for the future and that is why these investments in education are so important. but as i said government alone can't do it. there's got to be a shift in the american culture where once again we buckled down and we say this stuff is important. and that is why mark what you are doing in newark for example, the work that folks like the gates foundation are doing in philanthropic it especially around math and science training are going to be so important. we have got to lift their game up when it comes to technology in math and science. that is hopefully one of the most important legacies that i can have as president of the united states. [applause] >> the next one is from another facebook employee.

james mitchell. james mitchell, where you from? >> here is james back here. >> hide mr. president. born in chicago and raised in cupertino california. i have yet another question for you about health care. so the biggest threat we have to scully is the in health care costs. unfortunately, a lot of the solutions we hear to medicare and medicaid don't involve actually slowing down the rising health care costs. instead they involve shipping cost to beneficiaries in the state. so my question is can you talk a bit more about what provisions of the affordable health care act are designed to slow down the rise of health care costs and what policies you would like to see enacted in the future to continue to slow down the rise of health care cost? >> let me give you a couple of examples. because you are exactly right in how you describe it. i don't want to just shift the health care costs onto the people. i want to reduce health care costs. let's take the example of health

i.t.. we are in silicon valley so we can talk about i.t. staff. i will try to sound like you know what i'm talking about. [laughter] the health care system is one of the few aspects of our society where a lot of stuff is still done on paper. the last time you guys went to a doctor's office or maybe to your dentist office, how many people still had to fill out a form on a clip board? and, the reason for that is because a large chunk of our provider system is not automated. so, what ends up happening is you may go to your primary care physician. he does some basic test.

he see something of concern. he refers you to a specialist. you go to the specialist, he will do another test. you are getting charged for your insurance company getting charged for both of those test. as opposed to the test that was taken by your primary care physician being e-mailed to the specialist. , better yet, if it turns out that there maybe three may be three or four specialists involved, because it is a difficult diagnosis, this is all hypothetical. you look very healthy. [laughter] but let's say there were they were bunch of specialists. what would be ideal but he if you get all the specialists together with the primary care physicians the first time you are seen so you are not paying for multiple business as well as multiple test. that is not how it works right now. part of it is technology, so what we did in the affordable

care act building on what we did is to try to provide incentives to providers to start getting integrated automated systems. and it is tough because the individual dr. back may say to his or herself, i don't want to put the initial capital outlay of the expensive and though it may make my system more efficient later on. so, providing some incentives, some help for the front and investment for a community hospital or individual provider so providers so that we can slowly get this system more effective, that is priority number one. we know it can be done, by the way. surprisingly enough, the health care system that does the best job on this of anybody is actually the veterans administration, the va health care system because it is a fully integrated system. everybody is working for the va, all the doctors, all the hospitals and the providers so they have been able to achieve

huge cost savings just because everybody's on a single system. it is also though how we reimburse doctors and how we reimburse hospitals. so right now, what happens is when you have taken those two tests, if you are old enough to qualify for medicare, well, each doctor sends sense they are billed to medicare and medicare pays both bills. and let's say that you end up getting an operation. they will send the bill for that, and so medicare pays that. let's say they didn't do a very good job or you got sick in the hospital and you are readmitted and you have to be treated again and they have to do the operation all over again. medicare then gets billed for the second operation. i mean imagine if that is how it worked when you bought a car.

so, you go in you by your car. a week later the car doesn't work and you go back to the dealer, and they charged you to fix the bad job that they did in the first place. that is what medicare does. all the time. so we don't provide incentives for performance. we just provide, we just pay for the number of qualified items, procedures that were performed are tests that were performed by the provider. so what we want to do is to start changing how folks are reimburse. let's take a hospital. we want to give -- and this is what a bike race to the top what mark was talking about in education. we want to be able to say to a hospital if you do a really good job reducing infection rates in hospitals, which killed tens of thousands of people across america every year, and are a huge cause for readmission

rates, and we know that hospitals can drastically reduce those reinfection rates just by simple protocol of how employees are washing their hands and how they are moving from room to room and so forth, their hospitals who have done it. if we can say to a hospital, you will get a bonus for that, medicare will reimburse you for it through the simple procedures, that saves the whole system money. and that is what we try to do in the affordable care act. it is to start institutionalizing these new systems, but it takes time because you know we have got a private-sector system. is not like the va. a bunch of individual doctors and individual hospital spread out all across the country with private insurers, so it is not something we can do overnight. our hope is that over the next five years, we are able to see significant savings through these mechanisms and that will save everybody. nudges people who are on

medicare and medicaid. it will save everybody money including folks here at facebook, because i am sure that you guys provide health insurance and i suspect if you looked at her health insurance bills that don't make you happy. okay? >> we have time for only one more question. [applause] the question is from terry atwater from houston, texas. if you had to do anything differently during your first four years, what would it be? >> well it's only been two and half so i'm sure i will make more mistakes than the next year and a half. the jury will still be out. [laughter] you know, there are all sorts of day-to-day issues where i say to myself, you know i didn't say that right or i didn't explain this clearly enough, or maybe if

i had sequenced this plan first as opposed to that one, a beard would have gotten done quicker. health care obviously was a huge battle, and if it hadn't been for nancy pelosi and her leadership in the house and the great work that -- [applause] anna eshoo and mike honda and others, we wouldn't have got that done if it wouldn't have been for the great work in congress. but i do think that it was so complicated that at a certain point people just started saying, this is typical washington bickering. and, you know, i have asked myself sometimes is there a way that we could have gotten it done more quickly and in a way

that the american people wouldn't have been so frustrated diet? i am not sure i could have, because there is a reason why it hadn't gotten done in 100 years. it is hard to fix a system as big as health care and as complicated as our health care system. i can tell you that i think the best way to answer the question is, what do i feel i still have to get done? and where i still feel a huge sense of urgency. i've talked about a couple of things. getting our deficits and debt under control and in a balanced way. i feel it needs to happen while i am president. i don't want to leave it to the next president. immigration. something i mentioned. we have not got in done. is something i care deeply about any does the right thing for the country. i want to get that done while i am president. energy.

you know we haven't talked a lot about an energy today, but first of all, for dollar a gallon gas really hurts a lot of people around this country. it is not because they are wasteful, but if you are driving 50 miles to work and that is the only job he can find, and you can't afford some hybrid so you are stuck with the old beater that you are driving around to get eight miles a gallon, these gas prices are killing you right now. and so, this is the reason why i have said that it is so important for us to invest in new approaches to energy. we have got to have a long-term plan. it means investing in things like solar and wind, investing

in biofuels, investing in clean car technology. it means converting the federal fleet 100% of two fuel-efficient vehicles because we are a huge market market make her. obviously it turns out that i have got a lot of cars as president. and you know if we are out there purchasing electric cars and hybrids, you know, that can help boost demand and drive down prices continuing to increase fuel efficiency standards on cars, increasing oil production but in an intelligent way. i mean, those are all hugely important and by the way, we can pay for it. let me say this. we lose the treasury loses -- $4 billion a year on subsidies to oil companies.

now, think about this. the top five oil companies have made somewhere between 75 alien dollars and $125 billion every year for the last five years. nobody is doing better than exxon. nobody is doing better than shell or these other companies. they are doing great. there may king a hand over fist. maybe facebook is doing a little editor but you get the idea. they are doing really well. they don't need special tax breaks that cost us $4 billion so what we have said is why can't we eliminate the tax breaks for oil companies who are doing great and the best that in new energy sources that can help us save the planet? [applause] so when it comes to energy, when

it comes to immigration, when it comes to getting our deficit under control in a balanced and smart way, when it comes to improving our math and science education, when it comes to re-investing in our infrastructure, we just have got a lot more work to do, and i guess my closing comment mark would just be, hope everybody here that you don't get frustrated and cynical about our democracy. i mean it is frustrating. lord knows it is frustrating. [laughter] and i know some of you who might have been involved in the campaign or been energized back in 2008, you are frustrated that gosh it didn't get done fast enough and seems like everybody's bickering all the time. just remember that we have been through tougher times before. we have always come out on top.

because, we have still got the best universities in the world. it's a got the most productive workers in the world. this is still the most dynamic entrepreneurial culture in the world. if we come together we can solve all these problems, but i can't do it by myself. the only way it happens is if all of you still get involved, still get engaged. it hasn't been that long since election day and we have gone through some very very tough times and we have still gotten a lot done. we have still been able to get this economy recovering. we have still been able to get health care pass. we have still been able to invest in clean energy. we have still been able to make sure that we overturned "don't ask don't tell." we still made sure that we got to two women on the supreme court. [applause] we have made progress. so, rather than be discouraged i

hope everybody is willing to double down and work even harder. regardless of your political affiliation you have got to be involved especially the young people here, your generation. if you don't give us a shove, if you don't get the system to push it is not going to change and you are going to be the ones who end up suffering the consequences. but if you are behind it and he put the same energy and imagination that you put into facebook into the political process, i guarantee you there is nothing we can solve. all right? thank you mark. [applause] >> so i just want to thank you again. is such an honor to have you here. >> we had a great time. >> as a small token of our appreciation, in case for some reason you want to dress like me. >> nice, nice.

>> a facebook hoodie. [applause] >> this is the high fashion statement right here. this is beautiful. thank you very much everybody. appreciate you. [applause] ♪ ♪ ♪ ♪ ♪ ♪

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♪ ♪ ♪ >> this year studentcam competition as students from across the country to consider washington d.c. through their lens. today second prizewinner focused on an event that better help them understand the role of the federal government. >> my grandpa who has been in business the business for years into bonds is great dealership in a small town. he gives so much to the

community and he is such a strong and generous man, and to see him be in this position, where he had a fear for the security of his family was just a real big eye-opener. it wasn't until the big three bankruptcies and my families financial security that i realize what a big role the government can play in my life. >> the other group is our auto company. we have been here 15 years. the new vehicles that we sell here are buick, gmc and chevrolet and chrysler, dodge and jeep. all of those brands were affected by the bailout because of those two particular companies are huey our franchisees. we have companies like chrysler and gm that we representative steelers. their cost structure from 50 years ago has been totally outdated and it was not conducive to this type of them bremen and certainly not this economic recession.

>> the pain being felt in places that rely on our auto and history is not the fault of our workers. they labored tirelessly and desperately wants to see their company succeed. it is not the fault of all the families and communities that supported manufacturing plants throughout the generations. rather, it is a failure of leadership from washington to detroit. >> gm's union wages for about 25% higher than the import. >> gas mileage was another thing we would hear a lot of, gas efficient vehicles. we were concentrating on the issue of trucks as an industry. that is what the american car market wanted until gas gasquet sapiro problem. >> the news of the bankruptcy still for the dealership because people were scared to go out and buy products from the big three. >> what we we are worried about is the retail level when that came out, traffic slowed and you can understand why.

people said i don't know if i want to spend $25,000 of my hard money at this company is not going to make it. 3 million direct and indirect jobs would have been an unemployment if these two companies have gone bankrupt. >> this affects main street. this is a wall street. i'm a town of 8500 population. there were about 3200 chrysler dodge and jeep dealers and business at the time that would have gone out. i said imagine this, you driving by here. we have been here i guess 14 years, 15 years in this town. and this lot is empty. >> we have consistently about 50 employees with 2 million-dollar payroll, so it would have affected the whole town adversely. >> i was so preoccupied with what was going to happen to my family and the bankruptcy i

didn't realize it would affect our community on a bigger scale. >> a lot of the smaller rural market in the larger market, they are huge philanthropist and give a lot of money locally. >> we are very much involved with colorado state college. we doubled the size of the facilities out there twice in the last 10 years. we are also involved with the chamber of commerce and our industrial foundation. and trying to help make sallisaw better place to live and to bring jobs. particularly in this difficult time. >> after talk to my grandparents and family about how the bankruptcy affected people in the retail level i wanted to know exactly how the government intervened, so i went to the university professor and realized how complex and controversial the issue was. >> in the fall of 2008, chryslel motors approach the government

during the bush administration saying that they needed temporary assistance from the government in order to avoid bankruptcy. congress had a significant decision they had to make. do you bailout these companies? do you potentially save the economy by doing so and the potential for other losses of jobs? congress has to authorize any money that is spent, so it was the united states congress, the house and the senate that both pass measures that approve the funding. and generally although not entirely, there was democrat support for them both a house on and the senate. and generally there was republican opposition. the critical breakthrough i guess you could say is when the house passed a measure for temporary funding in december of

2008. the bush administration gave a temporary loan to the industry if they needed it. about $17 billion. legislation later on, i believe in july of 2009, formalized the total amount so about 80 alien dollars. ..

role of government and its actions relating to the economy have always been controversial. just how much in involvement should there be? >> government is by the people, for the people. government is the people. they take our taxes and try to use it in a way that will help the people. >> even though i personally believe in the government if this is a decision that probably had to be made in favor of the auto industry. if all of us are doing our part, then this restructuring will be

in the short term marked not an end but a new beginning for a great american industry. peaden deacons >> it shifted my world view because i went from like not even caring about what the government did. there in washington, it doesn't matter, to like my gosh i need to the attention. this could be there like save my family or leave my family and financial ruin and in my case the federal government came in and intervened and helped save a lot of jobs and families like mine. >> go to studentcam door to watch the winning videos and continue the conversation about today's documentary at our facebook and twitter pages.

>> at the new york university law school symposium legal analysts discussed public corruption. you'll hear from the senate committee attorney, justice department official, law school professors and the executive director of citizens for responsibility and ethics. this is just over an hour. >> okay. good morning. i am jim jacobs, the professor here at the law school and i have the honor of chairing this first panel on defining

corruption. because time is short, and because the speakers are identified here in the program, i'm not going to give them the introductions which they are due, and we will launch right into our discussion. to kick things off, i'd like to ask the panelists to consider where is the contested terrain today on the subject of corruption? where is the battleground, where are our -- we are confused about what is corrupt and what does not corrupt, what's left to be decided. i'm going to precede alphabetically starting with professor alschuler from

northwestern. >> [inaudible] >> i have to ask what counts as corruption for purposes of criminal punishment, or what counts as corruption for purposes of ethical regulations enforced by noncriminal sanctions, the rule of the house that might lead to expulsion from the house or whatever or what should count as corruption and campaign finance legislation and other structural reforms of the sort that were mentioned? i suppose we're focusing mostly on the first question, what counts as corruption for the criminal prosecution? and there's been a constant battle on that subject going on for the last 50 years. on the one hand you have the supreme court of the united states, and it thinks that we should define corruption in a way that provides pretty clear and definite rules.

and on the other hand you have everybody else. all of the prosecutors, apparently the congress of the united states, most of the lower federal courts, and they seem to want to criminalize anything that might divert a public official from faithful service to the public. conflict of interest, undisclosed conflict of interest. supreme court a year ago considered a federal statute that outlawed the provisions of the intangible right to honor services. nobody knew what it meant. supreme court said we better narrow the statute and they did but now there are congressional efforts so that's the topic in broad outlook. as el niño que. noah bookbinder, chief for the criminal committee on the senate

do you want to comment on that? are we on this situation for over defining corruption? >> i think everybody agrees that there needs to be real definition. people need to understand what conduct is covered particularly by colonel statute that needs to be noticed and fairness and the question is where you draw the line, when you do define it how you define it. i think by and large there's a lot of ways you can look at what is corruption. within the criminal context probably a fair place to start is to say corruption is what happens when you have public officials acting in their own personal usually financial interest rather than the interest of the public that they're supposed to be serving.

there's a fair amount of consensus you've got corruption and criminal corruption when you have what ever they recognize is to be abroad somebody that takes money to make a certain decision they may or may not make otherwise but because they're getting paid to do so the controversy a think comes when you have a similar principle that is structured in a somewhat different way. that doesn't look like a broad as we have all come to recognize it and i think that there is some tension between the need to be able to have some flexibility to address ma will conduct that comes up with because public officials and those who deal with public officials are often sophisticated and come up with new and different ways of doing what they want to do and there are often new circumstances that arise and prosecutors need some room to address changing and

evolving methods and circumstances. that on the one hand. on the overhead is the need to have noticed and fairness and have conduct that is somewhat specifically prohibited. to be on the services of professor sloan lewd it to on the services did allow a lot of flexibility and also created some confusion as to exactly what was covered, but we are staying in a more general level here but a couple of other examples of where that tension occurs as to the conduct that doesn't look quite like a bribe another was eis in the gratuity context the issue of known as the status gratuity where we have a public official getting money essentially because they

were a public official the supreme court and the sun diamond case in the 90's said that that was too broad of a construction of the gratuity statute and money has to be paid for in a specific link to a specific act and there's the question mother that leaves a gap that is significant. another one is in the supreme court case called veldt these which dealt with whether payments and a bribe payments needed to be for something that was within the range of official responsibility of a public official and a police officer who was taking money to do checks on the center of a criminal history database, and the defense essentials which the supreme court accepted well he wasn't supposed to be doing that so it wasn't a bribe because he

wasn't taking money to make a decision that was within his range of official responsibilities. that's another area where there is that line between staying within the sort of accepted boundaries of existing statutes so there's absolute notice but wanting to on the one hand and on the other hand wanting to reach the conduct officials and those who want to correct them are able to come up with and maybe the answer to that is continuing to refine the law with new precise but also effective statutes that reach the broad range of combat. we will turn to the professor pam karlan on the same issue of the contested terrain and maybe

we can sharpen a little bit by saying isn't the corruption is just hard to define that we can agree on what is if we can define the conduct in question. >> first, thanks so much for having me here. let me start by being a textualist because no one ever thinks i'm a textualist. if you ask where it comes from and comes from the latin word which means to break things into pieces and that is to wonder people understand what corruption is you have to have an understanding with the uncorrupted would be. that is how you would is corruption is a deviation from what would otherwise be the proper outcome and the difficulty in defining corruption and then going after prosecuting corruption is in part because we don't have an

agreement on the normal or what the good would be to begin with so dhaka that the criminal case for a minute i want to talk about two other recent supreme court cases that talk about corruption asia with the real difficulties are there wasn't a criminal prosecution, there was the caperton against age massey case and the citizens united case which are cases that involve in the first case entirely legal spending of money that is a man who had a case in front of the west virginia supreme court spent millions of dollars to change the re-election not come all of the money he spent was completely legal that is the campaign contribution he gave was within the limit and the supreme court has held that independent expenditure which is how he spent most of his money are completely protected by the first amendment. yet in the supreme court says we

think there was a risk of corruption because the judge who got elected on the basis of contributions and expenditures from the litigant is likely to fuel gratitude to the litigant who gave him all the money. so you have a conflict or tension between two different values we have. one is the first amendment value being able to speak and spend as much money as you want to speak how you want, and the other is having a justice system in which money plays no role. and then if you ask about citizens united, the supreme court comes up with a definition of corruption that's extremely narrow. with the supreme court said is when it comes to money spent on influencing who gets into office and who decides as often what determines what the decision will be, supreme court says quid pro quo corruption is the only problem. now what counts as quid pro quo

corruption? there are easy cases. the easy cases are you bribe a public official by giving him money he puts in his own pocket. or by votes from people by offering them $10 to vote for your candidate. and devotee understands those are corruption and those can be criminally prohibited. what about the intermediate case about offering the candidate money to put in his own pocket but offering money and spending the money independently to get him elected, well that's often constitutionally protected so what do we do about that? and the lists go even a step further which is the supreme court has held that if you offered a vote for $10 to vote for do that can be made a crime. but if you promise that if elected he will reduce his taxes by $10 that's not a crime that is again the first amendment protected speech. and so, the problem you have

here is that if you're going to have a very narrow definition of what counts as the crime of corruption while having a very broad sense of what it means for the system to have been distorted you can solve the vagueness problem that noah is talking but at a at the expense of leasing and of public discomfort of the kind of that then leads to the polling results that he's talking about earlier. was that an answer to your question? i wanted to make sure. >> that's your answer to my question. [laughter] estimate melanie's one is the director for citizens responsibility and ethics in washington, and we'd like to hear your take on this issue. >> i think that there is a serious danger in defining corruption marrow because the politicians are clever and will

come up with new ways and schemes as soon as we specifically define the crime and that is why the honest service trade statute in my mind was so great. it was broad and allowed to take on a whole host of conduct and this concept we need to very narrowly defined things so for a lot of americans, corruption is not too different from pornography and a good example of a lot of people might agree is corrupt is something we saw on the front page of "the new york times" today that ge that has gotten billions in tax breaks that is taking almost nothing in taxes in america and is the question about why, the tax breaks by a lot of political influence. they spend a fortune on lobbying and then they gave 30 million was to the new york city public schools and this involves the figure that has a lot of corruption issues, charlie rangel and i think that he brings up some really interesting point because charlie rangel would offer that he wasn't correct.

even on the last day when he was about to be censured by the full house, he was arguing that he had not received any personal enrichment, no money, no actual dollars have gone into his pocket which was his definition of corruption. he didn't get any money but i think that there's very few regular americans who would look at the host of conduct that mr. rangel was ultimately found to have engaged in and things thinks it was and corrupt so now i might differ from the keynote speaker to say that it isn't all about the money sometimes it is also about the prestige. sometimes because for mr. rangel he wanted the lasting legacy to new york and then there's the $30 million to the new york city public-school so it wasn't about mr. rangel personally getting money and then you have other public officials engaged in wrongdoing. not for money but to have become perhaps cover-up other misconduct like john ensign hill calvo i think the department of justice isn't taking this position most americans would also find scott. so i think that you have to look

at corruption as members of congress and members in the state legislature and using their powers for some personal interest that may or may not be financial. >> okay. thank you. now to jack smith, the chief of the public integrity section the department of justice. i come at the question i think a lot from a similar perspective the one that melanie just mentioned. i think regular americans respect that the mechanisms of government will protect their interests that a bidder taxes, they follow the rules and expect it to innocence gets what they paid for, and i think that that is a great starting point in terms of defining what is there and what's not fair. what i find when we actually

litigate these cases is what it comes down to often particularly following the skilling case is the issue of corrupt intent. the bribery statute is the most common statute we use and it's the bedrock statute. and what you see in the actual litigation of the cases of the battleground it's often not be dated by the time there is a trial about what one person did and what the other person did. it's not be dated a politician was given and it's not debated what act as he did that for a way to the benefit of the person who gave him something. the battleground in these cases come and we see it again and again is what was that person is intent? did they do this or that? did the act currently? did they take the things merely because they were friends, or was it because they were going to be influenced by the other party? i think the point raised earlier

about the status gratuity, there was a situation where you didn't have to prove that, you didn't have to prove that you did this or that. it was merely you got this and you were a public official that is a crime, and i think one of the things i think melanie and i would agree on is what was nice about that is a was a bright line but it is a broad line, so it was very clear to a public official listen, this is the rule. it's very clear you can't do this. but it the same time broad enough to capture a lot of conduct that i think regular americans would find offensive and in the broad sense corrupt. i think another important area to think about in terms of the reach of the corruption law and in terms of defining the battleground is and this follows up on some of the points that ann was raising in her address is how far that it can reach in terms of the state and local government. the federal programs, bribery statutes did an incredibly important statute and for the

department of justice and for my litigating unit because it allows us to reach corruption in state and local government and as was pointed out a lot of the tax dollars of those americans go to the federal government and come back down to the state government and there's a lot of room for corruption how we define corruption and where is it more it is very difficult to do that because i don't think the number of prosecutions is particularly a good way to do it because oftentimes when i go to speak to folks about the corruption programs and what sort of cases they are doing oftentimes i go places and the first thing i hear is we don't have a corruption problem. my immediate reaction is you definitely have the corruption problem. [laughter] and that has been our experience. one of the things we're doing in the department is to try to go places and bring cases where they haven't been or otherwise would not be brought if you were there. so i think part of the issue is

what are the tools, can we come up with a tool that gives people noticed so we give people notice with the rules are before the start enforcing and the same time broad enough we can capture conduct regular americans make that is not i expected more when i put my tax dollars in. >> we have a lot of perspective already on this question of defining corruption, and i will let you react to one another and perhaps keeping in mind now the general topic also defining and are we under criminalizing, sticking to the criminal law or are we over criminalizing corruption? >> jack and melanie talk about what does the average american think is corrupt? there is a lot of cynicism out there. you know, there is an academic

discipline called public choice theory that sees all of the government is corrupt. everything is bribery or the functional equivalent of bribery. 50% of americans say yes is congress corrupt? yes. that is the second most common name to come to mind when you start talking about the federal government. let me give you a hypothetical case. imagine that mother teresa is elected governor of illinois. i get to pose hypothetical cases that never could happen. and this is one. unlike anybody that has ever been elected to the public office, mother teresa gives no thought to her own welfare, no thought to the welfare of her family, no thought to the welfare of her political supporters, she thinks only about the welfare of the people of the state of illinois. but conflict of interest are ubiquitous. public officials can't avoid them. and mother teresa is going to make some decisions that are going to favor her political supporters and she is going to

make some decisions that are beneficial to somebody that gave her sister a job once upon a time. and she's going to make decisions beneficial to somebody who served as her host when she visited a foreign country. i mean, when it happens, when it happens, the newspapers in chicago and the u.s. attorney's office will say behold look one hand is washing the other. that's the functional equivalent of corruption. we always knew that mother teresa was no different from the rest of them. [laughter] and, you know, violated the intangible right on the services. one of the conflict of interest was improperly disclosed. you would have a long trial. he would charge one scheme to defraud whenever he was and what did office and the moment she left and every benefit she gave to somebody every benefit she received from some of the screen to be tossed into that trial were going to instruct the jury,

they can't find all that happened. all you can find some where there was a scheme and sure enough the jury will convict on mother teresa. so i don't think the standards should be written on the basis of what is the average american -- jack immel lenni do point out the quid pro quo standard isn't all-inclusive and there are things we don't like that don't qualify as quid pro quo, but if you try to do what they want to do, chase down every new thing that possibly might do and public official might do to evade the existing law and make that a 20 year federal felony as well you're going to wind up with a sprawling mall was trials and unjust convictions. >> professor alschuler seems a kind of reign of terror falling down on -- [laughter] local and state political officials and public servants.

any reaction to that mr. bookbinder? >> sure. [laughter] where to start. i think that it's easy to kind of see runaway criminalization of corruption and i think it's -- i don't really buy it. i think we are talking about sophisticated actors who generally understand the law who are going to be represented by good counsel if there are ever charges. and these are people who if anybody can negotiate statutes these are the people who can do it. i think that you can argue as to whether certain kind of criminal statutes have been overly broad, overly difficult to understand. i think that the solution to

that is not to the nsa okay let's not do it. let's not try to define the problem but rather lets do it better. and that there really are important categories what people would perceive appropriately to the corruption that simply are not included in a very precise limit of bribery in the status gratuity situation you have something that looks like favor of some interest providing money to a public official over a period of time essentially in the hopes that when the right time arises the public official will act in their interest. that's something that even if you don't have the precise group of that link it is very problematic. if you have a really precise

rule that the fines when you can and can't do that, that's something that certainly my boss, senator leahy would argue is a problem you ought to be trying to get at. similarly, if instead of taking a bribe, you have say a mayor who secretly has an interest in a company that that may your award the contract to it's hard to see that guy is less insidious than a cash payment, and yet that's the kind of case that formerly was covered by the services fraud and now is not. so, i really do agree that there is the need for as jack said bright lines but the broad lines and i will certainly agree with pam's point that you're not addressing everything through criminal statutes that there are structural issues that need to

be addressed on their own merit and that you're never going to be loyal to criminalize everything people find distasteful. and you should decriminalizing those things that are actually people being corrupted by taking money they are not supposed to be taking. and i'd actually argue that over time aggressive standards for corruption and ethics while you're going to have more prosecutions which may in the short term lead people to think there's more corruption over time is going to increase the public faith in government. >> so professor karlan, are we over criminalizing, are we putting public servants elected and appointed in a terrible position where they don't know what they can do and what they can't do and talking their hands

we started with dead people voting and now we have did people getting elected which is maybe a little bit scary the personal benefit to them might be less. i think the actual problem here is you can't have a criminal statute and we learned this in the incendy the obscenity area that we can't tell you what this is what we know it when we see it. that can't be the standard so you can't have the climate corruption broadly understood. that being said, the question is where the one to regulate, where do you want to put the effort and what can you expect the thousands of government employees and the people who are potentially covered by the statutes to understand their responsibilities to be. >> a standiford amount of time i get to and have come three years as commissioner of the california fair political

practices commission which is the state agency that oversees the campaign finance and conflict of interest. and the rules of the conflict of interest were incredibly complicated. that is good the legislators were other people who are making decisions go to a reception they could but then it turned out it matter how long you stayed, whether the food was sit down or stand up how could decide whether a gift need to be disclosed welcome that was complicated too if somebody gave you tickets to a ball game is it the face value of the tickets is the value on the stub stock, of the tickets or the light is to make it a crime to fail to disclose and you have the kind of disclosure regime that states like california have potentially were engaged in crime every time you interact with people. you have to get rid symbol a letter ruling saying that my

domestic partners gift to me didn't have to be disclosed because we were in a bonafide dating relationship which is better than me that apparently some stick legislative draft for one of these although he was married. [laughter] >> disclosed the voters no problem. >> we end up with very complicated -- you can end up with very complicated rules and people that don't have the access to counsel repeatedly to get information about the rules which creates not just the risk of enforcement but the risk of discriminatory and arbitrary enforcement and that is a lot of the worry is about if you have to prosecute everybody did you end up with different laws because the dynamic would be if we have to prosecute everybody for this we will write a law that is narrow, but it's the law that can then be kind of decided by the prosecutors and the prosecutors in many of these

jurisdictions have their own political interest on top of everything else, then i think you do run a serious risk that the broader you define corruption as a criminal matter the harder it is for people like chollet to comply with the law and other riskier prosecution becomes. >> okay. melanie, you want to jump in? >> sure. i don't think the problem is over a lot and to much to be considered. i think the real problem is when they're the devotee of prosecutors to go after corruption. there's been a series of bad court cases over the past ten years or so per the protection for civil to target corruption, and i would name the dimond case on illegal gratuity was the first terrible case making it very difficult to prosecute for

accepting things like tickets and gifts that were not specifically for a specific action but were just done in general to better the public official said that it leader wanted to ask a public official for something. then as mentioned there's the valdeze case which is overly narrow what an official act is because in that case a police officer somebody's license plate isn't an official act isn't that something we all think police officers do and that isn't an official lacks and what is an official act and then we have the lead during case but calls and the way the courts are heading in the future debate is another very significant problem in targeting corruption. the rayburn cases where william jefferson's office was searched and the d.c. circuit in that case ultimately suggested that

there is now the future debate calls means it doesn't simply mean you cannot use material that is a legislative in the legislative year and you can't accidentally assign some so there's the suggestion that might mean you can't wiretap a member of congress because he or she might say something about legislation in the course of that phone call and know permission to hear that. so i think those kind of narrowing enforcement tools have made the job incredibly difficult and we are not sympathetic to the department of justice. we are pretty hard on them, but i feel like that is the lack of tool at their disposal to make it much harder. and then when you have in other places ethics offices that also tend to not necessarily doing great job the house and senate i think are too terrific examples. there's an awful lot of conduct that may not rise to criminals

but certainly most people would view it as corrupt and that is where we have things like the gift rules and travel rules and all these things but what we often find is despite all the rules we have, to rules themselves are not enforced. so jack abramoff's scandal, which ended up with a wholesale change in the ethics rules and the house and senate was interesting because most of the kind of conduct jack abramoff and his cronies were involved in at the time was already against the rules. it's kind of meals and gifts and travel but jack abramoff is offering. the result would be prohibited. the problem is there was no enforcement of the world, so in my view the question is never as much about the definition of really aggressive enforcement because i think of enforcement is a determined but most politicians really don't want to go to jail and number two, they don't want to see their political careers entirely be revealed by front-page stories about their ethics problems and if they are aware that ethics are enforced they are likely to

engage in misconduct in the first place. >> jack? >> on the last 1i fully agree. i think one of the good things about this area of the law is the people who commit these offenses are in trouble. the show the department of justice brings cases like this other actors will not commit acts they otherwise would have done. so if you can come up with a laws that are giving people notice but are broad enough to address the conduct for the criminal case is we bring going back to the hypothetical so briefly, i kind of debate because i think that there's a difference between the law here and the facts. you mentioned that the case against mother teresa would be reported in the newspapers, and i believe very strongly and i think probably most folks here deutsch too we don't want to live in a society where some convicted on what is in the

newspapers. i can tell you very often we have cases we investigate where there are allegations in the newspapers which of those allegations were true, and if those allegations were the complete story, i could see why the average american would think that that is corrupt but we don't want to live in a society in which is to get if you have additions without any process and convict somebody but that is the rule of the prosecutors to take the allegations like that when they are above public and investigate and see if the facts actually back up what is there in the allegation and the source of the incredible. exculpatory information on the other side. they are corrupt reading information that makes it stronger and if you have that objective prosecutor to look those things i think the issue you have with mother teresa the other thing gets inside the courtroom and if it does, then the jury has to decide whether there is a scheme to defraud, and i think then if you have a

statute that makes clear what's illegal and what's not there isn't anything unfair about that. i think another point is to raise your eyebrows mentioned earlier the jefferson case where a large sum of cash was found in his freezer i can tell you there will be other cases like that in the future but that is not the usual corruption case the folks that commit the crimes are sophisticated individuals and by and large, they give the money and receive the money and give and receive the benefits and all sorts of complicated forms that make it not nearly start, not nearly easy to report in the flight line article and because of that, how the crimes are committed because they are often committed by sophisticated people with great means we do need laws that are broad enough to reach the conduct i think that the example given earlier was a great one.

right now the service is such that exist we cannot charge an undisclosed conflict of interest so just imagine to follow on that scenario you have a mayor and he takes bribes for the city contract. he takes bribes, puts the money in the contract who shouldn't have gotten the contract. the average american taxpayers aren't getting what they paid for. i can prosecute the case. that's bribery. i can prosecute that and i think everyone would think that we should. the same says it went on the bride's i want more money. i want to start my own company and i'm going to hide my interest in the funnel the context to me i can't prosecute the case and i think the average american in terms of what's wrong if you believe those facts and objective investigation are brought to light i think that average american wants the department of justice bring in that case. >> i see here in terms of the

terrain and the contested terrain we have got at least three areas of contestation. one is on gratuity, one is on campaign finance, and one is on conflict of interest. and in each of those areas, there is a lot of uncertainty about the line between criminally corrupt and call for an everyday politics. i'd like to focus if we could just on the conflict of interest the recent case put it in to play. i've been looking at the prosecution of our senate majority leader here in new york, not to leave the whole field to new jersey and joe bruno was one of the most powerful figures of new york state politics for two decades in addition to being the majority leader of our senate he

worked for an investment company and his job was to go out and solicit clients for the company particularly the labor unions. he had a special expertise with labor unions probably because they had so much a business before the legislature and to get the bills of interest of on the radar screen and so forth the had to deal with him and so we called the allegedly called both the public sector and private sector and urged them in his most persuasive way to please invest with his company which is an excellent company that would give them a very good returns and did quite well and was compensated based upon the business that he brought to the

company i was called after the indictment by "the new york times" and they said what do you think about this? i said that sounds like what we would expect to go on in a banana republic. how could there seriously be the question about whether that is a permissible way of governing ourselves here, and they said they say everybody does this. this is what business in albany does. as an macke told us before, all these legislators are just part-time legislators. they are citizen soldiers so to speak. they have law practices, insurance companies, other kind of businesses and they do quite well. they find many people come to do business with them probably because they are well known and prominent and very smart.

what's wrong with it? >> what's wrong with this is it diverts the public official from serving in the interest. but it's a tough problem. "the new york times" some years ago had a story about the fact that the general dynamics was getting $50,000 a year to the allentown symphony. orchestra in western pennsylvania, you probably wouldn't have heard of it, why were they given $50,000 to the allentown symphony? well, because this was the favorite charity of mrs. jack murtha, and jack murtha was the house armed services committee head. they were trying to curry favor. i don't think there's any doubt about that. what do you want to do about it? do you want to say they can't give money to the allentown symphony? do you want to say we are going to lock up the head of the armed services committee if he makes

any decisions beneficial to the general dynamics? and he hasn't disclosed the fact that some of the general dynamics gave money to his wife's favorite tree? the about drafting these regulations. that's where the problems ought to be addressed. we ought to have rules about what gifts you can get from lobbyists. they can't fly you to the super bowl. maybe they can buy you lunch. we ought to have rules about whether your insurance company and your law firm should be able to do business with people contracting with the state. they shouldn't be. but, can your insurance company do business with somebody who might have business with the state later? well, that's everybody, right? that's the way the problems ought to be addressed. figure out what conflict of interest we want to cut off at the front end and forget about trying to come up with some

sweeping statute that will cover everything that we don't want public officials to do in two or three sentences and authorize the long prison terms for violating the statute. >> conflicts of interest, just to complicate. it's a more difficult sound bright again and bribery. but when you have public officials who have been benefiting financially in a way that is not allowed by the rules and the laws and that can affect the way they perform their official duties -- >> what if it is allowed by the rules? >> i think that there ought not to be criminal law that conflict with ethics laws and those are

the points justice scalia made in the sun diamond case, and that makes some sense. but again, that is something that with good legislating you can address. senator leahy has introduced bills on the services and the gratuities question that attempt to fill the gaps that are less in all but to do it in a way that provides real direction that isn't setting traps for people but that is allowing prosecutors to go after those cases where we have people who are public servants not acting in the interest of the public but rather in their own financial interest, and i feel that i agree if you have a potential company charity somebody who likes this to attenuate, that sounds like something that ought to be addressed if at all and ethics

rules but if you have a public official personally financially that something that ought to be covered by the criminal statutes and can be it the statutes are drafted in the clear but appropriately broad way. >> pam, you want to weigh in on that? >> one thing to keep in mind here with regard to for example the state legislators who have business is on the side is the american people are getting the kind of legislature they are willing to pay for. that is if you say to people you cannot be a legislator and eat you have to do something else to put food on the table then that is exactly what you're going to get is people who have businesses that are connected in some way because you're not going to find a lot of people who are coming you know, in a business that have no relationship to government at all who want to spend 50% of their time on business. so, you know, if people want

legislatures on the cheap, somebody else is going to be paying for the legislatures and they are going to reap the problem that they set themselves. the second thing which i think noah touched on and i agree with antiyearly is it is very difficult to move everything into the conflict of interest as opposed to just talking about the financial interest of legislators because think back to caperton again. what was the conflict of interest that requires the chief justice to recuse himself from the case? it wasn't that he was given money directly. it's that the money was given to that he would get to have the job she had. and if you say that it's a conflict of interest in the time to act in a way that is likely to continue during election, you then create a really difficult dilemma because then what you're saying is if you do something that's likely to lead to your being reelected that creates itself a conflict of interest but of course, voters are voting

for you because of what you do or what you don't do. so if it is a conflict of interest so what are we just talking about money here or other things as well if you say that it's a conflict of interest for justice benjamin to sit on cases because campaign contributors gave money what do you do about the fact we have good empirical evidence that in the year before they come up for the reelection the judges sentence for criminal defendants more harshly? are they suffering from a conflict of interest? because they are putting somebody in jail terms of the can keep their jobs? i think once you get away from the narrow category of financial benefits to the individual, you are going to create a situation which there is a clear line, and just to quote the old cliche, if power corrupts absolutely and

unfettered prosecutorial power has its own corrupting influence that may be just as bad as the corrupting influences if you define conflict of interest so broadly that it sweeps any kind of constituents of a representative or benefit which is what you might think of the allentown simpson has. it's not like they are having private chamber music conference is in the house. that i understand, but who wants to go to allentown and listen to the -- i should say this because probably there's people on c-span that will see this and i will get nasty letters. [laughter] but whatever you do, never say anything bad about guns on something that's going to be on. [laughter] but seriously, if you view it as a conflict of interest when people try to ingratiate themselves with a legislator by

benefiting the legislators' constituents you really have completely elastic definition that starts to but against what normal politics deutsch. >> this sloan? >> it's critical for several reasons. this is a growing problem. the misuse of charities. the misuse of charity is getting much more sophisticated than just i'm going to be a defense contractor who's going to contribute to the defense appropriators charities with me give you another sable we saw recently, now the former member of the congress from indiana who created his own foundation the frontier foundation and he created this foundation that was allegedly given to help give scholarships to people and kids in india and indiana. its $2,000 in scholarships and indiana but what it did do is allow mr. boyer to play golf in

the best courses around the world and while he was playing golf he was pleading gulf with lobbyists who had business before his committee. and all of those folks with business before his committee were in fact contributing to his frontier foundation that was allowing him to play golf it didn't actually get any money to anybody this is the kind of situation that most people would find objectionable and would find to be the conflict of interest. but this is an example where the house routinely gives waivers for this kind of behavior, whereas you would think perhaps a member of congress or in fact allowed to raise money for charity. but, there's also ethics rules and federal regulations that say you're not supposed to try to ask for anything of the value from people who have business before you. but for reasons i cannot fathom, the house and senate routinely give waivers to the members of congress so that yes, they can in fact raise money from the folks with business before them

when charlie rangel got in trouble for raising money he forgot to get a waiver because he dhaka gotten away from the ethics committee all of those issues regarding whether or not when he got the million dollars for the center from joseph eisenberg that would have been a non-issue for the ethics committee, but because he went and got waivers, they were allowed to raise money from folks for the business for his committee's of he could go play golf and it seems like the kind of conflict of interest we would like to see and yet we are seeing more of this, many members of congress, that these committees come these charitable foundations, orrin hatch from utah as the foundation and who happens to get a lot of money to it, pharmaceutical companies. and pharmaceutical companies are have found mr. hatch to be incredibly favorable with the pharmaceutical the interest. they are not giving money because they are based in utah. they are giving money because they want senator hatch to keep helping them and that is something troubling, although i agree it is a little difficult

to get at criminally. again, this is where i think we can do -- have much greater ethics enforcement at a different level. but sadly, we don't. >> mr. smith, you want to -- weigh in on that? >> sure. and i think another -- to complicate matters further -- another difficulty is when you're trying to enforce whether it is in the ethical context or criminal context there can be difficulty where the ethical rule is slightly different than the criminal rule, and so what you end up with in that situation is people who have a legal defense to either or both because they follow the advice. i thought the rule was this because the rules are close enough and they got a lot of rice from somebody and what this will was consistent with that, so for us to have an enforceable conflict of interest while both either in the house or senate or any sort of state body i think there's the need for the coordination and consistency with the criminal law because

efforts to kind of add another layer sometimes can complicate things so much that it makes it very difficult to enforce. on the other side i would just say this in the beginning one of the issues that was talked about is everybody does this. and i can't help you as a prosecutor oftentimes when we investigate conflict of interest cases and other cases as well one of the defenses is a variation of everybody does this. i think most of the folks here, and i am sure melanie has devoted her career to making sure people who use that defense it doesn't work. and i think that we cannot accept everybody does this as a defense to a charge. if there is notice, fair notice that this was against the rules we have to bring those cases because it and if we bring those cases, i think they can have a deterrent effect going forward. we just need a clear rule to base the case is on. >> we are going to take

questions in just a minute. so, warm yourselves up for questioning. but we will give another five minutes for free back-and-forth here on the panel. >> just a couple of points on the sort of everybody does this approach. i think first of all, it's just not true. there are, as said, a lot of good public officials and for the right reason, and it's just simply a call about to say that the system is corrupt therefore i can't be held accountable for what i did. ..

that is where writing new laws that are precise and give fair warning but that ring does back in is important. and you enforce that law, and that is a strong counter to public officials, who might inclined because of the culture of the place to violate the law. one other just follow-up from an earlier point about not

convicting people based on what is in the newspapers, i think the jefferson case is actually an interesting example on that, because of course he is famous for the 90 whatever thousand dollars that was found in his freezer. he was one of the, the few counts he was acquitted on was the foreign corrupt practices account that account that stem from the money in the freezer. he was convicted on another -- a lot of other things the most people don't know that but it is really important that the law be precise and what they are convicted of and that is how you start at least on the criminal level starting these -- solving these problems. >> look like you are ready to jump in. >> i just want to say something. i will tell you something about this new legislation that will be precise and give fair warning to people that senator leahy has

introduced and now has been talking about. it says that you are going to lock somebody up if he has done -- where is it? if he has taken an official action benefiting or furthering the financial interest of anybody from whom he has received a thing of value, and he fails to disclose information regarding that financial interest, probably a thing of value by any statute rule or regulation. so you vote or a tax tax cut and you a unabated everybody. you vote not to reinstate the bush taxes or the taxes for people over $250,000, if you benefited everybody that makes more than $250,000. you been offended anybody who has ever done anything for you and you are required -- mcafee to have dale to disclose that as

required by a state or local regulation, he were guilty of a 20 year federal felony. so, at a federal crime and i was not going to be a federal crime in illinois. you are going to try people for violating the state and local regulations in the federal court. you going to take regulations that are mostly enforced by non-criminal statutes and punish them by 20 years and you are going to adopt all of the uncertainties of those regulations which are enormous. the person who administers the federal regulation says to the members of congress, study them carefully but you won't understand him. different rules for disclosing donuts then disclosing sandwiches. different rules for taking money for a book chapter then for giving a speech. in illinois, by the way the statute doesn't cover it at all

if the gift has gone to the spouse or the nephew or the cousin. so there are lots of ways around this statute. but, in illinois you do have to disclose the money given to the spouse if you constructively control it. what? so all this legislation does is adopt to the uncertainties of these enormously complicated ethical regulations. >> i just want to add very quickly to that. i do want to get into the details of the particular scale that has been introduced but i think that example doesn't really hold up. if a legislature votes for a tax cut that benefits their constituents, first of all they have disclosed it. >> so nobody, nobody. >> absolutely not. what it covers is a situation where somebody secretly getting

gifts or secretly -- has a specific financial interest and is taking official action that benefits that interest. it also does cover spouses. not in every respect but in certain respects, so i think i argued pretty strenuously with a number of those characterizations. i also would say that this is a piece of legislation that was introduced and if they can be tightened, no senator leahy is up for tightening it and making it better. but saying that this is hard is not an excuse for not doing it when there are very significant factual scenarios of i think what all of us would agree are real corruption that are now not covered by the criminal law. >> i want to move to the question and answer part so if

you have a question i see a microphone there. and please go -- please take the micron and if you don't mind, let us know who you are. you may be a law enforcer or even a corrupt politician. [laughter] >> good morning panelist and members. at the question for inn milgrom about corruption in new jersey. >> questions over the panelists and she will talk to you later. >> she told us in the front row she could answer she chooses to. my question is for the panelists. my name is howard and my question is in 2009 state inspector general ronald joseph has released a public report in which he found that regarding corruption at the waterfront commission of new york harbor among the subjects of the waterfront commission of new york harbor a report by the

inspector general was the prosecutor of union county new jersey. the report. >> please get to the question quickly because we are going to take the next question and 10 seconds. >> please give me some courtesy. i will get to my next question in a few months. my question is the inspector general found in his report that the prosecutor of union county new jersey improperly interfered with two separate criminal investigations one involving his uncle and one involving a close friend. what steps if any would you take to deal with that? thank you. >> i have a question relating to something that are thus are carlin alluded to or touched on. and it is kind of an economic and psychological question. what connection -- is there any correlation between the issue of corruption and beyond its bandwidth greed is and the issue of what celebrates our paid to

some elected officials? we have a situation in new york city about two decades ago where we had a president who is making i don't remember the exact amount but he was making about one fifth to one tenth of what his fellow graduates of business school where making running corporations and he was running the borough of queens with about 20,000 employees doing a very good job but having trouble paying for college tuition for kids and unable to be socially on the level of all of this della graduates, and may have felt forced to engage in corruption. i don't think he was lining his pockets. i don't remember the exact details. >> i think we have got the question. >> thank you. >> i think, you know, the salaries of public officials make, they know going into it with the salary a salary the salary is and if you feel that you can't live on the salary i don't think the acceptable thing to do is to say well i will take the salary and that i will try and make money on the side.

there is a problem and this goes back to you get the government that you pay for. dislike jimmy carter made this campaign promise that he promised a and people that it government is good and kind and passionate as the american people and that can be a problem sometimes. [laughter] so i think you do, if you want to attract first-rate talent to the public sector, you can obviously give a discount because people are committed to public service but you can't expect part-time legislators to take you a good a job is full-time legislators and in states in the west which should now move to term limits you can expect the same quality of legislature if people can't develop expertise in the job. is like any other job. that being said there is no excuse for taking status gratuities. there is no use for taking bribes. there is no excuse for any of

that but it does leave an awful lot of legislators and government officials to be thinking an awful lot of the time they are in office what is their next job going to be and to act in ways that maximize their future income in those next jobs and that is the problem. >> it appears appears that we are out of time, so we are going to call the first panel adjourned. [applause]

>> ratification of the free-trade agreement with south korea has been held up partly of her restrictions on beef imports. president obama is expected to submit the trade agreements to congress in the next few weeks. on tuesday, u.s. assistant secretary of state for the economy and business affairs

urged ratification of the raymond touting its benefits for the u.s. economy. he spoke at the woodrow wilson international center in washington. this is an hour, 15 minutes. >> my name is kent hughes aranda pro-can here on america and the global economy, and i must say today's subject is very much at the center of the things we think about on the page program. program. for those of you who are new to the wilson center let me give you a brief introduction. back in 1968, when congress decided they wanted to find a way to honor woodrow wilson, r. 28th president, they decided against a marble monument, against another marble statute and instead created this living memorial and the assignment they gave the woodrow wilson center was to bring together both sides of woodrow wilson's life. wilson come as you may know, was the only president to have earned a ph.d..

he was in his era a very prominent with akel scientist. he wrote eight or nine books, some of which are still used in today's political science classes. he went on then to be president of kinston. a two-year governorship of new jersey and then of course a two-term president of the united states. so what they wanted to do was bring together assisted both sides of his life, the academic, the thinker about policy, together with the people who are actually implementing or influencing policy and that is very much what we are hoping to do today. we have distinguished representatives from the department of? state, together with their senior scholar who with some erudite commentary on the question. and we are as you know looking at the korea united states free trade agreement, something that is timely and important and something that will be very soon i think.

i'm guessing i'm getting ahead of myself here but i think we will probably soon be the subject of congressional action. well it is a great treasure to welcome two distinguished gentleman from the department of state. to my right and to your left, we are delighted to welcome the assistant secretary of state for economic energy and business affairs. this is the part of state that deals with a whole host of complicated economic issues. he brings quite a record, positive record i might say, to his position. he was a very prominent lawyer at one time in the financial world. he was recognized for his adroit execution of international acquisitions and mergers. he was identified by observers of that team is one of the world's most influential and effective lawyers. he has been out of state for a

period and we will turn the floor over to him in just a moment. but i also want to introduce an old friend, william craft. he is the deputy assistant secretary for trade, part of that same group in the state department. bill kraft has a very erudite background and also a deep experience in negotiating trade policies. in fact, from 2002 to 2009 he was actively engaged with the doha development round. i am sure had he stayed there it would be done by this time. i have no doubt at all. he really goes back in time to the agreement that was one of the significant regional agreements that the united states reached, and he has started life as a foreign service officer but now is a permanent member of the civilian side, the civil side of the state department.

and finally i want to introduce a colleague, bill krist. pill is a senior scholar who in fact is working on a book on the future of u.s. trade policy. i think is going to be a very interesting and provocative and timely volume. he has a great deal of experience himself in the trade field. he works on capitol hill. he spent several years at the u.s. trade representative's office and also was the senior vice president of a major business association in town with his responsibilities being principally on the international side. well that they now turn it over to the assistant secretary, and after he has finished, we will call on bill krist for 10 minutes of comments or so and then we will open it up to your questions. mr. secretary the floor is yours. >> thank you and good afternoon. i haven't seen to grow so i'm

glad to see someone is coming onto the second row. i haven't seen a crowd like this with two rows since the first grade. good to be here. thank you for the welcome and i am pleased to see a number of faces that i actually recognize, which means that after a year in d.c. i'm actually getting to be old hand. i am here to talk about the career, u.s. trade agreement and if there is one point i would like to leave you with, it is that cloris which we call disagreement, will strengthen not only our economic relationship and not only our vital strategic alliance with korea but also a deep human bond with korea, with the korean people who already see us as one of their closest friends and most loyal partners. i am actually fairly familiar with those personal bonds. i spent a lot of time on the korea free trade agreement both

working on some of the issues that came up at the last minute and also talking about its benefits. as a lawyer i did a lot of work in korea, joint ventures and the like that one of my most memorable connections to korea came before it became assistant secretary, but i had the honor of serving on the board of trustees of dartmouth college and i was fortunate to be on the committee to look for dartmouth 's new president. this is not an easy test. we had a number of great candidates in effect a number of people who ended up in the administration but there was one candidate who stood out to me. he was the valedictorian of his class. he had been a star football player on his team. he had been to brown and harvard and had a medical degree and a doctorate in -- he cofounded doctors and health and named as one of the most influential people in the world. during his interview he told us he had in a failure and he'd

been a failure because five years before, he had been executive director at the w.h.o. world health organization and he had announced a 3x5 campaign, campaign to save 3 million lives in five years from the development of tuberculosis vaccines. and he had only been able to save 2 million. i thought this guy was fantastic i thought he was perfect for dartmouth. i spend a lot of time on the board convincing them that he was their man and in 2009 watched him being inaugurated as the 17th president of the college. the one reason i'm telling you this is that that 17th president name is jimmy on kaine. he was worn in seoul and he moved his ammo to the yes at the age of five and grew up in a small town in iowa. he was the son of an immigrant,

obviously korean and grew up to be a world health expert in the first asian leader of an ivy league institution by spending a year and a half with him on the board. i became very much aware of how far korea had come. the korea that his parents left is clearly different from the korea that we see today. over the last 60 years korea has billed itself as one of the world's most dynamic economies in the world and today is a strong partner and a source of economic opportunity for american jobs. the u.s. korea relationship is one of the world's most vibrant economic relationships. the two-way goods trade between korea and the u.s. today reaches nearly $88 billion a year. those are the figures from last year, and today korea is our seventh largest trading partner.

and we are korea's third largest trading partner. a little footnote. a couple of years ago we were number one and that is something else that we will talk about. our alliance with korea has expanded from its military routes to develop into one of the most vibrant and dynamic full spectrum strategic partnerships in modern history and today korea stand shoulder-to-shoulder with the u.s. in a number of places and a peacekeeping and reconstruction effort in haiti where they have also pledged as much as $50 million in addition to having a number of peacekeepers on the ground. in afghanistan, and iran and in lebanon. and the recent events in north korea have reminded us that this alliance is a vital lynchpin not only of the security of korea and the u.s., but also for the region has a whole. we believe that the implementation of course that the korean u.s. trade agreement

will signal to other asia-pacific nations our presence, continuing interest in the region, our budding presence in the region and its defense and evolvement and it will underscore the commitment of the u.s. to prosperity and security not just in korea, but also in the region as a whole. chorus will continue the history of leadership in shaping economic policy in the region and in crafting its emerging economic institutional agriculture. but of course, international commercial time can only get you so far and only get you so far in washington certainly and are not the only aspect of cloris but i believe that cloris is critical to america's prosperity. that is because our number one prior to in all agencies in the

u.s. government is jobs. and now more than ever, our ability to create jobs here at home depends on our ability to export goods and services throughout the world. by now you have all heard of the national export initiative, the nai, where president obama directed all of the agencies to work together to double u.s. exports in the next five years and to do so with the kinds of experts that -- export that would create 2 million jobs. chorus is a critical piece of our nai. chorus presents a historic opportunity to increase exports, to create jobs and bolster the american economy. there is a history to chorus. obviously it was signed in june of 2007, but at the time u.s. congressional approval could not be obtained basically due to

concerns about market access for u.s. car manufacturers in korea. so, starting in the fall of last year, the administration consulted extensively with u.s. stakeholders. we consulted with the business community. we talked with labor leaders. we talk to congressional representatives, and in december of 2010 of last year, we reached a new agreement to ensure that we created a level playing field for u.s. auto manufacturers and autoworkers in the korean market and this package we believe is a better deal for america's auto industry. is a better deal for the autoworkers and is shares widespread support in congress and elsewhere. let me just give you for differences between what was signed, the additional agreement that was signed in december of last year and a 2007 document.

first, in 2010 we agreed agree to encourage green technologies by immediately cutting in half korea's electric car imports and eliminating both of our tariffs altogether in five years. this was five years earlier than the 2007 chorus agreement. second, we level the playing field and improve transparency by addressing ways that korea's system of automobile safety standards have served as barriers to u.s. exports. and we also ensured the regulations that were in korea didn't place a disproportionate durden on u.s. on mobiles. there, we agreed that korea would immediately cut in half its tariffs on u.s. automobile exports while our tariffs on korea's auto exports would remain in place for five years. this was done in order to give american car companies and their workers a chance to build more

businesses in korea before the u.s. tariffs came down. and forth, and finally, in order to protect u.s. auto companies and their workers from searches and imports from korea, the two sides agreed to a new special auto vehicle safeguard to cover surges in korean exports. this deal that we reached last year according to the united autoworkers and the u.s. automobile industry address the concerns about the agreement's potential impact on u.s. auto industry and as i said before, we have been able to obtain pretty much bipartisan support or this agreement. theythe benefits, the benefits a new document are not limited solely to autoworkers but will also benefit others including those in the steel sector and other suppliers, to the automobile industry and we think it will also help support

initial job growth in america and that is ultimately the best thing we can say about it. that is ultimately the best security benefits that we in the administration can secure for american workers are go and so, the easy part has been done and now it is time to go forward. now it is time to move forward. to bring chorus' promise which we believe is billions of dollars in exports and tens of thousands of jobs in this country, that president intends to work with congress to secure its approval without delay. once congress approves chorus and the agreement there will be a number of benefits and these benefits will be tangible. the u.s. international trade commission estimates that america's economic output will grow by somewhere between 10 to $11 billion annually and that is more than our last nine trading agreements combined.

that may give you a couple of local examples of the anticipated benefit from chorus. one from virginia and the other one from maryland. we go around the country and we move these. in the last few years, electronic exports from virginia to korea have averaged about $50 million per year and one of the things that chorus will do is provide a competitive boost to those exporters by eliminating almost all tariffs, all tariffs and electronics not already covered by the information technology agreement. and there will also be benefits from maryland. just to give an example between 2008 and 2010, maryland businesses exported an average of $75 million annually in chemicals and related products to korea. twyla chorus will move remove the stairs from the products, tariffs that today in some cases

are almost 50%, and thereby making u.s. exports more affordable for koreans to buy. but at the end of the day, let me just emphasize the one benefit that we believe is the most important benefit of this agreement and that is the huge job creating potential of chorus. as i mentioned the tariff costs alone according to the ita could increase in -- export of american goods somewhere between 10 billion to $11 billion annually, supporting tens of thousands of american jobs. in fact what dave extrapolated is about 70,000 american jobs. by way of example, last year the u.s. provided almost one third of korea's total agricultural imports valued at almost $5 billion. chorus is expected to boost agricultural exports from the u.s. by as much as 1.8 lien

dollars a year. and it will do this by immediately eliminating duties, the majority of u.s. farm exports to korea and reducing or eliminating the rest of the duties over time. but the benefits aren't limited to agriculture. there are also benefits on u.s. service suppliers. and korea's service market is large. it is a 580 billion-dollar service per year. the new right's debt service providers have are the rights to include the ability to establish joint ventures or offices in korea and liberalizing for pools and easing investment restrictions. and that is good news. it is good news for u.s. service providers and good for accountants, good for lawyers and good for financial institutions and their workers who account let's not forget for about 80% of u.s. employment.

chorus also deals with transparency issues. and it includes strong transparency obligations. it addresses corruption and international trade and investment and it includes applications on bribery measures as well. so these are the benefits. the numbers i think are clear, but to gain these benefits, to gain the benefits of chorus, we think that we need to act fast. and that is because we are not the only game in town. korea and the asia-pacific region has a number of dynamic economies and we risk losing our market share we do not move fast in order to approves chorus. i mentioned before the last few years the u.s. had gone has gone from being the third largest exporter to korea to being the first, i'm sorry, largest exporter to korea to being the third today.

our competitors, the e.u., china, japan and many others aren't standing still and they have either signed or they are negotiating or considering signing free-trade agreements with korea. and its sign these agreements would eventually disadvantaged u.s. exporters in the korean market. let me give me a couple of examples. without chorus american exporters and agriculture would pay as much as 50% more duties on their products, it and nonagricultural duties would pay nearly 7%, more like six-point and some change in duties. so the time has come to move on chorus we believe and that is what we intend to do shortly. that is chorus. i know i came here to talk about the korean trade agreement that i have got to believe there are some in the room who may be interested in the colombia. >> there might be one or two.

>> panama trade agreement so let me preempt a couple of questions and talk about that. as you have heard me say already this administration is committed to pursuing an ambitious trade agenda that will help our economy grow and support good jobs. the commercial benefits of the colombia and panama agreement will be in our favor. today for example, 96% of panamanian exports to the u.s. come in duty free. most experts from colombia are also eligible for duty-free treatment under existing trade preferences programs and that means that our exporters are in many cases the only ones that are paying tariffs. in 2000 -- 2010, the u.s. exporters paid in colombia an estimated $3.2 billion in tariffs.

u.s. exporters -- but that is $3.2 billion that they could have earned, that american businesses could have burned had this agreement been approved already. this administration is discussing with congressional leadership how we can work together to accomplish the president's comprehensive trade agenda this year and that includes korea trade agreement, panama, trade adjustment assistance for workers, gsp and the ambien trade preference as well as normal trade as russia joins the wpo. so with korea and with these other agreements, we are in the brink of bringing home or job or virginity that can help working families in every country in every corner of this country but again, korea and chorus is more than just about trade. it is an agreement that will

continue to think korea and the u.s. even closer strengthening a vital partnership in the asia-pacific region. jobs will be created and lives improved by removing the barriers to a closer economic relationship between these two countries and justice kim overcame adversity to experience a remarkable century of service, so too can the work to deepen the u.s. korea relationship and that success. so that is -- i look forward to your questions and i also look forward to working together with you in order to explain the benefits of korea trade agreement and the united states. thank you. [applause] >> let me call on senior scholar chris to make a few comments. >> thank you very much, and thank you's secretary fernandez

for coming in for your comments today. let me just begin real quickly by noting my personal view that a korean agreement really does need to be passed very quickly and along with that, the colombia and panama agreements need to be passed right away too as secretary fernandez mentioned they are very important foreign-policy reasons for korea. i would just note fairer also are for colombia and panama -- colombia trying to create a more market-oriented system in contrast to hugo chavez's venezuela and also we have got a huge cocaine issue there. and with regard to panama, of course we have got the panama canal. these are also important for foreign-policy reasons, and -- i mean for commercial reasons. colombia has agreements with mexico and chile and signed one with canada and the korea panama

agreements were signed in 2007. colombia signed in 2006, so here we are four or five years after the agreements were signed and that doesn't seem to me to be any way to treat friends. so i think we need to get a system in place to move more rapidly on these. i would like to make a couple of quick comments about the korea agreement and then i want to offer a suggestion about how we might approach fda negotiations in the future. i think you covered the korean agreement very well. i don't have a lot to add. i think the agreement as it was originally negotiated would have caused serious damage to the u.s. auto industry. i think the changes that were made are really important changes. i think it is really critical now that the administration are simply monitor it and make sure that korea lives up to the spirit as well as the letter of

all of the provisions but reticular leave the auto one. one other issue on korea of course is the deep issue, which wasn't resolved. that restricts beef that comes from cattle that is less than three years old. i don't think it is a really big commercial -- more than -- right. i don't think it is a big commercial issue but i don't really think there is a scientific basis for what korea has done. but that can be addressed in follow-up work and there are been used to put pressure on korea for that. so i don't think that should delay the way progress on passing the agreement. on the longer longer-term, how-to how to maybe approach fda, i am basically a believer in the most favored nation treatment. i was the original vision of the founders back in 1947.

they like that because they felt that the preferential agreements between world war i and world war ii were a factor in creating clinical friction. secondly, most favored nation treatment is really consistent with the theory of comparative big a -- advantage. free trade agreements cause trade diversion which is contrary to that. and thirdly, the poorest countries tend not to be asked to the fda dance so they tend to be marginalized from global trade even more than they already are. unfortunately my world doesn't exist any more. we don't really fit in that much of an mfn well. the wto reports there is 193 regional trade agreements in place. there's an additional 38 pending before the wto. the european union has 29 agreements and goods and another eight agreements in the services

that includes agreement with south africa and even countries like syria. they are negotiating an agreement now with india. be after countries have 18 agreements in place including one with korea since 2006 and one with south african customs union and they are negotiating agreements with india and russia. so, as much as we might like mfn it really isn't there any more. once the european agreements come into effect, u.s. exporters will face preferential tariffs against them and it is going to make it a lot harder to achieve the goal of doubling our exports. the u.s. has used a standard model for negotiating our trade agreements. basically it is one that u.s. negotiators often called the gold standard. the model was developed originally to try to encourage progress on the doha development

round and encourage negotiations for the free trade agreement of the americas. i think the model baby was fine up until about 2005, when negotiations for the free trade area of america's failed and doha basically stalled out. so i think we need a new approach. first off, i think there are some problems that are in this model of free trade agreements that really don't belong there from our own interests as well as the interest of our partners and secondly i think we should have a more flexible approach. so, with regard to what is in there that i don't think it's in our interest, one is the intellectual property protection provisions that go beyond what is in the wto trips or trade related intellectual property agreements.

i think protection of intellectual property is extremely important. it is necessary to encourage innovation and research and development which are really key u.s. competitive advantages. me westies to say that too much of a good thing is wonderful, and i think that is true for chocolate chip cookies. but i'm not sure it is true for intellectual property protection. basically protecting intellectual property is designed to give the inventor a monopoly on the idea to get a barge profit to encourage more innovation and research. however, it also results in higher costs for the consumer and to extensive of a period of intellectual property protection actually discourages innovation because most inventions are built on existing inventions and if you can't use them sometimes you can't develop a new product.

the wto trips agreement was negotiated on 153 countries and it is pretty much of a balance between the u.s., what we wanted for strong protection and other countries, consuming countries that were concerned about too much protection on generic drugs and their own kinds of products. so it tried to strike a balance and the same thing is true for u.s. intellectual property protection law. it tries to strike a balance between the innovator and consumers. well, trips plus goes beyond what is in the wto and the number of respects he goes it goes beyond u.s. intellectual property protection. i would argue that it is not in our interest or our trade partners interest. may 10, 2000 agreement between the bush administration and the congress brought trips plus that more in-line with trips, but i

think that now i see an inside trade that people are thinking of going back to the old model and i think that is a mistake. a second area that i think is an area that should be addressed is investor state provisions. they basically allow foreign investors to bring in claims against the government of another at ta partner directly to an international panel of arbitrators. that is in addition to the regular dispute settlement mechanisms in our free trade agreements and i don't see any reason to have special protection for investors over what exporters get. affair dispute mechanism is either good enough or not good enough. so i think those provisions in addition to having reservations about them, they have been a sticking point in negotiations with the u.s. agreements and i think south africa objected to both of those.

more fundamentally, i would argue maybe the u.s. should be more flexible in our approach. our trade competitors often will negotiate agreements in goods only and then hope later to extend that to services. we insist on the whole ball of wax the first time, so i think it might be useful to reconsider our approach to how we do free trade agreements. as i said, i am still basically in favor of mfn and i think we ought to be working to try to move back towards mfn, but that actually is a topic for another day so let me just end there and look forward to the discussion. [applause] >> mr. secretary would you like a brief response before we go to questions? >> sure and maybe my bill crabs crabs -- my colleague bill craft

as well. if you want to be provocative i think you achieve your purpose. but i really couldn't disagree with you more frankly and i think it will be an interesting conversation. it seems to me that intellectual property is one of this country's principle exports, and we are not going to be able to achieve what we want to do in exports without really protecting our innovation and our creative industries. i would disagree with you on the legal side. i think -- i do not believe protections beyond what we provide in general, going what we provide under u.s. law. investor state connections, you know, i just imagine what would have happened to a number of our

investors had they not been able to pursue their claims against countries that have expropriated them or have not fulfilled their end of the bargain and concession agreements, loan agreements and things of that nature. and lastly if you are going to take out services, from trade agreements, you are talking about 80% of the u.s. economy. if we are going to allow importers to access the world's biggest market, why would you try to include the 80% of your economy? so, i think we have some fodder for a good discussion. >> bill, you may have some thoughts. >> i have a couple. one is that i never disagree with my boss. [laughter] but bill was able to string together a reference to me west

end chocolate chip cookies in the same sentence. those are two of my favorite things. on substance i certainly agree with that. let me make a couple of quick points. just to wrap back to bill's first about beef and the korea fda does not solve all of her problems with access to the beef market in korea. that is exactly right and i'm here to tell you that that is not the end of the story and not the end of history. we have been and will be and are come even as we. >> , continuing to press the green government strongly to adopt a purely science-based regime that would not in any way limit the export of beef from the united states to south korea. but, secretary fernandez and i have met several times with the national cattlemen's association and they tell us the story quite

lightly that korea is a major market for u.s. beef even with the restrictions that they have on restricting exports to cattle of three months or less. currently, they are our fifth largest agricultural market overall. we currently sell them over $469 million worth of beef a year. that is with the beef tariff of 53.9% imposed on u.s. beef. the fda will fairly rapidly drop the 20 and so the u.s. cattlemen think that even with the restriction on 30 months which we are working hard to get rid up even if it at the same place for some short time, u.s. beef exports will go up at the cantley into korea. as we have talked about, the world is not a static place. the koreans are talking to others. we compete with the australians

and we compete with the argentines. we compete with lots of others. theatre of korea fda has been approved by both governments and will go into effect in a couple of months, putting u.s. manufactures, particularly in the industrial side, at a significant disadvantage trying to sell products into south korea and while that is not why we negotiated the u.s. korea fte in the first place it does have something to do with ears and see we are bringing and trying to get congress to pass it as rapidly as possible. we are moving heaven and earth to try to get our congress to deal with that. colombia and panama so that they are ready to go. we are prepared to talk to the congress anytime, anyplace and anywhere. right now just yesterday the white house decided that panama has met all of the obligations we have laid out for them in terms of changing their labor laws in ways we had identified in passing some tax treaty,

obligations we discuss with them. we think that they are ready to go and the u.s. administration team is ready to meet with the congress to walk through those agreements with them. colombia, some of you may have heard that we spend a good chunk of the spring negotiating additional provisions on labor with the colombian government. they quite readily entered into obligations and our charms on a couple of timelines. the first significant batch of those obligations are commitments that they made, things that they said they will do before or by april 22. so, sometime very soon with and i would think a week or two, we will be in a position to know whether colombia's living up to the obligations they have undertaken in the promises they have made to us and at the white house decides they are we will be ready to move forward with

that agreement to the congress as well. i'm quite confident that we will be able to move all three free free-trade agreements to the congress, hopefully for passage this spring, certainly by early summer. and as josé said this has to be done in the context of a broader review of the country's overall trade policy which includes critical things including trade assistance and the passage of the other preference programs and things that run that secretary fernandez clicked off. on the question of fda is and whether standards are too high or not, i can just say that the team of u.s. government folks that negotiate these things on behalf of the u.s. does agonize over trying to balance the interest of producers and consumers and importers and exporters and investors and others, and i must say that the

single biggest element that drives what is and one of our fda's and what congress tells us has to be in it if we have any chance of hitting it into our congress. so, to the extent that you have strong feelings about this bill i would urge you to make your views available to the folks on the hill that are talking about doing an extension of trade promotion authority which by and large is something i strongly endorse and we can keep it with a few strings on it is possible that would need a direction both you and i could live with and i will stop there. >> thank you bill very much. let's open it up for questions. and please introduce yourself if you would. >> i am clyde prestwood president of the economic strategy institute here in washington and i would like to direct some questions to secretary fernandez and then to mr. krist. secretary fernandez, you emphasized a couple things. one was the importance of this

agreement geopolitically to submit their ties with an l.a. and the other was the economic, potential economic benefits. my first question is one, it is not clear to me how an economic agreement cements the geopolitical ties. what i'm trying to say is that we have the seventh fleets patrolling the western pacific, supporting korea. we have 30,000 troops in korea. we have 50,000 troops in japan. we have taken the lead in dealing with north korea in support of south korea. we have a very long history of providing geopolitical support to korea. in fact, i think it is still the case that in time aboard the korean army is actually under american command. how much more do we need to do to cement these geopolitical

ties? i guess my feeling is that if that is not enough why would another relatively small the agreement cement those ties more? so, i want you to respond to why is it that we do and not -- economic agreement to see that geopolitical relationship? but more importantly, the itc and the u.s. international trade commission have calculated that this agreement would actually increase the overall u.s. trade deficit, and so despite the numbers you have cited about the creation of new production in new jobs in the u.s., you talked about increased exports and jobs related exports. you didn't talk about increased exports and job loss due to

influx. the pc has calculated that we would in fact have an increase in our trade deficit and a net loss of somewhere around 140,000 jobs to the u.s. economy. so, that sounds as if in a moment where we have high unemployment and talking about doing a deal that would raise the u.s. unemployment rate in order to achieve some kind of cementing of the geopolitical relationships which have been cemented for a long time. so in fact you are trading off u.s. jobs for some kind of geopolitical intangible benefit. mr. krist i'm surprised that you support this korean agreement. you correctly point out the

fundamental ground of most favorite nation, which know has recently been translated as it permanent normal trade relations those two eshoo nor the same thing. now, the whole foundation of the post-war free-trade movement, the foundation of the gap, general agreement on tariffs and trade and of the world trade organization is mfn or permanent normal trade relations of these free-trade deals that we are doing are in fact not free-trade deals. they are in fact preferential trade deals. they should be called tpa's not fda's and is preferential trade agreements they precisely are the same thing that prevail a world trade prior to world war ii. they are the competitive preferential agreements that helped give rise to the war.

you are correct that these fda's are apathetic will to the notion of free trade, and so why are you supporting this particular agreement? you also point out the questions of intellectual property protection and some other issues. let me throw a couple more at you. and also to you secretary fernandez. you are all talking as if the primary assumption of your calculations is that the main barriers to trade our tariffs and you talk about how the elimination of tariffs will result in increased exports and increase sales etc.. anyone who has dealt with korea or japan or any of the asian countries knows