>> thank you, and i'm going to ask you to keep on engaging in the discussion. we're going to move to a broader discussion. i want to let our audience know both here and online, feel free to submit questions in the room. if you're on-line, and there should be a place to click to submit questions. we will try to get to as many of them as we can. secretary chertoff, let me move to you. you have many years of experience in this area. you have seen both the opportunities and the threats develop. you continue to be directly engaged in this. can you give us an overview of the most common threads that small businesses have to worry about? >> first of all, i think this is a very valuable program you have launched here. for a lot of people,

particularly small businesses, even though they've read in the newspaper about dramatic compromises of cybersecurity, they may feel it is something only very sophisticated companies or institutions have to worry about. as mr. jones illustrated through his own difficulties, this really touches everybody. at the same time, it is important to recognize that what we are talking about here is managing cyber risk, not eliminating cyber risk. there will never be a program that will eliminate all possibilities of cyber threat. the only way to do that would be to get off the network, and that would cause an enormous loss of some of the great potential that we have using the internet. you have to look at the balance. a lot of this has to do with the nature of your business. different businesses will have different sets of concerns. at one level, there will be basic concerns about the integrity of finances and

customer information that will apply to almost every business. and the other hand, when you're worried about your intellectual property, for example, being stolen, that could be of more concern to a high-tech business than a bakery. i am sure bakery recipes are important and proprietary, but probably not of interest to bad actors in other parts of the world purify everybody will have -- parts of the world. everybody will have different concerns. the particular technique mr. jones talked about, which are called fishing -- phishing, where you open a device or tool that allows people to steal your information, that is a very common device. there is a whole spectrum of the tax that you deal with insider that can range from actually a

-- spectrum of attacks that you deal with in cyber that can range from stealing loaves of information to stealing passwords. -- loads of member nation to stealing passwords. there are several categories of information. first, you want to be concerned about how you protect transactions that might reveal sensitive financial information about your own business. q1 to be concerned about proprietary business data, what -- you want to be concerned about proprietary business data. if you deal with customer information, credit cards and things, you owe it to your customers to ensure that that is not compromise. you have to be concerned about

intellectual property. that is a very big target for people who steal things over the internet. you have to be concerned about criminal groups that try to extort money from you by threatening to attack your system. often they do that by overwhelming your network with bogus messages. that, of course, shuts off the network to legitimate customers and also creates somewhat of a crisis of trust with customers who may be engaging over the internet. finally, you have to look for those who maliciously attacked you. we have had two experiences recently where a group referred to as anonymous will attack institutions because they do not like what somebody is saying or they are a -- or they do not like a client or customer of the institution. those are all things to be concerned about.

this forum is not only about education, but about empowering small businesses to know that there are steps they can take to deal with these kinds of problems. >> very helpful. i want to turn to h p. very interesting position when it comes to this, because you offer a whole array of products to help small businesses sees the benefits of the internet. you also, particularly in your job paula have a real view and insight into the securities sought -- in your job, have a real view and insight into the security side. every technology can offer benefits, but also brings with it some risks.

with something like internet access, you can eliminate the risks by not going on line. from a competitive standpoint, that is not a good idea because other businesses are going to be on line and the opportunities for growth and lower costs would not be there without it. it is not what we're advising people to do, to turn it off, just the opposite. i would like to us to talk both about -- as concretely as you can -- remembering that a lot of small businesses are on line, but a lot are not, what are some practical ways you can see for small businesses to expand their markets and lower their costs. then, on the security side, what are concrete things small businesses can do to protect themselves? >> it is true that small businesses are today cyber-

dependent. they cannot operate effectively or grow effectively without having cyberspace at their disposal, yet cyberspace's continually threatened, not only by individuals out to extort money or ideas, but also multinational and crime syndicates that are there as well. each of these threats are apparent to not only small businesses but to governments as well. the resources to deal with them are different at each level. i think it is important that small businesses work toward establishing security relationships as well as they would establish relationships with other kinds of suppliers, relationships with the people that will bring you the piece is the need for the product to make. likewise, you need to establish relationships with the folks that support the security of your company. it is important you have folks on stuff that understand the

privacy of the information's your handling. how you process, store it, what you are doing with it when you're done with it. that will protect you from losing in the nation, and also protect you in the long term from being accountable for losing that information. it is very important to make sure that the survival of your business is something that will happen after a cyber attack. as secretary chertoff mentioned, cyber attacks are going to happen along the way. the question is, how prepared are you, and how invested are you in knowing that this critical portion of your business is protected? with that, there are several products available at many levels that can help. a lot are available from small business value added resellers. they come packaged with the equipment that you might buy. it is important that you understand what you're buying, because you might not have to

make secondary investments. a lot of this is available freely to you because you're dealing with sophisticated vendors. likewise, there are relationships to establish with organizations like info-guard, so that you can understand what is happening in the broader environment and get some great in vice -- great advice. now, the other thing you have to look at is how my going to survive in the face of threats? just like you have to deal with weather and traffic, the price fluctuations in materials, you also should say i know i have to deal with the security of my information and i know it will not be perfect. i now have to plan for it and deal with reality as it comes. look at the tools you have, the processes you have, the people you have, train them and

leverage them to the greatest ability. no small business can be outside the cybersecurity business. they have to intersect at some level and understand investments they have made, and try to leverage those investments toward the most important piece of their business which is to survive in the event of an attack. >> i want to ask you a similar question. you're one of the largest information based companies in the world. what do you see both on the benefit side and on the risk side? also, talk about your own experience at thompson reuters that could be helpful. >> from the benefits standpoint, we use the internet for distribution. obviously, many of our customers connect to us a rare the internet. it is a very good way to reach a very broad -- connect to us over

the internet. it is a very good way to reach a very broad audience. mr. jones alluded to the risks that come in through e-mail and malicious code. we also see that often over web browsing. those are the two main channels. everyone is susceptible to those, both small businesses and large businesses. we see that very often. secondly is just direct attacks on your system itself, whether it is a hacker coming in and perhaps stealing credit card data off your web server or serving at -- or stealing a database. those are the two main risks we see. today, those are what occur more frequently than most. just to comment on an earlier comment made about services, i

view causes services as a way for small businesses to leverage the purview of large businesses. you can get good e-mail, ceram and process knowledge at a cost service and not really have to build the infrastructure yourself. i think that can give small businesses a step up as to what has been available in the past. >> ann, talk about small businesses today. what did they know in terms of opportunities, and what did they know in terms of risks and threats and what they should do? >> 97% of our membership is small business, so we do deal with them a great deal. as you can imagine, using the

internet as a small business is a wonderful tool. you can reach the world. the downside is, you can reach the world. the bad guys are watching you. if i were to sit down and talk to you about infrastructure and railroads and banks, i think you'd be surprised at how well they are protecting their infrastructure. i think events like this and cybersecurity awareness month in october all help to raise awareness, but we need to do more. i think it cannot just be one month out of the year. we need to have a campaign much like the stop, think, connect. it is a culture change. it is going to take a long time, much like wearing seat belts, not smoking, and getting people to not click on a link or not open an e-mail if they do not

recognize it. basically, yes, the internet is a great tool, but you need to protect yourself. it is about the bottom line. you can really hurt your brand. you can end up in a lot of legal trouble if you're not protecting yourself. that is key, and we are trying to get the message out to our members. >> thank you. i am going to take a minute and mention that we are releasing today tend cybersecurity tips for small businesses. en cybersecurity tips for small businesses. i am going to move on, but i would like you to comment on these. let me review the headlines quickly for people listening and people here. then i will ask our representatives from symantec and mcafee to comment.

one, train employees and security principles. two, protect information, computers and networks from viruses, spy where and other malicious code. three, provides firewall security for your internet connection. four, download and install software updates as they become available. five, make backup copies of important business data and affirmation. 6, control physical access to your computers and network components. fi enth, secure your wif- network. eighth, secure individual user accounts for each employee. ninth, limit employee access and ability to install software. 10, regularly change passwords. comment on any of those.

help small businesses understand what they can do to immediately improve their security online. >> how much time do we have? [laughter] first, i want to thank you and thank our audience and panelists. it is important that we understand these risks. the way we do that is by a hearing from everybody else. it is a little bit like the cbc. we learn about the disease not from its popularity, but by how it spreads. we, as the good guys, especially in small business, have to remember how important that small business is. we are two-thirds of the job

creation and 60% of the gdp of this country. we have to focus on not just one bit of information. other governments and other companies are very interested in what is in every single small business in this country and around the world. they will find ways to get it. instant messages a new one. mobile is a growing one. when you think about these things, i can pull a couple out. physical access -- very often we see an insider threat. you can secure your perimeter. it is shiny objects. when someone offers you a free gift, heaven knows what happens when you click on that.

you have to protect your brand. you have to gross sales and help your employees eat so that you can grow sales and build value. when you lose the quality of your brand, that will go away. it is a people think. regularly change passwords. a cyber event could cause physical damage. that is one of the many attacks we see at their worldwide. the nuclear passwords were the easiest to get and the hardest to change. resilience is key. be as flexible as you can be. another quick point to mention, at mcafee we say safe never sleeps. we see 14 million new machines become compromised every day.

these attacks will overwhelm your network. you can be part of that, if you are compromised, hurting other companies, or used as a compromise machine. i commend the fcc and this program in putting out some tips that help smaller businesses leverage the power of the internet and make your business and your customers safe. thank you. >> thank you. cheri from symantec, similar question. what jumps out at you as far as actionable steps he thinks small business owners could take right away to significantly -- you think small business owners could take right away to significantly improve security? >> as you mentioned, semantic conducted a study released in 2011 that actually surveyed small business owners and

customers around the world. what we found through that was that 50% of small businesses do not have a plan. more shockingly, 41% said it never occurred to them that they should have a plan. 40% also said the data protection was not a priority for their business. when you think about this, 40% of small businesses saying data protection is not important to their business, that is kind of a shocking statistic when you think about it. data, as mr. jones indicated, is what your business runs on. it is why your customers trust is dependent on, in how you conduct your business. from the standpoint of the 10 cybersecurity strategies for small business that the fcc is releasing today, we think it is a great list. we are delighted to announce that we will be posting this on our small and medium business

website that is dedicated to that particular segment of the communities of the week and try to get that awareness out to them. i would also like -- so that we can try to get that awareness out to them. and also like to mention that as customers of small-business owners, we found that not being prepared can also go have significant impacts. 44% of small-business customers have actually seen a small business vendor shutdown due to an attack. that cost as customers roughly $10 a day. here is the kicker. more than 54% of those customers actually switched vendors were switched to another small business owner because they did not believe they could continue to rely on that small business owner. so this can have, cybersecurity can have a bottom-line impact

steerer survival as a small business, and frankly those security -- impact to your survival as a small business, and frankly the security in packs can -- in packs can be the key to your customer's business. >> you spend a lot of time with businesses run by people from disadvantaged backgrounds, minority communities. do you see any unique issues among the businesses you work with that we should put on the table? >> i would not say unique, but i would say that if you look at the most recent poll out from ew, there is an indication that there is greater discussed -- greater distrust among the

community about internet security. perhaps the slows down ways in which minority owned businesses begin the process, but as others have discussed, it is critical to take that risk. it is one of the reasons the national urban league is excited about working to spread the information about cybersecurity for small business, because we know that is critical to the growth of urban small businesses. speaking to the secretary just a moment ago, up we were speaking about the importance of having some natural suspicion and being able to spot the kinds of things that cause problems for small businesses. i think there is a little additional skepticism, but overall, a recognition of the opportunity. >> ken, could you describe sc

ore a little bit? i will admit, i did not know about it before we partnered with score. describe what you do, and what you are hearing from small businesses around america about the internet, good and bad, and your thoughts about what they should be doing. >> thank you. thank you for having me and for having this panel, and thank you for your partnership. for those that do not know, as gore is a volunteer organization of mostly retired -- a score is a volunteer organization of mostly retired small-business owners who mentor people who would like to start a small business.

we speak about any topic that relates to growing, managing, buying or selling a business. our volunteers are well-trained and very knowledgeable, and anxious to be of value to these would-be entrepreneurs and existing entrepreneurs. we partnered with the fcc recently on a new e-business initiative where we're working to train these business owners on the values of broadband technology. how can they grow their sales? how can they manage internally more effectively by using these tools? a natural extension of that would be to talk about security. when we started the e-business now initiative, we did do some focus groups, and most of those that did not have a web presence or a web presence that included the opportunity to do e- commerce, they did not because they were concerned about security. there are so many tools and so many opportunities to mitigate

and manage that risk as secretary chertoff said, it is really something all small business owner should be aware of. small-business owners are busy. they're wearing multiple hats, and they often do not take the time to think through some of the issues that relate to a web strategy, internet strategy and cybersecurity strategy. i think the list you're putting out -- and congratulations on doing that -- no. one is critical. you need to have a plan and communicate that plan. that is not hard to do. this should be part of your ongoing business plan as a small-business owner. this should be something you review a couple of times each year, maybe when you set your clocks forward and backward. don't just check the batteries in your smoke detector, also review your business plan for security. people need to know about opening some drives, sharing

passwords, leaving their computer on. talk to them about securing data and data back up. in a natural disaster or a man- made disaster, business is that lose their data, 90% of them never go back into business. we saw that with katrina, and i'm sure that with some of the tragedies we are experiencing today, we will see that going forward. we work at score to educate through our volunteers, the web, and other vehicles, to really break down the steps that business owners can take and actually make a difference. talk about the plan. 50% of small businesses do not have a plan. secretary chertoff, let me ask you about that. how concerned are you about that, and how can this give us a

broader perspective of what we need to do as a country on cybersecurity? >> what emerges from the conversation we have had here, there are really two parts to solving this issue. one is to educate people. if you are a business engaging in transactions on line and you have a date to a breach and a loss of -- and data breach and a loss of information, it is important to realize your customers will probably not reach engage with you. the second part of this, and what is important about the program you are rolling out here, is that you are empowering people to understand that they can actually address the problem.

it is complicated, particularly if the look of these high-end kind of attacks. people walk away. the message has to be there is a lot that business can do to protect itself. we have talked about some. blogging the correct, the products to protect yourself -- buying the correct kind of products to protect yourself. also, buying the correct kind of products. you're not going to get the updates, you may find things embedded in that hardware or software that could be malicious. being careful about making sure you are buying their products to protect yourself is an important part of your plan. resiliency. how to make sure you have back up your data?

how you make sure you can reconstitute? what some of us call computer hygiene. how you train yourself and your work force in basic principles that minimize the risk that you'll have a compromise of risk of your data. on the issue of passwords. passwords that rely upon your spouse's name or other kinds of very available personal information are not likely to be useful or protective. educating people and how to select an change passwords is important. common sense is a great tool. we have talk about tony e-mails that come to you and induce you to click got -- we've talked about phony e-mails. a common one going around is

summit will going and get an address book and it will get everybody's address book -- everybody is addressed and it will send e-mails out to everybody. usually is something like, sorry to bother you, i'm stranded in paris. can you send me money? often this is from somebody you may have seen yesterday and they were not planning on going to paris. educating your employees about that is important. flash strives -- drives. the was a report outlining what had been one of the major security breaches in the defense department. it began when an individual officer picked up a u.s. peace stick -- usb stick of uncertain

origin and a major intrusion occurred. -gen -- hygiene. you do not pick up and eat everything off the street. this is very, very important. >> a couple of themes. we started about talking of being on-line can help small businesses and guarding against it is necessary. having a cyber security plan is a competitive advantage. not having want is a competitive disadvantage -- not having one

is a competitive disadvantage. if you do not have a plan, you're more likely to get distractions. having a plant is a competitive advantage -- having a plan is a competitive advantage. the stuff is complicated and technical. i wanted to come back to maurice jones. you're not using talking about on panels at the fcc. you have explored this issue. what are the best ways to communicate about these issues with small businesses that are not technology businesses, but that are starting to use the internet to grow their business and lower their cost? what have you seen in your work

be effective in talking to your own employees, talking to other companies in similar businesses? >> sure. thank you again. using the system itself, e- mails. when you get anymore, check the validity. if you received something that does not make sense come pick up the phone and call. make sure things make sense to you. having small meetings. the monday morning meetings. we may talk about things like this. sit down and let people know, if you have a problem with your e- mail or blackberry, let somebody know. communication is always the key. people felt the victim.

it is about communication. checking the e-mail, picking up the phone, calling supervisors and making sure people are what they seem to be. >> it starts with a lot of small businesses, especially ones that are offline business is starting to embrace on-line opportunities. is this all too complicated? how can we make sure that what we're doing is actionable for small businesses? >> i think you're right. the assumption is that this is an i.t. problem. if you lay out simple steps that are inexpensive, businesses will do that. i like the top 10 list that you put together. i have a prop. we didn't internet security

essentials for businesses. security an internet essentials for businesses. educating your employees, making sure they have strong passports, designating someone to handle security, taking control of your network, making sure you of someone who is watching the flow of traffic or the e-mails. then we put into policies and problems. identifying and prioritizing your business information. what is important to your business? defending your company computers. to not be plugging in those free things you get at conferences. that is a terrible idea. think about when you're buying new computers, what are you doing with your old computers? having a plan to deal with if

you get attacked. who'd you call? do you know the groups out there that can help you? a third part is defending your data on the go. for folks who travel abroad, make sure they protect their blackberries. backing up your computers regularly. not just participating in cyber security month, getting information from the chamber of commerce. make sure your folks know what they should do and what they should not do. >> chanelle hardy, can i ask you the same question? what suggestions on how to break through the common concern that technology is for other people, we're not in the technology business so it is not our

problem. >> i think a lot of that gets to who was providing the information and making sure that organizations, individuals that are trusted. part of the rule that the national urban league plays, we have developed services to 36 states, working with small businesses through things like our entrepreneurship center, where we have been in the committee for a long time and they know the information that we're providing is safe and tested. when we can partner with the sec and disseminate that information, then there recognize that we are giving them the same types of useful tools that we provide in our direct services world. >> i want to put a topic on the table. often we talk about small

businesses at forums like this. we have a picture in our head and small business or other offline businesses that are starting to think about the internet to expand their business. more and more, there are small businesses that are on line only. hp, if 100% of those online start-ups are doing everything they can to protect themselves, are they, or is there more work to do among all line -- online start-ups as well? >> there is a good chance they are already ahead of the game. there is a good chance they don't run their own networks. a certain level of security.

their culture is in and they are partnered with folks that have the broad responsibility to party do the security and the availability aspects of the security -- of that business, they are well off in terms of security, but there is always more to do. they have to have a way to switch business to another provider of those services if that provides to be susceptible to a threat like that. it is not like they can turn off the need to pay attention to what is going on, but in general they are more prepared than somebody who is running a less technology intensive operation. >> then the ask dr. schneck. we have heard about startups and the often struggle to raise money and a very focused use of capital.

some of them are young folks starting at of college. how important is it that even young entrepreneurs just starting out, how important is it to stop and say, do have a cyber or security plan as part of my business? so that i am protected. >> i think ann nailed this. this is an overall risk. there was a report that showed around the world a huge increase in awareness of all the attacks that you mentioned today, and then some.

within that increase of spending, some plan was responsible for that. if you look at the spectrum of companies, i had a small company when i was young and i was part of a slightly larger company after that appeared in both cases, security was not a profit center. that was over 10 years ago. the role of a small company is to make revenue and to grow. it insures your trust. it says you're building an infrastructure that is responsible. you are part of the entire infrastructure. we're all connected. if you don't do your part to keep a healthy network, you're endangering all the other companies, big and small. a lot of those online start-ups that leveraged, some managed

security providers we have seen have had issues with break-ins and personal information being shared where it should not be. you do need that plan to shift over. venture capitalists are looking at what your infrastructure looks like. who is your idea guy? how are they locking this down? that is part of the insurance echoes into venture capital. >> i will ask you a similar questions, cheri mcguire. ift of what we're hearing you're a small business and a growing -- whether you're an offline business using on-line, it is important to think about

these issues early because you are not immune from the threat and also because it could become even harder and more expensive to wait and then deal with an infrastructure and try to superimpose security. if you could each, and what you're seeing -- if you could each comment on what you're seeing. >> what i see a lot of is -- more contacts. we serve a number of market verticals. we have numerous security departments across those verticals. in many cases, they are not the same. here is the requirement that you have from your customers and your regulators and this is how you build it into your business and your products and services going forward.

we see the numbers a different way, whether it is is developing products for services, it is always cheaper to build it in upfront. that is critical. the complexity of the problem -- we seek well-regarded security companies are having issues. it is complex and it may seem like something we'll never get past. i like the list of 10 items. there is no end of the information that you can find on the internet about how to secure your systems but little that is summarize that can be useful. another interesting statistics. there is a well-regarded data --

that was just appalls. 96% of bridges could have been avoided by doing a medium ever in security measures -- 96% of breaches. they could have been avoided. >> any small business and those that are working online have to recognize there is a risk. you cannot transfer the risk away just because you have a vendor or someone providing services to you. you still own at risk when it comes to providing a service for your customer. a break in the trust can have a detrimental impact to your bottom line and the survival of your business. from that standpoint, you really need to know what questions to ask of small business owners of your vendors. what kinds of security protections do they have built

into their class services, for example? how do they handle things like data breach that you may be paying them to provide service for profit those kinds of questions that a small business owner should ask. >> what is the class -- what is the cloud? >> the cloud is storage in the cloud. it is a remote way to access your data comes to back up your data, secure your data, to use various applications such as, you know, word-processing, accounting, those kinds of tools that you can access, pay a service provider for, access them from pretty much everywhere. it provides opportunities for small businesses as well as lower cost. they don't have to manage those prophecies, updating of those

applications over time, updating the security. it is all being done at another layer by a provider this small business owner does not have to do it anymore. it is a way to simplify your business, gain efficiency, perhaps reduce costs, be more secure. it is something small business owners need to recognize. there's a risk associated with that. the need to manage that risk. >> there are terms that i think we all use ourselves that we know very well like cloud and malware, phishing, and i'm wondering and i will ask our team in partners to follow up on whether we should pursue ways to develop a glossary, usable glossary that mr. jones with tell us, this could be helpful. that is something we will follow up coming out of this. lemme think some of the staff

that has worked so hard on this. animal jimmy barnett -- admiral jamie barnett. tom reed. our main point of contact for small businesses. the staff of our consumer bureau, also very focused on these issues. a number of folks who worked very hard on this. i want to thank all of you for putting together something that i think has been and will be very productive for small businesses. secretary chertoff, then the ask you a question -- let me ask you a question. it came to us online. more and more malicious

attackers are compromising small business web sites by leaving the compromise site unaffected. attackers -- redirecting others to malware. the owners have little resources to scan for and correct security breaches which dealt primarily affect their sights. is there a role to discourage these? that is a great question. dr. schneck touched on this earlier. they are controlled remotely and can turn them into an attack. this is a challenge that we have in cyber security.

obviously there is an incentive to protect your own system against being compromised or degraded in some way because there is an economic loss that you want to avoid. what do you do when the attack on your system will not actually result in a negative consequences on your system, but rather a negative consequence on a third-party either because it is used or sicken or remotely or because it becomes a way to embed malicious code in the network of the third-party? this may not have an incentive because it is not feeling the consequences. the consequence is being felt by a third party. this is an area where people may find themselves facing lawsuits because the victims may wind up suing or complaining about the website the was the source of the attack, even if it was in a sense. -- even if it was innocent.

liability exposure and even some regulation to make sure people are properly incentivized so that their own networks to not become a weapon against some innocent third party. >> a very practical question. al kinney. this is from someone in our audience here. if my business is under attack, and who'd you call first? -- do you call private experts? a very practical question. >> thank you. the first thing is to make sure that your business can still run. that business is important to you. the employees that you have. once you look at that, the technical experts that you have

established relationships with during the course of planning for your cyber security and next, those are the people that you need to call. law-enforcement needs to be broadened in concert with that to this problem. -- needs to be brought in. there are some immediate things that you should do with that information to make sure that you preserve it for law- enforcement but also provide continuity for yourself. so you should switch over to your backup systems. if you have another place the year of made an agreement with to help you with your business. you need to switch over there quickly. theneed to perhaps unplug internet from that system. unplugging from the internet can provide some protection for you so that you don't continue to

bleed information over the internet. you need to find a way to enact your plan of communication. the customers know that something is going on and you have the responsibility to protect their information and describe for them the types of risk that they may be incorrect because of this problem. it is an integrity issue that every business wants to make sure that their brand is top notch on a good day and a bad day. be honest up front. >> excellent. dr. schneck. for companies that use smartphones for employees, or whether any special precautions to take? >> thank you, mr. chairman. i was in georgetown a month ago

-- smartphones are an extension of every other piece of technology that we use. they have an address. they do have additional information as to where you are. precautions go to consumers asian -- consumerization. shiny objects that everybody would like to use. they play and reedbirds -- they play angry birds. what we're facing right now is a huge increase in malware is directed to mobile in this country. and then start looking at how we can lock those phones down but make them adaptable. make it so the consumer, the small business consumer, the military, all those can work with the smartphones and still

be secure. everything with an i.p. address, you are connected. and they are connected to you. on the plan to respond to a breach, the fbi and secret service have done an amazing job of our reach to the private sector. as part of your plan, build in a relationship with law enforcement, secret service. having that law-enforcement in that list of cell phone numbers on a first name basis on who to call so that you could help drive the investigation. you know when you can unplug stuff and you know when to preserve that information frantically. >> if i could just add to that. we have seen an explosion with the use of mobile devices.

the simple thing is to make sure you have anti-virus or security virus installed on your smartphone. that is a simple thing you can do to protect yourself. second, use the same kinds of common sense precautions that you use when you use your laptop or your desktop at home or at worked. do not click on those e-mails that you do not know where they came from for sure. do not go to those websites that maybe are not totally trusted. use the same kind of common- sense principles when you're using your smartphone. >> that is very helpful. this is been very productive. i thank you all. we're getting near the end. i like to ask each of the panelists to provide one piece

of takeaway advice to small business owners who are watching this panel or will come to later. we have our tip sheets. i'll start with mr. jones and go round the table and then we'll skip secretary troth -- secretary chertoff. the question is, talking directly to small business owners, one piece of actionable advice, something they can do today to help protect themselves and sees the benefits of online opportunities. >> educate yourselves, education is out there with a great use of the internet and give you things like googl searche and you can find out things in five or 10 minutes back and make your day a lot easier and more comfortable

to understand what you are dealing with and understand what kind of simple things you can do to protect yourself. believe it or not, the list of top 10 may take you know more than half a day to look at and organized in an effective way that can help your business wants to understand what is your business is subject to. >> excellent. >> very similarly, this is a competitive advantage and a competitive disadvantage for the list of 10 is only good if you execute around it. i would suggest that anybody take that list of 10 or other resources they can find and do something that creates value in their business for their customers. unless they act and act quickly, it will be a disadvantage. in this environment, nobody needs that. >> the first step in cyber security for small business is all about relationships. you want to be able to impress

upon your employees their responsibility and give them the ability to perform a task they need to do and work with law enforcement and other industry groups to understand what is going on in the environment and what the tip of the date is for how they protect their networks and you need to be involved with industry at large so you can invest with capital funds are operating funds as needed to further secure your enterprise. it is all about relationships and knowing where to go and when to go there. >> what actionable piece of advice do you have? it be a deterrent to you're making maximum use of the opportunities presented by the internet and make sure use the education and resources that we are discussing today to allow you to continue to grow and expand. we have seen tremendous growth, particularly in minority-owned

businesses in the last few years. many, many single employee businesses. it is a real answer to a lot of the challenges we face in the employment due to the recession. knowing how to empower yourself, to not allow concerns about cyber security slow down and limit your business is critical. >> thank you. >> they should implement the top 10 sec recommendations as well as the chambers internet security guidelines. those are simple steps and they are inexpensive. is far less expensive to invest an internet security now than to lose trust business and partners later. >> recognize you have a risk first and second, don't ask before it is too late. insure that your information is protected completely, get your employees involved, get them trained, tester plans frequently, review and update those plans on a regular basis,

and lastly, don't be afraid to change with the evolving technology. that will keep you safe in the long run. >> all good suggestions -- i would say in closing, now what is valuable to your business and no if you lost information or intellectual properties and you can no longer function, now were that bad and that gets lost in the day-to-day operations. make sure your increasing revenue because sometimes we forget the bigger picture. until you really sit down and realize that, this can go a long way to protecting you. >> it is a lot -- as a way of getting a lot of value of getting communication is to take a leadership position in your sector. whatever kind of business you are in, had that business be a leader in implementing security.

you can find pretended security at could bulk rates and you can get informational relationships that will protect you and your customer and her brand. >> secretary chertoff, please offer actionable advice but also if you could put this into context against the backdrop of a broader cyber security issues that the country faces along with the broadband opportunities that we need to seize, what are your thoughts? >>two little actionable tips -- be mindful about free wi-fi. people have the ability to collect information off a free wi-fi. there is little in life that is actually free except for your family members. second, when you have your employees, there are capabilities that and now you -- enable you to the disabled in of late. watch out for lost devices.

i think this program is vital because you have given small businesses actionable advice that they can use to enhance security and that will benefit businesses individually. in a larger sense, a huge part of our national economy now rests upon the ability to operate on-line whether you are a business in the physical world or exclusively on line. you cannot really compete globally without the ability to use the internet. that means it has to be trusted. it means we have to safeguard our intellectual property. people who work about -- a worry about our national security are aware that enormous amounts of very valuable intellectual property is being stolen all the time by people who are acting as criminals or even seeking to help overseas competitors. the ability to protect against that and make sure the benefits

of the internet are available throughout the country so that we are on the cutting edge of the global move to internet and cyber communications, i think that is the number-one priority for the national economy over the next 10-20 years. these efforts are a big part of moving the country forward to compete in what will be an exciting but also challenging global economic environment. >> that is very helpful. thank you so much for taking time to join us today. each of you are all playing a very important role in our broadbent economy whether it is building businesses and employing people or whether it is advising them or whether it is building and marketing the security software that companies can use, the chamber, the national urban league working with small businesses, all of you, thank you so much for taking the time to be here.

i want to thank the staff again. let me conclude with a couple of observations. high-speed internet, broadband for small businesses and large is really the platform for our economy for the 21st century. no less so than electricity and telephone service were in the 20th century. imagine thinking that you could run a small business without a telephone or without electricity. at some point people did. small businesses seized those opportunities. we are in the middle innings on small business is getting to the point on broadband where we have gotten a telephone service and electricity and it is important

that this platform become available to everyone and it be seized two of them to our economy, growth businesses, to compete locally, nationally, and globally and to save costs and become more productive. we have to take the risks that come with new technology seriously. their respective the telephone service. the risks the kindle electricity. there are risks that come with broadband service. what we have tried to do today with this group and the work that has gone in behind it is to help busy small businesses manage these risks. so vacancies the opportunity of this new technology for their businesses and economies. i thought the data point that stands out for me today is one that 50% of small businesses don't have security plans.

50%, each of the businesses that does not have a security plan is at a competitive disadvantage in and is that needless risk. you can't address every risk but there are many risks that small business can address. everyone on this panel agrees that it is not an on/off switch. we have to do everything we can to improve our security profile and minimize risk. we can't eliminate them but we can minimize them. my closing actionable thought to small businesses is have a plan. we have given year the draft of a plan. with this one page cyber- security to small-business is, take a look at it and look at the resources available at fcc.gov. you will see a lot of material there. you will see similar information on the small business administration website and other places.

we are trying to do the opposite of confusing people with inconsistent information. we're trying to focus small businesses on a small set of actionable things. give us your feedback on that because that is what we wanted to and we know we can improve every day. thank you to all of us for joining here and joining at home or at your business. i look forward to part two of what i thought was a very successful forum today, so thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

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>> "washington journal" continues. >> our guest is the washington editor of the fiscal times. he is here to give us the nuts and bolts of the debt ceiling. for the people at home, if you have not seen as, it is quite a model.

it speaks to this $14.3 trillion number. it is fun to watch but the serious underlying issue. what is the debt ceiling, and how did it come about? guest: it is the statutory limit on how much the treasury can borrow to help run the government. the fundamental reality on all of this is that in times of war, economic upheaval, difficult times, the government is essentially spending a lot more money than it is taking in. it has to borrow money to keep the government afloat, and this is done by the treasury is selling -- issuing bonds, notes, whatever to private individuals, sovran financial institutions, governments, who

ever is interested in buying u.s. notes. u.s. notes are the gold standard internationally. that is how we operate the federal government. host: take this number, $14.3 trillion. give us some perspective. how did it get to be at that point and what does it mean in terms of the u.s. economy? guest: i obviously, it is at historic levels. if you think about the history of the united states, we have always borrowed to operate the government or to wage war. this goes all the way back to revolutionary times when the continental congress had to borrow money to wage war with the british. it took probably 30 years before the federal government under a system set up by alexander hamilton was able to pay off $75 million in debt for the revolutionary war. if you look at the history of

the united states, the debt rises and falls sort of coincidently with major wars and economic upheaval as i explained. if you look back at what happened in world war i, the civil war if you want, the great depression. federal debt inched up words to as much as 30% of the gross domestic product of the entire u.s. economy. more recently, during world war ii, and just a few years ago in 2008 during our financial crisis, dead as a percentage of gdp went up to 100 percent -- debt as a percentage of gdp went up to 100%. there is sort of an interesting

dynamic and graphic line in terms of spending money. really, in the last two administrations, we have seen enormous amounts of money added to the debt. paul ryan was on tv over the weekend. he was asked, who is responsible for this huge federal debt? is it democrats or republicans? he said, both parties are responsible. if you look at the budget ministration, they added $5 trillion in debt at that time. obviously, that was because we were waging two wars. there were two major tax cuts. there was an increase in the medicare prescription drug program, none of which was being paid for, all of which was being put on the government credit card. president obama has not finished his first term in office yet,

but he has added $3.6 trillion to the debt. but again, we just went through one of the worst recessions in modern history. we're still continuing to wage two wars, so unless the taxpayers are willing to foot the bill for this and pay more taxes, we're going to continue borrowing to operate. host: let me jump in and get the phone numbers on the screen again for our guest, eric pianin of the financial times. if today is the big day to hit the debt ceiling, what does this mean? what happens next? guest: it is an important moment, and it should not be taken lightly. the fact is that the treasury is now bumping up against this $ 14.3 trillion debt ceiling, which includes mostly public

debt, which is borrowing from outsiders, foreign countries, whatever, and probably one-third it is just the government borrowing from itself, dipping into other accounts like social security trust funds to come in a sense, borrow money to operate the government on a day-to-day basis with the promise of repaying those ious. part of it is an accounting fiction. it is an age ago approach to governing. revenues come in. revenues go out. we borrow the rest to cover our obligations. yes, this is an important day, but this is not the first time we have had a crisis of this sort. in the past, the treasury has been able to find or use a number of bookkeeping gimmicks, ies for, in atrategy'

sense, gaining a little more headroom. we're just about bumping up against the ceiling, but with some of these strategies you can buy some time, and that is what the treasury is doing. host: every year congress raises the debt ceiling. what is different this year? guest: congress does not raise it every year. it does it frequently -- or i should say regularly. the last time it did it was shortly after obama came into office. what is different this time is that we are in gauged in a very difficult -- engage in a very difficult battle between republicans and democrats. republicans are trying bloodlines in the sand,

demanding huge spending cuts as the price for raising the debt ceiling. unfortunately, some people, newcomers mostly to congress, are not taking it very seriously. they're wondering, who cares if we default on our debt? host:that should be a t, not a n the screen. the debt ceiling was last raised in february, 2010. $14.3 trillion, with a t.

republican caller, go ahead. caller: where is the omb on this? are they not the ones that are supposed to approve budgets and spending? obama, from what i can tell, since he took office he has run up the budget. three months into his presidency, there is no help for him. people have a vision of helping their cells. -- there it themselves. guest: the office of management -- jack lew, by the way, but runs that. he has been around for a long time.

he worked for the clinton and ministration. there are budget negotiations going on right now. vice-president biden is overseeing a group of six house and senate members from both parties trying to come to terms with some kind of spending cut agreement that would satisfy republicans and gain enough support to pass a new budget and also for the coming year raise the debt ceiling. today, officially, the treasury is bumping up against the ceiling, but they're buying a little more time, probably as much as two months' time in order to negotiate this deal. omb is a player, but this is -- what we're talking about right now is the treasury, which bars all this money, what they're doing to put off -- barrault's

all this money, what they're doing to put off -- borrows all this money, what they're doing to put off defaulting on all this debt. timothy geithner, ben bernanke both have warned that we're playing with dynamite if we allow the government to default on its borrowing. host: what is the dynamite? what is the immediate impact of something like that were to happen? guest: you have to keep in mind, we're just coming out of one of the worst recessions in u.s. history, certainly the worst in modern times. the recovery is very fragile. unemployment is still a big problem. markets are doing better, but everyone is very skittish. the notion of the u.s. government, for the first time in history defaulting on its borrowing, could have enormous

psychological impact on the markets. it could shake up the confidence of our creditors overseas, including the chinese and the japanese and the british and others. they own a major chunk of the public debt. if that happens, for example, they may lose confidence. they may ask the federal government to pay them more in interest on their borrowing. host: much is made of china into we owe money to. this is a chart we can put up on the screen. china at 20%. then the uk. then brazil. we will look at the leading foreign holders of u.s. debt. and we will take a call from

north carolina. how many bonds would it take for the taxpayers to buy to bring the debt down? guest: well, the problem is less getting people to invest more in the country. and the challenge is to get the government to spend less. and address the fundamental reality that we're continuing to spend a lot more money than we're taking in. we have seen a steady rise in the federal deficit. the deficit is the annual difference between revenues taken in in money going out in terms of outlays.

if you look at this year's budget for example, we are projected to spend 3.8 trillion dollars. we are projected to take into 0.1 trillion in tax receipts. the steps it is 1.6 trillion dollars. -- the deficit is 1.6 trillion dollars. a lot of people are saying we have to come to terms with the drivers of the deficit. that includes conducting wars without paying for them. that includes maintaining costly tax cuts, costly to the treasury. that means addressing entitlement programs. we are an aging population. more and more of us will be collecting social security and medicare. baby boomers are retiring. these are all things that the

parties are trying to impress in congress right now. host: indianapolis. republican. scott, good morning. caller: i have trouble with the word entitlement. i have taken social security since i was 10. it is not an entitlement. i have probably contributed quite a bit of money since then. -- and i have been treated to social security since i was 10. -- contributed to social security since i was 10. they are calling it entitlements like we are drags on the economy. we are fleeibeing blamed for a completely inept government.

we're blaming other countries for our problems, however, we are a problem. we of a completely inept government. that is what caused the uproars over the past couple of months. guest: it is a point well taken, and people should be more careful on how they entitlement things. -- on how they entitled things. those people have paid into social security most of their adult lives. it is something they are entitled to draw down on in their entitlement years. there is also fiction about the social security trust fund. i think a lot of people mistakenly think they are paying into it through the payroll tax, the money is going into a vault and being kept there, and when they finally retire, they can draw down on the accounts and

sustain themselves, but the reality is that those tax revenues flow through this also security trust fund and its flow right into the fund and are on a daily basis to keep the government going, to keep running government programs. with the federal government a vaultbehind iou's in somewhere in west virginia i am told. with the understanding that when the time comes the government will cover bustles with security costs. but what people are worried about long-term is whether the government is corn to be able to cover all of those costs, especially as more and more people are retiring. host: as they discuss the debt ceiling today in washington, there is this headline.

what are the accounting moves that can happen between today and the next couple of months to keep things going? guest: the important thing and buying more time is not to borrow more money. as to borrow more money, that adds to the total debt. there are a number of strategies. for one thing, you can redeem the bonds and loans and assistance to private companies as federal bailouts. you can redeem those, and are redeeming those you bring down the amount of debt so the ceiling sides to come down. you can encourage states and federal government accounts from investing in federal treasuries

for a while. then you can invest in treasuries, and we will make you whole if you have lost any interest or anything while you're waiting, we will make you whole on that. that is sort of what is going on right now. there are five or six different state and federal retirement funds, money market accounts, monetary stabilization programs that hinge on investing in treasurys. they are singh put those on hold so we do not push up the debt any further. >> our guest touched on this. -- they are saying put those on hold so we do not push up the debt any further. host: our guest is with "the

fiscal times." learning more about the debt ceiling. we're finding out more about what this means. caller: good morning. mr. eric, is it best that we've united states worked out a repayment with our creditors rather than continue borrowing more money. this is what citizens are told to do when we overspend or run into the money shortage. host: that is an interesting question. guest: everyone agrees we have

to get our fiscal financial house in order. the problem is right now we are forced to borrow between 1/3 and a half of all the money that we are spending in an annual year. we just do not have the revenues to cover the expenditures. either you have to drastically curtail or cut back spending or you have to find ways to raise your revenues. americans do not want to pay for more taxes. they want a balanced budget, but they're not willing to give up the programs near and dear to them and their communities. is not all that easy. even if he decided to go on a diet, a fiscal diet tomorrow, the cannot go cold turkey. you can say i am not want to

borrow any more, when you're generally barring half of the money your spending. you have to figure out a long- term plan for getting off that track. host: tennessee, republican. caller: we have had a congress for years that has not done their jobs and oversight. no matter how much money goes into washington, they find ways to make waste, fraud, and abuse. there is no oversight. i would like to know where all the tarp money has gone that was paid back. where is all that money? it will never be enough. there were firemen and policemen in texas that opted out of social security. they have done with better than

people on social security. it will never be enough, because there's no oversight of the money that comes into washington. host: trying to follow the money. guest: you cover the loss of ground. one thing about tarp, republicans in particular for beating up the administration on it, but the fact is that the treasury has gotten repayment for a lot of the emergency money that it put out. in fact, in a number of cases it made a profit. there is still some major cases insurancelike abovaig

involving billions of dollars, and it is not clear what did the united states will be made whole on all of that, but in terms of the bailout, it has not been a huge negative. oversight, you are right. it goes beyond the bailout. it goes to some of the biggest spending that we do, like defense spending, homeland security spending. secretary gates was on cbs over the weekend and was acknowledge in there are huge areas of waste in the defense department. lots of weapon systems. jetfighters, aircraft carriers that are no longer necessary, depending on who does not want them. there are huge constituencies and a number of spaces were those projects generate a lot of jobs. it is hard to root out some of

the biggest drivers of deficit spending. my suggestion is that as a good area to be looking out along with homeland security. >> prior with any breach that the government could occur, what is the practicality of the impact on the markets or to the people? >guest: i do not think there is any immediate impact, other than nervousness. as you know, the markets are very skittish, and it does not take much to set them off. i would not be surprised to see some psychological effect on the market. as we get closer to august 2, which secretary died near said is the drop dead -- geithner sen deadline.delsaid is the

i think john boehner and mitch mcconnell are serious when they say the last thing they want is the old on u.s. debt. i think there will be a big push to find some kind of accommodation. we have seen this before. the debt ceiling is a great vehicle for pushing your agenda, and both parties have it shamelessly in the past. they are using it again now. host: if they were to default, does that mean a government shutdown happens? guest: it does not mean a government shutdown immediately, but it does mean they have to look to other steps, including selling off assets. i think you mentioned talk about maybe selling off some of

the gold reserves. there're other things they can sell, including student loan holdings where they would be generating some money. then you have to start prioritizing your spending. you cannot borrow to continue spending in the third of your expenditures are borrow money. then where do you begin? salsa's security benefits? veterans' benefits? all of these things would be suddenly aly be on the table. host: this coming mostly from conservative economists. maryland is on the line from dallas, texas. caller: your guest made a good point earlier that we do not have enough money coming in to cover what we spend. all of the offshore tax

accounts, all of the corporations that are not paying their bills, even in the past congress has had no problem raising the debt ceiling until now. i have never heard of this kind of argument. and i and think because this president obama that is in office, he is trying to clean up what he inherited from the previous administration policies. is that not part of the problem? guest: i will agree with you on one thing you said it come in maybe disagree with another. you are right, there is so much tax evasion, so many offshore accounts, so many loopholes and the federal tax codes that the treasury is basically only collecting a fraction of the potential revenue. i think that administrations in

the past have tried to maximize tax collections. i think we will be seeing more of the spirit of congress just passed a law that would make easier to crack down on this. -- i think we will be seeing more of this. congress just passed a law that would make it easier to crack down on this. you have to track this back to the clinton administration when the government did shutdown, and the republicans, newt gingrich and others refuse to raise the debt ceiling until they could extract concessions from the administration on spending. robert rubin, who was the treasury secretary of the time, came up with the number of the gimmicks that we discussed earlier that enabled the government to operate for an additional 4.5 months before it bumped up against the debt ceiling.

timothy geithner is using similar tactics now, but the debt is so huge it sort of overwhelmed any of these steps, so most of the two months of extra time before they crash into the debt ceiling they are being. host: dayton, ohio. steve. good morning. caller: i keep hearing about corruption and medicare. i know there is corruption in social security as well. isave a neighbor of ththat diagnosed with bipolar, and has never suffered a manic episode. now we have the russian mafia coming in. why can't something be done about the corruption, then cutting everyone social security and medicare?

guest: that is a good point. there is a lot of fraud, and it is done not only by the patients, but the doctors and hospitals. earlier calller was talking about the need for more oversight, and i could not agree host: more about the debt

ceiling now. joining us at the table is a senior fellow at the peterson institute for international economics. we are also joined by a senior fellow at the george mason university. let's begin with the immediate debt ceiling. the immediate implications of today. tons of headlines reaching the debt limit. what does this mean to you? guest: i do not think it is a big deal today, but it is emblematic of a big problem. treasury secretary governor has said there are quite a few things he could do to postpone any problems today. i think he has done quite a bit more than he said he could do.

the problem has to be dealt with at some point pyridi. guest: the short-run issue is how treasury can economize on cash so they do not have to borrow. there are lots of assets like and move around to avoid the debt ceiling. the bigger problem is the budget. how are we going to deal with our budget deficit going forward, and that is a much more difficult problem? host: 2 are second-guess, what do you suspect other countries around the world are seeing as they viewed the situation here in the u.s.? guest: i do not know that other

countries have short-term memory loss or whether they follow or inform themselves about what has happened in the past, but we have been down that road before. there is an understanding that there is way more than secretary has claimed he can do to get is in a bad situation. there is also the understanding that congress will also try to avoid as getting complacent. the more important question, and i will agree with your guest is the fact that the budget and what we're going to do for the long-run is what is really key. the debt ceiling is nothing but

leverage. host: phone numbers on the bottom of the screen as we continue to look of the debt ceiling. they have reached the debt ceiling today. all the second was the date that was put out there as a drop dead date. what does that mean exactly? guest: i do not think it means anything, especially considering that the secretary has already changed the date four times. d we will default for sure, and that it was may, july come august. the worst-case scenario is supposedly the fault. there is no way we would get there. host: help us understand what the fault meadefault means.

guest: that would be of interest payments became do and the treasury was not able to pay the owners cash. that would be -- secretary said that is unthinkable, and i believe it is unthinkable. he raised this as a concern, but he actually is not saying he will default. i think what he actually -- i think what would happen in the worst-case scenario is a partial government shutdown. guest: i totally agree. what needs to happen is we pay interest on the debt. we have enough tax revenue coming -- the government collects revenue on a daily, monthly, yearly basis, and we have a way more to pay the 200 million to actually never have to really the fault on our debt.

that is a key message to send to the american people. one of the main headlines today. our guests are helping us to understand the debt ceiling more. our guests are joe ganon. let's start off with marty on the republican line from pennsylvania. good morning. caller: good morning, and think you c-span. i have been holding for about 20 minutes now. -- thank you cspan. the point was just made that as and as the debt ceiling i

the chatter about a false, i just do not get it at all. our receipts is about 2.2 trillion. 0.2 trillion or 200 billion has to go to service our debt. wire talking about a default? is it just a certain prioritization that is being picked to politicize? -- why are we talking about default? why is everyone talking about a default on the debt when we are getting 200 billion from service over bringing in two trillion. and i just cannot understand why all the chatter about defaults? guest: it is a very good question. the short answer is probably politics, and also trying to get leverage on things going on the

part of the secretary. the issue of the debt ceiling is a completely bipartisan one. each time a party is an office and is about to hit the debt ceiling, they work very fast to save the default threat. a reagan did it. everyone has done it. as long as we pay interest and the principle that is coming due, we will not default. to which the secretary says that any default, any default on the obligation would be the default, i do not faul agree. we have lots of reserves that we can use. i suspect the american people understand there is a difference between you telling someone

you're not willing to pay them and actually telling a bank and credit-card company or the person was lending you money for a loan that your not want to pay them. not going to pay them. would agree. the fault would be the worst thing we can do. -- default would be the worst thing we can do. there are plenty of assets. $200 billion worth of gold. $200 billion worth of mortgage- backed securities. there are bunch of other things. host: new bedford, conn. abraham, think you for waiting. -- thank you for waiting. caller: i am independent.

it looks like we're playing politics with our lives, a politics and everything. they should quit bickering and go ahead and look at what is happening. the citizens, everyone is suffering economically. my point is that they should come to an agreement, work together, not be fighting on these things. guest: you make a very good point, and i am with you. this is what i want, but the nature of politics as winning the next election. whether you are a republican or

democrat. that means looking good at all times, even if it is not necessarily good for the country and taxpayers and citizens. unfortunately all of the bickering is a product of this. all the bad laws and bad policies we're getting is politics. host: this is one of the stories out there today. "the washington post . " " "sell the gold." what are the implications? guest: obviously a large sale in a hurry might push down the price. one solution to that would be if the government wanted to buy a little time the federal reserve might agree to buy the gold. the idea that they might sell it

down when the problems stop pyridine there is only a current crisis, for under billion dollars worth of gold, which is only a quarter of the budget deficit. it does not get to three months. >> also, the u.s. is the biggest owner of gold. it is not even going to be 400 billion. more importantly, the real solution to the problem is to address this long-term. we are on the way to not having a budget for two years. without a chance of it going down. this is what needs to happen. host: to california where george is calling on the republican line. we're talking about the u.s. debt ceiling.

caller: one suggestion for c- span is maybe you should give the guest a pad and pencil. so many times they avoid the question by saying you put a lot on the table. host: they both have pads and pencils. caller: i think the political and social the bite is not getters.immes and 47% of the working people pay nothing. they get the full return. people are calling in and telling everyone that they are justified in taking others hard-earned dollars. i have never heard such a thing. where is humility? it seems to me it is a tough sell attempting to tell the

successful to hand to their hard-learned dollars. my big question is could anyone please -- if 47% of the people were paying taxes, maybe we would have a chance at it. the more everyone pays, the more the democrats spend. and if you could justify where is it written -- the excess and entitlements is amazing. the cruise lines, the franchisees are full. the casino is nuts. they have $500,000 that are not even growing a tomato. where is it written in about mcartor, the 10 commandments, the constitution that i should get my money, which should be slated for my next generation, to some other people? guest: first, i would like to

say that i agree. i think everyone should be paying some taxes. the reason why 47% of people do not pay the income tax is because congress, and most of them are very poor people -- it is up mostly very poor people. it is because congress distribute social benefits through the tax codes. we can debate whether it is a good thing or a bad thing. guest: i do not know anyone in this country who does not pay taxes. everyone buys things that the store. everyone who buys gasoline. everyone pays taxes. and i think it is only fair that those who make more should pay more, and i do not have a problem with that. those who do better, pay more.

host: we will stay with our guest for 35 minutes or so. sean is next. caller: i have so much to say. host: are you still there? he had a lot to say, and he dropped off. in we will get to dawn on the republican line from pennsylvania. no donna. let's try topeka, kansas. kevin is calling from topeka. caller: good morning. i would like to know how come i have never heard about this during the bush administration? eight years of destruction and not one word about the debt

ceiling, and i just cannot understand that. can you give me an answer on that? why all the sun with the obama administration is in office we have had problems with assailing being raised? -- with the deficit ceiling being raised? guest: it did come up actually. guest: each time there is an issue with raising the debt ceiling the party he was in the majority is in favor of raising it, and the party in the minority is against raising it. in 2002 president obama voted against raising the debt ceiling. it has always been a very partisan issue. over and over again. in the debt ceiling has been raised at 10 times in the last 10 years. there has been a lot of talking about the debt ceiling. host: there is a story, one of

the many in "the new york times" automatic cuts to curb deficits. --ey write tha wanted to get your take on this idea of triggering action when some of the goals are not reached, but because the article points out of the folks back here cannot get it done, something automatic should be put in place. guest: i would agree with that. i think it should include both spending cuts and tax increases, because there is no way we will solve this problem entirely on spending cuts, given the

tremendous increase in aging of the population that is raising spending requirements for retirement and health care. at some point we will have to have more tax revenue. guest: if you want to simplify the base and get rid of the tax reductions, i would like to see serious reduction in rates. basically a fundamental tax reform. this was a revenue on the table, but spending is really what put us in this situation. whether it is wars or education. much of the spending on things that we like, but we have done in ways that has been very unreasonable. obviously auto pilot-type programs are a big problem. they have been increasing the eligibility. promises have been increased without ever really considering who would go to pay for this.

it is time we have this actual honest debate. we want all people to get money, but we have to realize who and how is going to pay for it. it will be the young regeneration, and that has real consequences. host: more headlines. usually natural allies, the tea party and business party are at odds over how to raise the national debt ceiling. paul krugman writes about what he sees as americans being held hostage.

what will happen at the ceiling is not raise? any reaction? guest: i have spent all lot of time, i have researched the past two years looking at the literature of the implication of debt on the economy, the implication of the reaction of investors to spending and to big

deficits, and i think there is a pretty big consensus that there is a level where it debt and deficits hurts the economy. more importantly, there is a very good paper that does come out called "a decade of debt." what they talk about is the impact on interest rates of having sustained level of debt. they say it is increased debts that speaks out investors. guest: i would say totally agree with she said about thadebt. i do think there is a question as to whether our taxes too high or spending too high? it is not clear to me that the

position that you cannot raise taxes at all does not make sense to me. i would rather do it by broadening the tax rates. after about the point i wanted to make. -- i forgot the point i wanted to make. caller: good morning. and i have a quick statement or story. my son moved to georgia when he was 20. he made $7 an hour and shared an apartment. they started lower-paying jobs. now they are making a comfortable living they paid $7,000 in taxes last year. the first thing they did with

the spending packages to give welfare recipients more per month for food stamps. why is it fair to people in that income tax range of have to pay for everyone else? number two, 64. since the time i have been working, so security and medicare i have put to wonder thousand dollars in between me and the company. give me my $200,000 tax-free. this whole thing is getting ridiculous. they keep giving away money to the people who do not work and are not productive. guest: i am afraid i have to say i do not agree with the calller. the system is set up to benefit everyone. some people are able to do quite well. we have government that enforces laws, rules, contracts. it seems to me only fair that those who make more should pay

more. i think that is of fundamental principle i should believe in. guest: it is the case that income taxes extremely progressive. people who make more pay more. i will also agree that there is some profound dysfunction in the system where very often you end up taking from people to give them back a share of the money. this is why in my ideal world that would be a priority. host: stephen, independent from indianapolis. welcome to the program. basically, my comment is the relation of federal deficit spending is related to the the value of the u.s. dollar. in if the dollar crashes, we will live 25% of the standard of living. i do not believe we need to

raise the debt ceiling because we will risk crashing the dollar. that is why gold has gone super high. instead of that money reinvested back into the economy, it has been reinvested into gold. australians own most of the world gold. they mined most of the world's gold. host: explain the impact of the dollar on that. guest: anything that poses a risk to the u.s. economy, some people worry about that. if it did happen, it would be catastrophic. one thing i would say is -- and this is an area i have done most of my research in it -- up to a certain point, and surprisingly the decline of the dollar would be a good thing for the u.s. economy now is not taken too far. in a total crash would be

another thing, but we have never seen that in a country that had sound policies. obviously the debt problem has to be resolved. guest: i totally agree with you, but i think there will be dramatic consequences on the dollar also if we do not reform spending. there is a moment where investors will understand and perceive us as a very high risk. that is a bad thing. we cannot continue on the path. host: to the spending issue, the lead headline -- this has drawn a little bit of attention this morning. debt talks target federal pensions. is that a good way to go? guest: i read that article, and

the thing that shocked me the most is they presented it as employees increasing contribution being a pay cut. it is not a pay cut when you are contributing to your benefits in the future. the pension problem, when you look at the financial statement of the united states, but retention a car for 5.3 trillion dollars of debt. -- but the federal pension accounts for 5.3 trillion dollars of debt. we hashould have started 30 years ago. guest: i do not a strong view and what we should cut.

i do not work for the government anymore. host: beverly. good morning. caller: you guys always have the greatest show. you are more educational than any other show out there. i have a little thing with a fellow there. you were talking to a couple of the other fellows who call been about how you should tax the people that make for money. there is a large percentage of the taxpayers in this country that do not pay taxes, okay? i do not even consider myself middle-class even more. cut to 30,ours were and i am ill. you are talking about cutting something that i paid into all my life. give me a cash out and that will take the money and run. number two, you will never have

this in the country, because one party has everybody believing that the other party is going to make everyone died because they're not going to get health care, they're not going to take care of the children or education. why don't we do this right and have a flat tax? nobody gets a return. i do not know what number do could use, but the money goes straight into the federal government's bank, and nobody gets a return. we could eliminate the irs. that would help the debt, too. guest: i would support eliminating the income tax if they could collect everything through failed taxes and other taxes. let me say on your question about medicare, this is a bit out there, but i totally would be opposed to cutting medicare,

and at least one of the proposals out there would eliminate medicare in proposed -- replace it with a voucher where people could shop with health-care. i think that would be tough for many people to pay up to 30% of their health-care insurance cost. i think a better option would be to find a savings. we waste by% of gdp -- 5% of gdp. my doctor spends a third of his day arguing with insurance companies. that is just pure waste. guest: i am in favor of consumption-based tax in general. i think that it is an easy talking point to talk about eliminating waste in order to address the expanding spending.

we have this gigantic increase in spending, and we will have to deal with it, and of course the politicians and people who do not want to feel any pain, but some people will have to feel the pain, and obviously it should not be the people who the program was intended to serve, which are people who need the money, poor people, and needy people. it is unrealistic to think the system can continue and it only will address it by getting rid of waste. guest: i would disagree with the other guest. other countries with equal or better outcomes with health care in this state. we know within the u.s. some companies treat people better with less money than other companies. we need to figure out what the

other good companies are doing and make the other companies follow. it is possible. host: next calller from alabama. hello. caller: i have been listening to you all morning. when you talk about cutting the va benefits. i am a disabled veteran from vietnam. they talk about cutting our pay, cutting medicare, and all these people that got wounded or messed up in vietnam, that is all the have to live off of is there check they get from the government. they start talking about the benefits, medicare, i do not know what will happen in this world. we will not have enough money to live if they start cutting our pensions. guest: no one is talking about cutting benefits for people who

really need it. no one is talking about cutting these benefits. more importantly, one of the cases i am trying to make is because we are overextended, and actually high-income people are getting a lot of subsidies from the government, whether it is in the form of free museums, and a lot of that is seen as corporate welfare. there is a lot of focus on helping the people who truly need it. host: next call is from anthony. caller: i agree we can not default on our national debt. that would be ridiculous. exceptne has term limits an congress. why not have a 12-year term limit? that would solve some of it. i have never heard that on the tv yet, except for today.

host: another idea, a term with its. that's go back to learning more about the death. how do other countries do with the debt? -- let's go back to learning more about the debt. guest: a study by the g.a.o. found only one country does it the way we do it, which is denmark. most countries when you pass the budget includes authorization to borrow as much as needed to fund the budget, which makes a lot of sense to me. it seems the whole debt ceiling thing we're facing now should be rolled into the 2012 budget, and in both of those should be solved together. guest: is that of the argument on vader is making right now -- is that the argument john

boehner is making right now? guest: i agree, but i have not heard him say that. i want to see the debt ceiling went to how much the government can spend. right now you tend to have these things totally disconnected. government makes a lot of promises but some good about things they will give to people across the board without ever having an idea on how this will spend. we have reached a situation where the real problem is we are scheduled to spend 3.7 trillion dollars and only cut 2.2 trillion. you could blame it on the recession. it is a real problem. the american people and those it is not how it works of their household. when my income goes down, i cut things, even things i like. host: 15 minutes left with our

guests. macomb, illinois. what would you like to say or learn about the debt ceiling? caller: i just have a comment about i agree with that guy. if he is making $80,000 per year, you should pay more taxes. that is all i have to say. thank you. host: helen on the republican line. good morning. caller: i would like for your guests to comment on two things. how much would we save in interest as we lowered the debt ceiling? that is an easy way of paying 43g it we're cents out of every dollar, if we lowered it down we're getting something. host: can you help us with that? guest: interest on the debt is

not 43 cents. guest: 43 cents on every dollar is far road. guest: it is not enough to solve the problem. in guestguest: right now with af gdp is interest on the debt. by the time my children retire it will be 40% of the wealth created by americans, it will go to pay the debt. the economy will implosion, but you are right, if we reduce borrowing, interest on the debt will go down. host: did you have a second question? caller: have either of them ever heard the results of president obama's press conference that line by line they were going to go through and eliminate old programs that we waste money on? i have heard nothing ofand i bes

ago, so there should be over 2000-plus pages of results from that. back to the butts -- budget process. guest: when you are actually in your job, the incentive is much less. think about it this way. since the budget laws were changed in 1974, right, it is the first time ever that congress has not passed a budget. democrats did not even have an excuse. the republicans are no better, but because the white house -- they