his actually is a really important job. he is responsible for overseeing many of the new federal regulations which are promulgated and we honor that is a very large volume. in addition the past five months she has been overseeing a review of existing federal regulations with an eye towards looking for opportunity to improve the impact of regulations on competitiveness, on employment and growth, and you can see why we are happy to have him here today because the relationship between regulation and innovation is an obvious and very important one.

oira is one of those very peculiar washington institutions. if you walk down the streets of washington, and you're walking down the street and say to someone there's cass sunstein, he runs oira people say that's really important. he's an important guy. in new york where i live if you're walking down the street and say there's cass sunstein he runs oira, people say i don't think i've eaten there yet. [laughter] but it's actually very important. before joining the administration, mr. sunstein served as a pro law school and i am mentioning that because the university is my own all modern cell you can -- it deserves all the attention they can get. he specialized in administrative law, regulatory policy and behavioral economics and he's a

prolific author i think "esquire" magazine referred to him has writing books about as often as most people use their dishwashers. but most recently he coopted what is an important book and i was just saying i had the honor to need to read it. it's called "mudge," and it argues all of us can make better decisions. for a simple, on health through a judge's order better presentations of the decision shoelaces. it's a fascinating and important book which he co-authored which the professor the university chicago so we are pleased to have him with us and it's my pleasure to introduce him. cass sunstein. [applause]

>> thank you, roger, for that incredibly kind introduction. a special thanks to michael greenstone for inviting me. he was extraordinarily colleague when he was in the head and attrition as the chief economist and it was an honor and pleasure to get to work with him. with respect to oira i will tell you a story. i met my wife and mother of my little boy on that campaign and when we work almost been dating, in that stage, she asked me at our first dinner if i could have any job in the world other than law professor what would it be, good predate question. hoping england subsequently that i would say i would play center field for the boston red sox or backup guitar for bruce springsteen and as she tells the story and i'm afraid it's true i looked off with a storyline and

said oira. after irca she responded some version of what the heck is oira. i don't know she actually used the word hecky and a men's and the i did get a second date but that exchange was an obstacle. [laughter] okay. as you may have noticed in the last year and last month's especially with the national debate over regulation has become quite heated and badly placed. some people emphasize and ensure you heard this the importance of the regulatory safeguards including rules that prevent fraud and abuse keep water and air cleaner, reduce debt on highway and ensure the food

supply is safe. other people with equal passion have been of shifting to expensive regulations contending they appear economic growth, underlying competitiveness, a compromise innovation and cost jobs. both of the contending forces make legitimate points. but hard questions can't be resolved in the abstract and in important ways the two positions are stuck. that is their stock in a decrease in the helpful to update from decades ago as if the only question for the central question is less or more. what i want to emphasize here is in recent years we learned a lot about regulation and moved well beyond the less or more question. as a result of empirical

advances and some conceptual once, we know much more than was known during the new deal and the great society. in fact, we know will lot more than was known in the 1980's and 1990's. we know more clearly than our predecessors did even in the recent past that risks are part of systems and efforts to reduce a certain risk may be in a rare metal risk, may be a safety risk the increase other risks perhaps even deadly once producing ancillary harm. risk regulation can in this respect be risky. we know the efforts to reduce a certain risk may reduce rhetoric and increase other risks perhaps even deadly once loss producing and salary benefits. we know the risk regulation can be synergistic. we have state-of-the-art techniques for anticipating and

cataloguing the consequences of regulation and forgetting eight clear rather than murky handle on the cost and benefit. we know when rules imposing high cost they do not merely affect and burden some abstraction called business. they often affect consumers and workers including the prospective workers as well. we know the flexible innovative approaches maintaining freedom of choice and preserving room for private creativity and the capacity for privatization of flexible approaches like that are often desirable both because the preserve liberty and cost less. we are aware we know more than ever before that the benefits can come from seemingly small and modest steps including simplification of regulatory requirements, provision of information to the public and

sensible default rules such as automatic and fled for retirement savings. complexity can have large and unintended harm for consequences and to promote peace and simplicity can greatly reduce costs and burdens. we know much more clearly than ever before it's important to about public participation in the design of rules because members of the public often have and i have seen this myself valuable and dispersed information about likely effects, existing pubs, creative solutions and possible unintended consequences. we know that if carefully designed, disclosure policies can promote informed choices, promote innovation and see if not to just mummied of life's. we know we and this is important that intuitions and anecdotes are both unreliable bases for the regulatory policy making.

and we know similarly that the advanced testing of the effect of rules as through the pilot programs and randomized controlled experiments as in the context of medicine can be indispensable. we also know it's important to explore the regulations and the real world not just in advance to learn for their roles are having their intended consequences or producing in that effort and harm. to go beyond an increasingly stale and unhelpful to date with a focus on the less or more question, we need to begin with these understandings. above all, we need a careful assessment before the rules are issued and continuing scrutiny of the sort the governments typically haven't applied. we need continuing scrutiny

afterwards. of course it's true and this is a truth that underlies the intense emotions of the last months in the unlikely regulation, we know it is true people's values differ and in some cases the relevant values are going to lead in a certain direction even when the evidence is clear. what i want to emphasize now and put in bold letters if i may is the opposite possibility that where the evidence is clear it will often lead in a certain direction even when there are differences with respect to the underlying values. if, for example, a regulation is going to save a lot of lives and cost very little, people are likely to support it no matter their party and identification. if a regulation would impose real cost of human beings,

citizens are unlikely to favor it regardless of whether they like elephants or instead donkeys. the polarized debate has obscured some facts. the chamber of commerce recently announced its starting road show even its to complain about what it sees as a regulatory tsunami. we completely agree on the importance of reducing unjustified costs, but there is no tsunami. indeed, the annual cost of regulation has not increased during the obama administration. in the last decade the cost of economically significant roles from executive agencies that have gone through the office of information and regulatory affairs were highest not into pos and nine or ten but in 2008. in the last two years executive agencies and the bush and administration imposed far

higher costs than the agencies in the obama administration during our first two years. put the cost to one side there has not been an increase in rulemaking in the obama administration. the number of significant rules reviewed by the office of information and regulatory affairs in the first two years of this administration is actually lower than the number in the last two years of the bush administration. many of the most important developments in the last two and a half years have not involved an outpouring of rules or increase in regulatory costs, but the development of the flexible low-cost innovation friendly approaches building of a new sinking about regulatory policies. these approaches include a dramatic simplification of the free application from the student 84. i don't know how many of you or your children or relatives have had to fill out the forum.

it used to be really complicated. the simplification is going to enable a lot of young people to apply for a day and go to college. the new innovations include consumer friendly disclosure of policies, including very recently informative labels for the fuel economy and for sunscreen. these approaches include replacement of the widely criticized food pyramid, do you remember that? its extent, with the widely praised food played. take a look if you would. the new approaches include a series of important public-private partnerships designed to reduce childhood obesity and to diminish the risk of destructive driving. they include policies to promote automatic enrollment and savings plans. earlier this year, president obama adopted an executive order that explicitly reflects a lot

of the new thinking. the word innovation is in the first sentence of the new executive order. the first paragraph pointing to the crucial importance of the testing emphasizes that a regulatory system must measure and seek to improve the actual results of regulatory requirements. among other things, the president has called for what roger referred to an unprecedented historic event different wife looked back at federal regulation. agencies are asked to reexamine all of a significant roles and a streamlined, readers, improve or e eliminate them on the basis of that examination. what we have now, released quite recently, is look back preliminary plans from 30 departments and agencies. on the plans, you can see they

look forward but also look at the very recent past. they reflect immediate steps already taken to eliminate hundreds of millions of dollars of annual rent of three cost. in of the immediate future, we expect to be over a billion dollars in cost reduction. over the last several years we expect to be in the billions. these steps will free of the private sector to grow, to innovate and higher. all in all, the plans initiatives will save tens of millions of hours in annual paper burden on individuals, businesses and state and local government. the plans consists of over 500 pages. there are hundreds of regulatory reform initiatives, many of them focusing specifically on small-business, a major source of innovation in the united states. some of the hundreds of initiatives represent a fundamental rethinking of how things have been done.

as for example with numerous efforts to move from paper to electronic recording. and while this may seem kind of drawing and obvious, it's important to emphasize the extent to which in my job we see the police on the part of those in the private sector from little companies to very large ones you would have heard us please, let us do our filing electronically to get it's going to save a lot of money in the short run. over the next five years, the department of treasury paper this initiative, not clear if that made the front page of the newspapers, but it's going to save $400 million in cost and 12 million pounds of paper. we are also rethinking regulation that require use of outdated technology, regulations have been long on the books but not changed. the freeze outdated technologies. many of the reforms will have a significant economic impc

in my discussions with members of the community the last month or so, the one kind of eye-catching rules from the occupational safety and health administration which recently announced its going to eliminate 1.9 million annual hours of redundant reporting requirements on employers and saved in the process more than $40 million annually. another rule that has gotten a lot of favorable attention in the small business community is one that eliminates a dam on the definition of oil that swept up milk in the definition and that is the subject of milk producers to costly regulations designed to prevent oil spills. the exemption will save the milk and dairy industry as much as $1.4 billion over the next decade. the occupational safety and health administration also plans to finalize the host rule is

going to harmonize our rules for the communications with those of other nations can simplify the requirements, thus saving an annualized $585 million for employers. the department of transportation expects to have initial savings of up to $400 million from an alteration of existing rules that is regulating trades. there's been a lot of attention with particular focus on innovation to the unnecessary barriers to exports including duplicative, duplicative and redundant is good phraseology because it shows you the point, doesn't it? [laughter] the goal is to reduce regulatory burdens and uncertainty faced by american companies and their trading partners. if you look at the plans from the commerce department and the

state department, they are ambitious with respect to export reform. there's been a lot of discussion about the undue complexity and transaction costs under the endangered species act. did the department of interior is now all over the topic attempting to clarify and expedite. in the context of discussions the health care system one thing we have heard a lot is requirements placed on hospitals and physicians that have accretive overtime and are not helping doctors and patients just imposing costs on them the department of health and human services has a long series of initiatives to reconsider the regulatory requirements and ask whether they are really helping anybody of course, we don't need only to look back. that's been my focus in the last few minutes. we also need to look forward to determine how best to regulate a difficult economic time.

the president has issued in the short constitution executive order a series of new directives to apply and answer that question. i'd like to joost briefly elaborate the key points on regulation going forward. first, the president has made an unprecedented commitment to the public participation in the rulemaking process with a central goal of insuring the rules will be informed and improved by the dispersed knowledge of the public. there is a cliche in the world of administrative law. i taught at ministry of law for a long time and i will tell you the cliche i will confess i am responsible colin part for perpetrating on the lost students and the clich is the notice and comment process which of the agencies engage in typically is a little bit like kabuki theater that by of the time a rule goes out to the

public it is cooked. there's been engagements within the federal government, perhaps with the stakeholders and notice and comment is the human emotion, the reality is the kabuki theater is to the human emotion. a stylized kind of trauma that doesn't capture the real thing. in terms of the last couple of years nothing could be further from the truth. the notice of the comment process is indispensable for learning about the directions, less good ones, possible creative solutions, by tapping the expertise perspective experience of those who are interested or closely following or likely affected by rules. the president has emphasized the crucial importance of providing an opportunity for public participation not just by making rules available, but by making a

relevant scientific -- alvan scientific documents available, too. public participation fema one. fema to. we've heard a lot the last few years. i know the bush and clinton administration heard this, too, about the difficulty of those who face rules that are not harmonized or consistent or forced to link closely with one another. it seems somewhat technical but if you are a small business facing the cumulative burden or something from one agency that fits poorly with something from another agency it might make life a lot harder. for the first time the president has specifically directed agencies to take steps to harmonize, simplify and coordinate rules, and if you follow the federal first my condolences, but second, you

will notice there are explicit references to efforts undertaken to coordinate and simplify and harmonize. the relevant provision of the executive order, and happily for this conference is called integration and innovation because there's a clear recognition that innovation can be compromised if rules are redundant, inconsistent or overlapping and if you want to free up private-sector to innovate, we need to get that problem under control. third point, the executive order stresses the importance of quantifying costs and benefits in a way that's gone beyond anything in the former president has done. this president has directed agencies and in these very few words use the best available techniques to quantify anticipated benefits as possible and also to proceed only on the basis of a reasonable

determination that the benefits justify the cost. fourth and final point about regulation going forward, the executive order directs agencies to identify and consider approaches that are flexible, that reduce burdens and the most important words perhaps that maintain freedom of choice for the public. the key is to stress the value of identifying and considering approaches that maximize freedom of action on the part of those who are regulated. such approaches might include, for a simple, warnings, appropriately called for rules and provision of information is in the form that is clear and intelligible, and to hearken back if you would to the recent fuel economy and the labels for sunscreen which are specifically designed to provide information in that we that is clear and intelligible.

we know that simplification can achieve a great deal and very recently the office of information and regulatory affairs has issued a call to all agencies to reduce reporting burdens on small business to eliminate on the unjustified complexities. we hope to have good results in the near future. this pragmatic cost-effective evidence based approach to the regulation has informed our best practices for the past two and a half years. if you saw the highway deaths in the united states are down to the lowest level in 60 years. that is a statistic but it's human reality is that there's a lot of people, significant number of people alive today and then united states as a result in part of the regulatory requirements that have encouraged safer practices and made cars less likely lethal if things go wrong. we also promoted airline safety

while protecting passengers from tarmac delays, overbooking and hidden charges in large part through the requirements. we've issued a rule doubles long stock sharply reducing the risk of salmonella from eggs, eliminating over 70,000 cases of illness each year. we've dramatically increased the fuel economy of the fleet thus promoting energy independence while saving consumers a lot of money and we've taken steps to protect against air pollution that kills thousands of people every year. at the same time, and there's absolutely no contradiction here this is the effort to go beyond that question, though less or more question at the same time we are eliminating unnecessary regulatory burdens and tens of millions of hours of ret tape. i noted the benefits of

regulation in this administration have far exceeded the cost during its first two years the benefits of regulations are $35 billion, over ten times the corresponding figure in the first two years of the bush administration and over three times the corresponding figure in the first two years of the clinton administration. but our goal isn't just to have a one-shot look back plan and have guidance by executive order for the new rules. what we are seeking to do is change the regulatory culture buy constantly exploring in empirical terms what is working and what isn't. if you look over the plans you will see a number of agencies have made long-term commitments to careful analysis including the use of randomized controlled experiments. if you look for the plans, you

will also see that agencies are creating offices and teams to continue to review the rules to make this case of sustaining endeavor, not just an easement. the regulatory look back and the comments period now in progress is unquestionably a defining moment, but in terms of using the regulatory system in a way that protect health and safety while also promoting innovation would is just the start, and my hope is that this process will inaugurate a broad less polarized, more sensible, more evidence based conversation about how we might promote economic growth and job creation while protecting the health and safety of the american people. a number of years ago, actually a couple centuries ago, a little more than that, alexander

hamilton inaugurated another conversation and admittedly much larger with a series of short essays that have come to be known as the federalist papers. the federalist number one started in hamilton's words with a reference to the historic moment in which the soon to the nation found itself, it wasn't quite a nation yet. it has been frequently remarked it seems to have been reserved to the people of this country by their conduct and example to decide the important question whether societies of men are really capable or not of establishing good government from reflection and trace or whether they are forever destined to depend for their political constitution's on.

of course the current process doesn't have the decisions made by we the people in the late 1700's the process is also on its way an effort not to depend on accident and for worse, but to promote good government by reflection in a place to. in that sense it is in its more modest way an effort to honor their example. thank you. [applause] ..

it is not really true. you can actually say that innovation is the application of science and solving economic problems. economists have known since the 1950s that scientists and and and peck and innovation are intrinsic to how economies grow over time and we have made great strides in the economic profession with work by the paul romer in the 1980s which is help us understand the science and innovation and since i doesn't fall out of the sky in some kind of helicopter drop. a blue is actually an integral part of the economy and how

economies grow in the great thing about this insight is that it opens up explicit tasks for innovation policy. if you can actually unlock the path to creating creating renovation you can permanently raise the economy's growth rate not just the actual level of output. so i think that a great way to end today's conference would be to try and sort of bridge the two worlds of science and economics to try and figure out how we can use those two disciplines to try and sort of like propel in the bashan and grow the economy. i can think of two better people that we would have to tackle this question that our two guests here. to my left is eric lender. eric is the founding director of the institute of m.i.t. and harvard are one of the world's leading scientists and genetic science and the human genome. he is cochair of president obama's council of advisers on science and technology. which just in justin alessi put out an interesting report. i do recommend it to everybody.

you are not going to agree with everything in it but it has a lot of great insight on the role of government in promoting advanced manufacturing as a way of revitalizing the manufacturing sector and innovation. my far left is lawrence summers who i don't think needs much more introduction than that. [laughter] i am just going to get right into it. [laughter] i am going to start with you eric as i've just read a report and it is full of possibilities. what i find intriguing about the report and challenging is that it argues that it doesn't sort of like you know take the kind of strong position that government should pick winners. you arguing fact that government should be involved in innovation policy, and identifiable market values. we were talking a while ago. you sound like somebody in the science area and see possibility of a time nec market failures blocking the path of that scientific insight to produce

innovations that start growth. talk to me a little bit about that. where are the markets and how they happen? >> alright, so in principle, creative energies to just be able -- potential energy should be roll downhill. essential energy getting really -- as it rolls down heal it and capture some bumps in the helena can get stuck at the bottom. how do you get over this? there are times when it is perfectly feasible for the markets to say hey that don't does not very big. it is not very expensive to lift the ball up and get it over that bump and let it keep rolling downhill. i am going to invest or if i'm the person involved i'm going to seek investors and keep growing. there are many many situations though where that just doesn't work. it doesn't work because oh you know it is difficult to get anyone ball and what you have to do is old those that ball.

than that is a public public -- anybody can roll down that so it may take many of the situations either a public good to appropriate the value of it or at least partially publicly. we see that all over the place. the human genome products as was it example. every pharmaceutical company that would be a good thing to have the genome but it was not going to be something that they could appropriate enough of to make essentially optimal investment. gps. everybody, maybe could have been smart enough to say if we had all the gps satellites up there i can make rockets and all sorts of things. imagine going out to investor saying i'm going to go do that. whatever you can manage to reap the full benefit of that panel of gps satellites and therefore you are really not going to be able to raise the capital to do it. that was a public goods that put those things out there.

imagine the presidents council adviser has taken on the past year, health information technology. it will be a really good thing if our different health care electronic health care systems could talk to each other. some smart third-party entrepreneur could come along and write write an innovative piece of software that could work on all of them right now. they have to write one for each system separately. well, what does it take? it is going to take some universal exchange language so i can write up here and abstract these of software that can talk to all of these things. but that is a public good. there are market failures. what has to be disciplined about what is a market failure and what is a plea for money for my special project? people say we should do this because it is very expensive and industry won't do it. industry does expensive things or it is very risky. we have a good system for risk in this country. went however, it really does require doing something where

the private parties can't capture all that we have no problem with basic research acknowledging it is a public good. over here the basic research, we have to do that is public because industry can't do that. it can't -- area much over here in product development we have no trouble understanding it is largely a private good. there is a transitional stage there are in this whole discussion is about what is the role of the public. what is the common cause and the public purpose in getting us through that transitional stage and ding clearheaded and hardheaded about what is the public good aspect and what is the private good aspect there and there is no solution other than actually understanding what each of those problems is about. >> larry economists have no problem with the notion of market failure. god knows how many dissertations you have judged the dealt with examples of it, but i think also you know in the public policy arena you want to be careful

about assuming everything is a market failure and it would be so much better for could just get in there and think a little bit about it. when you hear the arguments what is your response to that? what is the test to apply to these arguments because the demand for the government to shower money on those pet projects are infinite. >> let me just first say that in your long and gracious introduction of may -- [laughter] holy after its you left out one thing. [laughter] which is an important accomplishment of mine, which is that i had some combination of the width, the charm and the wallet as president of harvard to recruit eric lender to join the harvard faculty as well as my faculty as i think you will see by the end of this session that was a wise thing that i

did. [laughter] >> look, eric and i i suspect come down and around the same places on pragmatic, on the pragmatic questions of what actually should be done. it is kind of the role of the scientist to raise questions so i'm going to emphasize a little more of the skeptical side, but at the end of the day, nobody with any sense thinks that they should all be left, should be left to the market. i think the first thing to say is that market failure is in a superficial sense absolutely pervasive. the most obvious way to say that is the economists estimate that two-thirds, 75%, 80% have the exact number of all the economic growth in the country.

it comes as a consequence of science and technological innovation and while eric and frances live quite well, i think we can safely assume that a vastly the vastly less than half of the ge tea t. goes as reports to innovators. from which it follows that there is a major externality and innovators earn elsewhere. so market failure is absolutely pervasive. there is a tendency to suppose that the market is worse at hearing market failure than it actually is. let me give what is now a somewhat dated example. around 25 or 30 years ago, there was this invention of the vcr. there was this invention of that videotape that could go into the vcr. and a halfway decently trained economist could explain how there was a huge market failure out of the chicken and egg

problem that nobody would buy at the cr until there were pervasive videos and nobody would buy -- nobody would start putting blockbusters all over the country without there being an installed base so you obviously had an externally problem and if you wanted to achieve rapid dissemination the government had to step in. the market did about four years vastly faster than the government has disseminated. so the first thing to say is that markets are more creative in finding ways to respond to these externalities that naïve thought suggests. the second thing to say is and the only thing that i thought was important that eric sort of left out when he said is that market failure has to be compared with public failure. there was a really important economics article which for a time was extremely fashionable

written in the 1930s by two economists. what they basically said was, look, everything that is good about the market, pricey low marginal cost trying to maximize profits, there is no white government can't do those things. and if the government owns the enterprises than they can internalize the externalities. they can tell the enterprises not to pollute. they can tell the enterprises to subsidize things that are good and so if we really just use market language but have the government owing everything, then we can have a really phenomenal economy. the argument was put forward and part seriously and in part as a kind of absurd him to this notion. if you look around the world, this argument is made in every communist and socialist country. and yet without exception, on the simplest and most basic externality problem which is

pollution, every socialist country is vastly worse than old-fashioned -- so the idea that there is a market failure, therefore we should have the government do it is not actually countered by saying there is isn't a market failure. there is a market failure. it is best countered by asking, is the government intervention going to add to the world? if you look right now, the u.s. government has recovered all the money in the t.a.r.p. throw graham that got put into the banks. it has acquired essentially all the money that got put into the automobile companies, almost all of that will come back. this government will be several hundred billion dollars in the hole at the end of the day to fannie and freddie. fannie and freddie were a public

private combination directed at addressing a set of market failures around standardization, around handling large-scale risks that were carefully explained as being innovative savings of government resources through a public-private combination. it didn't and very well. there is another public-private combination. we spend what would today be close to $50 billion on the idea that there were lots of externalities involved in finding ways of converting coal into standard petroleum products, essentially oil-rich and off by government. amtrak is a public-private partnership. in its current incarnation, the post office is a public-private

partnership. so i think we have to think very carefully in this area when we wants to get the public sector involved, how we manage the incentives so as to create a drive for efficiency. here is a simple rule. if the government has gotten involved in supporting a technology, and you look at key companies in the technology area, in the area the government is supporting how large is there watching office? their washington offices very large there is some substantial presumption that this is going to end up a lot about lobbying effectively rather than internalizing externalities. we have to think about how the consequences are going to play out over time. what starts as a good idea becomes an entrenched

constituency. instead of people making investments on the reliance in the substance -- subsidy. you have to think carefully about taking it away. so look, do we need to have the government do much more to support science and technology, education? yes. is there more the government can do to do the kind of thing that eric and i have worked on in the boston area that exists in many different places? which is to recognize that if you can get the right kind of cluster, you get increasing returns and the difference between farming and knowledge is that when you get the 30th farmer on a plot of land, he produces less than the 29th farmer did and the 31st produces less than he does but when you get the 30th geneticist, he is much more useful at the margin with 29 other geneticists in his presence than he would have been

on his own. so should we be supporting all kinds of clusters? yes. we absolutely should, but i think we have to move the conversation from is there a market failure to which the answer is, always cs, to how successful will the market e. in responding to this opportunity and what will be the full set of benefits and costs that a company, a company, said of government interventions in the area, and our analysis has to take account of the risks over time and it would be interesting to compare some of these reports

on the dance manufacturing and so forth which again make arguments that are basically right with one of the first things i study as an economist. harold wilson, the prime minister written in 1964 wrote a celebrated report about the technology and how government needed to get involved and did a much larger way as part of a labor government manifesto. it was not a conspicuous success in terms of the performance of the british economy between the 1960s in the late 1970s. so i would just urge recognizing both sides. let's make a distinction between different types of the public private partnerships or different types of investments. you bring the post office and amtrak. let's put that in the bucket of operating partnerships. there is an ongoing operating role that the government is playing because we think on a sustained basis there is a market failure and we are going to have to help it along all the

time. at the other extreme, most of the examples i'm going to point to, i'm going to call catalytic instances where you have to engage for a period of time and then we will unlock that ball that continues to roll down. >> i promise you that you will discover that the initial investments in amtrak were described as catalytic and not going to lead to something terminal. i promise you the same was said about the pony express. >> but wait a minute, wait a minute. you talk about running a railroad as opposed to inventing a set of standards that allows entrepreneurs to come in that allows people to operate. >> just an example where would you come down on what many see as one of the classic examples that is given in the contemporary debate is high-speed rail? do you say the government should

get involved in a major way in high-speed rail? >> the truth is i don't know. i think eisenhower highway act, i think at that point it was clear that the inability to move things across the country really was limiting the economy. you have to take a serious look and ask whether or not high-speed rail represents the overcoming of a rate limiting -- that would unlock all sorts of things. you have to be -- can i don't doubt everybody will argue many of the arguments are pretty unconvincing whereas others where you say it needs a five-year project and it needs to create a health i.t. standards. something. >> what would be the best example of a five-year catalytic heart checked? bit you human genome private -- project. that was a great one. that was not dominantly a private sector collaboration.

and that was -- that had a specific objective and a specific -- i am getting a set of looks. that i don't know what i'm talking about. [laughter] so i'm going to back off that one fast. but industry was crucial to producing machines that were used and had not the government given a signal that there was going to be demand, we would not have been locked that. and i will say just because we are in a point for a second when the human genome project ended the unlocking of the possibilities from it further drove the technology so that the cost of sequencing has dropped over the last decade by approximately 1 million full. >> i just want to add you are both right in the sense that of the social return to the one successful government backed it -- it could make up for the dead weight loss. we were talking about that.

maybe you do waste a lot of money on crude and reactors but somewhere along the line. >> but we should also acknowledge some of them will fail. but the things that are the short-term challenges i think are the easiest to justify. dartmouth does a good job. they just did a project where they said we are going to challenge industry to design a vehicle the specs that we are going to announce in 30 days manufacture complete in 90 days. no companies company is going to put itself in a -- to do that. dartmouth did that and the company pulled this off ahead of schedule. they know that is good for the military, the rapid turnaround of manufacturing but it is good for the economy. putting challenges out like that that can stimulate and then show the market, that actually is possible so i would at least -- i don't know where to draw the

bright line. i would say the spectrum from operating through these catalytic events give us some guidance as to where we are to be referentially invested. >> look, i think i was clear that i thought this all couldn't be left to the market and i think the question is, how do you apply the right kinds of disciplined? i think it is clear that the human genome project was a substantial success. i think it is a slightly, infinitely -- a slightly more complicated case in the sense that the nih continues to fund large amounts of activity that is part of that strain, as it well should, but it is not that the government invested in this thing and then it was all over and there wasn't more government money. the government invested in the thing and it was a success and

it opened up a lot of opportunities and then the government continue to invest in it. in other well-defined projects and the nih has a particular model and one of the things the nih has over time been relatively successful in doing with the emphasis on the culture of peer review and the like is maintaining some degree of insulation from politics and that is a crucial part of it. that has not been the experience of all that is done in the name of, in the name of promoting technology. and so basically i think we are basically in agreement that the genome project was good, that there is a market failure rationale, that there are real risks of public failure and that you have to apply, that you have to apply a lot of discipline to

it. >> i would like to ask actually, pushback on both of you on a broader question which is that threat. to challenge this premise of this event as an innovation problem. i'm not a scientist so i look at the data to try to found out what is is the innovation problem. [laughter] we are not looking at my data. if innovation is going to matter to growth it should show productivity but productivity looks pretty good. toward activity which is intrinsic returned when you adjust the amount of capital and labor was the highest since we started keeping records last year. r&d as a share of gdp is near the top of its historical range. where's the innovation problem that we need so badly to address? >> what is the lagging -- here.

it is a lagging indicator of good investments made 25 years ago perhaps. the information technology product -- [inaudible] you were going to trace that back to darpa and the dod in the 1950s. the microprocessing industry that itself wouldn't have economically gotten going but for the products. they will trace it to the creation of the internet. you will trace it to investments of digital libraries in the 1970s by the nsf all of which are now paying off. so you say i don't have a problem right now. well, i'm not sure you can draw that conclusion. it is taken -- the united states has united states has been the master of asic research funding and there's innovation policy in the public sector does recognize that it makes those investments in a transitional stage. what i'm worried about is a view we are not doing it so well and

maybe other countries are beginning to catch on to what we do so well. maybe they are going to get -- with respect to new industries and new technologies that arise in maybe 30 years from now we are going to be sitting around and saying why didn't we make those kinds of catalytic investments? well because we were so worried about our budget and all of that in the short-term and it will be too late to fix it. >> larry do you agree? >> i get to the same conclusion but i think with a different reasoning. >> i think eric is right. there are long legs so you think we are doing great right now it is a tribute to innovation over a long time. but i would put this in a different way, which is the question is do we have an innovation opportunity and the united states? and if there are high return investments available in investing in promoting, in

promoting innovation, that is it seems to me something that we should take advantage of and it largely doesn't matter whether the budget is larger today than it was 15 years ago or smaller and i think we have got to be careful of this international staff. so just take a stark question with the competitiveness metaphor. if you learned that japan and germany and china were each going to devote another $10 billion to biological and life science research each year over the next five years, as an american, would you regard that as good news or would you regard that that is bad news? i would regard it is good news because i think the world is going to make more progress and therefore i had my children are going to have a longer life expectancy and that it was better. the competitiveness metaphor to which we are happily drawn,

which is that there is some kind of lead cable and being at the top of the lead cable on r&d as a share of gdp is a sensible aspiration which suggests we should regard that as a bad thing. so i don't relate so well to some of the lead cable stuff. i believe in looking at this in terms of opportunity. is their opportunity to fund vastly more basic research in this country than we are? i absolutely think so. it is their opportunity for the right kinds of darpa to be expanded in a significant way? >> yeah, i absolutely think so. do i think the substantial investments that have been made and wind power for example, the windmill technology that did exist in the netherlands several hundred years ago, but that has been a major thrust of our policy rationalize by this qualifies as a temporary

catalytic investments? no, i think that is a harder argument, a substantially harder argument to make, so i think you just have to be very careful but if you ask are there a set of investments that we can make that would expand things, i guess. i think there are. i think where i am less certain than eric is is when you get to having certain particular kinds of production located here rather than located someplace else. i think you have to think very carefully about just how actually important that is going

to be over time. i don't know -- i don't know with certainty whether we should have a high-speed technology, high-speed rail on a larger scale or not, but i would argue that if we should, it has to be on air expression now like the internet highway system that will knit the country together not on the rationale that is frequently put forward that it will be a substantial spur to the development of u.s. technologies and trains and tracks and all of that. there is a great deal of encouragement to the suppliers, who are thought to be than job creators that i think one does have to look at in a more careful way. >> i agree with you but i want to come back to the international question because

while we can overplay the competitiveness there is something to it. the reason i wasn't all upset about the declaration of germany japan and china putting 10 billion bucks into biological research, we are best positioned to use that knowledge. we still have the leadership here in the doing as in manufacturing of these pharmaceutical products. it if you just told me germany japan and china were going to put 10 billion bucks into the next generation carbon nanostructures that would form the basis of a whole new generation of computers when cmos runs out about 2020, i am not sure -- i mean i could say this good thing this is the consumer and later i will be will to buy cheap products from germany japan and china. that new industry, the rents are going to go outside this country. the manufacturing is going outside this country but.

i would probably want that in this country and i might be clamoring for that 10 billion bucks to be invested here because i would be giving up an awful lot by not having that happen here so a little bit has to do with the fact that while innovation does not guarantee jobs here and does not guarantee manufacturing activity here there is a tie up the creation and early cluster especially in that early stage where researchers and this is is creative back-and-forth where as we do miss the boat completely it is much more expensive or maybe impossible to get back on later. >> so i think that is totally fair. i guess i would just qualify it in a couple of ways. first, to say that it is a productive investment for us to make also is actually a statement i would agree with bud is a rather weaker statement than the statement that we are worse off.

because they made the investment. i have always preferred the formulation the united states should be the envy of the world rather than the statement that the united states should win a competition because the envy of of the world formulation doesn't carry the implication that they are doing more is somehow bad for us and i think our example whether it is something that moore is bad for us i think is probably the minority. i do come back to, to take an area that you know much more about than i, as at the time i last followed this which was five years ago, 41 american states were engaged in seeking to be centers of biotechnology. there were nine that were not, but 41 governors had declared the importance of clusters, had explained the centrality of the life sciences and had sought to become centers of biotechnology

experts. it has to be that for at least 25 of them, it was not a plausible aspiration. and i just think that discipline needs to be present as one thinks about where one is going to invest. i think the other question that is very much worthy, worthy of study though i don't know how one would answer it, is if you say america has led the world in information technology and that has been a phenomenal thing, there are at least three sort of competing parts of how we have done it. one is that over the relevant interval, we lead in the relevant kinds of basic research. we provided an infrastructure where a zillion people like him

could think and create in peace. that is one. the second is we had a bunch of darpa and darpa needed researchers to communicate and that stuff. and the third is, we have a culture of venture capital and entrepreneurs and the ability to raise your first $100 million before you bought your first suit that was unique in the world. and all three of those things are relevant and the question is what their relative importance is. i think there is a tendency to run to number two as being the dominant importance and i wouldn't dispute that all but number two is an important part of the story that i avoided thinking about innovation policy, put at least equal weight on the number one stuff

being the place that all the best researchers, too with the greatest, with the greatest universities and all that, and on a set of things around number three and venture capital and support for entrepreneurship and the like. i think there is it that have a tendency and notice that neither number one nor number three has an intrinsic base political constituency, whereas there is all kinds of political constituencies for support for the solar power industry. and so just as i think about what the role of people like us in the system is, i think they carrying the torch hard for number one and number three which don't have alternative torchbearers need to be a large part of where we are. >> i could not agree more and i think it takes obviously all three of them. the number one, the making this

incredibly attractive environment, creating the basic research institutions and the clusters that attract them is an utterly crucial to our ccs. that is why for example when we turn away foreign -- to the country we are cutting off our nose. that was such a crucial part of it. all of this argument about the middle ground should not in any way diminish the incredible first part. without it there is no point and i think the reason we are not talking much about the third is another government has a role in it. that of creating the venture capital industry there are and leaping at the end leading a go forward so we are not addressing it not because it is not important but because i think the subject right now is what is the role of government in it? it does take all three. i think that in formulation is exactly right. >> i kind of wanted to move this

conversation to the issue of jobs because every time the president talks about innovatioo jobs. one of the interesting things i found in the president's advisory council report was the view that innovation itself can't create that many jobs directly. it creates jobs for you and her colleague at the institute of the real, the millions of jobs potential in the people produce the products that are the fruits of innovation. what we have seen the last few decades is increasingly those jobs have moved offshore some innovative jobs are still here but it seems like a slice of the american workforce benefits from it. in your report you make the point quite well which is that in the end, the process of making the product itself yields for the renovation and what you worry about is that the loss of that manufacturing base will eventually hurt our innovative capacity. what is the policy response to that? how dohow do you ensure in addin doesn't create high income jobs for the shareholders of apple

and the like would also for the millions of people who may have once had high-paying jobs in manufacturing and no longer do? >> i will say that larry is much more knowledgeable than i. innovation creates the opportunity to have new jobs in industry. it doesn't create a guaranteed. just like what larry is talking about it needs several pieces. why doesn't apple produce its ipods and ipads and the united states instead of employing three-quarters of a million people in china, something like that? why don't other companies? we end up talking to a number of companies. there are many reasons given but that the most consistent was why can we find the types of workers we need? for many of these products the wage is a relatively small part of the overall cost of the

product and the wage differential multiplied by the portion of the product means that it is really not the critical difference. getting the kind of factory engineers without a fancy engineering degree but the ability to be quantitative, getting workers who can run computer devices and things like that is again and again a frustration with doing business in the united states. so it goes back to things like stem education in this country, being able to get -- and there are right now somewhere between one and 2 million jobs available for this. it is a recession with lots of unemployment. so that is part of the overall environment necessary. then, if i were trying to make innovation policy sticky i would want to figure out how in the early stages of this innovation

the pilot plans were being built here frankly. i would be willing to spend some government money to invest to make sure those plans are here because that does create the knowledgeable community here. it creates the desire to build a small factory nearby because even though we are in a great internet connected world a able to sit down with somebody else and have workers and clusters is still powerful, there are ways in the first decade or two for people to keep it somewhat sticky. eventually it becomes mature technology. in these early stages i think there are actions you can take and i think the future is a succession of early stages of new technology. if we were to win all of those and lose them eventually elsewhere it wouldn't be a terrible outcome. >> larry will have a more. >> we are right now to stripping card so if you have questions please ask for a card and we will get to them in a few minutes. larry did you want to take a stab at that?

>> i think it is a good idea to try to be the leader of the things you can while you can. i think we need to recognize that right now only 5% of the workers in the united states are engaged in manufacturing production. and 11% are involved in manufacturing but many of them are in advertising or finance or management or working in systems. so the number of workers in the united states is 5%. fractional workers or 5%. it is where farming was in 1960. it is driven by the same kind of trends. remarkable part activity growth, a certain substantial demand but not growing that rapidly, fewer and fewer people. so the suggestion that somehow anything about manufacturing is going to be a large part of the

challenge of finding 20 million jobs in the next 10 years when there are only seven or 8 million jobs in production right now is they think just not possible so i think the core of the case for innovation policy resides in wealth creation, resides in our national leadership, resides in national security, not in large scale job creation around being in production work. i think it is important to remember in this regard though that they are are a whole set of

activities that are involved with distribution, that are created by new technologies and it is important to remember as well that incomes are wages divided by prices, so if you produce things that are substantially cheaper, you are raising the level of real incomes in our country and that is an important thing to do. just a final thought, there is a significant phenomenon going on of re-shoring of manufacturing that was once taking place overseas and it now is coming back here. that is the good news. the less good news from the point of view of a jobs focus is that is significantly because when it was all done by people it was cheaper to produce in asia than it was here. when it is now going to be

substantially by robots and there aren't very many people that he might as well do it close to your suppliers, near your point of innovation and all of that but it is somewhat inherent in the re-shoring we observed that it is in areas where it is not going to produce large numbers of jobs for those who are most in need. >> agreed, the numbers are not going to drive the whole economy and half the reason i want to be sure the manufacturing going on here in these early stages is because i think it is a critical driver of of further innovation which will be further rants. so it is not the panacea, not close to the major solution. i still think it is important we concentrate on having this manufacturing. >> i want to get into questions here. the first question is how to ensure that the r&d tax credit isn't benefiting multinational -- and i would like to broaden the questionable that. any activity that we undergo in

the government sector to stimulate innovation how do we assure that most of the benefits are captured here at home and not by our footloose corporate sector in some other country? >> i think we as former treasury secretary. >> we don't completely control that, but we take consolation from two things. one is it turns out that there are lots of things that don't disseminate to widely. it is kind of remarkable that the silicon valley 40 years after it all started. it is still chew today that if you look at the production of small airplanes in the united states, 80% of it takes place within 20 miles of wichita kansas. if you look at the production of certain types of carpets the large majority takes place in proximity to dalton georgia.

and, so it is just the case that dissemination diffuses and you therefore get the message list and so few stimulate innovation some good things happen near the innovation. that is part one. part two and this in this is a y deep question that was debated quite famously almost 20 years ago by bob raache and laura tyson is the sort of who is us question. which is better for america ge to proceed -- may succeed producing in malaysia or siemens to succeed producing in tennessee tax the aspects of that -- a statement that i think almost everybody would agree with is that a stronger america and headquartered american base company is likely to have a set of benefits for the american economy and so even if there is some spillover to abroad within

the international corp. there is likely to be some significant benefit to the united states as well. >> were you surprised at the rise of social networking? this goes back to something you and i were talking about. social media is an example of a very large family of innovation that didn't have any benefit whatsoever from government. >> yes. i think it is a perfect example. in my case where i felt too connected and i thought i would have the opportunity to be more connected to the world and have more people be able to -- that would be attractive. i didn't automatically see the benefit of it. i was not thinking about perhaps my kids, but to be totally honest i did not foresee the rise of social networking. >> i would be a much wealthier man.

[laughter] i think social networking actually does make a point that is worth remembering here, which is we have had a tendency in that conversation to equate innovation with science and tech knowledge he. the hard parts about facebook are not about writing a computer program that connects the people together. that is not the hard part about amazon either. walmart if you think about it is a very profound innovation but not the kind of innovation that comes from a laboratory. the people who would debate its impact but the futures market is an important kind of innovation but not one that came out of the

laboratory. so i think it is important to remember that a lot of innovation comes from creating a culture where some of that sticks, where it is friendly to entrepreneurs, all of that. questions we mentioned, questions around immigrants. there are questions around for examples sarbanes-oxley and its impact on the rewards to being an entrepreneur. a range of other public policies that i would just want to think hard about maximizing hospitality to entrepreneurship as a really profound part of innovation because it is not all spillovers from laboratories which is what people tend to bring to mind. >> one more question. do you think that they darpa type model of high risk high reward investment is scalable to

nondefense sectors? i think it is an important question. is a big challenge to the view because of course a lot of the innovations you pointed to began in the defense sector and had positive but unanticipated spillover to the civilian sector so how do you reproduce that sort of success when the success wasn't even intended? >> some of the darpa successes may not have been intended for some of the projects were done with full recognition that they would have spillover effects. i remember 20 years ago darpa funded a project to build an autonomous vehicle that could drive from austin to san francisco with nobody in it. it would be a good thing for the department of defense and i fully understood the broader social consequences of that for cars that could drive themselves as address. >> do i think the model should be extended further? absolutely. i think one of the remarkable things about this country and funding of scientific technology is we have a diverse portfolio

of -- with it. you system. the way the nsf funds its usda. it funds in these locke grants a great deal. darpa funds in certain ways. i think there are a variety of different funding models and they think we do too little and analysis of which ones work well for which problems. the human genome project was a perfect example of a darpa like funding mechanism because it broke all the models. yes it sat within a peer review system that the agency was vastly more involved in the project. it didn't do what most nih grants do which is some money, tell me how it went. you had quarterly reports. it had all sorts of exchanges of ideas, force of exchanges of ideas and milestones then it was goal directed. darpa -- the cancer genome project going on right now is sort of like that.

we need some darpa like authorities that the nih but i think should goal directed budgets be part of our portfolio more broadly? should rapid ability to fund things be part of our portfolio. arpa-e for example is funding in a much more rapid fashion so yes we should constantly be looking at the mechanisms, evaluating the agriculture. if we are not constantly being creative and asking how to win sent the best innovation was sense for what purposes, you think we missed it and darpa energy, think we should be doing more for. >> larry? >> what it yea good idea to extend the darpa model some ways

and in some places? yes, it absolutely would. we fought a war on cancer because we really wanted to have a goal directed health program in 1971. i will leave it to eric and frances to estimate its total cost relative to the human genome but i suspect it was not small. there is a lot of debate at a minimum about whether we won the war or whether we lost the war and how much progress we made in the context of the war. if somebody has a really interesting idea for a whole new way of converting sunlight into energy, should the government be prepared to toss $10 million or 50 million-dollar sums around to encourage the agonizing that failure is more likely than success?

absolutely. it is harder if you look at the portfolios of projects that are put forward. if you look at the full lifecycle of the agencies that are involved, to have it really be that rather than the program said a key congressman wants to support by his entrepreneur who is in his district and if you look at these initiatives, they tend to continue after they have been enormously useful and therefore one has to be quite careful. would it be good to move more money into a darpa for energy? yes. would it be good to fund more blue sky things in the life sciences area? i am sure it would. would it be a good idea to do

something similar in nanotechnology? i think the benefits likely exceed the costs, but you do have to think very hard about the public choice aspects and how over time and incentives are going to operate and i promise you as someone who has spent quite a bit of time with a clean energy portfolio, with the health information technology portfolio, with a range of energy things that it is much harder to find the attractive things and be doing the good things than it is to identify this space where there should be an opportunity. >> i completely agree. the right thing to do maybe a very hard thing to do and what

actually plays out politically may be worse than what you are doing otherwise so the question of how to do this well is the challenge. >> we didn't even get into the question of how we pay for it given our current circumstances. thank you eric and larry for an absolutely terrific and stimulating conversation. [applause] [inaudible conversations] ..

the national organization for women is the largest organization of feminist activists in the u.s.. the group recently held its annual conference in tampa florida. among the speakers during the closing session, department official sara diaz who talked about women's rights under the obama administration and former colorado congresswoman pat schroeder. this is an hour. >> it is time to start the last panel of the day. i'm going to introduce the first speaker, sarah diaz. the best way to describe her as

tireless. she is an attorney, a first-generation american, a policy expert, and an absolutely tireless advocate for women's rights in the workplace. she's the director of the women's bureau of the department of labour. the only federal agency mandated to serve and promote working women. and parenthetically, sara is assisted by our own. not immediate tasks members of the vice president. [applause] sara growth in the puerto rican family in harlem where she also served as translator for her parents which we have been her first experience and at his feet. she went as a prosecutor in new york and then in pennsylvania as the second highest ranking latina in the pennsylvanian government as the deputy secretary for the state

regulatory program and also served as the regional council diplomat. sara manzano-diaz has an understanding of the complexity that face women in the workplace today we're juggling work and family responsibility is still flawed and true equality is still a goal, not a reality. we are glad to have a champion in the women's bureau and i give you sara manzano-diaz. [applause] i can multitask. good evening. buenos aires. very good. can you rolph your "r"?

and [laughter] that's how you do it. all righty. first of all, terry, thank you for that kind introduction. i was just thinking how tired i am. [laughter] so that was good. i like that. and i also want to thank you for your incredible leadership because we rest on the shoulders of the lee visa came before us and we are linked to these women's is important and i want to appreciate the fact that i want to thank terry for recognizing these pioneers and leaders because they are the legacy we stand also thank you so much, i appreciate it. [applause] i'm very excited to be here. i look out at all of you and must say that she talked about my beginnings and i want to thank you because mike family

came from puerto rico and i'm the firstborn in the mainland united states and i was a translator in the translation was the first step for efficacy because i realized the institutions or not giving my parents would be needed. my parents were brilliant and was up to me at a very young age to be the translator and the advocate and that is when my love for lahoud group and a justice who grew from that experience fighting for housing. we were in a single room occupancy public bathroom for the whole building so when someone in washington decided to create public housing, we moved into public housing, i got my own better with my sister, my brothers had one, my parents had won, and we finally got our own kitchen and our own bathroom and we thought we were middle class

at that point. nobody could tell us anything but, you know, it is those kind of experiences growing up in a way in which by virtue of who you are by birth people make certain assumptions about you and want to deny rights. and as well as a latina, so the reason i tell you this is because it really shapes what i bring to the women's bureau in a lot of ways. the struggle has been there from dave wan on behalf of my family, struggling to try to get an education because people thought by virtue of the fact i was latina i wasn't entitled, or i tell people at a very early age i want to be a lawyer and they would laugh and say you are poor, you live in public housing, for did that.

but the more people told me know, guess what, the more i said i will show you. so what i am really excited about is that in that struggle to try to get an education, in that struggle to be the person my dream of, the person i wanted to be, unfortunately that struggle still happens today to our girls and you should be aware of that because as i go around the country and speak to the girls it is important why these discussions and these plenary session are important because we do need to be linked not only to the past, not only to the present but also to the future so this is very important. that's why i say that now serves as a great katulis for all of the change, and the struggles i had a family than of my neighbors, too, my community,

mining region and now the nation so the struggle and its global why the week. i get to meet with international delegations from all over the world. they have the same problems we have exactly, equal pay, the fact there's the violence against women, the issue of the workplace flexibility want to know what are we doing to a certain extent they hope it is a gold standard and behind the kerf but won't say it's an incredible honor for me to be here to talk about what we are doing in the administration to help women and i am proud to work under the leadership of president barack obama. [applause] that's right. the secretary of labor who is the first platina in the history of the country to be in a provincial cabinet.

that happens because our president understood the need for inclusion and diversity and that's why it makes a difference who sits in the seat. [applause] or president demonstrated a genuine commitment addressing the challenges women face and one of the things he did was the council on women and girls headed up by tina and many of you work with tina across the country on many issues but so do we. to share with you the council has to missions, one is providing coordinated response to the government on the challenges confronted by women and it's been sure the cabinet level agencies consider how their policies are impacting the families so this is something i have the honor to work closely with the white house in particular.

the president also early on what did he do? he appointed two women to the supreme court, not one but two. [applause] degette bragging rights right elena kagan went to the high school i went to which is hunter college high school. not at the same time. but also the first latina, how big is the, that's a huge. then you have women, so data by women, valerie jared who's the senior advisor to the president and allin rosenthal in the white house and is there as a white house adviser on violence against women. that's the first time i've ever created a position like that in the white house and that is because i to the gobi is the president and vice president care about the issue of the violence against women so they have someone right there in the

white house fighting for us. [applause] women obviously have unique, healthy and as you know one of the major pieces of legislation the president was able to get enacted in the affordable health care act which affected now 39 million people now have health care that didn't have it before the passage of our legislation. [applause] in the 2014 it will be illegal for insurance companies to deny women any coverage because of pre-existing illnesses or to charge more because they are women also to 15 million women who were uninsured to now game subsidies for coverage for health care and 14 print 5 million that aren't insured will benefit from the provision of improving coverage and reducing premiums.

but the great thing is it expands access to health care and that is part of a wraparound support women and families need and the great thing about it is that allows kids, for those of you that have kids whether the are in college or not they can stay on the plan until the or 26-years-old, which is really important, and also, women can receive preventive care without having to pay a copay for mammograms and that's something that is really has helped i think to improve the lives of working women went to leave to women. the president of the recovery act also spent $2 billion on child care development block grants, a billion for head start and another billion for early headstart. that's important. we need the record of services on behalf of women. [applause] the child care tax credit as well as the enacted unemployment insurance to help particularly

women in for instance to cover part-time workers. but the important part of the act was they put $225 million to address violence against women and that was huge. [applause] as you all know the first bill of bill lee ledbetter fair pay act. [applause] and he has called on congress to pass the paycheck fairness act. [applause] the number of small businesses that are being created are being created by women, and part of fog small business job act as well as the recovery act, the president put 16 times texas for the small business is coming and

you know when the women create the business she hires other women's that's good for the economy and good for us. [applause] the wall street reform and consumer protection act puts strong consumer financial protection, the strongest in the history of the country as a result of the crisis that occurred and that is also headed by elizabeth warren. [applause] our administration supports the healthy families act which would provide seven paid days for all workers and that is part of workplace flexibility is important for the components through the policies and our president has been a consistent champion of the reproductive choice and preserving the women's rights on the roe v wade. [applause]

but our secretary has been a champion for the women's issues as well and so she doesn't stay behind. and she has been a champion for women's issues as well as environmental issues. so i want to share with you some of the things we are doing in the department of labor because our society has made tremendous progress eradicating barriers for the women to succeed but as we know we still have a little way to go. so, for example, in terms of the inequality continues to persist in the pay gap we know the winner earned 81 cents per dollar. african-american women make the gap merger at 69 cents per dollar and for the latinas it is 59 cents per dollar. if you look back in 1963, the pay gap was 59 cents per dollar for all women, and so the latinas in the 1963 era so we have to get a lot of that.

so, president obama believed in the equal pay, and all of you i think in your book in your hand out received this book. that's what we put together because we want to make sure you have the information at your hands and this information the last time the government produced it is when eleanor roosevelt in 63 was part of the commission so this is a way of updating the 21st century data on women. [applause] if you go on the web site we also have several publications i want to point out to you. one is women's employment through the recovery. the other is black labor force in the recovery and the latino labour force so i want to point that out to do as other

references on the research information. let me just share with you a few things that report shows. in 2009 when one of eight women which is 16.4 million women living in poverty the largest number since the census began collecting this data in 1966. this is nearly 5 million living in poverty now. women of all racial and ethnic groups experience higher poverty than white males they're more likely to be poor than white females and slightly more than a quarter of both black and latino females have family income below the poverty line compared to white which was 11%. older women are more likely to be poor than older men and it is a real big issue as the baby boomer generation starts to come

on line. we know that women spend a lot of money and as part of the spending of like to do it turns out that we account for 80% of all of the u.s. consumer spending right now. so, what does that mean? that means women have the underpinning of the economic health and we cannot ignore that and the policies address and ev the issues of poverty and ensure economic viability for all women. i also want to share with you a couple of things with regards to our secretaries. she talks about the job for everyone. my translation of that is good job for women. and i have for priorities i want to share with you that i've been working on the last year-and-a-half. one is equal pay because it never goes off the table.

and i was looking at the 90th anniversary and went down to the archives. in 1920 the first women's bureau they were advocating equal pay for women back then. so the struggle has been going on for a long, long time. we also are promoting higher paying jobs for women. we want women to get on the ground for this new economy. we want as i call it a conscious inclusion of women to the grain economy because we know those will be the higher-paying jobs of tomorrow. the women's bureau will come out in the next month or two with a guide is called wide-screen is a color in its for sustainable green hotjobs. look out for that because we have tried to concentrate a lot of information about the green jobs and green of entrepreneurship. as a that is second. third is workplace flexibility. in the history of this country

you never had a president talked about workplace flexibility to read the president had a forum and in that forum a year ago, he and the first lady talked about the issues real to them as a family trying to juggle the kids, the law firm and careers. so as a result we want to amplify that information. we've been going around the country getting a national dialogue on the workplace flexibility. many of you participated in our dialogue across the country and we talk about the issue for the business cases that's important. many of them will not want to try so we already know that the businesses. the other thing we talk about is how we make it work, workplace culture and also the work effective because we cannot let that go by. so we've been having this

through the year. our last dialogue will be june 30th. will be in new york city, and we talked about in various places how to get flexibility for small business, how do you do it for manufacturing, retail, health care, but a new yorker would be white collar jobs and we are very excited that the highest ranking woman will be one of our keynote speakers so we are very excited about that. and last but certainly not least is homeless women veterans. as i go across the country, most people understand women are serving the military more and more every year but what they don't get is the fact on any given night there are 6,000 to 7,000 homeless women veterans, and every city that i go i visit them, talk to them. yesterday i was in a shelter here in tampa called tampa

crossroads and, you know about it, the official her during a couple of things coming sessions across the country across the country. we ask about how they got there what was the trauma we were coming out of a trauma guide for the providers to understand the unique and multiple trauma as the women are facing when they come home and have to deal with this and sometimes they don't tell anyone. sometimes it's post-traumatic stress if they are married to someone domestic violence see and fees on top of each other then you have a situation in which there are higher risks of being homeless so with this guy is intended to do is explain to the providers how do you treat the trauma and get them back into the job to the communities and with families so we are very excited about that. [applause]

we are also doing a stand down here in tampa sometime in september so stay tuned for that as well. there are many things we are doing in the department and the administration on behalf of women whether it's non-traditional jobs, whether its employment and training there's a lot of things we are doing, so sometimes no one gets the message out as well as we would like to but because you are here i want to make sure you understand we get it and we are here for you and i can tell you that as far as the women's bureau is concerned we are here to advocate on your behalf. so, let me say we work closely with our partners and what i would like to end with and conclude with is a couple of quotes. one is by president obama who has made it clear that, quote,

these issues like equal pay, family leave, child care and others are not just only issues, their family issues and economic issues, and of quote. he's also gone on to say our progress in these areas is an important measure of whether we are fulfilling the promise of democracy for all of our people. and roosevelt once said women are like teabags. you never know how strong they are until you put them in hot water. [applause] she was right. women are strong and proven caretakers. we've proven it in the classroom and in the workplace, we've proven it as breadwinners and we've proven it publicly time and time again. change has come about because women like yourselves have been strong and put a good fight and a good fight not just in itself but for others.

these issues are our issues and it's important for us. dorothy height said no one will do for you when you need to do for yourself. we cannot afford to be separated. we have to see that all of us are in the same boat together. so together we will proceed forward and i want to say thank you so much and i appreciate the opportunity to talk to you. [applause] [applause] >> thank you so much, sara. i know we do appreciate all the work you are doing in the women's bureau. we can't do with it without you and i am thrilled to see the

women's bureau reinvigorated in the past years. [applause] our next speaker is a scholar, and author an entrepreneur for social change and justice. she is the founder and ceo of global policy solutions, a social change strategy firm based in washington, d.c.. she is best known for her advocacy and analysis of health care issues, security, education and civic engagement, and especially for her analysis of these issues on outlets like cnn, fox news, abc news, national public radio, c-span, black entertainment tv and al jazeera. her latest book is called "the political action handbook: a call to buy it for the hip-hop generation," which michael

moore, yes, that michael moore, called a hard hitting analysis of what it takes to become politically active. at a global policy solutions dr. rockymore for its strategic leadership and coalition building for nonprofit organizations like the robert wood johnson foundation, the alliance for excellent education and congressional black caucus foundation. she serves on the board of the leadership for healthy communities and the national committee to preserve social security and medicare. [applause] it's a wonderful adlai organization. and just so she doesn't get bored with her life, she's also a member of the delta sigma theta sorority. please welcome maya rocymore. [applause]

>> moore terry. i appreciate the invitation, and i am especially thrilled to be here before the national organization of women. [inaudible] for women. excuse me. i want to follow-up with sara and sending olga and sonya and also patricia schroeder for her leadership. [applause] for laying down the foundation we all stand on. and so it is that when i was in graduate school i actually taught in the women's studies department in addition to being a political science student. so i taught multiculturalism, women in politics, and through that process, i became an activist if you would come and there was a group of us who were really engaged in really

standing up. we organized take back to the -- take back the night marches and we got various people to come on campus to talk to us about women's issues. we even organize our own protest movement, okay? so one day we heard a woman had been assaulted in a frat house off-campus so we were sitting together in the room talking about the injustice of it all and how the women's assault issues are taken over by universities that don't want to acknowledge violence against women on campus is etc, violence in general but especially against women and to take matters into our own hands and we actually coordinated a commander of operation.

we decided to meet -- we developed the plan and got our cardboard boxes and cut out a little letter and get that today and in the morning and some was postponed one corner to another post on the other, they were watching out for the cops and we got our stencils and we snockered up to the frat house and we stenciled on the wall of the garage "a great disk lives here." [cheering] [applause] -- "a rapist lives here." in the past three years or so, i have been having fantasies about doing a commando operation on the capitol. [applause] and you know how the shrink-wrap buses that have a sign on them i have a fantasy of coming to the

capitol and shrink wrapping it and putting a sign across it that says misogynist work here. [applause] [cheering] now what do i mean by that? how many of you have heard of paul ryan? is anybody from wisconsin in here? all right. this is pretty cool. he recently introduced in the house and the senate considered a bill focused on the wrong and plan and the ryan plan said listen, we are facing as a nation a budget crisis and guess what, we can't afford -- we can't afford -- jr saying let's raise taxes on the wealthy who can afford to pay their fair share of what's going on in this country where are they paying their fair share in terms of making us the alleviating budgetary problems we are

facing? instead of doing that, he said let us redo -- in fact that us eliminate medicare as we know it. let us create a black grant program for medicaid and let us, for all older people let's give them a voucher, about $13,000 where they can go and try to find medical care. i don't know about you, but let's 65 or older you have heart disease, you might have any number a provider in this country who's going to provide you with all the medicare that you need come all the medical care you need for $13,000. but what they are doing is basically trying to de construct and actually destroy the social safety net, the social infrastructure system as we know it, and that is unacceptable. [applause] that is unacceptable.

there's been bills introduced introduced recently by prominent republicans in the house to go back to the old proposal of partially privatizing the social security program. when the women here medicare, social security, medicaid, women in general are not hearing these are gender issues. these are gender issues. why is that the case? when you are looking at the older age population guess who lives longer, ladies. that means we are represented disproportionately a moment of those dependent on medicare programs. when it comes to women and their children who are low-income

guess who's disproportionately represented in that, ladies. women who are the caretakers and primary caretakers of the children, so medicaid is a woman's issue. when it comes to social security, it is a women's issue and this is why. social security is an old age problem, it's a disability program and it's a survivor program. now i already told you that when men are disproportionately among those who are older age because we live longer periods of the retirement benefits under social security are incredibly, incredibly important to us. disability the net or important to us as well. the survivor benefits, because we are often left with children and another breadwinner dies leaving us with children to take care of social security providing life insurance benefits to our dependent children, and our households actually benefit disproportionately from that. in fact, when you look at social

security across the board, women and their children are a majority of those receiving social security benefits. but when you hear that they want to privatize or cut social security in any way, know that it's a direct threat to hugh? women. okay. why isn't it ironic that women are not responsible, certainly, for taking our economy over the cliff but there were not any women who were the head of the universe or the international companies that kind of did what they did to the housing market and also do what they did in terms of all these strata evidence and everything else but when it comes to having to pay for it is it not an acceptable the first thing that you're going after the programs important to the women in their families to be i think it is unacceptable. and so we also have another situation going on. not only is it the assault on the social insurance programs

that person's important to our families, it's also the cuts they're talking about to the feeding program. it's the assault on unions. many of them are provisions disproportionately represented by women like teachers. it certainly also -- i want to expand the notion of the public goods by looking at even asking you to pay attention to what's happening in the public education and certainly the squeeze placed on the families in terms of rising food and gas prices. now, it's also ironic that we know the wages have been stagnating for the middle class and the rest of america for quite some time that the rich have been getting richer and the wages for the rest of us have been stagnating, okay? it's ironic that stagnation has happened as the women have become a larger portion of the work force and of course if you are a conspiracy theorist what was the quote, you know it

probably is. they are out to get you. if there is a conspiracy in this i certainly think that that is not coincidental. we know about the feminization of poverty but we also see the feminist u.s. economy. so what do you do when all of the economic forces are lined against your success and well-being? when the people in power currently are seeking to destroy the things that have made the country so great for the past century what do we do as a country? the title of the session is beyond the war on a whim and a feminist vision for a just society and i would like to pause at several things. one is something you absolutely already know, and that is that we have to have and have to strengthen our agenda and it is

an economic and social justice agenda. so one of the tenants of that agenda, one of them is when you are talking about tax cuts we have to say no. it is a zero sum game. [applause] that policy should be part of a feminist agenda. when they are talking about taxes, giving tax breaks to the wealthy know that it's a zero sum game because as soon as you allow the break they will turn around and say we need to take it from somewhere else and that's where the threat to the program rely on come from so we have to have an expanded notion of economic justice the requires wealthy corporations and individuals to pay their fair and we need to take a stand on that. [applause] and you know, --

[applause] they say americans coming in the coming year aspirational, if you're poor, middle class, you ought to be wealthy one day, so we don't really have the guts as an american society to really go after the wealthy. we don't believe in class warfare. i want to tell you this, if you're losing your home, if you can't pay your bills, if you have no food on your table, if you have no clothes to wear, then you certainly believe -- and if you know that the policies are in place to go after everything that would support you but then protect those who have everything in this world that something is wrong and we have to step up and do something about it. [applause]

we need to put pressure on corporations, we need to operate not only as voters but also shareholders putting pressure on corporations to go after excessive executive compensation. we need to have enlightened leadership. no of course i know that with a series and literature that women bring a different type of leadership. i would beg to differ. it depends. i've worked for women who have been wonderful leaders and i've worked for leaders to act like men. so when we talk about the enlightened leadership, first we are talking about both men and women. that they have to be enlightened to understand the importance of gender dynamics, but we also can give a path to making sure that women in our leadership can keep and maintain the notion of a public good and that we operationalize that how we interact with each other and certainly lead our

organizations. the last thing i want to say because my time is up and i have a whole lot to say that the economic and social justice and a practice political party engagement, so that means that it's never time to sit down just as soon as you win one battle the next battle begins. you either have to strengthen and protect what you have already won or you have to expand the agenda to go after other pieces of the agenda that hasn't yet risen to the top of the public profile. and so with that, that means that warriors like yourself, like ourselves can never rest. we have to keep going and that also means we have no permanent friends, no permanent enemies, just permanent interest. [applause] and so with no disrespect to the president of the united states of america, i supported him and i will support him in the next election given the lack of other

options, but we absolutely have to maintain and hold their feet to the fire to do the right thing. [applause] and that does not mean being polite, that doesn't mean being polite. sometimes it means speaking the truth to power, sometimes it means stepping up saying what do you think? sometimes it means calling and instantly saying you need to do the right thing. the reason i'm worried about that right now is because president obama has just stepped into this debate of and the debt ceiling. the republicans want to take the country over a cliff yet again and they want to do it by basically destroying the full faith and credit of the u.s. currency of the dollar by basically making us desalt. the president stepped up to the party and is going to directly

into the negotiation. we know the president likes to be liked. and we also know that he's very sensitive to criticism for the other side and also leads to him actually getting enrolled in any negotiations we serve in the form. so i would argue that we are at a moment here. social security is under threat, medicare is under threat, medicaid is under threat, a union bargaining is under threat. you name it we are at 80 moment we need to a rise or fall and that means we need our leaders to be strong but it is going to take you to make these leaders stay strong and that means holding the democrats to the fire and that also means being in the face of the republicans. thank you. [applause] [cheering]

[applause] >> i've heard maya rocymore speak before and she does not disappoint. thank you so much. for your words. [cheering] >> i think that sam bennett has already had to leave but definitely her name is maya rokeymoore. gough longline to

sheshouldrun.org. [applause] i am absolutely thrilled to introduce next a woman who has opened so many doors for so many women. we have a point of personal privilege, yes, marion. [inaudible] >> my name is marion weather.com indianapolis, indiana. next to me is stephanie of washington, d.c.. this year stephanie and i both became breast cancer survivors. on behalf of stephanie and i and other breast cancer survivors in the room and now across the country and across the world we want to thank patricia schroeder

for saving our lives. [applause] >> my name is stephanie and i'm surviving breast cancer. some two months ago i was diagnosed with stage 1 breast cancer but because of the stellar work of this woman before you, i and thousands of other women have a new lease on life. in 1993i believe in addition to various other pieces of astounding legislation, patricia schroeder was the driving force behind the women's health equity act, and also, i hope i get this

long name right, the cervical and breast cancer mortality prevention act. who got it out. the determination of these two bills and other things patricia schroeder did have in fact made it presented its breast cancer and cervical cancer screenings available to hundreds of women who have limited financial resources and in fact most astoundingly directed the dramatic change in the way that the national institutes of health did research on women because of course historical the they had done research on women's disease such as breast cancer and many others including the high incidence of lung cancer to my older sister among the women who never smoked. who did they do that research on? it was men and they were researching women's diseases on

the mn. thank you. knute testing has been developed such as the test which i just had a mere 4,000-dollar tested but, you know actually it's a kind of good company that does that. anyway, so -- [laughter] we are here. thank you. >> i cannot think of a better introduction for congresswoman patricia schroeder than that. [applause]

[applause] >> thank you. thank you. thank you. my goodness. that was very moving. i also want thank albany for scheduling that wonderful vote right here. [applause] to [cheering] what we have to remember is you keep working and sometimes it works. i also want to apologize to the woman over here the sheriff for an hour now and my sticker won't stay. >> i'm sorry i meant equal rights amendment. my sticker will stay on. >> we almost didn't have her

come. she said she couldn't. i said what the heck you're on the agenda, and she said that engagement was changed. any we come here i am. anyway, thank you. equal rights will ever come to florida, but us help. [applause] >> i have this terrible problem i made a mistake and i moved from colorado to florida to years ago and then i discovered what kind of a government we have down here. [laughter] you may notice i do have my pink uterus but then on and for those of you -- [applause] those of you who don't know, i was totally flattened when the speaker of the house told an assembly scott randolph from orlando, where i live, what he did is he sat on the floor of

the legislature and he said i have told my wife that if she really wants to be saved in this state on reproductive health she should incorporate her uterus because republicans never go after corporations. >> he should be disciplined for using the uterus word on the floor. some people on the floor are you wearing uterus buttons. but it only further is what this wonderful woman says about the war on women that is going on in the house none of this that is going on and legislatures of around this country and they are trying to push us back as far as they can and if they can get as economically dependent that's what this is all about. they really want to pull us back in and get us back in there.

the whole group of will lead the male has to be the dog had. you know that whole thing. it just scares me but they are all over the place and they are on the hill. they are part of that family group, remember? and so it is a real concerning thing that this is happening. and i also want to underline what she's saying because i think many of the democrats that we know and love are suffering from the sun from. [applause] this is america. we send them trying to explain but she did it again, a $20 million funded campaign already against all these

democrats including the president, it goes forever until they get it all and they are getting close to getting it all. but the good thing is then they have the money for the people and that is what we've really got to talk about tonight. [applause] there's so many things i want to say. we now have the splint slips and i can go on and on and i want to thank all of you who have worked for the equal rights movement and have rocks thrown at us and have been called everything we can, and then we get to stand there and watch urning for those open doors the pro-life people hockey mom and wonder what in the world we were doing.

now, i got into trouble with the press because someone said what do you think of sarah palin? [laughter] and i said well, about the same as i thought as phyllis schlafly and others like her. [applause] but i said the one thing we know is when you were to push open the doors you don't get to control who runs through. we are opening the for everyone. and they've really shown their ill manners. they've never stopped and said think you nor have they tried to open the door for one more person, so we kind of know who they are and we have the right to point out. and there is some good news that came out of that. think about this. if we can get more women running and we ever hear any of those

cultural or years of their attacking working moms, you can put in there not because they aren't defending little sarah. they're all out defending her working as a cultural war your. they also kept talking about how she was being harmed by six is on which i thought was hysterical. i loved watching those conservative commentators talking about sex is on and poor little sarah. period is really that is quite interesting. and the other thing i thought was quite interesting is they were talking about the daughter's pregnancy as a challenge. really? they did have to do a little twisting as they tried to get from that but i must say the rest of it is total badness. we have about women out there

that, well, i don't know what they are, but you're absolutely right, we have to look at the leaders that are standing for the right values and there are many people my wonderful friend, god love her, gerry ferraro. she lost because the red next i'm not going to vote for her because she's a woman. it's the guys are going to let them in the club or what was going on because the guys were not going to let them but invariably they went over and said i'm happy to hear you say that because i had said that they would have said i was a sexist. and i think my gosh, aren't be proud of ourselves how we stand together here and i do think that is one of the problems we have to learn to stand together so much more we have in the past

[applause] now, here is the amazing thing. we women are the sleeping giant in this country, we really are. if you look at the obama election in 2008, she carried the man 49-48%. over one sliver. among women it was 56. you have 56% of the women and lost 43%. what happened in 2010? we stayed home. we heard about health care and about part stupak remember that wonderful family member, and we heard a lot of our space friends one more time say to women you've got to take one for the

team. it is a team they never let us play on until it is time to take one and then it's okay you can come off the bench now you're going to take one for the team. wait a minute. i wanted to play on the team before i had to take one for the team. [applause] >> and women were just so doggone angry about it that they just didn't bother and it was hard to go out. but look what happens. and i am telling you we cannot let that happen again. and we cannot let the perfect the enemy of just getting by. now, what i think we really have to do is leave here and i will commit to have everybody go outside and find women that you can really work on and make sure to get to the polls. i will tell you something about

this state that made me cry. i literally was out registering people in the state, and the third time this happened i was just devastated. the first time i thought somebody is a little nuts. the second time i thought hmm, that did it. what happened is i would not and say you should register. it's important. honey, you're not from here are you? i said no, you can tell from my axson and not from florida but i live here now and blah blah blah. she said if you were from here you would know it makes no difference because the account our votes -- they don't count our votes in florida. [laughter] [applause] you know, there's a lot of people thinking that. so we've got to get out and they are doing everything they can to take the votes away from us. they really are. i could go on and on to the i know we are looking at the line

of sight. but my answer to stupak and these people talking about don't fund planned parenthood or contraceptive, people have to get a special rider they can buy their own writer for that. we won't have it in health care. okay then let's put men's viagra, the vasectomy, the macho men who won't wear helmets of a motorcycle, let's get them a little better for that, too, show them equal rights. [applause] i'm going to quit because i could go on for four hours but just remember if your dreams are not big enough and they scare you, then they are not big enough to beat the dreams of dhaka to scare you and we have to dream about when we are really on the team and when we are really on the team we may take one for the team occasionally. only when it is our turn. but if they are not letting us on the team we can't take it anymore, and the fact that this

is really serious, this whole thing about social security, about health care, all of this could come unraveled, and these dharma courts the decision and all was that, these are all impacting women and children and all of the cuts are women and children that is not the america that i am a part of. so, when in, people were going to tell you ten reasons they are mad they don't want to go vote, just tell them get mad and go vote. but the real reason to go vote, or you will not believe how bad your next time. thank you for everything you've been doing. thank you. thank you. [applause] [cheering] [cheering]

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and now they're released at the end of every week. so we are moving in a particular cameras present all sorts of challenges that these other areas don't. it's >> on today's "washington journal" can we discuss negotiations of a reason the federal debt limit. first from what to do executive director for the club for growth, david keating.

he is thought by former senator, blanche lincoln of arkansas. this is an hour and a half.eati, postcode let me introduce you to david keating, executive director of the club for growtht which is where? >> guest: it is a grouph, advocating policies that help lowate economic growth, things robt ow taxes, free trade, low inflation.e audience this morning about the state of the american dream. how would you assess it? guest: i would say a lot of people think things are looking like a nightmare for their family. host: what do you think? guest: look, i think there are a lot of positives in this country. i don't think, for all the flaws we have, we're the greatest country in the world. we have a great mix of people who have come to this country. almost everyone that's here has come voluntarily, and i think that's the one thing that gives us real strength. we have a good rule of law generally in the united states. we have pretty sound government overall compared to the rest of

the world, so there are a huge number of positives here. and we have a lot more freedom than around the world. so i think the real pluses of america are the people, the freedoms that we have, and the ability to innovate, and that's what has made america great for so long. host: as you know, washington is tied up in knots this summer over the looming debt ceiling deadline. guest: right. host: i saw that article from "usa today." one of many you see raising the question of what would happen if we reached the debt ceiling and no deal is reached. would you talk about how significant this debt ceiling question is and why or why not. guest: actually, i think it's quite a puzzling question. it's probably the most important legislative issue this congress will face during the two years. it will probably set up the debate about which direction the country wants to go in in the 2012 elections. so i think it's going to be really fundamental. the basic question is, are we

going to continue on the path that we're on. everyone recognizes there are a couple of key problems. one is our economy is not growing fast enough, so we need to pursue policies to expand the economy. and second, all the budget projections by the c.b.o. outside experts show that we have past programs that are unsustainable in the long run, and if we don't do something about this, the country eventually will weaned up in a situation like greece, where we won't be able to afford the debts that we're racking up. it's a very important question. they're not going to solve everything as part of this debt ceiling debate, but they can set up some parameters to put the country in the right direction or not. host: we've heard a number of people make the observation that, on one level, the entire conversation in washington has changed, that people are beginning to think seriously about how much government, the

country can afford, etc., a way to cut rather than looking for programs to expand. do you believe that there has been a change in tone in the city? guest: it's actually remarkable in many, many ways. you have the discussion really now today is, how much government spending can be cut, how much should it be limited, the growth of government. these are discussions that have not been seen in the past. a few weeks ago, the senate, by a large bipartisan vote, voted to end the subsidy for ethanol and allow ethanol to be imported without a special tax on it. that was an unprecedented vote. even the aarp has recognized publicly that changes need to be made to social security in the future. so these are -- they're kind of like preshocks for a political earthquake. clearly there's going to be a change in direction. but i don't think anyone knows the answer to how it's going to turn out.

host: we will open up our phone lines, and you can also reach us by to witter and by email as the conversation proceeds with david keating. we'd like your questions or comments for him. we'll go to phone calls in just a couple of minutes. you heard a number of people call us during the last segment, concerned about the ex-ploy -- exportation of american jobs overeast. i wonder what your opinion is about free trade deals and what role they have played in bolstering the economy or exporting jobs. guest: there's no doubt that free trade is something that has bolstered the economy here in the u.s. one way of looking at this, to make it easier to understand, is that the united states, one of the geniuses of the constitution and the founding fathers, when they designed the new united states of america was that we would have a free trade inside the united states. so new york couldn't put on special tariffs or import

quotas for products shipped from, say, virginia, and vice versa. so we've had a free trade zone here in the united states for the entire time of our country, and it's one of the things that's made our country great. the people in each state are able to do what they do best, and when everyone's able to do what they can do best and most sufficiently, everyone's going to be better off. now, that doesn't mean every person at every time is going to be better off, but as a whole, as a nation, indeed, as a world economy, we're all going to be richer for it. host: with regard to negotiations about the budget and debt ceiling, our first guest suggested that senate republicans are beginning to signal that there is some opening for discussion of tax increases in various individual programs, not so much looking at overall increases in the marginal rate, but finding ways to increase taxes -- say, for example, the corporate jet tax. do you have a line in the sand about taxes? guest: well, look, we think

that the key is to get tax rates down, and that is one of the keys to economic growth. we have a tax code where, whenever you mack a major decision, whether an individual or a company, you would be foolish if you didn't consider the tax consequences. . instead of maximizing the best investment to get the highest return on your money, people sit around and figure, well, what will the tax code get me in addition to what i might get from the investment? so we spend a lot of time figuring out how the benefits of the tax code instead of what makes sense economically. so the extent we can watch the tax rates and lower some of these tax codes, we can get more economic growth. that's the solution for the long run. you have to look at countries -- the countries doing well are the ones that can afford the programs that a lot of supporters and congress might

want. if we don't have the economic growth, we're going to be fighting over a smaller pie rather than something where everyone's benefiting in the country. host: before we go to calls, i want to talk about the attitude in washington changing. when congress comes back, the defense appropriations will be on the table. first of all, this is "washington post" this morning, pentagon costs are rising quickly. healthcare expense have outpaced those elsewhere. the c.b.o. projected on thursday that higher costs for weapons systems and healthcare will increase the pentagon budget by $40 billion over the next five years, at a time when president obama and many lawmakers are looking to cut military spending. that's item one. item two, this morning in the opinion page of the "wall street journal," the whole top half of the page, donald rumsfeld, the peril of deep defense cuts is his piece, and he argues why all those suggesting that earmarks are a potential target among others. then in the "washington times" today, winslow wheeler, we've

had him on our program before, defense appropriations, pork and gimmicks as usual. democrats and republicans alike pretend that austerity is the new rule. here's what he writes, it's a $649 billion bill close to another post-world war ii high, pretending reform and frugality, members of the house appropriations committee, democrats and republicans alike, have packed the bill with pork and gimmicks. the bill would spend $17 billion more than last year, but the house is calling it a cut because it's less than the original request president obama sent to congress in february. what's your reaction to all that? guest: well, i would not be surprised if there's plenty of pork in the defense appropriations bill. i mean, that's been a grand tradition for many years. i remember even ted kennedy, who was generally an opponent of defense spending, as long as the bomber was in part made in massachusetts, he was for that bomber.

that's something politics as usual hasn't changed in all departments of washington, and the defense budget is one where you've seen ear marks historically. >> getting back to the earlier conversation, people are beginning to talk about cuts, but they're still safe? guest: well, look, i think part of this is, the committee realizes the big fight's going going to be over the debt ceiling limit. that's where the hard negotiations are going to be put out. and then they will probably be given a new number, and they'll have to revisit that bill that they've worked on in committee and meet the new number. so if that's what happens, it's probably a good thing. host: so first things first. guest: look, here's what each department or each function of government is going to be getting, and then work out what you think you can get, the most bang for the buck, so to speak. host: let's get to calls for you. we're going to begin with a call from los angeles. michelle is a democrat there. you're on for david keating of the club for growth.

caller: given that you made the comments about the republican candidate mitt romney has developed an unshakable reputation as a flip-flop per uses federal powers to coerce taxpayers, and tim pawlenty is hard to pin down, who do you like? guest: well, what the club for we haveohas been doing, published a series of white papers on many of the presidential candidates, all of those that have declared publicly that they ought are going to be running for office. the club has a political action committee. we have not made a decision about which candidates to endorse and we may not endorse

any candidate for president. we have made three endorsement already for u.s. senate candidates. jeff blake in arizona. in the house, steve king for representative in iowa. we are going to analyze all of the presidential candidates. there may be some that we will declare, and if we do we will publish a white paper on them, too. a republican of michigan -- that will make him the third sitting member of the house tossing his hat into the ring. he opted not to run for a third term last year. do you have any early reactions to his entry? guest: we plan to publish a white paper on his record and i do not think it is going to be all that complementary.

we think it is great that people are putting their hat into the ring and giving voters a choice. we look forward to what his platform is in running a presidential campaign. host: what do you think the main theme of the presidential election will be? guest: what we are going to do to help grow the economy. two, we have an unsustainable budget for the future, so what is going to be done with that? so this is something that will be decided in the 2012 election. the control over the house and senate is going to be up for grabs. part of the debate should be should we solve these problems with massively higher taxes? you cannot pay for all of these programs by taxing the top 1% or 2%. or are we going to limit the

growth and try to make the economy grow? host: next up, ketith is a republican. good morning. caller: good morning. on this tsa -- doesn't anybody realize we have enough law enforcement agencies from all of the state's that have local police, state police, county police? these officers and these ex military -- they should put the tsa out of business because we have enough people in the united states because these law enforcement agencies when one gets on a plane, they are authorized to carry weapons. they are trained in them. when they get on the plane, they can give them rubber bullets.

when they get off the plane, they could be given their lead bullets back. it is an intrusion on the american people privacy. that would be a good place to start. host: thank you. cutting the government by cutting the tsa. i do not know how much we spend on the tsa. the question is probably how best can it be done and at the lowest cost as well? whether it is the current tsa or we have the airports or the airlines do it, i do not know but i suspect we could probably make some deficiencies there, too. host: ted is an independent.

good morning. caller: good morning. i think the jobs in the usa were cut because of jobs and wages. these are rich corporations and individuals do not like to pay decent wages and taxes, so they moved to china, japan, taiwan, wherever, korea. they are greedy and they are getting rich. the people that are left are still on employment. i think we need to put a moratorium on those boats that last year with taxes and wages because this country runs on taxes and wages. if we put a moratorium on them to not let them send their goods and services back here and pay for, you know?

then the government can help people that really need it, the ones that are drawing unemployment and the ones who know how to create these things and do it. let them create the jobs. they are taxpayers and they believe in good wages. let's quit handing it out to wall street, the banks, and the top 2%. just everything with the oil companies and the subsidies and the places that they do not need to go. everybody knows what is wrong. all it is is a bunch of stiff- necked republicans and democrats that do not want to do what is right. guest: there is a lot there. i would start by saying i would agree that there are tax policies making it more difficult for our companies and our workers to be competitive in the international market. one of the things we can do is lower the tax rates that are

corporations have to pay in the united states and we can be more competitive overseas. a lot of our companies are operating not only here in the united states but also overseas. when they make a profit overseas, they have to pay an additional tax on those profits. so the companies have an incentive to keep the profits that they have made overseas rather than bring it back to the united states. i think if we lowered that tax, a lot of these companies would like to invest that money in the united states. recommendingcomment the rule that is put on these other countries. that would start a trade war. if you are not going to take products from our country, we are not going to take products from your country. we export a lot from the united

states. we make some of the finest aircraft in the world. many airlines are using boeing equipment. i would not be surprised if you would see other countries not allowing boeing equipment to be sold in their countries or buy u.s. agricultural products. caterpillar manufactures a lot of earth moving equipment and construction equipment that is very popular around the world. a trade war is something like many wars, everyone is going to it.ud up poorer because of host: let's listen to senator harry reid talk about the budget negotiations. >> why have we done this? why have we pointed out these individual tax breaks,?

you add them together, they are worth tens of billions of dollars. iso appreciate my colleagues going down to the floor and laying out to the american public what we are talking about. guest: that is something i said earlier in the program. we have a tax code that is inefficient. host: so you agree with him. guest: what he wants to do is collect the money so they can spend more. these tax breaks are making our tax laws very inefficient and complicated. " we need to do is spur economic growth in this country. get rid of the tax breaks, lower the tax rates so people are not making decisions based on what the tax code says it. host: the next telephone call comes from cleveland. loretta is a democrat.

caller: mr. david keating, i want to change the conversation and bring it back on shore. my topic this morning is the deal, the bribe, the agreement, the pact, call it what you want, that the republicans in congress have made with grover norquitz. taxes pay for the cost of government. this deal, agreement, whatever it is, that the republicans signed with norquitz, -- my question to you is the oath that congress signed -- is it to the people or norquitz?

is this illegal? there should be an investigation on him. republicans say they are against a bailout, but they are for tax cuts and they fail to realize that tax cuts are mini bailouts. all of those bailouts -- $4 billion for the oil companies, $3.50 trillion went for jobs under the bush administration, and we did not get jobs. we got outsourced. i want to know when are the republicans going to be responsible for what they are doing to the country. thank you. guest: i think the original dge by n was this pleg grover norquist.

like many groups, there are tons of groups out there that circulate pledges. basically, it says that both republicans and democrats to sign it to say they will not vote to raise income tax rates, nor will they vote to reduce income taxes and credits unless those reductions are offset by tax rate deductions. that is the pledge that he asked candidates to sign eight. other groups circulate other pledges on social security, abortion, the environment. these things are a part of the candidate's platform when they run, and the voters decide whether they want to send these people to congress or not. i do not see anything illegal about the pledges. grover has not agree to give

money to their campaign if they sign it. i believe his organization does not even have a political action committee. i think the pledges are entirely legal and is something that is a part of politics. host: you might be interested in an op ed from the governor of massachusetts. the headline is -- mike on twitter wants to go back to the debate -- guest: there is no evidence of that. i would point to the prosperity of the united states. we have had a free trade zone, and everyone accepts it is a good idea.

certain states were seen as having certain advantages over others. another thing that i'd like to point out to people is we are all best at doing something, either individually or as a country or as a corporation. we would not want to pass a law that says only bananas could be grown in minnesota. bananas can be grown in minnesota but they cannot be grown very efficiently or cheaply. that is a simple example. yes, we could grow bananas and minnesota, but we do not want to do that because we would all be poorer because of its. host: this message also from twitter -- guest: yeah, i think that was something i said earlier. it would help the economy grow

faster. i think that is one of the keys to solving our budget problem and is actually crucial. one way to grow the economy is to get the tax rate down. corporations would make investments based on how they can grow jobs instead of balancing the tax considerations. host: of maryland, you are up next to my duty is a republican critic caller: good morning. i love c-span as always. i am very concerned because i think we are being led by charlatans and magicians. there was an article in the washington post this morning about bank fraud. every day, every day, repeated the, we read about fraud in afghanistan, iraq, pakistan, and now the congress wants us, after

giving away our jobs, not fair trade, free trade agreements -- now they want to go back and give them away with korea. i cannot believe the direction that this country has gone in. we keep talking about corporate tax rates. that is the key word. "rate." they are not paying 35%. they are paying 4%, 6%, 9%, and i am making up the difference. the irs is after a relative of mine who lost their job. they owe them $5,000. karzei and his brother have walked off with billions of dollars and our congress cannot seem to stop it. guest: well,