there. obviously, a lot of these countries, and it is very disappointing to see fraud and hopefully over time it will go down, i do not want to make any excuses for it because there are no excuses for that activity. a lot of these countries do not have the same developed a rule of law that we have over here. even in our country, there have been instances of fraud and bribery and things like that. there were huge problems in its new jersey and in the past. in illinois, rod blagojevich is it going off to jail unless he wins his appeal. clearly, fraud is something that goes with politics and government. hopefully, we can cut it to the most extent possible. you also said something about the trade agreements.

here in the united states, we did not impose any import restrictions on products from the central american free-trade agreement countries. and no import quotas or tariffs. at that agreement, those countries to lower their taxes or any restrictions they had on u.s. products. it was a total win for the united states. the same thing for the columbia free trade agreement. we have no import taxes. this trade agreement would make it easier for u.s. products to be shipped. host: jimmy on twitter asks -- guest: well, i think tim

pawlenty got it right when he said we should have a goal in the 45% growth. i do not think we can make their goal every year but it is a good goal to have. let's have everyone come up with the best ideas we can to get our economy growing as fast as we can. what was the second part of the question? host: about energy costs. guest: energy costs will impact our competitiveness around the world. if we could figure out a way to provide energy more efficiently in the united states, that would give us an advantage over other countries. host: next up is fort worth, a democrat. caller: your comparison of trade agreements between the states and the trade agreements between other countries does not make an ounce of sense because we live

in the united states and what these companies have done it is at last the united states and then come back to us using cheaper labor. how in the world is that fair? it is just frustrating to me to see that you are sitting there talking about how good freed trade is for us when 300 million of us cannot buy anything in this country for our households made in the united states or very rarely. he would have to search for days just to find a coffee pot. how do you justify comparing the two things between the states and other countries? besides that, this thing is just

frustrating to me. how people like you can sit there and talk like this. the only trade agreements that we have made it that made any sense was nafta, between north america, canada, mexico, and south america in our own time zone. the rest of it does not make any kind of sense. guest: at the time, nafta was very controversial. the same arguments were made. there was an argument that all of the american jobs were going to go to mexico. it turned out not to be the case at all. joanne believes that nafta has been a good thing, and it has been, not only to the u.s. but the other countries that have

signed onto it. earlier when you talk about a free trade zone for the entire unit states, that was something that had some controversy at the time and a certain states were seen as having advantages over the others. it worked. we had a free-trade zone in the united states. we have a free trade zone with canada and mexico. it is going to work for all of us if we have free trade zones with other countries as well. that is not to say that there will not be problems. there will be dislocations as adjustments are made, but over the long run, it is going to make us richer in the united states and people richer all over the world. people trying to make a living in other countries, i think it is good that they get out of poverty as well. the final point i would make is if we start this trade war and

decide that we are not going to take products from other countries, we are going to massively and not only to lose jobs from exports closed off but prices will soar in the united states. it will be hard to secure these other products that are made overseas and we will see sharply higher prices. host: i want to tell you about our guest as we wrap up our time with him. prior to his position as the executive director of the club for growth, he was a senior executive in washington director. he served on the national commission of a restructuring of the irs. how did you get so interested in tax policy as a career? guest: that is a good question. i guess a came partly through my studies in college and after college. i spent a lot of time reading up on economics.

i really do believe that economic freedom is a key component of freedom. and the national taxpayers union was a place that i had got a lot of attention for working for rights and lower taxes. i thought it would be a great place to work. it was very interesting. i was able to do a lot of things there and with supporters on capitol hill. i also remember working on other things such as passage of the taxpayers' bill of rights, adding indexing to the reagan tax cuts in 1981, and that has made a huge difference over time. in the debate of how taxes will be handled by congress. it has been very interesting. host: a twitter user asks this question -- guest: well, actually, they are

not the lowest in 60 years. after 1986, there was a bipartisan tax reform act with the income tax rate was 28%. today, the top rates are in the high 30's for income tax alone. the rates are close to 40%. if you count taxes at the state and local level, in many places, it is higher than that. if you look at when the country has grown and done particularly well, it is when we have lower tax rates. host: michael is an independent. good morning. caller: there are a couple of things isee go on. that is our constitution -- if washington and jefferson were alive today with abraham

lincoln and the assault of the mess we were in, what with a really say? and they would be shocked why we are in this in the first place. guest: i agree. we have not talked about this this morning, but one of the items up for debate on this debt ceiling is the idea of a balanced budget amendment. thomas jefferson wrote about a single amendment that he would like to add to the constitution, and that was a balanced budget amendment because he thought it was important to secure the financial security of the country in the future. i think he was right. interestingly, a lot of the states have adopted restrictions on its debts or deficits. while some states are in bad shape financially, some of them have a weaker balanced budget rules, by and large, the state

finances are on sounder footing than the finances at the federal level. what is the difference? do we have a better quality of politicians at the state level? i think some of them would argue that we do. i do not think we have much of a difference. barack obama used to serve in the illinois legislature. the difference is we have a different set of rules at the state level and we have no limits at the national level. so i think it makes sense to have a balanced budget requirement. i think thomas jefferson would of said, "see? i told you so." caller: i think the whole thing it stems from democrat jealousy of almost everybody that makes it in america because we all know democrats are leeches that sock on the rest of us. people who earned their money work for it and people like

obama say you did not earn this money, it is my money. we always hear this jealousy about corporations and rich people from democrats because they are such losers. they cannot seem to run a corporation. we just saw the economic collapse. they are all crooks just like obama and clinton. guest: i cannot agree with a lot of those sentiments. there are many people who run businesses that are democrats as well as republicans. i do not think people's political outlooks has anything to do with how they can run a business. i think there is too much focus among too many democrats about class warfare. i do not think it does our country any good to pretend we can solve our problems by raising taxes on the highest 1%

or 2% earners in the country. there is not enough money there to balance the budget in the long run. it cannot happen. they are trying to mislead the country about this. if you raise taxes very, very high on those productive workers, that is going to have an impact as well and have an impact on prices. if you raise taxes on successful doctors and physicians, what do you think they are going to do customer they are going to try to raise the amount that they charge. there is no free lunch with this tax policy issue. if we raise taxes on the rich, i suppose they will raise their prices or something else. it is just a way for politicians to hide the burden of what they are doing.

i think it is pretty clear. host: melvin is a democrat. caller: first of all, it seems like every morning between the second and third segment preaches republican talking points. jim was talking about democrats and putting money into successful businesses. basically, they are paying less taxes than other people who are working for them in lower positions. secondly, this gentleman was talking about the irs and the tax policy. most billionaires are paying the same percentage of taxes than a person making and $37,000

a year. most of them are not paying anything. when you have these individuals on, you need to have somebody on that can prove or come up with paperwork to prove their points rather than throwing out this information. thank you. guest: i would be happy to post something on our website, and you can look later today, about the percentage of taxes paid by the top 5%, top 2% of the public compared to the rest. most people, especially if they have families, if they are earning $30,000 a year, they are not paying any income taxes at all. it is hard to pay less than 0%.

so, go onto our website, and we will point to some of the evidence about how much the rich are paying in income taxes. host: the last call for david keating is from florida, a republican there. good morning, calvin. caller: thank you for taking my call. all of us in the united states who want to support this country do not want to buy eight any goods except american. i am surprised by all the cars that i see. we could propose our own prohibition for all of these goods coming in by doing that. the second point i would like to make is in this country we need

to show our representatives publicly funded their campaigns to get elected because the more they are funded by corporations, the mrore they are in the pocket of those corporations. we speak a lot about freedoms in this country, and we need to protect those freedoms. there are other freedoms that we seem to forget. even as a republican, i have to say i agree with ron paul because he seems to think that you can have a freedom without responsibility. to give an example, if the things we can do everything we want, why doesn't he drive down the wrong side of the road? host: we are going to stop at that point. americans buying american.

guest: it is a free country. a lot of companies to advertise that their products are american-made. if people think it is important, the information is available. many products have where the product was manufactured. public funding of campaigns, he suggested -- personally, i think that is a bad idea and i would not support it. i understand people who do support it and i understand their arguments. i do not think it will be something that will happen anytime soon. i think the point that people need to take responsibility for their actions -- i hope that is something that everybody can agree with. host: how do you think the next couple of weeks are going to play out? guest: i really do not know. it is a very difficult political

problem to solve. you have the house of representatives controlled by one party, fairly conservative, and then in the senate, you have a split almost evenly between the two parties. did you have the white house controlled by a democrat. how'd you get these three political actors to get there? how do cobble together the votes in the house and senate for something that helps the country? i h hope that can be >> "washington journal" continues. host: our next guest on this friday morning, july 1, is blanche lincoln who served in the senate from 1999 until 2011 and is now in washington and a d.c. -- in washington, d.c.

guesfirst we used to this advertisement. it is the american dream dead? how would you answer that question? guest: absolutely not. i have seen the good and the bad. you know, i remember, as i do almost every day, but certainly right now as we celebrate the fourth of july, for whatever faults is that people may find with our country, it is still the greatest place and the greatest country that we could be blessed with to live in. it is our responsibility. host: what makes it the greatest place? guest: of the fact that we can come together and talk about what the best ways to make our nation great. we got ourselves tied in knots right now but if we continue to remind ourselves how blessed we

are to be here, hopefully, we begin to come together and realize that members of the senate or the house did not come here or should not have come here with the idea that they are going to create a work of art or solve the problem overnight. it is a work in progress, and there is a lot to do right now. we have to buckle down and do that. there are some things that you have to give in on to create a conglomeration of ideas to move forward. we have become so focused on this in the gratification of solving the problem overnight. host: how do you see the next few weeks playing out? his description of the interest among the players at the negotiating table suggested he does not know. do you?

guest: i do not think anybody knows what is going to happen. i join the american people in trying to reinforce the congress . allowing our nation to default is not an option. we have watched other countries that are at the brink of that. it is one thing to think of greece in this situation, but when you think of our nation at that breaking point, it is just unconscionable. it is not just the consequences for us as americans but for the global economy. host: what we do say to the members about the negotiations right now? guest: i would say, first and foremost, this is a critical question at a critical time. be willing to work in a bipartisan way. it is interesting because i

think we realize the value of working in a bipartisan way. we are joined by other congressmen, democrats and republicans. bill has been a democrat and republican. nonetheless, working together and realize that you have to take steps and have the checks and balances -- dealing with the deficit is going to take tough choices. it is going to be a balance of things. we cannot do it all with revenues or tax expenditures. you have got to look for that balance. that is what i would be encouraging my colleagues to do, to look for that balance. put some benchmarks, some targets that you have to meet with consequences. host: what with the message before the gop? what would the message be for

the gop? guest: i have certainly voted for my share of tax cuts because i believe in them. at the time when we had a surplus. just as a former chairman greenspan mentioned, we are in a different time right now. it is the complete opposite in terms of the surpluses that we had in that time when we were able to give people those tax cuts, we also had not been through 9/11 or had the extreme expenditures and our military spending. you have to look at where we are at the time to solve the problem. we did that in 1993 when i was in the house. it is just like a doctor who sees a patient. every patient is different. host: a couple of specifics --

the president has argued for a while now to roll back the tax cuts that were inaugurated during the bush years. looking back on your voting record, you have passed different things at different times. what is your opinion about the bush tax cuts? guest: well, as the last of four children, my father said we were all very independent-minded. i do not know what you have to stay with the same remedy for whatever time it was. we are in a different time. let's look at what we need right now to grow our economy and to grow jobs. we need to make good, sound investments. coming out of the election from the last cycle, people were frustrated out there. they were mostly frustrated with the fact that congress and washington -- they are just not

productive. the lack of productivity up here. making investments in infrastructure, long-term investments that we know will grow the economy and help us get out of the hole that we are in in terms of job creation. host: water some examples? guest: the faa reauthorization would be great. no child left behind. we are almost five years overdue. these are good, solid investment in infrastructure that not only would create immediate jobs but would also create jobs in the long term. most people have a gps in their car. you get on the plane traveling commercially, there is a striking number of air travel where they don't have that.

there are so many things there that would help us in terms of manufacturing, investment in infrastructure. whether it is the faa, the highway bill, education, the farm bill. multitude of different things. the trade agreement. i know you talked about that earlier. i was very supportive of a trade agreement. opening up trade with other countries -- we are in a global economy now. i very much supported fair trade. we have got to work on the economy. host: you mentioned agriculture. did the senate make a recommendation on the ethanol subsidies? guest: i have to believe that we are never going to alleviate our dependence on foreign oil and

moving to the kind of volume of renewable fuel if we do not allow everybody an equal chance. we put all of our eggs early on in the basket of corn-based ethanol. it needs to be -- and cellulose ethanol and biofuel. you cannot grow those industries and those technologies if they cannot be cost competitive. do we need ethanol? yes, we do, and we need to make sure we support it in a way that is reasonable and balanced. host: let me get to one other big topic and then we will start taking calls. that is the medicare debate. what do you think of paul ryan's medicare plan? guest: i think there are too few big steps and not enough baby

steps. i think it is critical for us. i was willing to vote on the medicare part d which a handful of our democrats did that with president bush because i could not imagine a health-care program for seniors without prescription drugs being integrated into it. was it perfect? no. did it take the necessary steps to get us started on that discussion and debate and the evolution of a senior health care plan that had prescription drugs? yes, it did. i think that is how we have to approach medicare. a baby girl born today as a 50% chance or better of living to 100 my husband's grandmother passed away a couple of years ago one a week shy of 112 living in her own home. these are the things that we are dealing with. people are living longer. i was very engaged with care

coordination, wellness, how we coordinate care for our seniors in order to make sure not only are they getting the appropriate care but getting it in the setting that they want and having the quality of life that they want as well. medicare is an issue that, coming together, we can work to make better. host: from georgia, a republican. you are on with blanche lincoln. caller: great show. only in america could somebody of limited ability, an independent auditor for fortune 500 companies, and along the way, i was threatened about every way a person can be because i covered large sums of money for my client. in 2006, i want to go ask my

bankers some questions that frightened me to death. in testimony before the financial crisis, the vice president of citibank admitted that their bank in 2007, 60% of the loans were known to be bad. in 2008, it grew to 80% >> caller: six weeks later, citi is too interconnected and too big to fail implying we have to bail them out again. isn't this a declaration the americans are now enslaved to criminals? that's my first question. the second question, and this relates to your role in derivatives regulation before you left. the stock market recovery began almost to the day, the current one, almost began to the day that the congress and financial boards changed the rules to pretend that toxic assets were no longer toxics and only

temporarily impaired. this week, the fed tried to sell some of the toxic assets to back our money, and they found out there was not much of a market for the things, and this stems back to the modernization act in which congress gave banking industry exemptions from the state gambling law and state regulations. doesn't this mean our money is on the same footing as bad gam ling debts in attempt to lie our way to prosperity? >> host: all right. complicated questions. starting with the derivatives. >> guest: sure. first and foremost, it's important to recognize that, you know, from the cna, we discovered there was a $600 frl narcotic place acting out there with no transparency or oversight. we had no idea there was that

volume of activity in those hidden markets until we began to see the problems that existed, and you're exactly right. as chairman of the senate agriculture committee, we worked hard to put together a tough bill to ensure that those risk management tools would go through more of the kind of transparency and oversight that is used in the stock market, and i thought that was necessary. i think it's going to continue to be necessary, and i think others believed that it was important for us to do that, and that's exactly what we've been doing. up winding and untangling all of that is not going to be something that's going to happen instantaneously. you're exactly right that we were allowing some of those financial institutions to operate using some of those risk management tools in a way that was unheard of, and i think we've made a good step with the derivatives portion of what we did in the ag committee, in the

financial reform bill to begin to unwind that and put into place the kind of appropriate oversight still recognizing that risk management is absolutely essential for american businesses to be able to operate and be competitive. we have other countries now interested in what we did because they realize that they are going to have to do something. you've also seen u.s. bangs recently that invested in some of the very risky tools overseas and unfortunately, have met the same kind of problems that they met before. we now have in place the tools, provided we can give the ftsc and the fcc the resources they need to do their job, we now have in place rules to prevent that from happening in our country. i applaud the gentleman for paying attention and doing a great job in not only understanding what's going on today, but using the tools and skills of the basics in terms of accounting to realize that as

complicated as things may get, you still have to go to those basic accounting rules and understand, you know, what comes in and what goes out in making sure that everyone is held accountable. >> host: next question from san fransisco, jamie, a democrat there. >> caller: oh, good morning. thank you for taking my call. i just wanted to say the debt talks, they probably will continue to stall. the person that you had earlier, no one mentioned and i sat here an listened, no one who called in recognized the fact that's a carl rove entity. he set that up. that's totally a republican policymaking memo talking organization. another thing, too, is this country, you asked as far as is it debt?

-- is it dead? >> this country actually -- if you look at what happened with germany and hitler and the propaganda machine that was out there then, that's what's here today in america. we've been propgannized, lied to, misinformed, and most of all, will not take the time to understand what's really going on with america and with our leaders that pretend to say that they are all trying to work together. nobody's working together with president obama. he has been over backwards to the demise of his own base to try to work with the republican party, and they've drawn lines in the sand and have said absolutely not. >> host: going to jump in there. thanks for your call. >> guest: well, first of all, hopefully all of us as americans

celebrate the 4th july don't draw lines in the sand, but work together. that has to happen on capitol hill. i was a bipartisan member and enjoyed working with republican and democratic colleagues. we are in a crucial situation now with the debt ceiling and the issues of default before us. we got to realize that is not an option, and we got to put together a plan that recognizes that you can't do it all by cutting spending, nor can you do it all by, you know, the -- the expectations in the revenue raising. we have to make sure we come together with a plan that uses all of the tools in our tool box, and that's what we've got to do. >> host: one from colorado writes from us, congress, created this debt and deficit. congress went from a surplus to a deficit of $1.3 trillion under the bush administration, and $1

#.6 under the obama administration. this is fiscal trn. both parties talk as if the mess just fell into their laps out of the blue. >> guest: well, some of it we saw comes, and some of it happened -- if we remember 9/11, it's not something we predicted. the military spending in some of those instances, a lot of things that are unpredictable and some that are predictable. i go back to the responsibility that congress has and one of the things i was frustrated with was that there are the mundane, there are the day-to-day housekeeping tools we have to do, and those are basically, you know, the kind of infrastructure investments that we have not been making and doing on a regular basis whether it's the highway bill or the faa bill or the farm bill or education bill. all of those things have to be done and a big part of making sure with the keep the economy

turning, trade agreements on the table forever, those are the thicks that we see making investments and moving along, the day-to-day laundry that we have to do. we have to be able to focus in on looking at how we deal with circumstances we've been handed that we couldn't have predicted, and she's right. i mean, i voted for a constitutional amendment to balance the budget, voted for multiple things i felt would pull us back to, you know, dealing with the whatever it was, the mundane or whether it was the exceptions, and we got to keep working towards that. >> host: this is a good follow-up from the viewer in an e-mail. do you wish you were still a u.s. senator? it's nice to have your cooperative attitude, but the atmosphere on capitol hill is so partisan now, that your cooperation with republicans cost you your job. would you have changed your vote on health care if you knew it would have cost you your seat? >> guest: no. i don't know that health care is

what cost me my seat. i got hit from both sides because i dared to challenge both sides, and sides because i dared to challenge both sides. that was ok. i felt blessed to be able to serve my country. it was a great opportunity. that does not mean i give up just because i am not there anymore. it does not mean i stop preaching about the partisanship that is necessary. that is one of the reasons why i ended up at the firm and a bipartisan circumstance, working with somebody like former majority leader bob dole and my other colleagues from the house. i find that everyone of those individuals came to the congress with the idea of solving problems and working in a bipartisan way. that is been my attitude all along.

i will try to solve the problems in a way that is realistic. one day at a time, one step at the time, recognizing that >> host: could you see yourself though running for elective office in the future? >> guest: you know, i think it's wonderful to have other people in that position to. i think it's a great opportunity for everyone. you know, i knew i wouldn't do it forever, and as i said, you know, much of the reason that i was sent home because i challenged both sides. my own party as well as the republican side to really come together and vote for the solutions that moved us forward, and i don't regret that at all. >> host: chicago, joe, independent, good morning. >> guest: good morning. my question is about something i just -- i have not heard discussed, and i'm really wondering why not? why wouldn't we provide very focused tax breaks to companies

that actually add jobs rather than simply having faced that cutting taxes will increase jobs and possibly even increase taxes for companies that do not create jobs or cut jobs. thank you. >> guest: that's a great question. one of the bills i introduced before i left and worked on for a little bit was not only the research and development tax credit which i think is really critical in our nation where we do a lot of research and development and come up with great ideas, but i went the next step is offer the tax credit also for those companies who not only did the research and development, but used their research and development to create jobs here in this country so if they took that research and development to the next step whether it's manufacturing or services or technologies or whatever, and actually manufactured that product or provided that service in this country, then they got an additional tax credit because you're exactly right.

sometimes we create the ideas or technology, and it gets manufactured or sent overseas or something else, but it's great opportunity. >> host: former senator blanche lincoln is joan, republican, good morning. >> caller: how are you doing this morning? >> guest: good morning. >> caller: my call is in relation to the real estate market. you will find that modification in chapter 5: 9, and there's 22 words normally, but there might be something that's less, but it's clear with the 22 word scripture, and that's -- she said the angels promised god she rules for 1,000 years. that began in 2003 and 2004. that's seven, and those seven angels have gender in the back of the bible. >> host: john, you started out with the real estate market. what's the connection here? >> caller: the real estate market is chapter 5:9 of isiah, 22 words normally, but some

have -- i've seen some that are very clear in older king james. okay, thanks jap. let that stand adds a comment. obviously has an interpretation based on biblical readings. atlanta, georgia, you are on the air. good morning to you. >> caller: good morning. i don't even know where to start. i started out with a question, and i'm completely at some place else. i do think mrs. lincoln did lose her seat over health care, and her voting in congress represented that she did go more with the republicans than she did with the democrats, and that's why she was voted out, and i just don't understand how she could sit there so stoically and stare into the camera. you asked her a question earlier about the bush tax cuts, and she

went around and around and around, and you didn't have her answer the question, i would like her to answer the question if she thinks it should be implemented now, and, of course, she's not going to answer it, and i'd like that answered. >> guest: well, sure, what i said to susan was was why do we have to say whether or not we're going to use the bush tax cuts. why not come up with a new tax regime. we certainly need corporate tax reform, but we are look at multiple ways on how to structure the tax systems in a more job creating and opportunity way for the american family. you will -- you won't find anyone on capitol hill that fought harder for the refund the of child credit for low-income families. senator snowe and i worked diligently on that for years together in a bipartisan way recognizing there's a lot of households out there, many of

which are single women raising children on less than $14,000 a year. they are working, raising kids, and serve to have the tax code work for them just as the tax code works for other people, but it doesn't -- i just don't understand why we have to say, we're either going to accept the bush tax cuts as they were. use the different times we're in now, we're not operating in a surplus as we did when president bush proposed his tax cuts, but it's a different time. come up with the kind of tax initiatives that we know are going to meet the needs and demands of today in a better way. that's all i was sighing. i don't think we have to wed to former policies. we need to make sure we look at how policies affect the time and the circumstances we find ourselves in right now. >> host: terry is a, a democratic viewer in klum baa,

ohio. good morning. >> caller: good morning. yes, i'd like to -- i'd like to know why, you know, everybody that comes on, they always cover each other's butts when it comes to congress, and, you know, they all understand exactly what happened and where all the money has gone. you know, when the bush administration was in office, right off the bat when j.r. got in office, $3 trillion was missing, disappeared. why not say the truth? what happened to the money and why they are stealing from the american people because of all the secrets they have built that they don't want you to know about, and everybody can understand everything that's going on if they would just do the research, and that's all i have to say. thank you. >> host: response? >> guest: i just think the most important thing we have

before us right now is that we live in a great nation, and it's our speedometer to do everything we -- responsibility to do everything we can to strengthen it and make it stronger and more productive, and, you know, i worked hard at in in congress and democrats and republicans in congress work hard to do that. they have different opinions, and i think they come together in a bipartisan way to recognize the circumstances we find ourselves in and look for the the solutions, and, again, put themselves to the test in those slewses. that's critical. >> host: one tweets what about a national sales tax? it's cheap to administer and we can use everything we can find. >> guest: you have to be careful about a national sales tax in that it can be extremely regressive for the different levels of income and certainly the circumstances that working families find themselves in today. the cost of living, obviously, if you are in the top point-0

percent is not as cumbersome to you compared to a single mom raising three children. take into consideration what that does in the different layers of society. i think that's important. >> host: we have five to six minutes left with blanche lincoln of arizona. next is tulsa, marge, a republican. good morning to you. >> caller: good morning. >> host: good morning. >> caller: first of all, my reason for calls is i've been listening all morning to just everybody that's on, and i just get a little upset with all. negative rhetoric rich against poor. i was poor, i was raised a very, very poor person in arkansas, the oldest of a large family. we worked our way out of it, i'm not richings but i'm

comfortable. i don't like hearing all of this, i think it's tearing our country apart, to hear this, you know, demagoguing the rich. these people, most of them, the people i know who have some money have worked for it, worked hard for it. my husband and i worked hard for it. we really watched -- we're not rich, but we watched what we spent. i don't like the bad words said against republicans and by democrats, democrats against republicans. we're all americans, and i think we need to remember that on this 4th of july. i home school my granddaughter. i'm in my 70s, but i'm still smart. we are studying the presidents this summer. we are now up to fdr, during the period where i was born, and, you know, we've had these problems throughout our history. we had some presidents that have

almost taken us down, and then we get another one that, you know, people got smart, vote for somebody that would bring us back again, and i think sthas what we all have to remember, stick with our country. there is an american dream. some people don't have it because they want to depend on someone else to take care of them all the time, and i didn't like what people said to you this morning. i mean, i think you're very smart. i think you've been -- i see -- i have watched you and watched you as you said, vote with republicans, vote with democrats for what you thought was right, and i appreciate you being on this morning and letting me talk to you. >> guest: oh, thanks, marge, thank you for being a good american and reminding us we have to come to together to solve the problems. >> host: she's not giving our home schooled granddaughter the summer off doesn't sound like. >> guest: no, wonderful she's spending time with her granddaughter. >> host: the final segment this morning will be a report

card on how american students do in american history. that is in 10 minutes. next caller ray, a democrat. good morning. >> caller: good morning. i'm also an independent, i voted both ways, i vote on the person, but i'd like to bring up a point that i would just listen to all the news of all the channels, and i've never heard the perks that the big ceos and big mapping companies receive and discuss or their golden number when they retire out. they're receiving millions at retirement, and that's been reported, and -- nay don't cover their major medical for the whole family while their work as a company, and they also have a company credit card they use for meals, gas, trips, even

maintenance if they have cars that are given to them, and the there's upkeep not covered by warranty is covered by these credit cards, and they can leave them by later and sell it for profit, and the company maintenance department are painting these people's housing, down the roofs, yard work, electrical, brick work, they pay for their vacations. >> host: going to jump in, what's the concern? >> caller: companies write off costs as a business so we lose it as millions of dollars of tax laws. you also -- >> host: stopping you there. write off for businesses, the costs of the treasury. >> guest: one of the things we did not last congress is we know we cannot control what corporations want to pay salaries to their executives or

to anybody. that's not something that congress is intended to do, but what we did do was we were able to bring down and limit a lot of the tax deductions for some of those benefits, and we definitely saw that particularly in the health care bill and in some of the other efforts that we made was to ensure that, you know, they can still pay those bonuses and some of those executive company sageses, but -- compensations, but the tax liability that had been exempt before was no longer exempt over a certain level. there's been some good initiatives there taken that have been intended to kind of reign in some of that abuse or some of that access that has been occurring, but you're good to notice that, raymond. >> host: all taxes are regressive. we have to tax, i just don't want to pay a higher rate than

exxon. >> guest: i don't blame him. i voted it for a at a time of a surplus in a different circumstance, and now it's time to look at how we reform the tax code, especially the corporate tax code. there's a great opportunity to change the way our corporations do business in the global economy today and make sure we see the benefit in our country both through job creation and through investment in our economy, and i think the personal taxes, we can certainly take a look at that as well, but i don't see why we have to be wed to things that happened 10-15 years ago and continue to either continue those or pull back on them as opposed to looking at how we change the system to meet the needs of today. >> host: tennessee, vicky, republican, good morning. >> caller: good morning. >> host: morning.

>> caller: a few comments. i watch c-span for a number of years. i have timely become totally severely permanently disabled from a childhood disease, but i've worked all my life well past what my doctors wanted me to work, but i always believed in not taking, but trying to make it on your own, and believe me, there are people who i think are born in poverty that can't pull themselves out that we should help to a degree, but, yes, there are people who want to cry out there, give me, give me, give me, but let me say this. congress is not passing anything. i think it goes back to the bush days when pelosi stood on tv, and i'm choosing her, people among her, mr. reid and dodd and other people, but nap sigh

pelosi -- nancy pelosi in particular said on television that we are not going to do anything to help mr. bush or pass anything that mr. bush had to say or wants us to do. i think this is a pay back from the republicans and from the people, the people wanted the republicans in because the democrats with respect going to do anything, and now we're in the stalemate to where no one is going to pass anything that obama wants, and i think they're all going to bring us down. plus, an economist, many economists have said because of the recession, who should have taken the first cut in their pay? it should have been congress. up stead, they are getting -- instead, they are getting pay raises. now, i agree whole heartedly with the economist. you start at the top and give an

example to your people, but congress has not, and i don't want to go all the way back to nasa that clinton, yes, he didn't have a war during his years, but he put in nafta, and that started the economy going in a different direction, and i'm not saying that there aren't jobs here in the country that there's workers needed for, but we didn't do anything about our borders because both -- it was too good for the economy to get low wages and vote for both the democrats and the republicans and so they discarded it, just let them steam roll in here, and -- >> host: stopping you there. almost out of time, and you're getting a lot of complex issues there. nafta, assessment of it and whether or not it's good for the economy and ties to immigration. >> guest: right. i think nafta has been good for the economy. i think that we came to a point where we did have to begin to

engage in a global economy. nafta has been good in terms of exports, agricultural exports to mexico and canada. we have to continue to engage in that economy. free trade agreements like colombia with good opportunities to ship our goods into our country, and yet we still remain in a position where anything going in from our country to theirs, you know, it not duty free. we are still paying that. you know, i just want to complement the lady from tennessee though because i appreciate her tenacity and hard work and mother of twin 15-year-old boys who are starting to look for jobs, you do set an example of hard work and what it means and respectful and compassionate to those not able to do thatting and i appreciate that, but we've -- you're exactly right -- we cannot, i think some of what you said about the democrats and republicans and the way that

they flip-flop and argue in the congress. it isn't any good to try to r you know, build yourself up by pulling someone else down. it's only through hard work and being able to focus on the things that have to get solved and work with other people and their ideas to help solve those problems, and sounds like what the lady from tennessee has done all her life, and i think it's a good recipe for what needs to happen here, not pulling the other guy down, but all lift ourselves up to be a part of a solution and not a part of the problem. >> host: final call in because it's from little rock. >> guest: oh, good. >> host: jack, independent there. you're next for blanche lincoln. >> caller: good morning, and thank you for your service. >> guest: thank you, jack. >> caller: the study of the republics once the people figured out how to vote themselves benefits and reduce expenditures they had to pay to the gort, they left the grasps

of the government. what blame to you cast the public in terms of the sisks we find ourselves in? every since the baby boom was a voting block, they reduced their inputs and increased their benefits, and it seems to me that your two beautiful twin boys will be in a circumstance not because of congress, but because of congress' reaction to the public. how do you feel about that? >> guest: well, i think so some degree you are very right that it's easy to slip into selfish mode of what's it do for me rather than future generations and what's it's going to do to them. i ran for congress because i felt or government and congress was not crisis oriented and not proactive. even then as a young single woman in the house,. id to help build the country.

now as a parent, i want it more so, and i think i tried hard in the senate to really work at -- how do we solve problems for future generations because the immediate -- the decisions we take here are -- i don't anymore -- the members of that house and the senate take, are going to have long lasting ramifications for future generations, and it is absolutely essential that we all, whether it's the members of congress or those of us voting understand that it's one step at a time to solve the problems. these problems. if we don't stay focused on it, if we are not willing to look at the future and think about others and see it as a collected body of americans as opposed to have and have-nots, or what do i get out of it, it is possible we lose this precious gift of the nation that we have.

i hope this weekend and on the fourth of july that -- this gentle man, jack will remember that there are tons of parades and lots of opportunities to get out and reminders of how blessed we are to live in this great country, but the responsibility that each one of us have to make a decision at the voting booth, making sure we send people to washington that are going to make tough choices but are going to do so in a forward-thinking why not just about what it means to their immediate circumstances. host: the senate majority leader announced that the fourth of july break for the senate has been canceled in the hopes of continuing to work on an agreement for the debt ceiling debate. i want to t

the head of the white house office of information and regulatory affairs. on tuesday he talked about the administration's regulations on business, saying they haven't hurt the economy. these comments came at a capitol hill forum hosted by the brookings institution hamiltonln project.t. it's a half hour. >> good morning. i'm roger altman. it's my pleasure to introduceodc cass sunstein sunstein, who is e administrator of the office of information and regulatory affairs were much more widely known as oira. we appreciate him taking the time to be with us this morning 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 impact. 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] edify is a report on science and technology. this is one hour. >> de >> thank you very much. agreed discussion's over. i want to start by thanking,

observing oftentimes people think there's tension between economics and science. science is unlimited possibility and economics is a profession that deals with constrained optimization. [laughter] when in fact it's not true.u to conceive the innovation is the application of science solving economic problems and dconomists know that science isn in fact and innovation arenovatn intrinsic how economies grow over time and we have madewe hav strides in the economicession wk profession worth work by paulpl romer in the 1980's which has te helped us 1 understand that science doesn't -- innovation end in sight doesn't fall in this gaudy in some kind of a her helicopter dropping but it's ann enjoyable part of the economyhe and how the economy's growth and the great thing about this in a sight is that it opens ofitpens inexplicit path for innovation olvation p policy. if youou can actually unlock the path to creating more innovatin you can raise the economy'se growth rate, not just the level of islip, so i think that at

great way to end the conferenced would be to try to sort oftwo bridge the two worlds of scienco and economics to figure out how we can use the disciplines to a try to sort of repel innovation and growth economy. the i can't think to better people than we have on this question than the two guests here. to my left is eric, the founding director of the institute of mif 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 arry for. .. 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 moneto the. >> in the life sciences area, i am sure that it would. wood did the a good idea to do something similar with nano technology? i think theef benefits like the exceed the cost. but you do have to think very hard about the public choice aspect and how, over

time incentives are going tor operate provide promised come as someone who's been quite a bit of time with aan clean energy portfolio, health information technology portfolio, the range of energy of things that it is much harder to find the a attractive things to do the group sings the and it is to identify the space where there should be the opportunity. i completely agree. >> the right thing to do may be the hard thing to do. what plays out politically maybe worse than what to do otherwise. that is a challenge the. >> how do we pay for it given the current circumstances? >> thanki you for a terrific and stimulating conversation

[applause] [inaudible conversations]

mckinley and arrived he would kill him. he bought the pistol and followed weekend-- whereabouts in the newspapers that was reported in great detail for the president would be. he was tracking him throughout the fair. >> self-proclaimed anarchist fired two shots of william mckinley. scott miller looks at the president and his assassin and the changing era of which they live.

schroeder. this is an ho >> it is time and to start the last battle of the day. i'm going to introduce the first speaker, sarah of manzano-diaz. she is an attorney and first generation american and policy expert and tireless advocate for women's rights in the workplace. she is a director of the women's bureau of the department of labor.ur db the only federal agency mandated to serve and promote working women.

parenthetically, she has is assisted it's in the job as immediate viceb president. [applause] joshi group and a porter rican family in harlem where she served as translator for herem parents which may have been hurt earliest experience with advocacy and went on to serve as a prosecutor in new york then pennsylvania as the second highest ranking in pennsylvania government as a deputy it -- deputy secretary and also served as regional counsel in the u.s.-led department. ms. manzano-diaz has an understanding of the increased complexities were juggling work and family responsibilitiesto and i is still a goal, not a reality provide no we're so grateful

to have a champion in thela women's bureau and i giveppla you ms. manzano-diaz. [applause] >> good evening. [speaking spanish] very good. [laughter] that is how you do it. thank you so much for that kind introduction. when you said tireless i was thinking how tired i am. [laughter] i like that. i also want to think the others for their incredible leadership. inc appreciate what you have done we've rest on the shoulders of the ladies who

have come before us and we are linked so it is important and to appreciate the fact thank-you terry for recognizing these pioneers. if we do don't do that come with their the legacy we stand on.than we appreciate that. [applause] i am excited to be here. a little nervous to start with my beginnings my family came from pr and i am the firstborn in the united states now was a translator and translation was the first set for advocacy because i realized institutions were not giving my parents what they needed.a they were brilliant but did not speak the language andl it was up to me and a veryry young age to be thee tr

translator and the advocate that is where my love for the law grew had it stemmed from that experience.e whether for 18 for housing. we lived in the single room occupancy public kitchen and public bathroom so when someone in washington decided to create public housing we moved into public housing i got my own bedroom with my sister my brothers had won my parents had one and three finally got ourdy own kitchen and bathroom. we thought we were middle-class at that point*. [laughter] but it is those experiences growing up in the way that just by the virtue of who you are by birth that people make certain assumptions and deny the rights.ai we have the double whammy also being a girl as well is

the latino.o i tell you this because it shapes what they're bringing so it has been there since day one of whether to get the education because ofc virtue of the fact of what i was entitled? but i told people i wanted to be a lawyer but they would laugh to say you arehous poor and live in public t housing in of girl am puerto ricans? it is against you but the more people that told me know, i guess what? and i said i will show you.ggin what just the struggle to be the person that i wanted to become a that struggleou

doesn't happen to our goals as they go around and speak it is important and that is why it is important because we do need to be linked, not all made to the past and the president but. >> and now serves as a catalyst for all of this change. the struggles that we had were withn family. my cities, my regions and the nation's. i get to me from international delegation all over the world for of wrote that there is domestic violence against worldo would-- women, workplace flexibility, they want to know whether we doing?erta

to a certain extent they told us to the gold standard but we're also behind the curvehi depending on who you talk to. it is an incredible honorut for me to be here to talk we about what we're doing in the administration to help women.he i am very proud to work with this historic administrationea under the great leadership of barack obama. [applause] the secretary of labor, the first but he never to be in a presidential cabinet and that happen because our president understood he needed inclusion and diversity. [applause] our president has demonstrated genuinea commitment to addressing the challenges that women face. one of the things he did was

create the white house council on women and girlsb and many of you work with tina on many issues, but so do we. with the council has to missions.ov one is toid provide greaterhe response on the challenges confronted by women and also to assure the cabinet, a level agencies consider how those policies impact some of this is something i have a great honor to work with something in particular. >> what did he do? >> appointed two women to the supreme court? [applause] i guess bragging rights. elena kagan went to hunter high school. the same as mine. [applause]

not at the same time.also [laughter] how big is that? that's is huge. been you have women, then present it is surrounded by women like valerie jarrett, senior advisor, also a rosenthal and there is a white house advisor and violence against women. that is the firstw time to create a position like thatw and obviously the president and vice president care about the issues of violence against women so they have someone in the white house by team for us. [applause] women obviously have very unique, healthy and one of the major pieces of legislation the president was able to get enacted was the affordable health care act o which nowec th affects 39 million people who have

health care who do not have a before the passage of the legislation. [applause] in 2014 it will be illegal for insurancel companies tosu deny women in the coveragese because of preexisting illness is third to charge more just because they are women. also up that 15 million uninsured onsu news be there for them to prevent it. >> that expands that william of family is indeed and a great thing is that allows kids, if you have kids in college or not, they could p stand to plan with their 26 and also receive preventive

care without having to pay the:paper, mammograms, that is something that has helpedhe through the lives of working women. the president of the recovery act cents $2 billion of the block grants and headstart and another billion for early headstart. that is important for ago we need those services on behalf of the women. >> expand-t the tax credit as well as unemployment insurance to help women to cover part-time workers. but one important part of the act is they point to hundred $25 million.air

[applause] the of first bill president signed was the lilly ledbetter act. [cheers and applause]call and has called on congress to pass the paycheck fairness act. [applause] the fastest number of small businesses that are being created are by women. but the president could cut taxes 16 times and. [applause] >> a call street and it onceres the man as a result of a crisis that occurred held by

the strong women elizabeth warren. [cheers and applause] and our administration supports the healthy families act to provide seven paid sick days for all workers as part of workplace six-- flexibility and obviouslyh a hour president but our secretary is a champion for issues as well. she does not stay behind and has been a champion for women's issues as well as environmental issues. i want to share with you some of the things we're s doing in the department of labor because our society

has made tremendous progress to eradicating barriers fort women but we still have always to go. in terms of any quality and with the pay gap reno with men on $0.81 a81n african american it is $0.69 and four latinas it is $0.59.1 the pay gap was $0.59 for all women and 1963 so latinas are still stuck in that era. we have to get out of that brought. so he obviously believes the women's equal pay. i think all of you and your book? did you receive the book?ved that is what we've putca together and this

information the last time the government produce this was with eleanor roosevelt in.t so this is the way to update to the women at data. [applause] >> viggo on the website we of several publications i want to point* out and won it is when been through the recovery, a black labor force and the recovery and latina and the labor force. soil wanted to point* out of the resources. let me share a few things the report shows prefer 2009, one added a women are living in poverty. the largest numberwoar since the senses began collecting data at 1966.

5 million more women are living and poverty now. women of all racial and ethnic groups expired -- experience higher poverty but the black andre latino are more likely to beite poor. it 2009 slightly bland been more quarter had those compared to which was 11%. older women are more likely to be poor and that is a big issue and as that baby-boomers generation comes online. as a result the spending, but it turns out of all consumer u.s. u now?ng right% what does that mean? it means we don't have the

underpinning of the nation's economic health and cannot ignore that. it is essential policies alleviate the issues of poverty with economic liability for all women.ant i want to share with you ao couple of things with regard to our secretary. she talks about good jobs for everyone in my translation is good jobs for women. it never goes off the table i end i found our anniversary pitchers for crow they were advocating equal pay for win back years. thee struggle has gone for a long time. also promoting higher pay your jobs for women. we want them to be on the

groundto floor and we want them to be conscious inclusion of women into the green the economy because we know those of the high paying job tomorrow.ro but coming out in a couple of months is a guide for when anc unsustainable green jobs. lookout for that because we have tried to concentrate a lot of information about green entreprenuership. that is the second. third, workplace flexibility prepare in the history of this country never however president talk about that. he has a four amana dead-end the floor of one year ago, he and the first lady talked about the issues that were real to them.ry

but we have bank goingntry around with 10 national dialogue of workplace in flexibility. many view have appreciated and we talk about theou issuese of the business because that is important. if you cannot make that case many do not want to try. we already know it increase his productivity and our allies.l >> how do they make it work? also the workers perspective we cannot let that go by. we have a dialogue but we talked about various places of how to do that for small businesses, manufacturing, r etail, health care, but it will bectu white-collar jobs and we're very excited that

to the highest-ranking woman in the afl-cio will be one of our speakers. last but not least, the homeless women veterans.wome as i go across the country, most people understand when ms. serves the military moreit every year but they don't get that on any given night there is between the six vows and seven i a go and talk to them in the shelter i was there yesterday's in tampa across roads and they know about it and have a shelter and we're doing a couple of things. we spoke to them since negative shelters and how they got there. as a result, we're coming outnt e with a trauma a guide forum providers to understand

the unique traumas of acer three scene. they have to do -- do with an this. sometimes military assault if i amed i a have all of vio these traumas on top of those that are higher risk of being homeless. explain top providers have you treat said john mudd to go back and with the families. we are excited about that. that. -- . [applause] and we're also doing a stand at -- stand down in october. there are many things we do t in the department and thest administration onra behalf of women rather non-traditionals,

jobs, in employment and training. but it but because you are here are like you to understand that we've done it it. eric concern to but then the just say we are not very close with partners. thet girls have a couple of quote if but those like child care and others are not just women's issues but family issues and economic issues" islamic also to say our progress in these areas is an important measure ifling we are fulfilling the promise of democracy for all of the people.eo

eleanor roosevelt once saidwo women are like teabags you never know howe strong theytr are until you put them in hot water. [laughter] she was right. [applause] women are strong, and proven and caretakers, we have proven in thepla classroom, workplace and as fredas winners and politically time and timeic again. change has come about because women like your cells have been put up the good fight not just for your souls but others. it is important for us. as dorothy once said, no one will do for you what you need to do for yourself. we cannot afford to be separated and have to see with both of