across the united states will participate in community dialogues and celebratory events to reflect on what has been accomplished over these past 40 years since passage of ancla. participate ants will focus on the steps needed to improve on the continued success an the unity of alaska native drives and their corporations. and through their participation and management of resources through the vehicle of alaska native corporations many young alaska native people will embark upon a lifetime journey of service, of community engagement and philanthropy. alaska native corporations have afforded a unique opportunity for alaska native people to gain valuable insights into the business world while maintaining thoughtful focus on issues concerning alaska native tribes and communities. the next generation of alaska native people will continue to make positive changes in the world around them through

acquired leadership skills, cultural advocacy and community engagement. and through their dedication and through the enthusiasm the next generation of leaders as they honor the previous generation of alaska native leaders who really worked so very diligently to achieve the passage of the most significant native land settlement in our nation's history. in addition to all of the very remarkable young people who will one day be managers and policymakers of their native corporations, i would like to honor the work of those who contributed to the success of the passage of the alaska native claims settlement act. it was no easy feat negotiating this very complex piece of litigation. it took the drafters years for the settlement to be discussed, to be interpreted and analyzed, debated, negotiated, and finalized. it was truly an accomplishment. and while no piece of legislation can claim

perfection, the original drafters of the ancla bill worked tirelessly to achieve fair and just settlement for the native people of alaska and the ever-evolving document has had a number of significant amendments that have considerably improved the original bill. while a list acknowledging all of the alaska native leaders and advocates who worked on the act would prove impossibly long i would like to recognize just a few of the people who have since passed who played an instrumental and really an unforgettable role in its passage. first there was the u.s. secretary of the interior, secretary udall. i had both tom and mark udall sitting in front of me before i began my comments here. it is a tribute to him that he did so much as in his service as secretary of the interior. also our own senator ted stevens and his efforts.

u.s. congressman nick begich who was instrumental in passage of ancla and morris thompson who is an afbaskan. it was back in 1966 that stewart udall, the secretary of the interior responded to pleas from alaska native groups, imposed a land freeze on all land in alaska under federal control which amounted to about 96% of the land in the state at the time. secretary udall helped develop a program for solutions 0 the native land claims issues throughout the state. and although ancla at that time was still in its infancy the freeze prevented the transfer of all remaining federal lands and would remain in effect until the native land claims were resolved. without that freeze, the alaska native people might have won their claim but they may not have had lands to select. senator stevens in his role called his work on the unprecedented landmark

legislation of ancla his senate baptism of fire. in a 1991 newspaper article the senator is quoted as saying that he believed a settlement could be achieved because of his faith in the determination and the unity of purpose of alaska's native people. senator stevens was one of the advocates who pushed for the 40 million-acre land provision versus the one million acres the white house had initially proposed. with threats looming that subcommittee sessions would be called off which would effectively end a negotiated settlement -- negotiating sessions, congressman begich, nick begich, played a key role in keeping the legislative process moving. by the end of the negotiations the subcommittee package was a tribute to the congressman's role as architect of the house compromise. one veteran lobbyist said it's the best individual achievement i've ever heard for a freshman congressman. i would be remiss in not

mentioning the very unforgettable morris thompson. at 34 years old morris was the youngest commissioner of the bureau of indian affairs, held a cabinet position in the nixon administration. and with his interior department position, morris was very deeply involved in passage of ancla at the time. he was a prominent leader in the native, corporate and political world and known for a good sense of humor, wit and wisdom but also a very, very savvy businessman. he led an alaskan corporation to great success. his lifelong commitment to the people of alaska truly lives on in his legacy. i'm very proud of all of these people. i value their idealism, their energy, and the unique perspectives they brought to the table toward the initial crafting of the act. i thank senator begich for standing with me to introduce this important resolution that

acknowledges the hard work of the people in their alaska native corporations on this 40th anniversary of passage of the alaska native claims settlement act. i know that congressman young joins with us in celebrating this anniversary as well. since i mentioned that we're working a little bit on alaska day here, i would also like to take just a couple of brief moments here to recognize yet another alaskan leader, truly an alaskan legend. two days after christmas of this year would have marked the 105th birthday of an alaska legend, ray malla. despite insurmountable odds, ray dared to dream and went on to become our nation's first native american international film star. he would have been 105 or will have been 105 just after christmas, but he was our

nation's first native american international film star. he was born in the remote village of candle, alaska to a father of russian jewish descent. he was fluent in both english and his mother's native language of inupiat. he was a skilled hunter. he learned the native american ways from his grandmother. while the family lived a traditional lifestyle, malla learned to walk in both the traditional and modern worlds. he was a accomplished hunter using just a bow and arrow to catch whatever food he would bring home. we are had a -- wearing a hand made purchase parka he and his grands mother would traverse through arctic storms. when they wroo return home mala would pour himself into his academics, enjoyed studying at the local school, always striving to improve himself. at age 16, he made his acting

debut in the film "primitive love." mala was initially hired as a laborer on a remote -- remote film sets there in the state, but filmmakers discovered his natural talent behind the camera and as i say, the rest is history. he was bitten by the bug. mala set out for hollywood and he worked his way up from sweeping the stage floors to being an assistant cameraman at fox studios. initially he was turned down for any leading roles because of his mixed eskimo-jewish heritage but mala landed his first role in the silent film "igloo" which was shot in barrow, alaska. the film's success earned him the title of the eskimo clark gable. in 1932, metro goldwynmayer sent a film crew from hollywood to nome -- 1932.

my mother was born in 193 . nome was a very interesting community back then, very rough around the edges. they sent a film crew to nome to begin shooting the film that would thrust mala into stardom. the film is called "mala the magnificent" the first full length feature film ever shot in alaska. mala became alaska's first hollywood film star and also the first nonwhite actor cast in a leading role. over the span of his career, mala would appear in over 25 films, all the while devoting -- devoted fans would come, cross generations, cross cultures, they loved him. his widely acclaimed role in "eskimo" would earn mala his place in hollywood history. but ray mala was more than just an actor. he also excelled in cinematography and screen writing. keep in mind, this is a young

eskimo boy raised in the traditional ways back in the early 1,900. and -- 1900s. not only is he picked up by hollywood and is a phenomenal actor, he also excels in cinematography and screen writing. he worked on films with alfred hitchcock and cecil b. demill but his blossoming career was cut short by his death at the age of 45 due to heart complications. mala faced many challenging personal circumstances, racial discrimination at a very early age but that did not prevent him from achieving both personal and professional excellence. i'm sure he would be very proud to see his grandson was following in his acting footsteps. this year in hearn newly reliesed book eskimo star" leah morgan chronicled the story of ray mala and the state of alaska

hosted a ray mala film festivalling from juneau wall the way up to point hope. it's a great honor for me to reflect upon the life of this inoperational alaska native icon, and to offer a tribute to his spirited and really very try up fanned journey from -- triumphant journey from small town boy to leading man. alaskans look forward to the day when ray mala's star may be hoss timeously added to the hollywood walk of fame, a tribute to the nation's first-ever native american film star. a good thing to end our alaska day series with. thank you, mr. president. i appreciate the indulgence of my colleagues and i yield the floor. the presiding officer: the senator from iowa. mr. grassley: thank you very much, mr. president. it seems the president of the united states has finally acknowledged that the economy is in a terrible state, and

there's really nothing that he can do about it. so rather than offer new ideas to grow the economy, the president has now shifted into blame mode. i recognize that the slow economic growth and high levels of employment are having a significant impact on the middle class but rather than listen to political rhetoric and witness finger pointing by president obama, the unemployed would likely prefer ideas, ideas on how to turn this economy around. i presume president obama aspired to lead the country because he felt he had the vision and the ability to lead us to a more prosperous nation. beyond the vision, a president also needs a plan. and the leadership to put that vision into place. where is that leadership? during the past three years, we

witnessed president obama's theory on economic stimulus. we saw a massive expansion of government and deficit spending. more than $800 billion was spent on a failed economic stimulus bill that was supposed to keep unemployment below 8% but it did not. government spending in the process has reached an unprecedented level. today, the size of government if you can find -- combine local, state, and federal is 40% of our gross national product. 100 years ago, when teddy roosevelt delivered his speech in kansas, it was 8%. and i refer to teddy roosevelt and the speech in kansas because the president of the united states now tried to duplicate that speech 100 years later. today, government consumes 40% of the entire economy.

according to economic policies of president obama, government needs to grow even bigger to help our economy and in the process there's a goal to use government to redistribute wealth. if government just gets a little bit bigger, the argument goes, and if it gets just a little more involved, and particularly if it gets involved in every facet of our economy and our lives, that will surely increase economic prosperity of all americans. right? well, of course not. all of this has led to taxes and deficit spending that crowd out private investment that could grow the economy and in the process create jobs. government doesn't create self-sustaining jobs. government only creates government jobs.

the private sector creates jobs. it's the responsibility of the government to create an environment that leads to job growth. it does this by instituting the rule of law, property rights, patent system, among others and there's a lot of others that i ought to add to it. government sets a tone. remember, government consumes wealth. it does not create wealth. throughout economic -- through economic freedom, through entrepreneurship and -- through economic freedom, entrepreneurs and individuals are free to innovate and prosper. this economic success leads to higher standards of living, a better quality of life. importantly, these gains do not come then at the expense of others.

contrary to what some would have you believe, business growth does not have to come at the cost of others. in other words, it's not a zero-sum game. in fact, business success and economic growth lifts all boats through employment gains, higher wages and value to consumers among a lot of other things that could be mentioned. there are some who believe that individual success cannot be achieved without government involvement or intervention. what's more, they believe that an individual success must mean that someone else has been deprived. or they believe that if someone else is successful, the success was achieved collectively, only with the help of government or others in society. this line of thinking

concludes that government and society is, therefore, entitled to some of the achievements. president obama's recent speech in kansas provides great insight into his economic theory. he clearly believes that government should be involved at every level of individual and business activity. the president says that hardworking americans should be rewarded for their achievements. however, his economic vision demonstrates his belief that individual success is due to society, not because of hard work or individual effort. this line of thinking is a stark contradiction to our country's founding principles that government exists to allow for the individual

to achieve success and the pursuit of happiness. the idea of government intervention runs contrary to our founding principles of individual and economic freedom. government exists to serve the needs of people rather than people serving the needs of their government. there are some who believe that government is the only creator of economic prosperity. but if others have achieved success, they must be, by default, the cause of other people's hardships. this type of class wafr demagoguery -- this type of class warfare demagoguery is harmful to our country and our country's future and our people's future, and it has the end result of dividing america. it creates envy, hatred, resentment towards those who have worked hard,

played by the rules and achieved success. this divisive he rhetoric seeks to put blame on the successful for the hardships of those who have been hurt during this recession. most americans don't support president obama's divisive vision and rhetoric. the american people still believe that if you work hard, play by the rules, you can be successful and you can flourish. i doubt the majority of americans believe that it's the goal of government to intervene in this process. in fact, most americans would be happy just to have the government get out of the way. most americans believe in individual responsibility and liberty, including freedom to succeed and freedom to fail. it appears that president obama's commitment to these fundamental freedoms is

less sure based on this recent speech in kansas, it seems the federal government is the answer to all of america's problems. according to the president, if we just tax the wealthy, ensure they pay their fair share, we can get our economy back on the right track. president obama would like the american people to believe that higher taxes on job creators will lead to economic prosperity and create jobs. now, this is contrary to what republicans know to be true. it's also contrary to the vision that president john f. kennedy knew to be true when in the 1963 tax bill he reduced the marginal tax rates very dramatically. president john f. kennedy recognized the economic benefits of lowering taxes. so in his state of the union address on january 14, 1963, president

kennedy spoke of the need to increase economic growth, job creation, and so he stated this. quote -- "to achieve these greater gains, one step above all is essential. the enactment this year -- "that means 1963 -- "of a substantial reduction and revision in the federal income tax. a net reduction in tax liabilities will increase the purchasing power of american families and business enterprise in every tax bracket." end of quote. but he further stated -- quote -- "it will, in addition, encourage the initiative and risk taking on which our free enterprise system depends, induce more investment production and capacity use and reinforce the american principle of additional reward for additional

effort." end of quote. it's worth repeating. president kennedy pushed for lowering federal income taxes to encourage initiative and risk taking to induce investment, production, and economic growth. president kennedy recognized and believed in the american principle of additional reward for additional effort. now it seems to me from the speeches made recently that our president, meaning president obama, disagrees. it seems to me that he argues that innovators and job creators should be subject to punitive tax increases just for being successful. he seems to believe economic growth will come by confiscating the wealth of job creators and sending that money to washington.

and i disagree. for americans to prosper, we must first reduce the size of government. this year the federal government will spend about 24% of our gross domestic product. this type of spending has led to annual deficits above $1 trillion for the past three years. the total debt stands at over $15 trillion, 100% of our gross domestic product. the size of government, the size of deficits, the size of debt and the size of interest payments are unsustainable over the long haul. we must reverse course. second, we must work to reform the tax code and provide certainty and predict ability. nearly every day our president is on the campaign trail talking about tax increases.

well, then is it no wonder our job creators, particularly small business, are reluctant to make business decisions or investments in this climate, which decisions we would hope, if they would make them, would obviously lead to a great deal of job creation in the private sector. because what this country needs is not more taxes. we need more taxpayers. and the way you get more taxpayers is more people working. the president's threat of higher taxes then is directly inhibiting job growth and economic expansion. it's time for president obama to recognize that with 13 million americans unemployed, an anemic economic growth, tax increases will harm, not help, economic recovery. finally, we had a recent

gallup poll finding that compliance with government regulations is the single biggest issue facing small business owners today. and you might think we'd family size the fortune 500 corporations when it comes to creating jobs. but we all know that 70% of the new jobs in america are created by small business. so we ought to be concentrating on what small business people are telling us about the economy, not turning around. small business owners, when it comes from the standpoint of regulations, need to spend less time and money making sure they comply with burdensome and needless washington regulations. those valuable resources should be spent growing their business, hiring more workers, and as a result, growing our economy. we must halt the federal government's regulation binge. for many of these new

regulations, the cost of compliant outweighs the public benefit. they're acting like a wet blanket on our economy. and there should be a moratorium on new regulations. i'd like to give you a perfect example that's now an issue before the congress. the keystone x.l. pipeline. at a time of high unemployment and energy costs, the federal government should not be standing in the way of private investment that will create jobs and increase our energy supply. it's unconscionable that the largest private shovel-ready construction project is being delayed by president obama's decision to override two different studies by the state department that there was no environmental -- negative environmental impact. it seems the only jobs

president obama is interested in creating are government jobs or government-subsidized jobs. the unfounded delay should be ended and the pipeline project should move ahead. the situation typifies the obama philosophy that the free market and intelligent americans are incapable of making informed decisions. the argument we hear is that americans aren't smart enough to know that we need solar energy rather than fossil fuels. so our big government caretaker uses $500 million in taxpayers dollars to support a solar company while simultaneously blocks an entire private enterprise for developing an oil pipeline that will make us much more energy independent. we've seen how the decision by the government elite to support solyndra has

worked out. it was a complete failure. it's time that we get out of the way of the keystone pipeline. i hope that the american people will dismiss the economic theories and visions of our president as he seeks to divide our country. i believe we can achieve a prosperous future by empowering individuals rather than our federal government. americans are smart enough to put their trust in themselves and their neighbors, not in bigger government. it's time though end the political blame game and divisive rhetoric and instead work on genuine and real policies that will create economic jobs and, more importantly, economic growth that's going to help all americans. in other words, expanding the economic pie, because this does not have to be a zero-sum game. we can have more for more people. fanned we don't have more for more people, we're going to have less

for more people, and everybody's going to lose out. i yield the floor. a senator: mr. president? the presiding officer: the senator from maryland. mr. cardin: thank you, mr. president. mr. president, it's time for republicans to end the war on employees. the dedicated, hardworking, middle-class federal workers. who are these federal workers? the veterans administration, nursing assistants who care for our wounded warriors, the department of defense civilian employees who support our troops at home and abroad. social security administration claims representatives who process benefits to our nation's senior citizens and people who qualify for disability payments. nobel prize-winning scientists conducting groundbreaking research at the national institutes of health and the national space administration. from everything to fighting cancer to

understanding origins of the universe. the environmental protection agency and food and drug administration staff who keep our air and our water clean and our food and our drugs safe. the federal aviation administration air traffic controllers who keep the skies safe. the department of justice, federal bureau of investigation, the united states marshal service, attorneys and law enforcement officers who track down, arrest terrorists and drug cartels and gang members. and, mr. president, the list goes on and on and on. those who are on the front line of public service, of dedicated, hardworking federal employees, many of whom are struggling like every one of us to deal with their family budgets. federal employees are already contributing $60 billion to the deficit reduction through a two-year pay freeze. they've already contributed to deficit reduction. they were first in line to try to help balance our budget. like their private-sector

counterports, federal employees haven't been immune to the country's economic woes. they're confronting similar hardships. disabled and unemployed spouses, declining home values, rising rg gasoline and living expenses. many federal employees have single-parent families. like other americans, federal employees struggle to pay their mortgages and find ways to send their children to college. h.r. 3630, the house republican payroll tax cut bill, would require two million federal employees to shoulder nearly one half of the cost of the tax reduction that benefits 160 million americans. mr. president, what the republican bill is doing is extending the payroll reductions for working families but saying to the middle-class federal worker, you're going to pay most of the burden. that's not going to help our economy. that's not the right way to

extend the payroll tax relief. the republican assault on our federal employees is piled on top of the current two-year pay freeze which is piled on top of a workforce who is already lagging behind the priesks, according to the nonpartisan congressional research service. average wages among all workers in our economy has risen over 600% since 1969 while salaries for civilian federal employees have grown by a little over 400% since 1969. there's a widening gap between public sepublic-sector employeee private sector. what these proposals would do would widen that gap even further. republicans want to extend the current pay freeze for another year. that would cost a federal employee who makes $50,000 annually $800 a year. three-year pay freeze would cost gs-5 employees almost $4,000 in

cumulative lost salaries. for gs-9, almost $6,000 in cumulative lost salaries. it would slash benefits, this is rubbing salt in the wounds of the additional pay freeze. so they took two-year pay freezes. the republican bill would add a third-year pay freeze and tell our employees to triple their contributions to their retirements, which is another pay cut. not only a freeze, it is a compensation pay cut for our federal workers. in addition to that, we have asked them to do more with less. if you notice, as i think all of us have noticed on job growth numbers, the public-sector numbers are going down. the workload isn't going down. we're asking our federal workers to do more with less and now take a paycuvment that's not

fair. republicans save their most severe prkt for future severe punishment for future federal employees making it clear to provide as many disincentives to a career in public service as possible. it would force an employee making $30,000 a year to pay $1,200 rather than $400. noyou know, we should be embracg people who are willing to help in public service. republicans are doing just the opposite. it is time for the republicans to stop their war on the hardworking federal employees. increasingly, the federal workforce is being asked to do more with less. it is time to stop that assault. increasingly, the federal workforce is being asked to shoulder a disproportional share of deficit reduction. i think it's time that we all properly recognize the dedication, hard work, valor, sack fishings and professionalism of our federal

workforce. with that, mr. president, i would yield the floor and suggest the absence of a quorum. the presiding officer: the senator from iowa. mr. grassley: in the past three weeks, i think of a come to the floor three times to discuss the court case on the president's health care reform bill, one time to discuss the constitutionality of the individual mandate, another time to deal with the severability clause. i come now to speak about the unconstitutionality of the massive expansion of medicaid. those are three of four issues that the court is going to deal

with, and you probably remember that the court has extended the period of time that they normally deal with arguments before them from one hour to five and a half hours because this is such a very, very important case. today i want to talk about the far-reaching implications of this mandate but also about the constitutionality of the medicaid expansion. if the supreme court rules the individual mandate unconstitutional, it will have the effect of striking down this new law that hasn't been fully implemented. if the supreme court rules that the medicaid expansion in the affordable care act is unconstitutional, it has the potential to cause significant

changes in a program that has been in operation for the last 46 years. just to remind everybody about medicaid, it was created in 1965 at exactly the same time that medicare was created. where medicaid was created to provide health care coverage for our senior citizens, medicaid was created as a safety net for low-income individuals. medicare is run exclusively by the federal government. medicaid is a federal-state partnership. the federal government sets the parameters of the medicaid program, pays at least half of the program in every state but then turns the function -- functional operation of the medicaid program over to the states.

in the 46 years since both programs were created, the eligibility for medicare program has been essentially unchanged. eligibility, on the other hand, for the medicaid program has expanded significantly through the years, and with that the program has grown dramatically as well. medicaid, when it was created, covered fewer than 5 million. today the medicaid program currently covers nearly 57 million. the program spends more than $300 billion each year. medicaid has expanded so dramatically for two reasons: first, at various points in the last 46 years congress has mandated that the states increase eligibility and services for the program. and, second, congress has also given the states the option to

expand their eligibility. when congress gives states the option of exspannedding their -- expand their jicialghts the states can expand and the federal government will still give its proportionality share of federal dollars. one of those programs which i helped get passed with senator ken difficult massachusetts when phs a member of the senate, the -- when he was a member of the senate, the program that allowed some help for people that had families that had particularly high health care costs for kids, something that is just catastrophically high -- and that's just one example. the decision to expand is up to the states. when congress mandates the states expand eligibility, states can either expand their programs or forfeit all federal

funds for the program. now, this -- this is what we call an all-or-nothing requirement and has been used in every expansion of the program. the all-or-nothing requirement on states has not only been used to expand eligibility within the medicaid program, but it has been used to expand services and require changes in the administration of the program. if the federal government wants states to corvee a podiatrist -- to cover podiatrists in medicare and comairksd the federal government can mandate states to do so and if the state -- and if a state doesn't do it, withhold all federal dollars for that state. if the federal government wants states to implement a secondary payer program to ensure that services are being properly paid by private dlarks the federal government can mangeds states to

do so and withhold every federal dollar if that state refuses to go along. it has been a staple of the program for 46 years that the federal government can require states to do certain things in medicaid. now comes along the affordable care act. that act requires states to expand their medicaid program to cover all individuals up to 133% of the poverty level. it is the first expansion of medicaid's mandatory eligibility groups since the all-or-nothing expansion in the bills of 1989 and 1990. those were both reconciliation acts. it is this all-or-nothing requirement that states are challenging and that the supreme court will consider next year

and has given a certain portion of the five and a half hours just to debate this issue. so i think that means the supreme court thinks that this is a very significant issue that they're asked to consider. so, mr. president, i'd like to describe to you the arguments that are being made by the states that this is an unconstitutional use of congressional power. the states argue that the 10th amendment limits the power of congress to coerce states to accept federal funds as aopposed to providing inducements -- as opposed to providing inducements. the states argue that a restriction on federal funds compels rather than induces if its burdens and losses as they affect vital state functions are

too burdensome and costly. so i would quote from their position. "by conditioning all the states' federal medicaid funding for most states more than $1 billion each year upon agreement to substantially expand their medicaid programs, the affordable care act passes the point at which pressure turns into compulsion and achieves forbidden, direct regulation of the states." end of quote. that part of that quote that says "it's at the point where pressure turns into compulsion" makes the act unconstitutional because it's always been a principle that the federal government can put certain conditions on states, but if it

reaches a point where the state has to do it -- in this case, the states say you've really gone too far. the affordable care act withholds all federal dollars then from states that renews to submit to the policy -- that refuse to submit to the policy dictates. medicaid accounts for more than 40% of all federal funds that states receive. states spend, on average, 20% of their state budget on medicaid. federal funds cover, on average, 57 cents of each dollar spent on the program. because previously i said the federal government gives every state at least 50%. but the average of all 50 states is 57% of the medicaid dollars coming from federal dollars. in my state of iowa, for instance, i think it's 65% from

the federal government, 37% of state funds. so a loss of all federal medicaid fund wooing obviously be devastating to the states. the states maintain that the law's expansion of medicaid was deliberately designed to force the states to agree to expand the program because of the threat that a state's entire federal funding stream would be cut off if they decided not to go along with the decisions made here in congress. in the harshest terms, they were made an offer they couldn't refuse. further quoting from the states's act, "the affordable care act essentially holds the states hostage based on their earlier decisions to establish a medicaid infrastructure and accept federal funds subject to different conditions.

the affordable care act uses the state's decisions to accept earlier federal inducements against them and in doing so presents states with no real choice. they must abandon completely the existing medicaid system and funding or accept the radical new conditions. this amounts to a massive bait-and-switch." the states are arguing to the supreme court that there is no way that the states can turn down a federal inducement as massive as all medicaid funding. this is especially true because the effect of the -- of declining is that the states' only taxpayers have to pay the full cost of providing health care for the neediest citizens of the state and at the same time provide the federal

government taxes for medicaid funds that would be distributed to pay for the program, including expansion in the other 49 states. since no state could make taxpayer fund the state and federal portions of the medicaid while also taxing their citizens to pay for medicaid in the other 49 states, it is a phony choice, not a real choice, for the states to turn down the money to expand their medicaid programs. in other words, the states are being compelled to do so. the states argue that giving notice of conversion -- no. the states argue that giving notice of the coercion they face does not make the choice any less coercive, and they argue that when states originally

accepted medicaid, they were not warned that their participation would put them at the mercy of any future unpredictable deman demands. the states are arguing that congress can change medicaid and congress can condition the funding for those changes on state agreement -- agreement to them. but it cannot force changes on the states by threatening them with the loss of the entirety of federal funds. although the state government will pay the vast majority of the costs of expansion, the states also point out that coercion on the financial inducement that congress offers, not the amount a state is coerced to spend. the critical issue here is what is referred to as the coercion doctrine. the coercion doctrine protects

the states' decision whether the inducement is worth the cost. among the controlling cases here is south dakota v. doe, 1987. the supreme court there upheld a federal law that threatened states with the loss of 5% of federal highway funds if they did not raise their drinking age to 21. now, remember, that was only 5% of their road funds, not 100% of their road funds, as in the case of the all-or-nothing in the case of medicaid, where if you don't go along, you're going to lose everything. so in that dole case, writing for the majority, chief justice rehnquist noted -- quote -- "our decisions have recognized that in some circumstances, the financial inducement offered by

congress might be so coercive as to pass the point in which at wh pressure turns into coercion." in the years since the dole decision, federal courts have yet to establish a clear test of coercion, and i assume that that's what could happen if they would overturn congress's decision, that there would be a clearer test of coercion in this affordable care act. the supreme court will be challenged in this affordable care act case to determine where the limits of federal coercion, if any, lie. it is difficult to overstate the potential implications of this particular aspect of the affordable care act in the case that's being appealed.

there are three specific ways this decision could have a profound impact on federal policy if the supreme court rules in favor of the states. a ruling for the states could affect future medicaid policy, current medicaid policy and broader federal-state partnerships. the expansion of medicaid in at fordable care act was written to minimize the cost to the states. the federal government pays for 100% of the costs of the medicaid expansion in the first few years before transitioning to an approximately 92% share of the costs of the expansion. if the federal government cannot require expansion of the medicaid program and pick up 92% of the tab, what can the federal government require? would a mandatory expansion be

constitutional if the federal government currently paid for 100% of the cost? could the federal government mandate future expansions if they were much smaller in scope, such as in the 1989 and 1990 mandatory expansions under those reconciliation bills? if the federal government wanted to require states to cover podiatrists or implement a secondary payer program, could it do so using federal funds as leverage to require it? a ruling in favor of the states would raise those questions. further, if the current mandatory expansion of medicaid is unconstitutional, what does that imply for previous expansions and policies? in 1989 and 1990 acts, when congress required states to expand eligibility for women and children, congress did so without providing any additional

funding to the states beyond their normal share, which in the case of iowa today would be 63% federal, 37% state. if the supreme court rules in favor of the states, will previous mandatory expansions to medicaid be subject to challenge? will a state be able to challenge the existing enforcement mechanism of withholding federal dollars if a state wants to ignore a service requirement or an antifraud provision? these questions will then have to be answered. finally, the supreme court ruling on a coercion test necessarily has broader implications for all federal-state partnerships. the original dole case was about transportation funding. a supreme court ruling in favor of the states will necessarily bring into question every

agreement between the federal government and the states where the federal government conditions 100% of federal funds on state meeting requirements that are determined here in washington, d.c. it is certainly possible that such a supreme court ruling could require future congresses to carefully consider a coercion test in designing legislation. a supreme court ruling in favor of the states in this case could not only jeopardize the mandated medicaid expansion and the affordable care act but could challenge the fundamental structure of medicaid and have broader implication outside of health care. now, you may ask, does the supreme court have this case before it? why does it have it before it, a case with such expwrow broad and

far-reaching implications? it is because of a massive restructuring of our health care system in a partisan fashion using nearly every procedural tool at the majority party's disposal in accomplishing the goal of passage. the constitutionality of this law has been challenged in numerous courts throughout the country. these -- these challenges will soon be heard before the supreme court. and while most people want to focus on the individual mandate, it is important that we don't forget the potential consequence of the medicaid question before the court. it could obviously strike the expansion in the affordable care act. it could hamstring future congresses as they consider potential policies for medicaid program in the future. it could threaten the fundamental structure of the

medicaid program by bringing into question all the requirements on the states in the program today. it could require future congresses to consider the structure of every federal-state partnership, and we're all discussing -- and we're here discussing this because the white house and the democratic majority put their partisan goals ahead of collaboration with republicans and states to build legitimate public policy. contrary to how most social policy in this country's been devised -- social security, bipartisan; medicare, medicaid, bipartisan; civil rights laws, bipartisan -- but not this affordable care act, a partisan document. and now we see that far more

than this one specific policy is threatened. if the supreme court accepts the states' argument, a host of constitutional questions will surround the operation of many federal funding streams to the states. it would be difficult to overstate the significance of such a rule and i've outlined that it was not necessary for the congress to have taken action that might produce that result. i yield the floor and suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call:

the presiding officer: the senator from florida. mr. rubio: i ask unanimous consent that the quorum call be vitiated. the presiding officer: without objection. mr. rubio: are we in morning business? i ask unanimous consent -- i guess i can talk. there is a lot of talk in this building today talking about one

of the things is the omnibus holding back families traveling back to cuba. suffice it to say, it's important my colleagues know what's being asked for in the omnibus and what will be coming over here if it's kept in won't prohibit families from traveling to cuba. it's limiting the amount they can. it's a wise policy and one that i support. it limits access to hard currencicy to a different tyrannical regime. i'm here to talk about cuba travel which doesn't get a lot of notice these days but it's part of conversations that are ongoing with departments in the state department. that is the so-called people to people travel. i have here in my hand an immediate release from january january 14 of 2011 titled "reaching out to the cuban people." it came from the president where he announced a series of steps to continue efforts to reach out to the cuban people in support of their desire to freely determine their country's future. one of the changes they made is to something they call purposesful travel. it says here the president believes that these actions which i am about to describe combined with the continuation of the embargo are important

steps in reaching the widely shared goal of a cuba that respects the basic rights of all its citizens. so right here in this release, and i'm glad he wrote it, the president is stating that in combination with the embargo, the steps that he wanted to take, the goal of these steps, okay, was reaching the widely shared goal of a cuba that respects the basic rights of all of its citizens. that's the reason why he made these policy changes. so far so good. let me tell you one of the policy changes. it's called restore specific licensing of educational exchanges not involving academic study pursuant to a degree program under the auspices of an organization that sponsors and organization people-to-people programs. what that means in plain english is that this is not colleges or universities. these are organizations not for degree credits, educational in purpose but not for degree credits, and what we want to do is encourage them or allow them the opportunity to take americans to cuba under their auspices. remember, the goal here is to bring about as the president stated the widely shared goal of

a cuba that respects the basic rights of all its citizens. that's the purpose of these trips. well, i decided to look up some of these trips. let's see some of the itineraries because they are very interesting. let me read you one. this is from an organization called insight cuba. it's located in new york. i'm not going to advertise their website. let them pay for this. i will tell you their eye itiney for something called the cuban music and art experience. it sounds interesting. day two in havana, you're going to get to meet with the castro ministry of culture to learn how cuba promotes the arts on this diverse island. you're also going to get to spend the evening -- and this will become a familiar theme here -- dusting off your dancing shoes because tonight you will head off to casa la musicca. here you will enjoy performances by local cuban artists and of course dance. they put an exclamation mark after this. this is an important part of this trip. this is day two to promote as the president wrote the widely shared goal of a cuba that

respects the basic rights of its citizens. day three is interesting, too. you get to go to this place called casa of la mistad which basically means friendship house. there you will meet with your quote, unquote, host, and especially joy another exciting musical performance. you spend the rest of the day with incredible salsa music and dancing. day four is the highlight of this trip. you get to fly to another area and visit basically an old army barracks where on july 26 of 1952, fidel castro launched the cuban revolution. you get to visit this place where fidel castro's revolution actually began. imagine that. i can see where that begins to further the widely shared goal of cuba that respects the basic rights of all its citizens. and guess what you get to do that night. you guessed it. you get to spend the night at a

music and local dance club to hear performances by cuba's most popular artists, and you get to dance. it goes on and on. day five has dancing. day six, you get to historic the historic grandma province which is known as the birthplace of cuban nationality. you get to meet with a cuban institute for friendship between the people, which is a very catchy title. that night you get to spend the evening dancing and taking in a performance of cuban artists. it goes on and on, day seven, day eight. this is quite an adventure in pursuit of the government and a cuba that respects the basic rights of all its citizens. let me share another within. this is interesting, too. before i get to that one. i think this is another insight cuba one. this one takes you on day one -- this is called the havana jazz experience. on day one, it takes you to explore the famous cathedral square, the city museum, the havana club rum museum. it's part of this effort to bring about freedom and democracy in cuba, you get to go there. and at night, you go to the jazz

club la sorda and you get to do some of the best dancing you can ever imagine, in a very intimate setting, very intimate setting. day two brings to you a village which was the setting for the old man and the sea which won the nobel prize for literature in 1952, earnest hemming -- hemingway, very interesting. you get to learn about an afro-cuban religion. at night you get to go back to havana, you guessed it, for dancing at a local jazz club. day three, you get to go to the infamous now casala mistad, a historic mansion, where you will have the opportunity to observe a forum regarding u.s.-cuban relations put together by the cuban government. very interesting in pursuit of the cuba that respects the basic rights of all its citizens. you spend the night at a jazz

cafe where the seaside view is almost as preface the musicians who play there nightly. i imagine, i'm guessing now, but i'm not sure, but there might be dancing involved on night number four in cuba. night number five is quite interesting because there you get to learn from the musicians about the sensual and passionate rhythms of their music and you round out the day with a two-hour salsa class, in furtherance of freedom and democracy. that's trip number two. there is one more. this one -- this one is really good. this one is called cuba for educators, ethics and the revolution. so you go to cuba to learn about ethics from the castro regime. on day one -- day two, day one, you are probably tired from the dancing. day two, you get to go to the museum of the revolution where you will learn about the ethical foundations of the cuban revolution. this is not to be missed. clearly, we want to learn about ethics from the castro regime. then you get to go to the literacy museum where you get to learn about cuba's war on

illiteracy which is one of fidel castro's goals in his 1960 speech for the united nations. and day number three, you get to meet the ministry of public health, which i assure you is a government employee because it sounds like it, the ministry of public health, and you get to discuss why revolutionary ethics demand free public health care while our own society will not even consider it. very interesting. it goes on and on. and by the way, there is a bunch of dancing in this one, too, but i think you get the point. this one is run by a group called the center for cuban studies. why do i say all this? it's pretty simple. look. there is this sports show, i think it's on espn on sunday nights where they review nfl highlights. michael earvin who was a great player he has a segment called come on, man. something ridiculous that happened during the day. you say come on, man. when i look at this stuff, i want to say come on, man. this is about promoting democracy and freedom in cuba? this is not about promoting democracy and freedom in cuba.

this is nothing more than tourism. this is tourism for americans that at best are curious about cuba and at worst sympathize with the cuban regime. you may ask we're a free society, why would we restrict that? here is why. because this is not just a source of irritation. this is a source of hard currencicy. of millions of dollars in the hands of the castro government that they use to oppress the cuban people and to jail and hold hostage an american citizen who today is being held hostage in cuba, allen gross. by the way, after they took him hostage, we implemented this policy. so this policy have a reward for what? so here's my challenge to the administration and the state department. look, i know you're not going to change your mind. i know you believe in this people-to-people stuff. i know someone has sold you a bill of goods that this people-to-people travel is a good idea, will further democracy and freedom in cuba. i get that. you're not going to change your mind. but at least examine how this is being implemented because this is a charade, this is an embarrassment. these people are getting licenses to conduct this

outrageous tourism which, quite frankly, borders on indoctrination of americans by castro government officials. and so i hope we'll continue to look at this and that this administration as part of its western hemispheric approach will look at these trips for what they are. they're an outrage, they are grotesque, and they are providing hard currencicy to a regime that oppresses its people, who jails people because they disagree with the government. it's wrong. this is not what we're about as a country. this cannot be what we defend. even if you agree with this people-to-people theory in concept, you cannot, you cannot justify how this program is being implemented or these people that are getting licenses to conduct these kinds of trips. so i hope that we will in our conversations with the state department about their appointments in the western hemisphere and in specific, the nomination of roberta jacobson, i hope we will use that as an opportunity to examine how these programs are being implemented, because quite frankly they are outrageous. mr. president, i suggest the

absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: quorum call:

mr. reid: mr. president? the presiding officer: the majority leader. mr. reid: i ask consent that we terminate the quorum. the presiding officer: without objection. mr. reid: i move to proceed to calendar number 257, h.r. 3630. the presiding officer: the clerk will report.

the clerk: motion to proceed to calendar number 257, h.r. 3630, an act to provide incentives for the creation of jobs and for other purposes. mr. reid: i have a cloture motion at the desk. the presiding officer: the clerk will report the motion. the clerk: cloture motion. we, the undersigned senators, in accordance with the provisions of rule 22 of the standing rules of the senate, hereby move to bring to a close the debate on the motion to proceed to calendar number 257, h.r. 3630, an act to provide incentives for creation of jobs and for other purposes. signed by 16 senators as follows. reid of nevada, baucus -- mr. reid: mr. president, i ask unanimous consent the reading of the names be waived. the presiding officer: without objection. mr. reid: i ask unanimous consent that the mandatory quorum under rule 22 be waived. the presiding officer: without objection. mr. reid: i ask unanimous consent that we proceed to a period of morning business, senators allowed to speak for up to ten minutes each. the presiding officer: without objection. mr. reid: i ask consent we now proceed to h.r. sw 3421. -- h.r. 3421.

the presiding officer: the clerk will report. the clerk: h.r. 3421, an act to award congressional gold medals in honor of the men and women who perished as a result of the terrorist attacks on the united states on september 11, 2001. the presiding officer: the senate will proceed to the measure. mr. reid: i ask consent the bill be read three times, passed, the motion to reconsider be laid on the table, there in be intervening action or debate and any statements relating to the bill be placed in the record at the appropriate place as if read. the presiding officer: without objection. the presiding officer: the senator from illinois. mr. durbin: i ask unanimous consent the senate proceed to the consideration of h. con. res. 93, which was received from the house and is at the desk. the presiding officer: the clerk

will report. the clerk: h. con. res. 9, providing for a correction -- h. con. res. 93, providing for a correction to the enrollment of the bill h.r. 28456789. the presiding officer: without objection, the senate will proceed to the measure. mr. durbin: i ask unanimous consent the concurrent resolution be agreed to, the motion to reconsider be laid upon the table with no intervening action or debate, that any statements related to the measure be placed in the record at the appropriate place as if read. the presiding officer: without objection. mr. durbin: i ask unanimous consent the judiciary committee be discharged from further consideration of s. 1612 and the senate proceed to its consideration. the presiding officer: the clerk will report. the clerk: s. 1612, a bill to provide the department of justice with additional tools to target extraterritorial drug trafficking activity. the presiding officer: without objection, the committee is discharged and the senate proceeds to the measure. mr. durbin: i ask unanimous consent the feinstein substantive amendment which is at the desk be agreed to, the

bill read three times and passed, the motion to reconsider be laid on the table with no intervening action or debate and any related statements be placed in the record as if read. the presiding officer: without objection. mr. durbin: mr. president, i ask unanimous consent that the help committee be discharged from further consideration of senate resolution 347 and the senate proceed to its immediate consideration. the presiding officer: the clerk will report. the clerk: s. res. 347, recognizing the 40th anniversary of the national cancer act of 1971, and so forth. the presiding officer: without objection, the committee is discharged and the senate will proceed to the measure. mr. durbin: mr. president, i ask unanimous consent to be added as a cosponsor to this measure. the presiding officer: without objection. mr. durbin: mr. president, i further ask that the resolution be agreed to, the preamble be agreed to, the motion to reconsider be laid on the table with no intervening action or debate and any statements relating to the measure be printed in the record at the appropriate place in the record as if read. the presiding officer: without objection. mr. durbin: mr. president, i understand there is a bill at the desk. i ask for its first reading. the presiding officer: the clerk

will report. the clerk: h.r. 3094, an act to amend the national labor relations act with respect to representation hearings and the timing of elections of labor organizations under that act. mr. durbin: mr. president, i now ask for a second reading and in order to place the bill on the calendar under the provisions of rule 14, i object to my own request. the presiding officer: objection is heard. the bill will be read the second time on the next legislative day. mr. durbin: i ask unanimous consent when the senate completes its business today, the senate adjourn until 10:00 a.m. on friday, december 16, 2011. that following the prayer and pledge, the journal of proceedings be approved to date, the morning business be deemed expired and the time for the two leaders be reserved for their use later in the day. that following any leader remarks, the senate be in morning business until 12:00 p.m. with senators permitted to speak therein for up to ten minutes each, with the first hour equally divided and controlled between the two leaders or their designees, with the majority controlling the first 30 minutes and the republicans controlling the next 30 minutes. the presiding officer: without

objection. mr. durbin: mr. president, we continue to work on an agreement to consider the omnibus spending bill and the payroll tax cut compromise. senators will be notified when votes are scheduled. as a reminder, the majority leader filed cloture on the motion to proceed to h.r. 3630 this evening. unless an agreement is reached, that vote will be taken on saturday morning. if there is no further business to come before the senate, i ask that it adjourn under the previous order. the presiding officer: the senate stands adjourned until senate stands adjourned until

>> intel of the aspen institute and pbs blumenauer teamed up for a discussion on innovation, jobs and the global economy. next to hear from the head of the small business administration, karen mills. this is just under an hour.

>> good morning. i am elliott gerson executive vice president of the aspen institute. thank you all for coming this morning. we are delighted to have you here. we are absolutely thrilled to be presenting this program today with our wonderful partners, the "pbs newshour" and intel corp.. it's been part of an ongoing dialogue that we have been conducting with them that we began in 2009 with the goal of bringing together washington and national thought leaders to take a hard look at some of the most pressing questions facing the united states today. questions about what the coming century will bring for our country and whether innovation will continue to power our economy and bring us prosperity.

questions about our role as the world's leading innovator, which is frankly in jeopardy, and questions about the future as we are building for our children who will inhabit a fast-paced, ultra-connected world that is both interconnected and highly competitive. we use new technologies that we today could hardly fathom that will relate to their friends, to their colleagues, to their bosses, to their employees around the world in ways that we cannot even imagine. a policy decisions we make today will be critical to the opportunities they will have both here at home and in the global community. this is what has brought us here today to focus on the nature of the innovation economy, its critical elements, the role of the new technologies in today's global marketplace. i look forward to hearing from all of our superb panels and moderators and last but certainly not least, from the

secretary of state, hillary clinton. i would like to thank in particular intel for its generous support of this extremely important project as well for its passionate and genuine interest in the dialogue that we have been building over the last several years. paul, chris, tom walter and lisa malloy have been excellent partners in this effort and we are extremely grateful to them for all they have done. and before we get started let me also tell you, for those you, for those of you who would like to join this conversation on twitter, use the hashtag that you will see on the screen and it is ida e global mkt. it is now my pleasure to bring to the stage, douglas, intel senior vice president and senior counsel. thank you for being here.

>> thank you, elliott. we had intel greatly appreciate the work of the aspen institute, promoting dialogue about critical issues to public events such as this. we would especially like to thank u. elliott as well as jamie miller and walter isaacson for partnership in recent years in convening some of the best thinkers to discuss how we can continue to foster innovation and economic growth. we also are grateful to pbs, new power for its hard traditions over the years and helping guide these today in several locations in the past. as you know intel is both a technology company and a manufacturing company. about three-quarters of our investment in in manufacturing and r&d and half of our employees are here in the united states. more than three-quarters of the demand for our products are outside the united states.

we expect that share to continue with the increasing rapid growth of emerging market economies. with 95% of the world's consumers living outside the united states, the growth of the developing world presents a major economic opportunity for the united states today and the secretary clinton said earlier this year, 1000 opportunities tomorrow. at the growth of the developing world. presents challenges. today's event is about innovation and economic growth with a special focus on the changing world outside of the united states. other countries certainly those in asia, plainly recognize that innovation is the key to economic growth. and the u.s.'s lead in technology and innovation as elliott noted, is in jeopardy. as a global company, we see first-hand the global impacts of policy decisions in this country and abroad. as an american company, we share

the concern that u.s. public policy must meet, the challenge of the global economy and must foster continued innovation and broad taste economic prosperity. we look forward to today's discussion about these important matters. so let me now introduce jeffrey brown, senior correspondent for the "pbs newshour." >> well, thank you and welcome to you all. i want to thank aspen and intel are partnering with the "newshour" and for inviting me to be part of this. it is early to be at work. you know we do the "newshour" from 6:00 to 7:00 p.m. and every time i do something like this i remember some years ago, my son who just started in college but when he was maybe 10 or 12, he had a young friend visiting and the friend, i was meeting him

for the first time. he said to me although we watch you on television every night. and i said, that's great. although i wasn't sure he meant it was a nice thing or he was being forced to watch the news every night at home. he asked me a few more questions about it and i answered and then there was a long pause and he got to the question that i could see was most on his young mind, which was so, do you just work one hour a day? [laughter] and i thought about you know all kinds of things that i could tell him that i do all day long but then i realized to do you know what? i just work one hour a day. so today i am working two hours. [laughter] our title is innovation, trade and creating the next 10 million jobs. the plan here is no speeches, no opening statements. it's a conversation. i have encouraged the panel is to speak up and respond and engage with one another and hope

to engage your interest thereby and they will save about 10 minutes for questions at the end or as much time as we might. a short introduction because you have all the odds are face in front of you of our distinguished panel. karen mills has served as head of the small business administration since april 2009. before that is chair of the state of maine's council on competitiveness and the economy. she also brings wide experience in the private sector as an owner, manager investor and a number of businesses around the country. fred herds and is a leading economist and policy thinker. a longtime director of the highly influential peterson institute for international economics. deputy chief of staff of the afl-cio. previously chief international -- and expert on growth and labor issues and myron senior vice president for international affairs at the u.s. chamber of commerce involved in the chambers many global business efforts in

particular longtime experience and expertise on a show so welcome to all of you. i wanted to start backwards at the tail end of our title, the 10 million jobs. i love the ambition of that last phrase so why don't we start there and then we will go into innovation and trade and some of the details. karen mills, in the world as you would love to have it, where -- give us a minute of an overview of where were those 10 million jobs come from? >> well from small-business. [laughter] >> actually a lot of them will come from small-business because two out of every three net new jobs come from small-business and this has been true over the past 15 years. half of the people who work in this country own or work for a small business though this is half the jobs we are talking about.

there are actually three types of small businesses though and they will contribute differently to the future growth. mainstreet small-business is a lot of the jobs and we at the sba worry about them a lot. we give them access to financing. we just did 30 billion, we had a record year in financing small businesses and most of these are the dry cleaners in the restaurants in the car repair operations that depend on the local economy. when the local economy is good they are growing. but most of the net new jobs come from a very small number of high growth businesses. this is where innovation comes in. we know that this number has been hit hard. we are down about 100,000 new starts in this country right now, so usually this is a very bright -- vibrant entrepreneurial economy and we

start 600,000 new businesses a year and now we are down to 500,000. also jobs, that was almost 2 million of the jobs we lost that we get those back. we have made a nice inroad and then the third category, we start to talk a lot about supply chain. this is important for exports and some of the activities that they talk about. intel has a big supply chain. many of our small manufacturers in this country are part of supply chains of larger companies. many of which export, so we are finding ways to create innovation for the smaller manufacturers. the they might be advance manufactures and technology. they might be specialty manufactures and they can still come and other suppliers and if we make sure that they have a capital and the counseling and the tools they need, they can produce those products that can then either be exported as components or expo did --

>> fred bergsten where does your 10 million come from? >> let me tell you how to get three to 4 million of the 10 million. the united states runs a trade deficit of half a trillion dollars a year. where the worlds biggest debtor and deficit country is the world -- result of that. the residents had a goal of doubling exports over five years which is good but it is much too modest a goal and he hasn't done much to support it. anyway it is the wrong goal because the goal should not be just to increase gross export. but to expand net exports meaning our trade balance, which means we have to get more competitive on the import competing side as well as the exporting side in that go strictly to innovation. but if it imminently reasonable goal to get rid of the trade deficit, $500 billion worth, over the next five years? that would increase economic

growth to between a half a point and a full percentage point a year for that five-year period and would create three to 4 billion good high-paying jobs in the tradable goods sector. now of course some critics say that every country wants to export its way out of this recession so how could you do that in the united states? well the answer is we have been running massive deficits for 30 years. would become the world's greatest debtor country. we have therefore been accommodating other countries desires for growth for 30 years in the g20 quite rightly has called to rebalancing the whole world economy to make it sustainable and if that means anything it means getting rid of the deficit so our authorities are ignoring a huge component of potential job creation which makes sense for a whole variety of reasons. how would you do it? there are three basic steps that would have big payoff but they overlap with what jared said. one is clearly to get the exchange rate of the dollar at a

competitive level. it's still overvalued by 10 to 20%. most of that is against china because the chinese manipulate their currency. we need to get much tougher on that. second, we need to really aggressively expand our markets for services exports. the u.s. has a huge surplus and trade in services but we have underestimated the rate of services that we can export. we should be doing that much more extensively and opening up markets in the fast-growing emerging countries to permit that. and then third getting serious about defending our intellectual property rights. that is probably costing us one to 200 lien dollars per year because of piracy of our intellectual property by many countries led by china, russia and others. dead three-part program alone would enable us to eliminate the trade deficit of half a trillion over the next five years. that would create three to 4 million jobs. it would spur innovation because then innovating companies would

have bigger markets and could sell more and it would also rest on innovation progress because unless you innovate better you can compete internationally and you can take advantage of these opportunities. so this is a complete interrelated nexus but i think framing at around a goal of putting the u.s. for the first time in 30 years into international balance in its global economic position, which he a centerpiece for how to do that. that out to be a major issue in next year's campaign. as i say our authority both the administration and the congress are simply missing a huge bet by not going down that path. >> thea please do think that gets us three or 4 million jobs and you have a better idea to get us to tend? >> i will go to 10. >> you will go all the way, all in. >> i would like to build him a karen and fred said because i agree with most of what both of them said and i agree with fred

the trade has enormous potential. but it has not been. it to be both realistic and practical how we talk about tradable kind of policies were put in place, so i think it is really important that we do set her sights on closing the trade deficit not just happy talk about it and encouraging it but exports are great. we also have to think about the size of the trade equation. i think we do need to get 11 million is the jobs gap, just to get us back to the unemployment rate we were at before the recession began. we have lost that many jobs plus there's growth in labor markets that we have an 11 million market job poll. it is not overly ambitious to talk about 10 or 11 million jobs so we need to start with the trade picture and we need to start with policies that address currency that address our tax incentive, that really do change the way both policymakers and business think about reducing in the united states versus offshore. i think we need to think about

good jobs. i think all the talk in the united states right now is about how we can cut down on pensions and benefits and wages and tried to beat back american workers and wreck their unions in order to make labor cheaper. but what made this country great, what made this country strong as a strong middle class and we need to figure how we can get back to that infrastructure. it where we could get several million jobs if we were to pass the american jobs act that president obama put on the table. we have enormous infrastructure needs in this country in schools, and roads and transportation and communication. we need a modern infrastructure and we are going to compete successfully in the global economy. we have not invested and congress has been too cheap to spend the money that needs to be spent to create jobs and also bring the united states into into the 21st century. >> we will come back to the politics of that because that is very important. myron brilliant. >> the last time i was on a panel with thea it was debating

the u.s. korea free trade agreement and we know how that debate ended. let me suggest first of all, there are five areas, five or six areas that we need to focus on in job creation. before you go into the chamber of commerce the first thing you will notice is that we have four letters on the top of our building, jobs. so like others on this panel we believe we have to create jobs in this economy to stay competitive and to restore confidence in our economy. where would we go? one, we would expand the trade agenda. it's great we have passed free trade agreement that is yesterdays yesterday's news. 95% of the world's customers are outside our borders and we need to find a way to expand our trade agreements abroad. of course we need to be appropriately engaged with china and i may differ fred on where the priorities are but i don't

differ with the need to advertise to play by international rules. but that is not enough. we need to look at new markets, india, brazil indonesia, egypt. other countries where we can expand or trading relationships. we need to double down on our relationships with europe. this is a time where europe and the united states need to really invest in jobs and growth and i think this is an opportune time for the united states to engage europe and expand our relationship there. at a lemonade are terraced between europe and the united states. let's look at regulatory cooperation. let's look at investment and let's eliminate any investment hurdles there and let's look at service liberalization. essentially many to think about the markets of asia. that is where the transpacific partnership form is so critical and i was pleased that the president made a commitment in hawaii to move that forward. let's get it done. let's not allow an election year to undermine the ability of the united states to show leadership in the economic growth.

other areas that i will just take off and we will come back to. second secondly to have sensible immigration policies in our country. we need to invite people, this is what makes our country so wonderful and so great. we need to invite people not only to come and get educated in our country but to stay here and to develop enterprise and develop small businesses that create so many jobs and that are so critical to the vitality of our economy. third, we do need to protect intellectual property. that is critical if we are going to not only have 19 million jobs tied to innovation in our economy but to grow that figure going forward and we do have a competitive advantage that we want to maintain so we need to make sure we have the right policies here and we need to insist on the the right policies abroad. that i would just say education. i don't think i need to tell people in this audience the importance of education. both my parents were professors. i worry about the trend lines there that we allow people to come into our country and get

good engineering and science and other kinds of degrees in our country and then we export them out. that is not a good model for the future and we are no longer alone with europe in being able to attract top-notch talent. we are going to see more competition from china, from korea and other markets around the world so we need to reform our education system. it's not just at the collegiate level. we need to think about the k-12 level and subwhen i would agree with infrastructure but we don't have to -- time to cover that right now. >> i see a lot of people taking notes so i will remind the audience you will have a chance to ask questions. i want to focus in on the first word here of our title innovation, because elliott gerson got up and said that our leadership, the leadership of the u.s. innovation is in jeopardy as though it is a given. it is a given? is it true karen mills and what is the problem? defined the problem for is.

>> entrepreneurship and innovation has long been one of america's great strength but the rest of the world is catching up, particularly around entrepreneurship. we no longer have the corner on the world's great entrepreneurs. people have kind have gone to school on what somebody called our killer app, you know, which is how to create businesses and we do it very well in this environment. >> did we let that happen or did they just reach a growth stage? >> i think the good news is the rest of the world is developing and catching up to us but we need to do some things to keep investing in our own entrepreneurial ecosystem our entrepreneurs, and make sure that they have support and help. there's a whole series of things around this. probably many of you have been following startup america which is the federal government, we have partnered across the administration with the private sector.

we are working on both ends to make sure that we encourage entrepreneurs. so it is everything from high skilled immigration to capital, and what we realized is that early stage capital, the valley of death, is a big problem and we have all of these great entrepreneurs but that venture capital has really taken a hit and died down. but there is not a billion dollars lying around to just drop into that bucket. so what we have done is under -- you heard the president say, we can't wait. what we have done that the fda is take a small investment companies where we partner with the private sector and support investment in new entrepreneurial companies and we are putting a billion dollars into the early-stage companies. it is zero cost to the taxpayers. so under our current authority,

so we can use the tools that we have to get more capital out into these entrepreneurial businesses. that is happening all across the government, all across different sectors we are taking more notations that are in federal labs, pushing them out to commercialization. i am sure you saw recent agreements on fdi are which is going to be part of the defense authorization bill. all of these elements are going to be critical to making sure the entrepreneurs -- those be myron what is the problem then? >> i go back to thomas friedman's theory of the world is flat. i'm not sure it's flat but it is shrinking and if you look at any real indicators the mobile penetration for example is gone from 2% in 2000 or so to probably 70% in 2013. there will be 3 billion more users of the internet by 2020, so that on one hand creates an

enormous opportunity for a u.s. company and for u.s. workers to benefit from the increased connectivity. it will show advances in health care. it will show it advances in biotechnology. robotics and many other areas that will shrink the world and very significant ways. the challenge for us of course is how do we stay above the competitive curve? how do we create the innovations that will drive not only jobs but will drive our economic growth? and there we need to have support for the american business community. i have mentioned a few. another area that i did not get into is, we need to encourage more investment in our company. we don't do enough of that although i'm pleased the administration is now talking about investment. it used to be government didn't like to talk about outbound or inbound investment. we need to encourage that the most importantly we need to double down as i said in

education reform, and looking seriously at our immigration policies in this country. i am worried the election will now allow for a series of debates on -- but we need to have one of the country and expand our trading relationships around the world. >> at think innovation is extremely important to the future the united states and has certainly been important to the history and the wealth of the united states but one of the key things we have to think about is the nexus between innovation, production and consumption and i think for too long too many companies have figured if we do the inventions here, we have all the brains and we will outsource the production of these goods and stay on the top of the innovation agenda. i don't think it works that way and i think there a lot of business people. i know andy grove has been talking about that how when you lose the manufacturing you lose a key part of the engine that keeps the engineers and technicians the technicians involved in that picture. and that goes back to the trade

picture and it goes back to, we have an advanced technology trade deficit in this country of $80 billion in the first 10 months of this year. more than that entire amount is going going to china. >> i agree with part of your -- which which is productivity is change in the marketplace marketplace and we need to reflect our policies to better handle that change. i agree with that, however i don't agree with the notion that thea says it's something to limine. the reality is we need to have an open market and the reality is we need to have other countries play by international rules so weather is not a level playing field we need to address that in our trade policy. productivity itself is not a bad thing. as we innovate we are going to be more productive as a society. we just need to take more opportunities. >> this gets to the key issue here and certainly job creation,

innovation good for jobs, is open trade good? >> aaron mills. >> i think there's no question the data shows innovation is good at lisa productivity and we have recognized what thea said which is we need to have the first-aid to the manufacturing stay here because part of the innovation happens in the lab in the next part of it happens -- back and if you owned that early-stage manufacturing, you then can own much more of the technological expertise to keep that business here. and there are lots and lots of places where we are competitive or if we are losing we are losing in places like switzerland with drug production as opposed to the usual player. so we have to be very i think thoughtful and aggressive about

going after scale up manufacturing and that is something that we are focused on in the advanced manufacturing task force. all across the country we have long had a big investment in basic research, and we have got some pretty good mechanisms to turn some of that research and commercialize that although there is a lot of opportunity there and now we are focusing also on maintaining manufacturing expertise in this country. interestingly when i talk to start up so in early-stage manufacturing, and technology, the biggest problem? trained workers. this is where labor and manufacturing and innovators are partnering to build more skills and i think that is a big component of how we will be successful. >> i would add why is it if the u.s. is achieving the parts it -- port activity we want wake like a but not eliminated our

deficits and create three to 4 million jobs? ice or we can. i don't think we should oppose that is as a goal in the me come back to the basic question about innovation. i think it's an american concedes to say that we continue to lead the world in innovation. at least to say we recognize we are in the process of losing our lead in in world innovation. >> to who are releasing at? >> i will mention -- lots of people and i will mention three metrics. at the heart of the matter of course is human capital. all the talk about investment and technology, you can do it without human capital and we know that our human capital compared with the rest of the world is deteriorating enormously. you look at the k-12 level on every international test we wind up somewhere in the middle of the pack if not worse. and that position has been deteriorating sharply and steadily for two to three decades. but then what about at the the the high-end of the education level where we pride ourselves and that is where we have to get

the big innovation. if you look at the share of the american population that gets graduate training, including professional degrees, that ratio is the same today as it was in the early 1970s. that is a shocker. but, in the early 1970s that enabled us to lead the world in that ratio us. but we stood still and the rest of the world has shot by a so now we are somewhere in the middle to lower one third in world shares of advanced training and technology. and without that you just can't do the high-end stuff of which innovation is made. but then what about the corporate side? the corporate competitiveness and the headquarters here for american-based firms? 30 years ago we had the lowest for second lowest corporate tax rate in the world and so we were competitive on the big important tax measures attracting investment in the united states.

we stood still. the rest of the world has -- so now we are the second-highest corporate tax rate in the world and on that important component we discourage companies move -- investing in the united states so the bottom line is what the wicked human capital or physical capital the united states has been asleep at the switch. we have stood still for several decades. resting on our laurels that is why i call a concedes there by running massive trade deficits becoming the world's most -- worlds largest debtor country and relying on foreign capital to do the investment we need here at home there for putting ourselves in fall to our competitors led by china but many others as well. that picture i would say is not one of great optimism unless we start pulling our socks up a lot more than we are now.

>> why, focusing in on the capital side of education workforce development, why has this happened? before we get to the what can be done about it, do we understand how it has happened and why? >> i would suggest two things, complacency at the start three or four decades ago. we thought was some merit we were at the top of the scale so we were lax and never change that mindset but secondly and others are much more expert on this than i. when it isn't great debt it is very difficult for the united states as the country a country to have an education policy because the federal government does not make education policy. and d. the state government doesn't make education policy. education policies made by 15,000 local school boards around the country and to pull that into anything resembling a national education policy is a herculean task in administrative, not to mention conceptual terms. on top of that we have had huge

debate about what is the right way to go? we have fluctuated up and down down and back and forth but the bottom line is we have stood still for several decades. >> i think we have have underinvested estimation in education at every level, k-12 and also at the the college level. if you look at the united states compared to other countries college education is very expensive. i'm a high school senior simon focused on how expensive it is and how to breach it is for a lot of non-wealthy kids but i think the other thing is that we have an outsourcing culture in this country certainly over the last couple of decades where we have outsourced production. we also have outsourced a lot of the brain jobs, the software development and so on and so forth because we have a lot of corporate folks sitting in headquarters say it's cheaper to buy an engineer in this country or that country than the united states so you think about it from the point of view of kids in the united states investing in expensive education, first a college education and then the

advanced degree and wondering whether there is a job at the end of that. you can't have it both ways. you can't be outsourcing all the best jobs in united states and wonder why kids don't get an education. >> thea we all agree that education reform is needed at the k-12 level we need to deal with technical training, schools and the relationship between the private sector, the workforce and the education system needs to be strengthened. we all recognize the competitive edge we have had is no longer there so i don't think there is going to be any debate on that. the question is how you revenue it. i will say this. if you allow people who are coming here to get educated and to stay here in a great start up they are going to create american jobs. for every foreigner who comes here and gets an engineering degree and creates a startup business here, they create american jobs, well-paying job so that is not a bad thing. that is not the only solution but it is a component to it. the other thing i would just

point out, no one here is arguing he should maintain the trade deficit. on the other hand no one here should be arguing that the trade deficit in itself is an objective. >> why not? >> because the playing field is leveled out. if china and india are playing by the rules -- >> but they are not. >> we agree but but if they are playing by the rules that the competitive nature of our economy when. let our companies compete and that our workers compete. let's not worry and by the way fred you would agree with this i hope, imports to help our country. they create jobs here. they help the consumer. >> miron there is a macroeconomic issue which is we are borrowing half a trillion dollars from the rest of the world and that is undermining the united states and undermining our prospects for economic growth. that is the basic problem. >> if we are going to get into the debt conversation here,

let's do something about it. >> passing more free trade agreements that don't necessarily make money in the trade deficit are not the solution. that is the happy talk but doesn't actually deliver. closing the trade is a good goal in and of itself. >> you know that our trade agreements, if you look at the totality of the circumstances we have benefited. >> i'm not going to agree with you on that. >> we have expanded exports and job creation. [laughter] >> i fully agree we set a trade agreement and of course imports are good but imports are hugely important including to help renovation in our economy but there is nothing wrong and certainly nothing protectionist was saying we should compete more effectively with imports as well as compete more effectively in foreign markets.

>> absolutely, we agree with that. >> so that said improved not only the export side which is very important but improve the import side which is equally important and then put them together and become to reducing the trade deficit. we have a goal in this country of achieving full employment. we have a goal ms. country of achieving price stability. we have lots of goals in this country. why is it that we ignore the external side and don't seem to mind becoming the world's biggest debtor company and don't mind on relying on foreign capital investment. all the negative spillover and the externalities that go with it, why is that we ignore that particularly at a time of high and employment where we could see lots of good high-paying stable jobs in the tradable goods sector from going -- it just seems to me a huge ignored

opportunity. >> we have about 10 minutes of anybody has questions, prepare them. >> i will come back to this connection between innovation and export. right at the micro level, one of the things they do is i travel every week and i go to a pelot and memphis and every place i go, there is a company, a small company that is exporting. you would never -- with export in the past. there's a company called raleigh denham who makes denim jeans here in this country and they are selling them in the high-end markets of europe. in buffalo we are making roof tiles out of recycled diapers that look like a slate and slave and where they going? denmark. we have these in this capacity to make make these innovative products and now we have, because of technology, we have the ability to reach world

markets. they are reaching world markets through physical distribution, through the internet and through all kinds of that cavities. so i would submit that, and i have met small businesses all across the country who art going to be shipping stuff to columbia, to panama into korea and one of the things in the korea trade agreement is we are allowed to ship to their government. our small businesses are allowed to do korean government contracts which is very very good for small businesses who are in the supply chain of the american government particularly across all of our technological defense companies and they now have the opportunity to lead the world market. so let's not underestimate the ability of this country and our innovators if we support them, if we give them capital, if we give them counseling, if we do all the things we are doing to simplified the world for them,

they have enormous opportunity. >> if i could just say one thing quickly karen, i absolutely agree with what you just said. the reality is right now most of the small businesses in the country that think internationally and we have to change that mindset. that doesn't acquire an enormous change in policy but it does require a way forward where we can help our companies do better in looking at markets around the world. the internet helps. that's not the only tool but it's an important piece of that. >> we have some microphones around. wait for the microphone. >> my name is lorraine harrison from from the state department. i'd like to talk about measurement. as we look at the export numbers, i think we are trying to get a handle on services numbers as well as how do we map high-tech jobs and attach r&d to those numbers?

i would like to understand your perspective on how we get a handle on that because unless those reflect where job creation and the costs, and mean there is a good study with the -- to look at what are the facts that lead to job creation high-paying jobs. i'm not sure the numbers reflect that so i would like some thoughts on that. >> i would refer you to a brand-new study published by pearson institute which is actually, i will be modest but it's true, a seminal breakthrough study. [laughter] not all of our studies are seminal breakthroughs but this one is. what it does is analyze the extent to which services are tradable. people have traditionally well haircuts, home health care, that stuff is not tradable. it turns out when you really analyze its 60 to 70% of all of

our services are tradable and exported all over the u.s. from seattle to atlanta. if so why not to tokyo? so we have got a huge unexploited venture in the services area. up until now the data compiled by the u.s. governmental services has been abysmally tiny, 30 categories compared with 10,000 manufacturing. we have no idea what we could do with service. the new study at least against it chip and a bad and shows that we could double, triple our trade surplus services already getting close to $200 billion a year, areas where we have a competitive edge. lawyers, engineers, architects, all those things just as good as boeing aircraft in caterpillar tractor. we have systematically partly because of data, understated and ignored them not try to promote opening of foreign markets to them. as i said before that could be

one big component of turning the trade site into a job machine. >> okay, anybody? no? okay. yes, sir. >> i am david from the american chemical society. i help chemists get back to work in right and right now the unemployment rate for new graduates and chemistry is at a record high, so we have highly technically trained people, but we don't have opportunities for them. we are able to get our people that have been laid off back to work so we have a relatively low unemployment rate for chemists as a whole but for new graduates, we don't have those opportunities. so it is hard to argue that they should you going to school to get a degree that is going to cost them a lot of money and a lot of time when there aren't

the opportunities for them. how do we create those kinds of opportunities for highly technically trained people? >> interesting. so it is the flipside of what we are talking about earlier. there really are people that are ready so why should they go to school at this point? who wants to tackle that one? >> i am actually surprised to hear you say that about chemists because one of the things that we have seen is that high skilled folks particularly the production chemistry are very much in demand in this country, and i think one of the issues that we are doing a lot of work on is creating ecosystems where those who are coming out with certain skills are able to connect to those employers who are looking for those skills, and there is a lot of friction in that system.

i think we are doing a lot of in combination with guilt for america with regional ecosystems to make sure those matches get made. certainly in manufacturing, that is a new focus because we do have lots of folks coming out with you know, with degrees who can't find jobs and lots of employers now who continue to say i can't find the people i need. >> i would just add the standard economist responds that there is no lack of aggregate demand for the economy as a whole and that spills over into every sector like chemists. i said earlier that the presence goal of doubling exports over five years was okay but grossly inadequate. i would have a different goal. i would double the share of exports in the economy. it was 10% in 2010 and it should go to 20% in 2020. from 10 in 10 to 20 and 20 and would generate a huge expansion on a lasting basis if we could do that of demand for u.s.

services particularly highly competitive services, high-tech innovative sectors including the use of chemists and again, it seems to me to fit with a sensible national economic strategy. >> just about to miniter said he reached the 30 seconds because i promised we would come back to the politics. the political year we are in and will be for some time. myron t. think there are chances for a serious discussion of the kinds of issues we are talking about? >> well i think i would like to hope so. certainly we can't wait 18 months or two years to begin important debates about entitlement reform, corporate tax restructuring, the issues of immigration, trade policy. we can't wait. the world is not waiting so i would hope that we could again these discussions. we need to have this discussion and we need to have vigorous

debate and i hope the election process allows us to understand better where we can go as a country. we need to find a way to bring the right in the last closer together to resolve the important issues that our country faces. >> thea day where do you think we'll be? >> the political year doesn't get any by a lot of optimism now, the way the debate has focused. what i would love to see is for congress to really focus on what is important which is generating aggregate demand and there a lot of obvious ways that the president has put on the table in terms of infrastructure and education in state and local government that have to be done to get the economy out of a slump so we have to focus in on job creation in the short-term and we need a bipartisan solution doing that. in terms of trade i guess i would like to see the country talk about what's important which is how we can start to close the trade deficit, dress the currency issues, address the adverse incentives in the tax code that don't work but particularly the china currency

manipulation that is costing millions of jobs right now. >> one reason that i promote a new focus on eliminating the trade imbalance is that i think it's a bipartisan and nonpartisan issue. leave aside trade agreement, there are highly politicized but the other thing i'm talking about getting other countries to play by the rules, getting our own competitive up, strengthening our service exports worry have a huge competitive advantage. i don't feel that those are politicized. moreover they have zero budget costs. so if you want to find ways to create jobs without tapping the budget, improve the trade talents because there is literally no budget cost from the increased activity that would be generated. >> i think there is chairman is bipartisan support for some things. exports and also for small business as we saw with the sbir

agreement just yesterday but the one thing before congress that i would really like to see is the payroll tax reduction particularly for small businesses because right now we are at a tipping point. small businesses are gaining momentum and starting to higher. they are starting to get a little bit optimistic and there's nothing that makes them more optimistic and ready to invest and ready to take that next order than a little bit of cash in their pocket and that is what that payroll tax reduction would do. >> i want to thank you all for joining us for the first panel and particularly thank are panelist karyn mel, my ring brilliant and so blindly

is there anything that is being implicated by a failure of certain countries to adopt austerity measures that may be able to address some of this or do we need to continue this sort of imf support and otherwise to sustain it from a meltdown? anybody can jump in on that. >> i will start off. again, to start off at the top, bear in mind that commerzbank is in deep trouble in germany. credit agricole and friends.

if we have and it is right down sedition is going to sink the european banks which will then result in who is going to come to the rescue. i just don't think there is a solvable solution. greece there are riots, italy there are riots about austerity. i just don't think it is solvable. again it is not a liquidity problem. it is definitely a problem in fact that they are all insolvent. if the titanic sank in a highly liquid environment. >> well then, if that is the conclusion, then are we just, if we kick this can down the road so to speak, what is the day of reckoning? >> the trouble is that the road is getting shorter and we can't keep kicking this can down the road. my view is we have got to come to some resolution very quickly. it is difficult to see how you can string this along for another year given the state of the economy, given the political

resistance to adopting different measures. the point is that a number of these countries are insolvent at the second i would make is you are talking about huge amounts of debt in question so if we just look at portugal, greece, ireland, we are talking about a trillion dollars. if you add in spain you were talking about another trillion and if you throw in italy you are talking about another 2 trillion. we are talking about $4 trillion that is going to have to be written down at some stage so that is going to have a huge impact on the european banking system when that occurs, and given the interconnections between the european banking system and the united states ranking system, it is very difficult to see how the united states of voice a financial crisis if you do get your up paying out in a bad way. >> what would be the specific implications on the united states from that scenario?

>> the specific impact on the united states is that the united states banks would be put under a huge amount of stress. he would have a credit crunch in the united states. the united states would go into a meaningful recession. that would compound the problems. i think the way to look at it is like what occurred in the united states during the laymen crisis. >> the same place -- met the same way we were before. >> the same way that ricocheted around the world, now we would be having a crisis when the origin was in europe, the world's third-largest economy, larger economy than that of the united states, that would have reverberations through the globe and the united states would be impacted. >> mr. elliott and then mr. rosner. >> i just wanted to give a wider view. i think that the countries that much of the panel here thinks