are on their vacation break. this will be very short and immediately after we will return to the brookings forum on what business needs to create jobs. the presiding officer: the senate will come to order. the clerk will read a communication to the senate. the clerk: washington, d.c., january 13, 2012. to the senate, under the provisions of rule 1 paragraph 3 of the standing rules of the senate i hereby appoint the honorable jeff bingaman, a senator from the state of new mexico, to perform the duties of the chair. signed daniel k. inouye, president pro tempore. the presiding officer: under the previous order, the senate stands adjourned until 10:15 a.m. on tuesday, january

>> the senate meets again in a pro forma session on tuesday. we'll have live coverage. legislative work begins january 23rd. senators will vote on a nebraska judicial nomination and may begin work on a bill dealing with intellectual property theft. live coverage here on c-span2. we return now to the brookings institution here in washington, dc, where business leaders and economic analysts are talking about what needs to be done to create jobs. this current panel is talking about social media and digital technology. they're going to focus on innovations being developed and its impact on government efficiency. >> content deliverers to deliver it in various formats. audio, graphics and video. but providers just can't pour the same content into a different wrapper. the challenges creating content

tailored for each of those sources. we have to constantly reconceive how we deliver the same message and figure out what works in each place. think of content today as software, it needs to be optimized for the device or platform to which it's being delivered. and this has changed the way media gathers and disseminates news, media and information technology companies who fail to do this as we all know will become obsolete. words and images and platforms are all so intertwined to consider individual parts of the public process in isolation is to miss transformative connections between gathering, writing, delivering, consuming and sharing. few if any companies have to think through the ramifications of each new medium the way and to the extent we do at bloomberg. we are, i would underscore, totally agnostic. we don't care where you want, when you want but we're going to deliver it and let me give you a

couple of examples. our terminal users, 315,000 subscribers and 170 countries around the world are sitting at their terminals in most cases between 8 and 12 hours a day. they're busy. they're interested only in the facts and the prose of future stories is not what they want to see when they're sitting there worrying about key decisions in the financial markets. but our tablet reader where we provide bloomberg business week, bloomberg markets magazine, bloomberg television plus and bloomberg radio are usually seated, relaxed and prepared to spend time absorbing information. we have their full attention which gives us an opportunity to tell a much deeper and longer story. in our web audience bloomberg.com and bloombergbusinessweek.com we get post of our traffic 11:00 am to 2:00 pm, a lunchtime audience. they want information quickly

but they also want a diversion. and are much more likely to watch a video. on mobile, people don't want read a long story on a small device. we need to shorten those stories. so what does this mean in terms of the shift of our focus? in the past, the value of a provider's url was the most important factor. you always want to drive traffic back to your website and your home page. today, you, the average news consumer in this room go through 9 to 11 different sites every day looking for news. we have so many distribution channels we don't necessarily need to drive them back to the home page. we're happy as long as they're reading our content and don't care where they find it. home page, search engine, facebook, twitter feeds, et cetera. and once the content is on the web, others will share it and this enables providers to reach readers they may otherwise may have had no reason to interact with. our current model by the way for

our online offerings one-third home page, one-third search engines and one-third social media. and keep in mind, as we all know today, facebook reaches more people than any other u.s. media outlets combined. a great way to distribute our content. they do some of the work for all of us. it's a very and continues to be a very mericrattic world and the story usually wins and it's good for us as a quality content provider and as a new player. >> thank you, peter. ted, you work in both the technology and in the entertainment business and you're very skilled in your personal use of social media and public outreach. for those of you who don't know, ted has over 22,000 followers on twitter and anyone interested in following him can sign up at the

office. mine is a lot fewer than that in terms of the number of people following, i suffer from twitter envy when i go on to ted's site. so let me just ask you about social media. how are social media transforming what you do in the sports and entertainment area and then one of the things that i think you do especially well is you talk to fans but you also listen to fans and i'm also curious about your views how technology enables two-way communications and how that affects the way you do business. >> thank you, it's an honor to be here. it's very interesting the brooks institute at the epicenter really at the new economy. we forget we're living in this world where everyone lives their life on the net. and our government really initiated and launched this birth of a new economy, the internet economy. and we're living in a very sobering time right now where we're not connecting the dots

well enough between government and private industry, especially, to try to focus on the number 1 problem facing our country, which is how do we get america working again. and so what i want to talk a little bit about is a little round trip can lead to a political discussion about what's happened right before our eyes and how we know these facts and statistics happen but we become newspaper numb so what the big picture change really means for us. so today there are 2.5 billion people around the world connected to the internet. 2.5 million. the united states has 300 million internet connections. so we are becoming a very small player in an overall connected world. the changes that that will drive in terms of not only social adoption and change in ip and

the educational materials that are available now really will have staggering impact for us. the good news is, as -- from a business standpoint, it's u.s.-based companies that have been driving the innovation and frankly the business models and they've created great franchises. probably in autumn of 2012, facebook will have 1 billion users. google and all of its sites already has 1 billion users. that means their revenues will start to mirror their usage and where their customers are. and so all of these great internet franchises, the amazons, the ciscos, the googles, the facebooks, the groupons, more and more of their

business is being generated outside of the u.s. they're hiring more and more people outside of the u.s. that's where their growth is coming. and it's troublesome right now because their revenues get taxed in their sovereign country so one of the things i think we have to look at politically and from a tax system is how do we get these great companies that were initially venture capitalized with risk capital who then went out and hired lots of people and are now hiring lots of people outside of the u.s. to take some of those profit dollars that have already been taxed and bring them back to the united states and maybe have some kind of tax moratorium if they invest those dollars in private equity firms and venture

private firms to invest in younger companies. four years ago, a young entrepreneur visited me. there were four people in his country who will actually be featured 60 minutes this sunday so tune in. and he had this idea about social shopping and the ability in a bad economy to be able to aggregate up the power of people seeking discounts. but more importantly, it also was a way to get cash back into the system to support small businesses. banks had stopped lending to small businesses, factoring and receivables was drying up and so he started a company called

groupon, forbes listed it as the fastest growing. and we now employ people around the world and basically it created a new local shopping commerce phenomenon. more than 50% of its businesses very quickly is outside of the united states. and so i really do think we need to not lose sight of we were advantaged as we were the earlier adopter of the internet and the web and web 2.0 kinds of activities and technologies, but now that genie is out of the bottle on a worldwide basis and we have to drive lots and lots of new policy, new partnerships between government, between private industry, between the banking system to make sure that it doesn't get away from us and that we can continue to drive

innovation and create jobs for our economy. if i was running for re-election, that would be one of the major programs, the startup america initiative that one of my friends and partners steve case is running, i think, is vital for our country because it is small businesses that are venture capitalized that are hiring people. so the more money and more support that we can offer that system to grease those skids, i think the better off our economy will become. in regards to what's happening in social media, i think that it's even more dramatic than people understand. i started to make some movies a couple years ago, and i was stunned at how this $8 billion

industry, an industry that defines what our culture is like around the world, one of our biggest distribution products around the world -- how antiquated it had become. in fact, you shoot a film in digital and then you turn it into an analog product, which amazed me. i spent my career taking analog products and turning them into digital. and you then mail it out to a movie theater and people buy tickets. and the industry is pretty archaic. and so i -- i started a company called snag films. and i'm very proud of what it's doing under the term of what i call "film-anthropy." there's so many films that are

being made that are shining light on a tough subject, that want to shine a light on volunteerium, that want to raise money around a cause. and so snag films -- we now have 3,000 full length free movies. you can go to snag films and watch a movie for free on your ipad, it's on kulu, blackberry and the like. if you like the film, you can snag it and you can open a virtual movie theater, and you can show that movie to your friends on facebook or on your blog or your web page or your editorial page. we now have close to 200,000 virtual movie theaters open. that compares to 30,000 physical screens in north america.

we're streaming literally 20 to 30 million films per month. we're supporting 550 charities and we embrace the filmmaker. we've created literally overnight a brand-new infrastructure through streaming and distribution of these good work films. and i think you're just going to see example after example of new technology activating great new applications and opportunities that really shake up the status quo of traditional media companies. >> thank you, ted. bill, the other panelists have focused on i.t. and media innovation. you think a lot about political dysfunction and the need for institutional reform and i imagine you're putting out a paper today, the title of your paper is political dysfunction and economic decline, but i was wondering if you could explain both parts of it, the political dysfunction part and the impact

on the economy and innovation? >> well, i'll do my best, darrell. let me begin by saying that it's an honor to share this platform with two such distinguished private sector leaders. and i hope that what i have to say will add a little bit of value and to support the things that are put on the table. i also felt the most useful thing i could do as the last presenter before lunch would be to try to connect some of the dots from what has been said this morning and connect those dots up to the topic on which i'll be focusing. as was just said at the beginning, that we live in sobering times. indeed, we do. i think that's a very good way of describing them. not only because of the great recession which god willing will end some day, but also because

on a more fundamental and secular as opposed to cyclical basis the society and the american economy are being buffeted by the twin forces of globalization and technological innovation. these forces are transforming our economy and our society, and they are also posing a tremendous challenge for our political system. in the face of these dizzying changes, the question is, how are we doing? how effectively are we doing responding? my answer to that question is, not well at all. and i didn't hear a lot of dissenting views, i heard various amplification of those

responses. what i would just like to unpack that sense that we're not doing very well, bonding to these challenges by making four points. point 1, we are enduring a very high level of political dysfunction in our national politics. a good portion of my paper is devoted to spelling out some of the details. if anybody disagrees with that judgment, please raise your hands. [laughter] >> yeah, i will be happy to go into -- go into greater detail. i don't think it's really necessary. everybody remembers the debt ceiling fiasco. but it goes far beyond that. we heard references this morning to the atmosphere of political uncertainty that is hindering long-term investment decisions.

we heard multiple references to the most serious challenges that we are really not confronting with the scope and scale that they deserve. and it occurred to me that, you know, when i was younger, political risk analysis was something that american analysts did in a foreign country and now it's something that foreign analysts do about the united states. this is a sea change and a very unwelcomed one. my second point is this, and it is foreshadowed in the title of a paper that's being released today, political dysfunction is the enemy of economic growth. these two processes cannot be decoupled. there is no way for the economy to go around politics. like hell, it's something that you must go through. now, i made just a list of all

of the different linkages that people this morning talked about, and it is a long, impressive and depressing list. it includes immigration policy, education and training, infrastructure, trade, taxation, regulation. what a couple panelists called directed public investment. well, i'd like to ask you the following question, how on earth are we going to mobilize resources for directed public investment if we're on an unsustainable fiscal course and seem incapable of coming to grips with that simple, massive brute fact? not a rhetorical question. it's troubling. here's my third point and this is really the affirmative and forward-looking section of the paper that i'm releasing today,

institutional innovation is a key that i would say indispensable part to the response to political dysfunction. we can't sit around hoping that political leaders and political parties will join hands and sing kum-ba-ya around the fabled campfire. we are going to have to change institutions so that the incentives of actors within these key political systems are changed so that they will behave differently, so that they will produce better results for all of us. and in my paper, i lay out three key baskets of institutional innovation. one basket directed towards making congress work again. i can talk about the details of that, if you're interested, but

it deals with everything from, you know, the confirmation process, the filibuster reform to the restoration of majority rule to linking congressional pay to the performance of basic congressional duties such as producing an annual budget on time. the second basket deals with the budget process itself. and i lay out a number of options for reforming the budget process which was put in place, let us recall, through the 1974 congressional budget act, which is almost 40 years old and worked better at the beginning of those four decades than it is now. and finally, reforms to the electoral process, to begin the process of depolarizing our hyper polarized and gridlocked political system. point 4 and finally, and this is a direct response to some of the

things that i heard this morning. not only can we not decouple politics from economic policy, we cannot decouple governing politics from electoral politics. what is said during political campaigns is a very good leading indicator of what you're going to get out of the political system and not get out of the political system. and to be blunt, if it's not discussed in a campaign, and it's a matter of any significance, it is extremely unlikely to happen during a -- during the governing process, during an administration. what people say matters. what the president says in his forthcoming state of the union address matters. what appears in the platform of the opposition party later this

summer matters. what is discussed in the general election matters. and i have to say, and this is my closing thought, there is an almost complete discontinuity between the very important topic that has been discussed in this room this morning and anything that has been discussed in national political discourse at a level of visibility during the past year or right now during the presidential nominating process. and these are bad leading indicators for the kind of discussion that we're likely to get in the fall. bottom line, there are many people in this room who are capable of influencing what is discussed in our nation's politics. this is a very important election. this is a very important moment. if you want the topics you care most about to be on the public agenda, you are going to have to act affirmatively to put them there. >> and i like bill's idea of linking congressional pay to actually producing federal

budget sometime. i mean, that might actually change the incentives in a significant way. i'd like to follow up on this exercise of connecting the dots and throw out a couple of questions to any of the panelists who want to jump in, feel free to do so and then we'll open the floor to the audience after that. how well is government doing on innovation in particular and what should the government if anything, doing anything to promote innovation? any of our panelists and you can talk about innovation in public sector, private sector. >> you know, i was asked earlier in 2011 by somebody i consider to be an considerable thoughtful time -- who could avoid

washington that was probably the best outcome for them. and my sense is that there is very little that would induce the private sector to really reach out the government to try and figure out how to solve a problem and that may be an incredibly parochial and naive view, but i think it's -- you know, we are to a certain degree on our own i think one of the great life bloods of our country as ted was talking about before and certainly we see every day in our company at bloomberg this incredible power of innovation that occurs regardless almost of what the external environments are like. so i'm ashamed to say with the malaise that exists in the world of politics and government, to the extent you can avoid that, i think you're better off and have a much shorter path between development and ultimately success, but i don't know ted

whether -- >> you can't measure it, you can't manage it. and if we're serious about innovation, we have to create national database and make it transparent to see how we're doing. and you could very quickly come up with some sign posts, there could be a you been in of startups, how much venture capitalists have been in startups and how many new product launches have been and the flu plants -- new plants that have been opened. united states of america make a list, how many jobs have been created, and i don't think we do that. and so we -- we leave it to the singular heroic romantic figures. that's why we were as a country in national mourning with the passing of steve jobs. walter isaacson's book -- i was

on vacation and people reading it was like the bible. we are desperate as a people to recapture what made the company great. we're a startup nation. we're at our heart entrepreneurs. the country was based on innovation, our founding fathers really were our first entrepreneurs. and so i do think that washington, because of this political gridlock, gets in the way more than it helps. and that's really the biggest issue. one of the intellectual fight is, do you want government to create jobs or do you want industry to create jobs? pretty binary. and if government creates jobs, how do we know that we're getting our money's worth because we as taxpayers, in

essence, are becoming the venture capitalists. and will the government be able to manage those functions and those businesses and investments well? we know there's infrastructure in management and leadership on investing and trying to make these companies successful and so you know, i'm ashamed to say that i agree whenever i'm asked what's the best thing that government can do to help entrepreneurial business, i say do nothing, get out of the way because innovation is fresh ways of looking at things it's what's different between an institution and the government has gone truly the other way in terms of not being able to move quickly on things and overregulating things especially it wants young

companies to scale. >> well, i hope -- i hope everybody was listening very, very carefully to those last -- to those last two remarks because they bear eloquent testimony to one of the perverse consequences of political dysfunction. and that is that important parts of the private sector, if i heard correctly, are basically giving up on government. ..

which is a business issue. right? and, i know, and that, that's a micro example of political dysfunction that has airing -- bearing on your customers. so and i could, i could multiply example after example and just to be contentious i don't think it is binary. government creating jobs or business creating jobs because there's a third possibility which i actually think is the truth. namely that the environment of incentives and opportunities and prohibitions and regulations that government creates either facilitates or impairs the growth of

business and that is certainly been the truth, the case throughout american history. you go back to the 19th century with the system of canals facilitating commerce built with, you know, built through the public sector and henry clay's american plan and all of that. the whole land grant college system. abraham lincoln's finest achievement other than perhaps winning the civil war. you know, you know, the idea, the idea that the best thing that government can do is get out of the way is, may be a sad truth but it is also the symptom of a deep disease that i don't think we can live with as a country. i'm putting just as starkly as possible and if you don't agree, please say so. that's why we're here. >> i think too what we're seeing is a forcing of

business leaders to pursue double-bottom line initiatives that, that you're trying to run a business but you're also starting to run these enterprises like they were governments. facebook is going to be china and a have a billion people with some centralized command. it can communicate to its citizens in a very efficient fashion. what do governments do? they have to defend their citizens. facebook honestly is concerned about its citizen safety and security. it creates currency. facebook is creating its own currency. we're starting to see organizations take a lot of, what government should do into our own hand. might be in a virtual way

but we really are seeing that we have to take care of our employees. howard schultz is on the board of groupon and we have become good friend with howard and he basically has taken on a, we have to do the work. we have to be articulate and deliver the votes. we have to communicate to government but we have to deal with our people and our customers as if we're our own governing body. and if we can be exemplars in the way we run our businesses maybe that's a good proxy for what we should asking for government. i was mayor of my town for several years and in florida and you know i learned a lot about local government and then when i was president of

aol i used to say, i'm running the fastest-growing city in the world. we would go from a million to four million to seven million, 12 million people and governing really is a function of focusing on the vital few and what i think has happened is that there's so much noise in our system right now that we have lost sight of what the big, vital deliverables of the government is. and you're absolutely right. there should be a partnership and a simplifying of the best ways for the private sector and government to work around goals that are measurable and that's the thing that i keep coming back to. if you're a small business,

mid-sized business, biggest industry in the world, you have shared goals and metrics, and you, on a daily, weekly, monthly, quarterly basis you can review to see how you're doing and the company with the biggest budget of all time, we don't do that, and i just don't get it. and so i think that's, if we could force that kind of accountability where we all had a national scorecard around what the big deliverables are and how we were doing. it certainly would make your election vote easier. it wouldn't be based on rhetoric. it would be based on deliverable. and i think that would be a way we can start. maybe something that brookings can help with. >> in fact not only do we not have metrics in some areas we've actually

weakened our data collection and data analysis capacities. did you want to jump in? >> no. i just wanted to add, and everyone in this room is sendtives to this fact but one of the things clearly the web has done for all of us with the instantaneous flow of information around the world, is given us a much better understanding what is going on in other parts of the world and being lucky enough to be in a position to run a company that is very global in scope, the one thing that i come back when i come home after a trip, whether it is to asia or south america or the middle east or wherever, africa, wherever it may be is the lack of sense of urgency that exists here in dealing with some of these issues and dealing with these issues in a much more highly competitive world than we've ever operated in. and, and, if we, which i hope we never do, give up the roles that we play in the global economy, we are at risk today of ceding that

responsibility to others and i think to a large extent some of that will be our fault and i think that adds further complication to what both ted and bill were saying. that is the world is flat. it is smaller and it is just a lost different than it was when many of us in this room were growing up and we have to factor that in when we think about the competitive implication what is goes on whether it be in the private sector or the public sector. >> okay. why don't we bring the audience into this. we have a question right up front. there are microphones coming around. >> jim robinson. let me make an observation because, today is in stark contrast with yesterday. we're here at brookings. we had the metro program. the focus on mayors, the focus on governors and the feeling that, it is a brookings moment because we are generating metrics.

we are having examples, significant examples of public/private initiatives, leadership by governors, mayors, to make a difference because they realize just what we're saying here. the federal government has to then themselves to the point where they're irrelevant, at best, irrelevant, at worse, which is what is happening, they're in the way. so how do you deal with this paradigm and it's got to happen at the local level, in state and local, and it is happening, and i'm optimistic about that as much as i am pessimistic about the thought that we somehow are going to change and break that dynamic between the political process as counterproductive with economic development and job creation. that is just an observation but i wanted to make it because yesterday was quite upbeat in that regard.

>> any reactions? >> i have lived in virginia for a long time. i just moved into maryland but virginia kind of has it right. it's been ranked the top-managed state year after year after year. it has great business practices and, i think there's a direct correlation between their governor can only run and serve for one term. and so when they get in, they have to work as hard and as fast as they can. it is also unlimited giving, which i find interesting. i thought that that would be a detriment but has series of really good governors the state-runs well and it is kind of you're in. you've got your 100 days to articulate your plan. you sprint to that the fourth year and you're gone. next guy comes in and so, so i agree with you.

i think a centralized version of running thing versus a decentralized, high-tech, high touch, i can understand why yesterday was more upbeat than today. >> jim, i can assure you that this natural bias will be seen by everyone very quickly but if you look at what the mayor of new york has done in 10 years he has been there, and the entrepreneurship, the most recent example, which many of you have seen, is the cornell project which obviously has been spearheaded by mike. but it does show, if you have an ability to make decisions and have the authority to execute those decisions you really can have a significant impact. i think the biggest concern about the city of new york is when the mayor steps down and it goes back into much more of a political process. unfortunately i think some of the gains may unfortunately unravel.

>> well, just to brief refleck shun -- reflection on the dichotomy you're observing which is absolutely right, under our constitutional system there are certain large policy questions that only the federal government is empowered to address and many of those questions have an impact on economic growth and innovation. and i was, i was listen this morning as i'm sure everybody else was, a number of people, for example, talked about immigration policy, particularly in those areas that require a continual stream of high-skilled people, especially in the sciences and engineering, and despite the best efforts of a few of our states, immigration policy is still the exclusive province of the federal government.

and the last time, the last time i checked states and localities did not have the power to negotiate trade treaties. the absence of which can, you know, can have a very important debilitating effect on export opportunities. et cetera, et cetera. and so i don't, in the same way i don't think the private sector has the luxury of retreating from the public sector so too i don't think our concern with governance has the luxury of retreating from national dysfunction to state and local function. because there's too much that's vital that's left languishing in this state of gridlock which i don't think as a country and as a economy and as a society we can really afford and that's why, and that's why i spend my time as a brookings scholar beating my head against what most people in this room probably regard as

a wall, a very hard, stonewall because we don't get through that wall. if we don't have a national government that can function once again then our future is one of economic decline and i would add class division. i don't think that's a future anybody in this room would like to see. >> if we say innovation, job creation, are the deliverables and we say, well we need math majors, we need to graduate more than 20,000 mathematics, ph.ds per year. algorithmic work is the basic building block of everything that we're building in the new economy from financial systems to media, to marketing, it doesn't matter. we graduate 20, 30,000 students per year and, so if

we said that's important, then we would embrace bringing in more students who were mathematics, ph.ds and getting them to stay here and work for our companies. let's not forget, sergey brin, who is cofounder of google, hired a lot of people. they built a lot of value. his father was a russian emigre. came to the university of maryland. was instructor at university of maryland and, my dad is a greek immigrant. he was a waiter. he wasn't a mathematician but i just think that, that the discussion becomes politicized and gets away from the basic, what are we trying to accomplish? and right now, the economy, and, and unemployment are the two big drivers of the malaise that the country is under.

and so, we, we put people on the moon. we've been productive in manhattan projects. mayors have proven that they can organize and turn major economies around. we can do it. i just think that you have to hold people accountable for what it is that they want done and then hold their feet to the fire to get those vital few things built. >> okay. we have time for one more question. right here. >> both in palo alto when we went there with the board and today it was, i think, quite striking to hear that many of the panelists basically said that washington had become an anachronism. and so my question is, what specific metrics and goals

could washington have to kind of regain its relevance? what would be your view? >> gdp. knocking down unemployment. having a quality of life index. beauty town has a happiness index. we're down the 1th least active nation in the world. i do think that we can rally around some very, very important things. we've done it locally. college education as a deliverable. stunning, 40% of d.c. high school students don't go to college. so that's a metric that people are rallying around locally because we know that the biggest indicator of

poverty is not getting a college education. and so i do think that there are some glaring, big, things that we can metric and measure and, maybe that is something that the board at brookings can start to work on. have a national index that we can have dialogue with and, the probably would be more instructive and helpful to politicians who basically listen to the loudest minority voices that have been amplified by the web. in the downside of what we've created in social media in this plethora of new distribution is that if you have an opinion, you can now deliver it on twitter and facebook and in video and on youtube and instead of it being one vote, one voice, looks like a majority of the voices. and so i do think that there

has been a, an overhang, a negative overhang from this plethora of communications on the political system. >> okay. we're out of time but i want to thank peter grauer, ted leonsis and bill galston. [applause] we will have a buffet lunch that is available out in the hallway. feel free to grab food and bring it back in. we will reconvene at 2:00 p.m. today. thank you very much.

[inaudible conversations] >> when the brook kngs forum on jobs and the economy returns at 2:00 eastern, the impact of global competition on job creation and innovation. participants include the ceo of u.s. steel, and the international president of the united steelworkers union. we'll have live coverage. here's our run-down of today's gop presidential campaigning. mitt romney is spending the day campaigning in south carolina. he will be in aiken around

midday and travels to hilton head late this afternoon for a veterans event. rick perry stops this afternoon in bluffton and travels to charleston for event at a crab house. rick santorum started at a town meeting in rock hill, south carolina, and then travels to york for a meet-and-greet and cookout. newt gingrich is in florida for the morning. he open as state campaign headquarters in orlando. this afternoon he returns to south carolina for the candidates forum. jon huntsman doesn't have any scheduled campaign stops today but he will also be participating in the candidates forum in duncan, south carolina, 6:30 eastern. you can see that live on c-span. ron paul has no public appearances scheduled for today. as we mentioned, former massachusetts governor mitt romney is meeting with veterans in hilton head, south carolina and you can see that live coverage at

5:05 eastern on c-span. several of the republican presidential candidates will be participating in that candidates forum tonight in duncan, south carolina. it is hosted by republican groups in greenville and spartanburg counties. among those appearing, newt gingrich and rick santorum. c-span will have live coverage again at 6:30 eastern.

>> president obama announced today that he will ask congress for the power to merge agencies, to streamline government and improve efficiency. "politico" reports the proposal calls for merger of commerce department, the small business administration and office of u.s. trade representative and other independent business agencies. here's the 15-minute announcement from the white house. >> ladies and gentlemen, the president of the united states.

>> good morning, everybody. please have a seat. welcome to the white house. i see all sorts of small business people here and i am thrilled to have you here. as small business owners, you know as well as anybody that if we're going to rebuild and economy that lasts, and economy that creates good, middle class jobs, then we're all going to have to up our game. the other day i met with business leaders who are doing their part by insourcing, by bringing jobs back to the united states. and i told them that if you are willing to keep asking yourselves what you can do to bring jobs back, then i will make sure that you've got a government that helps you succeed. and that's why we're here today. i ran for office pledging to make our government leaner and smarter and more consumer-friendly and from the moment i got here i saw

up close what many of you know to be true. the government we have is not the government that we need. we live in a 21st century economy but we've still got a government organized for the 20th century. our economy has fundamentally changed as has the world but our government, our agencies have not. the needs of our citizens have fundamentally changed but the their government has not. instead it's often grown more complicated and sometimes more confusing. give you a few examples. there are five different entities dealing with housing. there are more than a dozen agencies dealing with food safety. my favorite example, which i mentioned in last year's state of the union address, as it turns out the interior department is in charge of salmon in freshwater but the commerce department handles them in saltwater.

[laughter] now, if you're wondering what the genesis of this was, apparently it had something to do with president nixon being unhappy with his interior secretary for criticizing him about the vietnam war and so he decided not to put noaa in, what would have been a more sensible place. no business or nonprofit leader would allow this kind of duplication or unnecessary complexity in their operations. you wouldn't do it when you're thinking about your businesses. so why is it okay for our government? it's not. it has to change. now what we've tried to do over the first three years of my administration is to do a whole range of steps administratively to start making processes, procedures,

agencies, more consumer-friendly. but we need to do more and we need authority to do more. so today i'm calling on congress to reinstate the authority that past presidents have had to streamline and reform the executive branch. this is the same sort of authority that every business owner has to make sure that his or her company keeps pace with the times. let me be clear. i will only use this authority for reforms that result in more efficiency, better service, and a leaner government. now a little bit of history here. congress first granted this authority to presidents in the midst of the great depression so that they could swiftly reorganize the executive branch to respond to the changing needs of the american people and the immediate challenges of the depression. for the next 52 years

presidents were able to streamline or consolidate the executive branch by submitting a proposal to congress that was guaranteed a simple up-or-down vote. in 1984 while ronald reagan was president congress stopped granting that authority. and when this process was left to follow the usual congressional pace and procedures, not surprisingly it bogged down. so congressional committees fought to protect their turf and lobbyists fought to keep things the way they were because they were the only ones who could navigate the confusion and because it is always easier to add than to subtract in washington. inertia prevented any real reform from happening. layers kept getting added on and added on and added on. the department of homeland security was created to consolidate intelligence in security agencies but congress didn't consolidate

on its side. so now the department of homeland security reports to over 100 different congressional panels. that's a lot of pea work. that's a lot of reports to prepare. that's not adding value. it is not making us safer to file a whole bunch of reports all the time. it has been a generation since a president had the authority to propose streamlining the government in a way that allowed for real change to take place. imagine all the things that have happened since 1984. 1984 we didn't have the internet. just to take one example. a generation of americans has come of age. land lines turned to smartphones. the cold war has given way to globalization. so much has happened, and yet the government we have today is largely the government we had back then. we deserve better. go talk to the skilled

professionals in government who are serving their country. and by the way, you won't meet harder working folks that some of the folks in these federal agencies. devote countless hours to trying to make sure that they're serving the american people but they will tell you their efforts are constantly underminded by a outdated bureaucrat maze. . .

web-friendly. by the way, that also helps in terms of accountability and transparency because the public can get on white house.gov or various other websites and they can see what's happening and track where money goes. but we've done a lot, but we got to do more. we need to think bigger. so today i'm outlining changes we could make if congress gives

the green light to allow us to modernize and streamline. these changes would help small business owners like you. they would also help medium and large businesses and as a consequence they would help create jobs, sell more products overseas, grow our economy faster and improve our quality of life. right now there are six departments and agencies focused primarily on business and trade in the federal government. six. commerce department, small business administration, the u.s. trade representative's office. in this case, six is not better than one. sometimes more and this is not one of those cases because it produces redundancy and inefficiency. with the authority that i'm requesting today, we could consolidate them all into one department with one website, one

phone number, one mission, helping american businesses succeed. that's a big idea. [applause] >> now, we put a lot of thought into this. over the past year, we spoke with folks across the government and across the country. and most importantly, we spoke with businesses including hundreds of small businesses to hear what works and what doesn't when you deal with the government. what's frustrating, what's actually value-added. and frankly in those conversations we found some unsatisfied customers. a lot of times what we heard was, you know what? the individual whom i working with was really helpful to me but the process is too confusing. most of the complaints weren't about an unresponsive federal

worker, they were about a system that was too much of a maze. so take a look at this one. i don't usually use props in my speeches but i thought this was useful. this is the system that small business owners face. this is what they have to deal with if they want even the most basic answers like how to export to a new country or how do they qualify for a loan? and by the way, this is actually simplified because there's some color codes. [laughter] >> the business owners don't get the blue and the purple. it's all just -- there's a whole host of websites, all kinds of toll free numbers, all sorts of customer service centers, but

each are offering different assistance. it's a mess. this should be easy for small businesses. they want to concentrate on making products, creating services and creating competition and we're supposed to make it easy for them and there's some tools we can put in place that every day are helping small businesses all across the country, but we're wasting too much time getting that help out. and if congress would reinstate the authority that previous presidents have had, we would be able to fix this. we'd have one department where entrepreneurs can go from the day they come up with an idea and need a patent to the day they start building a product and need financing for a warehouse to the day they're ready to export and need help breaking into new markets overseas. one website, easy to use, clear. one department where all our trade agencies would work

together to ensure businesses, workers can export by better enforcing our trade agreement, one department dedicated to helping our businesses sell products the 95% of global customers who live beyond our shores. so with this authority we could help businesses grow, save businesses time, save taxpayer dollars. and this is just one example of what we could do. the contrast between this and this sums up what we could do on the business side but these kinds of inefficiencies exists across government. there's a real opportunity right now for us to fundamentally rethink reform and remake our governments that it can meet the demands of our time, so it's worthy of the american people and so that it works. this should not be a partisan

issue. congress needs to reinstate this authority that has in the past been given to democratic and republican presidents for decades. in the meantime, as long as folks are looking for works and small businesses are looking for customers i'm going to keep doing everything i can with my current authority to help. so to take one example, as of today, i am elevating the small business administration to a cabinet-level agency. [applause] >> karen mills who's here today and has done an outstanding job to make sure small businesses have their own seat at the table in our cabinet meetings. the coming weeks we're also going to unveil a new website, business usa. this site will be a one stop site for businesses and

exporters and it will consolidate information that's spread across all these various sites and in one place and it's easy to search. so with or without congress i'm going to keep at it. but it would be a lot easier if congress would help. this is an area that should receive bipartisan support because making our government more responsive and strategic and leaner, it shouldn't be a partisan issue. we can do this better. we can provide taxpayers better value. so much of the argument out there all the time is, you know, up 40,000 feet, these abstract arguments about who's conservative or who's liberal. most americans and certainly most small business owners, you guys are just trying to figure out how do we make things work? how do we apply commonsense? and that's what this is all

about. i'm going to keep fighting every day to rebuild this economy so that hard work pays off, responsibility is rewarded, and i think we got a government that is helping to create the foundation for incredible energy and entrepreneurship that you all represent. i'm going to keep fighting to make sure the middle class families regain the security that they've lost over the last decade. now, i've said before i believe this is a make or break moment for families who are trying to get in the middle class, folks who are trying to maintain their security, folks who are trying to start business. there's enormous potential out there, the trend lines in our global economy are moving in our direction towards innovation, openness and transparency. but we've got to take advantage of it. you need a strong ally in an effective, lean government. that's what this authority can do. [applause] >> thank you very much,

everybody. [applause] >> thank you. [inaudible conversations] >> at 2:00 pm we'll be returning live to the brooks forum in washington, dc, on jobs and the economy. the next panel discussion will focus on the impact of global competition on job creation and innovation. participants include the ceo of u.s. steel and the international president of the united steelworkers union. a look now at a portion from this morning's discussion. former white house budget director alice revlon about what business needs to create jobs.

>> good morning. we're going to hear a lot today about ideas for strategies for making the u.s. economy more competitive and creating more jobs. but we have to start from where we are. and where we are is a difficult spot as all of you know. we have to start from a realistic look at why the economy is struggling. why do we have 8.5% unemployment? and a lot higher number if you include all the people who are either looking for work and have gotten discouraged or who have a job but would like a better job or to work more hours. and why has unemployment stayed

so high for so long? what is standing in the way of a more rapid recovery? so the job of this panel is to focus on why we are where we are and where we might be going. one thing that you may be very glad of is you're not going to hear any political blame game today. you will hear no references to, it's all the fault of the democrats. it's all the fault of the republicans. you will hear no politics, but sober analysis of what the situation is and what can be done. but that's not to say it won't be controversial. it's a very uncertain situation and you will hear different views of what is happening and

what might happen. to start us off, we have my colleague, one of my favorite colleagues. you can always count on gary to know what the numbers show to have dug deeply into subjects like unemployment or unemployment compensation or what really is happening to the distribution of income, what's happening now that we've had welfare reform for 10 years. gary applies his very considerable skills to those kinds of topics. and he will summarize for you the main points of the background paper which he and his colleague has written and

which you will read. it is available. and then we will turn to the ceos of two major global companies to see how they see the markets and u.s. competitiveness. so, gary, you and adam did what i thought an excellent job of laying out the current dismal state of the labor market and how we got here, the high unemployment and the slow growth since the recession ended, that the recession resiptated by the crisis of 2008. we had stagnant wages for a long time. there isn't a lot of good news in your paper. we've had inadequate consumer demand and all of this has been especially influenced by the plunge in household net worth as a result of the catastrophe in

the housing market. and you and adam also explored hypothesis why the economy hasn't come roaring back. i hope you will tell us about what you found and in a few minutes, for those who have not read the paper, summarize what you think the situation is and why this is better. >> well, this is the first session of the day, so i think it would be worthwhile to talk about what got us to the current fix and what are the explanations for why unemployment has remained so persistently high over the last 24 months. most everybody in the room recognizes that the great recession was connected to a big run-up in house prices and then a collapse in those house

prices, with fallout for the financial institutions that held all kinds of financial instruments that are backed by home loans. this spectacular decline in the value of houses which directly hurt consumers' buying power translated into an equally spectacular fall in the value of a lot of the financial products that are backed by home loans. and that collapse -- those critical values brought the financial system of the country very near to collapse. fed action, treasury action of the t.a.r.p. legislation played critical roles in keeping that financial catastrophe from occurring, so the financial system of the united states continued to function, but there was a huge falloff in the value of, first of all, the financial

institutions and second, all of the nonfinancial institutions that are selling goods and services to the american public. between 2007 and the beginning of 2009, the net worth of u.s. households fell by more than a quarter. that erased $19 trillion worth of wealth in the united states measured in today's prices. the stock and bond markets are partly recovered. so there has been a rebound in some of the asset prices but we've still seen about a $15 trillion disappearance in the wealth that households had before the recession began. there has been essentially no rebound, whatsoever, in home prices. they fell sharply and they're still very low. now, if households spend about

3% of the value of the assets that they own, the drop in that household net worth would translate into consumption falling by about $400 billion a year. that means without the crash in asset prices, the flow of household consumption would be about 4 or 4.5% higher than it was in the last quarter. now, a lot of the lost wealth was in housing. and there's a lot of evidence from the last 20 years that, in fact, households spend more than 3% of the improvements in wealth that they have in their homes. they may spend as much as 5% of it and this suggests that household consumption might be $750 billion higher without the erasure of so much household wealth. but whatever estimate you prefer, the house price collapse

and the ensuing asset price decline removed a whole lot of consumer spending power from the economy. the drop in consumer spending can be expected to reduce business demand for workers, which has another impact on consumer buying power when people lose their jobs, they lose the wages that those jobs give to them. in short, the direct and the indirect effects of this financial crisis, the run -- the big spectacular decline in home values has created a huge shortfall of aggregate demand in the united states. the fed's action, the t.a.r.p. legislation, a variety of stimulus programs have all offset part of this loss but not all of it. interest rates have fallen in the short run for safe assets to zero %. so there's not much more the federal reserve can do through

traditional monetary policy tools. the drop in the economy directly reduced the market incomes of american households. those fell 10% compared with their peak levels before the recession began. all of the federal countercyclical measures tended to reduce that decline, that 10% decline in what the market gives us as household income to just a 3% loss. we pay less taxes than we did before the recession. we receive more direct government benefits mostly in the form of unemployment benefits, but still there's been a decline in disposable income in the united states which also reduces consumption. so there's been a huge loss in household wealth which still depresses consumer demand for a wide range of goods and services that are produced here in the united states. we are emerging from the slump slowly and way too slowly most

people would say, a gap between what the economy does produce and what it could produce is about a trillion dollars or roughly 6% of what the potential output of the united states is. now, there's a very straightforward explanation for why we are where we are, with 8.5% unemployment, with unemployment employment ratio that has dropped 5 points, 5 percentage points since the beginning of the recession and we have a 6% gap between potential and actual gdp and the explanation that fits the facts is that there's just too little aggregate demand. using conventional monetary policy tools, there is little more that the fed can do. it has reduced interest rates in the short run to as low as they can go. it cut short-term interest rates to zero early in the slump and that's where they have remained. the usual policy remedy when you have exhausted monetary policy tools is to rely on fiscal policy. some of you may be saying, well,

we tried that and it didn't work, there is no evidence that the fiscal policy failed, none. 6 months after the onset of the biggest stimulus package that we had in the slump, the economy stopped falling like a rock and started to grow again. within a few months private sector employment began to grow slowly but it began to grow and it's grown ever since. about a fifth of the growth in the private sector employment since the low point has been offset by declines in the number of people on public payrolls, state and local governments face harsh fiscal realities and they are reducing their payrolls offsetting some of the gains in the private sector. i estimate we would need about 10 and possibly 11 million more jobs today in order to reach full employment. last year we added 1.6 million

jobs. at last year's pace we would need about 6.5 years to generate 10 million more jobs. and during that 6.5 years, the population of working age is going to grow so we'll need millions of more jobs besides that. what is tragic is that much of the excess unemployment is unnecessary. there are a lot of useful things that 2 or 3 million more employed americans could do if they were put on public or private payrolls to improve the country that we live in. there are millions of savers eager to offer the united states government their savings by purchasing united states government debt, in other words, to lend funds to the government at historically low interest rates so that the government can put those funds to use. its households and businesses are unwilling to spend their cash reserves on consumption or

on investment, the federal government can identify, it can organize, and it can complete useful projects with the money that households and businesses are willing to offer to the federal government for that purpose. so the first thing boost aggregate demand is to boost or to improve the nation's public infrastructure. we can offer district incentive to businesses to add to their payrolls this year or next year. for example, we can exempt businesses that expand the number of people on their payrolls from paying tax payments on those additional workers. this makes it cheaper for companies to expand their businesses this year and next in comparison to expanding them three or four years down the road. so what are some of the other explanations for why the persistently terrible state as far as the labor market is concerned? well, one there's a skills mismatch.

today's unapplied simply lack the skills that the expanding businesses and occupations need and subsequently this mismatch means that there is unnecessary unemployment which could be fixed if we retold the skills of unemployed workers which could be fixed if we paid businesses that are expanding to train workers in those skills. a second theory is that the social protection in the united states has become much more in this slump compared to the previous slumps since world war ii. now, it's certainly true the government has been more generous to unemployment than earlier generations. it may have had two-tenths of a point. some economists say it's added eight eight tenth of a point and the unemployment, it would be very high by post-war standards

so far after the end of a recession. personally, i'm not sure that the upper level estimate is a very good one. but something to remember is all of the improvements in our social protections since the slump began has been exclusively temporary. many of them have come to an end and i'm pretty certain that the steppings in unemployment benefits up to 99 weeks are going to be scaled back over the next year or two. and they're likely to go back to where we were before the recession began within two or three years. my reading is that the unemployment rate is high and it has remained stubbornly high because the unwinding of the house price boom had direct and indirect consequences that has removed a lot of buying power from the nation's households and that in turn has made businesses very unwilling to expand or to make investments that are going to increase the scope of what they produce here in the united states. the remedy, it seems to me, is

to take direct action to boost aggregate demand through the most reliable tool available to us right now, namely, direct government purchases of investment goods and indirect subsidies to employers to expand their payrolls and businesses in the near term rather than four or five years from today. >> thank you very much, gary, for a very elusive position of your paper and its findings. let me turn next to the representative who runs alcoa, an absolutely huge industrial company, global company, that i think employs about 60,000 workers here and in many other places. you've been dealing with this very difficult situation around the world with volatile markets

and rapid change in lots of dimensions. and you've dealt with it for a lot of your career. you came from another big global, german-based company, namely, sie memsiemens, and hown see the future of the labor market in the united states and if you'd comment on the skills mismatch hypothesis and has it affected alcoa. >> why don't you go into the aspect -- you describe the environment and let me throw a few thoughts out on what opportunities do we have here to create jobs because i'm with you, there are a lot of opportunities here. and some of those can actually

be put on a pretty short-term basis. i see basically three -- what i would call levers there. the one thing that you already talked about is the -- i would call it the workforce of the future. and that has two aspects. i'll be happy to elaborate on it the re-skilling and the second thing is immigration. i think we cannot leave that part out, right? so the second thing i see what innovation, i mean, growth to innovation. we have the first panel -- first public panel here we had a lot of good ideas around that. we should not forget about it and it has two big subaspects, one is entrepreneurships, america is the country where entrepreneurs have grown thousands of stories. the american dream i believe is still alive and would be kept alive and the second thing is large scale innovation where you need government. on the first one i think the best the government can do is set the frame conditions right and the third big aspect is the question of countries are

competing around the world for a share in the globalization markets, right? and there's a lot of things going on. i mean, you saw at the detroit auto show this week, i mean, more politicians have been going there and why did they go over there? because a lot of the automotive companies, foreign automotive companies see the u.s. market growing and a belief that they want to have a bigger share here and what do they do? they invest here? the global competition around foreign direct investment, you know, to get more of it over here and one very simple and bringing some of the things that that have been outsourced and bringing those things back and the work environments have changed in many places, not to the better where many things have been outsourced to experiences there. i mean, mixed and also here the environment has changed and the third thing on that end is dealing again with the same issue that immigration is

dealing with the question who are we dealing with. you see the middle class is growing all around the world once they have their refrigerator and their car, they want to travel. they want to see the world that otherwise only comes to them on tv. so tourism is booming. and the interesting thing is last year, france saw more chinese visitors than the u.s. did. and i think that is not a question of the preference of the chinese but more a question of how we deal with it. i've seen estimates through experts through tourism alone which is today the fifth largest sector in tourism we could create pretty short-term jobs. and they would all like to come to visit the u.s. on the re-skilling front, you ask, are we affected by it? absolutely are we affected by it. and we talked a lot about k-12 education. let me leave that aside. we know that's an issue. there are good solutions there.

but let's talk about the occupational skills. the way the educational skills are changing drastically, i mean, the workplace today requires people are knowledgeable about handling the security equipment and we see there's a shortage here invite u.s. at almost all places. i mean, we have started -- and a lot of our sites here in the u.s. we started programs together with the community colleges so that we can do it in the evening hours on the weekends that we can do a re-skilling training. and what do we offer there? we offer industrial machinist jobs, training, so to say. we offer maintenance, industrial maintenance training. we offer welding. we have a discussion about welding and with we need welder and it's not that difficult. i mean, you don't need that to be the biggest genius on the planet for all of those three jobs. >> even girls can do it. >> absolutely, absolutely. and i would encourage girls to do it. so -- and we're doing that with

great success. last year 900 people have enrolled in that program. we will continue to do that for alcoa only. and it's very, very successful. but again i don't want to leave the immigration side of things out because i believe when you look at the statistics here, i think 25% of all startup firms in the high tech space and engineering space have been founded by immigrants. and i recently mentioned that statistic to vladimir putin and got an interesting response saying america is really doing great things. we want the president of russia acknowledgeing it and us forgetting about it. i think we have to come back to the roots there. so those are my thoughts on these subjects. >> let me pick up on one thing you said about entrepreneurship because i think a lot of us think entrepreneurship is something that starts in

somebody's garage and is inherently a small business thing. you want to talk a little bit from the point of view of the big company? >> sure. the small company is important because you need to instill -- this mindset i only touched it. the mindset of the entrepreneurship is truly unique in the u.s. it's one of the things from the rest of the world. i think it's almost 40% of the venture capital money worldwide is here, available here in the u.s. you talk to kids that are at other places around the world that want to start a firm. they have much more difficult time to find people that invest in them. so the ecosystem, the fabric that we have been able to build here is extremely favorable. the mindset, the cultural aspect that we have here is unique. and we should be mindful of that and should continue to build on

that and nurture this ecostructure. we have a silicon valley that only exists here in the u.s. we have partial silicon valleys that exist in boston. and i saw a statistic that washington has received more inventory tour capital this time, this year. this is really not a competition. i think this is something where things come together, right, and build an ecosystem which fuels into itself and this innovation, when you see some of the large scale changes -- and i see the energy sector as the biggest one, they have so much going on in the energy sector. it's almost too big even for big companies and because it deals with so many fragments -- if you want to put this together, it deals with so many fragments that together -- so you need kind of a -- an intelligent coordinating hand in that and i give you a, for instance, on that. a good friend of mine who just

recently told me that he had been invited by the chinese -- he's on one of those advisory boards and during the spare time they drove him out and he comes from the energy field and the spare time they drove him out, outside of beijing to a test field. and it's about a two-hour drive from beijing and this test field is literally -- i haven't been there, i only describe it so secondhand. he says it's basically every windmill in china has -- it has different wind meals so imagine this is a field that has three areas. one has a wind farm with different types of wind turbines, in the middle you have different type of storage devices, energy storage devices so you can test those ones and on the right-hand side you have solar, different type of solar. now, the cool thing with that is, was the combination of that you actually mimic something that creates a base load because during the day, many areas where you have wind, the wind dies

down and you're in the daytime and when the sun comes out so when you combine this, you get -- you get rid of the problems that you have with these type of renewable energies that you only have the peak time and if you combine these and you put in the middle a very effective storage device you can literally mimic large scale, what we otherwise only got through kind of a nuclear power plant but you get it all renewable, all from renewable. to do this right you need a lot of companies including the grit, including the grit to handle this with elements of it. and that's the type of things we need on large scale innovation where some things need to be brought in but you need some intelligent hand around this to say well, let's take a look at it and in this case i think it's handled by some universities that have come together. it's almost let's go to the moon project and i think it would be worthwhile, absolutely worthwhile to do it if we don't want to lose the boat. and yesterday i saw we're

praising now that more investment has been going into renewables here in the u.s. than in china, that actually is a pretty lean statistic because if you look -- if you look -- it's very lame statistic because if you look into what's happened in this industry, this industry has been highly subsidized in the past so to get it -- it's fine to get it started like that but the reason why currently a lot of these solar and the wind power firms around the world are having troubles is because governments are withdrawal the subsidies and telling them you have to stand on your own which i think is the right thing to do and they can't stand on their own because the model doesn't get work so that shows the dilemma here. so that's my thought on that. >> thank you very much. one of the things brooks try to do is distinguish between lame statistics and real statistics. [laughter] >> let's get andrew in this because you also run dow, which is a big chemical company

involved in all sorts of different kinds of products. i was on the board of a different chemical company some years ago and thing i learned it's a very cyclical business and it's very intertwined with consumer products at every level. so, andrew, can you tell us a bit about how you see the current jobs picture and how you reacted to some of the things that gary and klaus have said? >> yeah, one of the difficulties of being last in the panel is everything has been said but not everyone said it. so i do want to make sure i kind of highlight some of the key points that i agree with that's already been said by klaus and the others. if i can start at the widest end of the funnel we are indeed global, 350 companies, not as cycle as you think these days because we've gone to science-based agendas but we have a lot of touch points with two-thirds of the company

outside of the united states and like klaus, a huge wing spain in terms of employee base. i'll tell you that the united states and the forces of globalization on capital labor and consumption -- i think we are not having the right debate and i think this forum, this panel and what brookings is doing all day is the beginning of a very large debate that the united states needs to have and at the widest end of the funnel it's really that short-term fixes in the short-term political cycles are vastly inadequate now for what's going on in this globalized world of ours. and really what we do need is very thoughtful strategies if you like five-year, ten-year plan approaches. so it's not business as usual. it shouldn't be government as usual and how do we intergrate, great thinking that occurs in think tanks like this one with what global enterprises and klaus is now experiencing and saying and how we make decisions and the myths, you know the

myths we're going overseas because of cheap labor and the myths associated with protectionism elsewhere and, you know, what is fair trade versus free trade and what does that really mean. and energy policy and how those all factor into our decision-making. that's -- it's no longer putting a mill in the market just for a sake of that market because we only have 300 million consumers, up to 2008 very big consumers. there's 6.5 million outside. this is a massive opportunity that needs to have the united states very integrated not as the center of gravity alone anymore and certainly the break in the housing bubble that gary so well described has put a new pressure point on the word "consumption" so follow market, putting a mill and it's a new dimension of skills and i want to get down to that one because that's where i think the panel is honing in on in a minute but

i want to stay wide if i can for a while because we're following skills. other countries and klaus alluded to it are putting in place five and ten-year strategies and i'm talking about free market economies i'm not talking about direct market economies like china who have a five-year plan and a ten-year plan. i'm like companies in germany and others that are free market economies but are a little more directed and a little more thoughtful about where we're going in countries where countries are going in this globalized world with capitalists flowing and markets are open in terms of labor and skills decisions. these are being made based on where you can find the skills and i will tell you the short-term fixes whether it will be the stimuli, monetary and fiscal -- whether they will be exports which is a phenomenal story in the united states in the last year or so i think that's focus on exports has been much-needed but clearly those are short term and what is really required and i think our leaders and government leaders in business need to figure out

to do this in a very thoughtful way is how do we, in fact, create new demand. gary referred to it. where is this new demand? and clearly i would hone in on the three that have already been talked about. i think the country is in huge need of directed demand around infrastructure, directed demand around energy policy and clearly the whole focus on renewables whether it would be solar and wind and as klaus indicated it's a holistic approach. natural gas and shell gas boom and how it can play into a revitalization of the united states economy. it's a once in a lifetime opportunity in my view for a low carbon answer to many of our fossil fuel burning issues. and then, of course, this whole discussion around exports and what a disgrace that we've only had three free trade agreements in the last three years under two different two years. that was not a political statement and really at the end of the day how do we put energy infrastructure and exports central to the agenda in a five and ten-year look and i will

tell you that the -- there are policy impediments that are out there, whether they would be the tax kind or the regulatory kind and whether they would be indeed we are very uneducated on trade and american workers don't understand that 10 million jobs in the united states are there because of exports. we have a lot of structural impediments but for me, the big structural fixes are in front of us and i think the debates of debate are going to help us get to them. klaus has already alluded to one which is immigration and i think that's a biggie for the united states that it needs to stay in place and be very open-minded of how to keep bringing in people from all over the world to help this country become its next century of entrepreneurialship because that's why people come here. people come here because of the freedom model and you got a german accent one and a vaguely australian one. [laughter] >> we are here because of your freedom and just to be very clear about that. so bringing in the best skills around the world from wherever

they come. education and clearly, that's a big structural fix. i won't dwell on it because of my limited time. fuels, retraining and skills mismatch. i want to segue from that point into the advanced manufacturing partnership that i co-chaired with susan hawkfield from mit. i think secretary bryson is going to refer to it in his remarks when he's on the panel. for the first time in my many, many trips to washington, finally bringing together universities, big corporations, small companies and government departments to take taxpayer dollars that's already being spent and focus it. and focus it with the input of the private sector and our institutions, our research institutions, and honing in on the pillars that matter and just to repeat them for you, secretary bryson will address some i'm sure. which technology? we've already identified the technology areas inclusive of energy efficiency and renewables, advanced sensing,

advanced materials design, information technologies and nanomanufacturing technologies. we addressed shared infrastructure, how to get the synergy of the whole. this is the -- lack of sin gi of the part, lack of manufacturing hubs is one idea that's coming up as a proposal. third, education workforce development. here the community colleges come in. taking from the german model and taking the high school diploma and retooling that high school diploma for modern age manufacturing and last but not least policy issues that i've already touched on. this is a little more directive market economy than many in the free market model are ready to accept. and i really say -- and i close with that statement that i opened with, this country has to realize that countries are competing like companies. and they are bringing in manufacturers of the advanced kind like klaus and dow and others to their economies they recognize the two major drivers.

one is new job creation. not just inside the plant fence but around the plant fence. 1 to 5 or high skilled. you count the jobs in the manufacturing plant and the supply chain. two, innovation follows. this is not low tech manufacturing. this is high-tech which means the research universities that are attached to it grow around it and then have a proliferation of entrepreneurial action, big company and small company kind. that's directed. that's competition as a country and i think we have to really realize if we don't bring that debate to that level we're not only going to have a jobless issue for a long time but we will actually lose out with a creation of new industries, or whatever what it may be. so that's my thoughts while we start. >> terrific. i think it's very great that these two immigrants have brought our attention to the

contributions that immigration can and has made. i wonder if think more can be done by the business community can educate the public about the benefits of immigration. that, you know, we have this backlash which is largely directed towards people perceiving that they're losing their jobs to immigrants. could the business community be doing more to turn the tables here? >> you want me to start? yes. it's all of the above. i mean, business leaders -- i think klaus is a great example of this and many of us who are out there today, ceos are becoming much more active out there in public policy than ever before. i think the era of hiding and just honing in on one aspect of running a global business, i.e. the p&l is over. and i think we touched so many areas not the least of them

being how to get the workforce of the future designed. >> right. >> and immigration is, therefore, a policy that matters. so we've got to educate our workers and we've got to be doing more in concert with government and local community people. >> i think we're almost beyond the information point because i said publicly that this is one of the best books that i've read on it because it provides a solution to the stalemate that we've seen. i've come to the point where i believe business leaders ought to be crystal-clear to both sides that we are not willing to accept and are not willing to discuss with anybody here who's supposed to be an elected official to representing the good of this country who's not willing to have an open mind on the immigration issue. and basically you see a stalemate on the side people say well, you know, we only accept -- we only accept the h1

visa thing if you also find a solution for bringing the illegal immigrants on and the other side we will but

road, rail, ports, pipelines -- we have gridlocked the approval processes. we have over 60 agencies involved in permit issuing. there's only a couple states in the nation that are easier than that. and the ability to get anything done in this country as a private sector company is almost beyond belief and so we're trying to break through -- i

joke often when i go overseas i get red carpet. when i go inside the u.s. i feel like it's red tape. [laughter] >> it's just gridlock. >> that's a good one. >> in terms of even getting solutions for our enterprise. now, if you load that up to the national level and say well, how do we actually coordinate between federal, state and local, i think the answer's very evident. i think it's not only a productivity issue. it's actually a deterrent from an investment issue and we go to states that are more friendly in the permitting process and can expedite because, obviously, time is money and i think you all know which states they are. there's not many. >> that is a big issue. it's a bigger issue than i ever thought it would be and it has increased over the last years, unfortunately, and the interesting thing is, on the local level, people are very understanding because they understand what needs to be done to keep the competitiveness up. but their voices are not getting through or takes a long time.

and, unfortunately, what people don't see is how -- how heavy the competition is for investment. what andrew says is literally true. i mean, when we go to some places, i mean, you really have a welcome pass there basically waiting and people saying, well, you want to invest, we give you this and we do that for you, right? so -- and that's a very fast environment and they're competing for our investment. and if you compare that the two investing at a place write need that permit and i have this thing still hanging there where i have clarity, you know, and how do i get that resolved the local leader says i can get it resolved but then it gets pushed out and gets pushed out and i say okay, for another four weeks well, now it's another three months and by the way, i was willing to present it to my board in three months and, unfortunately, i don't get an answer. so i'm not going to present it to my board and this is stuff i could give you a whole list in

the united states. it's very unfortunate and i think better dialog and a better understanding would be very good and unleash some of the investment that's sitting there on the side. it might not be sitting there for a long time anymore. >> we got a lot to digest but let me take the last few minutes to invite the audience to raise questions. identify yourself. somebody will bring you a microphone, i believe. and since we have a c-span audience, it's good until you get the microphone before you start speaking. but direct your question to any member of the panel but keep it short, please. >> yes, back here. >> my name is jack liebowitz,

would it be possible through fiscal policy to lower the dollar? you know, it's a high dollar now, which would -- which would increase exports enormously? >> gary, you want to tackle that one? >> that wouldn't be the main objective of running more stimulative fiscal policy i don't think. it's certainly true that a lower value of the dollar would help the united states find more customers in other countries for the things that it produces, but at the moment, we have to face up to the fact that the united states is still regarded outside of this country at any rate as a place where money is reasonably

safe and our currency is an excellent store of value against the risks in a dangerous world. we get benefits from that fact. it's cheaper for us to visit overseas. we get foreign products but there's a price for people who produce those goods and services in this country that compete with things that are imported or produce things that could be exported. i do think in the long run part of our long-term solution to our problems is having a weaker u.s. dollar. >> yes. >> i had a question for klaus and actually. i'm also an immigrant. you mentioned the fact that regulation and delays are

essentially strangling improvement -- both of you mentioned it, improvement in infrastructure which itself is needed for innovation. but at the local level, you often found a welcome. and so can you go into a little bit more depth to make us understand where this strangling effect really comes from and any of you have ideas on how to change that? >> i think -- i think it comes from -- i mean, i have an old saying that my folks know when intelligent people look at the same facts they come to the same conclusion. all right. so let's assume most decision-makers are intelligent, which would -- which would be my experience, so then the only answer is they have very different information. and they don't talk about it. so the people that are on the ground usually understand the situation and how this is going to hurt or help them much better than those that than high echelons, and very often those in my echelons do not take the time to get this type of

information and then also don't get the strong enough sense of urgency, of how important it is to get this matter resolved. so they kind of follow their usual procedure which is, you know, what? we have a backlog. we take it when it comes and it's going to take half a year a year to eat it up. and on a local level people understand this is something a half a year or two years would have damaged and opportunity would have gone by. that's what i've seen in different type of ways there. >> i would just say that regulatory environment have begun to be addressed to address this that klaus addressed. i'll tell you what happens processes on the private sector on currently existing regs whether they be environmental or in terms of citing a factor, et cetera are fairly understood well at the local level but the federal level the amount of

paperwork is horrendous and look forward it's gotten worse. there's over 287 new eap regs coming down the pipe already and they say i don't even know what my regs may be. so the locals may be dealing with the carrot but the country coming stifles them completely just a second i better fought take a risk and when you get down to the local level at the, you know, midmanagement level, they have no power, in fact, so we have disabled -- government is incredibly inefficient i'm sorry to say. and that's where we've got to get ourselves much more efficient. and consultive processes at the local level with local levels with the private sector is one way to beat that. >> it's a lot but not just environmental. >> but a lot is environmental, you're right. in our industry. >> we're leaving this morning

discussion as the panel discussion that's getting underway next is about to get started. it will focus on the impact of global competition on job creation and innovation. this is the brookings forum on jobs and the economy. live coverage here on c-span2. >> well, hopefully that will happen. [inaudible conversations] ..

[inaudible conversations] [inaudible conversations]

[inaudible conversations] >> okay. i am the senior fellow here at the brookings institute studies program, and i am very pleased to be here with this very distinguished panel to talk about some of the aspects of may factoring and technology and we are also going to talk a little bit about germany and what has happened in the german labour market and how that may be different than what we have had in the u.s. we have a terrific panel.

leo gerard, national president of the yen is steelworkers union. i don't think when i was in the government i was necessarily the favorite economist. those days are past. relative to the current political spectrum. anyway, next to him is john surma, the ceo of u.s. steel, and next to him is elizabeth jacobs. as i already previewed, she has written a paper which is attracting a lot of attention. a very good paper on what has happened in germany and some of the differences with germany. now, gary told us in the first panel of the morning that the biggest problem for employment that we have is lack of demand.

so this is still a business cycle. it is not a recession because recessions are defined as the part where you are falling, and we are not still falling. we are rising, just not fast enough. we are essentially what feels like recession given the high unemployment, and the biggest reason is because of caution about spending by businesses, consumers, and government. so we are not filling capacity in our factories and offices, and we don't have anything close to full employment. but this panel, as some of the other discussions have, turning about the role of the u.s. economy and global economy and its ability to be competitive globally and sell products and services overseas. in that think we are going to have a great example, both to

hear about what has happened in the steel industry and also what some of the implications of that are for the rest of manufacturing. two of our panelists dropped warm up at lunch, so there will be able to hit the ground running on some of these issues. i will save for the record, i am a little more skeptical than some folks that u.s. manufacturing can be a big source of jobs going forward. i think it may be -- we may have some jobs. we have had a modest increase. i think secretary rice said we had a couple hundred thousand, and we may be able to repeat that or do a little bit better, but i don't think over the next ten years we are likely to get much additional employment from manufacturing. i am one of those people who thinks the main reason for that is because of technology, that

it takes only two people to make a ton of steel or, whereas it used to take ten. whether that is true or not, i think the importance of manufacturing and certainly the competitiveness of the u.s. economy is terribly important. we cannot, i think, go back to the time of endless 6% gdp, trade deficits that we have before we went into this recession. i think that would be a significant drag on growth that would make it difficult for us to get back to full employment. i think it would also create a new imbalance in capital flow and trade of the kind that we had before. so i do believe that manufacturing is tremendously important, and the future of the u.s. competitiveness is heavily tied to manufacturing. so with that sort of patted preamble covering my bets in different directions, let me turn to our panelists, and i

will start on my right to, at least physically on my right with leo. now, you have some fairly strong views. listening to, the comments that you made earlier, i changed my question slightly in the sense that you believe that the policy , the reason that manufacturing employment has declined so much is because of policy, policy neglect, really hostile toward unions and may be hostile toward manufacturing. let me ask you as my first question, what do you think policy makers should do in order to create the kind of manufacturing sector that you would like to see and to the extent that you can point to examples within the steel industry that would be helpful.

>> let me answer the answer i wanted to ask as opposed to the question you wanted to ask. >> okay. >> and the want to say, i will try to say a bunch of things in bullet point forms so that i can cover area. first of all, the only real creator of real wealth in any economy is when you take things and make things. manipulating financial instruments does not create real wealth. it creates using their wealth. and we have gone for in excess of 30 years in this country and countries that adopted the philosophy of saying that it was the service sector, financial sector that was going to matter, this, that. then we set about even saying that manufacturing does not matter. in that time we fell from manufacturing being about 22-22% of gross domestic product to now depending which economists you

listen to somewhere between nine and 11%. if my premise is right that real wealth is taken when you take raw material and make it together and create something and that something is put into something else and you assemble something and after a while you have 8,000 parts and the wind turbines or card, that is how you create real wealth. my belief, we are trying to say if we leave manufacturing the way it is, less than 10% of the population is expected to create real wealth for the other. that cannot be sustained. if you put that aside, and i'm pleased to hear your comment about 6% of gdp at trade deficit except for what happened in 08 we have hit 25 years in a row of year after year record-breaking trade deficits to the point now where one of our main trading partners, if you want to call it that, is china.

we have been running a continuous trade deficit with china in excess of 200-to under $50 billion per year. it is not about -- john will readily tell you, it is not about our man hours and cost per man hour because we can now make steel in pittsburg. about two hours, give or take. labor costs, it is all the other cheating that china does, and i don't want to just refer to china because the asian economy that we are going to be competing against, which is going to be our biggest competitor, they have actually got a job strategy. what america does not have is a job strategy. we want to go out and get renewable energy. we could not get a renewable energy standards so that people could not make wind turbines because there is no market because there is no standard.

so at that point in time i think unless america decides that it once manufacturing there is a saying that people tell me, an old chinese saying, i don't know if it is are not. but it goes something like this, unless you change direction you will continue in the direction you're heading. [laughter] so we cannot continue heading in the direction of losing manufacturing which is a real wealth creator. manufacturing pays a higher wage, union or nonunion. simultaneous to that we have had 30 years of a tax on trade unions across the board by both government and large employers, small employers, the chamber of commerce, which has led to a falling in declining standard of living for many people which has led to the income inequality that we have, which has led to a demand crisis in america. we have a deficit issue. and not sure it is a deficit crisis, but we have a crisis in

manufacturing. we have a crisis in jobs, and we have a crisis in inequality. the only way to deal with those is to have a set down and decide that we want to make manufacturing over the next five, ten, 15, 20, 25 years grow its way back to 22-23 percent of gdp so that we can put people back to work. >> okay. so you think -- coming out of it, what would be the top three things to make you sit down and say you want to change manufacturing. you want to change the way union bargaining, the conditions of organizing and borrowing. >> this might shocking. the first thing i would do is blow up all the rotten trade agreements that led to 25 years of record-breaking trade deficits. >> that trade agreements. >> i believe we have to trade. a doubly there is such a thing as free trade. all trade is regulated. america has to be a trading nation back it up.

but the germans had a trade balance with china. >> they do. >> the japanese have a trade balance with china. why don't we? everybody but us. the. >> the chinese trade is greater with the u.s. than it is in total. that means they are in deficit with everyone else. >> some of point that is a policy decision. >> so you would really -- >> one transparency. >> transparency of what? >> transparency in trade agreements and our relationships on trade with all the other countries. we want to know what we're doing and make sure we are bargaining apples were apples and oranges were oranges. we ought to at least pontificate about wanting a level playing field. we cannot go into -- john may want to make a point with this. i believe we can make a ton of

steel in pittsburgh cheaper than they can make a ton of steel in beijing because we have the raw material, talent, energy, and all that stuff. we can't get a ton of steel. >> so the problem is basically trade and unfair trade. is there anything that you as a union could do in terms of skill, training? >> we're doing that now and have been doing it for 20 years with the employers that will do it with us. u.s. steel, we negotiated institute for pier development 20 years ago and continuously train our people. we have training programs. john, as the ceo of u.s. steel, the president of steelworkers union. in the areas we can have influence we go talk. we need to go back to talking about high-school doing

vocational training. you cannot expect everyone will graduate with a 4-year degree in go get a job. the other thing, i can only be angry at so many things and still is some sleep at night. [laughter] i put on my sticker that i supported the occupy wall street, the occupy movement. you know why? i saw a kid they interviewed about two weeks into it, and this took the microphone in his face and said, why you here? that it looked like he was 26 for 27 years old. he said i am here because i did as i was told, went to school, got to master's degrees, college that i cannot afford to pay the interest on, and i cannot find a job. when we are on that level where we are carrying record-breaking trade deficits of $700 billion keep telling people this is going to be the pathway to whenever and don't get their, at

some point people have to recognize that we have to change direction. there is not one thing that you can do. we did not get in this mess in six months. o a just aggravated it. we have been getting in this sense the 1970's. and so we need a plan to get us out. and infrastructure bank, set up an infrastructure banks so that people can invest and we can modernize our infrastructure the way they do in europe. we cannot put energy on the grid with of losing 7%. we don't treat water out of the tab because we are also worried we drink bottled water. look at all the things we could do. 60 percent of the schools in america are all then 50 years. >> okay. i'm going to cut you off and give you another chance. [laughter] i'm not sure. >> you can see why negotiations take so long. >> but we get there.

>> this is great. [laughter] i'm not sure i want to swap places with you. anyway, john, -- >> no one right now. that is the problem. >> trying to come back. john, i think you, as everybody has said earlier and would all agree, that technology is a very key part of being competitive. i think you have some interesting things to tell us about new technologies or applications and technologies. making a big difference in your industry, tell us about that. >> be glad to. thank you for inviting us. my distinguished colleague here. in the 110th year of operations in the u.s. [applause] thank you. we operate in four countries.

we do in a variety of places and it can compare policy matters. i think the u.s. is a good place for manufacturing. we have a lot of natural positives that we can use to our benefit. manufacturing certainly will have some positive direct employment benefits moderated by the productivity gains that we are making. at think you're quite right about that, but there are some policy things that could be very positive that would encourage us to do things that are big investments. and our lines of work we make hundreds of millions of dollars worth the investment, so we have to make sure we have a feel that we can play on. we need to have brick enforcement of our trade laws. laws should be maintained. if we can be straight up, my colleagues that deal represents, still going strong, and if we lose straight up, that's okay, but i don't think they should have to compete with the country. one of the things that is the most important thing that has

happened in our sector and 20 years is the whole energy change , natural gas, natural gas liquids, enormous technology benefits that natural gas industry and the extraction industries have brought to our country. guest today is trading for less than $4. in our business it takes about 5b t used to make 1 ton of steel that is $20. we make steel in europe. ten euro. that is $50. north america, a really good place because of that. an enormous opportunity to harness that energy. it needs to be extracted in the proper way and well regulated and environmentally stringently regulated. there is no reason that it can't, but it is a huge up paternity for the u.s. we are one small industry, one small company. and there are others who are much larger in the chemicals business to see even better or enormous opportunity. i've say the energy policy

choices that have to be made are extremely critical and should not be exclusive, only this or that. we need a broad portfolio. but an enlightened energy policy with natural gas usage. the way we make our product, we are in extractive industry, so we extract iron ore from mines in minnesota and michigan. we reduced that to elemental metal with carbon. and mostly that is coal which we make in to cope with reduced iron to make steel. it can be a little messy or expensive. it costs $600 million. 600 million. it will run for 30 years. instead we could take natural gas and use that to reduce iron ore to elemental iron at about two-thirds of the cost and have the capital. disruptive technology, several

units are already being built. a huge change in technology that would give us great of virginities all enabled by this enormous progress that has been made in energy extraction discovery. a lot of emotion about that subject. at the we should give it a chance and i encourage policy makers. >> do you think -- again, little outside your area, but do you think you may see some of the petro industry coming back to the united states? you say it will go to the mideast or africa or somewhere where the raw material is. >> it will go to were the lowest cost fees are. that is where it goes. pennsylvania, where our status, large extraction activities there. liquids, methane, butane, natural gas complex ultra. this can be easily consumed, and

so there is probably enough methane there for a cracker, which is an enormous investment command of the downstream that comes from that. that was at one time, but it is a huge opporunity, and there are lots of plans which were shut down by other companies. was andrew here this morning with us? he has a much different view. it has enabled his great company to be much more competitive. so the availability of low-cost in the u.s. is a huge, huge opporunity, not just for our company, but all sorts of industries. >> i want to put you too much on the spot. you do have a unionized work force. you have a nonunion competition in the united states. a lot of steel capacity. did you do have import as well coming in. so what is your secret? how have you been able to be

competitive and survive and remain as a union operation and remain -- i know you and the steelworkers have had your fights, but at this point you have a pretty good relationship. can you tell us how that has been accomplished? >> i give a lot of credit to my distinguished colleague right here, but the last decade has changed the way we view things. in the early part of the 2000's our sector companies were in a tailspin heading over the edge. thirty-five, 40 companies. and we began to talk about how we had to change that or we were both going to go over the edge together. we, i think, agreed on a number of things. we agreed that our employees work hard under potentially dangerous conditions and should be awarded 45 reported for it. they should do better when the company does better. they should be safe and have a retirement that will allow them to have a dignified retirement

and the company should be able to make money to invest. we agreed. we can argue about what the details are, but the basic elements of the safe, reasonably compensated employees in a productive, competitive, profitable company, we agree on that. the only way to get their we included was to be productive. our labor contracts, through no fault of anybody except us together, ended up putting so many barnacles on the way that we worked that we were just denying the benefits of capital and productivity, and it did not work. we had a big change back in 2003 and took out 35 percent of our workforce. greater on our side than the union side i think as it turned out, and we ended up with a much more productive work force. everything was fine. nobody complained. today we are much more

competitive company, and our cost from a wage and social cost standpoint is not a competitive disadvantage. twenty years ago, ten years ago wages and social cost with the axis of competition. we complained about europeans and what they paid for. today it is not the issue. we are productive, more productive than most of the other countries in the world and by the way the most energy-efficient. the highest recycling, lowest carbon emissions, and lowest overall environmental issues. we did a lot of that together. >> let me say something. u.s. steel four years ago had already met and exceeded the protocols. >> one-third below are carbon emissions, way, way beyond anything that was talked about. it was really good business. we use less energy to make the same kind of steel. so i think the long answer. the story i would give you, we

found enough things that we could agree on. when we meet regularly we try to focus on things that we agree on and not usually things we don't agree on. we give those things to other people to figure out. [laughter] >> thank-you. i will turn to elisabeth who is here, despite the sickness of her daughter that may have created a few bugs in you, too. we hope you get through this presentation. if she'd performance, it is a home situation. >> i hope is that our presentation. >> i'm sorry. you told me, and i took good vantage of it. [laughter] okay. elizabeth has written a wonderful paper. back some years ago i wrote a book with a colleague across the street on europe. the model in those days of a

european economy that had done well was a danish security system. denmark is a very small country. it would be hard to transport some of the institutions that they had to bigger countries or to the u.s., but germany is a big country. it has gone through some transformations. it is doing some things the same , and something's different. elizabeth particularly has talked about labor flexibility and some of the working time account as they have been. could you tell me some of that and how you think it has affected how they have gone through this economic crisis? >> this study point for this paper was the fact that despite the fact the contraction in germany's gdp was larger than the contraction in the u.s. gdp during the recession, their labor market took a slight eight and continued to improve and was doing well before the recession and has continued to do quite well.

unemployment is down compared to u.s. unemployment. our labour market is hurting. the question of what germany is doing right and what we can learn in the u.s. potentially to borrow from abroad, a new perspective for me. i am not a comparative this. i came off of several years on the hill working on stimulus, reform, and looking more broadly at this slow recovery we are in the middle of. that was how i ended up. what i found was the top line explanation is german public policy in braces this program that incentivizes labor hoarding, so it incentivizes companies hold on to their employees, reduced hours, but don't fire them so that when the economy improves you can ram back up. public policies in place in germany, specifically short-time compensation or work sharing

programs which essentially lets employers collect money through the unemployment insurance and pass it along to workers whose hours are reduced so that their salaries are not fully cut back equivalent week so that workers get security, and employers get a hold on to their employees. that was my starting point. a lot of people, if they have heard the comparison, may have heard that particular point. in thinking about it more, and it is starting to dig into some of the literature, it was clear that that was not enough. we cannot just transplant short-term compensation here in the u.s. has not done very much, but there were bigger question is worth asking about how a german business and the german government and german employees and german unions, what they refer to as the social partners, how interact and think about their public economy. really as people in this room probably know, it works quite differently than it does in the u.s.

much more of a commitment. they have very public policies regarding job creation, regarding really advanced manufacturing economy. and the government provided -- i don't think the government has done the work. it is really the social partners, which are the employers and unions, which are far more powerful in germany and the u.s., but i don't think that means they're not worth paying attention to. they have put together -- i call it a flexible working time kate. if you are thinking long term it does not make sense to fire workers during recession because when recovery comes along you have to rehire, retrain. in germany it is extremely expensive because employers put some much time and energy into training their workers. a very different set up and what we have in the u.s. in looking into this and digging into the private policy around labor market, very clear that

the working time account that martin mentioned, the working time flexible tool kit, working time accounts, if you think about a time bank, if you are an employee in your working the union conceded in the interest of employment security to allow their employer to keep track of the time that they were allowed to be required to work overtime in good times and accumulate hours. what happens in bad times is that rather than, you know, taking a cut the basically drawdown those accounts. there are no immediate cost savings to letting in individual drawdown this imaginary save time. it is not imaginary. they did work it. initially the way this was designed on the union's part is, if you want to fire a worker during a recession, if you have it working time account you have to pay out a pretty large

severance. a less-expensive for employers to hold on to employees in addition to the fact that there will be valuable to you after the recession. you have to pay out money at exactly a time when you're probably cash poor. it is not just the public policy that many of you in the room have probably heard a bunch about, but this evolution over time of the flexible working arrangements. i think going back to the big picture in terms of how labor works in germany, a long time germany was seen as the sick man of europe. unemployment was quite high. they dealt with, you know, at lunch earlier we talked about the fact that, you know, germany has acquired a pile of rubble. many people in the literature, the economic literature talk about east germany, and overtime

that meant that business and unions had to sit down and figure out how they would survive in the long run. unions and business both look forward and wanted to maintain this productive and competitive economy and made some concessions that have allowed for mitt -- more labor flexibility. not that germany looks exactly like the u.s. that is an important point to make. it decided to make itself look just like the u.s. a far more unionized than the u.s. employment projections are far stronger. even after a major overhaul. it is far more generous, training, giving individuals back to work effectively, evaluation, wage insurance, all kinds of policies that are still a pipe dream policies, even for progresses and the u.s. are all very much in place in germany, but they got rid of some of the labour market rigidities that were potentially dragging down the economy in the decades

prior, and the result has been i argue a sweet spot that has left them in a position that is different than the u.s. that is the quick and dirty summary of the paper. i have some recommendations. the key for the u.s., the lesson to take is to incentivize the kind of behavior that germany has come up with. the folks we have here are an admirable exception to the rule. it is unusual for people like this to sit down. the long view, workers and employers really do have a shared interest. figuring out ways that the u.s. can incentivize that kind of thinking through policy is the macro recommendation and i have some specific ones. that is a big picture project. we have not really put much time or energy, and i include myself in that we. and the starting to think about ways that we might be more effective and incentivizing that

kind of thinking. there is some evidence that it has potential to not just be good for workers but also the macro economy in the long term as well. >> okay. let me push back on you in a couple of ways. you compared the u.s. recession and germany in say the drop in gdp. let me just question whether the recession is really were that similar. as i think gary correctly identified, we had a real estate bubble collapse. that was really at the heart of the persistence the of the recession we are in now. we just don't seem to have the same of coming out as we did in 82 or 75 because of this loss of wealth. if you look back germany had a housing bubble following reunification. i think they have a pretty persistent timeframe of weakness

after that. i think i wonder if these are quite as similar as one might think on the face. and the second thing is, there are a lot of problems in europe right now. but germany has done is been very successful at being very competitive. they are competitive in the global economy, but the way they are really competitive is within europe. they have been able to out compete all of their neighbors in europe. i was in a session the other day on a panel with some german folks. i said, look, you guys are all in this same lifeboat. germany has made itself super competitive. greece has fallen off the boat. italy is about to. to what extent is the recession really the same, and has germany been successful, in part, at the expense of its neighbors?

>> to the first question, i think you're right. germany did not have the housing bubble. that means it is not necessarily an apples to apples comparison. that said, germany did have its own financial crisis. i am not super well versed on the details, but it was not completely unlike ours. adult think it is so different it is worth saying that it is not worth looking at. some ways i think to your second point, in my mind i don't actually think the most interesting thing coming out of the thinking and the work that i have been doing is so much getting the precise answer to why germany does well but more thinking about whether there are new ways of thinking about problems we are stuck in the u.s. that might be dodging your question. that is how would go with answering it.

i can give my $0.2. it does actually seem -- my home at brookings is in the government's studies. it seems to be of very easy case to make that germany really is succeeding at the expense of europe, and that is a separate conversation, not necessarily what i was aiming to get at, but one that is separately worth having. >> thank you. i mean, germany really is amazing. its manufacturing, at least. not so much, wages, but the work that many hours, longer vacations and are still able to be very competitive, not only in europe, but outside. something they're doing right, and i think you have told us some really interesting things about germany. i'm taking out of this discussion that we need to focus on manufacturing. the view here that we are being treated unfairly in trade and if we could somehow change that we

would get a lot more jobs. we have obviously got to use technology effectively to make ourselves competitive, and maybe we should think about the way we operate our economy, not so much short term as i'm thinking about how to use human resources more effectively, not just get rid of them as soon as they're is a downturn. okay. let me throw now the discussion open to the audience. interested in comments, pro, connecticut. can we get some questions? yes. must be an american-made microphone. >> probably from china. >> my name is keith light years. i have a question that is a little bit of a segue, but it does, all over the world we are

seeing a huge problem of the collapses of terribly built concrete buildings and earthquakes and other national the -- natural disasters. is there any economical way that the steel industry could meet those needs, either through reinforcing or other steel components that would stop all these terrible things we're seeing? >> certainly i think steel is, we think, the best construction material. whether it be steel oriented or concrete. in other regions there is not nearly the application of reinforcement you would see in the u.s. or other developed areas. we are members of an association that does evangelical work in all sorts of undeveloped regions to try to promote the use of steel. when you think about the basic

elements of life, shelter and warmth, water and mobility, still central agriculture, all those things. construction broadly defined consumes about 50% of steel in the world. the biggest breakthrough market is still in housing applications' in multiple dwelling applications in the undeveloped part of the world, and it is a question of expediency verses building something that will last. if you're in the gulf coast were fire-prone areas, the mold or steel framing. essentially codes take care of that, but in the developing world there is not nearly the kind of progress that we would like immobile we're trying to work on that. and not sure if that helps. >> let me jump in because not all steel is the same. if you go and approval of the

bay bridge in san francisco you will find that there is a bridge there that is three years behind schedule and to back billion dollars over budget that somebody decided would be better if they mated with tiny steel. the chinese feel will -- chinese steel will not hold the weld. when you talk about what you could do there are not many applications we can have in steel that is made in america or north america for that matter. >> in most developing countries the steel capacity is read bar production, that is the initial investment traditionally. >> the low end of the scale. >> question. >> was wondering, listening to you about europe. clearly there are some very serious reasons to be concerned about what is happening in the

eurozone, but my sense is that we are overlooking something, but overlooking is there is a real difference between what you would broadly call northern europe and southern europe. i, for one, don't believe for a minute that germany has become competitive, only to the rest of europe. it has become competitive in comparison to the rest of the world. they export things in competition with everybody else in the world. >> i don't necessarily disagree with that. they have a very firm policy of holding wages down, and they're is a lot of resentment about that. >> absolutely. that is actually the point i was trying to make. europe has been facing -- northern europe i'm talking about now, has been facing some of the same issues that we are

facing at the moment. it has taken action which we have not yet fully done. and as a result, things have changed, not just in germany, but holland and denmark and sweden, all over northern europe . they have brought about -- we pride ourselves on labour mobility. well, labor mobility according to some of what i have seen in northern europe is higher than the united states the reason was they took some action. that is or is being overlooked in this discussion. >> i agree with that. if i said something that disagreed, i take it back. what don't i give elizabeth a chance to respond. or do you not want to go outside of germany? what is your reaction? >> i think broadly -- i can

bring it back to germany, germany got where it did because it took action. particularly the chancellor put a lot of cars and the table in terms of making real progress toward overhauling the way that germany balanced opportunity and security. the umbrella that i used for thinking about my work, and i think it applies to germany. it is shorter put everything on the table in our newly lost his government be covered of it. some of the evolution that was happening in the private sector which mostly had to do with unemployment insurance reform but were broadly within the same policy state of labour relations , they all fit within the same idea that germany saw there was a problem for realize that it was not sustainable, and eventually for a variety of reasons did something about it, and we are not doing that in the u.s.

a lot of good reasons as to why not and looking at the political this function and the ways we are stuck, particularly in light of congress. again, that is a whole day's worth of conference is to talk about political in the u.s. that is having an impact on the economy and not just in the context of this particular recession and this particular pretty flat labor recovery but more broadly as far as our competitiveness and what it means to be an american worker and in the burke -- in american business for the long run. that is my attempt at an answer. hopefully that it's at the heart of what i think the question was about. >> yes, more questions. go back there. >> my name is rosemary. my organization focuses on job creation. thank you for your wonderful presentation. you talked about this strategy

on manufacturing and also imports. initially i come from kenya, africa. now that china is going all over the world, especially africa, materials of steel from africa, growing with the technology and strategy to africa. how did you look at the implication of raw materials in the future and for how long? thank you. >> that is an interesting question. the premise, just for context, the world makes about one-and-a-half billion tons of steel every year. tennant, 700 million. about half of the steel capacity the majority of that now, imported material. so china is resource short on iron ore, scrapped. chinese companies have been very aggressive in buying research

positions around the world, africa, latin america, and other places also, even some in canada on the energy side. the u.s. and north america are still making raw materials. very well-positioned. north america is a net exporter of iron ore, net exporter of metallurgical coal. there are a few things that are imported from china for steelmaking in the u.s. that we are concerned about. in fact, china was taking steps to limit exports, and the u.s. pr along with other countries very courageously brought a strong case. we have had a very positive step one. there is more to go. the big volumes, the big values, u.s., north america is in very good shape. i think some other regions that are also net importers, lesley brazil, canada, have some concerns, but resource competition is very important.

the companies in china have been very, very aggressive. if you go somewhere in africa or latin america, asia, china companies have already been there. >> let me ask you. we only have about a minute or so left. if i look at the development strategy that was followed in asia by a number of countries, it was a heavy investment in heavy industry, and china has been down that road. are they already or are they going to end up with a lot of excess capacity? can you tell either from steel or other sectors? >> i don't think anybody knows for sure. the policy that i understand, authorities in china have as ballast, the tour all your plan, which ever one it is, i think the view is that their capacity should be roughly equivalent to their consumptive need. there would be nothing in it, either economically or enormously for china to build a

big export machine like the japanese and koreans did, which is what you're referring to. >> right. >> materials would virtually all be imported. you can imagine. the coal market in china is balanced by metallurgical coal from west virginia. people in china did not know there was a west virginia ten years ago. it is economically not a good move, plus using energy that is otherwise on allocation. very high emissions because of lack of controls. they say they don't want to be a large exporter. i tend to believe them, but if they're is a glitch in their economy and 10 percent of their capacity becomes export, that is 70 million tons. the u.s. in total is 100 million. it can be very dramatic. we keep a close eye on it, but their policy is sensible. >> we are about out of time. one last comment. >> i wanted to just make a comment about something you said

when you started this forum that you did not think there was much room for manufacturing growth. >> employment. >> well, manufacturing employment. u.s. steel, as we work to get more productive, my understanding is over time unless we can expand that market we will have less people. we will take good care of the people when they leave. if you ever worked in a steel mill for 30-35 years, it is hard work. we will take care of them because i want the companies we work with to be successful to our people can live well. one of the things we need to understand, we can continue to fool ourselves and swallow these ongoing trade deficits in manufacturing. right now people talking even today about the future within advanced technology projects. we are running a multibillion-dollar, almost $100 billion trade deficit in china in advanced technology projects. in the last four years since the

recession started we lost almost 3 million manufacturing jobs in america and created just over two and half million manufacturing jobs in china with companies that left here to go there. we cannot continue to say that is okay. don't ask me what the solution is, because i am not smart enough to know the solution. i know that we cannot do that. i am willing to get a room with other smart people and figure out how we can have a policy of the next 25 years and grow manufacturing back to 22-20% of gdp that so my grand kids can go work in a plant and make 35 or $40,000 a year and be able to take care of his family. >> thank you very much. i appreciate everyone in the panel and audience. [applause] our next panel is coming up and will also be about some of these labor issues. [inaudible conversations]

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[inaudible conversations] >> the next panel coming up at the brookings economic forum will cover job creation with strategies for certain regions. a former treasury secretary robert rubin will be one of the speakers.

as we mentioned earlier, today former massachusetts governor mitt romney is a meeting with veterans in hilton head, south carolina. you can see live coverage at 505 eastern on c-span. several of the republican presidential candidates will be participating in a forum this not evening in duncan, south carolina posted by republican groups in greenville and spartanburg counties. among those appearing, newt gingrich and rick santorum. c-span will have live coverage of that at 6:20 p.m. eastern. >> it is easy to follow the presidential kendis through social media. go to c-span is campaign 2012 website and follow what the candidates are posting in real time. read the latest from political reporters and what viewers like you are saying. plus, access the most recent video from candid it's at c-span.org / campaign 2012.

this weekend book tv looks at the life and legacy of dr. martin luther king jr. saturday at 6:00 p.m. eastern with an encore book notes program congressman john lewis on walking with of the wind, a much more of the movement. and sunday at 3:00, dexter king, the many speaking styles of the rev. and the international manhunt for james earl ray. also this weekend on book tv, new york times washington correspondent judy cantor looks at the first couple and they're attempt to balance a busy personal life with the requirements of public life saturday night at 11:00. book tv every weekend on c-span2. >> and we return, again, to the brookings institution here in washington d.c. where business leaders and economic analysts have been talking all day about what needs to be done to create jobs. the next panel former treasury

secretary robert rubin will be one of the panelists. [inaudible conversations] [inaudible conversations] [inaudible conversations]

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[inaudible conversations] >> okay. welcome to the last session of today's important conversations. we are going to cover state and local economic development policies and how they fit into a broader growth agenda for the united states. so i wanted to begin this panel by illustrating the urgency of, i think, effective state and local economic develop a policy, especially in the current environment with three somewhat simple observations. the first is that local economic distress can be real, like in the world of economics there

aren't any thing that are called frictions but something that happens in the world adjusts and everything is fine. .. 30 years later, they still in many respects the like different places. before they looked at just the rest of the country. so that is one observation. sacking i think it's related related to the first is that there is a long history of local economic development policy

proposal. and i think this shortcoming is that, of that history is there's an element of a merry-go-round of that district. i.t. has come and go in and out of fashion without any real rhyme or reason. and along the way, we never develop a playbook of the ones that worked in the ones that despite best intentions didn't work out quite as well. and so, evaluation of economic policies have to be part of development in an effective set of data. and then, the third is that i think -- i don't think anyone has accused me of being a political scientist or having particular insight that deserve lots of notice about political environment. but i would say to someone who is not an expert, it does seem like the federal government is not going to be a leader in growth policy for state, local,

economic issues in the coming years. and so, i think that shine shines an especially important like i'm trying to define policies that work well. and for that, we have really fabulous group of people here. i can't quite believe the testament to the growth innovation project of the group of people we have here. i think the way we're going to run this as i left each of our panelists the question in this broad topic area. i thought it would start with rob rubin, who despite being former secretary of the treasury actually has a lot of expertise when it comes -- [laughter] >> let's see where the sentence goes. >> and a lot of expertise and it comes to local economic development. the chairman of the local initiatives support corporation, which gives the way or makes

investments of more than a million dollars figure in local communities. and so bob, i guess my question for you besides recognizing your past support business as secretary of the treasury -- >> that wasn't quite the ways that it. >> i'm trying to recover. it's like being on the bottom of a deep hole. so, i wonder if you could talk a little bit about what role they can play in a national growth policy. >> okay, good. let me give you my view as best i can. [laughter] i thought for a long time and maybe has mentored a little bit type burst has been in the metro project, but it seemed to me for a long time more at the point that states and cities have a lot of natural advantages. i always think states activity might be an important point in

any strategy. that may make a few comments that follow up on that. one is states and cities have compared it and teaches in various areas. it seems to me that one great opportunity for countries to build around this comparative advantages. some obvious examples are silicon valley developed at stanford and berkeley. you could develop industrial parks around transportation hubs. you could develop -- you could obviously shipped them as output more readily. areas for large numbers of labor and now when you could have labor-intensive industries in a more obvious and advantageous position. so i think there's a lot of opportunities. another good example are in many areas of the country i think that if great natural endowments, but are still underdeveloped.

upstate new york being one example. so that is one set of points. another as we have the federal system that gives us a great advantage, which we can try different approaches to areas critical to growth and see which ones were passed and then take the best practices and spread them elsewhere. in a certain matter that's going on. k-12 education, health care costs in other areas. that is something we can build a great deal more around. a third one, which i think it's gotten far less than a shed an infrastructure needs, but across-the-board capital. i think there's a real opportunity to attract very large amounts of capital from entities around the world and have it for example in china and the middle east. very often the greatest impediment to the flow into infrastructure is concerned about political reaction. you could structure that either by ownership of actual infrastructure assets or the

infrastructure assets could be publicly run, but could be ownership of the revenue flows. i think there's a tremendous opportunity for mayors and governors to develop strategies and then work with these entities so that the mayors and governors bring their own expertise about navigating in our system and help them navigate through the political issues and regulatory issues. and finally, let me mention list, which michael just mentioned. it's a very technical subject. let's leave out the technicalities to decide. what michael said the list distributes various forms about a billion dollars a year in inner-city. there are four essential points. the five o. one c. three is run as a real business with real business metrics. that could be applied to the public sector. number two, projects and neighborhood development and not or from any place else and i think that's another example of

what could be done in the public sector. third, a lot depends on loans with a tax credit, do not interact since funds are used, but are combined with the private or expertise. more accurately with products that. as a natural discipline. another discipline. and finally technical assistance with respect to the local neighborhood institutions that are developed. there's a lot to be learned from that experience and period when they went about making one observation. michael told me once there was a city someplace or rather that he seemed to gain with the serious and responsible study and i wanted to mention it or maybe the assumption is that right, but anyway. that shows that the return on infrastructure in the united states stays about 2%. that has to be because the infrastructure investment

resources are allocated by a political process rather than the kind of activity where capital is allocated based on private or investment criteria. for others reasons i think michael state and local activity could be under any circumstances and important part of the growth for its relatively dysfunctional. >> i understand your vision that a lot of the knowledge derived locally. if the government were operating at maximum efficiency curve, what could the federal government do to facilitate? >> is probably a lot of opportunity. there's a lot of opportunity and you don't have a choice where you can run from the federal level or you can develop and to house the state and local level and provide federal funding for

them. i think there's a lot to be said for the devolution idea, where you can have localities deciding where history should be or where he wrote should aware manufacturing or industrial park should be to begin to know the area. you can create more accountability and more efficient management and metrics application and so forth. i think it's devolution with federal funding. >> okay, next i want to -- thank you, bob, to shirley jackson who actually has many roles. she has a very unique to fund state local development and a major research university to do her service on the president's counsel advises that knowledge to you. and as cochair, one of governor cuomo's economic development councils in new york. and with that perspective, i

wondered if you could talk a little bit about your views on the elements that comprise an innovation ecosystem, which i know you and i talked about before. and further, how do cities and states can involve? >> i thought i would just talk about the kind of evolved view of what key elements of innovation system might be. and nancy talked about three examples that are actually spaced 50 years apart. 25 years roughly each. and those elements are they looking to commercial realization and therefore provide an economic base and infrastructure. and that means human financial and infrastructure o. human physical, i should say.

and financial capital back in 1959 and i don't know if most people realize it goes that far, this is an academic leader down in the raleigh area area came together with the ideas of creating a locus for high-end research at ticketing and business. and they started with the research part here the idea with b2 b. approximate two with a three-year research universities, duke university, north carolina state university and umc at capitol hill. it has since evolved to include a larger number of universities, including and historical minority institution.

and they started out with about 200,000 square feet of occupied space over 22 million home to 170 comes to me, many major enterprises are parts of enterprises. and so, there was an example that i think plays into something that bob rubin mentioned about you have certain asset. you have a certain geographical opportunity. and then one sets out to build on those and we all know about research triangle today. fast forward about 26 years from their. and in 1985, governor tom kean got the new jersey legislature to create a new jersey commission on science and technology. i was at a time in other states are looking at things like this. the idea was to have state capital and leverage university

industry and partnerships in areas that were deemed to be important to new jersey's economy. the structure of the commission deliberately was structured to have government officials. in fact, the state senate majority leader and the speaker of the assembly on the commission. presidents at any given time ex officio of two of the research universities of the state, always one public and one private. and then a certain number of private citizens for a gubernatorial appointees and i was one of those does not a paid position i assure you. and so the commission focused on creating advanced research centers, building actual infrastructure and then had a budget to deal with competitive grants programs in certain research areas that the commission discussed in deemed to be important. things like technology and

medicine, informatics at that time and computation and so on. and it's interesting in a way how many of those things are still things people talk about today. the one thing though is missing from the discussion at the time was of course being that elegy. and i would say that the upper spring for mightily as a research university. it certainly has played into the pharmaceutical industry in new jersey and helping to retain it. not alone, but it has played into that and has just improved the overall mobility of the state. so now we come to me six more years down the line in 2011 and governor andrew cuomo is elected in new york state. and he creates -- he has the states divided into 10 regions.

and each of the regions has eight to 10 counties and and creates regional economic development councils. and sets out a competitive process to have each region develop its strategic land. and to have those plans and competitively evaluate it against each other. the two latter framework for a five-year outlook. and in the end, there were four quote unquote plant that had certain characteristics, but all of the regions develop -- 10 regions develop these plans and therefore have a strategic outlook for the next five years that cause people to come together in collaborative ways. somewhere further down the pike and others in terms of readiness to launch activities. and so, it is still a work in progress. now what is the difference and how it is related to what i said

good on the idea generation site, one could make the argument that when you have the academic and business leaders come together for you create people who are legislators and heads of university and business leaders and a new jersey context, it's more of a top-down process and identifying key areas for investment and so on. what is interesting in the new york situation is from the bottom that because each region was asked to decide what was important. no one that happens, one runs the risk of confusing development with economic development. does it always thought that shovel ready products? these are interesting experiments. and i would say there's been persistent effects to varying degrees. the one in new york is new. now, new york this coming off of

having a very top-down process under a previous governor and made a huge investment in nanotechnology, which looks like it at least is bearing fruit in terms of a major facility, but it costs $1.2 billion to get there. so then, if you go back through, all of them have these elements. some more directly investing in human capital and research. most of them investing in some kind of infrastructure. in the financing mechanisms were different. in new jersey was the bond issue. in new york it is superb read it money. and frankly, i don't remember in north carolina. so, i think these are elements we need to think a little about because it's a question of what is strategically important. how its competitive advantage is really persistent competitive advantage develop and/or

conferred. and that played into work we've been doing in p. caspi identified a chance to talk about it, i'd like to do that. >> surely, can i ask you one question? premature. >> you've identified all sorts of ways in which localities can be dynamic. at a time in every state is facing extremely difficult fiscal construction, where is the financing for this going to come from? >> that's a good question. an attack about new york because her right in the middle of that. you had a governor who came in with a bell kind of mandate, minister bricker cries the partisan divide and get people to really pass a true balance budget that requires some cutting and he works through that and was willing to do that. i'm essentially amounts to essentially using funds that the governor in new york has available to him and essentially redirect those funds.

a couple without creating a more consolidated funding application process for the usual they thought the government would find and maybe at whatever level the budget allows. and so it gives people more of a one-stop shop for there is an efficiency fact your day gets put in. i'm not going to argue that we are totally where we need to be. their issues by regulatory reform and other issues that all of the councils want us to deal with. but it's really been willing to make to our strategic focus decisions to redirect. in new jersey this situation came along in a different time when these bond issues came to the past. it means taking what you have and placing events. that's always hard to do. but the other reason than some of the regional plans are collaborative mechanisms, both having the banking community come together to create loan

funds. that was actually part of one of the planned, revolving loan funds as well as having local accent, revolving loan funds as well as having local accent a binding type funding and well as having local accent a binding type funding and things like that. >> so if i can eject, that is exactly i was so excited to moderate this panel because the question has moved to funding. and who do i have sitting to my left but you are an incoming president of the rockefeller foundation. i'm just dying to ask you because i know you've been doing incredibly innovative work on financing received and local governments and wonder if you could talk a little bit about that. >> we have. we were given to this perspective because we recognize they really are not enough dollars in philanthropy or development to sell large global problems we face. and when countries all over the world are facing these kinds of situations, we really need to

look at other mechanisms, create a real ecosystem around pilot opportunities for exploring innovative finance team. and so, i'd like to talk about three briefly. they really touch on something bob said in some picture he said. we are now funding collaboration among the states of washington, oregon and california. and they are putting together the infrastructure that will ultimately create an infrastructure bank for the western coastal states. the governor and states treasures together i think they recognize quite correctly that innovation is about process as well as product. and before they are able to create the product they have to align and platforms the kinds of issues which are time frames, paybacks come and see if i tenure budgets. how can they do a payback rise. they are building the kind of

infrastructure of multiyear budgeting and their states that would allow the attractions of private capital, outlining the policies that would really do that. and they were ready to roll in 18 months i would say from now, to really begin to track large private investment with regard to infrastructure, which they think is going to be the next 15 years about a trillion dollars it needs. in which they don't think they can get through conventional bond structures. so that is a new kind of post that and structure. >> can interrupt for just one minute? these four states -- >> restates. >> three states. they will be drawn for the 47th version? >> no, i think this is what we're seeing. i am actually optimistic. bruce kasten i have been writing recently on what we call the pragmatic caucus, which is what our first two speakers are

talking about, which is the fact that in a lot of areas in the united states, the maturation are not waiting around for the federal government. >> there's 47 very good plans floated around the city right now. >> right, we hope that they will come to fruition. we actually funded the construction of two of those plans. but we are not waiting either anymore. the innovation is occurring in the states in the nether regions is really clear. for whatever reason if we could spend 14 hours speculating on the reasons. we're not going to get that creativity currently out of the federal government, so we have to go back to a federalist system if you will, which is what we are really talking about. and look for ways to promote that kind of energy and creativity at the regional state and local level. two other incredibly innovative examples. so we have had the privilege of supporting the pilot in the u.k.

and social impact bonds. these are bonds that really tried to take a proven social intervention in the case of the first pilot of reducing the rates of juvenile incarceration incarceration -- we incarceration. so these are juvenile presenters. the u.k. government was able to see the cost to them for the repeated re-incarceration. they developed with the investment bankers, and not a word they would float a bond, sell it to the private market and the payout would be if they could reduce the rate of the reoffending. if it's proven social intervention, could reduce the rate of the reoffending below what the government had been. it is in the marketplace now. it was sold out very, very quickly. and it has been brought -- the

idea has been brought to the united states in massachusetts has now solicited rfps for proven social innovation. they've gotten dirty for really, really interesting ideas. minnesota has actually gotten a legislature to float a $20 million bond for trying this process. so how you marry private-sector capital with proven social innovation, where you demand metrics because the payout requires both metrics in advance and a metrics and assessment for the payout. you're really getting the intervention speed measured and monitored. the next different example, one that rockefeller that about five years ago in creating a new york city housing acquisition fund. and this is one of the beneficiaries that they. the idea here is that the

commercial banks didn't want to put money up for the acquisition of land. obviously, they felt that the risk was too great, particularly for low-income housing. silly group of foundations came together and put in $50 million for the first level of risk capital. that allows the commercial banks, jpmorgan, two h., hsbc, to be willing to take a second tier of risk in putting 250 million then to new york city put in the third tier of risk. that has built tens of thousands of units of housing, without waiting for many from hud. so again and again and again, what we are really seeing is that the marriage of wall street capital equity and debt structures to government policy and producing social outcomes is

really, really going on. and it's very powerful and it's very compelling. >> i think surely -- >> i just have a quick kind of follow-up. another marriage that has worked and created more sustainable advantage has been the marriage of universities with government and the private sector. and you are here in your incarnation as president of rockefeller, the you're president of one of our great universities, you know, university of pennsylvania. and at that point, you did some amazing things with the university of pennsylvania in philadelphia. can you talk about that and that was then and this is now, but they are there any lessons learned out of that? >> welcome the u.k. such great examples of the economic development capacity of really bringing together universities and the dirt and government. we and the level of the very

disadvantaged neighborhood in west philadelphia and we felt we had a strong commitment to helping to rebuild that neighborhood. not only economically, but socially. its housing stock, schooling stop. and so, we initiated a multipronged intervention over a number of years. initially investing university endowment fund in order to gun get believers that we put our money where our mouth was, but also than to be able ultimately to attract private capital as well. and so, we intervened in safety and security, and building back housing stock and building really high-quality schools, that were neighborhood schools. they weren't for the 10 faculty unless they live there. and building economic development by creating a mechanism that said by west philadelphia first.

so we got five hospitals. we send our laundry out oliver philadelphia and new jersey. we created a minority owned laundry in west philadelphia that now has all of the hospitals in philadelphia as their clients. it supports 2000 jobs and really has started to move the economy forward. so i think that the moral commitment, the intellectual capacity and the economic resources that universities have make them a critical partner as we talk about regional development. in my case, i wrote about this as the road urban universities and you've been doing such 90% things as well. in most of our large cities and small towns, our amount of largest private employers. we often don't want to universities to be one of the partners economically in terms

of their resources. not only their academic capacity, i think as we think about what state and regions and cities will need going into the 21st century, they will not be able to accomplish this without universities really putting some skin in the game. >> and universities, let us not forget, i really attract it. >> absolutely. >> we are also extremely lucky to have alan brubaker year, which is part of the leading part of the fantastic pitcher politan program team and wrote a fascinating paper that is part of today's -- to papers released today. i think allen's cogley's really have their finger on what is going on around the country and want things to come out of the reading paper of experiences. i was wondering if you could

talk a little bit about what is allowing some places to flourish and kind of a relatively tough baccarat in the development of what is holding some places that. >> sure, happy to do that. in washington within all sorts of different levels of your creation, but one for that those of us who live here are fortunate to live in a bubble. this is a healthy economy, buildings being built, restaurants are pretty full. i don't know that many under three people maybe because they're always working on infrastructure being proposals. [laughter] and the washington area her an appointment today is 5.4%. several months ago i was visiting a friend who did didn't modesto, california and discarded the central valley at their pure he tried to their house you have sort of ghost town subdivisions on your way. the downtown has a lot of vacant storefronts now. they know personally a lot of

people who are unemployed or underemployed, people of college degrees. their only saving grace is driven to me commute to san francisco and san jose where there is a much healthier labor job market. the local labor market is worth the 15% come at double what it was before the recession. the point is that as it is a big country, vastly different conditions on the ground when you look around. i think we talk a lot about the macro measures that i think are vitally important for proud labor market recovery, but i'm not convinced they're really sufficient for addressing the unemployment crisis in differences in the nature of the crisis effector local communities. the paper i wrote looks at what's going on in the hundred largest metro areas across the country. two thirds of our population nac threes stacked juries that are present in combination of varying degrees across these hundred different markets i think have implications for how you address the crisis at the local level.

one is just about industries and the different metropolitan areas to. what they did before the crisis, what they do coming out of the crisis. we all know there's manufacturing areas, particularly the auto manufacturing they were clobbered in the first stage of the recession. detroit, cleveland, south carolina. those faces are recovering very, very quickly right now. they've made up a lot of ground they lost in recession. the unemployment rate for instance i dropped by five percentage points just over the last two years versus about a 1% decrease nationally. so i think you see a lot of strength in some of these export oriented metropolitan areas. their meeting domestic demand and foreign demand. at the same time he's got these metropolitan areas that were very invested in housing, real is date, consumption economies before the housing crisis. las vegas, phoenix, places in florida struggling to recover right now. struggling to rebalance their economy towards market at

resources unemployment, meeting demand elsewhere outside just the local economy and bringing both backend. as well, you're seeing government focused metropolitan areas that were buffered from the worst effects of the crisis struggling right now in the face of public sector employment and the ripple effects. a sega related issue is the nature of the housing market and what happened there. gary byrd was talking about that this morning between las vegas or prices are about 65% off their peak values pre-reception to pittsburgh where there only 8% of their peak values. the mr. ayres said that these house prices declined irrespective of how many people were working in construction have experience, stagnant unemployment rates, because of the direct effects of unemployment, but also the indirect effects in terms of how wealthy and the consumption patterns are. the third thing we talked about at the macro level today, which

i think is relevant at the metro level, to this workforce skills. we know the most educated workers employed much higher rates. 13.2% for individuals without high school diploma versus 4.4% for individuals with a college degree. at the national level, i'm not totally convinced that workforce skills are a barrier nationally to labor market recovery. at the local level we do see it affect you no longer route to recovery in some metropolitan areas. places like philadelphia, little rock, san antonio where they seems to be a bit of a gap between what the occupational structure the metropolitan areas from an educational tidbit about their work force looks like an educational perspective and places like augusta georgia, los angeles, phoenix that has asserted double whammy of both the industry structure problems and that looks like a significant education problem, too. in the name, but it's mostly a

longer run issue, that may be have in the short-term effects search metropolitan areas. as a panelist of already noted, there's a lot at stake state and local leaders responding to this crisis not just generally, but specifically with respect unique issues. in fact, our program is working directly with several governors across the country an initiative supported by the rockefeller foundation under the perkins rockefeller project on state and metropolitan innovation feedback to talk more about the examples of that were tears of some of those are highlighted in the work. but again, these places are acting in the abstinence of federal leadership, but the upside if they are tailoring their interventions in ways that are really about the unique sorts of challenges and opportunities. >> bob had a question. >> idea for anyone on the panel. michael asked me before with the federal government could do to contribute to the vitality's.

turn the question the other way around. what is it the federal government that appease the state and local governments from doing that they could do and whether the changes that could be made? is one area where the dysfunctional federal system you can get republicans and democrats to come together and free up local energies. that is a question for anybody. >> i will start. i think the various metropolitan areas that were working with this part of this project done next for initiatives to try doing priests they reach into foreign markets for consumption of the goods and services that they produce, they are having to navigate a very complicated and incoherent thicket of federal program policies, agencies that in the end is not transparent. things are done a too small a scale because they are distributed and diffused in a way that doesn't actually allow the series to act on what in many cases is a very coherent

strategy. at the federal government still retains a very large responsibility for foreign trade your there's only so much the cities and metropolitan areas can do on their own. i think some of the fact that secretary bryson talked about today in terms of bringing greater coherence to the way the commerce department works come into the night collaborations in cities and states that demand more of a bottom-up way that permits the ability to interact with foreign markets i think would be huge thing of the federal government. >> all build on that. the problems don't end on the ground in cities in regions and convenient packages that have the labels of the federal agent he is. and so, how that kind of collaboration across the federal government can occur with fangs bared a half. so we have a sustainable cities initiative among eta transportation and hud. that is one of the first of getting these agencies to really

work together, to recognize that each of the three of them has both for regulatory and funding perspective a real ability to transform the sustainability of suburban america. they can't teach do it in a silent way. but this kind of collaborations are few and far between. >> i would say the following. the government historically has always played a role in three key areas. in education, research and infrastructure. and many times i talk about infrastructure, we talk about rosen bridges. but let's not forget things like the internet or development of the microprocessor, the gps system. now, these things came out of mission driven me of the federal government. but they are beaten up into the commercials that there actually has led to creation of many great industries. an area where there are clouds

on the horizon really does have to do with support of our great research universities, particularly the private research universities. and they are being heard both a state-level policies and support as well as a definite slowdown in federal funding for basic research. so we just had a discussion about the important role that university can play. they obviously are in the human capital but as, but they also in the research business vendors to retainer of talents. so immigration policy is another area. and that affects obviously businesses and your number technology oriented companies. but it has an effect on the research universities as well, both at the level of faculty and researchers, but there are even

some wrinkles in the world of student visas. these are two key areas. the research and support in immigration. but then their broader issues having to do with coherence of governmental approaches relative to major infrastructure, particularly if it leads to energy, brought the end, the use of the spectrum, et cetera. and these are things that the rest of the federal government. earlier in a different session -- a more private conversation, we talked of having discussions about the degree to which the government should be the first follower versus the first leader. and i think they're a number of innovative initiatives and has been done at the state and regional level. rather than the government having its programs and people come that far, it might be time for the government to focus some

of its resources to undergird some of these initiatives. >> you know, i just want to pick up on what you put out there. look, i think there's nothing that says the united states has stood the haislip dangers in the world. in fact, a letter that reflects -- a lot of that history reflects conscious choices. one cannot help into see the ability more than six months at a time for succumbing to meet infrastructure needs for bradley, research and development in many researchers in the future and state and local governments are doing a lot to respond to that to fill in the gap. i think the real setter pattern that cannot be missed in all of this. now, i think we have about seven minutes left. and we have such an excellent panel that i think it would be a shame to not give everyone here

a chance to kind of talk to of talk to them and asking questions. i thought we'd open the floor for questions. >> thank you. >> if you could say your name. [inaudible] >> i have a question of small medium enterprises. today 95% of world markets outside the u.s. and of course multinational doing good and the fbi. how do you connect the growing market? i notice first encouraged by the federal government. but the visibility is encouraged because it was an image that we are losing jobs out eight. but unless you get closer to customers, you don't really expect growth. so how do you connect the idea?

>> one way and it goes to one of the innovative experiments that we are seeing on the ground is to link the smes more effect really into an ecosystem with the larger global companies. for example, putting a number of universities, very large companies and smes further along down in the value chain together to collaboratively and several research institutes to collaboratively work on energy efficiency i.t. their goal is to become energy efficiency i.t. of the world and then export, export, export. the smes go along an ecosystem through that kind of collaborative process. otherwise, you are really building them within a national

for even a local environment and the capacity to really grow may not be there sufficiently. >> let me make one other comment. you know, i had the pressure of collating weight eric smith at google, advanced manufacturing studies ip casted. one of the points we talked about was the importance of the government, where possible, being a commuter or providing a safe harbor for a public writer partnership would you do in fact been together the larger and smaller enterprises, particularly in areas where there can be shared infrastructure. because that can be of great benefit. we have talked a lot here about manufacturing. but what if we have not talked a lot about his advanced manufacturing. when we talk about it, tend to talk from the point of view of that cutting out jobs. but we don't talk about is how

more advanced techniques, including the modeling simulation can help existing enterprises, existing smes to print the productivity and quality of what they produce, which helps their competitiveness vis-à-vis selling it on the market. as well as the definition of advanced manufacturing that has do with using the newer technologies and bringing new approaches and new technologies to market. and to me, those are things when you talk on the one hand about the existing companies and how they can grow and improve what they do. and on the other hand, are talking about starting up of entrepreneurial exercises. but they do come together at the level of public right of partnerships of a certain kind. and they do come together when it comes to having shared infrastructure that at the university out of a national lab or some other mechanism.

so i think those are important things to thinking about. >> we haven't mentioned the great economy today, at least in the session. and there's a whole smb infrastructure around the green economy. jobs that can't be a source because their energy retrofit jobs, waste management, water supply chain, all of those represent really growth opportunities in the united states. again, we are seen a lot of regional and local government understanding i think what is your degree of creativity but the opportunity here is. >> the capital region of new york state is taken advantage. >> was 912th edition of combat. at about the answer, but your economy should note this enormous numbers of smes produce a product which they manage to find a way of exporting and the appropriate nexus with their tables are turned all over the world.

it is worth looking at that as a model. >> i think we are looking for a couple more questions. >> thank you curt margaret vander hey, virginia. i want to circle back to some of the things we are thinking about this morning and tie it into your panel this afternoon on workforce preparedness and the opportunities that states and localities would have in terms of education preparation and job training preparation. in virginia, i'll delete a tremendous disparity between the booming economy in northern virginia in what used to be the tender text on tobacco comments outside college is pretty decimated at this point. but they share commonality come which i'd welcome your perspective on k-12 education is not really integrated with community college curricula and preparation so that her community college presidents can play with their students come into the community colleges,

which we have a very strong one, 50% of the freshman class needs remedial classes. and we've had a big discussion in virginia. we welcome the chance to have some ideas and thoughts about how we present these silos and education systems within state what the federal government can do come with academia and businesses could do to help. and the other sort of non-integrated part of this as we a lot about curricula morris oversees a type or does seem because the arts are adding into it. if you use terms like innovation and creative work class can't create distinct sort of silos with humanities and science. if you're going to compete in a global economy. what are the kinds of things you see the government could do to create a partnership with local and state government to improve

those kinds of things and make us all competitive and suture? >> well, let me speak as the educator of the panel. and i will of course refer to judea spoke. i think first of all, any to two shins that says that it has people arrive at the door who are unprepared after then make an articulate of what they expect in terms of knowledge skills and abilities. but the income you have to have people who are the same in terms of the k-12 system, in terms of people having certain baseline skills and how to bridge to the next level. secondly, i worry sometimes when we talk about training programs in particular, that we say that they are people who don't have the skills for the jobs that are needed today and that is certainly true, but some of it is the geographic dislocation. people with skills are not where

the jobs are. the question is where there were incentives are programs that could get people to make geographic moves. the third is how compelling is the curriculum when one does ignore vocationally educations. how do you simultaneously train someone in a certain kind of skill, but give them some undergirding acknowledged that allows them to have self portability? so if we're really talking about a migration, which i think there has to be in a manufacturing sector and it's already happening, you have people who are working with much more sophisticated system. with computer-driven kinesis centers in in actuators and robotics. and i am not so clear that we are educating folks do that. now that doesn't get totally at your question about what the scotus will arise with, but we

all know that we need to think of a different way. so i come down on the side of two things. back to the fundamentals because i'm a theoretical physicist. if you can't read, write, add, subtract, multiply, divide, understand what a few statistics are decent graphing, i don't see how you'll do anything. but on the other hand, [laughter] but on the other hand, we have a number -- >> my wife is an english major. >> i'm sure she's going to add, subtract, multiply, divide, the daughter feet. >> not so sure about the logarithm. >> he spent $200 million building experimental media performing arts center because we believe in the cultural rootedness and the arts. but in addition, you can't just talk about to keep the arts in

the curriculum. the real issue is what is the value added and how does it play into what you're doing across the more integrated part and use those things in new ways, giving new technology to reach our students in a different way to have different patriarchical approaches. >> i would just add it i will give examples. i am looking for community-based solutions that the first lady and patty stone set for chairing. so we have been researching and communities were really good intervention are working on that set of issues. the driver for us if you think about the depression we feel listening to some of allen's data, we were looking at data that showed the exponentially quickest growing country in terms of middle-school dropout rates in the united states in the last seven years.

and so, we are on a jury, which really is going to put us at our increased risk than the one you just described. and we can't solve that with the federal government. we have got to think about community-based solutions. we will issue a report with recommendations, but we'll populate a website with all of the great extent owes we have found her in the country and i really commend that to you because it is a very good and really heartening demonstration of the kinds of interventions. we have a serious national problem here. >> i think we're out of of time, unfortunately. the one thing to amplify the last two comments are a siren charge of all state and local policy, which no one has appointed yuri been suggested i be in that role -- >> go-ahead.

>> i think the most important thing for the living standards for americans are skilled. three first-order, people get paid what their skills are. enter commented think the k-12 system has not been tesco's are five for 30 years. college completion rates are bad for 30 years. it shouldn't be surprising that in turn wages for many americans have been declining were flat. for state and local governments, the most important thing is to get the education systems working as well again. [applause] >> i think that is just a terrific panel. it's entirely possible we left the best for last today. thank you very much for doing that. as i said when we kicked off today. i know this is in a out here. you guys did a great job, too. which is what i was just about to say, martin, so thank you.

i promised earlier today among other things he sees workings property stage at the railroad on parade in front of you and i think that's what we see today. in fact, i can be more proud and pleased to what it expresses about hurricanes. i have one last days from a bunch of different not only industries, the government scholars and other rap is in the community. one theme that came back to us is the absolute importance of good governance in facilitating progress. and we heard it from a variety of different angles from what there's no industries could not have time for government to catch up, whether state and locals work around a dysfunctional governments and washing tins and whether the important questions are raised about can you actually have a

can to economic prosperity in the absence? and if there's one thing that we are going to do for today is come forward with actionable paths forward to make this a very practical day. but the one thing which brookings can do and i know we'll focus on is how we can create some kind of roadmap for functional government in this town, which out with if it gets done, gets done despite what happens here. thank you for coming. enjoy your weekend. [applause] [inaudible conversations]

.. [inaudible conversations]

[inaudible conversations] >> mitt romney spending the day campaigning in south carolina first in aiken and then heads to a veteran event.

>> william f. buckley went to yale in 1951. on the book's 60th anniversary, yale university looked at mr. buckley's legacy. weekly standard founding editor, william crystal, and neil friedman, founder and director of the pbs show, "firing line." this is -- [inaudible] >> it's an apt question to be asking about bill because bill's concern from the beginning of the career, it had to do with his own performances, it had to do with his own writing, much, much more importantly, it had to do with helping to shape the -- the direction of the country.

as various people remarked so far, he didn't use the word "conservative" of himself as a young man. terms like "radical" and "individual" were the terms he favored, but that soon changed when he started -- when he and billy started thinking about this new magazine of theirs, it was not meant to be another "time" magazine. this was going to be a magazine that would shape a movement, the conservative movement, and he started using that word, "conservative," and he specifically didn't want to gather just people of his own particular way of looking at the world and politics. he deliberately brought together libertarians, traditionalists,

people who were predominantly anti-communism and less interested in the domestic scene. he brought all of these people together, and his only -- his only exclusionary principle was they couldn't be anti-semis. he wanted a big tent within to be sure one's segment of the political spectrum, so since building conservative in the first part was his self-imposed mandate asking what -- what his legacy can do now to turbo charge conservatism is a good question indeed. we have three people who are doing this in their own ways and

whom i trust will have good ideas on how others can help them do it. rich lowry is the editor of "national review" as everyone knows, only the third editor in "national review" nearly 56-year history, and how he came to "national review" is very much in line with, again, what we've heard about bill this afternoon, that he was always concerned about young people. he saw himself as young people for the conservative face as well as for thee face, and how rich first came to us was by taking part in a young writers' contest. by now, 20 years ago this year, wasn't it? twenty years ago this year, and

the very next year, an opening -- a position fell open on the editorial staff, and we hired rich, and before long, he was our national political reporter, and then in 1997 when john o'sullivan stepped down, bill after extensively looking around the pool of talent decided that rich was the one, and that's when he became editor and chief of "national review," and he's been running the magazine with excellence ever since. our second -- changing the order here. the second panelist will be bill crystal, the only one of the four of us who has never exactly worked for bill, although he reminds me he was on the board of directors at "national review" for a couple of years. he describes himself as a fugitive from academia.

he did teach at the university level for several years, but then he went into -- it was the first bush administration, wasn't it? then, of course, became the founding editor of the "weekly standard," a position he's held with excellence and verve ever since. neil friedman, yale 1962, has probably served -- he hasn't worked for bill as steadily as some of the rest of us. he's gone in and out and done other things. he's now with his own advisory firm, which he's run for a very long time now, but he probably has served bill in more capacities than any of the rest of us having been the initial publisher -- not publisher, director. the founding director of "firing

line," having syndicated bill's column, and working for the magazine serving as editor, as a contributing editor on the magazine, and being the basically a man on the front lines in bill's mail campaign, senator judge lee was the official campaign manager, but neil was the guy who made the appointments and got bill to them. he is -- >> [inaudible] >> yeah, right. [laughter] and neil writes and speaks and does all of those other good things, but his -- what he did for bill will always remain terribly important to those of us in this circle. i will ask rich to begin.

>> thank you, linda. thank you, everyone. linda mentioned that young writers' contest i entered, and i actually finished tieing, which a rude friend tells me i was really third. [laughter] at least i was in the top three, but it's a real pleasure to be here. thank you to the folks at yale for putting this on. it's a pleasure to be here with linda who literally wrote the book on william buckley and integral to the history we're talking about, and those of you out here disappointed with the republican presidential field, blame bill crystal. [laughter] he didn't try hard enough to get another candidate into the race. [laughter] he never walked around the streets of washington with a sandwich board on or anything like that. [laughter] i was introduced to conservatism and really the world of ideas, and i discovered when i was in high school, and i would

literally sneak issues of national review into class and read them between my textbook. what "playboy" was to normal teenagers, "national review" was to me. i was fascinated with bill buckley. that's back when we had vcrs, and i would tape episodes of "firing line," and i'd sit there alone replaying parts of it over and over again to ensure i was following the argument. as you can see, i'm a well adjusted popular addless acceptability, but it's been -- adolescent, but it's been a pleasure to be associated. we have already shamed part of bill buckley's legacy because now at the office of national review, went in there and examined the junior editors,

there's two from harvard and just one from yale. if there was a human resources department, they'd investigating what the policies were leading to this impact, referring us to the eoc to see what was wrong there. [laughter] let me talk a little bit about bill and make two stipulations up front. one, i just got married four months ago, so i'm just getting used to be wrong about everything. [laughter] as a pundit, you tell yourself you're right about everything. open to be criticized on any front by you or my panelists, that's one. two, mark twain, right at the beginning the "huck berry fin" says anyone who finds a motive in the book should prosecuted and anyone seeking out a plot should be shot.

that's a little bit how i feel about people who speak too confidently about what bill buckley would think, people, or do about anything because he was such an original and fertile mind, but we can substitute things out. i'd like to talk about, briefly, is just what i think bill's attitude towards the tea party would be because this is obviously the most interesting and important phenomenon among some people on the right at the moment, and there's this view among the elite media and others that the tea party heard clammorous antipopulous trashing conservatism. i don't think bill would see that. one is that he's really in a lot of ways the original elitist; right? you know, whether it's vocabulary or the accent or the

sheer cosmopolitan. i heard chris buckley joke, i believe, that it was not until about age 12 he realized he was growing up in an american family. [laughter] i hope you are not going to use that line tonight. i hope i didn't steal that. on the other hand, there was no one who was more fiercely anti-elitist than bill buckley. a lot of us tend to have an image of him from the later years when he was this beloved figure going on charlie rose and isn't he just cute? when he was at yale and coming out of yale in his early career, he was utterly outrageous, a lot of ann coulter in him. he talked about dying the river red so when kruchev crossed the

river, he would remember the blood. it savaged the eisenhower administration and supported, of course, the goldwater conserve van sigh. one of the points of the run was to take down a few notches this golden boy of the liberal establishment, john lindsey, and that mayor campaign earned the contempt of elite opinion. he said once at a campaign that if he won, he hoped there were nets outside the offices of the new york times to catch the editors throwing themselves from the windows. that did not thrive in the precincts of manhattan, but among the cops and firefighters and in the ethnic enclaves so it

was really a pop populist endeavor, and this is why, i think, bill buckley, there's very little about the tea party that bill buckley wouldn't recognize and identify with, especially its love of the constitution and its broad streak of libertarianism because it is difficult to exaggerate the anti-statism of bill buckley. he said the socialized state is to justice, order, and freedom what mccar is to love. right at the end, he self-titled one of his books in the subtitle as a libertarian journalist. go back and look at the agenda as a mayor candidate, and it involved loosening the drug laws and legalizing gambling, so there's a lot about a rand paul type figure that bill buckley would have identify with, so i think that's -- those are all

very important. it's also important to enter a cautionary note. after his mayoral campaign and a disparaging passage, "making of a mayor," a book about the campaign, saying there's no future for the republican party and the party system will break up into various factions that would be insufficiently thoughtful, angry, and self-defeatingly sectarian. i think any political movement, especially one as highly aroused as conservatives are now, is going to be tempted in those directions. i think also when it comes to that, we can look to probably for some lessons and correctives. it's important to realize that history in that and how how much he cared about this, he was a practical man.

he saw the struggle working out in his own mind between the ideal and the real, and you have to strike a balance between the two if you're going to be most effective and whittaker chambers influenced him in this direction. it was not just about tending to the faithful, but winning new converts, new allies. you saw this in the initial composition of the editors of "national review" representing all sorts of strendz of different -- strands of different thought on the right. you saw it in his welcoming of the neo-conservatism into the movement, you're welcome, bill crystal, and even helping the reagan democrats, and you also -- i keep going back to the mayor campaign because i think it shows many aspects of bill. it was also an extremely solution oriented campaign. this was not just about going

out there and stating conservative ax yums, but it was a campaign soaked with policy, and bill intensely believed that we had better solutions to the problems of the day, and he very consciously addressed the problems of the day and adopted policies present and would go on actually later on to help save new york and finally bill was a joyful figure. he really loved our following world and communicated that in everything he did, not just in writing, editing, and debate, but in his sailing and skiing, and he never communicated a cent of being per at the time chewly -- perpetchewly angry. it doesn't take long grappling

with bill buckley with as life and legacy to realize the ultimate take away, which is that some losses are just irreplaceable. [applause] >> great to be here, great to be with neil, linda, and rich. the last few months -- i always like "national review" and last few issues have been really strong, and now i realize it's due to the influx of harvard. [laughter] how could i resist. it's good to go to yale to see how the other half lives. . [laughter] enough of all of that. i'm used to being told i'm wrong, so i don't need to have that in public. i need positive reenforcement.

[laughter] i also was a huge fan of "nationalnational review" as a kid. my parents got it, and i started reading it as early as 1963. i spent the entire summer and fall of 1964 believing what i was reading in "national review," which was that there was this hidden majority that was going to elect barry goldwater, and i shouldn't believe those gallop polls ran by the mainstream media. remember that major theme? [laughter] i love "national review" and it had a big influence on me. a neoconservative, and i was interested, and i personally read it as a kid, the evidence of that is that in my high

school yearbook in 1970, there's a page devoted to each graduating senior with a picture taken or whatever, and my picture has me wearing a lapel, one of those buttons people wore in the late 60s and early 70s, and mine said don't let them advertise the -- [inaudible] the political philosopher, and my kids came across this yearbook decades later, and they just were amazed -- they just couldn't believe what a geek i was. [laughter] i tried to explain to them why this was cool and hip, you know? [laughter] they didn't quite buy that. i was not as bad as rich. i still preferred "playboy" to "national review," but, hey -- [laughter] the -- i also like the title of the panel, how would the patrons

treat turbo charge conservatism. you know, it captures the elements, i'd say, in a way of two elements of conservatism and a reference to the past and sort of eagerness to move towards the future. i would say this in thinking about, i don't know what bill would say, and i won't pretend. i knew him less well than anybody on the panel. i think it's a mistake to pretend we would know what he'd say about thing, and as rich suggested, he was a practical man as well as a man of principle and a deep thinker in a way like many deep thinkers he concealed the depth of his thoughts sometimes in his fantastic journalistic facility, and he has a deep understanding of principles in a way more relaxed applications of the

principles to practical policies. there was the deal -- and knew the key was to steer the ship in a certain direction to get to a certain port. that's gone to mean basically keeping in the same direction not permitting certain things because they are contrary to the principles of keeping the ship afloat keeping it in the right direction, but being willing at times to be courageous and to toy with -- not toy with, but educate people, be in third party bids, even though he was not going to win, and support ore third parties, and there was a two day volunteer work in high school, and at other times he could be what he thought was necessary to be very hard headedly pragmatic saying, look, this is a moment where we need to choose between the available alternatives or even modify the message for now at least to make sure that we can make progress in the here and now. he was a complicated thinker,

and i think some of the complexity subtleties masked by the subtle grace and ease of which he wrote and spoke, obviously, and his cheerful willingness to engage in confrontation. i was most struck -- looking back at bill editing the magazine myself for awhile, i was struck by the work -- which linda and others -- other forms, but i'm struck almost more by his ability as an editor to be a sort of circus master for national review and to carl, all of these different thinkers and temperaments and to express themselves, and that's very important to the success of american conservatism. i thought a little bit about this, and i would try to do this, and rich did it, but it's not quite the same. you don't know ahead of time the

libertarians, traditionalists, pop pew louse conservatives, american conservatives, neoconservatives okay with some of the welfare state, libertarians who want to get rid of the whole thing, but it's hard to know none of those are probably exactly correct, an it's a some complicateed combination of all of those things, and it's hard to know ahead of time what will have resonance and where the agenda picks up popular support. i think it's very wise, and conservatives talk about hayek with the one's limited ability to know things and manage things, and when you put a conservative in charge of an organization, it's the total opposite of hayek and tries to figure out what needs to be done with his own five year plan, although we don't believe in those things, but i think bill read "national review," my sense is from visiting there a few

times and reading it over the years, much more in the spirit that was appropriate to a conservative magazine, which was a certain humility to who is right in some of the intraconservative disputes and who is right about what should be in the moment versus pragmatic. he had james being a hard headed realist, and defending china, where most of the "national review" was movingly really denouncing the opening to the murderous regime in 1971 and 1972. bill, himself, i still remember seeing him on tv denouncing nixon to the trip to china and whatever you dhi of the substance -- think of the substance of the outreach and the treatment of this horrible mass murder and i have to remind henry of that tonight. [laughter] henry's so relaxed and has such

a good sense of humor about these things. [laughter] it won't be a problem. [laughter] bill was able to publish both of these things and entertain the thought that, you know, one of mostly right, but in other circumstances, the other could be somewhat right, and that's true of a lot of different issues in philosophical levels almost and the very practice call political level in terms of the editorship at the "national review" and in terms of shepherding at the magazine. it was a hopeful moment for conservatism, but hard to know exactly what -- i mean we would have been wrong if we predicted in 2004 how things would look in 2008 or if we predicted in 2009 which elements of conservatism would be most reengineering, what -- resurging or what themes would be resinating, and i still think it's hard to predict in the

modesty that bill had really beneath the fantastic somewhat -- i don't know what the right word is, the not so humble confidence he had that was part of his great charm, and underneath that was the intellectual and political modesty combining with the energy and intelligence obviously to enable the conservative movement to do something that is amazing. it's hard to appreciate how -- of course it happened at national review and reagan was president, the cold war ended, reagan was the successful president, and giuliani in new york was able to do some of the things buckley did in 1965 and

areas made progress, and none of that was inevitable or likely really when bill buckley founded "national review" or 10 or 20 years later, and the agree of boldness, the degree of vision, the willingness to gamble we underestimate today, and i think that's also the key legacy and a key lesson of bill buckley. we shouldn't, on the one hand, be you topian about the next -- utopian about the next two years, but we shouldn't be too practical, and i think we know ahead of time necessarily the list of progress in certain conservative or libertarian or sensible constitutionalist pro-american directions are. in that respect, bill's kind of latitude in areas about conservatism within certain limits and his willingness to change and to take his guidance

from some degree from the political market, public opinion, which may not be wise as individuals, but in its entirety, it's often sensible. that's a very impressive and important lesson from bill buckley. [applause] >> thank you, linda. thank you, bill. thank you, rich. i donated my knees to the yale lacrosse team a half century ago, so i'll stand here. [laughter] i'm acutely aware i stand between you and the bar, so i'll make a few brief comments. three things about bill, and then i'll plunge recklessly into the territory both of these wiser men refuse to travel, and that's what bill would think today about various things. three things about bill.

one extraordinary personal coach in both the moral and physical forms of courage. as one example, one measure of the correlation of ideological forces, i think back to my class at yale, maybe somebody here, late 50s, early 60s. approached graduation, that glorious john kennedy gave that line, i have the best of both worlds, a harvard education and a yale degree. we sought to show support for the emerging champion, barry goldwater, and from a class of 1,000 young men, all men in those days, we had five supporters. [laughter] not included in our number, i would note for the historical record, was our hard drinking

classmate, richard b. cheney. as god as my witness, dick cheney was a 160-pound back on the football team, not included in the number was a quiet econ major named arthur laffer, and as little as the ranks were in the undergraduate college, they dwarfed our support among the faculty. the faculty, 700 strong approximately in those days, yielded two supporters. one was a fiesy lecturing in the yale law school named robert bork. the other was an asian scholar named dave rau, who contributed to the journal rich now edits. we would have had 50% more support, but for the recent defen strags of wilmor kenned l

after a long and difficult battle with tenure. the second thing to say about bill is what rich mentioned and a critical, critical ingredient is joy. every buckley enterprise was aimed at high purpose, but pursued in high spirit. the sound that rings a memory is bill's laughter. bill in the office with a colleague. bill on the phone with a delicious story. bill on the boat with many of his best friends. just one example here, this is years after the event, and i have excerpts of bill's interview with the fbi investigating me for a federal appointment. at the end of the field

investigation, the agent asked this on question would i, candidate freeman, be likely to embarrass the administration? [laughter] witness buckley under oath is recorded as saying, "i should think that the reverse is much more likely." [laughter] let me give you, again, proceeding reckless as i think how bill might proceed, he might march through the following agenda. first, he'd summon for cat ciz mic instruction, and my projection is it would go like this. mitt romney invited to dinner at 73rd street would have been passing on gun control, abortion, universal health care. bill believed that every human

being is endowed by his creator with the right to flip-flop. [laughter] bill would have brought in instead what he perceived to be a la cue that -- lacuna, and instead the widespread presumption that romney can fix our broken economy with an economic plan that is unlike say governor huntsman manifestly inadequate to the challenge. bill might have asked the guest, how do you reconcile mitt that which is irreconcilable, huh? [laughter] romney would have squirmed through the evening. bill would have barely survived it. he hated to drink alone. [laughter] rick perry's visit would have triggered the full buckley offensive. tales of the original wfb and

wildcatting days in mexico would have spiced the evening. bill would have taken it upon himself as the party favor to support perry's single most indefensible action as governor. towards the end of a long article, bill would have recast the perry initiative as not only defensible, but in some ways laudable. indeed as bill probed more deeply, the boom to the nation, quite possibly to the world. perry would have responded with a dan rather sized texas and penetrating phrase involving parched little and poisennous snakes. [laughter] bill would have segued into a discourse on contemporary international affairs that call for a foreign policy somewhat less parochial that the governor is heretofore advanced.

when sarah palin came, he would have been on the best behavior and maybe not would have ate the salad with his fingers. bill would have accountanted reluctantly under the bending terms of the buckley rule that palin was sufficiently rightward, but insufficiently viable. they parted that afternoon, bill would have accepted an invitation to go speer hundred hunting for large mammals deep inside the arctic circle. [laughter] the commitment that neither sarah nor pat would have ever let him forget. newt gingrich would have caused bill to remark with x-ray vision, his barbed wit, broad range of reference and illusion. it might also have caused bill to remember an observation by the late herman conn who said some people learn by reading through the eye; others through

the ear listening. i learned through the mouth by talking. [laughter] the summit meeting with herman cain would have excited high end anticipation and bill would have relished the process of a cain buckley alliance if only for its sheer theatrics. he would have spent as much time as he did with palin in a quiet inventory of the intellectual warehouse. what does cain know? what did he read? it it just possible that herman cain could be bill's guy? beyond the political arena, bill would have had eyes for the core constituencies, the hearty band of right leaning scholars in the american academy including here and would have said be brave, but until you have secured tenure, be no more brave than

conscious demands. [laughter] we'll reject the liberal counsel of st. augusta praying, oh, lord, make me chaste, but not yet. [laughter] by all means, concentrate your career's energy on the edge of the evolving scholarship, but celebrate loudly and redundantly the core values of the western cannon. the stewards of the movements public's diplomacy, the editors and publishers, writers, and produces, talking heads, bloggers, bill would say keep handy the metrics of fusionism and appreciate the vital contribution to our coalition made by each major strain of conservatism. adheres strictly to principle but labor without pause to coin the fresh forms of a timeless proposition. along the way, remember to have

some fun. try to be a little less constipated. [laughter] let me close by saying why i have chosen to support the buckley program. there are two reasons, really. the first is to keep alive a long standing, but very fragile tradition here at yale. decade after decade, yale has done almost nothing to encourage, but just enough to permit a culture of conservative dissent. i like to think of it as yale's grudging, but honorable acquiescence to the spirit of comake freedom. the second reason to support this program is that bill would have loved it. bill had the most complicated relationship with yale of any student since nathan hale. [laughter]

he starts out as a golden boy student. what he became with the publication of god and man, not a loving son of our sweet mother yale, but the university's designated appostate. his memories of the book bill once described them to me were, quote, "long." he formed his political views here and form the friendshippings that sustained him for a life -- friendships that sustained him for a lifetime. for this part, yale, i think, possibly nudged by the alumni fund, realized there was no upside in a long term feud with america's most gifted controversialist.

the ice began to melt. the door opened wide and bilateral talks began in the 1990s. [laughter] between the prodigal student and the forgiving university. what issued was not the treaty of vienna, but a historic document nonetheless, an invitation for bill to join the faculty here in new haven. his course in english composition debuting in the fall of 1997 became popular with both the students and their instructor. testify that the turn here, bill took deep satisfaction. the process of reconciliation was completed in the spring of 2000 when yale aworded bill an honoree doctrine. how pleased was he? when word began to spread of the award, i called to congratulate him. he picked up the phone saying,

"dr. buckley here." [laughter] and he -- [laughter] any metaphysical problems i can help you with? [laughter] to which the answer is, well, yeah, actually, there are. [laughter] the buckley program here at yale, i hope you will agree, is one way to address them. thank you. [applause] >> one, i've been reminded of a couple remarks this afternoon of a small incident that happened -- oh, by know, i guess it's about ten years ago, but

that ties in with all of these things about liberals and neocons and bill's wide embrace. john wrote had been at one point not too long before a president or chairman, i forget which, chairman of democratic action, that extremely liberal institution founded in 1948 by author others mentioned today, but anyway, it was really liberal, and john was the president of it, and gradually as the world changed, at least on foreign policy, he found himself much more in tune with national review than with many of the former allies. he and bill were talking somewhere, and john asked if he

could write a column for "national review," and bill said, delighted, please start any time, and so john wrote this column on foreign policy, and it was always brilliant, but i assumed that we were far apart on domestic policy, and then one day, i forget what subject came up, but something or whatever, and he gave an answer that led me to say, why, john, you sound like an israeli conservative, and he said, no, a catholic cynicallist. [laughter] these labels can be interpreted in very different ways. well, do you have comments for each other, or shall we invite the audience? let us invite the audience with any questions, comments, summings up. yes, nina?

>> first, i'd like to say it's been a tremendous pleasure to listen to these distinguished speakers and to hear more personal as well as political information about bill buckley's life. i would say that the one thing i would have liked to hear more about, probably know about, is bill's -- bill buckley's legacy to things which were musical and non-political. i knew mr. buckley for 37 years as both a mentor and a personal friend. at the core of his personality was always his deep concern for moral values. that was a tremendous part of his personality and makeup. he became interested in

supporting me. in charles' eyes, the composer's music, because i was interested in moral values, and he made a tribute to ralph waldo emerson making a note to remembering one's internal soul. i was the only woman in the world to end up recording the complete solo piano music and william f. buckley supported me as a concert pianist for his entire life. i met him in 1970-71. i was in that infamous class of women at yale. [laughter] in 1970, but i was very

privileged to be in that class, very privileged to have known william f. buckley as both a mentor and a friend, and i am sure the reason that i became real famous is because of his help and his guidance, so i thank you very much. i'm nina deutsche, and i'll be very happy to talk with you about what a wonderful person bill buckley was and what a kind and compassionate and brilliant person he was. thank you. >> thank you, nina. [applause] questions? nip want to tell rich -- anyone want to tell rich he was wrong? [laughter] don't tell bill he was wrong. he doesn't need to hear it. >> i'll tell rich he was right, and bill as well.

i had dinner with my long suffering bride a couple of years ago with somebody who had been very high in the lindsey administration, but, of course, swamped the buckley forces in 1965, and he had been keeping score over the years as the mayor turned over from jenkins to giuliani, bloomberg, and all the rest, and in the campaign of 65, bill recommended two specific proposals, all of them branded extremist by the "new york times," quite literally, every single one of them in serial fashion. they had all been adopted in the subsequent years but one, and i was dying to find out which one tfl. maybe -- it was. maybe it was the elevated buckley, i'm not sure. >> bloomberg is working to it.

just a matter of time. [laughter] >> even though we got 13.8% or whatever it was, we won, and that is a message for all conservatives, especially you young people at yale. i know you feel like you're facing the chinese -- [laughter] but they will run out of food. think of it that way. [laughter] >> yes? >> short question. [inaudible] the john birch society, and where did bill buckley stand on that from his friends and his writings? >> well, he, you know, famous famously -- first the john birch society fell down from a

company -- whose line was it, the john birch society said he was a communist when he was really just a golfer? [laughter] this was really quite controversial within "national review," and it goes to what yale referred to, bill's moral courage. i was just reading about this recently, and bill rusher opposed it, a number of senior editors opposed it, and if i was in that situation and all my high level colleagues say it's a big mistake and will hurt the magazine, don't do it, i would be hard pressed to do it, but bill was bill, and he did it, and "national review" paid a short term price, i think, up to 10% of their cancellations, but he had the long view that this was important to the health of the movement, and, of course, he was correct. >> i don't want to say rich is long, and i couldn't because

he's my former boss, but i want to ask about a tension in one of the things he said that probably all of you could address. rich said that buckley's antistatism was difficult to oversate, and that he would have supported rand paul, and that's probably true, but on the other hand, john birch society shows he had a history of purging people, and it end with the line he believed in freedom like david believed in god, and he clearly had a low view, not necessarily of rand paul, but the father given the 1988 interview. what anti-bodies did bill buckley have from preventing him from sliding into the school of conservative thought, and how do we address them? >> i'll address it briefly. i didn't mean to support -- suggest that he'd support 100% rand paul although he identified as a libertarian and the key

dispute among libertarians said he was wrong and that we needed a strong state in order to combat the soviet union, and that took priority over shrinking the state at home. if you had to choose, you'd defeat communism because it was just a -- if you were going to have limited government whatsoever, you actually had to save the west. >> i think part of growing up, i mean, come of age when bill did, the complacency of progressivism and welfare statism was so great that would have made me, i would say, more libertarian or clined to the libertarian that was absolutist and perhaps that's the case today when, in fact, progressivism has done a lot of damage, but not the confidence that bill could have caught in

the original statement of "national review" talking about the -- [inaudible] complacency and conformity of liberal opinion. i got to think some of the attraction for bill was a complicated thinker, mix of libertarian, traditionalist, some of the books and policies he thought out the most about was the mayor campaign, through the books, are not simply libertarian or small government conservative. he was interested in limited but energetic government on behalf of the founders, and i didn't know bill well, but the attraction of the real individualism, i got to think a lot came as a reaction to just the incredible complacency of which everyone dismissed that strain of american political life and that string l political

philosophy back then, and when he intervened in real politics in the 60s, 70, and 80s, he was obviously inclined, much smaller limited government, a decline in policies that free up people and encourage and allow them to govern themselveses, but not a kind of -- themselves, but he was not a dogmatic libertarian in the sense of the first principles, an incredibly minimalist state or almost no state at all. >> i think there's another factor here, and rich touched on it in reference to the soviet union. bill always talked about ordered liberty, and throughout his -- throughout his public life, which started here at yale, he talked about the westernization and about america as a particularly stunning example of that tradition, so he -- even

though he identified himself as libertarian, and even though someone else mentioned he didn't -- he wouldn't have said, but still, the western tradition was a very big part of his intellectual and personal makeup, so he would have been -- he was inoculated by those things i believe. >> just one thing. the -- we all act in hindsight as if it was a exercise of surgical precision. when i was there, and in the early 60s, no one knew what a conservative was. we were making it up week by week. [laughter] i remember the first time the father of fusionism and laid out

the full thing, you know, with graphs and reading lists, and here's how we'll put together the traditionalists and the libertarians, the national security types, and this will be one tight bond and we're march forward into the bright future, and i'm sure i was not the only one in the room who thought it was pore postrows. i tried to accuse somebody else, but somebody came up with the line which kind of stopped even frank meyer for a second. meyer could not easily be stopped, and someone said you mean, frank, you're going to make the holy rollers lie down with the high rollers? [laughter] frank drew on his background, author of seven books, roughly

to dabba, dabba, dabba. [laughter] the glue that held the idea of modern conservatism together was communism. the religious people, the economic people, the security people, they all knew who the enemy was. the trick for these gentlemen is to find the glue going forward, and we have have kind of zigged and zagged, and maybe we're zag to try ump. hope -- triumph. hope so. >> you gave away the clue, the holy roller and high roller, and, you know, the question just thinking of a minute while neal asked the question, and i -- bill was not a hater at all and rather disliked haters and conspirators and that aspect of

the strain of libertarianism view and ron paul for that matter would have really put him off. i mean, i don't like that birch -- it's not quite right -- bill was in that respect not just speaking personally that i don't agree with, but he was saying they can't be part of the conservative movement, but that was because the birchers were crazy, you know? [laughter] they thought, i mean some of the policies in terms of let's have -- the actual analytical climb that eisenhower was a part of the conspiracy and bill didn't want a movement that was friendly of saying things not in the harmless nuts way, but i have a cranky view of economic policy, but really, you know, saying about people that