notarized and orphaned to get a state issued id. so maybe even the next level of the churches or the level who will be helping with the voter registration, maybe they need of a notary public there and the parents, and for the older family members, not the older family members and that other younger people to have somebody in the family to give them a letter that states that they live there with them and have it notarized. .. >> that's one example, and

there's many other examples about it's not as simple as people think and that there's people that, like you said, that are trying to get to vote, but there are examples of people that have voted for years and never been questioned and now are being asked to get a different kind of id. and some people don't have a birth certificate or other. so it's -- people focus in on whether they're lazy which was implied is that an issue? it's not because they're lazy. it's because they're presenting the issue wrong. and -- >> [inaudible] >> yeah. >> [inaudible] >> yeah, i understand. yeah. >> okay, thank you. and with that, we're going to just briefly do some closing statements. so we're going to go down the line, and i'd like you all, obviously, have quite a few supporters of unions here in the audience. i'm wondering what you would tell them they can do in terms of helping unions and helping in

terms of the election. lee? >> well, let me rephrase that. it's not only helping unions, but it's helping each other. and the issues that confront all of us, and we've talked about those issues this morning whether it's worker rights or civil rights, women's rights, voters' rights, these a our democracy, our very democracy is being challenged. and we can't let it happen. i mean, we have got to come together like never before, develop those coalitions that the a national -- at the national, but more importantly, the local level, and we've got to make our voices heard. the 99% who are being smacked around every single day because the 1% wants more power and wealth. we've got to say no. we've got to say enough is enough. and all of us have got to come together, and we've got to fight back. and if we do that, if we do that and work 24/7, you know what? we will win, make no mistake about it. we won in wisconsin, in ohio, we can win in every state and in

this election in 2012. but it requires us rededicating ourselves to come together and fight back like never before. [applause] >> the fight, we may all be from labor unions here at this panel, but our fight is for america, its citizens, its future and the next generation. hopefully, they won't have to make these same fights again. we will have learned after enough lessons throughout history to quit repeating these things that cause division, harm and hurt to society. people should have a right the vote and make their own determination. and we ought to be able to, as citizens of this country, secure that for the next generations. we've got to take up everybody, each other's hands again and start marching toward a common direction. and we'll win, we'll win. [applause] >> i would agree.

it's not just about unions, it is about our country. and i think what, um, each of us in this room can do is talk to your friends, talk to your family. i think it's appalling in this country how many people do choose to stay home and not vote. either because maybe some are lazy, but a lot of it is because people don't care, and they don't think it makes a difference. but the fact is that there's decisions made in this town and other towns across this country that impact us in ways that we don't even really imagine. and so what i would say is, you know, make sure that -- talk to people about the issues and then make sure that people do go to the polls and vote. i think that's the most important thing people can do. [applause] >> i would just say let's work together to build a powerful movement for change in this country. this country needs to be again the land of opportunity where everything is possible and everybody's welcome to

contribute their talents, their passion and their commitment. if we do that, we will make sure that this really is a country of our dreams, the country that i imagined when i came from mexico. because it can be and should be that again. [applause] >> collectively, we have great power, and we have influence, but elections and campaigns to defeat issues that are trying to suppress us are won at the local level. so it's all about person to person, the power of persuasion. i don't care what kind of campaign, what is involved in. you win by talking eyeball to eyeball and using your personal influence with others you know. and if each of us does that in towns throughout this country, we will be victorious. [applause] >> okay. um, that's going to conclude the panel. how about a round of applause

for our panelists? thanks for joining us. [applause] and be -- any moment now we're going to have kathleen sebelius in here, so stick around. thank you. [inaudible conversations] >> remember that you can watch all of our coverage of the national action network's conference this week if you go to our web site. go to c-span.org. we do have more live programming coming up today. we'll be covering the u.s. chamber of commerce's aviation summit starting at 12:30. we'll hear from president and ceo of boeing's defense and

space security division and later the ceo of delta air lines. both will be looking at the future of the aviation industry. watch it right here on c-span2 again at 12:30. the afghan defense interior ministers will be live at 2:30 eastern. you can see it on our companion network, c-span. april 15, 1912, nearly 1500 perish on the ship called unsinkable. >> once the lookout bells were sounded, once the lookout sighted an iceberg ahead, they struck the bells up in the you's nest three times -- ding, ding, ding -- which is a warning saying that there's some object ahead. doesn't mean dead ahead, it means ahead of the ship. it doesn't say what kind of object. what the lookout then did after they struck the bell, he went to a telephone nest and called down to the officer on the bridge to tell them what it is that they

saw. and when the phone was finally answered, the entire conversation was what do you see? and the response was, iceberg right ahead. and the response from the officer was, thank you. >> samuel halpern on the truths and myths of that night sunday at 4 p.m. eastern, part of american history tv this weekend on c-span3. >> our specific mission is to work to see to it that human rights remain an essential component of american foreign policy. um, and that when we are evaluating our foreign policy moves globally, human rights can never be the only consideration, but it has to be part of the dialogue. >> katrina lantos swet is the president and ceo of the lantos foundation for human rights and justice. >> when we abandon our deepest values, and that, you know, whether we're talking about

torture as it relates to the war on terror or, um, or the recent policy with russia, you know, and the upcoming issue of whether or not the u.s. congress should pass the sergei -- [inaudible] accountability act. we don't need to go into the details of that policy issue, but whether or not we're going to stay on record as saying human rights matter. >> more with katrina lantos swett sunday night at 8 on c-span's "q&a." >> i walked out after the iowa caucus victory and said, game on. i know a lot of folks are going to write -- maybe those even at the white house -- game over. but this game is long, long, long way from over. we are going to continue to go out there and fight to make sure that we defeat president barack obama, that we win the house back and that we take the united states senate, and we stand for the values that make us americans, that make us the greatest country in the history

of the world, that shining city on the hill, to be a beacon for everybody for freedom around the world. >> and with that announcement, rick santorum ended his 2012 presidential bid, a process the former pennsylvania senator began in 2009. follow the steps he took along the road to the white house online at the c-span video library with every c-span program since 1987. the aspen institute held a daylong discussion on race relations in america earlier this month here in washington. and during one serious participants looked at how the current education system impacts minority students. among the speakers, d.c.'s public schools chancellor kentucky ya henderson and former baltimore mayor kurt shmulk. we'll show you as much of this as we can until the chamber of commerce's aviation conference starts at 12:35. >> good afternoon. how was lunch.

great, wasn't it? bon appetit. little bit late, but what an extraordinary panel this afternoon, and i thank you, ladies and gentlemen, for being here. chancellor of d.c. public schools, kaya henderson. kim yong? correct? she is from the american-asian legal defense fund, and from baltimore, former mayor kurt shlunk. we were talking as kind of the opening comments on education and the media and, you know, i think that -- and, ken, you've talked about this, there are often misconceptions, stereotypes both good and bad, i guess, although no stereotype is essentially good. that i think has a direct impact on our or children, how they perceive themselves, how parents

perceive their children and themselves within an educational community. so if we could start with talking a little bit about in your line of work what you see and what the biggest misconceptions and battles are. >> sure. well, um, i am the director of the educational equity project, so, obviously, a lot of our work in this area is, um, colored and influenced by the experience of asian-americans, students in education. and i guess to start off as food for thought with regard to how these issues impact the community, um, you know, there's this myth of asian-american students as being uniformly or largely high-achieving and doing well in the school system. unfortunately, that's not the case. there are certain students that do very well, but there's great disparities among ethnicities by english-language learner us the and in geographic

concentrations. and a lot of the work that i do looks at, um, how a lot of these policies that we're going to be talking about today have certain unintended effects in particular upon immigrant communities and in communities that are not empowered to, um, often advocate for their rights. >> when you talk about some of those difficulties that language is the primary one, there's cultural as well. >> yes. i mean, i think language is a huge issue -- >> primary one. >> yes. i would say that there are cultural issues, but i think that language, um, the ability to access programs that, um, are needed by english-language learner students and in particular the fact that, unfortunately, some of these school reform strategies that we'll be talking about today which are very well intentioned and have had some great results, um, sometimes aren't being accessed by, um, some of the students that are most in need. for instance, about a quarter of

asian-american students in the public education are english-language learners and what we've seen in new york city is a lot of them have been left behind by some of the reforms even while at the same time certain asian students are also concentrated in the, um, in the magnet schools that are very high performing as well as concentrating in the ivies and the, um, the selected institutions. so i think that the need to, um, have programs that are accessible for those populations as well as to have translation -- [inaudible] >> kurt, when you were mayor, you were also in charge of the school system, and a lot of the programs you instituted have been mirrored by other cities. >> yeah. >> do you think that the role of politics, the role of political figures in the educational system has been a positive one? >> um, as -- speaking as a

former mayor -- >> right. [laughter] >> but a good question because for the majority most of the time in the 20th century chief executive officers of cities, primarily mayors and even governors to a certain extent kept public education at arm's length. i mean, you had school boards, some elected, some appointed that were your primary policymakers for education, and then, of course, you had this national infrastructure of what was formally health education and welfare that morphed into the department of education. but bottom line is that as we started to move towards the end of the 20th century, mayors started to see education and improvements in education as key to the quality of life in the cities, that it was not an issue that you could just leave to someone else. and so you started to see some structures change where mayors became more involved in

appointing, trying to appoint the chancellor or the summit of schools -- superintendent of schools, having more control over the budgets. and so the question a lot of people ask is, well, is that too much political involvement? but i can tell you education in america is just full of politics. i mean, from top to bottom. >> sometimes politics lacks in education, by the way. >> well, i mean, the difference between, you know, the discussions of policy and politics in education, they blur an awful lot. and it's a question of striking the right, striking the right balance. i came to conclude that we had very serious problems in the country with a system that was so top-down driven that is we would get these mandates from the federal government, and then the state would add their little layer, and then the locals were going to implement it.

and my view as mayor in the end was -- 12 years i served -- was that it was my responsibility to provide great educational opportunity for students. it was not my responsibility to try to run a particular type of system. >> be -- but there's so many mandates, there's so much federal regulation coming down the pike for you. >> right. by the time i left office, um, if you looked at our total budget, 35% of the budget went to 17% of the kids because of mandates. and that's something that -- so it wasn't always that we needed more money, it was we needed the ability in how to use that money. i, you know, watched kaya henderson in the chancellor's job, and i think she's doing an outstanding job, but there are constraints on how she can spend her money even if she wants to

implement programs for certain segments of the community. but different than what the federal mandate requires, her hands are tied. so bottom line i became a big advocate of parental choice. i think that that, for me, that became the way in which we would infuse -- >> what exactly do you mean? because everybody has a different description of what that is. >> how about the g.i. bill? take the best of the g.i. bill which gave certificates or vouchers to returning, um, soldiers and said you can use this, and you can go to university of maryland, or you can go to catholic u or notre dame. i mean, you have the choice of where you want to exercise this particular certificate. i think that we should do that for parents, that that would

bring more competition, would be a better way of allowing parent -- treat parents as customers and allowing for improvement if their child's -- in their child's education. >> with and that brings me to kaya. i presume you'll agree and disagree with some of the things the mayor has been saying in the sense that you're dealt a hand, as the mayor was saying. your hands are tied in certain things that you can and can't do as far as how you spend, what you can't spend but, you know, in our communities i think parents find that a very attractive possibility, the possibility of being able to choose and to help choose where our children are educated and how they're educated. >> yes. i think absolutely some parents find that to be a very -- >> many. >> -- attractive option. yes, many. but my concern is that the parents who actually need to be most vigilant about where their

young children are going to school often don't have the capacity or the time or the education to be able to make good choices. we don't provide information that helps parents become great consumers, and so what we see is parents fleeing just from whatever the traditional public school or the neighborhood public school that's failing and choosing an option that, quite frankly, is often times not much better. >> we agree. but, you know, sometimes one feels in the gut i may not know what i want, but i know what i don't want. >> yes, absolutely. >> and sometimes what i get i don't want. >> yes. and for the children -- but for the children whose parents literally can't get up every day or are working three days and can't actually go through an application process, there have to be neighborhood schools, public options that are able to provide a good education so that if you are not able to make that choice, um, that you still have someplace good to go. >> how do you make the existing

public school system more in tune with the needs of minority children, for example? >> well, i think, um, you know, i am a chancellor of a public school system because public education changed my personal life chances, changed my family's life chances. we grew up in a low-income environment -- >> where, by the way? >> in mount vernon, new york. and education was the priority. we understood that was the key to moving out of the lower class. and because my mother got a good public education, she went to a good college, she got a good job as a teacher, was the first person in our family to go to college, to buy a home and to move us into the middle class. i do what i do because i know if i'm able to provide great schools across this city, that young black and brown children, yellow children, white children, polka dotted children, it really doesn't matter, have the opportunity to have their lives

be enhanced if i do my job well. >> i just want to mention as dr. henderson's talking, the ideas are not in conflict really. they've often been presented as kind of an either/or situation. either you're for choice, or you're for the public schools. i want to see great public schools. i just don't want to have a situation where any family is required to send their child to a poor-performing school. >> and that your zip code defines what education your kid is going to get. >> and kaya used the term "consumer" at one time, and i think that's right. we don't treat parents right now as consumers, as clients. they get dictated to too much rather than saying give people a choice, and i think that would make a huge difference. >> sure. i don't think that having, not having vouchers necessarily means that you should be, you're going to be limited to the school that's in your zip code. i think that most -- a lot of public school systems are having choice within the public school

system where especially at the higher grades where you can apply to different schools across city like we have in new york city. even that does not work that well, i have to say, for low-income, immigrant students of color or even nonimmigrant students of color. i think that what we see even in that situation where we're working within the universe of public schools is a situation where the students that are the most be at need -- new immigrants, refugees and native-born students from -- >> with the least information. >> exactly. least information and parents who need interpretation, translation who don't get it, immigrants who come in in the middle of the school year and, hence, don't get a chance to even apply to the most sought-after schools. and so all these students often end up in the most be challenged schools. now, in terms of what those schools need as far as, um, a solution i think we may disagree on, but i think that i would agree what we need is to create,

um, a better, meaningful system of choice within the public school system. >> [inaudible] >> what we have, i mean, what we are trying to do in d.c. public schools is to create a portfolio of options. different children, different families have different types of school needs. gone are the days where everybody goes to the same type of building and gets the same type of education. and so, um, we need to create a system and are creating a system where whether you're -- if you're a neighborhood school or a school clear across town, you actually have options to go to any of them. the charter sector is another key piece of this in that many charter schools are providing robust opportunity for some of our most vulnerable populations, our lowest income young people and our minority young people and are able to do a better job than some of our neighborhood schools. so we're looking for opportunities to partner, to co-locate. but in order for parents to be real consumers we have to engage them in a very different way. we have to be transparent about the quality of our buildings,

and we have, um, gone -- >> what do you mean by that? explain what you mean by that. >> so parents know that their neighborhood school is okay, but they don't have any real quality indicators. people look at test scores because that's generally the only across-the-board indicator of how a school is doing and how they'll be able to serve your young people. we've gone to a scorecard system where we lay out all kinds of data about the school. we look at behavior incidences, we look at the kind of programs that are offered, we look at, um, test scores and other things to show people a full picture of how that school is doing and that way a parent has more than just test score information to decide whether or not this is the right place for their school. >> yeah. and we've become so addicted to tests. i mean, my goodness -- >> i never was, by the way. i just want to throw that out. [laughter] >> no, i mean, because we do rankings and all this sort of stuff. i see the students, i'm dean of a law school now, so i see these students as they come out of the high school through college and

the law school, and so many of our schools, the law schools in particular, get hung up on these lsat scores, all right? the law school application -- >> because there's a lot of pressure to deal with that. >> i know. >> to set the base on this. >> even the people that run the tests tell you that the lsat is not going to tell you who's going to be a good lawyer. the only thing the lsat does is tell you who's going to do well the first year of law school. >> even that, it tells you who does well on the lsat. [laughter] >> pretty good though. >> that's the only predicter, basically, who's going to do well. and from there it flows down all the way -- >> well, why is it so difficult to accept other aspects of that? >> because we keep looking for easy solutions no this. kaya, what she just talked about looking at the full range of students is tough. it's, sometimes you can't quantify it. it's hard to quantify a kid's ambition. you know? you may get some, some young

man, young woman who has got this great vision of what they want to do. they don't test very well on your standard tests but they do great artwork or something like that. it is so difficult to judge. you these to give the schools a little more flexibility in making those decisions. >> and i'm not an educator, and i so applaud what you all do because it's the toughest thing, and yet it really is the most important thing that we can do for our country and our future. >> sure. >> and let me throw one other aspect i'd like for the three of you to comment on. you know, secretary of labor hilda solis off tells the story, she's -- often tells the story, she's the first generation in her family to ever reach high school and go on to college. and when she was in high school, her final year in high school she went to see an adviser, you know? counselor. and said i have treatments of going on -- i have dreams of going on to college and university and maybe postbrad, and the adviser, the counselor

at the high school said, listen, you're a young latina, focus on being a secretary. i always tell her at least she listened to the counselor because she's secretary -- [laughter] but, but i say that story because a lot of the things we talk about federal, state, local if in the schools and in the school systems there aren't people that have the sensitivity about issues of fighting stereotypes and some of the vicissitudes that our students challenge -- face that are challenges independent of their intelligence, if there isn't a sensitivity, you know, maybe 80% or 90 have been % or who knows what percentage of the kids that are told be a secretary lose faith in the future and do, indeed, drop. and so all of these structures and lsats and scores and

organizations and change and challenges and vouchers are moot if there is someone in that school who doesn't see the potential for a nicaraguan-mexican child with dreams of being the first in her family to go further in life and nixes it. >> with well, it's not just about the sensitivity, it is about the expectation. information, this is the most pernicious issue around race in education as i see it. we have incredibly low expectations for minority students -- >> who's "we"? >> our educational system writ large. um, we hear about poverty being an excuse, and while poverty is absolutely a crushing impact, um, it is not the end of the story. in fact, we see children rise out of poverty every single day when teachers, when counselors, when principals set high expectations for them. and you hear -- >> they become school chancellors. >> that's right. you hear the no excuses movement

where, you know, people are very clear that it doesn't matter whether you have breakfast or not, whether your parent read to you or not. we actually believe that what can happen in a school building can change your life outcomes if we do it well, if we expect -- children rise to the occasion when you set high expectations. but as long as you continue to make excuses around why they can't, they won't. >> and, look, you know, if you're not willing to get me ahead, at least don't step on me, you know? but i like you guys' thoughts on the issue. >> sure. i agree that i think different expectations of different students can be a major problem in the tracking of lower income students and minority students. i think that we can talk about the resource and equities as a cause, um, in a way as to lead to better equalization of resources in two different schools. as we were talking earlier, you know, school choice doesn't work as well as it should even in school districts where

theoretically any student from any lower income community could apply to any school in the district. so that just doesn't work. and we need to create infrastructures to equalize resources toward all these students. >> what does that mean? give me an example -- >> sure. they have access to the finest programs for all students and to prepare all students for those programs like, for instance, for english-language learners. in new york state if you are a high school student who enters as an english-language learner at a beginning or intermediate level. you probably cannot, first of all, get all the credits you need to graduate on time -- >> because they just don't offer them -- >> because they don't offer them and, also, because you're taking a certain english as a second language curriculum which is great, which is important, but at the same time they're being taught, um, the esl curriculum, but they're being asked to take

tests to graduate that are being given to mainstream students. so, i mean, i think that all students should be held to the same standards to graduate, but i also think that they need the right infrastructure, um, and support and resources to prepare them. otherwise it's a set up. if you make an english-language learner take a test to graduate that you haven't been prepared for, you're not going to pass. or if you're going to pass, you're going to pass at a low level, and you're going to need remediation. so i think it's a way of singling out how we can, um, apportion resources to equalize for those differences in different communities. and i think you can say that without kind of using poverty as an excuse. you're saying that to talk about the resources and equities that will lead to parental outcomes. >> kurt. >> yeah, i guess for me i am not real thrilled with the limited choice of just choice within the public system.

i like to see a much broader system. but on the point about expectations, i think what i've seen recently on college campuses is young people understanding this themselves and wanting to become great teachers. i mean, the number of young people who are participating in, you know, going to get degrees to become teachers is increasing. you can see it a little bit in the applications for things like teach for america. these folks understand that having a great teacher in the classroom is going to make a huge difference. i certainly agree with the issue of resource allocation. but while we're waiting for that to happen, something else has got to occur. so i keep telling people, you know, the if my child is, you know, a ninth grader and you're telling me four years from now we're going to have a change in the allocation and formula and there's going to be all this reform, well, my child's only got one time in high school. give me something i can do now

for that child the -- that's going to make the difference. and that's why i really press the idea of giving the parents and the family the opportunity to make a different kind of -- >> okay. kaya, tell me some of the things you have seen that have had an immediate impact. >> so what the research says clearly is that the single most important in-school factor is the quality of the teacher, and this is why we've pressed really hard in washington, d.c. to radically change the caliber of every sickle -- every single teacher. >> how do you do that? >> we are one of the only countries who let all of our c students become teachers. when you look at finland and singapore, you have to be in the top 10% of your class -- >> do you have a lot of freedom to do that? >> yes. >> are you pretty structured on that? >> we have, no, i mean, part of the challenge is we haven't been creative in terms of maximizing the things we need to do to get there.

we need to evaluate our teachers by taking into consideration a number of things including how their students perform. that provide that feedback to teachers, give them professional development to help them learn and grow. when i got to the district, we had teachers who hadn't been evaluated in some 20 years. in any profession that is absolutely ludicrous. how am i insuring the best teacher's in the classroom if i'm not providing consistent feedback and professional development opportunities for that purpose -- person to get better? we hold a huge event at the kennedy center called the standing ovation for d.c. teacher, and all of our teachers who are rated highly effective, they are feted in grand style like the kennedy center honors, and we have, they have, um, they get bonuses and prizes, and we watch videos of them teaching. it's literally like the academy awards of teaching. >> and this is just because i don't know. is this based on just course, do the teachers have to fill out a

test to how good they are? how do you determine a good teacher other than the kids' education? is. >> we do five observations over the course of a year. the principal goes into the classroom to see what's happening, and we have what we call a master educator who's a professional teacher, a highly-regarded teacher who's a content expert. for example, i taught middle school spanish. my principal -- >> really? >> yes. >> [inaudible] >> my principal was a gym teacher. he couldn't assess what was happening in my spanish classroom. so if you're a foreign language teach e we have a master educator who is a foreign language person to come in and look at you. we look at things that you do above and beyond the classroom because everybody knows a teacher is not just doing stuff in the classroom. we look at your student achievement, what happens on tests that you give and what happens on tests the state gives -- >> can i ask you, and i'm sorry

to -- >> please do. >> because this is important. we get an awful lot of discussion in conversations about public education about whether the unions are good, wad or other. what ms. henderson is describing is something that came about through a resolution. the d.c. leadership and the unions got together on that, so that was one, that's, i think, progress for the kids that the leadership of the school system and the teachers' unions joined together on. >> again, i'm just trying to understand better because it's a fountain of information. in cuba and dictatorships, there is a saying among the people that the government pretends to pay me, i pretend to work. i presume that if you go in to a school where the teachers have been there for 20 years and never being tested or required to prove how good or bad they are that there may be among that class of teachers the you

pretend to pay me, i pretend to work syndrome. how do you breakthrough on that kind of a culture that isn't a culture of a year but -- >> have you been watching what's been happening in d.c.? [laughter] >> i'm asking. >> it's noisy, it's crazy. we have had to, you know, it means fundamentally changing the status quo around how we interact with our teachers. and, um, culture change doesn't happen in a year or two years. it takes, um, years to create a new set of expectations. but that's what we did. we effectively said this is what good teaching and learning looks like, so this is what we're going to evaluate you on. and we're going to provide professional development and support. we'll show you videos to show you what we think the exemplar is, we'll provide rubrics to work with you. some of them have gonic canning and scream -- gone kicking and screaming. other people have grabbed the

bull by the horns and said, yep, this is an opportunity for me to better reach my students, so we're seeing some positive initial results. >> yeah, i mean, i, of course, agree that teachers should be evaluated, and i fully agree that doing it with, um, seasoned teachers and principals who are aware of the content that the teacher is teaching as well as special needs of the population that the teachers serve are, um, i think, crucial. i think that to the -- this is where we may part ways, kaya. i think to the extent that we're taking into account student test scores in teacher evaluation, i think we need to be very, very careful because there are so many different factors. i fully agree that we, that we, um, you know, need to do something now before we, um, address poverty, that there are things we can do to improve education at the same time. i think if you have a system that focuses too much on test scores and particularly on, um, value-added or test score

improvements, your basically -- >> so what else would you include? >> well, you would include the ability to work with students in, um, to do well in portfolio -- >> how do you gauge that? >> by the same way, using the teacher, peer and principal evaluation. but you just wouldn't rely on the toast -- the test scores -- >> i don't think there is an evaluation system out there right now that just relies on test scores. >> sure. >> it's the complete piece. but here's what i don't want to let up on. we have, when i got to d.c. public schools in 2007, 98% of our teachers were rated as meeting or exceeding expectations, and only 8% of our young people were reading at grade level. so to ignore that, right, and continue to say that these teachers are doing a good job when our children are not doing a good job is disingenuous. so i think what we are all trying to do, districts and states all over the country are grappling with how to use

student achievement data. but we're at a point where we recognize you cannot say teachers are good and their kids are not performing. we have to strike a balance which is why it has to be, we call it a pie, but there are lots of different slices to the pie that tell you whether a teacher is performing or not. but student achievement has to be one of them. test score's not the only way to measure them, but it has to be part of the pie. >> just a quick add-on. i think to the extent you're looking at student achievement in other ways, i think that's good. and i think in some school districts or some states like new york where even if you theoretically are looking at a variety of factors in addition to test scores, you often have a situation where the test scores can be the determining factor. and that, i think, is where -- what i think is really judging the teacher base on the quality of the incoming students' scores as opposed to the work that they're doing. >> i don't know whether you agree or not, but the elected

officials, particularly the governors, would say that they were a great catalyst to this movement from discussion about the state of education in the 1980s and moving into the administration, particularly of clinton and then when governor bush became president and focused on the education thing. they would say this shows there's a need for political involvement. only thing i would say is that it has to be kept in balance. um, there is a role, i believe, for the elected officials, but they -- i don't think that the mayors ought to just be running or the governors running all the school systems. but certainly they ought to provide some incentives to allow these types of things to occur. >> look, i think the -- >> we will leave this program at this point. you can see it again at c-span.org. the u.s. chamber of commerce and the national chamber foundation are hosting their annual aviation summit today to look at the future of the industry and its impact on the global economy. this is just getting underway.

>> those engines have powered the kr-135 fleet as well as the new p8 for the united states navy, and our new be leap engines will continue that tradition. our company is producing flying panels and harnesses for be, again, a wide diversity of platforms that include the 737s, 777s and 787s as well as the v 22s and the chinook ch-47s. wheels and brakes, landing gear, air cell and avionics and saffron engineering as well as power distribution capabilities continue that long tradition of providing support and key technologies to boeing products. venice's long and distinguished career with boeing includes many of the programs that this industry thrives upon to include things as diverse as global

supply and support, future combat systems, joint strike fighter, air traffic management systems. and so dennis' career has spanned everything from basic engineering to program management and leadership and now in his senior executive position as well as the board membership. it's with distinct pleasure and honor that i introduce to you dennis mulen berg. [applause] >> peter, thank you. well, good afternoon. it's a privilege to be here with you and, peter, thank you for that kind introduction and the wonderful partnership that we enjoy between saffron and boeing. thank you for that. and i also would like to thank the u.s. chamber of commerce and the chamber foundation for this event and for the opportunity to be here today and what you're doing for our country. thank you for that. and be, russ, i'd like to acknowledge your well-deserved

recognition today as well. i didn't realize until the introductions that we're fellow iowa minneapolis, so it's good to meet a fellow iowan as well. and, carol, it's good to see you again. we had the opportunity to work together back in the days when i was working air traffic management for boeing. so very good to see all of you and lots of other friends and familiar faces here in the audience. you may be wondering why the leader of boeing's defense business is here today given that this is often a commercially-focused summit. and don't worry, i'm not here to necessarily ask for your help on the defense budget which has its own challenges these days. [laughter] although if you'd like, i'd be happy to take any questions on that a little later. but i'm really here today to talk about where we see some very key, important intersections between what we do in the defense business, in the commercial business and only of our collective interests.

and that's where i'd like to spend my time today. now, on a personal note, the commercial business is very familiar to me. i've had the opportunity to work now for boeing for about 26 years and i've spent a good amount of that time working on the commercial side of our business. it started with our business up in the puget sound area, and that included work on some of our new airplane development programs, such concepts as high-speed civil transport back in the day and also the opportunity in the 2000 time frame to head up engineering and program management for boeing's air traffic management modernization work. and that's a place where i met many of you, and it's so good to reconnect with many of you today. and that air traffic management area is one area that aisle delve into in a little more detail. but i think it's important to recognize that i not only have an appreciation for those challenges, but i think we see a lot of common challenges and a lot of common interest areas between defense and commercial.

in fact, many of the technologies that have made air travel possible, things like radar and gps, arguably, had their origination in defense and space programs that have now transitioned to commercial. there are few questions and specifically four areas i'd hike to touch on briefly today -- like to touch on briefly today. the first is next gen atm and what do we need to do as a community to help make that a reality. next topic is collectively some things that we can do there. thirdly, how do we move biofuels from today's demonstrations to being fully implemented and used in a manner that's productive for industry and our customers, and then lastly the topic of the talent pipeline and how collectively we have a mutual interest there. i think all four of those areas can resonate with all of us in this collective community. it certainly is all connected. and i think sometimes our public

policy is as a country perhaps doesn't recognize that connection, and we have work to do as a country on that front. meanwhile, competing nations around the globe understand it, they understand that those matters are connected. they're not sitting on the sidelines, and they're certainly not trying to fight over turf. instead, they are investing to win with the idea that their future depends on it, and it does. and i would argue that america's future depends on it as well. globally, aviation generates and supports 56 million jobs, and if we want america to win these jobs, we've got work to do. this is a serious economic matter. so i'm here today to suggest some ways that not only can we work together, but we can speak with one voice and that we can partner between industry and government. and when we look at defense or commercial, we face some similar challenges; intensifying competition, economic uncertainty, environmental

constraints, technological innovation, the rise of emerging markets, government regulations and talent mobility. these are some common challenges that we face. we need a strategy as a country to deal with these. as we all do in business today, we have a strategy. i can tell you from boeing defense space and security standpoint we understand we're in a challenging defense environment. it's something that we've anticipated, something where we've been shaping and implementing our strategy over the years and while we have challenges ahead, we understand our game plan. i'm concerned that when we look at america's game plan for aviation, that strategy doesn't really exist. and i'm not talking necessarily about a formal industrial policy, but i am talking about an industrial strategy that's thoughtful and competitive. now, the world is changing, and we need to adapt. otherwise, i fear that america will wake up tomorrow, and we will not be the leaders in

aviation that we are today. so let's take a few minutes to look at those four areas that i mentioned. first of all, nextgen atm. now, back in the summer of 2000 i had the privilege of having a leadership role in boeing's air traffic management effort and in trying to work with the community to bring solutions forward, and i can recall the summer of 2000. and many of you do, and we remember the environment in the commercial flight networks, we remember the capacity pressure in the system, some questions about the reliability of flight times and the reliability of the system overall. and then 9/11 happened. and oversight we went from an emphasis on capacity and efficiency to an emphasis on security. and i will say that over the last decade certainly some improvements and enhancements have been made in the security of the system, and those are needed and still needed. but we haven't made as much progress on capacity and efficiency as we need to make. and this is not so much about

the technology as it is about the political alignment and the will to implement. now, i think we all understand that there are some very significant benefits to nextgen nextgenatm. it will make air travel faster, safer and greener. it represents the greatest opportunity to reduce fuel burn and co2 emissions. greenhouse gases up to 12% by 2025. boeing spends billions of dollars to introduce new product lines like the 787, and the investment that's been made in the 787 to drive efficiency and reduce emissions was significant, and that investment resulted in about a 20% improvement on that front. but with a similar investment in nextgen, the u.s. can conceivably make all airplanes up to 12% more efficient regardless of the individual platform. think about the implications that has to our country and to

our leadership in aviation. now, what's needed to achieve that? i would say, fortunately, after 23 extensions the faa was finally reauthorized, and i know many of you worked hard to make that happen. obviously, that's a positive thing. but this battle that russ referenced on funding and stability in the process, i think, is important. we need stakeholders to aggressively pursue alternative financing rather than traditional appropriations. the administration, we believe, must step forward with an implementation program that makes the business case for investment, and i know that's always been a hurdle in this area. government needs to encourage technologies that boeing and others are already providing that fit with nextgen. these cost government taxpayers next to nothing other than the political will and a focused effort to implement them expeditiously. faa and other air traffic

providers must be open to new ways to relieve geographic bottle necks. this is about finding new and creative procedures that take advantage of technology and nextgen thinking. and lastly, governments around the world need to start providing incentives airport by airport, region by region to be nextgen equipped. this could be the start of a snowball effect around the world that will lead to full implementation. this is too important for us not to accomplish this task. on a somewhat related note, it's the introduction of unmanned systems and aircraft. i know this is a technology area that we're all working on. this is another intersection between defense and commercial. it is something that nextgen technology will allow and another area that will allow america to stay on the leading edge of aviation. i'd like to move now to the second topic, cybersecurity. this is an area where better collaboration is also required. today we are more dependent on

the networks than ever to control everything from energy to finance. damage to those networks could have serious consequences for national security and for our economy. the threats are constantly changing, and a complacent network can quickly become a compromised network. now, as a country we need to invest in protecting our critical infrastructure, and i could argue that the air traffic system is one of the most critical things in that critical enough. imagine if somebody hacked into the system or if airplanes were directed to go somewhere they didn't want to go. imagine the impact on lives and the economic impact if all or portions of the air traffic system were shut down for those kind of cybersecurity reasons. we simply cannot afford that. pilots and controllers need to know that the messages they're receiving, that the information on their displays are awe they wantic and accurate. authentic and accurate. coordinated efforts can help insure the security of flight

plans, and when it comes to cyber cybersecurity, no one of f us has all the answers, and i believe industry can bring innovation, speed and technical expertise. at boeing, certainly, we are invest anything that area, and i know many of my industrial counterparts in this room are also invest anything cybersecurity. we recently opened up a cybersecurity unit here in the capital region where customers can come in and test out new strategies. the government also has an inherent role working with industry in establishing standards to secure critical networks and to coordinate efforts globally. because cyber threats are continuously evolving, this is an area that demands government/industry alignment and partnership be. this, i believe, is a very, very important matter to our national security and economy and one that this group should take on with full effect. the third area i'd like to touch on briefly is biofuels.

commercial aviation has set a goal to reduce its carbon foot print of commercial aviation by 50% in 2050. certainly, a tough goal but a very good goal. on the defense side, the pentagon is working to derive 25% of its energy from renewable resources by 2025. even more aggressively, the u.s. navy has set a goal to secure 50% of its energy from renewable sources by 2020. so the navy is very much pushing the the leading edge here. now, biofuels can help us, help us reach those goals, and when the defense side makes big commitments like the navy has made and like the defense department has made, it can be a down payment on progress on the civilian side. it can help us drive infrastructure and capacity that we all need. now, to be successful biofuels, as we know, require no modification to the platform that they are fueling. boeing aircraft as well as those of our competitors have been involved in biofuel testing.

we've been doing that since 2008. as you recall, last summer we flew a new 747-8 to the paris air show on a biofuel blend. now, in addition to that we see the military moving forward with biofuel implementation as well. in december the secretary of the navy and the secretary of agriculture announced the largest purchase of biofuel in government history. nearly half a million gallons of advanced, drop-in biofuel. in 2010 the navy flew a superhornet, f-18 superhornet on a biofuel blend including the first supersonic flight. we now affectionately call that airplane the green hornet, but it is allowing us to drive implementation of biofuels. the air force has certified the c-17 for unlimited use on hybrid, processed, blended biofuels, and the air force has also tested and certified biofuel as a 50% blend with

regular jet fuel on the f-15, the a-10 and the f-22. and just last year we flew the first apache with our royal netherlands air force customer, the first apache on biofuel making it the first rotocraft in the world to use that fuel system. certainly, advances are being made here, and i would argue by commercial and defense sectors working together, we can move forward more quickly. now i'll move to my final topic of work force and industrial base, and perhaps the most important of the four and one that underscores the other three. now, consider that according to aia -- and i see marian here -- according to aia, america's aerospace and be industrial base is at its smallest since world war ii. not a well known fact. at my company, about 28% of our engineers are eligible to retire today. and looking ahead there, aren't enough young people pursuing engineering and technical degrees.

in fact, only 5% of american bachelor's degrees are in engineering compared to 20% in asia. to me, america's work force is no different than any other element of our industrial base. the u.s. needs a strategy to preserve what we have and to grow what we need when it comes to talent. now, let's start with preserving what america has. certainly, as defense budgets are being cut, we're taking a close look at this and looking for opportunities to share talent across defense and be commercial sectors. for example, at our long beach plant with c-17 engineers, we have revectorred some of them to support commercial development activities on the new 737 max. not all skills are interchangeable, but certainly there are opportunities for making those kind of redeployments. we've done the same thing in our space sector. as the space shuttle program has come to an end, perhaps a premature end, we have moved some of our space engineers to work on commercial aircraft.

in fact, they've had a pivotal role in standing up our new charleston 787 production factory. now, just as we're able to move people around to different programs, that's not the only thing that we can do to retain talent. we need to be thoughtful about how do we build the pipeline for the future. one of the ways we're doing that is by tapping in a rich source of talent and leadership in our military veterans who are returning to civilian life. currently at boeing, about 16% of our employees are veterans. that high percentage doesn't just happen, we actively recruit these experienced veterans because of the leadership skills that they bring. last year we hired more than 1800 veterans and, again, i know many in industry are moving forward with similar initiatives. ..

each year 4 million children enter preschool in the united states. 25% of them will complete algebra in their junior year, 9% will declare a stem nature, only 4.5 is that will graduate with a stem to greek. and only 1.1.7% will graduate with an engineering degree. if you do the math, it is 60-70,000 engineers which is woefully short of what our industry, needs, let alone all engineering categories. we simply have an insufficient

talent public aquatic life cycle approach, that did not look set investing but engaging students, getting them into successful s.t.e.m. related engineering related careers, and helping them achieve career rotations early when they are in industry and government so they can expand and grow and have successful lifecycle careers without a plan for doing that, we will not be successful. so it's important we all chip in here and participate in this process. one good example is the first robotics program. let me give you one data point that i think you will find enjoyable. today, we find if you serve a young people, it's important to note that 84% of american kids in 11-13 age range would rather clean their rooms, eat their vegetables, or go to the dentist than do their math homework. now, having a couple of youngsters of my own, i can vouch for that data.

something to consider. one way we engage kids, get them interested in programs like first robotics. i know many of you were involved in his. this is just one example of a program that is hands-on technology driven program that gets kids interested in their ability to become scientists and engineers and be technology driven. it's open up career options for kids who may have thought technology was not an option for them. i would suggest there are many other programs like this, and we can all invest and have an impact on the pipeline. so in closing, whether it is air traffic management, cybersecurity, biofuels, industrial base and metallic pipeline, these are big challenges. together, we can solve these challenges. our country will only move ahead if we band together in these areas. and together, we can reap the economic security benefits that go with these investments.

now, i have no doubt that we can solve the technical challenges associated with these items. i think more importantly it's a human challenge of realizing we're all in this together, and that's the hardest part to solve, to bring us all together in a political framework and a financial framework that allows us to be successful. we must do it for the sake of our country, for our security, and for our economy. and i believe we can. now, just to wrap up and then i'll be happy to take any questions, i want to take is one final story, and last year i had the privilege of bringing my children to a space shuttle launch. i don't know how many of you of entry space shuttle launch, a few hands out there, if you have been there before my favorite spot to watch it is from an area called nana creek, which is across the water from the pad as close as you can get. at this point my son who was nine years old and my daughter

who was six, had the privilege of watching what was then the last night launch of shuttle discovery. and the timing was just right that the setting sun was still casting a glance on the space station, as they came across the sky, and then just a few minutes after the space station departed, our view, the shuttle lifted off to rhonda v. we stood there watching the shuttle rise up through the night sky. for those of is the of entry night shuttle launch, it is amazing. literally lights up the sky. we watched the shuttle go up and felt the rumble come across the water. and as we were watching it i felt the tug on my sleeve, i looked out and it was my son looking up at me, and he said that, i think i want to be an astronaut. now, that was a great moment. it was a very memorable moment. one because of the present mess of the shuttle and u.s. space program and all of the things that come out of that program,

that also may be reflected understand space shuttle program was coming to an end without a clear path forward on what next on human space exploration. but perhaps most importantly it reminded me of the inspirational nature of what we all do. nothing is more inspiring in the world than what we did in aviation. and it's a way for us to engage that future talent pipeline. and i think we need that same conspired mindset if we are to take on some the challenges that i talked about earlier. and if we're going to retain america's leadership in aviation, as we should, we need that same conspired mindset to have that commitment and that investment as a country. and i think that's fundamentally important to our future. it's an area that we all have confined interest in. it's one we have a collective responsibility for, and i think that responsibility stars with each one of us. so with that, thank you. and i would be happy to take any questions you might have.

[applause] >> all right. any questions out there? we have time for a couple. right there. >> yes. in terms of maintaining u.s. leadership in the aviation field, how concerned should we be about the many u.s. companies that, due to pressure from the chinese government, have had to enter into joint ventures with chinese companies, state-owned enterprises, including sharing their technology and intellectual property? and want as a practical matter do you think the united states could be doing about that?

>> that's a very good question. and, frankly, a balanced approach is required here. you mentioned intellectual property, and in the aviation industry as in many other high-tech industries, our capacity to succeed is built on our intellectual property in retaining that as an advantage. so agreements that are made and joint ventures that are struck need to be done in a mindful way. we also know today that in the cybersecurity realm, that some cases intellectual property is being threatened in that venue. so i think we need to be reflective of that, consider that. on the other hand, it's important to recognize that our aviation industry is a global industry. i can tell you our boeing supply chain is a global supply chain, as is the case with many of our industry counterpart. so we need to be able to complete globally. that includes partnering in china. that includes all ability to bring the best capabilities to our customers because that's

what they didn't. so striking agreements, building global partnerships is part of the success, criteria i believe. and in some cases that gets interpreted as building jobs outside the united states. i would argue that this global partnerships are good for jobs everywhere, and a good for jobs in the united states. so we need to drive that. we need to be leaders on building global partnerships, but it needs to be done in a mindful way for the reasons you mentioned. >> one in the back there. >> since we are facing an engineering shortage, are you prepared to import engineers, say, from asia to help meet the engineering deficiencies at boeing? >> yes, we are. as are many other companies. and as you know, many of our u.s. universities are graduating engineer students from other countries. again, as part of our global partnership networks we need to be able to access, bill talent

around the world. and companies like boeing, our town is not only in the u.s. we do have major operations around the globe and in many cases engineers from other countries to support those operations. so i think that's important for the future. but again let's not interpret that as a win-lose situation. we built the right kind of partnerships and built the right kind of talent pipe on we will create more engineers in the u.s. and more jobs in the u.s. while we are also building talent around the globe. that is very doable as long as we set our mind to it. >> one more question. another one in the back. >> there's one right down here. >> you mentioned the importance of biofuels and the commitment that the military has made to fit. and as you know, we work with boeing and cofounder a lot of

the coalition's out there to promote this. we have this concern, right, that now a number of strong defenders of defense readiness up on the hill don't believe in the aviation biofuels story. i won't name names right now, but you probably know them, too. what can we do to turn that around and we convinced them that's important for u.s. energy security, military security, and certainly for the environment and other issues? >> certainly, this is a coalition building process. i would offer that while there are several some of both audio there are some vocal and strong supporters. and i believe the supporters are growing over time. and that detractors are shrinking over time. and i believe we need to succeed by example here, by implementing pilot programs, by showing that technology is double and we can do it in a drop in mena, that is economically feasible, that if we can build the distribution channels that we know we need, this is a good answer for all of

us, but economically, but for the security sample, it's good from agreeing standpoint. it's the right answer for the longer but i think we need to lead by example and build coalitions over time. it's like the four areas i talk about. we can't be successful on any of these four areas without building a broad and theft of government partnerships that are required to make it a reality. i think biofuels is one of those examples. i do think the vectors move in the right direction. we just as eclectic community need to continue to move forward with force your thank you. with that i will wrap up. thank you very much. [applause] >> well, from the very warm round of applause, obviously you were a big hit, dennis. thank you so much. you and boeing have done so much for us to make this a successful event. and we are most grateful. we are also thrilled that russ meyer was here to receive the

award, and we did not give it to you said you would say those nice things about me, but thank you very much. i really think that we have had a great time sitting here -- >> we will be leaving this conference at this point. we will continue our coverage of the conference on the future of aviation at about 2:15 p.m. we will hear from the seal of delta airlines. be sure to join us later today for an event featuring a pair of afghan ministers. defense and interior ministers of that country will talk about the develop and other military and police forces and the u.s. afghan relationship. you can see that live starting at 2:30 p.m. eastern on our companion network, c-span. we have more from our q&a program coming up later today.

you're watching c-span2 with politics and public affairs. we kasey kahne live coverage of the u.s. senate. on weeknights watched key public policy events. every weekend the latest nonfiction authors and books on book tv. you can see past programs and schedules at our website. you can join in the conversation on social media sites. >> the head of the agency regulating fannie mae and freddie mac on tuesday said that to mortgage holding companies could see benefits them reducing loan amounts from homeowners.

edward demarco said no decisions have been made on principal reduction, and he defended other programs aimed at helping homeowners facing foreclosure. he spoke at the brookings institution here in washington. the panel housing finance experts also discussed the potential impact of the housing market. this is about an hour. >> welcome. i'm the director the economic studies at brookings. i'm pleased to introduce today's keynote speaker, edward demarco, acting director of the federal housing finance agency, or fhfa. director demarco has been in his current job for almost three years now, serving as the regular and conservator of fannie mae and freddie mac. since going into conservatorship in september 2008, these gses have cost taxpayers $185 billion, and counting. previously demarco served as the chief operating officer and

deputy director of the office of federal housing enterprise oversight, a predecessor agency to the fhfa. he also served as assistant deputy commissioner for policy at the social security administration. and prior to that served as director of the office of financial institutions policy at the u.s. department of treasury. where he oversaw analyses of public policy issues involving sponsored enterprises and other financial institutions. before that he worked at the general accountability office. perhaps you are noticing a pattern here. i think it's safe to say that director demarco has dedicated his professional life to public service. this is something he takes very seriously. which leads us back to his present position. as "the wall street journal" editorial page noted yesterday, mr. demarco is the career civil servant who drew the short straw and ended up as the acting chief of the federal housing finance agency. and so director demarco "cq"

today at the center of a controversy, having been labeled the nation's top obstacle to economic recovery, as well as being called america's most dangerous man. with some liberal members of commerce in calling for him to be fired. director demarco also had a tied to brookings but i think is interesting. he was a doctoral student in economics at the university of maryland, and his visor wasn't my colic and hank aaron, a longtime brookings senior fellow. when we asked hank for his recollection of demarco, he said, and was the kind that any father would want his daughter to marry. [laughter] hate when on to say that when you saw at demarco was the name of the person is in the crosshairs of berries groups, he went and checked whether it was the same person he had known, and he thought quote, it would've been hard to have anticipated that a person as quiet, nice and mild as an demarco would ever become the center of the sort of controversy he is in.

i'm sure there are many who share hanks surprise, including perhaps the director himself. getting onto the program, director demarco will speak and then my codirector in economic studies, ted gayer, will moderate a question and answer session, they will have a panel discussion at the principal reduction issue featuring several experts in the housing finance a. with that i'm going to let director demarco take it away. [applause] >> good morning, everyone. it really is an honor to be here

today. i'd like to thank karen for that introduction and welcome. it is a particular privilege for me to have hank aaron herr this morning -- hank aaron here this morning. i'm very grateful to him for all the support and guidance he gave me, and reflecting on what karen said, i can't wait to be done it and give him a call my wife and tell her how lucky she is. [laughter] over the past six years, many efforts have been launched by the federal government to s.t.e.m. the losses arising from the housing crisis. and to keep people in their homes. some programs have worked better than others. almost all of them require trial and error, and were more difficult to actually implement than many people had expected. as conservator of fannie mae and

freddie mac, the federal housing finance agency has been deeply involved in many of these efforts, and we have seen our share of successes and missteps. today we find ourselves in the midst of a national debate regarding mortgage principal forgiveness. with homeowners come the housing market and a taxpayer, but he does or by providing outright forgiveness of mortgage debt for certain homeowners who currently own more on their mortgage than their house is worth today. i am grateful to the brookings institution for this opportunity to offer some perspective on this debate, and to provide some preliminary findings from fhfa's most recent analysis of this issue. i will not be announcing any conclusions today. our work is not yet complete. but in view of the state of the public policy debate on this subject, i am pleased to have this venue to enhance the public understanding of this difficult

question, and to explain how fhfa has approached the matter. brookings institution's reputation is a home for thoughtful policy analysis and debate of challenging public policy questions, makes this a most appropriate setting for this endeavor. typically when i begin a speech about fannie mae and freddie mac, or the enterprises as i will refer to them, i set the context by reviewing fhfa's legal responsibilities as conservator. i do so because i believe it is essential for people to understand that congress considers the objectives it wanted fhfa to pursue as conservator. these objectives may not be easy to me, but they are clear. fhfa's job is to preserve and conserve the assets of the enterprises, and in the current state, that translates directly into minimizing taxpayer losses. we are also charged with ensuring stability and liquidity in housing finance, and

maximizing assistance to homeowners. today, however, i want to set the context for my remarks in a different way. i'd like to begin with a few words on the human element of this housing crisis. throughout this crisis each of us know of rf heard about any individual stories of homes lost through foreclosure. one cannot help but have sympathy for those that suffered such misfortune. and surely know what to look at the dislocations in the housing market and not feel frustration at how sony people and institutions failed us, whether through incompetence, indifference, or outright greater fraud. yet we are also blessed in this country with people are institutions who care, or strongly motivated to find solutions. the staff that fhfa has worked tirelessly since the enterprises were placed into conservatorship to seek meaningful, effective responses to the housing crisis.

with the staffs at fannie mae and freddie mac, at the treasury department and hud, and newest financial service companies, fhfa has sought to develop and improve on loan modification and loan refinance programs that bring meaningful options to struggling homeowners who want to stay in their homes. in a moment i will describe these efforts and the progress to date. we know we have much more to do in this area, and a strategic plan for conservatorship that we submit to congress in february identifies that work is one of our three strategic goals. there's another human element in the story that does not seem to receive much attention. clearly, many households got overextended financially. some achaemenid debts they couldn't afford when hours or wages were cut, or jobs were lost. others withdrew equity from their homes as house prices soared. others bought houses at the peak of the market, often with little money down, perhaps in the

belief house prices will continue to climb. get their other americans who did not do these things. there are families that did not move up to that larger house because they were not comfortable taking the risk. perhaps they had to save for college or retirement and did not want to invest that much in housing. and there are people working multiple jobs or cutting back on the family budget in many ways to continue making their mortgage payments through these tough times. many of these families are themselves underwater on their mortgage, even though they may have made a sizable down payment. whichever of these categories any particular homeowner falls into, the decline in house prices over the last few years has reduced the housing wealth of all homeowners. federal reserve assessment from the end of 2005 to the end of last year, the decline in housing wealth amounts to some $7 trillion. six years into this housing

downturn, the losses versus. the debate continues about how we as a society are going to allocate the losses that remain. asking hard questions in this debate does not make one and feeling about the personal plight this situation has created for so many. indeed, the majority of those most hurt by this housing crisis did nothing wrong. they were playing by the rules but they've been the victims of timing, or circumstance, or poor judgment. in short, the human element in this unfortunate episode in our country's economic history stands out and our attention. virtually every homeowner in the country has suffered a loss. that doesn't make the answers any easier. it imposes a deeper responsible on policymakers to win all these factors in seeking solutions. including the long-term impact on mortgage rates and credit availability of the actions we may take today. but this is the backdrop. my goal today is to answer two questions. what do the enterprises due to

assist borrowers through these troubled times in housing? and how has fhfa ss printable forgiveness as an option for assisting troubled borrowers? so let's begin with borrowers assistance efforts. some critics have concluded that fhfa's refusal to allow principal forgiveness raises questions as to the agencies and the enterprises commitment to helping borrowers stay in their home. to put the principal forgiveness discussion in context i think it is useful to start by reviewing the enterprises current borrowers assistance programs. fannie mae and freddie mac have an array of foreclosure prevention programs for borrowers that are delinquent or in imminent default, most of which allow the troubled borrower to stay in their home. for those who are current on their mortgage, refinance opportunities allow borrowers to lower the monthly payment or shorten the term of their mortgage. the primary focus of the enterprises foreclosure prevention programs is on

providing borrowers the opportunity to obtain an affordable mortgage payment for borrowers who have the ability and the willingness to make a monthly mortgage payment. let's look more closely at the foreclosure prevention efforts. i'll start with home retention options, which loan modifications principle approach. the enterprises current loan modification programs are designed to homeowners who are in default and those who are at imminent risk of default. now let me say, we will be posted on the website a lengthier version of the remarks that i will be making this morning. and they go into greater detail about this and some of the other figures and tables that i will be using in this presentation. so i will try to summarize some of that as we go along. with his chart shows is that for troubled borrower seeking a loan modification, the mortgage servicer the first work through

with a borrowed whether they're eligible for and can benefit from the hamp or home affordable refinance program modification. and his chart shows the order of the steps that are taken to reduce the monthly borrower, the borrowers monthly mortgage payment down to 31% of their current gross monthly income. some borrowers are not eligible for or can't benefit from the hemp mod and fannie and freddie have the own proprietary modifications or standard mod, answer the second second column works through that modification approach as well. but again the idea is to get them into an informal monthly mortgage been. you will know in these because they both talk about for bearing on principle. with a principal forbearance modification, a portion of the loan principal amount is set aside. these are the underwater portion. the homeowner does not pay interest on that portion of the

loan. this means the lender allows the homeowner to defer payment on a portion of the principal until they sell their home or later refinance the home. and during this period of april they're paying no interest. this approach allows the enterprises to reduce the borrowers monthly payment while avoiding an actual principal right off. interestingly, this is the same approach used in many government guaranteed loan programs, including the fha program. enterprises also offer temperate assistance because a loan modification is not always the best solution. for someone who loses their job, has a medical emergency, or faces some other short-term issue, a loan mod not necessarily best. in such cases and and freddie offer payment forbearance plans that allow a borrower to make no or only partial payments for a period of time. the enterprises also offer repayment plans for borrowers who fall temporarily behind and

just need an opportunity to get caught up and back on track. since the start of the conservatorships in late 2008, fannie and freddie have entered into more than 660,000 such plans. this slide shows their are also non-retention options. most troubled borrowers should qualify for home retention option if they have the ability and the desire to stay in their home. but if the borrower does not want to remain in their home, or his experience to permit a significant loss of income that makes continued homeownership in feasible, the service or is obligated to consider the borrower for a short sale, a deed in lieu, rad for lease. of these short sales are the most common. in a short step from an enterprise agrees to allow the borrower to sell the home at an arms length transaction and accept the payment, the proceeds as payment to the debt.

importantly, the unpaid balance becomes forgiven principle to the borrower. fannie and freddie have completed more than 300,000 such home forfeiture actions since conservatorship. so in short, fannie and freddie's instructions to mortgage services are clear. only after all these home retention and home foreclosure for future options have been exhausted, should he servicer pursue foreclosure. so, let's turn to the results. while mortgages on by other financial institutions are held in private labeled mortgage-backed securities have a much harder language he rate than those owned or guaranteed by the enterprises, the enterprises have been leading national foreclosure prevention efforts. fannie mae and freddie mac own or guarantee 60% of the mortgages outstanding, but they account for only 29% of seriously delinquent loans. even though these other market participants then holding 71% of seriously delinquent loans, and

and freddie account for more than half of all hamp permanent modification. between hamp and their own proprietary loan mods, the enterprises have completed 1.1 million loan modifications since entering conservatorship. not only are the enterprises leading efforts in concluding loan modifications, the performance of these modifications has been better than that for most other market participants, and i would have probably better than most analysts had expected. this chart here shows the various stages after modification, what the redefault rate on the loan modifications have been. while there are many issues involved in the decision on whether the enterprises should employ principal reduction that i will discuss later, data on loan modification from the enterprises shows that performance on loan mods is not strongly related to current ltv.

so take a look at this slide. while not a definitive analysis, current ltv loan-to-value has a strong effect, we would expect that the more underwater the borrower is, the higher the redefault rate would be. however, fannie mae data that we present in this slide shows the performance on modified loans varies, did not very much at all across the loan to value ratio. so as you can see in this chart, looking at the current loan-to-value ratio at the time of modification, even for those deeply, deeply underwater, the reader from which rates on these loan mods has been about the same. so what this tells us, that what matters most here is that the performance on loan modifications seem to be more a function of the payment change to the borrower rather than the loan to value. this slide is showing that the

greater the payment decrease, not the borrower gets, the better the reperformance rate on the modification. collectively, these efforts have made a meaningful impact on reducing foreclosures. since conservatorship, the enterprises have completed more loan modifications than foreclosures, and adding all of the foreclosure prevention actions to the loan mods totals to some 2.1 million foreclosure prevention actions the enterprises have taken, which is more than twice the number of foreclosures that they have completed during the same period. enterprises also offer borrower assistance for those who are current on their loans. working with the treasury department and enterprise, fhfa develop the home of fort will refinance program, exclusive to enterprise owned mortgages, harp

allows underwater borrowers a path to refinance the mortgage without attaining new mortgage insurance or some other credit enhancement as would normally be required. since april of '09 the enterprises have acquired 10 million refinance mortgages, of which more than 1 million were harp loans. still, these harp results fell short of what we believe we could achieve. consequently, fhfa engage with fannie and freddie, treasury department and the wide array of market participants to identify and resolve impediments to the program. changes were made to the program took effect last december and already many of the largest lenders in the country are seeing tremendous homeowner interest in this revised h.a.r.p. program, and we expect the blog of h.a.r.p. loans to be increasing in the near future. let me turn now to principal forgiveness. in the original hamp program,

principal forgiveness was always permitted but was rarely used. in 2010, to encourage greater use of principal forgiveness, for loans with loan-to-value ratio's above 115%, treasury supplemented the original hamp program with the hamp principal reduction alternative, or hamp pra. hamp pra is an investor option, not a borrower option, and the hamp program does not require the lender to offer principal reduction, even if the service or determines it to be superior to the standard hamp mod on a net present value basis, or npv bases. the take-up rate on hamp pra has been low. and earlier this year treasury announced its intention to triple its current incentive payments to investors who use this approach. while both the original hamp and hamp pra focus on the borrower's ability to pay, by reducing the monthly mortgage payment to 31%

of the borrower's monthly income, pra also addresses a borrower's willingness to pay by reducing the loan balance. the rationale for the reduction in loan balance is that a borrower whose mortgage exceeds the homes value may not be willing to continue to make monthly mortgage payments. in other words, even though the borrower may achieve an affordable monthly payment, the ability to pay, through a basic hamp mod, the borrower cannot continue to have the willingness to pay because they are deeply underwater. by forgetting principle as part of the hamp modification, the lower loan-to-value ratio should improved a borrower's willingness to pay. in fact historical data has shown that the probability of default correlate with the borrowers current loan-to-value ratio. the higher the ratio, the greater the likelihood of default.

so, by forgetting principal and reducing a borrower's current ltv ratio, the probability of default is reduced and hence, losses are reduced. this type of relationship between default and current ltv supported by previous analytic work in fact is embedded in the hamp net present value model, and thus has been explicitly factored into fhfa's repeated analyses of principal forgiveness. some proponents of principal forgiveness would limit eligibility in various ways, such as precluding it for cash out refinance loans, or loans that have mortgage insurance. there's no consensus on what such limits should be, nor does the hamp pra option impose any beyond the basic hamp eligibility requirements. however fannie and freddie might apply principal forgiveness, it would have to be clear and

transparent, having a basis in the conservatorship mandate and a general acceptance of reasonableness, if not fairness. and you would have to be clearly and publicly described so that more than 8000 mortgage servicers could apply these rules the same way. so let me look first at our previous analysis of principal forgiveness to have the most basic level, the comparison between the loss mitigation strategies of principal forbearance and principal forgiveness is related to who gets the upside. for both principal forbearance and principal forgiveness, if a borrower defaults, enterprises loses the same amount. however, if the borrower performed successfully on the modification, and a principal forbearance mod, the enterprise retains an upside to you for born an outcome but any principal forgiveness modification, the borrower retains the upside.

so that's what this figure tells us here. at the bar of the defaults after the mod, the loss is their italy. if the borrower default sometime later there's been some payment down of principal and house price appreciation, then the investor loss through forbearance could be less than it is through forgiveness. if the borrower is successful as a result of this modification, remains current, stays in home for a while, house prices recover, there's an opportunity for the taxpayers to be repaid that entire principal amount come if forbearance issues, but in case of principal forgiveness, the amount that it was forgiven up front remains a loss. now, this basic relationship between principal forbearance and principal forgiveness, largely explains the result in the analyses at fha dashed fhfa provided to represent cummings in gmu. before fully described in the early analysis, one key point is

worth reiterating. in and ask them point principal forgiveness involves more than just looking at in tv resulted at a minimum, fhfa would have to consider the operational costs of implementing the program and the borrower incentives effects from the program, given the three quarters of enterprise deeply underwater borrowers today are still current on their mortgage. in the analysis we published in january, we did not go beyond the npv analysis as the results did not indicate the principal forgiveness would produce superior results to principal forbearance. so now let's turn to the latest change to the hamp program, the triple hamp payment and senator fhfa is still in the process of analyzing whether the enterprises will offer principal forgiveness as part of hamp, with the triple incentives provided by treasury.

this morning i will provide some preliminary findings from refreshing our earlier analysis, incorporating the triple incentives and altering our model works based on the critiques that are previously worked -- previous work has received. in considering principal forgiveness as a loss mitigation tool, besides the npv impact, we also need to consider operational costs and borrower incentives effects. now, questions were raised about the methodology fhfa employed in his earlier analysis. to address these concerns we have made the following adjustments. we have lowered a delinquent borrowers fica scores, or credit scores, by 100 points to better reflect the current credit standing of the borrower rather than where they were at the time and on which version you. we have raised illegal bars ratios, those that were below

45% have been set at 45%, and those above 45% have not been adjusted. this time around we have applied zip code level rather than state level house price index is to estimate what the current loan-to-value ratio of the mortgage is. rather than doing the analysis as simply forbearance only versus forgiveness only, this time around we use the original, we use the full hamp pra and regular hamp waterfall to work through with the actual payment to the borrower would be. and again we've incorporated the triple incentive payment that would come to fannie and freddie from doing principal reduction. in addition, the original analysis that reproduced considered all enterprise loans that a current loan-to-value above 150%, not just the delinquent borrowers. this time to provide an estimate of potential hamp bar work pool,

the analysis, i'm going to talk about here, limits the analysis to those borrowers that are deeply underwater, so above 150% loan to value, and are delinquent on their mortgage today. we did allow for some portion of those who are still current today to roll into delinquency. so we did was we assumed 5% of the enterprises bar, deeply underwater borrowers who are current on their mortgage, we assumed 5% of them will roll into, becoming to liquid and then being considered for a loan mod. this wasn't randomly decided, the 5%. 5% is actually the roll rate we saw from the end of december 2010 to the middle of 2011. him so let's look at some of the results are. this slide shows that the enterprise losses on these loans are expected to be almost

$64 billion if they are not modified, but went through foreclosure. so you can see in the two columns and 63.7. now, if we do principle for parents, the model results tell us that the losses on these loans would be 55.5 to conduct. be if we use the hamp principal reduction alternative, the losses would be $53.7 billion to fannie and freddie. hands, in this analysis principal reduction is better for the enterprises, that is, it reduces the enterprises losses by $1.7 billion. now, the total potential incentive payments from the treasury to the enterprises in this analysis would be nine and a half billion dollars.

but expected incented payments that would actually be paid is much less. it would be $3.8 billion. that's the bottom of the last column. the reason for this difference is that the hamp model allows for and predicts that a good number of the borrowers that can get this loan modification are still going to default anyway. and if they default anyway, not all of these incented payments would actually get paid because the incentive payments from treasury are paid out over several years. so in summary, on just a net present value basis, this updated analysis shows a positive benefit to the enterprises, but $1.7 billion, and treasury incentive payments to the enterprises of $3.8 billion. which would imply a net cost to the taxpayer of to .1 billion. this does not account for any offsetting benefits in terms of greater of housing markets about if principal reduction reduces

total foreclosures relative to doing a standard hamp market by the benefit is difficult to quantify. as i've noted, the npv results alone are not the sole basis for the decision on whether the enterprises should pursue principal forgiveness. one factor that needs to be considered is the borrower incentives effects. that means will some% of borrowers who today are deeply underwater but current on their mortgage be encouraged to either claim a hardship or actually go delinquent in an attempt to capture the benefits of principal forgiveness. this is a particular concern for the enterprises because unlike other mortgage market participants that can pick and choose where principal forgiveness makes sense, the enterprises must develop a program to be implemented the same way by more than 1000 fellow servicers but in addition, the enterprises will have to publicly announce this program in borrower awareness of

the possibility of receiving a principal reduction modification will be heightened among enterprise borrowers. so as opposed to more targeted efforts of individual lenders, or the current capacity of the hamp process, there's a greater possibility that borrower incentives effects would take place on an enterprisewide principal forgiveness program. now, it's difficult to model these borrower incentives effects with any precision, what we can do is give a sense of how many current borrowers would have to successfully become strategic modifiers for this npv economic benefits provided by the treasury incentives to be a limited. in this context, the strategic modifiers would be a bar with either claims a financial hardship, or mrs. two consecutive mortgage payments in an attempt to qualify for hamp and obtaining principal forgiveness. this table provides some sense of the results.

if principal reduction was successfully done on all 691,000 borrowers that i talked about a few slides ago, the enterprises would need to have 90,000 additional borrowers strategically modify for that to wipe out benefit of receiving the treasury incentive payment. but that's unlikely. will not give 100% to pull through on loan mods offering principal forgiveness. suppose we were successful on half of the 691,000. we would need roughly 50,000 strategic modifiers. and if we only had a corder poulter with principal forgiveness, then we would need only 20,000 current borrowers to strategically modify in order to wipe out the benefit to the enterprises of the incentive payment. and keep in mind in this, that the enterprises have about

2 million deeply underwater borrowers today who are current on their loan. finally, in considering whether the enterprises should adopt it for forgiveness under hamp, fhfa must also consider operation cost. direct operation cost would focus primera on technology modifications and improvements. we are still developing those cause but they are not trivial. they would be other more indirect cause. these include the cost for launched a new program, including the developers of guides to and training for mortgage servicers. the indirect costs also include the opportunity costs of converting existing resources at fannie and freddie for other loss mitigation activities, or from some of the activities announced in the strategic plan. all of these cost factors would have to be carefully considered in coming to a decision to employ principal forgiveness or not.

in closing, let me try to summarize all of this into a handful of conclusions and observations. the issue before us is not about whether fannie mae and freddie mac provide support to families having trouble making their mortgage payment. clearly, they already do, and it remains fhfa's and enterprises collective objective to do so. as fhfa makes a decision on whether the enterprises should offer principal forgiveness with the hamp triple incentives, we will look to the issues i have described in the net present value impact, the borrower incentives effects, and operational costs. those are the issues within our responsibility as conservator of the enterprises. whether fannie mae and freddie mac forgive principle or not, the universe of enterprise borrowers potentially eligible for a hamp principal reduction is well less than 1 million households, or a fraction of the

estimated 11 million underwater borrowers in the country today. this is not about some huge difference making program that will rescue the housing market. it is a debate about which tools at the margin better balance to goals. maximizing the assistance to several hundred thousand homeowners, while minimizing further costs to all other homeowners and taxpayers. the anticipated benefit of principal forgiveness is that by reducing foreclosures relative to other modification types, enterprise losses would be lowered and house prices would stabilize faster, thereby producing broader benefits to all market participants. a far larger group of underwater borrowers who, today, have remained faithful to paying their mortgage obligations are the much greater contingent risk to housing markets and to taxpayers. encouraging their continued success could have a greater impact on the ultimate recovery

of housing markets, and cost to the taxpayers, then the debate over which modification approach offered troubled borrowers is preferable. a key risk and principal forgiveness targeting to delinquent borrowers is the incentive created for some portion of the current borrower population to cease paying in search of a principal forgiveness modification. in closing, the population of underwater borrowers, current and delinquent, remains a creed under a key risk for fannie and freddie, for taxpayers, and for the housing market. there may still be improvements to current efforts that can mitigate this risk in a cost effective way. and i want to conclude by saying fhfa remains committed to working with the administration and with congress on these difficult questions. because we recognize we all have a shared objective, preventing foreclosures, minimizing taxpayer losses, and bring a

greater measure of stability to housing markets across the country. thanks very much for having me today. [applause] >> well, first let me thank you for coming, and we share with you the ambition to try and a form the basic debate. i think we're good panel set up to comment further i wanted to start, you mentioned today as you suggest he do everything you give a speech he talked about your legal responsibilities. and a key question i think for a new analysis, you alluded to it in your sample on tv analysis

there is how much is the payments change the equation. and in the role of your legal responsibility, do you do the cost of these treasuries and senate dems also payments from the taxpayer. is this viewed as a cost to your analysis or is this money coming from another source and, therefore, if it's enough to fill the hole in the principal reduction worth it, in some sense, that's not your will, that's not your problem that's a different how taxpayer money and so, therefore, it's not a part of the analysis? >> we are approaching it is as our responsibility to conserve assets of the taxpayer, and so we're looking at what the cost would be fannie and freddie. they can't help us but to be aware that we are conserving assets on behalf of the american taxpayer. so we engage a principal forgiveness because there's money being taken from another taxpayer pocket, we are trying to provide a transparency, you

know, that is the case. that light may be in fannie and freddie's losses lawyer, if it makes the overall profit to the taxpayer higher, trying to provide clarity to that point, we recognize that congress gave us a responsibility, and a mandate, and it gave the treasury department a different responsibility, and mandate in a different funding source, with t.a.r.p. fund. t.a.r.p. funds up to now has never been used for anything and freddie loan modifications, but the treasury department is determined for the first time this january, that if we were to do principal forgiveness modifications that it was use t.a.r.p. money to fannie and freddie as investors to receive investor incentive payment. so we are trying to provide clarity about how this all works, but our responsibility is to that of conservator. so we how this affects the net present value's, fannie and freddie, but it will also

include these other considerations i touched on in my remarks. what's the cost of doing this and what are the borrower and incentive effects which are very hard to measure. >> understand is that preliminary. you have a sense of wonder final analysis will be? >> i believe this issue needs to be brought to conclusion. there's an awful lot of new information, and obvious to the treasure offer is very new. we are looking to wrap it up in the next few weeks. >> sounds great. also i get on your responsibility of how you see your role, you mentioned affordability i think in previous speeches you talk about the from the point of a loan modification and to make it affordable for the borrower to make their monthly payment. i noticed, i tried to scribble quickly as you were writing, do you distance between ability to pay and willingness to pay.

quite likely that their underwater borrowers out there who might be able to afford their mortgage or maybe if you give them a principal forbearance or lower the rate, they can afford the mortgage but they're so far underwater that they make the decision. you know what? i'm so far underwater i will never make this equity of, i'm not willing to pay. and i think i got the quote. using any principal reduction policy would have to consider i think quote general acceptance of reasonableness, if not fairness. so i can see if they principal reduction is helping those people who can't completely afford the mortgage but they opt not to because their underwater, many people may be that as a big maybe that's why this is a tough thing to pass through legislation, but does that go into calculus and how to do that npv and us and got to go for it? because good from the bottom line point of view, fannie and freddie, if you have a bar what is going to walk let's take a principal reduction and it's better to give them, they'll borrow a principal reduction.

>> be careful about the kind of incentives. >> sure. >> but the point i was trying to make about this being sort of reasonable if not there was the context of the situation for fannie and freddie in determining to offer principal forgiveness and then who it would be offered to is different than individual mortgage servicer who may make this decision with her own book of business. because the individual mortgage servicer can go through their loan book and decide on whatever factors it wants to use, whether to offer the borrower principal forgiveness. there's no regularity to it, in that particular servicer can do his thing in the way it sees best. for fannie and freddie to do this, they are working through over 1000 mortgage servicers and they're doing everything they do has to be much more transparent. so we have the right guidance

that gets published and posted publicly. .. how relative to and individual service r doesn't have to provie any transparency to the borrowers. >> two points. it may make complete sense to

give borrowers a principal forbearance but it is hard to distinguish which is which and what you are saying is putting aside the change of behavior trying to set up rules you can identify one versus the other is difficult. you may be faced with a different system which is they both get it which may not be worth it versus they both get principal -- principal. >> that is part of it. to clarify that on principal forbearance, principal forbearance is in fact taking most call or all of the underwater portion of the borrowers loan principal, setting aside, charging zero interest on it, there is no repayment against it and until the borrowers ultimately foreclose -- goes into foreclosure failing the mod were

successful and stays in the home and eventually sell the house. it takes that forborne principal. down the road if the loan modification is successful then the borrowers retain the obligation to pay off the forborne principal amount. that give the taxpayer the opportunity to share in the borrowers's up side. of the loan modification is successful is the -- allows borrowers to stay in their home and go on. that is great. the borrowers got that opportunity because the taxpayer provided the loan modification but the taxpayer then gets to share in the upside down the road due to principal forbearance. the borrowers is getting the same monthly payment either way. the question is on the upside if over the long term these loan

modifications are successful how do we get the taxpayer to share in that upside success of the borrowers? >> we may hear about this later. another question. is there a way to do shared appreciation model where you give them a reduction in principle but fannie and freddie keep the upside for future price appreciation? >> a fair question being talked about. principal forbearance is a form of share appreciation. it is a less complicated form of it because we don't have to do a new loan instrument and the operational tracking is much simpler. but in fact is a form of shared appreciation say we are setting aside this forborne amount and home prices are covered and home -- borrowers paid down the mortgage. the investors fannie or freddie and get the upside to the forborne amounted every dollar after that vote homeowner gets all that.

is one form of share appreciation. >> you talk about this and it is a useful exercise. even if you did go whole hog on not principal forbearance, how much would it affect the housing market? one thing that building you touched on is the incentive payment has a range and i think the range is incentive payments are lower for people without payment or an foreclosure process for in longer period of time over six months. those incentive payments are pretty small. i think if somebody hasn't paid their mortgage in six months even with principal reduction they may not be recovering and staying in their house. i looked it up after i saw that in the latest number has been other people in the foreclosure process something like 11%. only 11% have paid -- been less

than six months simple last payment. is this something that figures into your analysis? you gave a number of less than $1 million. that is addressing this issue. lot of people might be too far into this that principal reduction might not keep them in the home. >> a couple things on that point. in the preliminary findings we reported, the assumed treasury incentive payment for fannie and freddie were scaled according to the rules of the hamp program. the incentive payment did very on the loan and that was in the model response but the request and of the universe we are talking about, there is a common estimate that there is eleven million under water homeowners in this country. estimating this is pretty difficult because it involves

using house price indexes and all sorts of measurement issues with that. taking that on as it is for fannie and freddie if we use zip code level house price data, fannie and freddie today have about 2.5, two.six million loans that are what we call deeply under water. the current loan to value ratio on these mortgages is 115%. the two.six million. of that, approximately two million of them are paying their mortgage. the group that is delinquent whether it is 60 days or haven't made a mortgage payment in four years is on the order of 500 to 600,000 borrowers. those of the folks we are trying to reach right now with various loss mitigation tools i talked about in my speech but it is the two million who are deeply underwater and current that we are concerned about and that is

why the h.a.r.p. program and changes we made to h.a.r.p. as so important to get these folks encouragement and a better opportunity to continue to pay their mortgage because that is a huge credit risk to us. >> we will take questions. we have time for a few questions. back here. i think there is a microphone. introduce yourself. we are limited on time so keep it to a question. >> i won't stand up. two thirds of all fannie may's loans are under water and half of them have loan values above 125%. hamp mods the temporary and that reduced payments rise again. in places like las vegas where amortization and depreciation may not bring these borrowers back to positive equity in five years do you think the current modifications in these parts of

the country are sustainable? >> fair question. one thing about what happens in five years is the interest rate got lowered to 2%. it starts increasing at that point. if there is principal forbearance it goes for the life of the low. it does not change at the five year marks. what changes is a resetting of the mortgage interest rate and so in the h.a.r.p. -- the hamp program it can be lowered 2% and after five years it will go up a percentage point a year until it hits whatever the current market rate was at the time of the loan mod. that will be on the order of 4-1/2%. there will be in gradual increase in interest rates from 2 for sent to 4%. the other aspect of the loan mod will stay in place including the principal forbearance.

the other thing to observe about the question is clearly when we talk about underwater borrowers these are not randomly or uniform distributed around the country. they're concentrated in certain markets that were particularly experienced at big housing bubble. most of this is concentrated in a handful of states. >> now we go to hank aaron. >> i have an analytical question. to what extent did you subject your calculations to the real-estate equivalent of the bank act stress test? that is to say to what extent did you build into your analysis the possibility that real-estate

markets might perform significantly better or worse than the best guess and if so, what was the sensitivity of the calculations to such variation and a related question to that is you stressed the fact that the interventions you were discussing are relatively marginal in the larger sweep of delinquencies. but the impact of even marginal shifts in behavior of homeowners on the course of the housing market could have feedback effect on various calculations you are trying to make so my question, i am asking you for the error properties of your model. >> fair enough. the model assumes home prices stay flat. there's no appreciation or

depreciation in home prices that are part of this so we don't bank on there being an upside but we are not stressing it on the downside. we do other analyses that do that. as far as assessing an individual borrower for loan modifications that is not part of what we do but the other part, the incentive affects, that is what we are wrestling with today. that work is not complete but the idea that -- on the other hand -- on the one hand if principal -- principal forgiveness achieve its stated objective accelerating stabilization of house prices and the feeling that borrowers are going to continue to say we're not going to see more foreclosures that has a positive feedback effect. on the other hand if principal forgiveness offers borrowers who are deeply underwater to stop

paying their mortgage creates a sense across the country of among all these borrowers who are paying their mortgage that what am i doing this for? i am at 140 or 180 ltv because i have an obligation but i see the government is encouraging activity the other way or provide certain people -- the government is providing an opportunity for certain people who are not paying the ability to get this principal down. there's a feedback effect that is very negative in the housing market and in fact the more we see that kind of behavior of the more that could build upon itself. interestingly the various participants in this debate to end to take one side or the other but in fact both are plausible but to your point these feedback effects in terms of how they may affect borrowers behavior is quite important. >> on the first point do you have any sense as to the

sensitivity of your calculations to possible increase in real-estate prices or on the other hand to a decrease? >> the dissertation defense. [laughter] i don't believe there's anything i can report on that. >> back there? >> thanks. chris arnold, national public radio. could you talk a little bit more about the shared appreciation approach that you described as more complicated when let's say there is $50,000 that get pushed back and no interest paid on it. house prices recover. the homeowner would get $25,000 to the upside. fanny or freddie would get $20,000 to the upside.

there is a disincentive for strategic default because the homeowner would be losing the left side. but enough of an incentive to stay with making the payments because i am not giving up all my upside. the kind of thing we talked about in the hearings and stuff. is that being considered? >> what i was trying to say was a shared appreciation mortgage, we get a principal forgiveness modification and run a shared appreciation agreement that is a new instrument that doesn't exist today. we would have to figure out what the basis for the shared appreciation would be. operationally this would be harder to track over time and the ability to take this loan and probably end up having to be on the balance sheet of fannie and freddie which we are trying to shrink so operationally different complexities and judgments about share appreciation feature. this would all have to be worked

out. the system, the operational system, that are in place today already allow for principal forbearance so there is no additional investment we can do easily and we know how to track and it is one way of doing shared appreciation. the point is the way with principal forbearance we are in effect doing shared appreciation mortgages using technology and tools that are already in place. we don't have to take time to build that and make other decisions. >> does that mean you are not considering a more complicated one or you are running the numbers on it and just saying it is more complicated and would cost more money to implement? >> i have it where i have it. >> let's take one more. >> with all these programs to help delinquent borrowers you went through many of them. to what extent do you think in all the political pressure to help delinquent borrowers to what extent you think mortgages

no longer backed by collateral and what does that imply about the future return to the private sector? >> let me say this about the underwater borrowers and how many -- a lot of private labels. what doesn't get reported widely enough is most americans that are under water on their mortgage they realized they signed a contract and have an obligation to make that payment and in fact they are. so whether we consider it a collateralized loan or how many investors looks at it the real important point is folks that are under water on their mortgage realize they get an obligation to make the mortgage payment and continuing to do so and they should be encouraged to do so. in terms of bringing -- bringing private capital into the market private capital is going to look for a number of things to be

fixed relative to the way the market operated over the past decade. so the strategic plan for conservatorship we set up in congress is one measure of steps that we at fhfa are seeking to take to fix the problems with the mortgage market and we think they are a part of what needs to be done in order to attract private capital back into the mortgage market. private investors are going to look for -- take a lot harder look at mortgage credit risk as they reenter the market. >> i want to thank you again and welcome you. we have a panel following. thank you for being here. [applause] >> we are live at the u.s.

chamber of commerce to continue coverage of the annual aviation summit looking at the future of white. remarks now from the ceo of dell airlines, richard anderson. he is being introduced right now. >> well-organized and aggressive advocate for u.s. airline industry. he has also led our efforts to lay out a clear path to create a more competitive global commercial aviation industry through the adoption of a national airline policy. this is a major issue not just for airlines but for the economic global connectivity of this country. richard is stepping up to business challenges as well as documents. what is less well documented is his commitment to social issues that impact all of our personal lives. this was recognized last year when he was given the humanitarian award by the breast

cancer research foundation. he has been a really good friend and valued counselor. migrate privilege to introduce richard anderson. [applause] >> thanks for having me here today. thank you for that kind introduction. we are modernizing the organization which is what i want to talk about today. this is a great opportunity to do that because everyone here has a significant interest and all of you here are significant fatah leaders --thought leaders in the industry. i'm not here to talk about that. i am here to talk about a

national airline policy. over the course of the last 20 years how many of you remember the miles commission? some of the people here were on it. how about the borgore commissio? the mineta commission? npv? they were also going to be policy changes that help this industry. they all failed. we have the opportunity now under ray lahood's leadership to really adopt knocked an aviation policy but an airline policy for america. it is important because if you look at the last ten years and look at airline profitability by region of the world, asia or latin america or europe or the middle east, in those regions

they have sustained profitability. in the u.s. we haven't. a number of carriers we are into our third year of significant profitability. but we still have an industry that is not in a stable situation given the tumultuous nests -- tumultuousness of the organization. what is it going to take have a real national airline policy in this country? china does. i spent a lot of time there. we have two of three partners, china eastern and china southern. i spent the dozens of trips there. a few aviation as a national asset. one of the most important strategic assets of china is their aviation -- are there

airlines. but we don't seem to have that same sort of vigor in the united states that i see travelling around the world, whether it be mexico and the revitalization of air mexico which is one of the most profitable airlines in the world. or latin america, central america. so the past -- since 9/11 it has been a difficult decade but without government aid we have made enormous strides in this industry. if you look at where delta is and where united is, consolidation has really helped but we have helped ourselves so we have among the most competitive cost structures and most efficient operations in the world but we have to have policies that supports of the industry and it generates more jobs than manufacturing. if you look at the buffet a - --faa data, if you send me your

e-mail address i will send you the presentation because we have done a lot of research on competitiveness around the world. only the agricultural and oil industry have a greater contribution to gdp versus the u.s. airline industry. so our economy is important. it represents 5% of gdp, ten million jobs. this is the airline industry. what are the issues we face? you always hear all of us talk about the tax burden. we pay a greater sales tax on tickets than you paid for gun, alcohol or cigarettes. the tax burden is 20%. now we have a lot of talk in this country that we're going to increase that. that disproportionate burden, all it does is that has to be paid for.

we don't run an institution. is going to be put in the ticket price. the ticket prices will go up. the man will go down and capacity will come out. there is a cause and effect between those two things that is very important. the most remarkable fething is r fares to they -- adjusted for inflation fares are down 40% from where they were at regulation. it continues to be a phenomenal value. the hub and spoke system has brought a level of convenience to travel in this country that we all take for granted. competition policy. we have only recently been able to get a merger approved but boeing gets to by douglas and go

from two manufacturers to one. the g d s system as though from 3 to 2. we end up with two catering companies. and when the engine manufacturers get together on a new piece of equipment they do a joint venture so we'll have one anginal choice. there is consolidation all around the industry and all these people that supply the airlines get 10% margins. so our competition policy delta took two years to get the u.s. air swath swap transaction done between la guardia and dcday. if you look prognosticators over the years that opposed different mergers and look at the data today the data today will tell you this is a supercompetitive industry and will remain a supercompetitive industry for a number of reasons. we have use of entry. number 2, nonstops compete

perfectly and one stops compete perfectly with nonstops but we use antitrust analysis from the ca be days. is the same work even though now we have very different networks. very different forms of distribution. open skies across the world. of very different world than where we were 30 or 40 years ago at the time of the regulation. we ought to have a worldwide scandal in guidelines and rules of our slot controlled airports. we should have a different view of competition policy to allow consolidation. our competitors certainly are around the world. china has three major airlines. europe has three major airlines. latin america is quickly going down to two major airlines or south america going to two major airlines. mexico has one. the point is as you look from

the world what governments are realizing is they have to take care of their flag carriers in order to participate in one of the most important sectors in our economy. we got a good look at that the summer before last with the ash cloud and a shutdown because we couldn't operate -- delta couldn't operate 65 flights a day between the u.s. and europe. it is an incredibly important part of commerce so we should have policies that support it. our open skies policies need to be modified to be fair skies. we have in sinss that -- instances of the chicago convention that don't work for us because we don't have a fair trade mechanism in our open skies agreement. so let's take an example.

if the european governments gave airbus $9 billion what do you think would happen? think we would have a trade war? perhaps a wto case filed? we have had that happen in the airline industry. japan airlines was given $8 billion by its government. we don't even think about that. instead we have an open skies negotiation. in the u.s. it is four flights for all of its carriers in the middle of the night and we have a case to distribute those four flights that will land in the middle of the night. we need a component in here that has our government understands the importance of aviation trade. is a massive positive in the balance of trade. we negotiate treaties and the have a fairness mechanism.

we are not advocates on behalf of our industry when we meet other countries that have trade negotiations over aviation. not the way we do under the wto and its predecessor the gap. next gen. great fact for you. delta's block time in 1956 flying between atlanta and washington national in d.c. 6s is the same as it is today on the 757200. our block times haven't changed. i was 1 year-old. our block time hasn't changed at delta between atlanta and d.c.a sins i was one year old. we talk about next gen and we need to make the investment. it hasce i was one year old. we talk about next gen and we

need to make the investment. it has got to be real. remember future area navigation systems? you couldn't fly an airplane and some carriers did. the carrier i worked at i said no. until they demonstrate that the equipment is going to be used in produced value. we need to get it done. we need to get it done in a prompt way. that is the answer to the emissions problem we face in aviation overtime and the way to do that is we could save 10% to 15% fuel burn and emissions by using the technology that many of you have done a great job in this room developing for us but we need the commitment from the manufacturer and from the faa that will be implemented and used. if you think about this whole other panoply, this whole other

panoply of what i call general regulation it is extremely difficult to get a visas to travel to our country. secretary locke before he became an ambassador did a phenomenal job on a travel and tourism committee that a number of us participated on with a whole series of recommendations about how more visa waiver programs, much shorter wait times, many more piece of offices overseas and let's make our lines short when we come in to customs. let's make this a welcoming country. john pistol has done a good job and we're down the road and t.s. a free check to make flying easy for people in this country and easy for people who want to come in to this country and visit

this country. and i think there is going to be a natural -- as the industry evolves away all consumer industries evolve when was the last time you looked at all the options to buy a personal computer or an automobile? more and more merchandising as this industry evolve into a consumer like industry there will be this propensity to regulate more. we should avoid that. let customers decide whether they like to travel on an airline that charges for over headspace. just another product on the market. there is plenty of choice in the market. consumers have more perfect information about their transportation than any other industry in the world because the internet and our internet site and the search engines they have give every consumer virtual shelf space on every single price option availability for

any ticket virtually anywhere in the world anytime. let the consumer decide. they are smart. everyone has an apps. it tells you what to do. so let's avoid the propensity to go in and say the display has to be a certain way or we regulate this or we are going to prohibit certain kinds of activities. i think overall in the industry and i could give you a lot of examples, we have to evolve to where we understand whether the regulation is really adding. the regulation we are imposing an economic regulation or an operating regulation? is it really improving and advancing safety or transparency or a policy that we really like? we file a lot of the same forms we filed with the cab in 78. we need to think about are we adding regulation that works or

matters or is it just more paperwork? i would be remiss given the controversy around x them back to plainly state the case. to plainly state the case. our purpose is narrow. ceo of dell airlines is telling you it really hurts because when you buy an airplane you try to build a model of the 30-year financial and in that mall you got to put the capital cost. when you buy 1 $50 million white body airplane which is what they cost the dismal 150 to $175 million. if you put in your 30 your cash flow $4 million the year for interest over year over 30 years

or $1 million a year for interest every year over a 30 year period, you think that npv is going to change? it is as fundamental as that. our focus is very narrow. we don't object to that kind of financing from manufacturers out side of airplanes. we don't object to that financing on narrow body airplanes but i got to have an answer to the fact that how do i compete against people with a $4 million advantage on january 1st of every year when i start to fly that airplane? that is what happened. i bought two, triple 7s. hard to financial we bought them. a lot better now that we paid down $4 billion in debt since then. he put the airplane in service and you spend $300 million to buy the two airplanes to serve

in the. and a carrier comes in, government sponsored airline and takes you out because their pricing $400 a ticket before you. what would you do those of you in private business? i would love for somebody to give me a good answer to that. i am not trying to be express -- extraporous about this. is hard to see my foreign flag competitors to receive financing are investment grade and among the most profitable airlines in the world on a consistent basis and many of them are my alliance partners selling won't mention them but they tell me what it is like. they love it. we need a narrow answer to how to make up that gap and what we propose is transparency, do

analysis on what the impact is and help us figure out -- i understand what the challenge is but please don't dismiss the challenge i'm telling you we have as largest international airline in the united states. you'll discussion. i am not talking about refineries. just to put everybody on notice. but let me talk about fuel. we don't think the right way in the airline industry about fuel because if you are at fedex or ubs or at less or your local utility company or norfolk southern railroad they have a big fuel component in their business too. but their business model covers

their input costs. 40% of your cost structure you can't just say it is not in your control because then you -- you have given up on free will at that point. we have really been about changing our model to be much better at hedging and buying fuel. last quarter our last published quarter we are at $2.96 a gallon and most of our competitors were 20% to 30% -- 20 to $0.30 higher which is a lot of money when you are talking about jet fuel. a lot of investment in winglets. we just bought 100, 737900s. we are not rely on governments to finance them. we will finance them as a private business normally would and try to pay cash for most of them. we do have to make sure at delta

our pricing and scheduling and capacity planning and distribution cover the cost of fuel. we determined there were three important constituencies that make the airline successful. it is successful 40 or 50 years from now and if we take care of our employees and do a really good job of that last year we distributed over $300 million of profit sharing and shared rewards to rank-and-file employees so every employee got an extra paycheck and we don't think it is a solution in this industry to always seek concessions from your employees but to make them partners in what we are doing to get there. the second is to take care of customers and of the people who give us for $26 billion in capital we have at work and our

airline. and take care of constituencies and build a business model where fuel is an independent variable but dependent variable we will be a more successful enterprise over the long run. that brings me to the conclusion which we will be 5 minutes for questioning because i don't want to have carol shoot me. i thought i would read you the statutory objective of the united states department of transportation. encourage efficient and well-managed air carriers to earn adequate profits and attract capital. promote, encourage and develop viable privately-owned united states air transport industry. at least ensure quality with foreign air carriers for u.s. carriers. eliminate discrimination and

unfair competitive practices faced by united states airlines and foreign air transportation. the law is on the books and i hope we will all bring to bear given the importance of this industry to our communities and the manufacturers here, be all get behind nick and make certain a national airline policy becomes our priority because if you look back over the history we had two great examples in our country of similar transportation industries. the shipping industry which we don't have any more. we don't make ships except military ships in this country. we made a decision that we were not going to be in the maritime industry anymore. we have very few u.s. flag vessels or shipyards any more. it had a significant impact because will rigs are ships.

the oil rigs made in korea and a lot of other places and on the positive side we have a railroad industry. the railroad industry was facing a pretty cataclysmic situation 20 or 25 years ago. actually have one of the pioneers of that era on my board, the chairman and ceo of norfolk southern for years and years and guided his railroad through that. congress decided to pass the staggers act and another act. two important acts that established the national railroad policy in this country and it allowed consolidation so there are two railroad east of the mississippi and two west of the mississippi but we have a list rail rate and highest reliability of any rail systems in the world. i give you a juxtaposition of those too because we have that

opportunity. it is not about grants for aid or any of that. it is just about setting up the right policy structure around united states airline industry to give what its competitors overseas have. a fair shot because we get a fair shot against our foreign flag competitors we win. we win. we win. with that a few questions or am i done? >> you have time for questions. and actually i am going to take advantage of the opportunity and ask the first one. this afternoon mary and blakely is leading a panel on unmanned space flight, on military. it is up panel for which you will not be present. i would like your thoughts on whether or not we are going to see unmanned space flight on commercial airplanes that would

obviously mean fewer pilots. >> not in my lifetime i don't think. when i heard the other folks talking about that on the hat were right before it brought to mind something. this past -- weekend a half ago i get all these e-mails and pages when you run an airline so you are in this constant 24/7 loop about what is going on in world. there were high cross winds and we file lot of 747s over there and they were right at the minimum crosswind so there was near gale force but it kept dropping below. one of our crews was coming from detroit and ms. two approaches and shot an alternate approach into another airport in tokyo. i was glad there were two sr.

747-400 captains. i was proud of how they handled it. that may be for some of these young people whoever the speaker talked about who are video players but i like a couple delta captains up their. >> lee roker would say the same thing. >> i should give points to we for that. where is he? >> he'd better still be here. questions from the floor. does that mean richard answered all of your questions? you are going to keep us on time. thank you so much. absolutely. [applause] >> i should have kept you hear another minute. i see you are a minute early. thank you very much.

more or less. all right. i know that you expected to have a break. i am going to ask as many of you as i can cost -- >> we will leave this conference on the future of aviation at this point. you can see it in its entirety on our web site at c-span.org. this year's student cam competition asked students across the country what part of the constitution was important to them and why. today's third prize winner selected the first amendment. >> no matter what -- >> freedom that people fight for. >> the first amendment means freedom of speech and freedom of

assembly. we are trying to reclaim democracy. democracy really means freedom to a symbol. freedom of speech. i have to be my own lobbyist. we lobby for ourselves and we lobby for everyone else who can't be there. >> without the first amendment we would not be here and people would still -- without any say. they do what they want. coming out here and stand to get the united.

>> reporter: supported no restrictions. or occupy wall street movements. they are coming adding different directions on what but the bottom is they try to express themselves. peaceful assembly. that makes america great. ♪ >> the pilgrims set sail for the new world. left it all for a -- religious oppression where they used their beliefs had been denied by the authorities. so the new world offer them an opportunity for freedom of religion. a chance to express their beliefs in a safe way.

150 years after that the signers of the constitution recognized religious freedom had to be the central part of any structured government in america. religious freedom was adopted as part of the first amendment. >> the first amendment in our constitution is that it provides each citizen in this country with the opportunity to worship as he or she feels moved by his heart and soul. >> this country was founded by individuals who left their countries of origin because they were unhappy with their government and the restrictions imposed on religious life and liberties. they wanted something better. freedom of speech. separation of church and state. these were among my earliest lessons in american civic life. in america we do protect these

differences. we protect a different expressions of faith. will assemble in our various houses of worship to pray, chant, recites sacred scriptures or simply come together in communion and draw together and draw strength as a community. ♪ >> freedom of information is really has any reporter -- important no matter what. it will tell you so much. there are ways you can find out. there are websites and freedom of information that allow you to

ask for certain things like travel records. you really see what someone who represents you, there will be a lot of celebrity and and don't necessarily know what is going on. and tell you why. there aren't really any checks and balances without freedom of the press. >> under some attack because it has cut back and consequently newspapers that used to cover the general assembly are covering the current to cut back on its press representative and no longer has a representative

for the capital and some danger not only from connecticut but the united states as a whole. >> to always know there is information is power. it is a powerful weapon in the hands of a free people. these are the masked live, rips off the bandage and deceit for all to see whether it is facebook or text message and cellphone videos, how rapidly they are unmasking the lies of tyrants. >> documents released through freedom of information act cannot be uploaded on the internets available not just to the person who made the request but the whole world to see.

♪ >> go to studentcam.org to what the winning videos and continue the discussion about the documentary on our facebook and twitter pages. now john nichols of the nation needs a panel on changing the u.s. tax code. participants discussed options including the buffet will which would require millionaires to pay 30% of their income in taxes. during a speech in florida president obama called on congress to pass the buffet will. the senate is expected to hold a procedural vote next week. this is just over 90 minutes.

>> we are going to get started. my name is don gusler of americans for democratic action. i served as secretary of the education fund and it is in that role that i welcome you all here today. very excited about the panel we have put together. i want to hand it over to will rice who is rector of policy and we will get going. >> thanks. my name is will rice, director of program and policy for the americans for democratic action education fund. for those of you who don't know, americans for democratic action is the nation's longest established liberal advocacy

group being founded in 1947 by people like eleanor roosevelt, john kenneth galbraith bleep delivered humphrey and other progressive luminaries. the fund has been holding a series of monthly congressional briefings where we try to bring important national topics to the attention of congressional staffers as well as other interested citizens. this is the latest iteration of that series. this is also part of the commonwealth project which is a joint venture of ada and coffee party. i have a list of people to thank. point director brad bowman. also the office of senator sherrod brown has been able to get as this space and diana

baron was the point person on that. on the house side not to leave them out, amanda ott from the office of the president. she has been very useful, very helpful in publicizing this event internally and externally. then i want to thank our organizational partner in this. united for a fare economy. an excellent group that works on issues of inequality of boston. the fairest, tim sullivan and muhammad ali who helped everything from felicity to the lunch you are eating right now. finally i want to thank the staff and volunteers of a d a which includes the executive director of americans for democratic action, our communications director karen trader, ben wise and mary von u huell

hueller. how to make the tax system fair has been and will be a hotly debated topic this whole election year. with the nation facing record budget deficits at the same time as slow economic growth the question of how to raise the revenue to address those is an extremely urgent one. next monday the senate is going to be considering the so-called buffet will which would raise taxes on wealthy people who have a lot of investment income. earlier this year the house voted on a budget, the ryan budget that moves in the opposite direction. spurred by a phenomenon as divergent as the occupy movement and warren buffett's secretary tax rates the question do should pay how much has come to the floor of the public discussion.

that is why we are here today. we will address this issue with an all-star cast, dream team or any other team you want to use for people who know what they're talking about. assembled here. at the end of their discussion we will accept questions from the audience. we have a handle like the one come around you. if you are watching this remotely on c-span or youstream. you can tweet questions to this address right here at atheyaandfund. if you're watching this on tape you can log on at home. i will turn the program to our moderator john nichols. he is the washington correspondent for the nation magazine. he is also the associate editor of the capital times in wisconsin. he is the author of the just published book uprising: how

wisconsin renewed the politics of protest from madison to wall street. with that we can applaud for everyone i just thank and also welcome mr. nichols. [applause] >> thank you. right up front i want to -- ada education fund and especially will who went out of his way to pull this together and dragoned us into this position and we're very excited because it is rare to have this collection of people together at such a critical moment. the president of the united states and was talking about these issues today. he is out on the road. many political pundits believe framing his whole reelection campaign around many of the issues that we will be discussing today. i think it is incredibly

appropriate and timely for us to be in this position. i think that will must well be one of the more visionary people in america who put us here today. i also want to knows sherrod brown. the senator who arranged for this room. didn't just arrange a room. he also is one of the senators who is more engaged with tax policy than anybody else. ..

wealth should bear its share. amazingly enough the republican party of 1912 adopted some element of that proposal. over the ensuing 100 years the party seems to have wrestled with the issue that it may not have come down in the same place. but a proposal of 100 years ago to remind people this is not a new conversation. we are not arriving at this point without a lot of backup, a lot of history and frankly a lot of frustration. getting fair taxation, getting i.d. of an equitable tax policy to the forefront even of the popular debate is one of the great challenges of our time. we have seen for a variety of reasons to be edging toward a point where that might happen and i give compliments to paul ryan, the house budget committee

chair, because he has for some of these issues and gone to what any people see as extremes but has force folks to talk about policy in a way that they had up to this point. i give president obama credit because president obama has countered a discussion of the buffet rule, which begins, does not end, but begins to address some of these issues. but we are going to go a lot further with the -- in the buffet rule today. today we will try to explain why it is so very hard to get a good riproaring honest debate about tax policy going in america and in our congress. we look at why it is so important to have these debates at a time when the alternative appears to be an austerity discussion that takes us into, taking a part in undermining and perhaps even eliminating social security, medicare and medicaid. we will talk about what ideas could and should be at play at this moment.

we will talk about what our prospects are politically for bringing them into play and we will discuss the fascinating tension of some wealthy americans to suggest that they should pay more taxes. i know. a novel notion which we have some real experts on. i want to begin, i'm going to begin with rebecca thiess who is going to -- before i go to rebecca let me take us run our panel so we let people know a little bit about who they are. bob mcintyre, what the heck are you doing on this panel? >> i have a microphone. >> are making progress. >> i wanted to talk into a microphone, one of my favorite things. i am always at these things. i've been doing this since 1975 and you could argue i'm to blame for everything that is wrong in the world today at least when it comes to taxes.

and just to say that you know people think oh, and this is always going one way and it's always against us. it's not sure. we have had over the years some very amazing victories and we have had some staggering losses. are we better off than we were then? i would say but we certainly have done some good things as well as bad, and i'm looking forward to this year to pushing that rock up closer to the top of the hill before it falls back down on me again. >> and you do this as director of citizens for tax director. >> that is my title. >> you're supposed to throw that in there. you have been banging away at it and we will come back to you in the second and ask you why you haven't had more successes over those 40 years. rebecca. >> hello everybody. thanks for being here become in alice at the economic policy institute and i mostly focus on budget policy with a little bit of tax policy and social security thrown in there.

the things i've been most involved with at epi are putting together numerous budget alternatives which i really enjoy doing. we had a document called investing in america's economy that came out in november of 2010 and basically your ideal budget picture for the next 25 years i think, and then we have also been insisting the progressive progress in putting together their budget alternatives over the last two years. it just came out a few weeks ago and i highly encourage you to check it out. i have spent a good deal of time working on that. >> rebecca thiess is with the economic policy institute and the professional caucus which i think had 76 votes. 78. >> 78, my apologies so a little bit of work there. mike lapham tell us what you have been up to and why you're with us again.

>> i am the responsible of project director at united for a fair economy and that is fair economy.org if you want to look it up on line. but what i do is organize wealthy individual business people and inheritors, investors who are in the top 5% who are in view that the poster children for tax cuts and we get them to say you know, to get into the halls of congress where they are very well represented in to get a different voice to say, we need higher taxes on folks like us. we also tried to get the voices into the media median and into corporate boardrooms for corporate accountability. i would say, we are actually just over the white house and some of our folks were talking with president obama who just gave a speech on why we should have the buffet rule. and i would venture that it might be the only person here who advocate repealing all of the bush tax cuts so we can come back to that. >> we will have a wrestling match on that issue.

[laughter] some of your folks that you have gotten to speak up for raising their taxes include? >> well probably the most famous would be at guy named bill gates senior. his founded this big tech company called microsoft. anybody know about that? he has been a big advocate for the estate tax, and there is a number of others but we have 2000 people have signed on, wealthy people who have signed on in favor of having a strong estate tax. >> thank you mike lapham. dean baker some of the subject you have been working on? >> on the codirector for the center for economic policy and usually i actually haves a different hat on as a macroeconomist i like to do things i tell people there's a big housing bubble that's going to crash and wreck the economy. in other words i'm essentially ignored in washington. it's too early is what i've been told. >> things today that were

already matter many years from now. >> the background area and it is important winston the macroeconomic context and unfortunately people down here make all this fiscal policy and they act as though the macroeconomy doesn't matter and it actually does matter. those of you are old enough to remember back to our balanced budget surpluses at the end of the '90s into thousands, what you should know and probably don't is that is all because we were wrong. i shouldn't say we. the congressional budget office was wrong about the macroeconomic projection. they been right about their macroeconomic projections in 1996 elliott 6% unemployment in 2000 bill clinton would not have had a balanced budget. so an important point there and the other other point i would like to make not quite the macroeconomic context is when we look at our long-run budget deficit and all these people running around chicken little the sky is falling, so health care story. it's the private sector health care. if we don't fix it none of us can make enough gas to pay for.

we have to remember we have to fix the macroeconomy and we have to fix taxes. i will be the big proselytizer for the financial speculation tax, taxing wall street speculation which could wage an awful lot of money but has the very nice effect of increasing the quality and make in the financial sector more efficient by eliminating a lot of waste in the financial sector and eliminating a lot of those high income people. that is the best way to get rid of the top one person is to do it right off the top. if they don't get the inlet we don't have to worry about taxing than. >> dean baker and financial tracks action -- transaction tax and a number of labor groups and even got a reference in the congressional progressive caucus budget. it is in play and i believe john. chuck marr you have been around the capital little bit. talk about what brings you hear.

>> i am chuck marr from the center on budget and priority policy where i work on tax issues. right now obviously the hot topic for us is the ryan budget which hopefully we will get to talk about today. also the whole issue of tax reform which i would like to raise some flags about as well but heading into the real debate this year is what to do about the bush tax cuts. the first step should be, at least the high income wants to start and then the other's. >> elspeth gilmore resource generation. tell us about that. >> hi. i'm one of the codirectors of resource generation and we are national nonprofit that works with people 35 and under to mobilize with wealth, so we have been recently identifying with the 1% and figure out how we can mobilize their resources and their access to actually move towards progressive social change. so recently we have been working on a tax equity campaign and

it's been really exciting to figure out how the one person can speak out in the moment and occupy wall street in the context of what we are all here today to talk about and figure out how the one person can actually say it is in our best interest and especially bring the voices of younger folks and i speak from a personal member of the organization as well as the codirectors so moving my appears to be part of this move in. >> before you move on i want to bring becky and on some history to give us a frame but right at the moment, do you think occupy wall street has played a significant role in bringing tax policy debates more to the forefront? >> absolutely. i think one of the messages i want us to bring today is the way that occupy has been able to shift the national debate and conversation has been huge and we are at a moment when the folks in this room and the people i work with and the people that mike works with and the staffers in congress, people on the hill, have a chance to

take up movement and more but forward and capitalize on that and move with a brought to the forefront into policy. >> thank you elspeth. i think is significant for anybody to bring something to the war front in the tax policy because it's never easy. rebecca you have been working a lot on the history of tax policy and i realize realized at this very moment there are people across america who are thinking i wonder what is on some other channel. it's actually very exciting. you are going to give us a quick history to give us a sense of how important understanding where we came from is in understanding where this debate is today. >> i will run for it rather quickly but we are coming up on the 100th anniversary of the 16th amendment. that his next february. >> the 16th amendment. >> the 16th amendment of course allows the government to put in place the income tax, the federal income tax so a big moment in our nations history. i'm going to go back before that to begin with. we actually had a federal income

tax during the civil war. that was instituted because we needed revenue to help pay for that war. it proved to be highly unpopular and it was done away with in the 1870s. some politicians try to bring it back a few decades later and it was actually found to be unconstitutional. i'm not a constitutional scholar. i cannot explain exactly why it was not constitutional and maybe somebody else or can. >> they said it was communism. >> okay. but as we got through the press of air at the turn-of-the-century more and more people started coming out and in favor of is having an income tax, federal income tax and you saw william howard taft come out in support of one. we saw teddy roosevelt come out in support of that and in inheritance tax. >> for some of the folks who weren't around in the elections of 1912, that was the liberal or the conservative wing of the republican party, both coming

out. >> an interesting note is that both teddy roosevelt and later franklin roosevelt framed a progressive income tax is an issue of fairness. they didn't frame it as we need revenue for x, y and z. obama today is doing the same thing and it's actually an issue of fairness. it's not an issue paying for the war. there are those issues as well but fairness and the income inequality gap is very important as well. with woodrow wilson's election and the 16th amendment and the income tax coming into place, tax rates were immediately raised during world war i to help pay for that war. they came down after world war i and came down significantly from under harding and coolidge. then of course the great depression hit and federal revenues took a really big hit.

we saw fdr like i said, come out not only for america but for actual tax fairness. in 1935 he propose significantly what we might call soaking the rich. he ended up raising tax rates to 79% and i recently read that when he did that he also raised the threshold to $5 million which is $78 million in today's world to go iraq that only john rockefeller paid that tax rate. >> poor guy. >> then we saw world war ii and taxes continue to go up again to help pay for that war. you couldn't do much more on the wealthy. the tax rates were already fairly high so what happened was we saw significant ace broadening. taxes went up significantly during world war ii and then after the war they came down moderately but not as much as you might think. there were years of inflation and also years of soviet

expansion, which do not allow us to cut our military budget very much. we still have high military spending and we couldn't bring taxes down all too much for canady and reagan -- actually canady was assassinated before the tax cut and johnson did that but the president to brought tax rates down. just to wrap up i think it's important to know over the last 40 years really into tax policies we have seen some pretty interesting trends. the first of which following marginal income tax rates. it is to be 91% back around the time of world war ii and they fell to 28% under president reagan and now of course they are at 35%. that was put in place by president george w. bush. we have also seen a decline in the income threshold so it used to be up around 3 million fell

to 1 million in the 50s and now it is at 380,000, so that is the amount of money that is taxed at the top rate. finally we have seen corporate income revenue fall by about half as a share of gdp. corporate profits have not fallen and we have seen a substantial increase in payroll tax rates used to finance social security and medicare. >> thank you nikki. as she went to that history i noticed off mcintyre sometimes rolling his eyes, sometimes nodding, saying i remember that. i told them not to do that. [laughter] but if you have been at this since gerald ford was president. you have seen victories and i think it is important to recognize that tax fairness can win but you have also seen the frustrating battle. give us a sense of where we are at now in a tax fairness fight

and also why it seems to be so very hard to bring these issues to the forefront and to get a real debate on tax fairness? >> well there has been a change in the republican party since the liberal years of ronald reagan and that has been a big difference. reagan you know put through what was possibly the worst tax bill in the history of the united states in 1981. he was advised by people like jack kemp and newt gingrich and arthur laffer, a business professor who has an unfortunately laughable name. reagan was told that if we cut the taxes on the rich people and the corporations it would increase revenue to pay for the defense increase. he believed that because he was a believing type of man. when that didn't work out, a year later when they came to reagan and says we have a big wretched hole and reagan looked

and he said do you mean tip o'neill was right? the speaker of the house at the time, democrat. well, for the next rest of his term reagan raised taxes regularly every year mainly by closing down some of the loopholes he had previously opened up and in 1986 we went a long way to getting rid of tax shelters in the individual side of the tax code in make in the corporate income tax back into what it was supposed to be. that was a very good thing. how did we do it? the stars were aligned maybe that we had a bipartisan congress, a republican senate and a democratic house and a republican president. no interference from the supreme court and the public was energized. i take some credit for that because i was putting out reports regularly about how general electric and most of the other big corporations weren't paying any taxes. we made them pay taxes for a

while. then bikes chained -- are public and party change in the democratic party somewhat lost interest and tax reform and things started to fritter away. but we are now at a point where we are having an interesting debate about who should pay for government and whether we should pay for government or whether we should keep tax breaks for millionaires or whether we should have medicare. that is a nice way to frame it but it's a true story. should we give corporations big tax breaks whether to move jobs offshore or to do what they do anyway? or should we prepare the infrastructure so business can succeed in this country? a lot of business people would prefer the latter but unfortunately the lobbyists are as powerful as some of the companies. we will see. i think the public kind of gets annoyed to hear that general electric and bullying and so many other companies are making these enormous profits and paying nothing in taxes. they might vote for a guy who

says he's going to do something about it and i don't mean that romney who says he is going to do something about it by doing it more negative. is barack obama the guy? >> he does have the buffer rope but is he getting to the point of saying the thing you're talking about? >> we are working on him. what he says he wants to get rid of the loopholes but he wants to use all the money to lower the corporate tax rate because in his vision corporations are paying exactly the perfect amount in taxes right now which is 1.2% of the gdp which is compared to 4% back in the kennedy administration. >> i think we can talk him out of this but we will see. >> mike wright the white house today. >> to me the question is do we want to tax policy that works for the 1% or do we want a tax policy the that works for the 99%? you know and that is part of the problem, we have a tax policy over the past several decades

that is really benefits the top 1% and not only that, their income has gone up in their taxes have gone down. meanwhile we are saying we can't afford to to do stuff like infected education and infrastructure and research on all this stuff. there is this myth out there that the one wealthy person we have to get off of that entrepreneur who does all the work and we have to get government off his back. and then what we say is, everyone who is rich is a small-business person so we have got to keep taxes low on these people otherwise they won't invest and do stuff, right? the reality is, you know, business people don't make business decisions based on the tax rates. i represent a whole bunch of business leaders. >> ran a business for a long time. >> my family was in the paper business for a long time. i was not making a lot of decisions. take one of our responsible members, for 25 years in the

management committee of his company no one ever mentioned the tax rate around that table. it just does not come up in business person after business person will reinforce this. the idea that we have to keep taxes low for capital gains rates low so that people invest is hogwash. and it's being used to undermine our country. it's being used to say, we can afford to do all of these -- to invest in the stuff that made these people return the first-place. >> many of these ideas are outlined in a fine new book. >> i happen to have written a book called the self-made myth it's all in there their and their profiles profiles of great people. self-made myth.org. it is true, is really hurting our country. >> and the concept because i think one of the elements we want to stick on for one minute, the concept of a wealthy person who somehow potentially is going to create jobs or something is going to happen.

>> one person -- >> mitt romney's money in switzerland will somehow do something. >> the one person investing money in the stock market and buying their shares from someone else does not create any new jobs. there was a guy who said i've built big companies but i'm not a job trader. it's the middle-class. we need a strong middle-class otherwise there is nothing to build companies for. >> chuck marr. >> these people talking about these logical ideas. there is something they need to be done. i know chuck that you were senior adviser for budget policy at the national economic council and you antiwar or economic policy adviser to the majority leader and the senate budget committee. i mean i would assume that you are personally responsible for these things not happening. why don't we get do you know, a

realistic debate about tax policy? what are the pressures on congress to prevent us from getting there? >> i think the real debate right now john is what has happened last two decades and before was what happened in the late 1980s was president bush's father, president herber wore offered -- herbert walker bush his no tax pledge he went back on. we had a conservative revolt against that and the whole rise of grover norquist in washington. you basically had one side of the table, the conservative movement has become a sort of a litmus test of against tax. that overtime is morphed into the top priority being taxes on high income people. really for them and anathema and sense of hiring people and paying higher taxes. they always strive to lower taxes so you really have one big part of the debate on one-sided the table is constantly pushing for lower taxes on high-income

people so i think there is a reason why it's difficult. but i think now, as was mentioned, you do have this moment of public opinion where after decades and decades of greater inequality, where you do have incomes at the top rising so sharply and the middle-class working class people becoming wages more segment and more typical, that debate has been almost impossible to avoid and that really has bubbled up. so you have a different public dynamic now and i think you are getting this debate on the buffer rule and i think as you head into the debate over the bush tax cuts, you do have this one side who is very reluctant to give anything on that but the public, there is this debate which i think there is going to be really which side is increasingly siding with hey high income people are doing fine. they did great during the '90s. we don't need to keep doing everything for them and having them more tax cuts and realize that a lot of tax budget

decisions are going to hit working-class people and everyone has to be part of that. >> digging in little bit deeper and one thing i'm working around congress and the white house, is there money in politics component to any of this? >> no. >> well, sure. obviously money is rampant in politics and i would even say to so much money but if you think about the corporate and bob touched on the corporate tax debate. there is there is a big debate right now for whether the united states should say -- whether they should be taxing the romney plan and a lot of congressional plan say we shouldn't have it zero tax rate on foreign profits. which for most average people would not be a good thing. why should we encourage china investments overseas over investments in michigan and ohio? from a company perspective, the multinationals and it is very much in their interest so i think you know we need to have a

debate in it needs to be elevated somewhat because if they could be put in terms of people that could understand and people get engaged we have a better chance. >> is focusing attention. >> that overcomes the lopping pressures i would think is, the other pressures. let me take you in there because one of the things you try to do is to bring some folks into this debate to get attention and to say as wealthy people, we think we should be taxed more and they are not simply saying we are patriots. there is a sense of how you create a civil society come how you create a functional society. talk to me about that for a moment. >> actually building off what mike was saying before, that we want what is good for the 99% and i think building off that point that actually what we are saying and i think what we are all saying here is it's good for

the 100% and it's good for the wealthy as well and terms of building a civil society. but i think in particular the young people i work within the people i talk to every day who are mobilizing around this, we know actually the country want to live in and that we want as we get older and that we want our kids to have is actually one that has public infrastructure and we know there's a safety net we know there is help there, education and the people that are affected by that are not only -- i went to private school so maybe i was in direct impact about my entire community is full of people who are relying on public education. i want my kids to go do a decent public school. i want to not have to be in communities where people are hoarding wealth and not -- and having to live in that scarcity mentality and worry about medical emergencies but actually been a place where there's a corrective net for all of us to have and not only the 99% of the 1% as well.

>> dean baker. >> in addition to saying there is a housing bubble and some concerns that we might want to be looking ahead to, you have been talking for a long time about fair taxation and fair tax policies come about the role of tax policy that it plays in making civil society. if we have a consensus on the panel it's that we might be in a moment where we could do some things. if we recognize that some people in this debate say we shouldn't do any tax reform or we shouldn't do any tax or form that might be -- for people who believe we are at the moment and there things we should do what are some of the initial steps we have to take, things we should be talking about right now and we can build that out to some of the bigger things. >> the most obvious thing is very much on the table as people mention the bush tax cuts expiring at the midyear and i think it should be a no-brainer

that we want to take back the bush tax cuts for the top 2% so that raises the top tax rate from 39.6% and for people who forget, back in the 1990s the economy did pretty well when those job creators pay the higher tax rate. i don't see any big harman racing at somewhat higher, 43, 44, 45%. hard to see that in a problem. a couple of the other things to my mind and again that people alluded to as common sense, we created this big gap in tax rates on capital gains income and dividend income and ordinary income. this is why you have the buffer rule because you could have the buffets of the rule get most of their all of their income from dividends. people work for living a living are from paying 25%. if you got rid of most of that gap and remember back in the 86 tax reform ronald reagan make it beautiful speech berkeley square going to people make money the old-fashioned way by working and investing. one of the things i did was that creates the same tax rates for

capital gains, dividends and ordinary income. that means you have this whole industry hiding income as capital gains dividends and other types of incomes. it's a total waste and people are cheating the government. that would be a great thing to go back that way. reagan was right there. >> reagan is coming out very well. >> we are all for ronald reagan. there are a few other things, people talk about deductions in the tax code. they want to get rid of the market interest reduction, that would be a tough one but what you can do and get support from people across the board or at least economists across the board, you can cap data make it 40,000. the government doesn't have to subsidize summoned to get it 900 million-dollar home. cap and affordable house in dollars and that would be a great way to make some money. a proposal present a bomb at a couple of years ago was a budget proposal to cap the rate at which you take deductions so we could have wealthy people getting big deductions for

charities that they would only be able to take the deduction at a 20% rate come the same as what a middle-class person would make. a good thing to do in my mind. the last thing i will mention that does not forget talk about but would be a really good idea, we currently hold about $3 trillion in assets buying up mortgage-backed securities, government owns. when they hold those assets, guess what happens to the money? it gets paid back to the treasury. the treasury that $80 billion from the fed last year. i would like to see that they continue to hold that money. to the arithmetic and that is 800 billion over the decade. that that is not in the game plan. the fed plans to not hold that money and not continue to have that. the monetary policy won't go into it but i point out there's a lot of money potentially there. in washington they have this fear that the fed is the church and they believe in separation of church and state, sometimes. you don't have to argue about the separation of church and

state. decreased of congress, congress can't tell if and what to do. to my mind that's a good way to get $800 billion in the budget. >> we are talking real money there. >> it's over a decade. >> let me give you a quick -- here about financial transactions. >> glad you asked that question. financial transactions is a speculation tactic. it's getting a lot of play in europe and in fact it's very likely france already has put into law that they're going to have a financial speculation tax and many other countries in the european union are looking in the same direction. germany most importantly. they should sound strange to people. i races to be blanco you could possibly do that. you have to cover the stupid people in england because they think they are getting the equivalent of 30 or $40 billion a year in revving up. they are not taxing futures, just dock traits. my calculations are that you

have a rope us tax and you can get as much as $150 billion a year. the tax we mentioned earlier as proposed by senator harkin, tom harkin from iowa and peter defazio from oregon in the house. that was scored by the joint tax committee as raising $400 billion of the next decade. that's a very low tax. the taxes paid exclusively by wall street types engage in heavy trading. they will all say oh your 401(k), you won't even notice. anyone who notices is probably doing something they should be doing. it is a great tax and it would be great to see if we could make headway on that. >> bob. we are hearing a lot about personal taxes. a little bit about speculation? corporate taxes, anything we should be talking about there? >> that is what we should boast we be talking about in tax reform. on the individual side, it's kind of complicated and too many things to the internal revenue service that the mortgage interest and action in the charitable deduction and so

forth, they are not undermining taxpayer intended to go on the other hand on the corporate side it's an absolute mess. on average, the companies are paying half of what they are supposed to pay but some of them pay full. >> would the made up what they're supposed to pay? they are not paying its? >> on average, that's right but some of them are paying 35% in some of them are paying absolutely nothing. that is kind of a weird way even to run a -- compared to a tax system. it is who has the lobbying power in washington so if you are ge and you hire hundreds of lobbyists and so forth well, you don't pay taxes. if you are a retail store, you probably do pay 35%. i have no problem with a retail stores paying 35%. i just think ge ought to also. >> doesn't make it a little bit more fair? >> if you close the loopholes that are allowing this have to

go on you could make close to two chilean dollars over a decade. that is a lot of money. it's more than anybody has talked about raising in taxes even by their phony baloney standards when they are cutting taxes but say they are raising taxes. way more than simpson-bowles and way more than a president has ever talked about. way more than anybody and it all comes from making these guys pay their rates that they are supposed to pay. >> in the context of the citizens united ruling by the u.s. supreme court and a number of related rulings which seem to suggest corporations get into the political game and seek election results, how realistic would it be to suggest that we are going to be able to get a tax fairness with regards to corporations? is that a political challenge more than a legislative challenge? >> how realistic was it to think ronald reagan would sign onto a program that was a lot like what i just described? it's going to take some effort.

it's going to take leadership. we need the president of the united states to start being a little bolder on issue but if he gets there, i think the american public will be with him and congress despite the fact that they are frightened to death of corporate money being used against them, they are even more frightened of voters not liking them and throwing them out of office. >> mike, we have touched on a lot of things and the estate tax would take me down that road for a second. don't go all the way but go as far as -- >> just for the record, before we run out of time, i suggested rolling back all the bush tax cuts not because they think we shouldn't have some of those in place for lower income folks, but because we believe in united for a fair economy is that is the way we are going to get them. we are not ever going to get agreement on where we should draw the line and if we get rid of them all and go back to 2001 and start from there and give tax cuts to people who really need them and it will put it

back in the economy. just for the record, i put that in. the is that -- estate tax, united for a fair economy have been -- bill gates senior signed on with us and basically the estate tax has been weakened over 10 years and it is not to the point where the exemption is $5 million per person, 10 million per couple. we think that is much higher than it in the city before you start paying dollar one in the estate tax. the mcdermott legislation now says 1 million or 2 million per couple. >> congressman jim mcdermott? >> obama's position is $3.5 million exemption which we think is weaker than it needs to be. we have a letter actually that we are circulating fair economy.org/open letter, but it is to rollback the bush tax cuts on upper income folks, cut capital gains, have a strong

estate tax and do some of this corporate tax reform. >> you mean don't increase capital gains taxes? see what did i say? increase the capital gains rate, thank you. anyway, that is a letter to congress on obama. >> that letter is called our tax code is raised if fit the. >> they are green forms of back if you you were here in the room and if not -- >> are entrepreneurial activists. >> that is what this is about. we have to get the voices of wealthy people in particular and that is what we are looking for. those in the voices make a huge difference when it's the people themselves who will be tax. >> else beth? >> i wanted to throw in a little bit about philanthropy here. >> let me frame it or throw a frame on it here. there aren't awful lot of folks who say if we got rid of taxes altogether, than rich people could just do nice things and take care of everything.

we are dubious about that concept. >> i just want to say that is all of the tax policies being talked about and i'm really excited to move on all of them. the financial transaction stuff that is incredibly exciting from the perspective of wealthy people, capital gains taxes and whatever we can move through, not a policy expert wet whatever we can move through different moments over the years is exciting to me and just to put the context of philanthropy and what you are saying. i work with wealthy individuals and i am a wealthy individual. and i work a lot through my organization, i worked a lot with people who work in philanthropy with foundations, private foundations and the amount of money we are moving as the field and is a sector in individuals is nothing compared to what is needed for public infrastructure and all the things we are talking about funding. it's nothing compared to what the government is moving, what you are saying is going to be raised. so to put in a context of whatever we can move forward at any given..

the amount of money is not going to be covered by individuals and what we give through charity through our own interest is a completely different ballgame and also when we talk about rights are moral imperative, education and all of those should be things we are all guaranteed, then are we leaving that up to charity? probably not. >> and they can't be voluntary. that is a critical point just to underline here because i think often the way the media covers these discussion is the sense that there are wealthy people and we get out of their way they could do some wonderful things. sometimes they do, and we raised those instances up to be greatly celebrated and sometimes forget that it isn't the perspective as powerful as some would think. becky, we are talking about this

stuff, maybe what philanthropy canst do and where we might find some money. let's go to the course we are talking about and i want to bring chuck in on this too. can we save social security, medicare and medicaid which seemed to be central to the current debate, without fair taxation, without some tax policies, shifting tax policies? is it possible to say that realistically without doing these changes i like easy questions. >> i don't think so. i think in order to do it in a fair and ethical way and wait or check the social safety net that we all want to see, the answer is no. i will say first of all that it drives me crazy that people talk about social security at this point in the game. social security is perfectly fine. it has another 25 years. you know we have got a huge trust fund and you will hear social security user report is

coming out soon and we will hear people scream about cash income deficits. the reality of social security is taking in less money because people are working. we have a high and employment rates still, and that is what we need to be focusing on, not fixing social security. we need to get people working and paying their fair what taxes and income taxes and social security can wait a few years until our economy recovers. but that said, i think a really good answer to the social security problem now that i talk about it, which i said i don't like people doing, is raising the payroll tax cap. you can raise that and to back up the payroll tax cap is currently at about $110,000. that means meeting, but that is not taxed at 6.2% or 12.4%. whatever threshold you want to go to.

but if you raise that tax, you can still pay off higher benefits to the wealthy people who will be paying that tax and you can solve almost the entire 75 year social security shortfall so basically asking people to make you know and million dollars a year, $200,000 a year to pay payroll taxes on all of their income instead of the first $110,000 of it. that can solve our problem. >> and that is the tax fairness concentrate there. it gets to the simplest level of it. the richer you get, you don't have to pay. whereas now we would take it out. >> with rising income inequality, we have actually seen a greater percentage of income about that cap so it needs to cover 90% of income and now it covers around 84% of income. income inequality has really i would say increased regressivity and social security taxes. as for medicare, think health

care is a mess and we can have an entire panel on that. with the affordable care act, president obama, he raises taxes and that was actually a necessary in order to get cbo to score that act on the positive side of the ledger. so it's just about a trade-off. if we want to continue funding medicare, medicaid, -- does not think so but i do. >> speaking of paul ryan, check you have looked at the ryan plan. is there anything about it that is in play? obviously as much as the president takes his megaphone out in speaks about the buffer rule, paul ryan has become the central figure. now discussed much is a vice presidential candidate. i know there are some democrats who are excited about that prospect, but is he talking at any point about tax fairness or is he really talking about taking us to an extreme that

would be kind of what we have now on steroids? >> mr. ryan's budget is divided sharply between the spending in the tax side. the spending side is extremely harsh and where he really goes after poor people, old people, medicaid, medicare, very harsh cuts in a whole range of programs. and actually really puts the main part of the federal government on a very downward track, almost an impossible, theoretically impossible level over time. so the spending side is very harsh in his tax side is in sharp contrast to that. on the tax side, mr. ryan starts with making all of although the bush tax cuts including the high income once, permanent and then on top of that goes much much further. there he sort of talks about how he is going to go beyond the bush tax cuts and have a

deficit-neutral. but he says nothing about raising money. only on the cuts in the cuts not surprisingly are heavily heavily toward the high income people. the most prominent is mr. ryan proposes a top tax rate on high income people down to 25% which would be the lowest rate it has been since herbert hoover and coupled with the same tax rate for corporations. the result is that his specific tax cuts on top of the $4 trillion over president bush in the next 10 years, another $4.5 trillion deeper and then he says we are going to close all these loopholes to hasten that. the one loophole he takes off the table is the capital gains rate. think of that -- loopholes so you cut the taxes to the lowest level for the highest income people and in the

sort of leave on the table the mortgage reduction, the exclusion for health care, all things that are much more toward middle-class people. those things can be reformed as dean mentioned but president obama's proposal, which made those more fair. that would raise them $500 billion, so a tiny fraction so basically mr. ryan has really set up, implying that the top priority the united states is to cut the taxes for the highest income people. >> before we had questions, but before we go there want to add two more elements in here. dean, you do an analysis of how media covers economic issues or you have over the years, "meet the press". i wanted to ask you, how do we get to a point where the most talked about tax plan of the moment is seemingly a plan for redistribution of the wealth upward.

>> it is remarkable and what is striking about the ryan plan, it is in play. no one knows what chuck just said and i will go a step further, not to say chuck didn't make it clear but you really have to understand. the ryan plan literally gets rid of most of the budget. the congressional budget office did and also so the plan under his direction and if we just assume his numbers and we send that he wants to keep the military spending at its historic level somewhere between 2000 or de and 2050 the rest of the government disappears on talking bout the justice department on the state department, the border patrol, the food and drug administration, the national -- all that disappears because there's no money for it and that is what he signed off on. the fact that that is taken seriously, that is incredible reporting. basically, i'm sorry, a limited budget but you have all these people running around watching like lowe represented brian put out a serious proposal on the table. that is not serious reporting. reporter should get fired for

saying that. they should've been pointing out represented brian just propose getting rid of the federal government 30 years. no one did that. >> there was a little moment when the ryan plan first came out where he was saying we are going to cut $4 trillion off of the dead and we are going to do that by increasing tax cuts for the wealthy. obama said we are going to cut 4 trillion but we will do it first by rolling back those tax cuts so there was like this moment. >> that is healthy to have that conversation. >> to ask up with those two of the table and have people look at that and say where's our party? do we want to five -- fined five shillings dollars to make up for the additional trillion dollars in cuts for the wealthy. we didn't have that conversation but part of it is, we have to stop coddling the rich. we have to stop saying that we need these tax cuts for the rich and we need to have that voice saying -- in 2010, you all saw this, 93%

of the income gains went to the top 1% so you had income over $350,000 you on average got $40,000 of income increase. if you were in the bottom 99%, you've got $80 on average. so in other words you got nothing. it is bad and it's getting worse and to say the that rich people can afford to pay more taxes or it would somehow hurt our economy is -- >> to sum it up, and rob mcintyre will remember that fred harris ran for president in 1976 on the slogan, take the rich off welfare. will? do you think what mike just said is a good call to outrage? let's first give a round of applause to the panel. i think it's been an amazing conversation. [applause] and then what i would like to do

is have questions from the audience. again if you're watching this at home, and it's not some other day than today, you can tweet and questions to this address at ada fund and i will try to be the medium for those questions. but if you are here physically, just raise your hand. john will call on you and dawn will bring you a mic. i've been waiting all day to say this, wait for the mic as we are on c-span. >> there you go, very good. we have a gentleman right here and do you want to give him the mic? i'm going to ask people, we have got a half-hour left so we will ask folks to, if you have a long and extensive statement to make about tax policy, you might want to submit that for the record and go straight to the question. >> thank you. i am norman curlin, senator for economic and social justice. the philosophy goes through a

man named louis kelso who had developed the concept called binary. the economics and a plan for moving beyond the keynesian model and the marxist model. he challenged both. neither of whom thought that individuals with only the means of production was an important goal. the ada education fund, you had two of the heroes. you had walter luther, who i worked for several years ago, and senator hubert humphrey. both of whom congratulated kelso and supported the ideas of democratizing the ownership. the problem i have is there is

no discussion at all about the system and it assumes that the tax system as a whole is a good system. in terms of what do we do, i think that is unfortunate and there is a plan that i would like to call attention to. >> i wanted to tell people where they can find that plan on the web or give them a web site. >> it is cesj.org. >> now i'm going to say i appreciate your good insight here and i'm going to go to bob mcintyre. should we just scrap the whole dam tax system? is the system itself the crisis or do we have a frame that we should work and that we can work in? >> we have to have a tax system. >> i think so. i'm not sure ron paul would agree. >> ron paul has not just

refudiated the 20th century, he has repudiated the 18th century. you may recall that we put people on mount rushmore because they were tax euros. george washington for putting together the constitutional convention that gave the federal government to tax. abraham lincoln who instituted the first income tax and teddy roosevelt because of that and petulant moment ago he ran for president is a third-party candidate, split the republican vote and got the 16th amendment adopted. the outlier was jefferson who was hit by louisiana. >> you are basically saying with that of framework. >> there are a lot of people who would like to go back to the 19th century and have all of our taxes be sales tax. >> the flat tax. >> that would be the scientology movement tax program called oddly enough the fair tax but it must be an acronym for

something. then you have the flat tax is like dick armey who wanted to exempt rich people from taxes entirely and only tax the middle class. louis kelso was an interesting character in this program is was to try to get worker ownership to the company. people have talked about doing that with tax programs. we have a stock ownership plan. >> we would need some reform there. >> well yeah but the problem is any well-intentioned loophole ends up and attack shouldered -- tax-sheltered for the rich. >> my mother who spent a lifetime as a tax preparer always said. let's go to the gentleman in the back row there. >> question about capital gains. we have spent a lot of time discussing the capital gains rates. conservatives will argue as the primary argument that a capital gains are not indexed for inflation so two questions on that.

one is in exchange for raising capital gains tax rates would you also index the base when calculating natural game and secondly, how much of an impact would that have any way? does anyone have any idea what the dollar weighted average, gains that have been exercised over a year? >> who is -- who wants to grab a piece of capital gains? >> it's been talked about especially when inflation was high. of course it is low now so it doesn't matter much. the problem is number one, if you index gains and don't indexed debt, you create a tax shelter. people borrow money. you have got the interest in the games will be indexed and you can make money by losing money in terms of the tax code. number two, realizing capital gains is a voluntary thing. most people don't realize this,

so we have already an exemption for something in the order of three-quarters of the capital gains are going to kind of break for the report that we do get seems to me to be unnecessary. >> i'm going to get chuck in. >> there is a really telling., that it is an optional tax. what a lot of people don't know is that also, it's almost the same stock at $10 ibm stock at $10 when you are young person and you grow old and it goes to $100 you make this huge gain. if you die without selling it, the capital gains completely forgiven. so you have wealthy people who make tremendous amounts of wealth and income from that over their lifetime and they borrow against it. that money is actually never tax. >> or you could give it to charity as many people do. >> bob made that same point but again you aren't going to have perfect fairness in the system that we think i'm getting money

in interest or dividends there is also an inflation premium there. have to pay tax on that so you know i would want to maintain some separation if we raise the top marginal rate to 45%. it would be counterproductive and there is research it shows that. 20% or there but i see we have to do special indexation for that. >> rebecca? >> just a quick word on putting dollar amounts, which you mentionmentioned, on the capital gains were reform. there is definitely a pretty interesting debate about behavioral responses and what actually happens if you do change the rate at which we tax capital income. there is a great congressional research service report by jane gravelle. i'm forgetting the name of that but if you can google the report you should be able to find it. ..

>> 4% of all income over 250 goes to the federal government, state or local government. and i know from the tax freedom day that the average taxation is 28%. so the system is effectively progressive. cbo has stated that. they've shown that in, like, five different reports in, like, ten years. part b is, last thing, there's also indirect costs for tax systems that lack compliance and

excessive legal system costs which according to the cost of government today is about 22% universal, and those are progressively incurred, too, because wealthier people are in the courts dealing with the tax system, dealing with the regulatory more. so it's probably like 26 for that. added to the 34, 60% of all the income average over 250 is in government-related costs. >> thank you. um, do you want to -- >> yeah. in terms of the tax, that sounds plausible, 28% of what people make above $250,000, that doesn't bother me. the compliance costs, i think they're being overcharged by their accountants. >> they're not really compliance costs, they're avoidance costs, and people do it because they're trying to lower their taxes. >> yeah -- [inaudible conversations]

get rid of the loopholes. >> and if you look at our tax system, it's mildly progressive the way it is, you know, if you look at combined taxes. it's mildly progressive. income, on the other hand, is not mildly progress i have. it's -- progressive. it's, you know, extremely skewed toward the wealthy. so we have a class of people who can't afford to pay more, never mind fairness. >> i realize there's real confusion. i'm not saying it was deliberate, but that statement about 28% was of the income over 250,000. so if we have, you know, some hard working job creator that makes 250,000 and one dollar, they're paying 28% on that one dollar, not the whole sum. it's very important. people often miss that. when we were talking about the estate tax, i realize there's a lot of people that are worried that they're going to end up with one million and 100, they pay the tax on the $100. that's the way marginal tax

works. a lot of confusion on that. >> will has got a text coming into us, right? >> i do. it actually worked. somebody sent a question, actually, three questions, you can choose which one you want to ask. this is andrew who's, apparently, an occupier or who knows an occupier and wants to know what occupy can do to shed more light on any angle of the tax justice question that hasn't gotten the attention it deserves. the next question is, is there any concern about the small revenue increase, apparently, that the buffett rule would actually generate and thirdly, and you touched this earlier, how possible are fair taxes when money runs the electoral system, as he says? >> okay. let's take a piece of that. you've spent a lot of time talking to people with occupy building some of these coalitions, trying to connect people up. it strikes me that occupy wall street, which is now much more than that, it's a national

movement that isn't in one place and has many, many manifestations. but it has as a core of it a discussion about the inequality of wealth. is it, is it beginning to get focused now on how we might address that inequality and how we might use tax policy? >> yeah, and i would almost go back to what i was saying before in terms of the opportunity for all of us to seize the moment, focusing less on occupy wall street in and of itself. i think the question that this person asked, i think there's a way that there needs to be a popular, we all need to be mobilizing around this and talking about this conversation for legislation or anything to be able to move in washington. i think we all know there needs to be popular support. so i think there is a way that occupy can just continue the conversation and keeping people mobilized around it whether it's around -- i don't know if occupy's the place where solutions should be talked about. it should be talked about everywhere, but i don't think it needs -- i think a lot of

people -- >> i don't have the suggestion that occupy o has to come up with all the solutions, but as a way to raise these and try to keep them, you might want the president to get more focused on some of these issues. you might want other folks. >> right. so i think just talking about occupy that a key role is keeping the conversation going and mobilizing people, and then i can talk about my own trajectory around looking at tacks and five -- taxes. the popular issue that begins to happen is people beginning to think about the role of government, the wealth disparity, how that's impacting people, people looking at what's happening in their communities and actually tying it to a larger analysis, that's huge, and that's going to be what's going to allow, you know, my generation to actually have a different perspective on the work that we've been working on far long time. >> you want to throw something -- >> i was just going to say i think occupy together with warren buffett coming out and

saying stop coddling the rich, those two pressures from someone from the top saying i should pay more taxes, that powerful combination makes it possible for obama in the middle to say we should have a buffett rule. now, the buffett be rule is, i would say, sort of the camel's nose. don't let the republicans hear this. it's, like, a little tiny sliver of all the stuff we're talking about. we're talking about the bush tax cuts, capital gains, estate tax. there's a lot bigger issues, but i think it starts the conversation on a national level about should we be taxing the well ty more and -- wealthy more. >> i want to come off one thing that elspeth mentioned that i thought was important. you talk about where you live, and we have focused so much of this discussion on tax policy in washington and on congress, but an awful lot plays out at the local and state level. and it can also be very, very unfair. we've had a great discussion about the american legislative exchange council and the center

on media and democracy with its exposed project has focused a lot of attention on how this national group develops model state policy on allowed tax issues. is it important to kind of keep your eye on the broad prize rather than to just think this is a d.c. debate? >> oh, it's huge. um, to get back to what the gentleman was talking about, the progressivity of the tax code, it's true the federal tax code is somewhat progressive, although less than it used to be, but state taxes are very regressive. bob does great work on this all the time. they fall much harder on lower income people. lower income people pay the heaviest share of sales taxes of their income and pay much higher share than the wealthy people do. so state tax is really poor and moderate income people much harder than federal -- >> if i could jump in on state taxes. >> yeah. >> one of the things i'm crusading about financial

speculation taxes, i'm stealing one from the international monetary fund. they did a very good paper on financial transactions taxes, and they didn't say that was the best thing to do, but they said the football sector's -- financial sector's undertaxed. for the most part, financial transactions at the state level are exempted from the sales tax, so you're paying taxes on your shirt, your clothes, your food and everything, but you go to the bank, that's not taxed. why shouldn't that be taxed? great thing to do. you could also tax, i discovered this from talking to a high-powered wall street-type attorney, you could tax mortgage transfers. so wisconsin, pennsylvania, whatever state we might be talking about, they could transfer the taxes of mortgages issued against properties in that state whether they're traded in new york, switzerland, or wherever it might be. >> it might also slow down all the gaming, mr. housing bubble. >> can i -- >> we've got somebody back there with a question, and we're going to come up to you. yes. could you stand up, please, so we could see you?

>> sure. my name is meredith dawson, and i'm wondering if you all could talk a bit because i think one of the under-- part of the tax code focused on people always realize in terms of tax fairness is the tax credits for low income working families, the child tax credit, and the eitc does more than any other program to lift americans above the poverty line. so can you talk a bit about how you see that playing out with the kind of year-end battles and how to protect those small but important pieces of our progressive tax code especially for low income families? >> bob, do you want to take a piece of that? >> chuck -- >> chuck's going to. people should understand that bob is, in many ways, a great seer of things here. so if he says chuck, we'll go to chuck. >> yeah, thank you for raising that. this is a huge year for the low income tax credits. if you think about it, president

obama made an improvement of the child tax credit and made it so low income people could get it. if you look at the ryan budget, the ryan budget would eliminate that. so at the same time he's proposing this $265,000 tax cut for people who makeover a million dollars, what he would do -- picture a woman with two kids, works at a nursing home, makes minimum wage, works full time. right now she gets a tax credit of about $1800. if ryan budget were to go into effect, she would lose $1500. you have at stake now $1500, and that family and millions of families like that could take a huge hit. so the stakes for working, poor families, sort of the welfare reform success stories that people like to point to, they're very high stakes for the whole tax debate this year. >> let me -- let's take will for another texted in or e-mailed --

>> this is through twitter. >> twitter's even better. >> yeah. and i'll just use my authority as the ultimate moderator here that we probably could just take one more question after this. >> i think we've got a woman up front who's ready to go. >> richard phillips wants to know how companies actually dodge taxes and who are the worst offenders. >> all right. i'm not letting bob off that one. [laughter] >> well, they dodge taxes by reporting less income than they really make through the internal revenue service. they do that in a variety of ways. sometimes they move their profits to a tax haven in a warm caribbean place, sometimes the congress passes a law saying that they can report less than they make. by taking writeoffs for expenses they don't have. sometimes it gives them a credit against their taxes for research they don't do and things like that. so that's how they pay less. the reason in this recent report we put out a little while ago

that so many companies paid is so lit and sometimes nothing is because -- so little and sometimes nothing is because they had more loopholes than they could use, and some of them haven't paid taxes for ten years even though they've profited tens of billions in profits. that's how they do it. >> quick follow up. do we need more auditors? >> no, we need zero loopholes which means we need a better congress. >> ah. and then you need campaign finance reform -- >> no, no, no. we just need a -- >> better congress, all right. >> especially one big one that has become increasingly important. people are familiar with the private equity industry. when something's taken over by private equity, they tend to borrow large amounts of money against the company, and then they pay out interest payments. that's all tax deductible. so typically, a company owned in private ec bity is paying much, much less in taxes, that's one of the reasons why private companies are paying less. an important one. >> okay. i'm going to take two quick questions here.

i know we're winding down. i've got somebody back there, thank you. >> hi. i'm brian roberts, i'm the ada ed fund board. and i take this in a slightly different direction, one of the big expenditures as, obviously -- is, obviously, education, public education. and one of the big inequities, of course, is that property taxes are what fund schools, and so i'd like to hear options, different funding sources, different options for, you know, k-12. and then you've also got states that are strapped -- >> uh-huh. >> -- and higher education at the public level is also suffering the same way. so -- >> terrific. thank you. i'm going to have my microphone master scramble up this way, and we're going to catch one last question up front here, and then we'll pick both these questions into the crowd. and, well, a round of applause

for dan's incredible work on the microphone here. [applause] there you go. [laughter] yes. can you stand up so people can see you? >> mr. lapham said there are a number of wealthy individuals who are in favor of raising the estate tax, and i was just wondering if there's any consensus around what they want the number to be? is it 55% on a one million exemption, or are they thinking about some other number? >> uh-huh. thank you very much. all right. i'm going to parcel these out, and we've got a few minutes, so i'm very -- you've been a wondrous audience, thank you so much, and great questions. our twitter fans, great questions there as well. we asked a few minutes ago about state and local taxes. the property tax is something, you know, by and large you run at the, at the state level. um, but is there, are there ways as we talk about a federal policy debate that we can begin to address education funding? should we? and what should we do? what's the most equitable way to make sure that our schools are

funded adequately? somebody have a notion on this? bob is smiling slightly. >> it's an interesting question, you know? some states fund more of their education through taxes other than property taxes. >> uh-huh. >> they're generally known as southern states. they don't spend much in education. so that's possibly an advantage to the property tax is that people see it as going to their kids or their neighbors kids', and they're willing to pay it. it's certainly not the world's most progressive tax, it's not the world's most regressive one either. but this kind of ownership people have over it with the schools seems to be a factor in increasing education spending. >> and some states have tried to move the money from wealthy districts to poorer districts to do some equalization. >> and some states get away with it. virginia's one that does a massive amount of movement from wealthier areas and gets away with it with hardly any

complaining. i don't know how we do it. >> they're a southern state. >> well, only half of it now. >> i understand. it keeps moving south. i know. and the estate tax. mike? where are you going with that? >> so, i mean, i think the honest answer is most people want to see the exemption about $1 million more than they have. [laughter] so i've literally found this to be true often. but, you know, when we started this work back in 2000, actually, there was a repeal of the estate tax that had passed both houses, and clinton vetoed that repeal, and bush made it sort of the engine of his tax cut proposal in 2001. we turned into it the caboose and have kept it there. with a lot of pressure and a lot of other groups, the americans for fair estate tax recently signed a letter, 78 organizations. signed that letter. and right now, as i said earlier, we're working with the mcdermott legislation, jim mcdermott from washington is

suggesting one million per person, two million per couple. you know, i think that's quite a lot of money. people on the coast in california the east coast and some of the big cities where property value gets you to a million dollars pretty quickly feel like that, sometimes feel like that's a little too low. but certainly we don't need it to be five million, we don't even need it to be three and a half million per person or seven million per couple. and the other important thing is what is the rate. are we going to say have it as low as 35% now or go back to a 45% rate and then have it aggravated graduated above that and then hopefully indexed for inflation. this is how we got into this mess in the first place. we had a gradual estate tax that most people paid or a lot of people paid. and then as incomes -- as wealth went up, that chart didn't change at all, and so now it just kicks in immediately at 45% instead of i would like to see

it go lower and start more gradually. but that's, that's another perhaps dream. >> thank you, mike. we're really now at our kind of wrap-up point. i want to go just around our panel here and give people a last moment, and it really is a moment, to give us a bill or a proposal or an idea that they think ought to be in the mix of our tax debate. >> can i read a story instead? >> if it's a quick hit. >> okay. so we launched a tumbler of blogs that has over almost 200 people, wealthy people signing on saying i'm the 1% standing with the 99%. >> check it out, it's great. >> fabulous slogan, right? is. >> it's amazing. it's people who wrote signs and took pictures of themselves with a sign, it tells almost 200 stories. one is from -- i'll just read it. it's a man. i made millions studying the math of mortgages and bonds and helping bankers pass the chartered financial analyst exam. it isn't fair that i have

retired in comfort after a career working with financial instruments while soldiers, teachers, etc., are worried about paying for their future, their health care and their children's educations. they are the backbone of this country that allowed me to succeed. i am willing to pay more in taxes so that everyone can look forward to a secure future like i do. i am the 1%, i stand with the 99 percent. 99%, which equals 100% of america. tax me. and then mostly i just want to say quickly -- [applause] um, and this is a blog that has, it's started by young people, but people, i mean, people all over the country have signed on, and then one more just brief piece from a younger man, i made more than i need after 12 years of hard work. now i'm giving back, but i can't do it on my own. i need government to help redistribute my wealth. tax me, i am the 1%, i stand with the 99%. and i think the message i wanted to leave everybody with is that this is a moment, and i think people on this panel know a lot

more than me about the political moment and the opportunities, but people are talking about the movement moment, and it is a movement moment, and there's people who are waking up and listening to the message that occupy has popularized in a really different way. and if we don't -- there are people, there are people who will back this legislation moving forward. there's people who are going to back all the things that people are about to suggest. >> elspeth, where can people find this online? >> it's we stand with the 99%.org. >> we stand with the 99%.org. >> and resource generation is resource generation.org, and you can find it through there. >> chuck? >> thanks, john. i would just ask people in the audience and policymakers when they hear the words "tax reform" that they keep two things in mind. first, that the country has got huge budget deficits and is going to be making some gut-wrenching choices, and that it's really much more about the revenue than it is about the reform. and second, if your top priority is not to lower the top rate for the highest income people in the country, be very worried of that

term. thanks. >> very good. dean baker. >> well, elizabeth was talking about giving back, but i want to talk about it in a somewhat different way. a lot of the reason why we're sitting around here with 8.2% unemployment, millions of people facing the loss of their home and, for that matter, a very large budget deficit is because those folks on wall street helped build up a huge housing bubble that collapsed and wrecked the economy. i think our obligation to give back to them would be a nice financial speculation tax. raise a lot of money for us, and it will give it to them. >> dean baker. mike lapham. >> well, we're not investing as a country in what we need to be investing in the future, so if you're in that top 5% in terms of your wealth or income, sign on to our letter and congress and obama. fair economy.org/open letter, and, you know, it covers these topics that we've been talking about, the bush tax cuts, capital gains, the estate tax -- >> the ultimate entrepreneurial

activist, yes. >> sign up. >> rebecca? >> so i would say you have to get rid of the preferential rates on capital gains and dividends. the changes in income from capital gains have contributed greatly to income inequality, more so in the last 15 years. and we've got to get rates equalized on that kind of income. >> and our friend, bob mcintyre. >> if there's anything else you'd like to know from me, just google citizens for tax justice. i must have said something about whatever you're thinking. [laughter] >> indeed, you have. >> and let me before i hand it back to will close off, we've had just a terrific panel. i will guarantee you we've covered more important turf today than whole sessions of congress. [laughter] and i want to leave you with a quote from robert, again, from 111 years ago. he said the people have been promised equal and just taxation for years and have borne repeated disappointments and delays in the fulfillment of

those promises with great fortitude, but their patience is not limitless. thank you so much for joining us -- >> let's hear it for the -- [inaudible] [applause] >> i just want to thank everyone for coming out, and i want today direct your attention to the back of your program. this is an event that's sponsored not by the education fund, but by our sister organization, americans for democratic action. it's a rally happening on tax day. so if you'd like to come out and express the idea that paying taxes is patriotic and that real tax reform involves making sure that everyone pays their fair share, we invite you to join us. if you're watching at home, you can go to stop the pledge.org, stop the pledge.org. but other than that, thank you so much for coming out. if you want to know more about ada, visit the ed fund, ed fund.org. keep your eyes on the tax issues. it's going to be a hot one. thank you very much. [applause]

[inaudible conversations] [inaudible conversations] >> join us later today for more from our "q&a" program. we've been focusing on documentaries this week, and today we'll hear from the folks behind american casino at 7 p.m. eastern here on c-span2. >> our specific issue is to work to see to it that human rights remain an essential component of american foreign policy. um, and that when we are

evaluating our foreign policy moves globally, human rights can never be the only consideration, but it has to be part of the dialogue. >> katrina lantos swett is the president and ceo of the lantos foundation for human rights and justice. >> when we abandon our deepest values, and that, you know, whether we're talking about torture as it relates to the war or on terror or, um, or the recent policy with russia, you know, and the upcoming issue of whether or not the u.s. congress should pass the sergei accountability act which is, we don't these to go into the details of that policy issue, but whether or not we're going to stay on record as saying human rights matter, they matter in russia, they matter in china. >> more sunday night at 8 on c-span's "q&a." >> april 15, 1912, nearly 1500 perish on the ship called

unsinkable. >> once the lookout bells were sounded, once the lookout sighted an iceberg ahead, they struck the bells up in the you's nest three times -- ding, ding, ding -- which is a warning saying that there's some object ahead. doesn't mean dead ahead, it means ahead of the ship. and it doesn't say what kind of object. what the lookout then did after he struck the bell, he went to a telephone nest and called down to the officer on the bridge to tell them what it is that they saw. and when the phone was finally answered, the entire conversation was what do you see? and the response was, iceberg right ahead. and the response from the officer was, thank you. >> samuel halpern on the truths and myths of that night, sunday at 4 p.m. eastern. part of american history tv this weekend on c-span3. >> major league baseball players' association executive director michael wiener talked about the future of collective

bargaining in baseball yesterday at the national press club here in the washington. baseball players and owners reached a new five-year labor deal in november. it increases the minimum player salary to $480,000. tests players for human growth hormone and requires them to play in the all-star game unless injured or excused. mr. wiener also talked about the downturn in the economy and accused some of using it as a means to attack unions and collective bargaining rights. his comments and a question and answer session last about an hour. [applause] >> thank you, teresa, for the introduction and for the privilege of speaking here today. um, before i get started, i'd like to acknowledge a few people that were kind enough to come today. first, a long-time friend and a committed union leader during his distinguished playing

career, b.j.serhoff. [applause] they had to leave, apparently, to handle a new orleans saints matter, but dee smith, the executive director of the nfl players association and richard burlson, his longtime general counsel were here. i want to thank the executive director of the major league soccer association, john newman, judy scott, general counsel to the seiu, pat she man sky, i'm also honored to acknowledge here the presence of mark pierce, the chairman of the national labor relations board, sharon block and richard a griffin, nlrb members, les hatser sitting over here. patricia smith, solicitor of labor. john lund, assistant secretary of labor. i proudly welcome as well a longtime colleague and friend,

virginia seitz, assistant attorney general for the office of legal counsel. thanks to all of them and to all of you for attending this afternoon. for going on 24 years, i have worked for the union that represents major league baseball players. and for going on 24 years, i've heard that's great, mike, but it's not like you work for a real union. [laughter] come on, you get to hang out with derek jeter or jose pa tease that or -- batista or ryan zimmerman. it's part of your job that you have to go to the all-star game and the world series every single year. i'll concede there are benefits to working for this union. [laughter] but i'll insist at the same time that the mlbpa always has been and remains today a real labor union. our members make more money than most. our guys have a higher public profile. but at bottom the mlbpa does what every union does; we attempt to further our members' interests and to protect our

members' rights through the process of collective bargaining. collective bargaining as an institution took some body shots over the past year. in wisconsin, most notably among other places, the right of public sector employees to bargain was blamed for the state's fiscal difficulties. in indiana so-called right-to-work legislation was passed with supporters contending that collective bargaining actually hampered job growth. the national labor relations board has been vilified for fulfilling its statutory mandate to administer the federal labor statute. in the sports world, nfl players abandoned their right to bargain collectively in the face of aggressive demands from their owners. fortunately for all, that dispute was resolved without the loss of regular season games. nba fans were not as fortunate, and the nba owners' lockout of our brethren there resulted in a truncated season. the mlbpa and the 30 baseball

clubs by contrast announced new five-year labor contracts last november, a month before the previous deal ended. we had no lockout, no strike, no threat of a work stoppage. why did collective bargaining succeed in baseball last year? how did baseball, the sport whose labor history is most contentious, avoid strife in 2011? some suggest a smooth negotiation was inevitable given the economic circumstances under which we bargained. but neither revenue, nor profitability explain our results. coming into 2011, the nfl's annual revenue exceeded major league baseball's, and the nba's annual revenue lagged ours. but both leagues picked protracted fights with their players. and the it's millionaires v. billionaires line was also said of baseball in the '80s and

'90s when every labor negotiation included a work stoppage. profitability is not the driver either. both an admittedly profitable league in the nfl, and a reportedly unprofitable one in the nba had work stoppages in 2011. baseball's profitability fell in between the two. moreover, each of the last three labor contracts in baseball were reached without a stoppage. one negotiate canned when the owners were suffering losses in 2002, one when they were enjoying substantial profits in 2006 and last year when the truth lay in between. there was nothing preordained about bargaining during this round. as always, the union was prepared for a worst case scenario. we had sufficient reserves in the bank, we counseled players to save their money, we told players that while no one wanted a stoppage, they had to be ready as if one were coming. we've been roundly applauded for

having achieved labor peace. but i'll let you in on a little secret. labor peace was not our goal when we started bargaining. our list of objectives in bargaining generated over years of discussions with players included improved health care and pensions, a higher minimum salary, better treatment of injured players, better salary arbitration and free agency rules and a whole host of other demands. but labor peace wasn't on the list. neither was labor war. we set out in this negotiation to achieve a fair deal for players. ideally, a good deal for players. our preference, just as it was under marvin miller's or don fear's leadership, was to get that deal without a work stoppage. but the goal was a good deal. not a quick, easy or pain's -- painless one. collective bargaining by design is an adversarial process. our negotiations in 2011 were

adversarial, at times intensely so. controversial, even provocative positions were advanced. conversations were heated, frustrations were expressed, meetings ended abruptly. people, players, owners, negotiators for both sides got angry. we didn't air our arguments publicly as we've done in the past, but that doesn't mean that we didn't argue. collective bargaining in the end is about power. federal law governing collective bargaining limits the exercise of that but not very much. there's plenty of room under the national labor relations act to beat your counterpart into submission, even to mutually destroy your industry. for years in baseball the power struggle that is collective bargaining was defined by the owners' attempts to force their demands down the players' throats. sometimes through distaste but legal means such as lockouts, hard bargaining and replacement players, sometimes not through

collusion and unfair labor practices. in 2011 and in our more recent bargaining rounds that power struggle has manifested itself differently. it's still a power struggle. baseball owners' desires have not changed. they want to pay players as little as possible and control their services for as long as possible. and that's understandable from the owners' perspective. what has changed is that baseball owners led by commissioner bud selig have come to respect the collective power of their bargaining adversary, the players. that respect was earned through the solidarity of players in the '60s, '70s, '80s and '90s. that solidarity culminated in a real sense in the spring of 1995 when the owners used replacement players throughout spring training to try to break the union and force acceptance of a salary cap. and not a single union member, not a single 40-man roster

player crossed the line. but that was then. the membership of our union turns over very quickly. only a handful of players active in 2011 were professionals during the 1994-'95 strike. the mlbpa understands that each generation of players must justify the respect that their predecessors earn. we must remind the owners of the players' collective power every time we come to the bargaining table. that is why starting with the days of marvin miller this union has insisted on direct player participation in the bargaining process. players formulate bargaining proposals and strategies -- that might come as no surprise. but players attend bargaining sessions. we won't schedule such sessions unless players can be there. and players actively participate in those sessions. at any given meeting, the mlb negotiators are as likely to hear from curtis granderson or jeremy guthrie or -- as they are

to hear from me. player participation in our bargaining in 2011 was extraordinary. and even for our union, unprecedented. as for player leadership, we had a remarkably dedicated negotiating committee of 25 active players. week after week of conference calls they were responsible for developing and approving all of our major bargaining proposals. and those negotiating committee members attended bargaining session after session. be but player participation extended to the full union membership. we had 238 different major league players attend negotiating sessions in 2011. 238 players. players in their first week in the majors and players with 20 years of major league service. players whose tickets to cooperstown already have been punched and players whose major league careers may not extend

into 2012. players making the minimum salary and players making $20 million per year. players from virtually every country represented in our bargaining unit. it was a tremendous show of force. in the power struggle that is collective bargaining, it is natural to gauge the strength of your counterpart. those 238 players by their presence provided an unmistakeable answer to any owner who might have questioned whether in 2011 the collective power of the players remain deserving of respect. collective bargaining changes when each side respects the power of the other. you've got to try something else if you can't just push your counterpart around. if you want to change, you've either got to persuade them to give it to you, or you've got to fashion some compromise in which you trade for it. the most likely result of bargain anything that situation -- bargaining in that situation is a truce, a deal at

or very close to status quo. that might not be what's best for either party or for that industry, but that's what you're left with. our new collective bargaining agreement amounts to far more than a truce. it contains meaningful changes in the rules governing free agency, salary arbitration in the amateur draft, significant revisions in our revenue sharing, competitive balance tax and debt service rules, a new structure for our leagues and divisions, a new format for postseason play, enhanced health care coverage for international players and their families, improved benefits and other payments flowing to former players and their widows, important changes in our joint drug agreement and dozens of other improvements in the working conditions of players. this negotiation touched more parts of our labor contracts than any other in which i've been involved in 24 years. none of those changes were made at gunpoint.

some resulted from persuasion. there were times when one side recognized the validity of the other's position and acquiesced to a proposal. many changes resulted from compromise and frequently from creative compromise. one side or the other often expanded the scope of matters under drug to create -- under discussion to create more flexible, more moving parts to fashion that compromise. other changes resulted from the partyies identifying areas of mutual benefit. i can't say this has never happened before in your bargaining, but only in bits and pieces. in 2011 we made agreements that were unimaginable in our past. in revenue sharing and health care, in drug testing and most notably, perhaps, in our new 15-15 alignment and additional wildcard team. that happened only because each side was prepared to recognize a good idea when it appeared no matter who presented it and no

matter if that idea historically was associated with the other side. more than ever before our bargaining was not just over how to resolve our differences, but how we could identify and further our common objective. how did that happen? we avoided a work stoppage because of mutual respect for each side's collective strength. but why didn't we just default to a status quo deal? the answer again lies in respect, but respect p here for the players' ideas, not just their muscle. i credit bud selig, rob manford and the mlb negotiators and owners with recognizing that the players are not just a force to be reckoned with, but that in area after area the players, those 238 guys who showed up at the meeting, had good ideas about how to improve the game and the industry. it may seem obvious that the best players in the world and

their representatives would have those ideas. it just hasn't been obvious before to baseball owners, and it certainly didn't seem obvious in the approach adopted last year by the nfl and the nba toward their players. the real success of bargaining in baseball last year was not just that we made a deal without a stoppage, but that we made agreements in scope and content that should benefit players, owners, fans and all connected with the game for years to come. i'm now torn between prudence and opportunity. prudence tells a guy who has worked his entire professional career in baseball to limit his remarks to baseball. but on my other shoulder, opportunity tells me that i should at least try to relate baseball's bargaining success to the broader world. be this is the national press club, after all, not the mike and mike show. [laughter] so here goes.

the economic downturn has placed tremendous stress on the already adversarial relationship between workers and their bosses. private sector employers and employees in the u.s. face increased global competition. public sector labor relations have been caught in the vice of budgetary crises. in both areas a handy response has been to attack workers' rights to organize and to bargain collectively. to attempt to strip bargaining rights from public employees and to handicap private sector workers who seek to organize. that's unfair in many part because our current -- in part because our current economic difficulties were not caused by america's working men and women. history counsels that such blame may be inevitable, but that doesn't make it fair. it's just not true that municipal and state employees making $40,000 per year caused the present fiscal crisis. it's also unfair because

depriving workers of their right to organize and to bargain deprives them of the only realistic leverage they have. it's okay, even laudable in this country, for political candidates or for companies to have leverage because of their financial assets. it's okay in this country to obtain leverage through a successful push for legislative or regulatory advantage. but why is it not acceptable for workers to exercise the only leverage they possess, to act collectively? if you take bargaining rights away from wisconsin schoolteachers or indiana factory workers, it leaves one side in a contest with no be ability to compete. it has long been the public policy of this country that labor relations should be a fight, but never a one-sided fight. it's fundamentally unfair, particularly in this economic environment. to pass legislation that still allows that fight but rigs it

against working men and women. all the collective bargaining -- all that collective bargaining allows workers is a voice in the ongoing environment in their working condition. bargaining does not guarantee any result, it doesn't guarantee that pensions will be preserved or that wages won't be reduced. under federal legislation on our books for over 70 years, permitting workers to organize and to bargain collectively has been seen as a natural component of our competitive economy. what is unnatural and counterproductive are the recent legislative efforts to strip workers of those rights. the economic health of our country will not be revitalized by depriving workers of their voice. in 2011 baseball demonstrated that collective bargaining can produce a progressive and productive agreement if each party respects both the power and the ideas of its counterpart. even in an economic environment

as challenging as today's, better results will flow from the bargaining process and from unilateral imp decision by -- imposition by management. we've proven in baseball that through collectively -- we've proven that in baseball through collectively bargained innovations such as the world's baseball classic, our jointly-run international tournament that'll be played for the third time next ma. agreements made with employee support can be implemented more effectively and efficiently as shown by our jointly-administered drug program. unions can effectively and productively represent workers even in struggling industries. collective bargaining in times such as these may be difficult, adversarial and contentious. but as demonstrated in baseball, of all maces, it -- of all plac, it is the surest path to a potentially enduring solution.

thank you, enjoy the season, it should be a great one. [applause] >> thank you, michael. since you believe that baseball's collective bargaining agreement is the gold standard for professional sports leagues, have you within approached by other union leaders asking for advice? >> the leaders of the various sports unions cooperate on all kinds of matters, and the unions do as well as evidenced by the process of soccer players' representatives and the football players' representatives here. i more than occasionally will talk with the head of the hockey players' association, he happened to be my boss for 20 some years. [laughter] the industries are different, and the sports are different, but we collaborate as you might expect. >> you mentioned the labor struggles in wisconsin. have you ever advised public sector union leaders, and do people seek you out?

>> i haven't been presumptuous enough to try to give advice to somebody remitting a public sector union, the nature of bargaining there is very different. but we frequently are contacted by unions and their members through letters of support, for assistance. our players, our members politically are all across the spectrum, but when it comes to labor matters, they understand the importance of unions, and we've tried to support those public sector unions every chance we could. >> you're heading into years of labor peace, but do you think that people are more willing to negotiate because of what happened with the strike of '94 and '95? >> i don't know about more willing to negotiate, but you can't understand our success in bargaining without understanding that history. as i said before, um, we moved to a world where there was respect by both sides for the bargaining power of the adversaries because of what happened leading up to, but

perhaps most principally in '94 and '95. so i don't think you have the agreements that we have, that we made in '02, '06 or 2011 if players hadn't taken the stand they took back then. >> a couple of questions wondering if fans were represented during negotiations either in internal union meetings or collective bargaining. one person says it costs the average american family of four $900 or more to go $300 or more to go to a baseball game. >> there's a few questions smuggle inside there. [laughter] -- smuggled in there. >> we didn't have any fans on our negotiating calls, but i can tell you that the players -- and we have representatives here -- all of the players that are sitting up here as well as portfolio j. were negotiating committee members themselves when they were active. players are constantly thinking about the fans and public acceptance of the game. that shows itself in our negotiation over things like the

schedule, over things like the postseason, over the drug-testing program, throughout our negotiations. in terms of the ticket prices, players' salaries, various economists in the room here today, but ticket prices are set by demand for the product. the owners set their prices as high as they can based on demand for those tickets. they really don't have anything to do with how much money players get paid. >> do you think the players' union would ever agree to eliminate the designated hitter and restore the game to the way it was meant to be played? [laughter] >> i don't know if there are names on that one. that one could have come from my wife who's been known to -- [laughter] who's a national league fan and has been known to parade around the house saying dump the dh. [laughter] let me say this, i've gotten a variant of that question quite

frequently. neither the owners, nor the players came to the bar gaining table -- bargaining table this time looking to change the rules regarding the designated hitter even though we changed the alignment of the leagues and postseason play. i don't think anybody would design an industry where, you know, one league had one set of rules and the other has another, but i think that compromise, if you will, is here to stay for a long time. >> safety in sports has become a big issue at both the professional and amateur levels. what is the mlbpa doing to address this issue in baseball? >> health and safety was as much a part of our negotiations as it's ever been. um, in addition to what we did in the, in our joint drug program and to address substance abuse and substance use by players, we negotiated over safer batting helmets, we negotiated recently new protocols for treating,

diagnosing concussions and return to play, we negotiated over safer bats. there was a tremendous amount of negotiation over health and safety this time in bargaining. i think that's a reflection, as i said before, um, what bargaining can do when you stop trying to knock the stuffing out of one another, it allows people the really put their heads together and try to solve problems in a way that you can't do when it's a death match. be. >> why can players only be required to take a blood test for human growth hormone for reasonable cause? if they don't have anything to hide, why not conduct random tests like any other sport? >> again, a few questions smuggled in there. i'll work from the back. i think that the drug testing and the blood testing that we agreed to stands up with that in any other sport, including the olympic sports. in terms of what we agreed to as well, it's not only that players can be tested for reasonable cause, that's true. all players were tested for blood during spring training of

2012. i dare to say that we had more blood collections in spring training of 2012 than any sport has had in any single year alone just with our spring training testing. we also have, though, random testing for all players starting this off season. every player in baseball is subject to testing for blood once the season is over. >> what is the difference between not smoking on the ball field and not using smokeless tobacco? in other words, why should players be allowed to chew tobacco in front of the cameras and the kids? >> there's a few differences. one is, you can't play baseball while you're smoking, and there are secondary -- it interferes with work, and there are secondary health risks associated with smoking. the position of the union on smokeless tobacco, though, is pretty clear. we have long advised our players of the serious health risks of the product, we have long

provided resources for our players to try to cease using. the discussion that we had in bargaining this time showed that the players understand that they can have an impact on the use of this product by younger people and through education and through other efforts, we're going to do our best to try to be role models there. >> how can small market teams like the pirates ever hope to win without a salary cap? >> if i wanted to be -- give a wise answer, i could say the way small market teams like the twins and the marlins and the rockies and others have. major league baseball has shown that we can have extraordinary competitive balance without a salary cap. competitive balance in the game since the collective bargaining agreement reached in 1996 really has been unprecedented. through revenue sharing, through

our reserve system which allows clubs to hold on to reserve rights for players for the first six years of their career and through other measures including our, the competitive balance tax. we think, and i think as well, the representatives of the owners think that we're at a place where each team has a fair opportunity to win the world series. >> how can you encourage small market teams to spend revenue-sharing money on payroll instead of pocketing it? >> that's a subject that's, we focus as much on in bargaining over the last 20 years as almost any other. we do it through a few different ways. we have an enforcement mechanism in our contract. clubs are required to spend the revenue-sharing proceeds to put a more competitive team on the field. if they don't, there's an arbitration process that we can go through. we've used that effectively in the past to monitor this position.

we've beefed that up. in this last round of bargaining. but more importantly, we try to create incentives in our revenue-sharing program so that each team has the maximum mum to increase their local revenue to put a team on the field. i think some of the most credittive bargaining that we've done -- creative bargaining that we've done, and this goes back to chuck o o'connor, some of the most creative bargaining that management and labor has done in baseball is in revenue sharing and fashioning a system where every team no matter where they fall on the revenue spectrum has an incentive to try to win. >> the head table is populated by former players who are active in union leadership. what role do they play that other union staff members do not? >> well, there's a lot of people in this country who think they know a lot about baseball, and then there are guys that have played the game. [laughter] guys that play the game know what it means to play the game. they know what it means on the field, they know the stresses

that, um, being a professional baseball player bring, they know the joy that being a professional baseball player brings. it's always been our view that to effectively represent baseball players, you have to have the input of those players. we get the input of current players all the time, but it's incredibly useful. it's essential really to have the degree group of -- deep group of former players we have on staff. we have people -- without giving away ages, we have people -- [laughter] on our staff, even on this dais whose playing career span basically the entire history of the players' association, and part of our success is having that resource tapped anytime that i need to send an e-mail or make a phone call. >> with 20/20 hindsight, how do you think the drug testing in the mlb should have been handled? >> i don't have 20/20 hindsight, nobody else does. don fear's been asked that

question, and he said that in retrospect it would have been better if everybody associate with the the game had moved a little more quickly. but let me say this. without getting into too much history, the bargaining history of baseball suggests that it would have been very difficult -- well, the bargaining history of baseball explains that we got to random drug testing about as quickly as we could. um, like with everything else in baseball there was very contentious drug-testing history. in the mid '80s, we had a joint drug program, and the owners terminated it. the drugs that were involved then were cocaine and drugs of abuse, not performance-enhancing drugs, but the owners chose to terminate that program. who knows what the world would have been like if we had a joint drug program continuously operating up through the '80s. we had very contentious legal fights about drug testing. the owners did make a proposa