>> that makes no sense. you've got to prevent diseases rather than to pay to treat them later. come up with a new proposal i read about today that they want

to take away the ability of states to raise money for their medicaid costs through taxes on the providers. it's used in california. if the state can come up with their money, the state can't provide service for the very poor. so we are being told we have got to cut the benefits for health or very poor, usually disabled people, in order to pay for student loans. that doesn't make sense to me. we had a lot of interesting hearings about what happened in 2008. the most dramatic one to me was alan greenspan who have the power to regulate some of these loans that would be used for mortgages and diced and sliced and sold off, and brought about the downfall. he had the power to regulate and he didn't. and asked him whether his ideology captain from recognizing the failure in the

market. and he said he was actually shocked that he was blinded by his ideology, that he thought markets would correct themselves. now, what i am concerned about, chairman ryan, and others, there's too much of a date that markets will correct themselves, that businesses will do things right. well, they will if they have the roles of the road to regulate them to make sure they don't abuse their powers, because often they are very powerful and want to squelch on competitors. and it also means we've got to protect the public health and well being. so one of the biggest problems for the 2008 recession was whatever was we had, they weren't being in force. laws that could have been adopted were not adopted by the federal reserve. and the cops are not there to tell the banks you can't use other peoples money and take these kinds of risks. that was something from both parties when we did away with

the glass-steagall restriction. which came about during the great depression when we said, banks, we will protect the federal dollars that we will not let you take depositors money and take risks with them. that was repealed under president clinton, with strong bipartisan support. i voted against it, and it about the banks to take all those risks, and with those risks the taxpayers ended up having to pay the cost and a lot of people are still suffering because of unemployment. >> with the remainder of your time, if you would like -- on the document that mr. rokita have but regulation. >> he gave a bunch of examples. i couldn't agree more with stupid regulation. we don't want stupid regulations. we don't want that, but regulations are needed. in order to protect the public

interest. president george h. w. bush signed the law that put in place the cap-and-trade program that told private enterprise, you figure out how to reduce the emissions that are causing acid rain, they are killing the forests and streams in the northeast and canada. and he said, we can't allow that. so we said, you've got all the market incentives. the industries came and said we will go bankrupt. they did it in less than a fraction of the price they said it would cost into successful. >> thank you. >> thank you, mr. chairman. this is been very interesting conversation. mr. edwards, we've talked about tax deductions and subsidies a little bit, but one program that i become aware of in my last 16 months being in his office in visiting a number of the industries in my district, those that are in the food production area have made me aware of

market allotments, and something i guess i really didn't know that much about until i had them educate me. but the fact that we in the sugar program have allotments to certain producers based on their history and their expected productions. and this has made it extremely difficult for new entrants to come into the market, which they tell me really does cause an unnatural high cost for sugar. and so does the sugar program to these market allotments, in your opinion, provide a structural barrier to entry? >> yet, sugar program is something i've written about and it's an interesting welfare that is off budget. it's a regulatory corporate welfare program but basically, in my view the training has kind of a system for sugar production. we have import barriers. we have detailed quota. we have loan programs that

eventually guarantee the price. and i think unfortunately what it does is by blocking entry into the industry it raises the domestic sugar price that usually, you know, the price varies but is usually twice the world sugar price. and the effect of that is not only to our consumers and at the department of commerce studies on this, it hurts consumers by the 10th of about 2 billion a year. at all sorts of u.s. companies that produce food items with sugar. so companies like kellogg and companies that make chocolate bars and confectioners, that sort of stuff, they have had to move out of their production out of the country to either canada or mexico to access the lower pressure to. so the sugar program is an example of corporate welfare. especially producers, but creates this broader damage to other businesses. >> i do want to note that one of the pieces of information they gave me was an actual advertisement that was coming from the canadian companies to say, produce your take here in

the united states and send it to canada to get it sugar frosted. they can save so much money. this is truly happening. so we see now a market that is moving into canada, taking jobs away from us, and also increasing the cost to the consumer at the other end. so i appreciate your information on that. are there other market allotments that you would raise up here beside sugar? >> the milk program. we have similar sort of program with u.s. dairy production, milk and cheese and away. essentially it's the same way. it's competition for, it's blocked competition in favor of existing producers and pushes up the price of milk and dairy products, which often hurts lower income americans, for example. so i think there's a lot the federal government does that helps certain businesses, but it actually hurts consumers and particularly lower income consumers. >> governor bush, i want to go, since i was in state government

and we the same time you were dealing with your medicaid issues, we were looking at your state as a model for defined benefit for those were on medicaid, and it was a very successful program. unfortunately, i didn't have the kind of support i needed to bring that same model to the state of tennessee. but given what you're saying about the success there, would you agree that block granting medicaid may be a more effectively, and affordable way for states to come up with their own ingenuity on how they can best provide for those who need that safety net? >> i do. i think that there ought to be careful review of the rules that go along with the block granting. you have to apply, you don't get a waiver from some of the requirements that would be a challenge, but it's a far better approach to be forced to

innovate because state budgets, i don't know if there's a single state that doesn't have a challenge with the medicaid budget, and they are forced them to either stop spinning on other things. because with balanced budget requirements, or reform how medicaid works. been given the freedom to reform and innovate and return for some fixed amount of money that would come, in our case i believe we were probably one half of the growth projected that we gave up that half of the growth in return for the ability to innovate. but that's a good trade off. >> thank you for that, because i think too many times we just continue to think about taxing and bringing more revenue through taxing to help the subsidizing programs. and yet there are some innovative ways to do it. using market competition. i yield back my time. >> ms. castor. >> thank you mr. chen, and welcome to our panel. if i've learned anything in my

45 years is that nothing is black and white. there are very few absolutes in this war. and that is one of the reasons that i think the extreme tea party ideology is so divorced from reality. free enterprise and government are not either or proposition. thank goodness we have both. we celebrate capitalism and free market in america, but i hope that we recognize that after looking to the worst economic collapse in our lifetime that reasonable oversight of wall street is important. now, when you talk about government in america, i do government as a way to secure opportunity for all. in fact, thomas jefferson wrote in the declaration of independence that we are all

endowed by our creator with certain inalienable rights. among these are life, liberty and the pursuit of happiness. but then remember jefferson went on and he said, that to secure these rights, governments are instituted. people want good government, and thank goodness in a 230 year plus experiment that has created the greatest nation in the world, we have successes to celebrate in government. when other countries look at this, they see the premier government funded medical research center, second to none across the globe. we can build bridges, airports. our commitment to taking care of our veterans is second to none, across the were. that's something government does a pretty darn good job of.

and our public schools and our colleges and universities are the envy of the world. and people want institutions to succeed. i just don't understand the extreme tea party ideology. they say government has no role to play, and the free markets are the answer to all. with the what i think drives citizens crazy more than all of these impediments to free enterprise and good government, when special interest achieve an unfair advantage, whether that's in business or the special interests use campaign contributions or their political influence to gain an undue advantage when it comes to public policy. and i've seen in the state of florida. we have a fundamental this room and policy over education. governor, you're an outspoken advocate for school vouchers. i don't think that's a secret.

idea vouchers as kind of a -- i view vouchers where you're taking money from the public schools, undermine their mission, giving those funds to private for-profit center. i think oftentimes those vouchers come with no accountability for student success or fiscal responsibility or oversight of those profit centers. and i fear what's happening with your push to take taxpayer dollars and give it to the digital classroom as a substitute for a good teacher, a good classroom as a supplement, fun, but to drain public resources and hurt our public schools by focusing on a digital classroom that have a poor record of student success i think is questionable. so here's the inconsistency.

vouchers, digital schools without classroom, i think you could include private for-profit tutoring companies that came in under no child left behind. these are not free enterprise. a free enterprise and education would be an independent private school, not depend on government funds. but what we have here our government back, government funded businesses. what do you call on a private for-profit business uses its political context to get the government to direct money to a private business, rather than public schools? you said honey pot. is that capitalism, crony capitalism, the term that is thrown around you? or just effective lobbying? so the national education policy center wrote in a recent report that his policy prescriptions are part of a corporate driven agenda to access public education funds. these folk talk about free markets but they couldn't exist without taxpayer dollars. >> since used up all your time

for the preamble on the question, and it's directed straight to governor bush, go ahead governor bush, and response back so that osha programs that exist are three in florida. you have a corporate tax scholarship program where companies voluntarily give a dollar for dollar credit to an organization that is not-for-profit, that provides for low-income floridians a chance to go to a private school. the best i can tell every one of those is a not-for-profit, not a for-profit. we have a scholarship program which says if a parent is not satisfied based on federal law with the individual education plan under the ide a law, that they can take a dollar for dollar the money. that's not the government's money. it's their money. for their child to go to a

private option. the best i recall, every one of those entities is a not-for-profit as well. so to use the thomas jefferson analogy, i don't think that president jefferson, if he knew that we're spending at the level we are spending him if he saw the size and scope of the federal government, he would be appalled. why not empower people that don't have choices to be able to go to an option? its work. public schools in the state of florida are better off base on the only measurement that matters, congressman castro, which outcomes based on n.a.p.e scores. public schools are better. we've gone from out of 31 in the fourth grade reading to something like now i think we're in love with the out of -- >> but the same account of the standards have not been applied to many -- >> the gentl gentlelady's time s expired. the gentleman, we are allowing him, we gave you 10 minutes more than a windows.

you can take time to response and use of all your time to ask a question. >> on digital learning, the great majority of the courses on digital learning will be done in the classroom, high quality content brought him, using the internet and the abilities for adaptive software to enhance the learning experience seems to be a 21st century solution about to be embraced by everybody. in fact, a great majority of people in the state, left and right, are supporting this. thank you. >> thank you. >> thank you, mr. chairman. governor, i want to thank you for being here. you brought up the mckay scholarship issue, and i think that's a tremendous model for providing options for special needs children and their families. been a very successful program. i applaud the state and your efforts on medicaid reform, and actually agree that some options in the state of kansas we try to

emulate him implement some of those even under a former governor who was ahead of hhs. it's kind of interesting we put proposals in the state that she wanted to do when she was governor. so look forward to her approval of those. but when you want to talk about this morning is the obama jobs deficit bill. based on the projections from the administration with their stimulus package, that if nothing had passed and the seamless package, they projected the unemployment rate today, this month, would be 6%. if nothing were done. it's sitting at april 2%. the obama jobs deficit is 13 million jobs failure. they have failed, its impact has not worked. i will ask chris and the governor as well. can you tell us why that stimulus plan failed? again, it will cost us about $111 trillion. i open it up to that question. >> i think the governor mentioned it is the slowest

recovery of any of the recession since war ii, which is remarkable. what market economies do when they're left alone is the naturally adjust and the economy starts growing again. we've seen that in every recession when the government leaves it alone, it naturally starts growing again. back in 1921, there was a terrible recession. unemployment soared to 15%, but the government at the time congress at the time didn't do anything, and the u.s. economy very quickly adjusted and started growing again. i think there's been lots of mistakes. i think the jobs problems i think of both business investment problem. if you look at the national income accounts data, u.s. companies are not building new factories. they are not expanding their factories. they are buying equipment from investment, but investing in new factories has not recovered. it's plunged to very low levels today. when business invest they need to hire new workers, so we need

to get the business investment first, which is why i suggested corporate tax cuts. each of unemployment benefits the last two years, you greatest natural incentive for people not to make the tough decision they need to go out and find jobs. so i don't believe the idea of changing work. with a trillion dollars deficit for years and will never even this year, the 2000 stay in this bill basically has already ended but we've still got a trillion dollars of so-called stimulus with the federal government deficit. that's textbook keynesian terms that sustains. look at the results. the results are still very high unemployment, so i don't think this models were. i think when the government spends more money come it takes money away from the private sector. i think the private sector is more efficient. the bigger the government gets, the more you push of gdp and it

just hasn't been working. >> i had an employer in my area code, i don't care how much you give me an expert, i'm not going are more people. it's the demand, and less of the economy is going. we see in europe the idea of austerity put england into a double dip recession. we have seen people in europe bridling over the oak of this austerity notion. what we needed to do in schedules to work together on a bipartisan basis to do something about it. but everything that the president obama proposed, the republicans opposed. and i haven't heard a jobs proposals from the republicans, except give people more tax breaks. >> mr. waxman, i appreciate that. i do have a question for you. >> oh, good. >> it's good for you to defend the steamers which is 13 million jobs short of what the president promised us. i wasn't sure, and i presume you voted for. one thing that bothered me on

the regulatory side as well, is this idea, this question for you, because this question is consistent, congressman, do you think washington politicians and regulators make better decisions than businessmen and women? and i would be my question for you. >> there are things called market failures, and there are things called government failures. but there are market figures, and that's where government needs to step in. for example, if you don't regulate that solution, the waste disposal in the air would be free. the market provides no incentive for polluters to control pollution. social costs on their buddy that far outweigh the cost to clean up. the other area where there's a failure of the market is insurance companies. i have so me people tell me -- >> could you answer the

question, mr. waxman speak with you asked me about -- >> i'm out of time, i want you to answer the question spent on trying to answer your question. the market failure of insurance for health care. people cannot buy it if they have pre-existing medical conditions but you can't blame the insurance company because if they have to provide insurance coverage for sick people, they have to raise the cost of insurance for everybody. so the idea behind the romney plan in massachusetts and the obama plan here was to spread the cost out with the requirement that everybody participate. stimulus, either by tax cuts or direct expenditure, what you need with this strong unemployment to get people back to work, and that is what we need to do. and i wish there were some republican who would've helped. not a single republican in the house voted to our president obama. >> thanks. i think you did answer his question by want to keep on time. mr. ryan?

>> thank you, mr. chairman. we covered a lot of ground you this morning. i just want to kind of go back over a couple things. one, first of all with the auto bailout, and the government getting involved. the reason for government got involved is because there wasn't any private sector money to help marshal them through this bankruptcy. state like ohio, one in every eight jobs in ohio is tied directly to the auto industry, and there are good manufacturing jobs, we would've lost a lot of those. and i will tell you that it was my republican car dealer friends who are coming to washington, d.c. weekly to tell us how we needed to do this. and i will quote here bob lutz from general motors, the vice chairman who also happens to be a republican talking about some of the republicans leading the auto industry go belly up. he says quote, it's once again the fiction that we did need the government and this could've been a privately run bankruptcy

with the normal chapter 11. what these people always deliberately forget is there was no money. nobody had any money. and that's why the government had to intervene, and for those of us in ohio, we are very, very glad that they did. also, there was an issue of, and i think it is this balance between public-private partnerships, and the gentleman from indiana talked about the in day in the turnpike. i think it's very important for the people who are listening to know that the tolls on the indiana turnpike have doubled in the last five years. because you're not only maintaining the road and not only making sure it is cared for, you also have to factor in profits. so the tolls on the indiana turnpike that have been privatized have doubled in the last five years. >> will the gentleman yield? >> i'm sorry, i would have five minutes. i'd be happy to. can't alter the facts. those are the facts. the other thing you mention, governor bush, and i agree with

you wholeheartedly, the issue of candidate. a candidate solve their problem by the conservatives and the liberals coming together to solve the problems. the issue intent is the conservatives in canada would be moderate democrats in american political system. and there is no question about that as well. and so what we are trying to argue here is that is going to take a balance, it is going to take both parties, and it's got to be a moderate approach, like i think you probably espoused, and like her father certainly a spouse as well. is that down the middle, be happy, if want to comment on the. >> will, structural reform is not really ideological, but it did take out your entitlement costs and modified in any way that made it possible for them to reduce their size of the government as related to the size of the economy.

now, i'm not sure i don't know if, that's not an ideological thing. but it's reality checking. when you structure problems, you've got to pause and deal with them. many countries do that. unit, so i would disagree that conservatives are moderate democrats, or moderate levels, whatever. >> nobody in canada said take away their health care for all the people. they said let's do some things on a bipartisan bases that make sense. here we have proposals to cut the safety net out of the poor. take away the guaranteed benefit for medicare so that millionaires and billionaires can have tax cuts. that makes no sense to me, and i don't think make sense to the american people. and the auto bailout was a success. why are we fighting against what was a success? >> i agree. let me just ask governor bush a question, because i think the debate of investments and what the role of government is today i think is a very important question for us.

and i know that in the florida budgets when you're governor from from 99-'06 had went up significantly from $48 billion in 1999, to $74 billion in 2006. and my question is, what were the investments that were made, what with a priority that were given, and explain some of those increases? and has florida yielded some of the benefits from those investments that you may? because i've heard you talk about -- >> thirty seconds left. you may want to give them a second to answer it. >> the largest increase for medicaid budget, which the federal government was her partner in increasing, and it grew dramatically because we had no control over it. we did spend increase money in real terms on public education. we increased money on land conservation and things that, the objective was to take one time money and spend it on

long-term things. so we created a research -- from california, and so we did, we prioritize our government grew slower than personal income growth in the state. we had 22000 fewer state workers since the growth of the government. i think our job creation in the state, not because of the government but because there were good times. we had a good business climate, grew faster than, created more jobs than any state in the message. so it was a different time than where in right now, that's for sure. >> thank you. mr. ribble. >> thank you, mr. chairman. thanks to the panel. get right at it. only five mins. mr. edwards, if you had, let's just say existing tax code

disappeared in the blank paper in front you. would you tell me your top three principles that you would choose as your guide to writing your new tax-cut? >> i was a economic efficiency, supplication, and visibility and transparency. so economic efficiency, the key is lowering marginal tax rates. and the chairman's plan does that, lowering rates down 10, 25%. simplification. the tax code is usually complex, especially for business and small business. that is just a compliance tax on the overall economy. it doesn't do any of us could. transparency and visibility. i would take steps, for example, americans only see half of the social security and medicare tax on their pay stubs every couple of weeks. so they don't know, they only know half the junk cost of social security and medicare. i would make that visible on pay

stubs. so that's the type of thing i would do. again, i would do the most important thing, lowering the corporate tax rate is the single most important thing we can and should do in this country. and again, that's been a bipartisan reform around the world. even the most socialist welfare states in europe, france and the like have jobs or corporate taxes because of this realization that they wanted businesses to do well in the global economy, and we should do the same. >> just a quick follow-up. wit as any corporation get the money to pay the taxes? where does that money come from? >> of course, corporate taxes are really the ultimate burden lands on either workers, consumers or workers for corporations. every economist agrees with it. there's disagreement about where corporation push down the burden. but in the global economy, the general rule is that the burden lands on the most in mobile factor of production, the most in mobile factor of production

is labor. so economist more and more agree that the corporate tax burden ultimately lands on labor, american workers. there's been studies by scholars and others that find most of the corporate tax burden has factor lowering the wages of workers speak governor, what would your principles? >> that sound pretty good to me. simple, transparent and at a place that creates the most efficiencies for economic growth and for the government to receive the revenues that they need to do the basic things. there is a point where there is a balance. there's inefficiency, a place on efficiency where the rate will yield a greater amount and will create at the same time you

create economic activity which really ought to be objective. a growing economy based on our tax code creates far more revenue for government. disproportionately more spent cannot do do a follow-up question on that topic? if we reform the tax code to eliminate the expenditures, take the savings and apply it to a lower rate, and essentially the effective rate, which is what it is, have we really done anything to gain competitiveness? or do we need to go below the effective rate? >> all, i think the first thing that happens when you do that is that your shifting power away from washington and the surrounding areas, which is probably the place of greatest economic prosperity right now. back to the rest of the country, where decisions, economic decisions are made by individuals that want to risk their capital and pursue their dreams. right now it's fun to go to

dulles airport, tried by the. these are major companies that have huge growth, lots of construction your housing prices are incredibly high. income levels are the highest in the country. why is that? i'm sure maryland has a great business climate, and so does virginia. this is a source of business now that is incredibly important for all sorts of businesses. so you would shift power away from washington, and i think you'd have more economic activity if you simply find the code that would generate more revenues for the government. >> thank you. just one, to congressman waxman. thanks for being here. i would say you used the phrase that house republicans want to return america to -- just give you my take of the robber baron to a robber baron is government that steals money from middle-class, hard-working taxpayers and gives it to rich bundlers like solyndra. thank you. and i yield back my time. >> mr. waxman?

>> i don't think that was a question, just a comment. he hasn't used. >> just want to make sure, because you are invoked, out of fairness. who is next? i don't know if you know this, the gentlelady from florida, her name is ms. wasserman schultz. >> we have met governor. it's good to see you. welcome to the budget committee. i want to ask my question, inflame and from my standpoint as a mama who is raising three young children and attending the public schools in florida. and also as someone who served for six years, my tenure in the legislature with you. the one times money -- the one time money she gives -- and i do find some irony here, you are here today under the guise of removing barriers to free enterprise. while in office you recall you spearheaded a deal to use more than $690 in public money to lewis the script research institute to build a facility in

florida as a state legislator at the time i remember being called into special legislation so we could pass a one time $310 million gift for the script research institute from federal sting this mess around cared for florida. palm beach county and about $269 million to pay for land and building for script. at the time you're quoted as saying there's no better way to spend a one time and federal economic sting this money than by investing i in the project is first taken a -- i was on the appropriations committee and remember questioning your staff and you about the importance of accountability without investment. you insisted that wasn't necessary. i remember distinctly attempting through amendment that we could ensure that the promise jobs are not grea great, great at scripps would have to pay some of the funds back to the state. you oppose the and said it wasn't necessary. in spite of our strong reservations about this gift without a canada at all three private entity, democrats including he voted for the scripts the. i voted for the scripts built.

>> no, you didn't. >> we tried it your way. let me describe the result but as of 2010 scripps florida employed 377 people. that's $1.32 million per employee. that's over $900,000 per employee. in fact, governor bush, scripps florida and the promises of massive job creation were massively over. it would treat a 2800 direct jobs after 15 years. but as of the end of your seven, scripps florida employed 377 people. estimate spinoff jobs in other companies were largely -- fancy stuff at the time to 40 or 50,000 were predicted. going to rectify the florida office of program policy analysis and government accountability, in fiscal year 2004, scripps for the creation of a projected 615 full-time and part-time equivalents and in fiscal year '07 as were the creation of an estimate of 1327

jobs. in 2003, the year it passed, it was a $49 cut from state universities and end of the road and healthy children's insurance program. given the employment numbers which were far lower than projected was it a good decision to fund and private enterprise? how middle income children could of had health insurance or student could receive tuition assistance at the equivalent of $1.32 million per employee? the same policy is writ large and romney ryan budget plan which doubles down on a policy that benefits large private corporation and the wealthiest most fortunate americans at least the middle-class working families to fend for themselves by sport has one of the worst high school graduation rates in the country and rough require remediation when they get to college. just this year florida's universities got $309 from the reserves and i think budget

speakers can you get a jump in time to respond? >> i'm trying. you just took some seconds off my time. time. st. jude restored i would appreciate it all because it economic policies were originally status by to governor gave away millions of dollars in taxes that could've gone to education infrastructure and other important investment. here's my question. is fiscally from tasman this morning, as you said them that is why my best advice to you is to perform a fundamental cost benefit of many programs in government. you said no matter the good intention of the government creates unintended consequences when you act. what would it show? later in reference to example of the 49 different federal job training programs you ask, are they being measure of success? good question. so how do you think that we apply your advice to the scripts deal, would hold up? how could you justify giving

away $600 million in public funds with no accountability to a private conference because i again, welcome to the budget committee, governor bush. you have 90 seconds to respond. we will let you go over. >> the scripps research institute is not a corporation. it is not a for-profit company. it is a premier not-for-profit research institute that does world-class research. accountability that you voted for, i'm glad that you voted for it. you were against it before you were for it. you were for it before you against it. i'm happy that we had your vote, was based on the money would go out based on 5% five jobs that are in the process work already completed. so this is an idea to spur innovation, to spur additional activity. it gets hit by the downturn in the economy, but has been significant higher number of jobs, spinoff jobs or jobs created because of scripps and

torre pines and other institutes, and with increased, at least in my tenure, i haven't followed the budget states and to, but we increased funding for funding for research and universities as well. i'd say we're probably in terms of research spending, probably number five or number four. and 10 years ago we were probably 25 or even-it. so i think from the perspective it ought to be reviewed, i completely agree with that. there ought to be an analysis done, but for some is work in progress, i would say it's been a success. and i would add that we not spent this one time and on these long-term things, the money would have been spent and it would have been spent creating huge recurring gaps that many other states have funded, has had to deal with that would've ended up creating higher taxes for floridians. it would have hurt our economy and made our business climate worst spent know, governor --

>> the gentle it is time has expired. >> i know. i was just going to ask speed if you want to include something in the records because yesterday let me just say what it is, if i can get it included it's an article from the sun sentinel that shows that palm beach county's $100 billion -- [talking over each other] >> because it was such a debacle. >> without objection. governor bush, were you finished with your interest to? just glad to be here. [laughter] >> i know, it's amazing. thank you, mr. chairman. and thank you all for being here. i won't give a five minute campaign speech. mr. edwards, what extent is it necessary for governments to provide infrastructure? and how much can the private sector to? >> the governor touched on this. he commented that we are a dime a lot of countries around the world in terms of privatizing

our infrastructure, moving a lease to public-private partnership structure to the indiana toll road was mentioned that where i live in virginia, the capital beltway is being widened by a billion dollars a private moment. they are building new tunnels and bridges all with private money. so there's a heck of a lot the private sector can do in terms of infrastructure spending but i'm on a in e-mail list by the consulting company that tallies the global total and private money going into public infrastructure. united states is way behind countries like australia and canada are ahead of us on this so that there's a hell of a lot we can do. i mentioned canada, for example, in terms of in the structure. they privatize their air traffic control system back in 1996 the people in this country think wow, crazy come sunday as a more as the air traffic control system. in canada it's run by an independent, self funded, nonprofit corporation. it's been a huge success. it has international award for

innovation. the private sector can do a heck of a lot if we really opened up some of these barriers to inve invest. >> mr. waxman earlier talked about market failures when my colleague from kansas was speaking to them. do you have any general thoughts about market failures versus government failures? >> i think there's a lot of government failures that led up to the big crashed in 2008. i think the central bank, the federal reserve, all these housing subsidies that helped create housing bubble. and i think the idea of more regulation is problematic because some of the biggest scandals, the bernie madoff one, for example, was not a result of lack of regulation. that was a result because the sec was sitting on its hands and ignoring the obvious evidence that was after. the enron corporation debacle, to me, that was outright fraud. there's always illegal. so i don't think regulations will solve our problem.

>> when people are paying most of the taxes to the federal government rather than to state or local governments, do you think that's the right balance? should we shift in the long-term some more taxes going to local government rather than federal government? >> for a century now there's been this huge pressure of centralization in the united states what you think is problematic but if you look at total from spinning in the united states, it's now 70% federal and 30% state and local, which is rather us down. they other way around in my view. the federal government should have some basic function that we all agree with him and we have to leave a lot of stuff like infrastructure and education to state and local governments. again, i believe in the laboratory of democracy. i think when state and local governments have control over their own program, there's a lot more innovation, and the programs are leaner and better run. that's the direction we should moving. >> as i talk to constituents, whether they are tea party

people or people in the occupy movement, this seems to be a lot of anger about similar things. it's the bailout, subsidies, revolving door between wall street and the treasury department. these are the kind of things, these crony capitalist features would seem to be a part of interventionism, do you think that cronyism, corruption, waste are a natural byproduct to interventionism? is inevitable when you have a government that is this big you are going to get cronyism, corruption, waste? >> yeah, absolutely. i mean, again, we're always going to have lobbying. that's always going to be a problem. but we don't need of all the subsidy programs. i calculate the united states now has, the federal comment has 2000 different subsidy programs all the way from medicare down to peer programs most of us have never heard of. all those 2000 different subsidy

programs, they get lobby groups, you know, grab onto them and they lobby for more and more and more. that is a fundamental problem. i think congressman waxman, get together for a lot of these crony programs in the budget and agreed to cut and i think congress ought to be doing. >> governor bush, any thoughts on that? >> in what? >> cronyism in general. spent the more complex, the bigger the government gets. so you will see more of this. and the less clarity on what the rules of engagement are. unit, a good example of that is dodd-frank. with five in a separate rulemaking processes that will take seven or eight years to implement. the unintended consequence of all this will play out, and congress will have to adjust to. but in the interim it freezes job creating kind of activities and it's not a question of regulation. we had regulation in place.

intand to the congressman's ..,f you federal reserve chairman at the time said well, we didn't apply the regulation, that the law already allows, that's a separate subject than being deregulated or unregulated. >> greed is not unique. it is unique to people and, therefore, you need to establish restructure and so the people to take advantage of others. that's why we're pleased. but that's why we have the law. there's abuse in private sector. government has nothing to do with that. that's just rampant greed. and that's why one of our hearings, the advisors for compensation realized they could also -- they didn't pay

attention to that, and there was an area where there was abuse. because of greed, let's keep that in mind. >> thank you. >> i'd like unanimous consent to place certain newspaper articles in the record. >> without objection. >> thank you very much. along with the governor's biographies presented to the committee. >> is already in the record. >> thank you very much. welcome, governor, congressman waxman. thank you all for being here today. governor bush, i read your testimony with interest and apologize i was on the floor and couldn't be here for the early part of the hitting. but into chechnya state and ago, i understand that there may be political support for specific industries and companies comment and we know from recent experience in government is not good at picking winners and losers in the economy, and fundamentally it's not the job of government to pick winners and losers in the economy. i've like to learn more about

your thoughts on the financial services industries. one that i understand from press reports you have worked with. according to "the wall street journal," shortly after you left the governor's office you went to work for lehman brothers in what is described as the in house investing arm of the company. was that correctly reported? is that chris? >> i was on the private, private, advisory council of the private equity arm. >> thank you. and you are working for our with lehman brothers then when it collapsed, is that correct? >> i was a consultant advisor to lehman brothers. >> okay. [inaudible] >> excuse me? >> not an employee. >> to use to work for -- did you receive compensation for the engagement? >> yeah, sure to be used to work for lehman brothers merchant banking, which i understand was spun off? >> no. >> you do not, thank you. thousands of people lost their

jobs when lehman brothers collapsed and many people lost money. what was your job at lehman brothers exactly? >> i was an advisor to lehman brothers. have dealt with basically, spent most of my time dealing with their customer base. providing insights, things like washington, d.c. sharing my experiences with customers to try to add value in their relationship. so it was not related to internal functions of the company. it was related to client interface. >> if you could provide mean specificity for the record, that would be greatly appreciated. do you think the government picks winners and losers from the financial bailout? >> i think government oversight was lax. not the rules that were created afterwards, but the oversight was lax, for sure. >> might make a simplification

on another small point? because of some reporting in "the guardian" newspaper in britain, for whom do you work now? and he had any relationship to berkeley? >> i do. >> what is the relationship? >> i'm a senior advisor to berkeley's capital. >> they reported in 2010 that u.s. bankruptcy examiner concluded that grounds exist for legal claims against top lehman brothers auditor ernst & young for signing off, this leading accounting statements, in the run up to the 2008 collapse. the newspaper said the 2200 page forensic report, which i'm sure you're familiar with, into -- >> does the gentlelady have a question about the subject in advance? >> i do. reveal that barclays which bought lehman's u.s. business out of bankruptcy, to which it was not entitled to i'm quoting, are you aware of any of these

validations? did you respond you can? >> no. no, i'm not. >> valukas report filtering lehman's final few hours its chief executive officer sought to convince prime minister gordon brown to overrule britain's financial services authority when it refused to fast-track -- >> does the gentlelady implied this gentleman anything to do with that? >> well, thank you if you just allow me to finish a. according to "the guardian," and i quote, during the banks final hours of september 2008, tried to desperate to strike a rescue deal with barclays but the fsa would not allow the british bank and exemption from seeking time-consuming shareholder approval. mr. chancellor declined to intervene and hold appeal to the u.s. secretary henry paulson to contact the primacy. in according to valukas report, asphalt and to call prime minister gordon brown but he said he couldn't do that. so he asked paulson to ask

president bush to call brown, but paulson said he is working on other ideas. but in a brainstorming session he suggested being the present brother, jeb bush, was at lehman adviser to get the white house to lean on down industry. did your boss make such a suggestion of? >> first of all, he wasn't my boss. i was a consultant to lehman brothers, as i stated. and no, he didn't asked me to do anything am and i didn't do anything. >> i would solicit what you direct your question to mr. fuld? >> mr. chairman, it's very interesting how terse you were with my questioning this morning. >> you are not asking questions about the hearing. you are asking innuendo. >> it's important for the american people to understand what their financial connections actually are. >> so, i will bring it back to them. i will start off with testimony from the witnesses. mr. waxman, congressman, you made the comment with reference to i guess the appearance of

propriety. let's go that way when you can soldier on the payroll to companies on the one hand and they are the ones that are involved with the decision-making of the souders and what have you. certainly there is an appearance of impropriety there. i guess the politics, you can sometimes see the same things we're people who are making donations to politicians or elected officials on the one hand, and at the same time those very same politicians or elected official are making decisions with respect to those donors. is there not the same situation there regarding politicians of? >> well, i think there's an appearance of unseemliness. and that's what i think the system we have for these campaigns is one we have -- i think there are distinctions between the two. >> i appreciate it. so we have the same situation on financial matters if this gentlelady brought her up with a situation of mf global where the

individual is now one of the largest bundlers on one end. and on the other hand the same individuals being investigated, or at least the company is being invested by the very same administration. so there is at least an appearance of impropriety when someone donates to the administration and the administration -- or maybe not doing a valid investigation. speak you need to go beyond the appearance and look at the fac facts. the solyndra investigation -- >> i'm not on the particular much. what i'm concerned about is your testimony when you make the accusation that republicans want to return to an air of robber barons with no restraints on wall street and enriching themselves at the expense of everyone else. i don't know how you can say that. further, you going to say that the problems of 2008 were demonstrate on the collapse of wall street, was caused by the absence of cops on the beat. really? there were cops all over the be. when you look at the institutions that failed. aig, they were a regulate institution to lehman brothers,

they were a regulated institution. actually was not sitting inside lehman brothers at the time but there were regulators who were sitting inside lehman brothers on a daily basis and they failed to get it their job. >> i would absolutely dispute that fact. >> there were regulators at lehman. >> their financial practices were not being regulate or being watched, and i think governor bush was right when he said it was not government oversight. the acc, it was shocking how poorly the sec did it's job spent that's exactly my point is you have regulars from the sec, the ogf, to the federal circuit each one of these institutions were regulators involved with starting from bear stearns on out, regulars have the authority. they had the information. they had the wherewithal to try to prevent a meltdown in l.a. so we would not find itself in a situation today. the regulators failed to do the job. so where's your testimony likes

to point the finger in at wall street and the free enterprise system for failing and greed i think we can equally point the finger back at the regulars who were sitting in these companies. they failed to do the job. spent the solution -- [talking over each other] >> i appreciate that, but as you can see from both investment and financial services, there's not a single republican who is ever said that everyone said was said to reform. let's turn to another issue which i know is dear to the governors are, and that his theory of education. that's also important to me as well. you have k-12 education, and we know what has been able to be done in various states such as ours. have enough flexibility in this area of governance role in

education has been limited. it's grown in the last few years, the last decade it's grown i would say. but it's not similar to health care with the federal role is now significantly both in regulation spending and the two major programs significantly higher. i think the objective ought to be a years worth of knowledge in a years time ought to be effective measuring, and states occupied to apply different approaches. in our case we have an accountability system that was based on grading schools, 1% based on student learning, ending social promotion, school choice, compensation for teachers that was different than just longevity and service

driving it. digital learning being an element now of the florida strategy. and the results are there, just congressman waxman will probably appreciate this. low hispanic income kids score average -- we spend less than 7000 per student. it's because we have a focus strategic approach. and florida is different than california. we are different than other states. and so we ought to be given more freedom to do things. i think that title i monies is a place where maybe there could be more innovation, for example, in the lower performing schools. you know, i think you could trust governors and state legislatures and the communities in states to be able to come up with the best solutions. >> thank you. a vote has been called so we will have to be dispatched to last but not least, mr. mulvan

mr. mulvaney. >> mr. edwards, thanks for coming. by with quick introduction, these are reductions in tariffs on things that are not major that are generally unable to the marketplace. we're having debate now whether or not those are in moscow whether or not those attacks of these. they are some specific discussion as to whether or not miscellaneous tariff benefits are a subsidy similar to a tax loophole. i would like your opinion on what you think they are tax subsidies or tax loopholes. ..

>> bill that's in front of congress there, but tariffs are not a good idea in general. like taxes, they distort the economy. >> generally speaking, would these reductions on tariffs, on products that are available across the market, would you consider that to be corporate welfare? >> no, certainly not. um, you know, i'm for closing tax loopholes, i'm for closing, i'm for getting rid of special deals on the tariff side, but i don't -- special deals for particular industries on tax and spending and tariffs are distortionary, but be it does strike me there's a difference between tax reductions and tariff reductions and spending. >> and, ultimately, the primary men ri is the consumer -- beneficiary, is that right? >> oh, absolutely. >> governor, i don't have any questions for you.

mr. waxman, i have one question for you. i've sat here and heard the auto bailouts mentioned several times. they were designed to somehow save the auto industry, save them from bankruptcy. of course, you knew that chrysler went bankrupt anyway, right? >> i do know that there's a vibrant -- >> did chrysler go bankrupt in april of 2009? >> yes, they did. >> did gm go bankrupt in june of 2009? >> well, i don't know, i'll refer that to -- >> did gm go bankrupt after the bailout? >> i don't know. >> they did. i can assure you they did. i'm a little surprised you hadn't heard about it. i've only got one question about it. mr. waxman, i'll ask the question, and i appreciate your answers. when, when chrysler went bankrupt, it did so in an extraordinary bankruptcy proceeding. that denied for the first time in a long time, if not ever, secured bondholders of the rights to which they were entitled. one of those secured bondholders

was the indiana state teachers' retirement fund. another was the indiana state police pension fund. together those two pension funds of public employees, teachers and policemen, lost several millions of dollars of their retirement money, and my question to you, is what would you like to tell them? >> i'm not an expert in this area, but i know when the airline industry goes into bankruptcy, they tell their workers you can't continue the pay you have negotiated from us. people get hurt, and when businesses go bankrupt, the stockholders get hurt, the bondholders get hurt, but in this country the ceos all come out on top. >> mr. waxman, do you understand the difference between a secured bondholder and a stockholder? >> i do. >> so what would you like to tell the secured bondholders who were entitled to certain protections who didn't get them,

and specifically i'm speaking of the retired teachers and retired policemen of the state of indiana? >> tell me what you would like to tell the unemployed autoworkers and the oil industries in the midwest that are dependent on them if we let the -- >> and i will ask you again, mr. waxman, do you understand the legal difference between a secured bondholder and an employee, a secured bond holder and a supplier, or a secured bondholder and an ordinary stockholder? >> i don't want anybody to get hurt. but the fact is people do get hurt when we have a mismanagement of the economy so that we have banks taking huge risks with other people's money on securities that don't make sense and then slice them and dice them and sell them abroad, and the whole bubble fell. and government should have been there to stop that from happening, and government wasn't there -- >> and instead what government was there to do, mr. chairman, was to steal money from retired teachers and policemen in order to give it to unii don't think so. with that, i yield back the balance of my time. >> thank you.

that, all time is yielded. as you can tell, washington is as friendly and kind as it ever was before. [laughter] look, henry waxman, congressman waxman, thanks for coming and spending your money with us. chris edwards, you've testified a number of times, appreciate your insights. and governor bush be, it's not all this bad. when these microphones are turned off, some of us actually do kind of get along with one another. so i just want to thank you for taking the time out of your busy schedule to come and share your insights with us. thank you very much, this hearing's adjourned. [inaudible conversations]

[inaudible conversations] >> in a few moments, a look at diplomatic efforts to curtail iran's nuclear program. in a little more than an hour, matthews on the presidential campaign. and the senate's in session at 10 eastern. today's agenda includes a procedural vote on a bill regard b gender-based pay discrimination. >> we have several live events to tell you about this morning. a senate government affairs subcommittee holds a hearing on the hiring of veterans by goth contractors. that's on c-span at 10 a.m. eastern. also at 10 on c-span3, the senate finance committee looks at government programs to provide poor families. the program that provides assistance to families and

children expires this year. >> michelle and i are grateful to the entire bush family for their guidance and their example during our own transition. george, i will always remember the gathering you hosted for all the living former presidents before i took office. your kind words of encouragement, plus you also left me a really good tv sports package. [laughter] i use it. [laughter] >> last week portraits of former president george w. bush and first lady laura bush were unveiled at the white house. it was their first visit since leaving office. >> as fred mentioned, in 181 dolly madison famously saved this portrait of the first george w.. [laughter] now, michelle -- [laughter]

if anything happens -- [laughter] there's your man. [laughter] >> watch the entire event online at the c-span video library. >> former ambassador tom pickering says it's difficult to see how questions over iran's nuclear program will be resolved without bilateral talks between the u.s. and iran. he's on a panel hosted by the arms control association. this is a little more than an hour. [inaudible conversations] >> as those in this room know, we are now at another critical juncture in efforts to negotiate a resolution to issues surrounding iran's nuclear program. after a long interval, the six powers reengaged with iran on april 14th in istanbul, on may

23rd, 24th in baghdad the parties discussed specific proposals. the six powers called for iran to end its enrichment of uranium to 20% and ship its stockpile of material out of the country in exchange for providing 20% enriched uranium in the form of fuel plates for the tehran research reactor, nuclear security assistance and critical spare parts for civilian aircraft. the iranians presented their own five-point plan offering greater international access to its nuclear facilities in exchange for easing of sanctions and recognition of its right to enrich uranium. iran's chief negotiateor, said ya lille lille, voiced disappointment and complained that the proposal was unbalanced. the head of the six-power

delegation, europe's captain ashton, was more positive hoping for tangible progress in moscow on june 18th and 19th. meanwhile, the head of the international atomic agency, amano, discussed specific concerns about past iranian activities. by the end of june, the united states is scheduled to tighten exist being sanctions by beginning to sanction all foreign banks that process iranian oil transactions through iran's central bank. the europeans are scheduled to ban all imports of iranian oil starting july 1st. and the centrifuge bees keep spin being -- centrifuges keep spinning and suspicions of iran's nuclear program linger. as with the israeli/palestinian dispute, it's easier to sketch

out the shape of a realistic ultimate solution than it is to figure out exactly how we get there. so to help us sort out this most difficult task, we have a panel of three imminent experts. biographic highlights have been provided to you in writing, but let me introduce each to you with just a few words. ambassador thomas pick beering has headed more -- pickering has headed more u.s. embassies than many work in in their entire career. he has served as undersecretary of state for political affairs, and he's also been very active in track two discussions on the iranian nuclear issue. ambassador ohio sane mousavian has served as the head of the foreign be relations committee of iran's supreme national security council and talks with the european union 2003-2005.

he's now a research scholar at princeton university and the author of a new book, "the iranian nuclear crisis: a memoir," which will be launched here in this building tomorrow. sonya cronberg is a member of the european parliament and chair of the parliament's delegation for relations with iran. an engineer by training, she has doctorates in business and administration, has served as minister of labor for finland and speaks six languages, the most difficult of which is finnish. [laughter] without further ado, let me turn to our speakers for brief remarks on where we are in the wake of baghdad and what we need to accomplish in moscow. ambassador pickering, if i could ask you to go first. >> thank you, greg, very much

for the kind introduction. it's a pleasure to be on the panel. hosein and i have done shows together. we are -- if it won't really destroy his reputation at home, quite together on a lot of ideas, particularly the negotiations, and i've just met and had the pleasure to talk briefly with dr. cronberg. let me also control the arms control association, and i believe you have made and continue to make a major contribution to thinking and, indeed, to constructive examination. i think in a way that's a policy in this critically important area. i'm honored and pleased to be here, many old friends in the audience, and i'm delighted to have a chance to address this critically important issue. i was asked to address two questions. one, what is my judgment about istanbul and baghdad and, secondly, what is my view about the process ahead. i'll do that against the

backdrop of a third issue, the question of the overall situation as i see it at the present time. i used to frequently tell the story about the man jumping out of the empire state building going past the 25th floor, everything was simply splendid. i have to modify that a little bit, take it to the west coast. the guy jumps off the golden gate bridge. he survives in the water, and the currents sweep him away. we're sort of more in that mode at the moment than we are on the empire state building where even with the new york police holding the safety net, the chances are 99.9% death. be we've struggled very hard and so have the parties to get us to the negotiating table, and it's very important, obviously, that maximum use be made of this. against that backdrop it is extremely hard to see how and in what way this process be will move ahead. there are 32 years of mistrust

between the united states and iran supplemented by galloping misunderstanding and, indeed, the lack of communications has been a thoroughly and, i think, completely deleterious experience for both countries. the idea of being able to examine the problem from the worst case on both sides has become an art form and, indeed, is more of a controlling piece than the ability to begin to talk. and i think that that's very significant. the p5 mrs. 1 or the european 3 +3 is a process that has now begun and holds a faint crack open for the future. my sense is that in every serious commitment of this sort that crack must be kept open. an estimation of istanbul and baghdad is pretty much the golden gate bridge leap of faith

story. the good news is that both have tended to produce a continuation of talks whereas the old pattern was to have a one night stand meeting go away with, replete with disagreement and spend the next eight months trying to negotiate the next meeting. i hope we're past that stage, but we could slide back. istanbul had some good news in the sense is i believe the iranian side suggested some thoughts that the non-iranian side agreed to proceeding with stage-by-stage examination and perhaps resolution of the problem based on the notion that there would be balance and reciprocity in each stage. and while there was a disagreement by half that iran would like to make the guide posts for this particular set of arrangements pretty exclusively the non-proliferation treaty, and while the non-iranians could agree they also had other guide posts including the security council resolution that asks for a cessation of iranian end

richment -- enrichment to double the problem further. i have a sense that coming out of the baghdad meeting there could have been three results; minimal, better and slightly better. minimal was to have another meeting, and they did it with the benefit of a sandstorm keeping them there another day agree to have a meeting in moscow on the 18th and 19th of june. i remember as ambassador to moscow there used to be an old soviet story that there was an arafat contest, and first prize was a week in moscow, and second price was two weeks in moscow. so let's hope we go for second prize. there is a strong and, i think, important piece that the new president of russia who is really the old president of russia and has been president of russia despite the fact he's been prime minister for some time has now gotten himself hooked onto this particular issue as he's gotten hooked onto syria because of his veto.

and we have to do everything we can to persuade him that some further success in moscow whether it's just hanging on is important. the first piece of baghdad which didn't result was a small agreement. answer the trr for 20% enrichment cessation, and the third piece was perhaps some endorsement of what amano had worked out in iran over transparency, but it was clear that was not going to work because in many ways the iranians felt they should receive something more in return for it. the third point i want to make is looking ahead. here i believe an estimate of the situation has to very much take into account some of the domestic imperatives that influence both sides. in that regard, my summation is that for the united states smaller is better, particularly to begin with, and for iran bigger is better, and that's certainly where the two sides are coming at this. smaller is better for the united states, because in an election

year -- i speak quite frankly -- the president takes great risks in making big compromises because the points of attack are multiplied and, indeed, explaining why he went so far particularly very early in the game is a very difficult situation. on the other hand, the president has a natural, a national interest imperative in finding a diplomatic solution. in the effort to continue to find a diplomatic solution is a small but not very conclusive make weight against presiptive israeli action to attack rapp. so keeping the -- attack iran. keeping the process going with no movement also has a kind of conclusion of sterility and fecklessness that will arrive sooner or later to greet the process if something isn't achieved. so my own view is that the smaller is important and better from the united states' perspective still remains. on the iranian side, there is very definitely a significant

degree of mistrust over the united states and has been for a year and, indeed, over the western side in the real policy is regime change. and while we have, perhaps, tried more or less to avoid conveying that notion, from the iranian optic it is possible to see through whatever prism they're looking at that almost everything we do one way or another is examined in that context and is looked at them as a very serious challenge in that regard. to escape from that and, indeed, to make some progress and, indeed, to deal with what their preoccupation is, the notion of two peaches or two features on the landscape make a certain amount of sense, and friends and i along with many others proposed some years ago that the essential trade-off would be some permitted enrichment, perhaps limited to civil purposes. it certainly should be, in return for much greater transparency about the iranian program. and while this was not a sovereign answer, it provided the best that we could think of at the time and seems

continually now to swim in to the picture. and i'm quite pleased that iran is in favor of that. i think underlying this particular crisis is the notion that something that large so soon from the u.s. perspective would be very difficult and something too small from the iranian perspective keeps in mind the lurking shadow, the 900-pound gorilla of regime change which is not as dispelled as the notion that the real purpose continues to be to take iran totally out of the nuclear business. now, iran is in the nuclear business for reasons that are difficult to fathom, and my friend, hossein has been challenged but in his own way has tried to make it clear. why the hell would you spend billions and build so ,000 centrifuges for a program for which you have no use for the apart output? there is there is from time to

time, talk to have going back to the shah's program, and there's been be recent talk of building one or two reactors in the next 5-10 years. the large accumulation of enriched material is concerning, and that's one of the reason why there is a western preoccupation about enrichment per se, even though it could be limited. underneath this and obviously affecting negotiations, and i'm getting to my final points, there is a continuing problem about what i would call different interpretations of the npt. hossein and his friends, and i believe with him quite rightly, believe the npt provides a right to enrich. but in my view, it doesn't provide a right to enrich for purposes that are unrelated to civil programs and may be related to military programs. and this is one of the difficulties. my sense is that a reasonable interpretation of the npt issue, you can do what you need to do

in a nuclear sense in order to try to get a sufficient amount of material for your civilian programs. but going beyond is difficult. and on the iranian sense, i think it is anything that doesn't represent proof of diversion is permitted by the treaty. and getting ready to make a dig or putting yourself in a position to make a decision to go for nuclear weapons is, in a sense, the underlying deep difficulty here or one of them that we have to look at. where to go? my sense is that the next stage ought to be within the p5+1 an effort to get an agreement around the trr and some cessation of 20%. don't embellish it, don't foul it up with much more. maybe it could be slightly enhanced by some willingness not to institute some of the sanctions that have been approved, some of which may be small but not insignificant. someone has once suggested

perhaps the sanctions on insuring petroleum cargoes from iran could be a way of beginning to indicate that the u.s. is ready to move on sanctions. the second piece is much more difficult, but i think very important from the iranian side. and it goes to my deep concern about mistrust. i think that there ought to be a serious effort -- and so far i have to say iran has stood in the way of this -- of opening bilateral conversations in the context of the p5+1 talks between the united states and iran at a significant level to convey assurance that real decision of country x and country y is being conveyed. this could include a lot of things, but it could begin to talk about an end game. an end game in which weapons were prohibit inside accordance with the fatwa in a binding international relationship with no uncertainty about the npt.

a set of relationships which included much more transparency, i hope, designed and carried out by the iaea a set of relationships in which we accepted iranian right to enrich for civil purposes and perhaps sequestration of excess material the iranians have produced until they're ready to use it and then, finally, barragal and significant removal of the nuclear sanctions as this process proceeds and some serious effort to deal with the problem that has now arisen that there are sanctions on things other than nuclear which very much also impact iran. they're there for purposes that people consider legitimate and right including human rightsish i shoos -- issues but somehow need to be factored into the discussion in a painful, but i think useful way. if these two tracts could proceed as a result of moscow and beyond, i think there is a slight way that we could thread the needle if you want to call it that into a position where perhaps after the american

elections bigger and more useful things from the iranian perspective can be done, and my own view is that we have to get there. but giving the iranians some notion of the end game each on a private -- even on a private basis would be an important aspect of the second tract within the p5+1 of bilateral u.s./iranian discussions. thank you very much. [applause] >> thank you, ambassador pickering. now, ambassador mousavian. >> thank you very much. always talking after tom is difficult and easy both. is easy because we have our mindsets are very close. is difficult because normally he leaves nothing for you to discuss. [laughter] first of all, i would like to thank arms control association, greg, for managing this event. i would like to touch some points out of my experience which i believe would be helpful

for reaching a face-saving solution for iranian nuclear issue. the first issue is to depoliticize the case. i think it too much politicized. the two parties, they need to take steps to depoliticize the issue. the second issue is what tom raised about the rights on their npt. definitely there is rights under npt because many other countries, they have enrichment and reprocessing. if it is illegal, everybody should stop. why they are talking about only iran now? therefore, the rights is there. the argument is the western side is emphasizing maintaining that responsibilities come first and then rights. iran maintains the rights come

first, and responsibility come after. i think in moscow they can -- already they have agreed in istanbul on step-by-step plan. in one step they can agree on a simultaneous approach. i mean, the p5+1 respects the rights of iran for peaceful nuclear technology including enrichment under npt, and iran also immediately at the same time accepts to sign the tentative draft agreement already agreed in tehran during last visit of amano. this is a work plan which if iran signs, this would address the whole ambiguities and technical questions of the iaea including the possible military dimensions. this can be in parallel in order to end the game, this chicken

and egg game. the third one is the focal point of the p5+1 during last nine, ten years. always they have been focusing on suspension. i believe they should in the future negotiation, they should or focus on transparency measures. if they are looking for a sustainable solution, suspension would not work, and the last ten years of negotiation proves it has not worked. the fourth point is proportionate reciprocation. they agreed in reciprocation in istanbul, but they fail in baghdad because i believe the p5+1 was asking too much, giving the minimum. they were asking, as greg mentioned, they were asking iran to stop 20%, to close fadu, to

implement additional protocol, everything. the maximum iran can do in reward to give some -- [inaudible] this deal would never be successful. the fifth point i have, i think there are 14 countries, either they are operating or building enrichment. any solution on iran should have the capacity to be a model for other countries because iran would never be ready to be singled out and devim niced as a member of the npt. they should have a broader vision in order to create out of iran issue, to create a model to be acceptable for others. number six is to have a broader vision on negotiation. i think a face-saving solution can accommodate broader cooperation between iran and the

west, iran and the p5+1, on bigger issues, security and energy, regional stability. if they have such a vision, i think they would not have staged everything to the nuclear issue. and number seven is iran/u.s. relations. i believe this issue plays a very, very important role on the nuclear issue. that's why i believe always i have mentioned iran and the u.s., they these to have a direct talk in parallel with nuclear talks between iran and the p5+1. and issue number eight is impartiality of the iaea. after eight, nine year working on iranian nuclear case, at the end he said during my time at the agency, we have not seen a shred of evidence that iran has been weapon nicing. just -- weaponizing.

just right after that amano came with the u.s. revealed by wikileaks that amano is in the u.s. court, specifically on the iranian nuclear issue and alleged military studies of iranian nuclear issue. amano focused on the possible military dimension. and iranians, they have a feeling that more cooperation they have had with the iaea, more sabotage, more covert action, assassination of the nuclear scientists, this is a big issue for the iranian side. and my ninth point, the last pointalso tom mentioned, for iran it is extremely important to see the end of state. the u.s., the p5+1, the -- not the p5+1 because russian and chinese, they have other position. the western powers, they always have looking for a piecemeal approach, but iranians, they

want to see the end state, the end game. that's why step-by-step plan, i mean, a broad package to be implemented in step-by-step plan is extremely important. but for moscow i think real stockpile, 20% stockpile initiative would be the best achievement for both parties if they can agree in moscow. the p5+1 is, they are asking to iran to stop 20%. this would not be a sustainable solution. because maybe for a short time at the end iran would never accept to be vim niced as a member of npt because the ore others, they have rights for 20%, why iran should not have? as a confidence-building measure for a short period, maybe. but they should think about a long-term solution. my idea is zero stockpile for

20%. what do i mean? a joint committee can be established between iran and the p5+1 to determine the percentage of the stockpile of 20% which iran needs domestically. the rest can be exploited or converts to 3.5%. therefore, iran would accept zero stockpile forever. this is the best objective guarantee for nondiversion. rather than pushing iran to close fadu or to stop 20%, this -- even if it works which i don't believe it would work, even if they accept this would be a short-term solution. the second issue, as i mention, on transparency, the maximum

question on iranian nuclear dossier is possible military dimensions issues raised by the iaea. what iaea expect and the p5+1 they can expect? the maximum level of tran participant si. they can define for iran the maximum level of transparency. if iran accepts to address the possible military dimension pmd, it means iran would have to implement additional protocol and would have to give access to the iaea beyond additional protocol. if iran is ready to sign such agreement, then the p5+1 also should be ready for at least the upcoming sanctions on central bank 1st of july and the oil, iranian oil by europeans, even if not by americans. thank you.

[applause] >> now dr. cronberg. >> thank you. i am the last speaker, i'll speak from my chair and my notes with the others, so i'm trying to fill in the as much as i can. first of all, i am a member of the european parliament, a member of the -- a member of the foreign relations committee and a member of the defense committee and also the chair of the parliament's delegation with relations to iran. this doesn't mean that the delegation, even if it's called a delegation, is located in iran. on the other hand, we are in the parliament. it consists of different politicians from different groups into parliament, and our goal is to understand what's going on in iran. we follow the nuclear negotiations, we try to follow also the human rights situation and many other aspects of the

iranian society. we try to have contacts with the parliament and also with the civil society as well as people outside of iran. so i am not a part of the negotiations, but following the negotiations closely. as you know, the negotiations are led by katherine ashton, the high representative of foreign policy in the european union, and i think this is why we in the european union, or on the ore side of the atlantic as ambassador pick oring said -- pickering said, we like to talk about the e.u.3 +3 rather than the p5+1, but i don't think it does make a big difference. i'll first comment on the current situation and then try to look at what i feel is too narrow focus on uranium enrichment in the negotiations and then go on to the european, what could be the next step the european union could do.

first of all, katherine ashton sent a letter to the iranians and mr. jalili said there would be respect for iranian interest in the peaceful uses of nuclear technology. and this, i think, created the hope among the iranians that, actually, uranium enrichment could be discussed, it was a negotiable thing, and it would be on the table. they were willing, i think, to reduce their 20% requirement, but no such op decision was on the -- proposition was on the table. actually, the question was that the p5+1 insisted on suspension of uranium enrichment. and i think the second thing that there was this question of that the iranians needed guarantees of being able to

access 20% uranium because of their one million cancer patients, and no such guarantees were provided. i think there's a history. i presume that the iranians have had a hard time in getting 20% uranium, enriched uranium for these medical purposes. on the other hand, of course, giving up maybe the 20% enrichment then the iranians would expect a relaxation on sanctions. no such proposal was on the table. i think there was a proposal of airplane parts and maybe minor things like that, so there was this clash, and the question is how to proceed. the iranian approach has been that the chief of the iranian nuclear establishment has said that they will not give up 20% enrichment, maybe what was just proposed, the idea of not

stockpiling 20% enriched uranium would be a solution on this question. but the stance is touching, and the language -- toughening, and the language is a different one. now, why do i feel that the focus on uranium enrichment is too narrow? i think the goal is to prevent a nuclear-armed iran, and nuclear -- the military aspects of nuclear weapons, it's much more than uranium enrichment. this is only one of the aspects. and i think the other aspects have been taken into account, design and implementation of nuclear weapons and how far is iran from, from this aspect. i think we're talking about longer time than just one year or the sort of the one year free time before we have a nuclear

weapon-dominated rapp. iran. >> so much more, and this aspect should be included also in the negotiations. the second question is the sanctions. the iranians expect some signs of relaxing sanctions, and the west -- at least the western powers -- are not willing to give this indication. this may be a step-by-step procedure, i don't know what means end game on end result of the sanctions, but the question is, of course, that the, i understand that in the u.s. the situation is such that since it's the congress that is legislating on the sanctions, it will be required more time, and it will be more difficult to relax any sanctions. in the european union, the european council, the foreign minister that can decide on this question of sanctions. so maybe there should be some

discussion of 1st of july the european sanctions would go into full effect, and in moscow there should be a discussion of this deadline. the third point is on the uranium enrichment is the npt context. i think what the iranian case shows is that it's very difficult to define the limits of the peaceful united stateses as opposed to -- peaceful uses as opposed to the military uses. we have, actually, a treaty where there's no clear divide on these two aspects. and i think this is very detrimental for the negotiations. there are interpretations one way or another. iran feels they have the right. on the other hand, the p5+1 feel that iran has not respected its obligations. and the question is maybe what comes first, obligations or rights? i think they should be in balance. but the iranian argument is, of

course, that there are double standards in the npt and nuclear powers have not respected their obligations to disarm, that there are double standards in terms of other countries which have nuclear weapons outside the npt, are not pressured equally as iran and finally, the right to fuel cycle, what does it mean and how will it be defined. so in this case the npt, i think there's a fundamental question of the future over the npt in this case. and we should consider that as well. if there is a military strike which i hope will not be the case, it is a question of a country outside the npt with nuclear weapons attacking a country within the npt and at least as far as we know without the decision to produce nuclear weapons. so the question is, how, how

important is the npt for us in the future? the fourth dimension i would like to take up is the question of regional security before going to the next step for the european union. i think the question is there are some security concerns in the wider -- we all know this, and i think it's interesting to note that when the continuation of the npt was agreed in 1995, there was an agreement of a conference on the wider middle east on nuclear weapons-free middle east. at the conference 2010, it was agreed that this conference would cover the whole scope of weapons of mass destruction, and the conference would take place in 2012. we have the situation where this conference is going to take place. the countries that sponsored this issue -- u.k., russia and

the u.s -- actually propose that this conference will take place in finland, and the facilitator who's traveling the world around actually trying to discuss the question of mass destruction weapons-free middle east. the question is difficult, i know, and no practical steps will probably be taken for a long time. but it's important that all these parties will meet at the same table and that we'll be able to at least start the process. so i thigh -- i think these negotiations in baghdad and next time in moscow should also be seen in the context of this u.n. security and u.n. conference that's coming up. they should not be isolated and at least there's a timeline. probably this conference will take place in december, so if the negotiations break up before that time -- which also coincides with the new u.s.

president -- then it would be very, very unfortunate. so i would actually like to, like to appeal to the arms control association that you observe that this conference is taking place and that it's important that, actually, this question of the negotiations will be related into the wider scope of regional security in the middle east. now a few words of -- how many minutes do i have? two? >> about two. >> okay, fine. the european perspective, what are the next steps? i think i'll try to concentrate on those. the european union has accepted the u.s. dual-track approach. so, actually, sanctions were approved in the end of january, and the intention was to send two messages. first of all, a message to iran that the european union is serious and, secondly, send a message to israel not to strike

and not to provide a military solution. the, i think this decision was unique in the sense that it was actually the first time the european member countries supported the common torn defense policy -- foreign defense be policy. this was the first time the europeans actually agreed. i mean, this was historic. this was an agreement on the surface. there were different positions in the european union. i think one could describe that the french president, sarkozy, was on the other extreme supporting sanctions, very tough sanctions, each tougher maybe than obama and keeping also president obama on the sanks line. and own -- sanctions line. and then on the other end sweden was actually, went along with the sanctions rather reluctantly. so there was an agreement. the european parliament has supported sanctions and has a

longstanding position that no military solution is possible. so, actually, the european parliament stands on diplomatic solutions with or without sanctions. now, the problem is that the e.u. is leading the negotiations, but it lacks a long-term strategy on iran. contrary to the u.s. position which actually sees iran as an enemy, the e.u. does not see iran as an enemy. there's no enemy picture related to the question of diplomatic contacts with iran. so this is a different position. so i think the european union should actually design a long-term strategy which implies cautious engagement rather than containment of iran. and as a first step in this long-term engagement, there's a proposal by the european

parliament to establish presence in iran actually in the form of a permanent delegation. secondly, it is important to note that the nuclear issue, nuclear dossier is only part of e.u.'s relationship with rapp and that -- with iran and that this should be balanced with economic incentives as well as the question of human rights which is very important for the european union and particularly to the parliamentment -- parliament. so the nuclear non-proliferation issue should be combined with these incentives. and, thirdly, there's the question of the regional security which is important for the europeans. and here i think we should at least support the confidence that i mentioned -- the conference that i mentioned before and see turkey as an important bridge building for us. finally, i hope that the negotiations will continue, that there is no breakdown, and i think for the nuclear

proliferation treaty and for nuclear non-proliferation, a military strike would be a fundamental mistake. thank you. >> thank you. [applause] we have about 25 minutes for questions. we're going to move quickly to them. i just wanted to use my prerogative to ask one follow-up question to ambassador mousavian. we often hear cited as a, as a model for future negotiation of nuclear cooperation agreements the one we negotiated with the united arab emirates as the gold standard. we in the united states, obviously, prefer a model which does not involve the full fuel cycle, does not spread the number of countries that have a full infrastructure for uranium end will havement. -- enrichment. i gather from what you said you would be in favor of encouraging countries like the uae, like

jordan, like turkey to use iran as the model for nuclear development? >> no. >> no. okay. >> should i explain? >> yes. [laughter] >> yeah. i think the enrichment today is just because of the u.s. policy. right after revolution when iran decided to shrink to nuclear activities, the u.s. position was no nuclear power plant for rapp. for iran. the u.s. was not ready to recognize each the rights of iran for power plant. and this was the reason the europeans also, they could not do anything in order to complete the unfinished projects of bushehr. the resident countries, they left iran with millions of dollars of unfinished prompts, and they were not -- projects,

and they were not ready, iran had no program for enrichment, and the revolutionaries, they decided even to decrease to minimum the ambitious projects of shah. they canceled many projects. but when the rest challenged iran with the rights each for nuclear power plants, you left no other option for iranians to go for self-sufficiency. then after iran mastered enrichment, then the u.s. said, okay, now we recognize the rights of iran for nuclear power plants. after iran mastered the enrichment. this was the best way in order to convince the u.s. that you should respect the rights of mens under np tennessee -- of members under npt for at least civilian power plants. and then that time, again the u.s. position was zero enrichment. when iran mastered 10,000

centrifuges, now the u.s. and the europeans, they are thinking, okay, not 20%, maybe 3.5%. i mean, the mistake is from the beginning, greg. iran was never going to have enrichment from the beginning. you just pushed iran to this situation. if at the beginning of revolution the -- the germans, they have completed the bushehr power plant, iran had even no program to have the second power plant. it was the u.s. proposed iran to have 23 power plants before revolution. after revolution iranians said, we don't want 23 power plants. now, after 30 years which iran has paid hundreds of billions of dollars of costs because of your pressures, now you're expecting iran to give up everything. it doesn't work. it's very different with united emirates.

you cannot compare iran with united emirates. >> thank you. we'll take questions from the floor. please, wait for the mic, give your name, be brief. francois? >> there's a microphone coming. >> i'm francois, deputy head of delegation of the european union here, and i've been, also, working on nuclear issue since 2005, taking part in the talks with iran, and i'm also adviser to the security general ban ki-moon. and that's why we reflect a lot about this issue of npt and u.n. security council resolutions, and i have to say i disagree with the presentation which has been made about the two interpretations of npt. i think there is a very central interpretation which is shared by almost everybody and which is that when -- you have the right

to enrich. under the -- every country under npt has the right to enrich. this is clear in article iv. but at the same time, you have to have a use for that. and i agree it's ambiguous, the distinction between civil and military because even military use is admitted for brazil for building possibly nuclear submarine of which it has been disputed, also by canada. but at least it's not building nuclear weapons because -- >> [inaudible] >> the question is very simple. we have today no use for except a very small thing. so if there is a solution, we have to image in civilian use for iranian program which today has none. and my question to you both is do you see the possibility of having to use commensurate the site of the program, and if not, can you reduce a program to the

size of the uses which you could have? because the present civilian uses are so little compared to the size of the program, you know? but there is an absolute presumption, but it is not for civilian or military-authorized uses. thank you. sorry for being long. >> so how to make commensurate, i guess, ambassador pickering, do you want to field that? >> i think francois raises an interesting question. there are disagreements about interpretation of the npt. i agree with him, the broader, accepted interpretation is that anything that looks military, goes beyond the civilian is suspect. my own feeling is that in the course of a negotiation at some point we're going to have to sit down and define the question. otherwise we continue to propagate the misunderstanding or at least the differences and the difficulty. and i think that's very important. i think that doing that early rather than later is significant. one of the reasons i proposed

the u.s./iranian bilaterals is that that question among many others might be explored privately. it wouldn't be to the exclusion of the p5+1, but it would begin to give a sense of confidence for people who have had much less contact with iran than the e.u.3 have had. and i think that that along with the questions of different interpretation make a lot of sense. i also think it's very important for us to continue to think about how to plug the loopholes of the npt. one of those is interpretation, one of those is, obviously, definition of what's civilian and isn't. everything that's not civilian excluded, or is everything allowed unless it's diversion? i mean, these are broad questions. and they have to be, i think, put into shape. , i think, finally, we need to think about the end state. if you asked me, i would say there is no palpable reason -- apologies to my french family --

for the use of plutonium in any fuel proposition unless it can be conclusively demonstrated that there is an economic imperative. and if there is, then that -- and i would then ask for enrichment to be totally multilaterallized. and be done on a basis where there is competition, but done on a basis where there is absolute transparency. and the greatest safeguards against diversion rather than as hosein would say, forcing people to go independently on the one happened or alternatively failing to persuade people that there is a reliable international system with competition that cannot be used as a way to bring political pressure on countries for questions that go beyond proliferation, and my hope is that it would support non-proliferation in an important way. but that's my hobby horse, and i'm sticking to it. [laughter] >> dr. cronberg, you wanted to

say something? >> yes, i free with the ambassador that we have -- i agree with the ambassador that we have to define the question and reach a situation where the civil and military uses are defined in a way where political is as little as possible. but what i want to make a point is that there's a third dimension between the civil and the military, and that's the prestige dimension. and i think we are seeing all over the world that the nuclear technology carries with it prestige which probably has nothing to do with military uses or civilian uses, but actually provides the country with a self-esteem about being on the level of other countries. this was the case in china when it acquired nuclear weapons. this is at least to some extent the case in iran today. so i think the question of delegitimizing this prestige question is very