so, yes. i have always been a little envious. because at the end of the day, and my business the have to have policy which is increasingly becoming digital and available online. you can at least walk over to the factory of the show room. you have something rather big and huge that you can touch and work with. take a few minutes here and share a little bit of background the governor touched on it. state farm. state farm was started here and in illinois from central and lori, bloomington illinois, 19 years ago this past june. a semi retired farmer by the name of george. he had a crazy idea in 1922. being a farmer and looking at roads at that time, still gravel and impassable. but insurance was still sold and

an annual basis. farmers, cannot drive have the time, the roads are impassable. so the car is sitting in the barn. maybe farmers should pay less for insurance. crazy little idea that kind of hatched the entrepreneurial energy in the 1922. a little company called state farm mutual. smallest company in the industry at that time. that's crazy idea moved to today we ensure over 40 million, nearly 20 million rental or home across the u.s. and into canada. it is -- we have led the industry in terms of customer base and we employ over 65,000 employees across the country.

we operate about 18,000 agents. we are very engaged locally, and many of your communities across the state you represent. and this gives us the most unique and powerful footprints across the country, local communities, and in space. we are very involved in looking at communities, looking at states. we invest each year to charitable donations from other programs, in essence, driving a focus of how to build a safer, starter, and better educated to many. in addition to the dollars that we provide, we are investing time and resources abroad. we have worked with a number of you in the state legislature looking at how we enhance building materials, building codes, building safer, stronger

structures in your community. and number of groups helping safety. coming out of the interstate highway system, as state highway, how do we build them safer, make them -- we tend to forget back in the sixties are so, highways were somewhat of a death trap. simple things in a way that there were designed did not do much to improve safety aspects. things have come out. efforts of the industry, things looking at making cars safer, passive restraint, seat belt usage, airbag, cars basically minimizing the amount of injury to the occupant. there is an unfortunate accident. communities are, indeed, an important part of our organization. if we reach out and look at

young drivers coming in to be it the work force to my getting their driver's license, we are very much involved in helping the parents. youthful drivers coming in. helping make a connection of parents that they can use to help the young driver become a safe driver. next month state farm will host a new program. it is something that will be held across the country. it will be focused on allowing communities to support teens everywhere as they learn to drive and get ready for the road ahead. now, we were to prepare students for their time behind the wheel. we also want to support them in their formal education. now, we are looking at from the public policy standpoint, we can all debates regulation.

i have to tell you today, and major underlying contributor to our country's economic growth is, unfortunately, our students lack of proper skill sets required by american business. workers in the marketplace creating a huge competitive gap, one that, frankly, needs to be filled in order for us to create jobs and compete in the global economy. today businesses are searching for skilled employees ready to take on the challenges of working in the 21st century global economy. skills that i things such as a verbal and written communication, critical thinking skills. really, how do we build that

intellectual curiosity that is going to be so critical for their generation to continue in succeed. some amount of change. what we have seen during our lifetime. i was sharing earlier. colleagues of mine who several of years ago, the three sons, the oldest was 16 and 17, the youngest was 13. the kendis look at his older brother and said, what was it like? growing up before broadband? [laughter] my generation, whether the party line. we have to watch party lines, a much different connotation today. but as we think today, within the u.s. there is an estimate of 2 million until jobs available for skilled workers. ..

>> the economics confirms over employment are making it increasing and difficult for people to achieve their life dreams. the challenges and issues we face today as individuals, as states, as companies, as a country must take on the importance of this education

issue. no longer are we to be passed on to next generations or the proverbial kick the can down the road. coming in this morning, i was thinking that kick the can done the road analogy is like looking at the right hand rearm -- rearview mirror of the car and changing the octobers closer than they appear. consequences of not addressing this is much greater than they appear perhaps today. to address these items, it's incumbent upon us to work together, have the best solutions, we do not need to reinvent the wheel, but we have to be about addressing this issue. i applaud what you all do day in and day out in the public policy arena and in dealing with

constituents back home and the politics of your local states. business has a key role and can play a key role with you in conveying the context and the importance of what it is that we'll be talking about this morning in creating an environment with job creation and long term success be it for companies, be it for states, and it's important for our nation. again, i appreciate what you all do day in and day out, and i look forward to sharing the perspective with you. [applause] well, doug, thank you very much for excellent presentation, and that gives you a perspective from the manufacturing company and a service sector company. there's issues that are common. different -- very different businesses, but let me start with this because these are state legislatures and people

influencing stot government, and try to break down -- we've got a half hour to have this conversation, but it does strike me that today, and, doug, you mentioned 5% of the people who live here, 95% of the customers are outside. some more domestically focused, but there's a competitiveness among states, and then there's a competitiveness among nations, and state legislatures influence national policies to an extent, but they are key in terms of a state's competitiveness. is there a way to look at this, when you're making a decision, and you think about competitiveness among the 50 u.s. states, how do we look at that, and what ought to be -- we heard education and, you know, lateral base in your case, and infrastructure needs in both cases. do you look -- and the state's

own fiscal ability. how do we evaluate among states, states get rated, and then what is it that we as a nation need to be pays attention to if we're going to win against a location. europe's got their problems today, but other parts of asia, not just china, but malaysia or i indonesia, vietnam, or south america and brazil. two parts to this. let's start with the state, but i also want to -- can't leave out the national government because the taxes and the regulatory burdens from washington are dwarfed what any of the states are imposed, and so kind of give me the outlook. >> i'll be happy to start on that. really, i think it comes down to two things -- two basic things right now. one is education. all three of us talked about it. everyone's aware how critical it is. we are falling further behind.

there's a loot of great initiatives out there for us as a society. we need to reprioritize its importance. secondly, national government debt, state debt, county debt, municipal debt, you can't pick up 5 newspaper today and not read about doubt. we've dug the hole so deep it's going to take a generation to dig out of, but in some states, they started it, some cities started, the national government has not started it. in fact, getting further behind in the debt. i heard a good one the other day, john. the difference between europe and the united states? about six years. that was a frightening thought. >> very scary thought. >> revenue has to be raised. expenses have to be prepped. every legislature in washington knows this, and it's not a surprise to anyone, but nobody wants to talk about it.

we are failed by the lack of discussion around that, deep discussion, and then when it comes to states, in my mind, i think we have to move business, and whether it's illinois or georgia, texas, whoever it is. workman comp's laws, states roll out the red carpet to welcome jobs, and others, you don't hear it so much. it's an attitude. i can tell you as i go around the country and recite different plants, you can tell the states interested because they are first in line with the hand up to tell you how business is. that's critical if we're going to create jobs in the country, and that backs up on tax rates, costs, workers' comp, you name it. that's critical on a local level, state, and national level. then we can talk about competing with china and competing with europe and elsewhere. >> ed? >> john, three things. i would echo what doug has just

touched on. i think as you look at the global economy today, many of us, why would you be interested in that? today, in -- if you had not traveled or had the opportunity to be in asia, india, south america, europe, struggling, but if you don't have a point of reference and context, you are going to be significantly surprised about the reality. another point, we look at budgets. outcome a little bit different. we are a major institutional investor. through the years, we invested in that role and state municipal debt, and i got to tell you from our perspective of working through and doing our own homework in evaluating states and where we put money,

deficits, strong financial cliffs, or bad cliffs, however you want to characterize it, grow with us. as we look at this, it's been part of one how we support local communities and state, and we're feeling an avenue that is shut off because of the financial problems. i think that, you know, any first finance portion, the miracle of compound interest, how, you know, in over a lifetime of 40 years, it can be four to five times what you started with. on the liability side, looking at pensions and other obligations, it's the same dynamics, but the problem is we don't have the support for the liability. i'm concerned very much with where that will lead because as

doug said the difference between the europe and u.s. is six years. that is not something you can just pull back from overnight. >> opportunities for state lawmakers, and it seems to me that the rules that govern how you manage your aggregates and pensions for health care are very different. the standard or i think for legislatures, one of the thing that is there, probably, and part of that strengthening may well be additional mandated transparency with real rates of return, not fictional rates of return. there's a clear understanding of how much that future obligation looks like because today california's in the news again with several other cities in conversations about their fiscal health, and you got one of the reports on one city talking

about how reduction per retiree benefits are immediately, and these are unkept promises. i think there is a need for the states maybe to step up and mandate this so everybody knows what's going on. >> well, that would be eye-opening. those who worked in that know the reality of working, and you'll find out, john, and i'm the first to say, and i think there's no disagreement, it's easier to say it. time is not on our side. trying to keep the consequences of this more -- [inaudible] this is where in coming back and dealing with what we have to deal as businesses and economic reality in the world of which we live. you look right now, and you can argue on fiscal policies within the u.s., interest rates, it's

very challenging for industries like state farm, particularly in the life insurance, where you are dealing with guarantees and the interest, and we have a 3% or 4% guarantee on a product, you don't make up the difference between a 2.5% 10-year bond and a guarantee bid vieter, and -- by the provider, and this could derive from unemployment, conflict, chasing deals, and i think this is something that, you know, the business community, coming together with a, i think, it's an important one to avoid in saying we have got to address the debt issue be it with pensions, aggregations, health, but the fact is that have the discussion in dealing with it, and we cannot afford what was talked about, and let

me get this point. we have to have plans for the conversations. that's going to be very difficult, but it is something that the sooner we have that, then hopefully, the sooner we're on a more sustainable path than before. >> i'll make an observation which is that the transparency standards are not tough enough. we need to get all of the evidence to the people quickly. see what they want to deal with. the public policy consequences of that, however, are going to be painful because, in fact, the public companies are absolutely transparent, but unfortunately, that's forced us to end the client benefit plan, and that's a painful thing for us to do at caterpillar and private industry, but today, they are

virtually non-existent. the only supply and benefit plans we see today are government. it's no coincidence the liability has not been fully recognized by states for that matter. let's get it on the table and deal with it that the coming bomb on that is really going to be painful because as i said, we have to raise taxes to pay for it, and the citizens have had enough of that in my opinion, or benefits for current retirees to be cut. that time is not on our side. it's a 3wu8 -- dull et. >> transparency strikes me being in education as well, 3 million jobs that are around in the country available for people

with skill, and so the ability to scale up, and in this case, we're not always talking about college degrees, maybe a 2-year degree, but specialized skills that have to be acquired, but clearly, talking about a child in 3rd grade, 68% not proficient in reading. i mean, we can't accept that. we got to fix that. we got to have a science education, and we also got to have a skills focus, and it strikes me that states that want to compete in this area could do a more transparent job of explaning the results and showing what works because it's just that we don't have the same set of incentives that require

it to be duplicated everywhere once discovered, and i'm just -- you've done so much work in this area. what are your thoughts, and what states -- this is where legislate and governance can make a difference. >> you know, john, we've spent more years than we want to acknowledge on this issue. the agitation is so critical. as we said before, it's years, and if we are not getting kids out in the right environment and learning, when do you ever make that up? i think the effort, and i complement the states involved around the adoption debate, adoption of the common core in terms of these are skill sets regardless of where you live in the country or where you live in the world, are critical, foundational steps, blocks, that

you got to have if you're going to be able to survive in a world of lifetime learning. >> you mentioned the time and core, and that's a debate in some states, and you've done 5 lot of work. common core means what? >> common core are fundmental things. math, science, you know, principles that -- these are things that one plus one equals two, environments are where you live. read, write, and math. we can't afford to do that anymore, but that common core, what are the fundamental skills, communication being able to read, write, comprehend, math, science, be what you might call the liberalized, you know,

issues, curriculum. states so communities can address that in the way they feel appropriate, but when it comes to the core fundamental skills that are the building blocks for lifelong learning, i -- i know there have been debates around that, but i got to tell you from an assessment whether or not your kids in your state, your community, or what, if they don't have the fundamental skills, they will be among the six out of ten that are not going to get a job, entry job at caterpillar or at state farm. this is something, you know, we talk about common assessments and the common core, here's a common assessment for years called a preemployment battery which is what got me involved with this when we heard from parents that a son, daughter, niece, or nephew was not

employed because they couldn't get through the basic math, reading, and writing comprehensive skills. it's tough for the audience as we go back and look at the common core and particularly at assessments. we kidded ourselves. we any we are doing well until we read the score. when we realize we do 75%, when, in fact, we may be at 50%. that is a difficult, difficult discussion to have when we're back home saying, hey, we thought we were doing outstanding, and now we're down here. this is something where i think the business community can provide very important support to you when you're back home taking some of those difficult positions to point out if you want the kids in your states to have an opportunity to have a good growth opportunity at a caterpillar or state farm or any

other business, these are the skills they're going to need. >> the one thing that appears very clear that in today's economy, if a young person drops out of school, and we still have dropout rates from the urban schools that are pretty high, we've got dropout rates in the country that are too high. of course, there's just simply no -- there really is no -- today's economy doesn't provide a future. if they dropout, they still have to re-enter at some point. >> yeah. >> i come at the other end of this, sort of the area where they enter the work force, and i think our, you know, as we've gone from the urban civilization, we've lost so many mechanical hands on skills where a lot of people used to go into manufacturing jobs and had it because they worked on the farm or something with their hands, some mechanical aptitude, carpentry, whatever it is, and that coincided with a big push towards four year university education, and i, for one,

struggle a little bit with a $50,000 education for a philosophy degree. they are wonderful people, but we can't employee philosophers in manufacturing in the united states. we need a one or two year technical add-on to a high school, and maybe that's where some of the kids pick up where we have a lot of work with community colleges around the country to ensure some of them can go to work on a diesel engine, and there's a great career there today that we're really missing. >> on that, be it a, you know, a 2-year program, a 1-year program, or just a continuing certificate or something because, you know, as we kidded earlier ring going, you know, what was life before broadband? you think how the skill sets and the requirements, you know, man, i'm great in basic computer language or programming language. well, that's great if you work in a museum, but just how does

the skill set i have today is going to be inadequate in three to five years. what are we putting in place to junior colleges or what to where it is more of a -- just a second nature. you know what? i got to go back in the evening or weekends and upgrade my skill sets. >> doug, when you went to north carolina, one of the things i remember being announced was the cooperation you have with the community colleges and the high schools because it seemed to me, and there's innovate *eu6 things happening in part -- innovative things happening in parts of the country where they part with the high schools earlier. i'm not sure i can did out and get that philosophy degree or history degree, but i want to be prepared, starting as early as their junior year now working with the community college. >> yeah, we've had wonderful luck with that in many areas, actually. in peer --

peoria, illinois, they have a community college working with us, us with them, and the local high school, and they take a person that shows some degree, the four out of ten we could hire, he or she wants to do something with their hands, sees there's a tremendous career in working on caterpillar equipment so we guarantee that person a jb if they complete the -- if they can complete the program in one of the dealerships around the country. we just can't get them through quickly enough in the colleges around the country, but it's an effort, and it starts with a state that recognizes they got to have kind of everybody lined # up too put out those kinds of people that we can use in manufacturing. we really want manufacturing jobs, and there's not one politician i met that says we don't want one. we turn around, and almost every policy, john, in this country hinders or gets in the way of manufacturing jobs. >> yeah, yeah. >> there's a lot of that involved, and education -- education is what made the united states great.

that put the man on the moon. the single school room schoolhouse put the man on the moon, and today, we spend more money than ever, and we can't get it done. >> look at it from spending more money, and we get a poorer result. the thing that, back on the comment of looking of getting outside the u.s. and see what's going on elsewhere, is when you realize some of our toughest global competitors, growing nations take it to china and elsewhere, they copy what we did in terms of education in recognizing that young people coming in have to have critical sets of skills. it doesn't mean they are flawless in how they are going about it, but they are, you know, you hear, what, 3 # 00,000 engineer -- 300,000 engineers graduate in china versus 50,000 here in the u.s.. there's a pushback, well, a number of are not as competent

as ours. 50%, that's still 150 ,000 engineers to our 50,000. do that over a number of years, and you find they have the competitive advantage. >> yeah. >> ed got us going here a little bit. that touches on a favorite subject of mine -- immigration. we have a shortage of technical engineers in this country. we welcome engineers from around the world, young students to come to our best universities, and we won't give them a visa to stay here after they get the best education in the world. we send them back. they had the experience at caterpillar, send them back, five years later, they are across the table negotiating with us with our fiercest competitor, and we trained them. we stumble over this, and we have way shortage of this in the country. >> and immigration, there's another one as you look at the

demographic of john looking at failing high schools, and you look at young people who are not graduating from high school or graduate from high school with limited skills. the school failed them. you look at the impact on youngsters of color, look at demographics, and you look at the fact that we need all young people performing at high levels because of the aging population of this nation. we're not getting it done. you look at this. it is a demographic, a slow happening, but they do, and we -- this is part of -- come back while no child left behind brings different con connotatioo different people, the policy of looking that we have got to bring all young people along in terms of developing fundamental skills because as a society we need them because if they fail

at that, then the social cost become horrendous, and the competitive costs or experience we lose is another factor that holds us back. >> i wanted to start sort of with education and work force, and i'm glad we had the conversation come to this because that's clearly and state and local responsibility to whatever extent washington plays a role, it is, despite what they might think, secondary to what the men and women in this room deal with on a topic that is something that state legislation also deals with, the whole question of incentives, and i kind of wanted to go there because is it possible to -- and this has been a debate. what state level incentives, tax incentives or other -- you mentioned a one stop shopping for permit and the business climate attitude, but are there

not probably enough incentives to make up for -- and can't pay enough to produce, but at the margin, and let's take this to the national level because i think it's hard to send the best state here out against what other nations are doing where there's a national strategy to support a competitor to caterpillar or a competitor to a farm pharmaceutical company. the labs are not far from here, and they are going up against national power houses and other nations. >> yeah, i learned a lot on this in the last couple of years, and on so many new green field assembly plants in the united states. i've learned a lot about incentives over the last couple years. the bottom line on this is that most states because we use consultants that work with you

and economic officials, and we all do that, most states' dollar up sentives are not that dissimilar. it's interesting. somebody does here more or there, but taking the total cost and benefit over ten years, it's not the determining cost. i found that quite interesting because before i got into this, i thought, well, some states will be really aggressive with the money, and some are not, but when it comes down to it, add it up, it's not -- it's not the determining factor. it's sort of the price of admission. if you're not there doing something with your competitive states, you're out. for the most part, most states have a level playing field. then you get into other things. the way we look at it is really around business friendliness. does the state come forward on workers' comp? an example here in illinois and indiana, two states. an engine plant in illinois and a plant in indiana, basically

the same work, same sized plant, same number of employees. our workers' comp costs in illinois are five times greater than that plant in indiana. that's a fact. five times. >> wow. >> same injury, acl injury is five times more expensive in illinois. how can that be when you want to put a thousand people plant, how does that happen? in illinois, it doesn't matter the cause of the injury. playing softball on the weekend. if you come in, we pay. causation it's called. that's one area. business friendliness around local taxes, education, we talked about that. a quick story. when i joined caterpillar in 1975, i was a junior financial analyst.

we did tax analysis. tax analysis we did were 35% cost in the united states, 3% statutory generally, 38% all in. japan, at that time, 1975, 80%. germany 70s. france, 60s. u.k., 70s. you didn't hear anything about china, india, brazil, or anybody else. today, we do analysis, u.s. 38%, headed to 44%. higher in states when that's added on, and all of our competitors are below our tax rate. some substantially. canada, it was always greater than the united states, but now they are much lower than we are. when i talk to politicians, oh, we have to have manufacturing jobs. i follow that up why are we the highest taxed country for manufactures in the world? oh, we can't touch that. you big rich guys make the money.

we can't do that. well, it's a competitiveness issue. there's nobody out there today whether it's the labs, caterpillar, that doesn't have an international competitor. state farm, we all do. it's a different world today. >> a went watch which -- and we watch it while we're in north america, but from an investing standpoint, we're global. this is back on that theme of we are more than any other time in our lives live in a truly, global economy, and i know that it is a very difficult subject for most all of you, not all of you, but when you're back home visiting with constituents around why are these things important? it's because of that global economy that, you know, we have got to continue to judge. >> what's the best place for state legislators to gain awareness? i mean, you got members here

that are at risk because they traveled to chicago to come to the national meeting, you know, and there's critics back home saying we shouldn't do that. everybody in business, obviously, gets out, and you have to see what's going on. you mentioned that earlier. probably not feasible. everybody here go overseas and see what's going on, but it strikes me there's global businesses in there space, and there's got to be a way to get that knowledge up from a competitiveness stand point so any advice? what do they need to do? >> when we can talk to all of you, and at the federal level, the senators and congressmen one-on-one and explain our story at caterpillar, how important exports are, the fact that 95% of the population is outside, and take you through that on a local basis. you don't have to come to peoria. we have plants everywhere. suppliers are in all of your districts. go out, talk to the job creators, and listen to what, you know, and learn from that. we find that we can really help educate. we may not change an opinion,

but at least we've had a dialogue and fry to do that often, sometimes with luck and sometimes not so much that. >> doug, one thing, this is not just caterpillar. you have a substantial supply chain, that small-medium sized -- >> yeah, in our case today, around 150,000 full-time heads at caterpillar in the world. we think about a factor of seven of that in the supply chain. call it a million people. we got another 250,000 with our distribution. call it a million and a quarter. they are everywhere. half are in the united states. there's three quarters of a million people more or less all in your district somewhere dependent on a caterpillar job dependent on global trade, and there's a dialogue that can be held there. >> the -- i would echo what doug is saying, and, you know, it is -- this is one of the important things of partnering a

business and legislative, helping us make sure we're attunedded to the dynamics of what you have to deal with back home, but also our sharing with you the perspective facts, dynamics that, perhaps can help you in creating a better umsing and context back home, or there are times that, you know, i look at the years i've been involved, and there's times every one of you in an elected position, there's times you walk up to that podium, and it can be pretty darn loney, taking a tough position on something, and if you have a business leaders in the community, in the state that can step up along with you and say, you know what? this is tough medicine, but it is critical for us to do, for us as a community, as a state, as a nation.

i just encourage through a variety of, be it state round tables, chambers, and that to make sure that you are reaching out and we'll push from a business standpoint from the business community, reaching out to make sure that we have impactful partnerships to address these issues that we're talking about. >> doug, done in a minute, but just one quick question that i think people would benefit from hearing me because mckensey did work for the president and jobs council and competitiveness, and what struck me in the briefing of the round table is the fact they found the relationship between business and government, as they looked at all over the world, to be the most hostile here. >> yeah. >> that's why i'm delighted there's key business leaders here and have the opportunity to have this conversation, but it does seem to me that that has to change. >> for some reason, and i don't know how it happen, and we talked about this, ed and i, and

a lot of business people, the country that was built on private entrepreneurs and business now for the most part hates that society, and resents it or -- i'm not quite sure what, and we have an obligation because some of bad apples in the business contributed to a bad reputation for business, and we all got to watch that and clean up that, but having said that, i don't know how that's turned, really, in my lifetime where you or a businessman, hardware store owner, car dealer, state farm agent, the pillar of the community, and today, that's changed so much, and we really got to watch that. we have competitors out there all the time. to the point on the contentious relationship between business and government, i don't really see it elsewhere where i go. >> yeah. >> we are welcomed in many other places, and today, we're welcomed here 234 many places, but it's a different attitude. business has an obligation.

it's not everybody else's fault, but business. we have an obligation to step up, to be ethical, do the right thing, but somehow that, i think, dialogue has to change, and maybe we have to lead it and we should. >> well, i think it's a good point to end on there. many of the states here where actually the relationship is business friendly and professional. >> very good. >> i think that's what needs to happen and is the case in other countries. i've heard this repeatedly, it's a bigger challenge in washington today, but everything's a big challenge in washington seems like, even little things are big challenges, but i think that the energy in the inventiveness and innovativeness coming from the states has the potential to be transformative, and so i -- my -- closing with just that i think we've been given good guidance today, good conversation from both ed and doug, and i very much appreciate your participation here, and i just want to say to everyone

that we're anxious to work with you, but you keep up the good work because it is something that serves the good example, allows us to try to challenge then people at the national level to copy that for our nation. we're still a country that can send a, you know, a rocket all the way to mars now and land something on the planet's surface. we can do that, we can do amazing things, but we ought to be able to figure out how to get the people to work and get the country about the business of solving our problems, and business is ready to play a cooperative role. we heard that today. thank you very much. >> thank you. >> thank you. >> thank you, all. [applause] is about jobs and the

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members of congress, a non-profit organization that promotes public service and civility and political discourse. this is the third year of our collaboration based on our shared interests in promoting understanding about congress and the history of representative government in america. jobs in the economy, posters and political science remind us are central issues in every campaign season. our history confirms this in the records of the national archives here providing evidence of the many ways presidents and congress grappled to meet the economic challenge of their times. researchers come to the national archives interested in learning about the origins and implementation of the laws to research the records of the senate committee on labor and public welfare, the senate committee on public works, the house committee on education and labor, the house committee on public works, and others. the records of the house and ways and means committee are an

unrivaled source for illuminating how the nation has addressed matters of taxation and finance, and the records of the senate banking and currency committee, the forerunners financial services committee are in understanding our policies in response to crisis. we could do a tour of the histories, and recall the popular slogans and symbols from the past that resinate with tonight's themes of jobs in the economy. presidents have promised voters a square deal, a new deal, a fair deal, a new frontier, a great society, and a new morning in america, and who can forget the promises of a full dipper pail with a chicken in every pot? [laughter] in short, talking about jobs and the economy has been the duty of every president and each congress for over a century. tonight's distinguished panel of former members of congress,

historians, and economists revisit our history and comment on the past approaches to promote job creation in the healthy economy. it's now my pleasure to introduce the president of the former member of congress association, ambassador connie morela: she's a great fan of the archive, and we're a fan of hers. she has a distinguished career with 16 years of service in the house, six year ambassadorship in the economic cooperation and development. throughout her career, she's been a champion of economic growth and at all levels from capital in developing countries to promoting biotechnology and advanced scientific research as global engines of global economic change. please welcome ambassador connie morela. [applause] >> thank you, thank you. that was an introduction i

didn't expect because i'm not even on the panel. i'm connie, i approve this message, and i want to thank the archivists for inviting us to the beautiful home. we appreciate being here. the introduction was so lavish that it reminded me of may west when she said too much of a good thing can be downright enjoyable. thank you. i enjoyed every word of it. thank you. [laughter] i also wanted to welcome those who are here, thank you, members of the community who care about hearing about jobs in the future, and thank you former members of congress who have been with us all day long from 7:30 this morning on through this evening. thank you, visiting parliamentarians with us all day in making great contributions to our various venues during the day. here at the national archives,

we do have a wonderful partnership which some people call a strategic partnership, but it is, i guess, but it's a wonderful partnership we've had with three or four events here in the theater every year and invite you back to all of the ones they have. right now, i have such an ease sigh let assignment -- easy assignment to introduce the moderator. a man named han is nichols, the white house correspondent for bloomberg television focusing on foreign affair, and the international community. he's right here in washington, d.c.. he's interviewed many political figures and government officials as well as past and present heads of state. in 2008, he coveredded the presidential campaign. ..

>> i would like to invite doctor david sicilia. now, i will turn the program

over to our very distinguished moderator. [applause] >> thank you very much. i appreciate it. thank you for joining us and also to the audience watching on c-span. we have a promising and exciting panel that actually has the added virtue of being true. we have a variety of lawmakers and doctors. so i will get out of the way. we can get into a conversation that their expertise. congressman bob clement, he is from tennessee. formally university president. it will be interesting to get your take, congressman, on what the president says is the role of colleges and community college education. doctor nela richardson, a former economist at the cftc. i have watched her grow other economists and it makes me very

scared because i'm not an economist, and i need to keep it in a language that we can all understand. congressman mark kennedy from minnesota, we won't ask you about governor pawlenty's overall thoughts, but the exciting clear before government and in business school,, also, he did some nma. we might be able to get him to talk about the opposition of häagen-dazs. and doctor david sicilia. a historian at the university of maryland. we really want his overall pick up where we are historically in terms of the jobless rate from economic growth, just where we are at. finally, senator larry pressler from south dakota. chairman of the commerce committee as well as served on

finance, especially as we talk about that prospect for individual tax return and corporate tax reform. i know you probably know what a lot of loopholes are. to start off, we will talk with doctor david sicilia. thank you very much. >> delighted to be here, thank you very much for having me end this great opportunity to learn about this organization and all the great things you have been doing. i want to just provide a little information. over the course of the 20 century, u.s. unemployment rates have ranged between 3% and the highest 10% with the exception of the great depression when it hit 25%. during the early reagan administration when the fair

chairman paul volker was trying to wring inflation out of the economy, which led to the 10% unemployment, and then of course come in the last two years. unemployment throughout history was recognized as a very serious, debilitating aspect of american life. but it really wasn't until the 1930s and 40s that the federal government explicitly started to claim serious responsibility for addressing the problem. first through deal programs and things like the employment act of 1986. it commended the federal government to ensuring maximum employment. the broad index that we use is misleading in several ways, as many of you know, because it doesn't account for things like discouraged jobseekers, underemployment, ms. employment.

but there are other things that we need to use to interrogate a little bit. there is a national index, which in the current economy, there are parts of this country that have depression levels that face unemployment and other areas that are actually prosperous. you might think of it differently, called unemployment frequency. which measures the percentage of americans who are out of unemployed for any part of the given year. if we look at that, over history, we see that it is an astonishing 21 to 22% in the postwar. we can also think about joblessness has affected different fortunes of our population. in fact, before the new deal, unemployment was kind of more egalitarian. since the new deal, teenage

workers, african americans, and women, disproportionally. this could be a little too radical for a panel about what this federal government do to ease unemployment, but the fact is that the unemployment rate has changed remarkably little over the course of the 20th century, with the exception of the great depression. the new deal programs actually did not bring about any kind of revolution in addressing the unemployment problem. even though we do have more forms of insurance and other safeguards. the transit unemployment, particular administration affiliation, democrat and republican. the record is mixed. and this is because i want to suggest that by and large, unemployment is caused by things that don't have much at all to

do with the federal government. macroeconomic trends. international forces like energy prices or exchange rates or international trade. those are the things that really drive the unemployment rate. obviously, the performance of private business sector is very important. but even there, it does not correlate neatly with the unemployment rate. because corporations can perform very well, and yet that does not automatically translate into jobs. we have this phenomenon that is becoming more and more prevalent. so-called jobless growth. when we think about the federal government's efforts to ease unemployment, it is useful to try to separate out the long-term versus the short term. obviously, there are things the federal government can do in the short-term to sort of be the economy. actually, when you look at

efforts by the federal government specifically targeted toward easing unemployment, as opposed to more general measures to try to make a robust growing economy, there hasn't been that many end virtually everyone, by the time it was enacted, the recession it was enacted to address was already over. it came too late. many of them were bipartisanship . except for the cases of the major depression or the major recession today, this actually gives us more time to act. so actually there is more opportunity there for the federal government to take steps, which brings me to the longer term. again, larger macroeconomic forces and private sector competitiveness in hiring practices, for its part, federal

government has had the greatest positive impact, not when we simply spend money for any purpose, john boehner says he could build ditches and build the whole and i don't think that's the way to go. but even if the government had to borrow money to do it, they have invested in wealth producing capacity for the country. for example, in transportation, communication and i.t. infrastructure or in education or in the energy sector. not that the government cannot or should not accept these as unemployment, but to target wisely and carefully and keep the longer term in mind. and i think voters need to do that as well. thank you. remark one thing jumped out at me. jobless growth. that talks about what doctor richardson might be talking

about. >> it is likely to be with you here tonight. and i would like to just pick up on doctor sicilia's comments and the current economic situation. there are 12.7 million americans who are currently unemployed. and that does not count of 5.4 million individuals who give up looking for work. the economy was rebounding and producing jobs. for the first three months of the year, job creation averaged 226 jobs per month. that is a far contrast to the jobs reduction we are seeing in the second quarter, which is about 75,000 jobs per month. now, to give you some perspective on those numbers. just to keep the 8% unemployment rate that we have currently, 8.2%, the economy needs to post

90 to 100,000 jobs per month. at our current rate of job creation, we are not even holding steady on what is a high employment rate for the healthy economy. given those facts, what are the key out the -- key obstacles? about 40% of those people seeking a job have been unemployed for six months. not only that, young people, ages 20 to 24 are disproportionately affected by the unemployment rate. this is not just the capacity of of individuality for these people. but long-term, research has shown that for 10 to 15 years after they become employed, they still make 20% less than people who were employed during this time period. that is a lot of ground to make up. for young people, for their part, they may delay important life decisions.

like living in their parents house, order, you know, finding a partner in getting married and starting a family. these have real implications for people. a second obstacle is the mismatch that we see in today's unemployment numbers. the bureau of labor statistics recently, just today, put out a number of 3.6 million vacancies happen in may. for the first time since the early '80s, there is a mismatch between the jobs that are being advertised, which are in the sciences and math and technology. and the jobs that graduates are preparing themselves for. there is also the job polarization. highly skilled jobs are being created, like quantitative systems, and jobs to take care of our aging population are being created. but those jobs in the middle, the jobs responsible for the upward mobility of the middle class are disappearing.

a third key factor in the job market today is the shift in responses to downturns in the session. back in the 1970s, firms were more willing to sacrifice productivity and profit keep workers. now it seems like every downturn is a downside, and firms are more willing to lay off workers permanently in order to keep profitability and productivity in place. finally, the fourth key issue going forward is that americans are just much less willing to move to where they are. in the 1960s, the average american move at least one time in your -- one in five americans. now, only one in 10 americans were many are. why is that? first of all, the housing market is broken right now. and it is very difficult to sell your house and moved where the job is.

secondly, we have seen a rise in dual career families. it may be possible to find one job in the new location, but finding two may be more difficult. finally, as the population ages, there are so many more social and family commitments to make that make people unwilling to move from their present location. the final thing that is holding back job creation, i think, in the united states, is uncertainty. there are a lot of macroeconomic issues that are still undecided right now. the fiscal clip is one. the wonderworker till spending and perhaps increase taxes going forward. there is the burden of deficit that is also impeding firms for making decisions about hiring workers when they don't know what the tax rate is going to be next year. these five things will have to be addressed for job creation to go forward. i would think about running for congress. but since i don't, i will go to

my esteemed copanelists were used to addressing these things. thank you. >> i will start with a the senator. i know we couldn't possibly start with it represented a first. you were in the senate for 18 years. one of the biggest sessions we had, the president was in iowa, back-and-forth, a thousand miles apart, but what to do about the tax cuts and want to provide consumers some sort of certainty that their taxes will not allow. you have been in town for a long time. is there the bipartisanship to actually get a deal to cut something to prevent massive tax increases? >> first of all, i consider myself a member of the house.

[talking over each other] >> neither one. in any event, in tax policy and honest labor issue, our national media in our presidential candidates are not really dealing with the truth. for example, even if we have a sequester, we are still going to have substantial tax increases to get through the spending we ever be done. and we will not admit that. the presidential candidates are talking about 5% here, 10%, some days the president of the united states, if we have a cataclysmic financial event, the president of the united states may say we have to pay more. the wealthy people have to pay much more. the gas tax, as in the simpson-bowles report has to be tripled to suffice what we are

paying on infrastructure. everybody knows that revenue has to be substantially increase increased in the united states. as a republican, i think both parties should amend that to the people it is going to have to be done. and we are tossing around these job report percentages. lou dobbs, whose facts are good, and the he had a program on jobs and he showed all the jobs were available. and i can say to you that in the state right now, that anybody could get a job in the oil industry for about a hundred and $50,000 a year. that is man or woman. we have to get past the thing that nobody wants to move anyplace. on the lou dobbs piece, there was a lady in the unemployment line. these are not minimum-wage jobs. these are 18 or $20 per hour.

there were six of them within two city blocks where she was and she said that i am a language translator and i don't want to work in a drugstore. so this is very frustrating. we have to become much more honest with ourselves. our politics have to be much more honest. his presidential campaign, neither candidate is talking about the real issues. >> you sound like you think the united states is about to become greedy? >> well, we could very easily. i would predict that unless we do something about the statistical matter, the day will come the next five years. and we will have a cataclysmic event in the president of the united states will come on and see if we didn't have to do all of these things right now, it will be a very painful thing. high inflation, for one day will decrease faster than it does now. we are headed for some very hard

times and very substantial tax increases and a lot of us are going to have to take jobs that may not be where we want to live or that may not -- we may be language translators, but we have to work in a department store. >> congressman, do you agree with that five year time horizon? >> i think the difference between europe and america when it comes to the issue is that europe acknowledges that issue and are working on it. i agree with senator larry pressler. my most recent post in huffington post is that we were talking about things that are not the real issues. there is a fiscal clip. the fiscal cliff with the decision on which tax breaks and what we will do with the increase of the debt limit, and what we are ultimately going to do to solve the deficit, it has

not been decided. integrates uncertainty, businesses stay on the sidelines. this economy would not recover until business has the confidence and can only come from addressing the fiscal clip. neither campaign is really talking about it. until they start talking about it, we would have to open up the discussion. there is a breakout opportunity for either campaign that comes out and says, my first priority is to solve this. i'm going to work with whoever is in congress and whatever one of her party. i'm not going to let anybody leave town, not going i'm not going to do a fundraiser for anybody until it happens and intuitive signed into law. if any member of any one of the candidates came forward and said that they would be the immediate front-runner in anybody who tried to follow -- i hope somebody takes that across the country right now. >> do you agree with that old prescription? both of these lawmakers seem to

be blaming the candidates. how much does it fall on the house of representatives and the senate? >> first of all, i thought it would be disagreeing with larry and mark. but i agree with them. i think they put it very well. what we need more than anything today is political courage. and that has to happen. i know the students, all this talk about today, about compromise. there is nothing wrong with compromise. that might be a dollar for additional revenue. it might be $5 of cost cutting per dollar of additional revenue. it might be $10. $10 of cost cutting for a dollar of additional revenue. but the fact is that we need both. if we are really interested, if we are really committed to end

these budget deficits and balance the budget, once again, i am proud to be able to say, and i know some of the other former members that are here with me tonight, they will probably be able to say that i served over time where we didn't have a balanced budget and it was a good feeling. >> i am too young to remember. [laughter] >> when you talk about these looming facts historically, have there ever been periods of time like this -- we all know that the bush tax cuts expire -- has there ever been a time where there has been a greater consequences for inaction? >> well, yes, we tend to think that our current times are the most challenging and they don't look that way in the longer view. you know, a lot of things happen

. obviously, given the onset of the great depression in action. it seems to be the worst thing to do, and yet the president did it because we have had those cycles and recessions for virtually every 20 years for 150 years. so this is another 1921. virtually everybody thought that. by the time president roosevelt took office, it was pretty clear that this is something different. so this happens all the time. and we somehow -- no, i will stop there. historically, we have accepted the narrative that a tax

decrease increases employment. that is not historically true. as you said in your historical comment, or levels of unemployment stay pretty much the same. in fact, during some of the biggest tax increases, we have had an increase in employment. i think our national media needs to dig into the facts mourn with all due to the facts of the present company. and i just happen to see lou dobbs, i know he is on a fox channel and that makes him was given to some. but he did a fantastic piece on what the job market really is. people are not taking the jobs that are available. >> are we stuck at 80% unemployment? >> it may be. there is recent projections that

even under optimistic scenarios, if the country grew jobs by 205,000 per month, we are still looking at eight years before we return to the unemployment rate that we had before the recession. >> and that is a too 3% duty? >> the senator's point, that people need to take the jobs are out there. that people need to be trained to work those jobs. right now we are seeing the scale mismatch. such is the jobs that were advertised, there used to be where firms were willing to train employees. now, firms want somebody who is ready on day one. and they are willing to wait six months or year. they find a person who walks into the door with a complete [inaudible] >> providing that training for middle skilled jobs.

it then became a four year university. what role do traditional community colleges have been filling the gap that other companies to? >> we ought to have congressman mark winchester. what a great leader he was in north carolina in this country when it comes to unity colleges. i was college president out of nashville tennessee. and move the college to a four-year accredited institution. i have always said that that is the toughest job i have ever had. when i came out here, people mention that you are a congressman now. but yes, the last 4.5 years they have called me mr. president. i might say about community colleges they serve such a great purpose. what a great need and what a great bargain that they are. and i think all of us know that

young people need more than a high school diploma to survive and compete and get a job. that is why community colleges are so important. these tuitions are going out the roof. a lot of people are an unbelievable debt. and i can see why so many people are questioning, should i go to college at all? i can't afford it, i don't want to put that burden on myself. i don't want to put that burden on my family. we do have a disconnect today about skilled jobs. jobs that are not being filled. >> welders, manufacturers. >> absolutely. and we have to fill that need, and that is just not happening today. a lot of people just need more advice and counseling. not only young people, but a lot

of adults. that's what we had at cumberland university. i started and funded it. working adult degree program. the end it worked. >> would you like to jump in? >> two quick things. there is new workout of harvard. claudia goldin, the investment in education -- the quality is better than anything else that you can come up with. the other thing that i want to mention in which doctor richardson brought up, and congressman kennedy, this issue of uncertainty. other work shows that if you want to predict how well the economy performs, having a high tax rates were low tax rate is not a very good predictor.

with the best predictor is this how often the tax code has changed. so when the postwar. none, you had an extraordinarily good economic performance, the tax code did not change for 25 years. that is part of the problem. it underscores the issue of the gridlock and congress. the biggest risk is if we are not able to get more bipartisanship and have this kind of brinksmanship around around our treasury notes and if we will default. [inaudible] we can't play brinksmanship with things like that. >> there seems to be a lot of blame in washington.

you have significant private-sector experience. sometimes the president vetoes the business community. some might use a different verb. he talks about the need for businesses to get off that $2 trillion and start spending. how much of this is on the business community on corporations sitting on cash? >> i think that corporations are sitting on cash because they are waiting for certainty. when you extend tax cuts by year, when we heard that it is less correlated with the level of tax cuts long-term, politicians are waiting for the next election, the business communities will wait until the next election. it is kind of hypocritical for politicians waiting for the next election, or focus on the next election comes when businesses for doing the same thing. i would also like to take a historic perspective since we are here at the national archives. and think about where we are in

our economic development and what kind of economy we have and what needs to move forward. because i teach a lot of courses in world economic forum, rankings of competitiveness. three different stages of economic development has a look at countries around the world. resource driven countries, like we used to be in the 1800s. back then, infrastructure and other things were important. much more important than they are today. then we moved to an efficiency driven economy. how efficient can he you be. and then they moved to innovation economy, where we are today. twelve pillars of competitiveness, the one that they rank than the one that makes the most difference in an innovative economy, it is a sophisticated production system. read that as a global supply

chain for he that is in sourcing and outsourcing. i saw it today, the very first bill and the congress, we saw this earlier here at the archives, with the baltimore citizens petitioning to protect. he was on the political table from the beginning of congress. they were on than when they are on now. you are bashing was critical for our economy to move forward to the central and licensed for a global supply chain. and you ask well, it's pretty easy. the second thing is innovation, which requires two things. getting a reward. why am i going to taste this risk? here and there, when in reality, it is risk-taking that drives an

innovative economy. we need risk-taking and free and open trade. it is one of the proven tools that has been left in the toolbox. sites approaching the fiscal clip, we need to be part of the global economy and lead the global economy, as opposed to cowering and being fearful, the person that will leave this economy back to the job growth. >> we talk about the toolbox, the president has free-trade deals, they are moving ahead on the partnership they have invited mexico, we are talking about the pacific -- are you accusing the president of not doing enough on free-trade? >> i would say america is not doing enough for free trade. let me applaud the president when it was given to the congress with a 90 day requirement in an up or down vote to finally get three builds on what some of our most vital allies. it took us five years to get a

trade deal with south korea that we have needed all these years. it is not a great croissants. transpacific partnership is not talked about enough. if you talk about the most -- top-five most of the things that your kids and grandkids employment, it is whether or not the trade deal in asia is going to be in asia trade agreement or a specific trade agreement. we are not talking about enough. is it an asian trade agreement, the printing itself from america, we are going to have far less prosperous economic futures. i applaud the president again for putting forward a specific partnership. i applaud them for putting candidates in mexico in the mix. that needs to be part of the narrative. move beyond this in sourcing and outsourcing discussion and talk about our futures dependent on

this trade agreement. >> i'm glad i am glad you took it to a global term. imagine all of you guys have a variety of views on what countries competitors potential collaborators, what other countries are doing well, and what they are doing poorly. when you look at the global footprint of countries that are competing, who should we be emulating? who is really out there innovating? >> well, it's very hard to say. so many countries have gone into this deficit spending business so much. this is not a thing of the 1950s to the present. much of the western world in countries such as india, china has not engaged in that sort of deficit spending. and i suppose we would have to emulate china. that is not a very popular thing to say. but in terms of managing the fiscal house in managing the business, i think that we might have learned something from the chinese.

that may surprise some. also, let me say that i think we have to be very honest with ourselves. historically, and this isn't part of historical discussion, things like in the presidential campaign, we talk about the immigration issue on the edges. the fact is that everybody in this room knows that we will not deport illegal aliens who are here. now or in the future. after the president is authorized to deport those democratic and republican presidents have not. and we are not deport the people you're here. they are going to say. so we should accept that and deal with it. we are going to make them citizens, and that is what is going to really happen. if we look at ourselves historically, we are not a country to deport people. therefore, if we let people into the country, they are going to stay with the immigrants are

here. everybody knows that, but nobody seems to be willing to say it for a presidential campaign or anyplace else. a whole host of issues. taxes, trade, international matters, we are not having an honest discussion with ourselves. >> congressman? >> i agree with what larry just said. i agree with what mark said. one of the toughest vote i ever cast when i was a member of congress was on nafta. and most democrats were opposed to that. i will never forget going to the oval office and pleading for my help. [laughter] [talking over each other] >> i wasn't not smart. [laughter] but i did help him. and i do feel very strongly

about fair trade and free-trade and opening up our markets. because i know americans can compete. i know the american work can compete. if we don't have our hands tied behind their backs. >> you raise something, one of the criticisms that you hear of obama and the relationship he he has a capitol hill if he does not spend that much work lawmakers on his own. the presidents who served under, how frequently did you socially interact with president clinton? >> yes, i served under four presidents. starting with president reagan and ending with george w. bush. eight of those years were under president bill clinton. it was a real pleasure.

>> did he play golf? >> all, he did. as a matter of fact. that is a real story. [laughter] >> i will just tell you the last part. we were on one of the last hopes. the army and navy country club. right in the middle of the gore campaign. we had a lot of time to spend. [laughter] >> i sent mr. president, i had a tree about 10 feet for me, you might want to move that golf club. and he said bob just hit the ball. i hit the ball, it hit the tree, he came back on the president, should the golf cart, just an inch and he could've gone down. [laughter] >> the next day, tennessee congressman kills president.

[laughter] >> the shot heard around the world. >> thank goodness i'm not much of a welfare. >> those things happened. >> yes, he would even call me. i will never forget i'm even though i didn't vote with him this time around. on the floor of the house. >> but you went within -- and i said this is one time i can help you. but, i didn't mind saying yes, but i did say no. i said no at times, too, because abbott district and the state in the country and you have different feelings and you take different positions and you have to stand by your decisions. >> i just want to come back to an interesting question about

who should we emulate. should be emulate china? i don't and we should emulate anybody. because capitalism comes in many different varieties. i don't think there is one best way. some different ways work very well. there is the so-called scandinavian approach. in that performs very well, but it would not work in the united states because we wouldn't go for that kind of a large social welfare system. the issue in china is always about the government. and the government actually introduces a lot of unpredictability. it has shifted from the 1980s to the 1990s. and actually, there is a lot of evidence that the economy performed worse in china in the 1990s because of that shift. now, we doh innovative society. it is one of our competitive strengths. however, in some of you may know this book in circulation and says that we should, you know, cut taxes even more because it

will incentivize people even more. the problem that i have with that is that i don't think people should go out to start companies and say well, if i'm only going to make $800 million instead of a billion dollars, then i'm not going to try to start this company. the middle class -- the moral issues involved. the middle class has been the engine of economic growth in this country. in fact, we talk about america trying to make a mcdonald's on the world. the fact is that other countries have tried to get into our economy because we have had the most affable middle class in this country. from a purely economic point of view, to the extent that we continue to grow the middle class, we will possibly end up like reese for whatever model that you want to use remap i

will give you two people to emulate. i agree with president obama when he said that health care is our deficit issue. nothing else even comes close. >> do you mean medicare and medicaid? >> health care is our deficit issue, medicare and medicaid -- nothing even comes close. if you look at australia moving to the social security side, and i will come back to health care, the liberal party passed a mandate that you had to save extra of your earnings. when the conservative party, when in which everything is done under, they are considered part of the liberal party -- when they came into power, instead of repealing that, they said that we are going to let you invest in whatever you want. so you only access social security at 9% of your earnings in your lifetime aren't enough to give you enough payout to make it more than social security. so 4% of the people are actually

drawn from the government. so rather than having people when they turn 65, they are are turning it on savings and they have a huge pool to invest in private industry. that is one model that we should look at. when you look at health care, i would look at business. you look at the grocery store that said says they determined that 70% of health care costs are influenced by behavior. and that they're only three or four big things that account for a big part of that. diabetes, high blood pressure, etc. they came up with incentives that if you don't smoke, if you're not making progress on that, if you have high blood pressure, high cholesterol, they take the medications, you do the right things from a behavioral perspective and they give you a lower premium. when everybody else's health care costs are going up everybody else's were going down. they have incentives and there

is no incentive in our government health care plans, and there are restrictions on what private health care plans can do if we put the same incentives and encourage it for private health care. that would go a long way towards bringing the health care health care costs under control under jefferson under control. >> is that possible? >> i am stuck on this idea. because honestly, i am kind of listening to the comments that are being made. what is going on is that we are coming off of an addiction. there is a withdrawal happening. the withdrawal of easy credit. not only when it comes to that housing market in 2005 to the 2007 housing boom, but the world kind of fixes themselves to this. china investors -- not just

china, but international investors all over the world. they gave the incentive to manufacture this so that more investors can invest in the american housing market. it gives people the ability to purchase homes they couldn't afford. and now we are in the most painful correction ever. what is real is how much of our economy, not just our economy come for the world economy is driven by this bubble. just recently, the imf took down global growth. they change their projection of global growth. one of the mandates that the imf has told the u.s. is to fix the housing market. why? because we need consumers to start spending again and advise the global economy. revive the global economy. the fact is the rest of the world depends on the u.s. consumer to spend and to import

commodities and products that these countries are selling. and so we can't oversell or under estimate the role of housing and installing u.s. economic recovery, and also stalling global recovery two so have we bottomed out on housing, and if we are on the upswing, i figure savings is for our 5%. germany is 12%. if housing is sort of on a slight uptick, where you see the u.s. savings? >> you know, the house was the savings instrument. for millions of middle-class. if it is not in the house and interest rates are almost at 0%, where it is the middle class go

to save? more than that, we haven't talked about small business yet. small businesses -- you know how small businesses are generally financed. through savings and home equity. as home equity disappear, so has there been a decline in businesses. that is an issue going forward as well. >> one thing i heard the president say, particularly when we were coming out of the global recession, wendy's international forums come in talking to foreign leaders, don't count on the u.s. consumer to be the instrument of growth. there has been more difficult conversations with merkel and gordon brown -- i think what i am hearing all of you say is that the u.s. consumer is no longer going to be the engine of growth. senator? >> i think that is a very good assessment. it is also deficit spending by individuals with privatizing home loans and so forth. and we have gone through a

period of time where it has been very difficult. everybody has forgotten about that. about 1950 onwards, we really haven't had a shortage of things in westford we have a sense of entitlement. a sense of abundant goods. and it is, as you said, we are hopefully going to come off the addiction. but it will be very painful, i think. >> as long as we are on addiction, and this is something that we hear the president talk about. addiction to foreign oil, where are you, congressman on the overall hemispheric energy policy? where are you on crack and?

where are you on energy where are you on energy is being a job growth factor. >> we need to look at how we can use our research in the most productive way possible. >> that is a man who is going to run for congress. [laughter] >> i am a big fan of the fact that the incentives for the energy companies come up with something like that, it radically shifted the geopolitical landscape. we have a real possibility of being far more independent than the middle east on our own energy needs. now, we are finding that we have the cheapest natural gas in the winter.

all the things that go down to miss. i think, you know, we are getting way too contentious on the energy and issue at hand. that not only has great economic benefits, but from a geopolitical stature in the world, to have that economy is a huge change. one thing we have to watch out for is they need to preempt regulations that could stifle all this and act in a responsible way to say this is the way we are going to act to address consumers and resident legitimate concerns. >> senator? >> i would like to see, especially on energy, i believe that we should not a lot -- i

think both pipelines, the main pipeline that we are talking about, deficit in order we have been trying to build a refinery for 16 years and south dakota. the combination of the rights of individuals in lawsuits and extreme environmental concerns. we now stand -- we have great wealth. if we could harvest the whale that we have in the alaska area and north dakota area -- and we also have refineries to movement -- we consult with much of the world and pay off a lot of our debt. we are extremely wealthy in that area. i just think it is a shame that we don't break out of the box and really develop that oil and gas and sell it. >> congressman? >> i am former director of the tennessee valley authority. and we sell electricity over

seven states. i felt very strongly that then and i still do now about diversification. >> we were building when i first came on board 17 nuclear plants. >> how many are you building right now? >> which was outrageous. as a matter fact, led the attack by myself. two to one to curtail part of the nuclear program because we were overprotecting and driving up the rates and we would've lost the tva it would've kept moving down that track. it was the right thing to do. but america has an abundance of energy. it is about like a growth policy in the united states. we've never been serious about the true energy policy. because energy in the past have

been so cheap to buy overseas, if we move in that direction, rather than moving towards energy independence. >> well, taking a long view, thinking in terms of the age of the automobile, the combustion engine and fossil fuels -- we are kind of at the end of it. tracking could give off an indian summer. because of the synonymy and disaster they are in japan, if they could get off of fossil fuels and nuclear power, it is an astonishing claim, almost any country can do what they can. if they do it, that would be a game changer. every other developed country like us will have to follow them because of economics. >> when the historians -- i just want to be clear on your time horizon, would be 20 years or 30 years?

>> no, i think we could extend it for 20 or so years. but the fact is that we need the age of fossil fuels as being in a twilight. president obama coming in for his second term. you know, thinking on terms of legacy. the issue hasn't come up yet today. so i don't think that we can just say that we article you talk about fossil fuels, we need an immediate solution. but the longer-term issue, and again, it will be driven by a country like japan. because if they are able to actually pull this off, that we then we are going to have to pull it off as well. >> i would respectfully point out that they're going to keep it. in fact, italy is buying all these nuclear plants that are designed by the french.

>> and this runs on nuclear energy increasingly. and though japan was traumatized by that. but i would say that has not been the case with france and italy and switzerland. and england. and the united states. i think we should have nuclear energy is a component. we don't seem to be willing to build pipelines and refineries or do the things that we need to do. and if so, we are going to have to have a nuclear component the larger. >> i think larry said it well. what they did, that the united states did not do, is standardized nuclear plants. and where we did all this end we got into retrofitting in the nuclear regulatory commission, the nuclear plants became very

expensive. i support nuclear. but i also believe very strongly that we can move forward with diversification and our energy sources. and accomplish argenta. >> commerce and, thank you. really quickly come after this, if there are any sort of audience questions, i can keep droning on or we can have a conversation to ask. if anyone has questions asked, we invite you to go to the microphone and his raise your hands. >> is i was going to say we talked about political courage. an election where the person ran against the idea that we are going to have this in japan. i'm not really sure. because when you really care about global warming and tracking and all these issues, nuclear is the cleanest form of

energy. also, you don't have to worry about where you're going to store it. we have not really had a real conversation about nuclear energy and energy independence and insolvency. >> i agree, which is what i have talked about with fossil fuels. we just now licensed a new one. there was a historical period when it was completely dead. >> if there our audience questions, i would encourage you to go to the microphone. because this is all being recorded by the archives. by c-span. if anyone has a question, please let us know. if not, i'm going to talk about what senator kennedy was talking about. social security reform.

one of the first things that president bush did after he won an election, was to try to privatize part of social security. it didn't go anywhere. what makes you confident you can have some sort of social security reform in this country, given what happened in 2005? >> well, first of all, let me say that social security is a much smaller problem. but i think you have to approach this, not putting everything on the table all at once and trying to do something in addition to social security. but if you have local capital, figure out a way to make it work -- something that doesn't cost them too much consternation -- many people say when it comes to entitlements, we need to do something from a bipartisan perspective. there are really a couple of things that change social security make it solvent for extended period of time. social security problem, if the

politics out and let them come up with a solution. it's an up or down vote in conjunction with the medicare and medicaid -- it is a fraction of the problem, that health care is. i would suggest -- i will give you an example -- of how it has been done in a way that is more official for the economy. >> we have the first question. introduce yourself for the historical record and fire way. >> i am from [inaudible name]. i was just going to ask about you guys brought up a lot of factors. skills and uncertainty, did that worry you about the future deficits. but from my understanding, a lot of those problems existed 2007,

and we didn't have massively high unemployment, whereas the biggest change was a huge shock to aggregate demand. so i would be curious about why those factors do not cause unemployment in 2007. and why you think there is still the driving force of unemployment today? >> that is a very good question. during the 2000 decade, what we have is a distortion in the economy. we had an have an oversized housing market and an oversized financial sector. see that in all areas. the best and brightest students went to wall street more often than they went to medical school. that distortion had some structural inefficiencies in terms of what was happening with the economy. once there was the recession and once it hit, all of these bubbles, starting with the.com bubble, ending with the housing

bubble bursts, you saw the gaps in the economy that dealt with the unemployment rate. for years, upwards of 80% -- that has not happened in a long time. >> senator, i think you wanted to say something? >> we have all these narratives reported in our life that are just not necessarily true. a lot of things happen economically, and it doesn't work out that way. everybody assumes that we have a tax increase on the economy will slow down. that is not historically true, although most people assume that it is. we accept the fact that there is a% unemployment, when in fact, there may be only two or 3% real unemployment. there are jobs available. we accept the fact that we are going to do something about the illegal immigrants. we are not. it is not in our dna.

it is going to have to be making them citizens eventually. we seem to deal with all of these prodigies. in this presidential campaign, i am so upset. either obama or mitt romney, and say, listen, the stuff we are talking about is just on the margin. the real issues are best. and we are not doing that. i think you for your observation. >> i would just say that yes, there is some misconceptions about higher taxes reducing the incentive for innovation. if you think of what happened in 2007, we have put so many different issues on the table, he created so much uncertainty. whether you are talking about the health care bill were the cap-and-trade or what will happen with labor laws,

financial regulations, they are all just kind of creating uncertainty. part of the problem was what bush saw -- which was a fraction of what was put on the table by president obama. take them in bite-size chunks that we can wrestle with and get them done. as opposed to putting so much uncertainty that it discourages businesses from stepping forward and solving the issue. >> go ahead, and then we will get to the gentleman to historically, the high point of the unequal distribution of wealth in the country has been 1929. but it went down and we had this great expansion of the middle class, especially of the 40s and 50s. then it started declining in the

80s. it is an order of magnitude. corporations are not passing along any of their earnings to workers. they are passing them along to shareholders and that comes back to my point about the middle class. it is just fun sometimes, but it is not a one-size-fits-all answer to all situations. right now, we have a problem. >> next question? >> i am from the center for american progress. there has been a lot of agreement on the panel that the debt and deficit are big issues. when economists think of this in terms of debtor deficit ratio, i think doctor richardson was hinting at this, when people are unemployed, that can reduce our potential gdp. i know that larry summers had a recent paper published by the

brookings institution that had been a relatively low interest rate, there are levels of history that suggest that government spending would almost pay for itself. what does congress need to do to get growth moving again when there is such infrastructure investments they could pay off, investments in education that would be incredibly useful for our economy. >> well, i believe that's one of the economists. >> economist surrounded by congressman. [applause] >> that is a tough question. if you like the stimulus was like cotton candy. it was very sweet, and then it disappeared. and i hate to have the solution be more stimulus. because it has to be smart spending. we have a mirage of infrastructure problems.

and we have a labor force, a lot of construction workers who are spending time at home because there is no new task that could be put to work right now. and we have an education sector that could use investment. there are definitely those starving for government funds. those funds have to be directed in a smart way that recruit their investments. and i think that is why maybe congressman for american people are gun shy about more government spending. because they didn't see the results were expected were advertised. >> more fiscal stimulus if you yourself? >> in the national archives, we had a lot of [inaudible] it was world war ii that brought us out of the depression. so far, there is not much historical support that i see

for stimulus really having any kind of significant impact on the economy. but we touched on something earlier that is vital. and that is we can't be the engines of the world economy. we need to get the developing countries like china and india and brazil, to start buying more american goods. because that is the kind of stimulus that can offset us being in a fiscal constraint it. if we just stop spending, that is going to depress the economy. we need to be doing more training. getting consumers to buy more. that means they need to have better safety nets. the key thing that we need to be focused on more today than the campaign is how we sell more to china? and we sell more to brazil and india and turkey and africa?

we are losing africa to the chinese. we have this myopic internal thing, when in fact, the solution isn't necessarily washington. the solution is doing everything we can to encourage businesses to go abroad and sell more. >> made a historical point. that historians your right may want to challenge. >> the great depression, it is true that the new deal did not end. however, it is actually a rather conservative effort that fdr tried to balance the budget in 1937 and brought about another severe debt. doctor richardson reiterated what i was trying to say in my opening comments about investing in wealth produced -- wealth producing capacity of the country. two programs i have mentioned would be the federal program and the g.i. bill. i think that those had an

enormous positive effect on this country. because it educated people for higher skilled jobs and a lot of construction workers back to work and created a highly system and transportation infrastructure. >> i agree with you on the transportation committee. >> yeah, you know, i would've done the obama administration a different way. i would have done national health care on an incremental basis. i think american people would better understand it. and they would better accept it. because there is an unbelievable amount of fusion, lies, chaos, over national health care. and you could still help people and help cover people. the pre-existing conditions, taking care of young people on their policy to age 26.

selling state insurance across state lines. transportation infrastructure comes first. that is what we need to do first. it would create more jobs faster. people just like during the roosevelt administration. the wpa. the same economic activity, and i think he would've gotten a lot more bang for your buck than the way we have done it. >> and currently we are about 60 billion analyzed for surface transportation bill? >> 110 billion. the amount is that correct? >> yes, we haven't had a transportation bill since 2009. we have gone for three -- now we have just passed one. and thank god, made part of it, keeping the interest rate low for students. or it would've skyrocketed to

over 6%. >> the lawmakers up here, about 55 billion? >> yes. >> more or less? >> congressman kennedy? >> again, we are talking history. we pass the highway bill, we didn't have a highway bill around the country, now we do. there is a huge proponent of higher education, which we have today. we are not in an efficiency driven or an innovation driven economy. transportation is important, but it is far less important today than encouraging innovation and having a sophisticated supply chain that was the center. one thing on transportation i think we are missing is we are building a lot of roads in africa and southeast asia. do you know why we are not building them? because we have socialized highway construction. and that's only funded by the

federal government. so our contractors only know how to respond to a government. they are the ones who are taking advantage of those markets. again, rather than having washington spend money, we are selling to emerging markets and we will be in far better shape because we have taken a citizenship approach towards transportation. we are far worse in shape as far as access and emerging markets go. ..

well, our system really requires presidential. for example, the president had the simpson bowles committee, a presidential committee that met for a couple of years. they reported to the president with much fanfare. report that was signed by even tea party members. and republicans and democrats. the president did not put those numbers into his own budget that he sent over to congress two weeks later, and deny release in the budget.

the president must lead. whoever our new president is, i would like and to start bit -- sending bills to congress. when i first came to the house jerry ford was president, and he had a bill that he would send up there for every subject. it that changed a lot sometimes, and he would veto it sometimes, with the point is there would be someone in the hearing room, and he would give the administration's position on this amendment. that was very helpful in working with the two branches of government because if you just say, you pass something. i'm going out of town. and so, the old fashioned working together, is not that they're going out to dinner together, not people putting their arms around each other. it is people working on a bipartisan basis with the bill submitted by the white house and take responsibility for it and being willing to admit defeat

and taken up or down. that we stopped doing both on the presidential side and in congress. that has been an historic change . a very dangerous one. >> another question from the audience. >> good evening. i am a citizen, luckily, employed. my question actually ties into your lasted meant. what has happened to the political career? guess this is not a statistical question, but it is a basic, i think a lot of citizens are wondering what happened to that political courage. is it tied in? the comments to the media and other media has changed over the past few years. the different channels definitely have a very different spin. they're not really giving them permission that they need. they seem to be going hand-in-hand. >> the congressman. >> well, these polls have gone rather sophisticated. as you know, there are very few states and play.

as a matter of fact, both candid it's don't even have to go because they know what the outcome will be. so -- the raise money and all that, but it is commentary. the way that we have it structured now and the amount of money, and i wish we could take money out of politics. i am one of those. i just think that it is outrageous bill we have done to ourselves and with the u.s. supreme court ruled not too long ago about no limits. it is just not healthy for america because most people in american never run for public office. they don't want the public scrutiny for themselves and their family. and therefore, there is no political courage to as i said

earlier. people are not stepping up to . don't worry about the next election. worry about the next generation. >> just said to that. ticking off the economist at and citizens had. there is a saying they should never make a permanent decision from a temporary place. at think the most selfless thing a person can do, a decision making to the decision maker can do is think long-term. >> i am pleased to have the graduate school of political management at jo's loss to university. we are dedicated to the purpose of helping democracy. how do we get that acquisition jack because advance legislation , how can you do both? this is a very, very important issue with many factors that

impacted. at think the fact that there are very few districts where their word about a general election makes it harder for them to be coming to the table and figuring out. but there is a myriad of other things that result from that. the fact that it is still bifurcated and everyone listens to what they wanted, the facts, ms nbc people, their point of view, one of the best things citizens can do because congress is a reflection, to listen to both. the editorial pages and the "wall street journal" and the new york times in evaluating critically. because until citizens start looking at both sides of the issue, were not going to make it. another one of the things we have had with this primary election is there is not much middle left. one of our historians from the

archives is saying his favorite aunt figure was henry clay who ran for president and lost because we don't want a compromise of president. if you don't have a deal maker in the house and senate, ted kennedy and president bush that could come together, polar opposites. you need deal makers. many things that we need to work on to get to the point of getting past and maureen about the common good. >> senator, did you ever face a primary? >> no, i didn't. fortunately, i never did. i don't know if i could win one today. >> do we have any other questions? we were coming to the clothes. like to sort of finish up or just ask one final thought to be due to speed around. to ideas for a job creation, and we will start with congressman

demand. >> job creation has to happen. we all know that. we know that unemployment is too high. naturally government can do certain things when it comes so the tax code and tax incentives. a lot of legislation still stalemated, not going anywhere. you're not practicing much between now and election time. so i want all of you to watch the lame-duck session. i think that is critically important for all of you because there is going to be a lot of so-called tennant demand between november 7th and january 2nd so beyond watch there. also, the private sector, you know, still business.

they have so many opportunities. i hope they will capitalize on those of virginities. what i am worried about, just like some speakers have already stated, if so many of these particularly large corporations, big business, sitting on unbelievable amounts of cash and not releasing it. a lot of people are suffering. a lot of people are unemployed and underemployed today because of it. >> i know that the message that obama sent abroad is don't count on the u.s. consumer debt lead you out of this, but i would like also the message internally to be, don't count out the u.s. consumer. and i think that is the best thing that we can do to create jobs in this country. start thinking of job creation as resources to invest in the

american people, to invest in education, to invest in the skill set needed to drive the innovation that is necessary for us going forward. forget the past and go forward, invest in people. the thing that is the best thing you can do. >> one of the most damaging things to america's competitiveness is the fact that we are the only industrialized country that taxes earnings. so the caterpillar worker, having to compete with the japanese worker for who will take the dirt to build the big skyscrapers and tax, that caterpillar worker is disadvantaged because caterpillar has to pay tax. with the president talks about when he says that cell and so is for a subsidy for exporting jobs , it is trying to make that even worse.

you have to quit demonizing this and eliminate tax on foreign earnings. we have to do the exact opposite of what the current running start. a level playing field with caterpillar, rather than giving them a head start. the best thing that we can do because right now americans are the worst placed in the world for corporate headquarters. if you're a quarter here you are taxed to death. we could be the central hub of the global supply chain. the best thing that we could do to create jobs in the middle class. >> i remember people saying things like we need an new equivalent to the space program. i think we kind of do. my vote would be for the energy sector. the private sector is extraordinarily innovative. at the same time, and remember,

i was someone who started off by saying that the federal government really does not have that much influence over employment. i still stand by that. however, there are just certain things that the private sector is not going to do. i mean, to use a historical example, the vote -- federal government started using standards for automobile mileage , you know, the big three automakers said oh, god, this is the end of the world. you're going to kill us. you know what they did, the invented one of the greatest inventions of the 20th-century, the catalytic converter. they had to in order to meet the standard. it has been wonderful. so i think that the government could play a role in helping to stimulate innovation. i think the big thing going toward is energy and the environment. there are all sorts of the opportunities there. >> welcome i think that is a very good example, the catalytic converter. we can do a lot of things if we

have to, and we have done a lot in the environment, for example. we have developed fracking which is an knew was that of getting oral and gas out that is much less and are mentally damaging. we have also developed new ideas on pipelines which we are apparently not willing to use it, but this is a very good example. a very innovative society. i have great hope for the future the american people will figure it out. i just think we need to have some very candid discussions about worry are in our rear going. >> thank you all very much. thank you for joining us. thank you for introducing. [applause]obama and former presl

clinton. >> a new initiative by president obama allows undocumented immigrants to apply for work permits and protections from the partition. if they served in the military, are under the age of 30 come and enter the country under the age of 16. next, an administration official from the health and human services department on an investigative reporter talk about the cases of children being separated from their morgan parents. this is an hour. >> i am an immigration tax analyst. we have a panel to talk about immigration and its effects on children, families, the community that the 11. watch our new report, how

today's immigration enforcement impact children, families demand communities. that report can be found on our website as well as to my belief, we have some copies on the back table. this report is the third in our series documented the undocumented which looks at all aspects of life for authorized immigrants trying to turn a spotlight on an issue of the immigration debate that gets overlooked in conversations about other members deported or arriving or larger policy discussions a leave of the human element. i think it is timely that we are having this conversation a few days after the government began accepting applications for deferred action tigre reprieve from the partition and work authorization to those will young people. today's event really tells us that deferred action will go a long way to helping a large number of people, it is by no means a complete solution to the issue.

at most a temporary fix and leaves out far more people than actually helps, and we will be talking and a number of those people that are left out of this program today. so, in terms of immigration enforcement, over the last few years the u.s. has supported an ever increasing number of people, averaging roughly 400,000 removals' each year for the past four years, more than double the number that reported. and one of the staff that i think is most shocking is that in the first half but it does the level of the u.s. supported over 46,000 parents of u.s. citizen seven. the truth is that most undocumented arrogance stay here for more than a decade, live in families, and some with children . eleven and a half million today,

more than 16 in half million people and what we call next status families with at least one unauthorized immigrant and one citizens child words to the supply should say. in most cases undocumented parents and citizens seven. even being the sole provider for a u.s. citizen is very little help when it comes to immigration enforcement. recent reports of for example, by law school found that they are city which had 2005 and 2010, 87 percent of cases where there was apparent, undocumented parents are citizens of ended up in the deportation of the parent. that is almost nine of every ten cases in the nep and family separation. that is a major number. so, while we would like to think that we can really separate out the authorized from unauthorized and simply focus our efforts on the latter, the truth is that immigration enforcement really affects a wide number of people

and a wide swath of statices. and the levels of family and community that our enforcement decisions really hit home, so this level is so we will be talking about today. so let me introduce our panel. first on my right we have assistant professor of sociology at the university of albany. executive director of the national agent @booktv asian pacific american women's forum. investigative reporter at the research center. and finally, deputy assistant secretary for human services policy in the office of the assistant secretary for planning and evaluation. >> let me start with you. your research and what you thought happens to families

experienced a partition. >> sure. want to start by telling you that i did not anticipate writing about enforcement activities. i was interested in integration and how children in mexican families integrate in the very different environments, there is a very small and invisible maximum population and the other in central new jersey where they're is a very visible concentrated mexican community. so, i went in an interview 110 children. their parents, the mothers. i also spent time in children's schools of visiting with families. the story that silva had to tell me in their parents as well, under this environment the you describe, it increased deportations was one of the enforcement having both indirect and direct impact on family life so this is really the story of the children, not what i anticipated writing about.

>> they're both indirect and direct impacts. i want to start with the direct impact, what happens to children when a parent is detained were deported. and actually, this was sort of a small group of families that experience this in my sample. what happens to families to well, mostly men are detained or deported. and so it is really a story of single motherhood and women having to do with the effects of suddenly being the sole provider for their children, having no preparation to be the sole provider for their children. so you see changes and things like child care routine, housing insecurity, and, of course, the economic difficulties of keeping everything together. one mother i interviewed, for example, in the three years after her husband was deported moved eight times with her two children. eight moves. that's pretty significant. i just recently moved one year ago and am still recovering so

the long-term consequences of the separation, and i found that in many cases families are not able to reunite by especially of the father as up in mexico, many cannot support their children from afar. they cannot find work in mexico and are not able to maintain their relationship. some men suffered not being allowed to have relationships with their children. women suffer as single mothers of a long-term, and children suffer, being raised in a foster family. >> really terrible. and, as you to pick up on this. your work at the research center , approximately 5100 citizen seven of undocumented parents living in foster care after their parents were detained or deported. tell us about how this happens and how we get such high numbers in the first place. >> for the better part of the last decade we have heard

stories of families where parents are contained or -- detained or deported. children are in the welfare system for one reason or another . they face significant barriers to reunifying with parents. we hear these stories over and over again. they got to the point where we were quite sure that there were not al lyres and decided to the spend time digging to the extent to which this is happening. we found was that there are -- we felt really conservative estimate of the total, there are about 5,000, more than five dozen children who are in the child welfare system around the country and to face barriers to reunifying with their parents. now, you know, we are reporting, as you mentioned, 400,000 people per year, and based upon data that was first released to us, we found that 22 percent of those people are parents of united states citizens.

we don't know how many those are, but the collateral effect of that kind of massive to my you know, the partition will continue to grow. one of the most troubling is that children are stuck in the welfare system. these cases and the family's lives are complicated, like most families lives are complicated. kids are in the welfare system for a number of reasons, some in foster care because their parents were detained and there was nobody else to care for the children. in other cases families had interactions with the child welfare system previously and were on their way to reunify, which is sort of the goal of most child welfare cases. was the kid is an assistant calabasas some switches into gear and starts trying to bring this family back together. we found was that when parents are detained, they are generally

severed from the final lines of communication between families and children and families in the child welfare system necessary to bring families back together. so i edge of the dozens of parents in side of the immigration detention centers around the country, and all of them said to me that they missed at least one of the hearings when there are -- or decisions are made about what happens to the family. others never had contact with their children when there were detained. and will be found was that once these parents are deported, was there sort of removed from detention and deported, they are often treated by child welfare department says f. -- and i heard this repeated. falling of the face of the earth. and so reunification efforts to often cease for these families. in some instances child welfare departments really refused to even consider reunifying these children with their parents in

other countries. and so these families are at a significant risk of being separated for extended amount of time, sometimes permanently separated, sometimes the children are adopted and you never see the valleys again. >> to me it strikes me. [inaudible] why he think there is that? >> well, i think that in many ways neither system is functioning with the necessary degree of accountability to the needs of these families. parents are detained and lose access to their children. sometimes they're able to get on the telephone to be present at hearings, but they are being separated from their children. very difficult to be involved with the case plan. so when a kid is in the child welfare system the child welfare department assigns apparent to a ticket back, parenting glasses

or drug and alcohol issues, a drug and alcohol treatment, things like that. none of that exists for people in detention. people in the race to detention centers have no access to those kinds of services that the necessary to move forward with the reunification plan. and so while parents are detained they are completely severed from this process. and once they are deported child welfare systems are not treating these families and i suppose in an equitable way, the same way that there would others, though there is this commitment to reunification. it sometimes too often goes out the door when parents are outside the country. >> let me turn to you. you coordinate but the we belong together and the national coalition. so you have been at the forefront of advocacy in this arena. to tell us a bit about the campaign that some of the families if you have worked with that have been going through the separations? >> yes.

i want to, you know, back above little bit. there has been a lot of work really trying to link the women's movement. the national coalition for immigrant women's rights, the national let's institute. operating system does a seven because we really saw a lack of analysis that included. you really hit it on the nail when you did the injured talking about our image of immigrants. we don't think about women. we don't think about families. as a result, our policies are completely incapable, and our systems are completely incapable of handling the real-life situations. detention of parenting and a pregnant woman. what to do with women who are breast feeding. some of those stories from detention centers have been terrific. children have been ripped from their mothers breast. there is no access to the post part of health care that women need.

so they have been doing this incredible work of trying to lift a policy analysis along with the public partners. i will also say there has been incredible organizing around women who are survivors of domestic battery. the inclusion in violence. the national network. violence against women. so one of the latest efforts we are working on is the we belong together campaign which we call lead with a national domestic workers alliance. to borrow a phrase from the national domestic workers alliance, they always say that when you see the world through a woman's eyes you see the world more clearly if. partly the main goal of our work is really to get the world to see through the eyes of everyone in more and more. and one of our core strategies of doing that is building a stronger linkage and alliance between the women's rights movement in the niagara movement by inviting prominent women to

what we call human rights delegations to states like georgia, alabama, arizona, some of the harshest of fourth loss. so really organizing meetings and conversations with an iran women who are living through this harsh conditions.

had in days and policy research on this topic. so that families.

so i had much more experienced tight from that side which i try to bring. that into the work we are doing. but i do want to say come engaging in terms of the research, we looked at about 200 children and 100 families across seven states. the impact of immigration enforcement. very encouraged. we never had a chance to talk to the children. subject to review. would never have permitted that a man so i am glad you're able to, but we did it to the families in the short and long term as follows stories, all directly impacted by enforcement in seven states across the country. we also interviewed service providers. police officers, the entire sort of range of this sort of enforcement spectrum and found many of the same things that other people here have sort of raised. the largest impact on families immediately or parental separation and the effects that

that had on tab relationships among family security, child well-being and development. we also saw intensive almost immediate effects on economic well-being. again, the most part a typical effect was a father being detained, arrested him detained, deported, and perhaps a two-parent family becoming a one parent family. especially in many of these communities among his men that have been working before. there are required to go to work almost immediately. and often are also themselves may be authorized or have limited economic a virginities.

very severe forms of depression, anxiety, ptsd digses among the kids. so when we went become a year later, on the behavioral checklist, on the food insecurity, many of these things >> so coming into -- coming in with that background into hhs, while my portfolio is on human services broadly and not on this

particular issue but the well-being of children and family is so when i joined the administration earlier this year there's already some sort of nascent interest among folks at hhs, apart because the relatively new acting assistant secretary, george shelldon, came in as the sect for children and family services in florida, and had seen some of these situations and was very concernedded and other people recently joined as well. and so we came at this issue saying, our mission at hhs is focusing on the health, development, well-being of children and families, and this is a relatively large group as the numbers indicated, that are being affected. do we know if hhs programs can identify or touch families and what is going on? from the standpoint of what, as

the department, do we know. so the things we have been ingaged in -- we are vary early in our stage. we have begun conversations with the department of homeland security to understand the context of enforcement, how it varies by different type of enforcement operations around the country and that's been helpful. we engaged internally with all the different programs that intersect with children and families. that includes head start, child cair, child support, antipoverty organizations and others, and we have again to make site visits to states across. we've been to four things so far. we just return a couple weeks ago from texas. but we have been to texas, north carolina, and california. four very different states and different immigration con tense e text and health and human

services context, and where we have talked with a wide range of providers in the community, and what we're -- still very early and we haven't -- we're planning to do more visits, but what we are sort of seeing, it does vary a lot across the country based on the type of enforcement, based on the set of human service providers and where families tend to go. two things we probably are seeing is that there's just a great deal of fear in the community. so people may not come forward to health and human services programs. we don't think there's any one magic program like head start or anything else that sort of reaches a great many of families the set of organizations that -- this confirmed what we found in our research before that has the greatest contact with these

families are ngos, nongovernmental organizations, sometimes they may provide other services but they're the trusted community and they're locally based. the aren't sort of -- locally based organizations, and churches and faith-based communities. if family are going to reach out for assistance, that's the there's reach out to. we do find that to some degree marx human services programs do have contact with families but it varies by place. so when we were in texas we found that actually local community health clinics, because they're often the safety net and provider of last resort -- will know and it's usually not because the family comes in and says this is what happened. our family has been divided because of impore -- import -- usually the physician will diagnosis a medical condition and say why is this going on? usually because the family is

dealing with that. so, like i said, we're in the early stages, and in terms of what doing because it came up in our conversation -- we are encouraged by the fact this conversation is happening and also by the degree of research. this is still a relatively unexamined area in large extent. so we have sponsored research. the first time that as a department we're putting out rpf for research so we rear hoping we can learn more. >> that's great. gives us a number of things to go off of. i want to come up with the solutions conversation. let's talk more about the consequences you brought up. the behavioral issues, the economic issues. let's talk more about this. what are the long-term consequences from family separations in the immigration context?

>> okay. well, i think there are severe long-term consequences but have yet to be explored from a research perspective and we need more information documenting it. but i don't think it's difficult to project a little bit based on some of what we do know about family separation. prior to doing this work i did work on family separation and families in which a parent migrated voluntarily to the united states, and chirp remained in mexico, and there's actually quite a large body of research on family separation, from voluntary migration that shows extreme negative impact for children over the long run, and this is a family decision to do this, but parent separation is still very difficult for children due to the insecurities of immigration. so, a lot of the research documents, lower academic achievement, dropping out, and this occurs even post

reunification so often times chirp are left and then reunited but you see this long-term consequence that lingers on, and i saw that in my interviews, because i interviewed families in which a child had been in mexico and then reunited with the parents and they still talk about the long-term impact of the separation on the family. so i think we can extrapolate a little bit and place it in a different context. instead of it being a voluntary separation, this is enforced by the state. so, imagine how children will feel about that in ten years when they know that their family was broken up, not because their parents were trying to get them a better life, but because the state intervened. >> i was really struck in read your report, joanna -- if you don't mind me jumping in -- the people where you can people saw the word immigrant as a dirty word, and real suspicion and

fear of authority, of police not making distinction -- not making distinctions between police, and i think about the long-term effect on our country as we knit a more diverse tapestry in the country, what kind of message do we want to send to people about which families belong and which families don't and whether they're going to fully trust our system of government. i think that's a really big question that we'll have to keep asking ourselves. >> we aren't able to follow what happened in any of the families, the parents i met in these detention centers, but everybody who i talked to who works in child welfare systems, in child welfare departments around the country, it's clear that outcomes are better for kids when they're with their own

families. whenever possible, kids should be with their parents, and so when we're erecting these barriers, it sometimes makes that totally -- destroys that possibility for some families-permanently separating families, or where children are separated from their parents for two months, a year, two years, before they're reunified. we know from research that that has detrimental impact on kids across the board and i think more investigation is needed into what those impacts are going to be. but i actually think the kids that we're talking about, it's in some ways predictable. kids do better when they're with their families, and so detaining massive numbers of parents and deporting them makes that really difficult. makes that an impossibility for

some families. >> i think just to kind of draw this out a little bit more, certainly a lot of the restrictionist groups, people in favor of less immigration, would say the answer is just to send them all back to mexico, send the parents back and the children back. is this about family reunification or about keeping families together here? >> i would certainly say that the earlier you can stop this kind of thing from happening, the better. which means it's about keeping families together. all of the families i talked to said they wanted to be here with their kids. all the parents i talked to said that. and so that -- for the mothers and fathers in detention centers who are facing deportation, it's absolutely their first desire. they want to stay here with their families, in he homes they've built. if that's not going to happen, if parents, mothers and fathers,

are going to be deported, then what seems clear from the work, the investigation i did, is that lots of these mothers and fathers aren't being given the choice. included in the decisionmaking process about what happens to their kids. so decisions are being made about the future of their children without them, and many parents decide that their kids will stay here if they're deported. but that's a choice some parents have. some parents don't have that choice. >> so again, speaking probably solely from the vantage point of the research conducted, because we did follow families for at least a year out to see what they would -- what they -- and in only 20 of the 100 cases was there actually a resolution --

in many cases these cases go on for a long time where a parent had been deported and do kids go back or not? in the end, this is a family's decision. we can't design policy to encourage or discourage. these are u.s. -- for the most part, the vast magic over 80% of u.s. citizen kids so have every right to remain in the country, and in fact the country needs them down the line. now and down the line. so, what the impacts are, in some cases there was eight of those 20 families, where the families returned en masse, death. in other cases the child may be left behind while the parent left in some cases we saw some kids went and some kids stayed, depending on the situation, the ages of the children, the situation where the mother could handle both adolescents or children, depending on the status of the parent. so these become complicated and,

again, the main thing is that the parents are separated. so these are not -- we actually have 100 families we followed, and the seven sites we never came across a family that was enter acting. these are just families that faced the broader set of implications we saw occurring, and these are sort of very difficult. but from a policy standpoint, we heard about self-deporting policy once. that's not something you can suggest as a nature of policy. these are mixed status families and it's complicated. this is a very -- we interviewed families in the progression of making a decision. not a decision i would ever want to have to make myself. >> 110 children i interviewed, over 70 were u.s. citizen children. so i think it's very important not to lose focus on the fact we are a talking about u.s. citizen

children who if they return to mexico are not being integrated into mexican society because they've been born and raised here. so this is a very difficult problem, and the other issue is that the most important finding from my research was the indirect consequences. not necessarily children, u.s. citizen children, aren't only impacted when a parent is detained or deported, but it's the message these enforcements are sending to this generation of u.s. citizen children that is really the most devastating, i think, for the families i met and interviewed. the children who equate immigration with police. i had one girl, ten-year-old in new jersey, she talked to me about the police, police i.c.e., that was her term. i'm afraid the police i.c.e. will get my parents. it's a powerful term. another girl in ohio referred to the police as the police who are going to come and take my parents away. so, there's an equation between

police and immigration that does not bear out at the local level, depending on where you are, whether or not police are acting as immigration officials. so you see great fear of the police among u.s. citizen children and that's devastating over the long run. children are also misunderstanding who is an immigrant so i interviewed children, and children aren't the easiest to interview. one of the things i asked them, do you know what an immigrant is? and i was shocked because children would say yes, and i i would who is it. >> somebody who crossed the border and came to work here so there's an equation of illegality with immigration, which is also extremely devastating over the long run. we're a country of immigrants but suddenly for this generation of u.s. citizen, which i immigrant becomes a dirty word, something that's stigmatizing, and very devastating. >> the fight over rhetoric is

going to be incredibly important in whether or not immigrant is a dirty word. i think we are not just fighting for reunification, this is a broader conversation we need to have in the country about who is an american family. who do we consider american is the real issue at hand. even media portrayal of mixed families. those are the stories we need to tell more. this is the family living in queens. that could be your neighbor, not some image. >> let me pick up on that as well, miriam. a lot of the conversation and discussion on enforcement focuses on latinos and mexican issue but there are lots of other groups involved.

talk to us about how this impacts asian american communities and lgtb communities and other groups we don't think of. >> well, great, thank you for asking. asia americans are affected by these immigration issues. in fact the asian-american community is the largest foreign borne in this country and 27% are undocumented. so it affects our community in the same way. there's a natural interesting link between this conversation about immigrants, lgbt and asian pacific islanders. the numbers are kind of similar. 16.1 million asian pacific americans in the country. there are 15 million mixed status families and half that lgbt americans in the country. so there's a way in which in our

country, if you're under that 20 million mark, there gets a -- there's a lot of mythology that can be written about your community, and is why this research work is so important. painting the actual picture. like from a portrait, not made up stereo type stories based on the worth of our fears but really taking a look who we are. that's why the work we're doing is important, and serious change is about, here are the stories of real life women and their children. they're not the scary image you have or that you're going off of. so that's an interesting link, and talks about need wes have for more accurate data and portrayal. >> i also think certainly lgbt communities have been faced with family separation for a long time. couples struggle with

enforcement issues for biracial and the lgbt movement is making the country grapple with what is a family, and some ways revolutionizing how we think about families. it is breaking down barriers of gender, sexual orientation, and also, at least i know, someone who cut my teeth work during the aids crisis, when people were dying, we took care of one another as a community, and we're talking about folk whose have been disowned by their biological families for the most part so we formed our own chosen families that were there for you in the toughest moments, and if we think about building strong american families, those are the ones who, regardless of biology or status or paperwork, those are the people you know who are going to be with you in your toughest times, and i think that's the kind of family we ought to be lifting up and

supporting. >> gees. i do want to come back to the enforcement issue and ask a little bit about one of the major movements over the last few years which i the rise of state-level immigration bills, like arizona, and georgia, and alabama. that are sort of remaking the landscape of enforcement in terms of adding the actor of the state and not just the federal. so, how does this change how children and families interexact how we think about reunification. >> certainly in a conversation i was having with the child welfare department caseworkers all over the country and with parents, these state level antiimmigrant laws, like in

arizona, alabama, georgia, and elsewhere, create a lot of fear, both for families in terms of what kinds of services they think they can access, but also for service providers who don't know what they can do for families, don't know whether state agents -- whether their own agencies may be in the business of engaging with i.c.e., and i think that create as great deal of confusion and a great deal of fear. i want to say that i think these state bills are absolutely changing the terrain, and -- but i think the thing that is fundamentally changing the terrain all over the country in terms of immigration enforcement, is really the rapid expansion of locally based immigration enforcement mechanisms, mainly secure communities, which use local jails as their springboard for

immigration enforcement, for deportation, and so when every county jail in the country soon -- most county jails in the country rupp run immigration checks on anyone booked in jail. that's going to start having -- already has started to have a significant impact on -- collateral effect on the people -- the families of the people who are picked up. we found that in places where 287g programs, which is an older program which dep e dep pew tieses local cops to act as i.c.e. agents -- in those counties the chance of kid being in foster families increased significantly and all reasoning suggests similar things will pan out to be true about secure communities. often families who have shield welfare system involvement also have some kind of involvement with the criminal justice system. and in our ideal scenario that shouldn't -- involvement -- a

patients involvement with the criminal justice system shouldn't end that family, but when these parents are moved into detention rapidly, the possibilities for reunification go out the door so i think we're see this intensification of local enforcement that starts in washington, changing the landscape. really as much as these local immigration -- state immigration bills. >> i picked the two community is wanted to do research in purposely because neither one of them had kind of this -- i think these state laws and local environments have a national impact because the children that i interviewed were aware of what's going on in other places at very young ages. i had a nine-year-old who i interviewed who i asked, what do you think it's like too be an

immigrant, after asking what an immigrant was she said, think it's sad. i said why? because i saw on tv that somebody was arrested and taken away and they left their daughter in the car. so i think that these local state and -- policies are having a huge immigrant pact on children in other locales where there isn't such a local issue going on because children feel the trickle-down effects and are very aware of them. >> i think there's a -- racial justice and racial equity that gets maybe not talked directly about but when we look at the states with the harshest enforcement laws they have the most complicated racial histories and that's an important piece for us to think about, and to kind of predict in this country, as we grow more racially diverse and are trying

to mix, where is there still work to do in our country? who are the latest targets, i think, is the question. >> i think the only thing i would add -- i think the panelist covered a lot of the impacts, but i think that these sort of sweepingly harsh legislation in states does create both climate of fear among families, immigrant and nonimmigrant -- because obviously you can't just tell by appearance whether someone is immigrant or nonimmigrant -- but also creates difficulties for the health and human services programs that are trying to serve these families because people are much less willing to sort of come forward and apply for programs, and sometimes legislation does implicate processes, so i think the program providers are also sort

of not sure what to do. i just wanted to echo that sentiment. >> i think this is a good way to segway into -- sounds harsh -- to solutions. we heard at the beginning you talked about the ways after studying the problem but what should we be doing to try to solve this problem and what are the barriers to happening families reunify after immigration enforcement. anybody? >> well, certainly in cases where children in the child welfare system -- that isn't a piece of what we're talking about here, obviously. the impact of immigration enforcement are much broader than that. but in those cases, by and large, county -- state and county child welfare departments generally lack clear policies and guidelines about what to do

when parents are in immigration detension and are deported. what happens in this vacuum of policy, i found that without any sort of clear structure, a whole set of biases start to come into play to essentially create their own policy. so, child welfare departments arguing in family courts that children will be better off in the u.s. with foster parents that reunified with their parents in another country. there needs to be clear policy that makes clear that these families, like all families, deserve a chance, real chance, to be reunified, to come back together, and as is often the case, when agencies, when government is not pro-active about ensuring more equitable outcomes in the case, across borders, other sets of biases and practices get to fill in those holes, and so it's really

important that localities begin to take on this issue explicitly. try to make sure that these families can be brought back together as well. >> i think it's clear that coordination of different systems -- the child welfare, the criminal system, the immigration system is necessary but from the perspective of chirp and -- children and families i interviewed, two things must have. deportation of parents must be stopped. chirp are afraid of parents being taken away because they are being taken away and that needs to cease and we have to check the priority of having parents of us citizens not deported. the second problem is we are in a situation where there are a lot of mixed status families and that us because there's no legalization programs available to families.

the families would become legal immigrants if they could they described trying to come on series saturday -- visas from mexico multiple times. the problem is there's no legalization program and that's a problem. >> if we are going to continue to do harsh detention and detainment, some common sense legislative efforts would make sense to help the separated children. and i see my colleagues who have been working hard on the bill in the audience who can speak much more expertly on it. i think secretary clinton talked about -- this bill being driven by stories stories of a seven-yd wandering in a park aimlessly when her parents were both picked up in a detention raid. that is inexcusable, and not just to think about the terror in the young person's heart. what kind of community and society would let that happen?

so legislation would put in safety measures that allow parents to be able to make determinations, make phone call and child care arrangements for their children if they happen to be detained or arrested. i think that's a good common-sense-humane, stop-gap measure, not a solution. >> i think the only thing i would add -- i can only comment on what we can do on the health and human services side of it. we have seen some things that will eventually want to figure out how to share because the potential practices other communities should be aware of. so, in california, we were in san diego and los angeles, and both counties and other counties in california, have developed memorandums of understanding between mexican consulate and either local or state child welfare system.

child welfare policy is a state domain so not something hhs can say this is what you should or shouldn't do but we can at least provide information that, this is what this county does or this is a model around mous, to help facilitate either the reunification if parents are living in different countries, or other things. similarly, we were in the southeast, we heard about some head start programs where families were -- because of they're scared to even bring their children into head start any longer, they expand their transportation mechanisms to pick up kids and bring them to the head start program because they were finding that attendance in head start was going down. not by people directly affected but the spillover effect in the community. these are relatively small in the scale of the issue, but they can at least -- we can either

provide some guidance or technical assistance or just broadcasting these practices to the degree we can. >> so, now, nobody wants to have children suffer, but how do we deal with reality that u.s. population growth is all about immigration these days, and if you recommend we stop deportations and legalization programs, how are we going to deal with just the basic overload of population numbers on limited resources? >> there's a lot of ways to respond to that, and there's some that are, i think, purely ethical and principled and those may be obvious. there's also, just to be clear -- mass deportation of 12 million people isn't going to

happen. it's not something anybody wants -- it's not something that many support, and the impact -- just in terms of resources, deporting people and leaving families to struggle in need of services and -- is significant. if we're talking about resources, that's what we're talking about, think that families supporting families is probably a good way to save resources. >> a paper that draws out the linkages between the so-called environmental rights movements that have gone -- what i would say rolled because i consider myself part of the movement, and has been making this overpopulation, linking it to immigration, and it has extreme effects to women, particularly women of reproductive age

because when you talk about population, who does the focus come on? so this may be a policy but the fact is the target is put on women's wombs, and even if we - there is a -- there are environmental justice strains but we have do more careful analysis that doesn't point fingers. we're not looking at the hundreds of millions of americans who consume resources the same way. some argue those with more resources consume more and that's part of the -- we eat more meat, drive gas guzzling cars and all of that. it seems like sensible reproductive health and rights and policy and justice policies would be a better way to address and really helping women and their families control their situations seems like the better way. >> a surprising number of families that i interviewed come

from rural areas in southern mexico, but were mainly agricultural but could no longer sustain their way of life. starting really in the 1990s. before that there wasn't as much migration from those areas. so if we're talking about the environment, we can't think of just the united states' environment. we have to think of the environment and resources in mexico that are being strain in promoting immigration to the united states as well. >> great. i think we have time for one more question. >> the obama administration made -- can you speak louder? >> the obama administration made a proposed rulemaking change for hardship labor, to make it possible for family members who are in the united states, instead of having to leave the united states to be able to apply without leaving to have

the three and ten-year ban waived. this seems like a small change but can you speak to what the impact this might have on the population of -- undocumented parents of children here in the united states. >> i think it would have a huge impact on the mexican community i've worked with for now 15 years. the implementation of the three and ten year ban has been devastating to families and family unity. lawyers i work with are not able to work on behalf of their clients because the hardship -- the bar for hardship is so high so all of the children we're talking about would not meet that bar of hardship. so i think it would go a long way if it would filter down into local communities and what is happening. >> well, why don't you join me in thanking our panel. [applause] an hour and forty

minutes.

[inaudible conversations] subcommittee of financial protections comes to order. thanks to senator for the good work he does with the subcommittee and senator reid and senator akaka thank you for joining us. my staff particularly appreciates the relationship in making the subcommittee hearings work. june 29th of this year the congress passed the student loan package essential legislation that not only ensured funding for our nation's infrastructure and highway system, but also including extension of the current student loan interest rate of 3.4% for staff staff

ford loans. the pass of the legislation was important for 7 million undergraduate students nationwide. some we figure 382,000 of them loving in ohio. without the extension the student would have faced an additional $1,000 in student loans. i spent a lot of time in community colleges and four year and private constitutions in my state in cleveland, cincinnati, and dayton. talking about hearing the number of stories from students sharing with me their fears of graduating in a bad economy without the legislation at high levels of student loan debt. other share the experience of family members and friends who are paying off the loans years after graduation from college. this isn't surprising earlier this year student loan debt knows as we have heard repetedly student loan debt outpays credit card debt. it's a problem that effects people of all generations not

just the student but the family sometimes even the grand part parents. according to a report released by the federal reserve bank of new york it has risen 58% since 2005. borrows in the 40st are the most likely to default. parents and grand parents who may have cosigned must share the burden of the younger generation. it's clear more must be done to ensure future generations are not saddled with high level of student loan death while helping borrows pay off their student loans. that's why today's hearing which will focus on the challenges facing borrows in the private student loan market is so important. a small portion relatively of the overall student loan market american consumers owe more than $150 billion in outstanding private student loan debt. the numbers have increased 14 percent of undergraduates in 2007 have taken out a private loan up from 5% in 2003 and 2004

about and continues to increase. it is troubling private student loans it is the riskiest way to pay for college. they come with a variable interest rate ranging from 5 to 18% with no limits on origination and other fees. potentially unlike federal student loans, private loans are less likely to come with affordable payment loans or e loan forgiveness or deferment options or cancellation rights. i'm proud to have fought for the inclusion of the private student loan as part of the dodd-frank legislation. for the first time in history private student loan borrows have a place to file complaints have aned ad a -- advocate inside the government. i'm concerned that too many bore rows are not receiving the system they need from the borrow, the consumer protection bureau published a report in the

private loan market on the consumers who use the loan. what was ease many borrows took out private loans without fully understanding the terms. now many of these borrows are saddled with thousand of dollars of debt with limited option. hopefully the hearing will allow us to further i hep with. ! trying to work with their servicers. i conclude with a story a girl from ohio and the struggles struggles with private loans. he graduated from college in 2009. he applied to join the base corp. he almost had to turn down the once in a lifetime opportunity because of the unwillingness of the lender to defer her loans. she came to one of my

constituents to ask for help for the work of the staff. the lender finally agreed to defer the loans. she was able to go abroad. it brought her home sooner than expected her loan concerns remain. he strug les to make the payments that top $400. the balance has jumped to $22 ,000 with $30,000. without intervention the loans will continue to grow. we need to think about her and people like her as we make the decision. i'm hopeful the hearings will help move us closer. i'm glad we're here to talk about private student loan market. to me it's more important we look at the entire picture. we have been reading in the news lately student borrows have nearly $1 trillion in

outstanding student loan debt. but we need to remember as chairman just mentioned 7% of the loans are private student loans. other 93% are loans that are back by the taxpayer. i think all of us know the real problem we need to consider the rising cost of college tuition and the amount of federal student loans students are borrows. i miewght add on one hand the federal government wants to help solve the problem and they continue to mandate medicaid. for every percentage we spend on medicaid we spend less on legislation. education. that's the driver why students are spending so much. the federal government took over the loan program. i'm convinced it's not benefiting students. there are income forgiveness programs on the federal loan side borrows don't have to pay

back the full freight. sticking the taxpayer with the unpaid burden. i think it's important for us to understand the whole picture not focus on a tiny fraction of the marketplace. i'm pleased that sallie mae is here to talk about the progress they have made to encourage to borrow more responsibly. i look toward to the testimony from witnesses. >> thank you. senator acabbing akaka. opening statement? >> thank you very much, mr. chairman. good afternoon. panel lists thank you for being here today, all of you i'm pleased that congress is continuing to monitor leading practices regarding student loans. a quality education must include an understanding of economics and personal finance so that all

americans will be prepared to make a sounded financial decision. i look farred to hearing an update from the consumer protection bureau on the work that we have done to improve consumer financial marketplace thank you for your testimony today. i hope your insight will help the committee work to ensuring students have safe options for obtaining financial support for their college educations. thank you very much, mr. chairman. >> thank you senator akaka. one point i wanted to make that the reason the hearing perhaps senator narrows than you might want. we don't have the jurisdiction over federal loans the way we do private. i'm certainly willing to work with the whole issue of student

loan debt. whenever it comes from. this is serious. i'd like to introduce the first witness. rohit chopra student loan ombudsman consumer financial protection bureau. immediately prior to the opening of the agency he worked at department of treasury on the implementation today. he hold a ba from harvard and university of pennsylvania. welcome. >> thank you. chairman, ranking members within thank you for holding the hearing today. to prosper in the ghoabl economy our work force needed skills to innovate a highly gettive environment. the rapid growth of student debt raises concerns that warrant attention. student loan debt has crossed the $1 trillion mark. now college is still a greet investment. graduates have lower unemployment rates and earn higher wages. there is another side to the

story. overt past decade, real wages for college graduates have declined. the growing college wage premium is largely explained by faster falling wages of nondegree holders. the cost of college has not been falling rising faster than inflation, wage growth, and health care cost. growing cost declining wages and job market uncertainty have lead to more diselt and risk. the story of distressed borrows reveal the impact of the financial crisis in the significance work that lies ahead. prior to the crisis private student lending rapidly increased like the mortgage industry, lacks lending practices practices are much less common today. loans are cosigned and have significant disclosure requirements. it like the mortgage market there are stull opportunities to make improvements. private loans lack repayment flexibility. in 2007 congress and president bush enacted the college cost

reduction and access loans which allowed borrows to remain current on the low in the income based repayment pam. it doesn't impact private student loans. private borrows experience challenges when attempting to restructure their loans. due to capital market conditions and unusual status in the bankruptcy code. even the most responsible borrows have sought to better manage their debt burden. we see them stuck with high monthly payments because they can't easily refinance. the in march the cfpb launched a student loan complaint system. many borrows have sought and received help and lenders have learned more about the borrows experience. we work closely with the department of education on a know before you owe financial aid shopping sheet released this morning we developed online tools used by tens of thousands of consumers how to navigate their student loan repayment

options, avoid default, and honor their commitment. the cfpb opens this continue our work with the other agencies that may play a critical role. while student debt might not suppose risk like mortgage, it would be imprudent to dismiss it can act as a drag on economic recovery. consider borrows facing high rates and high payments who are dutifully meeting these obligations. without a refinance option, they struggle to reduce the payments even though they have build a solid credit history. what might be the consequences? take the mouses market. first time home buyers are the important source of demand and data reveals that adults in home buying age cohorts are living at home with their parents and seeing reduction in the home ownership rates. in addition to home ownership will da that reveals low

participation in contribution rates to retirement plans which can challenge their future retirement security. congress and federal agencies have taken steps to increase liquid i did in the function of the market race. the current conditions may have a long-term impact on the economic vitality of borrows today. many are unable to secure adequate credit accommodation to manage their debt burden. policy makers have paid significant attention to conditions in the mortgage market. but give the potential impact of student debt on the broader economy, the situation demonstrates the need for attention. they will continue the work to make the loan marketplace work better for borrows, schools, and honest lenders. we look forward to working with congress and policy makers to ensure that economic mobility is still within reach for those who borrowed to invest in an

education. i look forward to your question. >> thank you, rohit chopra. a couple in your student loan report. you note the average interest rate. the private student loans of 7.8 percent. we know with the federal reserve monetary policy action that interest rates in the country are pretty much at record lows. talk to me about the differential. why so much higher for student loans? what does it mean in terms of students not being able to take advantage of those low rates. what, if any, can we do about it? >> one unique once someone takes on the credit profile can significantly change over time. while an 18-year-old might be considered higher risk, by the time they're a graduate and gainfully employed and theying for a few years, they might be a

lower credit risk. and what we see is not many all. and when markets are not appropriately allocating prices and risk we do not see a well functioning market. so borrows may be paying higher rates than what justifies their risk profile. >> why are there not refinancing opportunity miss. >> it's not clear exactly, but historically the market developed as a consolidation market, so essentially multiple loans you can consolidate into a single payment. it had to do with the way the federal family educational program was structured. but partially due to capital markets conditions, but we just simply do not see many lenders actively competing to find borrows who may be able to refinance. >> is there a lack of knowledge on the borrows' part to not

think about the issues of refinance. >> yes, i think that's right. >> if they were, answer fa that's. if they were more knowledgeable -- are you suggesting there would not be the opportunities to refinance because there's not enough opportunities in the market? >> yes. it you're right, i think many borrows simply don't know that refinancing is an option. we do hear that many of them are dutifully paying on time for months and years and unable to manage their debt better. currently there is not a large of amount of marketing or offering of refinance. it's generally marketed to people so they can reduce the number of loans they have to a single payment. not necessarily to compete down the price. a more competitive market amongst lenders would serve to benefit the entire marketplace. >> okay.

let me shift for a moment. you know you in your testimony you know the federal agencies have interviewed in the private student loan market citing unusual circumstance. the federal board of governor exercises the authority to establish the term asset back security loan facilities which facility the issue of wide range of abs including those backed by private student loans. is there a role for federal student loan in providing relief? >> i think all federal regulatory agencies particularly ones that monitory the capital markets have role to play to make sure that the market is liquid and well functions. i wouldn't necessarily characterize it in relief. but increasing and ticks so pricing is more fair and connected to risk. we have seen in the mortgage space the fhfa has sought to

create the conditions for responsible mortgage borrows to refinance. as i said before, more responsible student loan borrows see their credit profile dramatically improve over time. but the market simply may not be liquid enough to appropriately price their risk and allow them to have lower payments. we look forward to providing any expertise to the federal reserve board of governors and others as they monitory conditions. >> thank you, rohit chopra. >> thank you. thank you for being here. you know well the relationship between the investment and higher education at the state level and how that's been diminishing. but in many cases in most cases, actually, because of the tremendous burden of investing in medicaid, which, you know, we made happen in the big way at the federal level. that has a direct relationship on what tuition levels are for students. that's one of the main drivers of why so much student debt, is it not?

>> it's certainly true that the constrains state budget which many of which were badly batteredded started? starting in 2008 as well as other policy interventions and there has been cuts on a real basis to state higher education. so we have to not just address the underlying cost of higher education, but also to make sure that financing market the are working properly. >> it's fascinating here. we are we are dealing with an issue over the last several years we have help create and exacerbate and exacerbate over time. i want to point that out. indian that your agency a new agency is advocating that on the private side that students just have the ability to danger their loans through bankruptcy is that croarkt? >> no passenger's side actually -- actually a little bit different that that. presentedded to congress on friday analyzed about a million

$5 million records of data starting from 2001 and going forward. we expect that the 2005 changes to the bankruptcy code would have lead to lower prices and greater access but immediately following the legislative change, we did not see a price decrees. we actually saw price increase. larger capital markets conditions we think largely explain volume and access to credit. so the director of the bureau about secretary of education ask congress to take a second look given that borrows for private student loans may not be able to restructure their amortization schedule like in federal loans. >> so you have asked congress to take one of the first actions of the consumer bureau is to ask congress to look at allowing students of private loans, not the public loans only the private loans to file bankruptcy as a way of getting out from

under the terms and condition of those private loan, is that correct? >> so -- yes, have asked congress to take a second look. we are happy to provide more expertize. >> i understand what you're saying. i think we have read the report. i find it fascinating one of the first things that you would do as a consumer protection agency is get us to consider letting students, again, only on the 7 percent private loans not the 23eu9 percent public loans be able to file bankruptcy which is one of the most damaging things that a consumer can possibly do. i just would like for people to take note of that. i think you understand on the private side, they do not have the flex able you do on the public side. on the private side, through pry determine lenders will not allow them to do many of the things on the public side. >> yes. in fact we have been working closely with lenders to identify

areas where certain guidance can be win-win situations for both borrows and lenders. >> yeah. >> lenders said they feel constrained by the guidance. we think there's opportunities for capital adequate sei measures to be met while still allowing the market place to function. >> i think you can see now why so many of us thought it was a terrible idea to have the consumer agency separate the lentders. we have the problem. basically you're giving guidance that is very contrary to what the safety and soundness regulators are saying on the other. it's the exact conflict. it is fascinating to me in one of the first things that come out of consumer agency web see the conflict that on the private side, the regulators will not allow the private lenders to have at flexibility, give them the flexibility to work through the issues, and therefore they

have contrary guidance. i just i think it's pretty fascinating we're having this hearing. i think it's fascinating that you're noted a vote caption that on the public side students be able to file bankruptcy, and i just i think this is speaks to possibly some of the political nature of the consumer agency that so many of us were concerned about in the beginning. >> on the federal loan side, there actually is a chapter 13-like option for borrows which avoids the damaging partings of going to court and hurting your credit history. a borrows who is unable to make the payments is able to elect the income-based repayment option. caps their payment as a percentage of the discretionary income. that is a great, low-cost model for borrows we think is a way to whether the unique circumstances of a student loan product given labor market uncertainty.

i would say that our relationship with the regulators is actually been extremely productive. we have actually been able to find opportunities where we're identifying ways to promote innovation and ways that the whole financial system can actually prosper. our work on private student loans with other regulators is going to be seen by lenders as one that is win-win for the whole marketplace. >> i hope that's the case. i appreciate very much you being here. i look forward to hearing sallie mae's testimony in a moment. >> senator reid? >> thank thank you very much. first thing i want to do is commend you for connecting the dots. let me say for not just this huge debt overhang, but the effect it will have on buying a house for the first time being an entrepreneur and starting a business. reserving money for retirement inspect to me, is one of the

most daunting challenges we have to face. we have a whole generation that can't get started until their maybe in their mid 30s and doing things that can or would assume would be 0 done in the mid 20s. that's a important point. second, your responsibility is give the nature of the organization is solely with respect to the private sector lenders now the public domain, is that clear? >> '. yeah our authority as the rulemaking authority relates largely to private student loans on the origination side. >> right. it's notice to say that a lot of the insights so you drawn could be applied to the public sector? >> yeah. senator said it's important for us to look at this holistically. in the recently released report, the treasury's office of financial research briefly

discussed that student debt burdens could significantly depress demand for mortgage credit and dampen consumption both may be political drivers for recover i are. look at it ho listically one of the first a, is working with the department of education to actually improve the financial aid information and student loan information people find. we are allowing schoolings on a voluntary basis to present a simple one-page financial age shopping sheet which give the them their loan options as well as what they're estimated payment might be after graduation and already so many schools across the country have embraced this. we're happy to enter this for the record. >> one of the major issues, of course, is the escalading cost of the college education. even though you focus on the private lending sector you looked at public and private

institutions. there is acceleration to private university to? >> yes, there has been cost increases in increase burdens for debt across institutional sectors, and they're not responsible for public programs like medicaid or anything else what is driving the private institutions to increase their tuition so dramatically? >> i'm the wrong person to answer about specific economics of college cost. we're a bit more focused on the finances. generally speaking, we have seen over a period of many, many years escalating cost of college across sectors in access of inflation. in particularly, we have seen debt burdens be very high in the for-profit college sector utilizationization of private loans were particularly high. >> that goes to a quick technical question. i asked this because i don't know the answer.

are there prepayment penalties included in the language of some of these private loans? >> the truth in lending actually bans prepayment penalty for private student loans. one would anticipate would help facility at a time a rather robust refinancing market borrows would not penalized for trading one note for a less expensive note. it has not beared true. >> thank you. that's a very helpful classification. the other issue among several that i have, let me pose this one. is there a correlation between school and the number of private loans. one of the things that you have suggested you have now format everyone can check it out, but this lack of competition, this sort are essentially some schools steering students to these private loans and is there

any kind of relationship between the school and the private lender? >> so in 2007, at the state level, state attorney general identified certain unsavory relationships between schools and private lenders, but the 2008 higher education opportunity act has largely changed that. we see a much better relationship between schools and lenders. in fact, we believe that involving schools more in the process by requiring servicer of student loans of private student lones helps schools better counsel their students on their full range of options. the only marketplace that remains where there is a arrangement between private lenders and schools is that presents some risk that's worthy of attention is certain lend ago -- arrangements between the

propry tear school sector that are helping with driven the come plins. >> if i may, just a clarification again, you point out that there is a quasi bankruptcy remedy under public lending which is to go in and make an income-based repayment. that does not exist on the private lending side, and the issue here is not, again, i'm asking the question so correct me. the issue is not that someone can't file bankruptcy. they can't danger the loan in bankruptcy. is that the technical issue? >> correct. the private loans loans are treated differently compared to credit card debt and others. >> because it's federal statutes. >> correct. the 2005 changes. private lenders have increasingly told us they are looking for ways to offer more repayment flexibility. we think it's a great

opportunity, and again, we hope engage with lenders and den rnl regulators to -- lenders themselves. >> thank you very much. thank you, mr. chairman. >> senator akaka. >> thank you very much, mr. chairman. mr. chopra, the report you presented today suggests that the students have taken out too much debt through student loans because of predatory lending practices. you have also noted that students should consider takes out additional student loans in order to avoid excessive credit card debt. can you please elaborate on the

appropriate role of private student loans? >> sure. the total debt market has reached over a trillion dollars. it's important to note that education induced indebtness is certainly far higher. many families utilize home equity lines of credit, credit cards and other products to ensure they can pay for the cost of college. and generally speaking, a student loan is going to be a safer bet than let's say a credit card which is going to have an immediate repayment requirement which might be challenging for a full-time student. there's certainly a role for private credit in many market. don't get us wrong there. but we do want people to make more optimal borrows decisions over all. we think some of the steps to make the whole market more transparent with the shopping sheet is a good first step.

>> thank you for that. i understand that cfpb often hears from students who are strugglings to repay the student loan complaint system. . .

the report that we submitted the director recommended that the role of the financial aid office in lending decisions be substantially enhanced and 51 having private student loans be certified, financial aid offices can be provided the opportunity to give the full range of financing options and many times financial aid officers are able to use professional judgment to adjust loan amounts so that our words are able to meet their tuition obligations while still borrowing responsibly. and you are right that there is still ways to make sure that the private loan market can meet the demand at a fair price. >> i must commend you on your remarks that cfpb had then working together with the department of education.

and i wish that more departments and agencies would be working together on common goals as well. so, thank you so much for what you are doing mr. chairman. >> thank you mr. chairman. senator hagan. >> thank you mr. sunday -- chairman and thank you mr. chopra. on these report that cfpb recently released on the issue of institutional bones may direct you by the for-profit schools to the students, it is advertised as a way for students to fill the gap in their tuition at the david exhausted federal loans or pell grant money and then i think part of what i heard you say in answer to an earlier question had to do with the rule also which we might ask you to elaborate on. many of these institutional