funding to support green energy innovation. most of that funding has created instead of novel products, continuing with the same old model of process innovation which is making the products created in the west faster and cheaper and, therefore, using that to age, take away some of the u.s. market share. they have been very successful doing that on solar energy. china is making solar panels at lower prices than what other countries around the world are making. they therefore substantial increase their share of the global solar panel market. the problem is they have not been so good in the domestic consumption side. chinese companies export 95% of the solar panels they produce. that's a big from for a lot of chinese citizens and ngos because there sank this is supposed to be about green energy but what we're getting is the factors that make solar panels and have a lot of pollution from the factory. and we are expert in the solar panels to the united states. to u.s. citizens have cleaner

air but we do not. that's a really big problem. that's an old model. the old model. the new model would be if they cannot only create the manufacturing solar panel but also creating new innovative types of technology that might be way more efficient than what we have to. but also in staunton and consumed by an adult. that is very, very difficult to do because that requires central government to break past some very powerful state owned on ane interest, including coal country, power generation companies and state creates. the state grid corporation controls china's national utility grid. they can do 80% of the chinese territory. they have been really dragging their heels connecting wind and solar resources to the great. so getting that side of equation right is going to really critical going forward, but very, very difficult to do. and so that raises the question of whether this new leadership is really going to be able to get things done, we don't know the full politburo standing

committee. we do come in now the top three that are most important for answering this question. xi jinping of course will be the party secretary. as we played with 99% certainty, and as cheng li put up on the screen, he will be acting as the head of state and serving as a decision-maker, one among equals on the politburo standing committee. we believe lee will be the next premier. he will have the economic portfolio that they currently have. but the question is what happens if wang qishan, china's argubright china's strongest financial fixer that they have at the top level. he has in the name of the firefighter. because he's been brought in to fix a reins of -- range of crisis for me. the former premier who rolled out some very ambitious banking system reform, and the question is going to be, how will wang qishan be able to work to i

should push disruptive reform passed the rest of the politburo standing committee, and more important past powerful state-owned enterprises and local government interest that might resist them. at present it doesn't look good because at present, china's paul pierce tinicum he only has one economic for the. that's is the portfolio of the premier. he has been around for the week economic manager. his predecessor did not rely too much on the bureaucracy behind him. yet his own team. he came up his own reform plans and he rammed into. he did not rely on agencies. he is very dependent on the nation development reform commission to those of us who were close with the nation development for commission with respect our colleagues but also realize that the policies that make it to the top o of the organization are often not as cutting-edge as what china needs to move forward. so it would be great if we could

have another leader of the topic on an extra game and not get bogged down in politics. on my last trip to beijing i did hear that he has his own team working on a transition plan for at least one sector of economy. that team is not at indy rc. it is located external. i noted that was her intellect. if li keqiang comes in with new policy proposals ready to roll out, and pushes those, that would be very promising. however the this economic policy push that china has is probably going to be wang qishan. since he does have the premiership, it's not clear he will have a strong role and ability to influence things going forward. he may be given the title of something like executive vice premier and be given a secondary economic role to focus on specific sectors of the economy, but that's not good going for. that is something we will be keeping a very close eye on whether he is given some kind of great economic portfolio, or whether he is put somewhere like

the chinese people's political consultative conference or the nbc which would significant reduce his ability to push things forward. >> great. thank you very much, melanie. let's turn now to train one. spent thanks very much to derek for inviting me. i want to keep this relatively brief. so i want to focus today on china's internal economics, because my book is about what the rise of china means for the united states. so that's a more gloomy message. so let's focus on china itself. if you want to gloomy message, i'm getting a public lecture tomorrow, so do come and listen to that. i want to make a couple of points. first is that i think coming in, i think from previous panel also said, i think it's a difficult

conjuncture in china because of a combination i think of for things going on. one is cost the leadership transition. the second is the world economy is relatively weak so the external in time in china is uncertain. but the two other big things going on our, one, the fact for the first time there is the parties legitimacy has been choose a question which kind of altars politics of reform going for which was again mentioned in the previous panel. and above all something that melanie alluded to, i think the old chinese growth model has, is running at his team. so these four things are coming together and that's the context for reforms going forward. and i think the big challenge for china is how to rebalance the economy. and rebalance means many things to many people, but i think at one level it's about how moving towards a more consumption based economy, at another level it's

also about moving resources from essential to producing a lot of tradable exports to producing services. that's all part of rebounds a. and melanie alluded to one time, another kind of rebounds in which is to move away from producing cheap goods to producing more high-tech kind of district of something i'm going to take issue with a little bit later. and i think, so my central claim is i actually think the incentives are moving in favor of rebalancing. i don't have a clue as to who is going to be on the politburo and what the personal preferences are. melanie gave you a sense of that, but i think if you look at the underlying thing, i'm going to make the claim that the incentives are going to move towards reform and rebalancing. and i think over the medium term, i think china, this is about a 20 year horizon, china can feasibly a growth rate of

about six and a half, 7% which i think it should become is a were to occur, get that, it would be fantastic. and i think that's something that's feasible and i'm not sure why it is going to be feasible in the medium term. now, as i said, china in recent discussions, we talked about the imbalance problem but there have been two imbalances. and one of them actually has been cured or interest. the one imbalance is china has relied a lot of extra demand and on domestic demand. and the most egregious case was in 2007 when external was about 11% of gdp. so there's like to much on foreign markets. today, it's 2%. so china has it seems apparently moved away from relying on foreign markets to domestic markets. so that's, whether it will

remain is an issue for the future, and perhaps it won't, but at least one of the two has been kind of partially interested. but the other one, it has not been addressed and, in fact, in some ways a substitute for the rebalancing problem is that china as it moves away from exports, its effect move towards more investment. investing 50% of gdp, that's completely out of whack with anything we've seen in history. so that imbalance i think remains, consumption remains low. investment remains high. so the question is what does china do? there are three avenues going for. was to go back to the more exports until. but i think that's unlikely both because the pressure is going to face from the outside but it's also unlikely for domestic reasons because i think that's going to involve a continuation of cheap credit, undervalued exchange rates, and a whole

panoply of policies that are think china itself does not want. china does not want to be so aligned on foreign markets because it relies 2000 a crisis, that makes it very, very vulnerable. 20 to 40 many people are potentially going to be displaced after the 2000 a crisis. -- 2008 crisis. i think that could be quite a lot of social consumption in china. china is not going to go back. that is the only potential high growth strategy available china. once it has to move away from external, it is necessary a local strategy. from the history of humanity nobody has grown at eight to 10% based on domestic demand. ain't going to happen. never happened in the past. so the question is an has to move, if it goes to internal demand it has to be a little growth strategy. so then there are two options. continue with a high investment

strategy, or to move finally a way for investment towards consumption. i think the politics of this is increasingly moving in favor of rebalancing and they consumption strategy for the following recent. i think if china continues to invest more, maintain the kind of strategy, more imbalances and the financial system, cheap credit, rising inequality because cheap credit -- lower welfare and lower consumption. so i think what that strategy is. if it goes towards higher consumption, less equality, higher employment and higher consumption. and the question is, why do i see that politics is moving in that direction? i think for one, i think simple reason, i think that because of the political changes that have taken place, i think, get a, risks, it's true the advantages

that china doesn't have to take on vested interest in essence of the kind that melanie alluded to. the fact that banks are state welcome they collect state enterprises are all part of the party. so a combination of the state enterprises and state banks creates a kind of massive vested interest that's blocking this move away from, away towards consumption-based strategy. but i think what is working in favor of that is the old legitimacy of the party, the political restiveness and the fact that there is, in fact, a clamor for change. so this sense of crisis that, or high anxiety as you said, i think if that continues, and affect our like to see a few more quarters of even worse growth to kind of exaggerated sense of crisis, because i think that sense of crisis we'll, at the margin tipped the balance in favor of moving towards -- if the party wants to retain

legitimacy, i may, ironically it has to give up our in order to retain power. and that means so the million-dollar question going forward is, will they be able to do the kind of, some kind of political reform that will be necessary for economic reform. notably taking on the vested interests in the state-owned enterprises and state-owned financial sector. i think, but i mean, i can't say for sure it's going to happen but i think the balance of forces is building towards reform, towards taking on vested interest because there is a larger populace that is rested that is clamoring for change, and i think the current strategy will not deliver on those changes. now, i want -- now, my last point is about the medium term. i think one of the problems of the chinese party has kind of lock itself into unfortunately

is this growth narrative. you know, china necessarily has to slow down. and not because it's doing badly but because it's doing well. it has it's done so well, it has to slow down. it's in iron law of growth will recall convergence is the faster you have grown and the rich you become, you have to slow down because opportunities for producing things cheaply necessary to decline because -- so it has to slow down. it's been growing at about 8.5% per capita for about 20 years. i think it has to slow down to about 5.5% per capita which is something like 6.5% in the aggregate. now, i think it's eminently feasible, eminently feasible because china still remains a very poor country. it is still about 20-25% of u.s. standard of living, and, therefore, it still has tremendous scope to continue growing based on the fact it's

still a little bit poor. so i fundamentally disagree with melanie in saying that, yeah, the future has to be based on high-tech and intellectual property. not so. if that happens that's a bonus, but china does not need that. because it's about 20, 25% of standard of living of the united states. at the level of income, korea, japan, taiwan, et cetera, did not do high-tech. they still basically relied on relatively cheap labor. of course, the financial sector, but it does not require some fancy high-tech thing to sustain its growth. that i kind of fundamentally disagree with. and if china goes at the rate i'm projecting, about six, 6.5%, then even at the end of 20 years it still only the 45 to 50% of u.s. standard of living. so there's tremendous scope to grow and catch up without feeling undue pressure.

so the one point i would make here is that, you know, my colleague estimates that still in china there are 200 million people employed in agriculture who are potentially a labor force to finance the next growth. so china has not reached the lowest point what we call was suddenly it's become uncompetitive because wages have become so expensive. now, what are the threats to growth? there are lots of financial imbalances. we don't know really, and i think that is a shot but i think china still has more policy space than any country in the world to be able in the event things go badly, wrapping so. so a lot of talk has been about china having a hard line. and the way i describe it using airline metaphor is a think development is kind of a long-term flight with many takeoffs and many landings. so the question is not whether

china will land hard, but whether it has the ability to recover. and i think for some considerable period of time china has both political will and macroeconomic policy space to recover from these jolts. now, you shared a lot about middle income in china. in fact, i was in china to discuss the china report with the drc with the world bank, and tomorrow again, i'm going to be speaking to them as well. and i fundamentally have a problem with china and the middle income. let me tell you why i feel this pixel in the book of what i do is i say look, i'm pretty content to grow at about 6.5% which i think is very reasonable, given how well it's done so for. what is the chance, what does history tell us about countries faring at the comparable stage of development? so i went back and looked at all those countries, who were at

various points in time where china is today. what i mean by china is today, china is about 20, 25% of standard lingo would've all these countries in the past? about one-third of the countries that i looked at actually did grow subsequently at what i'm projecting china to go. so the way i like to put it is the unconditional probability that china will not fall into the middle income crowd as i've defined it is one in three. but if you look at those list of countries, and i want to put those up in red, is look at the countries that did make and didn't make it. you ask yourself the question, is china going to be more like japan, hong kong, germany, spain, taiwan, korea, portugal? or will it be like jordan, poland, bolivia, kind of the question answers itself. so the conditional probability that china will avoid the middle income trap is much higher and one in three.

it's 50, 60, three chords. i mean, southern ocean that china will fall in the middle income crowd i just don't think it's likely, at least until china reaches 50, 55% of your standard of living. roughly where korea is today. yes, there is 18. it's a problem but i think -- aging. as i said, there's lots of things that china can do to overcome because it's still very poor to avoid this problem. i forgot to mention that, you know, america booster, u.s. boosters and china always draw japan and algae and say, you know, japan had this bubble, japan slow down, china is same situation. i think that is fundamentally ironic analogy because when china -- when japan penn state in the late '80s, early

nights, japan was at u.s. standard of living, or close to the. so the scope for ketchup japan had was over. china is still at about 25% so there's tremendous scope, so china, japan and algae is just plain wrong. so it went to the aging point. so democracies is on the way up like indians believe it is. but equally, demography is our destiny on the way down, and china thinks that it can do. now, does it mean that it's going to be a real growth center for china? absolutely no. i think if china does have a lot of serious challenges, and i think what could derail china is a combination of all these social and political challenges if you're to come together. and, of course, i think we're in for some considerable, especially with unlike politics, i think there is a scenario

where china really does lose it. but i think given the pressures that the leadership is doing coming given that nietzsche kind of legitimate itself, i think the odds are that you will see the kind of rebalancing strategy that i think china needs. they do have a kind of pr problem. i think they do need to hire the best american pr firms to change this narrative from a growth obsessed person of us do something because remember, a point i forgot to make is china has been growing at about 8.5% per capita. it's been delivering consumption per capita growth at about 6.5 to seven. so when people tell you this is an economy that is kind of -- that's complete nonsense. in the history of humanity, no economy has delivered as much consumption growth as china, even though it's been so imbalanced. so the way the trick works going

forward is you get gdp growth down to the kinds of numbers that i said, but because it's a rebalance kind of growth away from domestic demand towards consumption, china can effect maintain the same levels of per capita consumption growth that it does have delivered so for. and that's the way the politics and economics square. you get more growth but you get as much consumption growth, as much welfare, less integral, higher employment and i think the chinese leadership is smart enough to recognize that. >> that's great, train one. thank you very much. now derek. >> 's that i forgot to mention in case you want to buy my book -- [laughter] in chinese as well. >> the last person in a two panel event has to keep everybody awake, and i have the disadvantage that melanie and trembling have staked out

opposite positions of the other to transition so i will say outrageous things but if people and i still look like they're paying attention i want to say more outrageous things. so don't provoke me because if you know, you know i can get really, really outrageous. at me start with a background. i'm it would've a lot of time on this because i've been singing for a long time but it's worth noting, we are not in a position of saying will try to continue on the path of reform. the current government, the one that is leading left the path of mark reform years ago. 2003, the first party plenum of this chemical everybody because the first party plenum a year from now will be important for 2003 the first party plenum of this committee met with a bunch status but and social policy and the road to my clients and said we had a problem. this is not the same as the other committed when a change in chinese policy. and about five years later the american business community realized this. if you look back at it as the consumption balance which tran

once referred to like them in 2001 and was fun. china was an imbalance country. it was an imbalance country in 2001. it was created by this government. this is the government that is moved away from balance consumption of growth, balance consumption investment growth. to an imbalance. it has created the problems that china now needs to solve. and that's important to realize because on one hand is extremely positive. i think you can see the and a lot of arvind's presentation but when you take 30 i could get nice numbers about china and you say people are mischaracterizing china. if you look at the longer. that's too. it's just discovered that is taken china off the path. not only was a very strong, it was sustainable. on the other hand, unfortunately, that means the situation has gotten worse. china was in a much structurally sound position five years ago and tinges ago than it is now. so the trend as a melanie referred to is negative. that's really why we have this difference.

over the course of the reform china has done very well. we all know that but it's worth remembering when people start at about chinese weakness now. the reason chinese weakness is especially salient now is because this government took them off track because i don't want to make is too long at the end of want to talk about two things, is the next government going to also change? as this, did but in a positive direction? and what did those options mean for the u.s.? that's a fun one because we might hear a little bit about it tonight. i think it will be taken as bragging if i say you might learn a little bit more from me then you will this evening. and -- spent and even more if you read my financial book spent i should have lined up advertisement. we're getting out advertise here. okay. so, so, you know, one of the things, and he is a great comparison because i did this trip to india in 2000 they kept him from the indians that it's their turn in 2000.

countries don't have turns. just because you have the conditions to do what doesn't mean you're actually going to do well. it's the policies you choose. i don't think arvind disagrees. the conditions are still there for china to grow strongly for another generation. that doesn't mean they will. and so we had to evaluate to what this new, is going to do rather than what might happen. i can easily imagine a situation where u.s. growth averages more than 3% for the next 10 years and i'd also imagine where it averaged 1%. those are huge differences. the differences china may face with 7% growth, 7.5% growth or 4% growth over a ten-year period of the new government are gigantic. how are we going to second how can we anticipate what they're going to do, and only touched on a lot of things. the party has diverged away from what was best from china as a whole. we refer to the in the first panel. when transiting to respond and 79 and again in 92, that's important. it wasn't just 79.

and took the part onto a mark reform path, he did for the party sick. can, we need to keep in power but also because it was what was best for china. that's really not clear now. in 2002 there was no reason for this government to lead the market reform path on a national basis. the country was doing really well. they didn't do it for the country. in 79 and 78, deng xiaoping change for the party and the country in 1992, he change again and the party in the country in 2002, hu jintao and whoever is pulling the strings, because i don't think it is wind, did not change for the party and the country. they just change for the party. they were unhappy with the pace of the reduction. they're unhappy with the concessions made for wto entry. and china left a marker for best. that's important understand because we have seen already my colleague talked about magnetism. we've seen already a break and pragmatism.

there was no need for the change in 2002. now we have a situation which arvind, arvind is one of the principal defenders of china's economic future, says they need to rebalance. why take a good thing attorney into something that you need to fix. that's not pragmatic. there was no pragmatism in this decision. the party has moved away from pragmatism on the economics of. the question is can they move back. now we get into the discussion a lot of your for money with and we'll hear a lot about over the next six month anti-which is how rich countries have gotten. the richest people in china and all their ties to the government, we have the list that the members deputies are much richer than members of the u.s. congress. and may i say from our perch to block some discounters, members of u.s. congress are not poor. it's not like they've had a real struggle the last 10 years. they have just gotten blown away by the national people's conference. there was a bloomberg exposé on the family being very rich. there was an big ft spread

picked up in a lot of places on the pole appear as a whole. so that are huge personal incentives that didn't exist in 2002, and a 2002 the party had diverted from what was good for the country. their friends and family. so it's going to be a really, really, really big challenge. there are some encouraging signs. we sing the world bank report. yassin repeatedly in state media senior officials quoted in english as well as chinese, and the language difference is important that we need more private investment. you do need any of that for years by the sector is fun. it's fun, we don't need to do anything. we haven't seen action yet but to be fair, and a going to switch all of it over to the optimistic side, forget this government. this government is lousy. five years ago i was telling people that hu jintao will be removed as a terrible leader and anyone disagreed with them. well, he's a terrible leader and china is reaping the benefits now. so this government is a lost

cause but the fact or even getting taught in 2012 of possible reform is encouraging that people recognize this. arvind wanted more problems. that's a possibility the more you can reflect badly on what this government, not reform, this status government has done, the more political pressure is going to build up for change. now you're going to want a bottom line on this at the bottom line in china is the status quo is good hold for a well. you don't show up in office, if governor romney wins, he gets 100 days or whatever to do something new. and he's posted it right away. he's not supposed to say i'm going to think about for a while. i get back to you in july. is supposed to act right away. china is the exact opposite. you don't come into office even if you're convinced, denouncing them. you're just making trouble. so the day care is the first party. that's when things change in 2002. it's when the southern was ratified formally in 1992.

the first party plenum will be in october or november of 2013. it is not going to bring massive reforms that are already being implemented. that's not the chinese way. it's going to give us a sense of the direction of the new government. whether they say something like, you know, the previous government responded so well to the financial crisis, but there are these things it got a little carried away and we need to fix them. and an example, some state firms should go bankrupt. that would be assigned to you just have to say that you don't have to do anything. that would be a big stack. if we get it has done well, china is on the right course, if you want to would've talk about, what a sight of the status quo is, we've any announcement by the state political cope your. they start off by saying under the great leadership of the party, blah, blah, blah. that kind of announcement at the party plenum, that's a sign we've got more and more years of stagnation ahead of us. policy stagnation.

if we get some sort of breakthrough. a defense be five, just one. one thing they're willing to do. you know, ownership of land i think we need a modification. we of modification before. of course, the state will still control than but we need a modification ever going to open the capital account. here's a sketch of the open the capital account. those kinds of things by the first party plenum are a sign up before. we don't get them, we're not getting reform. and in that case that's the deciding factor. its policy but it's not conditions. the policies are going to determine whether we go down more like an enemy, put words in my colleagues now, but more like the path that melanie was suggesting that will be very hard, china will continue slocumb are more like the path train to suggesting that they can get back, they can hold rather, sustained consumption 7% growth. both our possible. and i think will get a sense of it about a year from now. i don't think we should be

saying that whatever the trend in china is going to think will continue, that's not true. policies really matter. they mattered in 1992 in a positive way. they mattered in 2000 in a negative way. so policies that are going to be adopted over the next couple of years are was going to determine china situation. implications for the u.s. of course, i have to say how we do things in this country matters more for us than china. that's, i hope we don't lose track of that tonight. and it sounds like our economic future is determined by what other people do. we are still twice as large as china on a gdp basis as arvind has pointed out, much richer. what we do here will determine our future and our competitiveness. this government is going to set the direction for 10 years. the u.s.-china relationship 2012 is very for different data was in 2002. and to convey different that was in 1992. when i first went to beijing and 94, i had all these chinese intellectuals telling the, nobody in his cares about china.

what are you talking about? now the u.s. does care about china. it might be too. so things have changed quite a lot. it will change quite a lot again if we're all fortunate enough to be here in 10 years, we are going to find them at the status quo didn't hold. one way or another it got broken. that's not the way chinese economic policy and economic performance has worked. it has not been an error of status quo. we had a dramatic change in sometimes retinas after the fact, sometimes recognize at the time to do if we see this from a document, the u.s. needs to help. that seems really challenging at the current time. we're supposed help someone else, can't even help ourselves. but for example, we really want china to open an account. right now there's and extortion in a tire global financial system. but it contains capitalism. big sticky point. we want them to open it, but there are risks to the opening. someone who is completely free market fanatic as i am doesn't

think you can stamp your fingers and let money leave the chinese banking system and it will be fun. there is a risk. we need to offer to the. the main place the money will leave is the u.s. that's already do that. we need to offer technical cooperation. we need to put president obama in a completely different era, reach her hand up to the people's back and say, come on, do it. we will help you. we will share information. we will coordinate our policy, we will listen to you. be more assertive on the reform front. that's just an example, and again i want to stop very soon, i don't want to go to lots of other examples but there are plenty of ways in which the u.s. can help. china has to make this decision. we're not going to enforce them significantly. is to import. it can be made internally. how things that i u.s. wants to help china reform is a small positive politically for the times but might look like a that they will choose for. the flipside is would also have

to prepare for unpleasantness. 10 more years of statism. that has to promise to would. it means as a partner china becomes more and more difficult, more and more subsidies, more and more criticism of american policy. undermine the trans-pacific partnership is a threat to china until. and the flipside, sorry, tom committee that is that china's growth will slow down. so the our american partners have done very well on the basic growth strategy. china's growth slowing that is at a positive for the world. sometimes in washington we lose the. different kinds of growth would be a positive for the were but just slow growth and stagnation is not a positive. japan's stagnation, which a lot of people in washington probably wanted 20 years ago, did not turn out to be a positive for anyone, including the u.s.-japan allies. so there are challenges involved in chinese weakness, and we need to prepare for those just as we

need to reach out and try to encourage chinese reform. the bottom line on all this is very simple. a government that is coming in now is going to determine the direction of the chinese economy. not historical trends, not what he did before, not the mistakes they made in 2009. they are there for 10 years. 10 years is a long time to change the path. we will get about a year of trying to figure out what they're going to do, if they reform that opens up a challenge to the united states but also many opportunities. if they don't reform, china as a challenge to the u.s. goes away but china causing difficulties in the world may increase. thank you. >> thank you, garrick. i think arvind wants to say one thing and then it's going to be your turn. >> icon either, agree with a lot of what he said. but there's one thing which i have to point out, because it's something that is common to both china and india. which is coming up, i want to show this chart which i wasn't

able to show before. it up? is it up? >> that's my fault. >> wealth -- >> you can draw a line if you want. [laughter] spent essentially the point is that the parallel over the last 10 years or eight, nine years between this regime in china and his regime, this regime in india is that this has been the fastest gdp growth and fastest consumption growth, even compared to before. so when people say, you know, these guys screwed up, they did reform, true. same is true in india. at the outcomes are spectacular. now, so let me be careful in what i say. actually and, unfortunately, despite not doing very much, actually the chinese and indian economy did spectacularly well.

i think the differences that intrinsic to that good performance of china was also the building up of imbalance is an problems. but that's a different story from saying it was an unmitigated disaster. far from it. >> thanks. let's let the audience have a chance. if you've got a question, please raise your hand. wait for the mic a phone, and then please identify yourself and ask your question and keep it as brief as possible, please. right down here in the front. spent thank you. my question is for mr. arvind. yesterday in the article published on financial times, you mentioned that it's becoming currency for many asian countries. and do you think this trend will continue? and finally challenge the

dominance of u.s. dollars? what should be done for china to become international -- [inaudible] thank you. >> so essentially, you know, i have just done some research on which this piece is based. essentially that's what's happening is that more and more currencies in the world, especially, are tracking renminbi rather than tracking the dollar. so my line zinger is dollar bloc in asia lower. renminbi block. and reason have is to for. it's more integrating with china but also the fear of losing competitiveness. because chinese policy. both are at work and that's why

it's the country. this does not in itself mean that chinese, the renminbi will become international reserve currency. china has to undertake a lot of the kind of reforms that derek has been talking about, just open up its account and so on. but all these things are kind of adding up little by little, to the kind of dominance that i speak about him a book which is that committee, chinese economy becomes very big. it's a huge traitor. it huge credit to come and that its currency is also becoming the top currency. so i see a kind of semi-inevitabilities about all these developers, but again there is actually. this has to be facilitated by serious chinese reforms, not just of the capital account but also of the financial system. because otherwise outsiders will never have confidence in holding the renminbi as currency. now they track the currency which is what this piece is

about. but having confidence and restore valley, that will require more. >> okay. he asked -- icelandic you can't stop me. you know, i agree with much of that. the renminbi is still pegged to the dollar. it's a loose peg. so the one qualifier i would add, it's an important qualifier and its did more strong than he would stated, is when countries are tracking the renminbi they are tracking a derivative of the dollar and they will be tracking it derivative of the dollar until china is willing to less the renminbi afloat. so i don't really see, i mean i have some problems with the dollar-renminbi mayors because it gives too much weight to the dollar policy in were. and it's not a challenge to the dollar until the chinese are willing to make these reforms. now, what the situation is setting up as is we're getting these distortions as china grows bigger and dozen of his its own independent turn to come and if

china ever does take the steps we will get sudden move into a new world. because suddenly will have an independent currency which we don't have now, that is backed by the second largest economy. that's a big change. we thought were getting that world with the euro and the eurozone kind of shot itself in the foot. china may do the same thing, but what i agree with arvind is we are getting a conditions that if china is what reform, they haven't done it, if china is going to reform suddenly we have is rapid, much more rapid the wood used to change in the international monetary system. >> sure. >> he always gets the last word. >> remember, i think derek is subsidy right when he says that commute on these currencies follow the renminbi but the renminbi is still tracking the dollar. i wish i could tell you a joke which captures it but i can't, and my translation is not -- in translation it doesn't, there will. barry minkow the difference is the renminbi was also tracking the dollar, 2005-2008.

but what i'm talking about now has changed. so from 2010 to on court, these are tracking the dollar even though the dollar -- tracking the renminbi even though the renminbi is tracking the dollar. but previously even though the renminbi was tracking the dollar, that's the big change that's happened. >> okay, another question. over here. [inaudible] >> wait for the microphone, please. >> an argument about a transition of the chinese economy, okay? you mentioned the chinese economy actually need to turn from consumption to consumption. the thing is that one, if you look at expert -- exports of raven import, like 60 or 30% of gdp, right? but actually what is really contributed to the gdp growth is

net export. net export minus import. that is less than 5%. so actually consumption part is up to 50% of the gdp growth but, of course, we cannot compare with u.s. because the u.s. is up to 70% figure developed country. we are developing. we do have more investment that holds this part of gdp. so that's one thing. the other thing is that actually the export parking contribute to the gdp growth because china is actually the last part, and -- [inaudible] employed a lot of people. so the poor people get money from export parts so they have money in their pockets. ..

>> but the disturbing thing for me is not the level, it's the trend. chinese consumption was a bigger share of gdp, labor income was a larger share of gdp versus capital ten years ago, so what you would want as the country gets richer is the consumption share to rise. as the country moves closer to income in developing countries that have higher consumption, what's happened in china is it has fallen. that trend needs to be reversed. that's the transition i would argue for. >> i would disagree with arvind a little bit. i would also warn that we shouldn't be too excited about consumption as an opportunity. we want china to grow consumption and rebalance from export investment towards

consumption innovation, but that requires increasing interest rates. right now china has very low interest rates and not many options for saving money. so if you're an average chinese citizen, not the type with overseas investment opportunities, but if you're an average chinese citizen, basically, your biggest opportunity for safing money for your future is to put it in the bank, and bank interest rates are really low. and so then the bank takes the very happy capital, very -- very cheap capital, and turns it around to soes. and so that's a way that they're basically subsidizing the state sector on the back of the chinese consumers. they also, as derek mentioned, have a very closed capital account, so if as a consumer you don't like the fact that your options at the bank are not good, you can't take your money abroad. you don't have many options other than some mutual fund type investments that also have relatively low interest rates. so in order to grow consumption,

one of the big changes china would have to make would be to let interest raises ride -- rise so households can get more from their savings so they would not be saving every penny they can so if they have, for example, a medical expense, they know they can cover that. so there's a very complex network of policies that china's going to have to roll out to actually increase household consumption, and that involves things soes really don't like. the first is raising interest rates because soes have to pay more for their loans, they no longer have that soft budget constraint. that's good for china as a whole, maybe not so good if you're head of china mobile or other companies that are getting a lot of government credit. the other side is that soes are going to have to pay more taxes for things like social security so the chinese citizens have a better package of welfare policies and don't have to worry so much about keeping money in the bank instead of buying

things like bigger houses, better cars and refrigerators. so those are an entirely separate set of policy choices that the the incoming leaders may or may not be able to make. >> thanks. next question down here in the front. >> i would like to ask the panel how do you evaluate the influence of free chinese investment in the u.s. on the china/u.s. relations and its international image given that china based economy on quality and -- [inaudible] even the renewable energy roles has been labeled as u.s. national security threat? and do you have any recommendation to the chinese families that plan to invest in u.s.? >> well, as you may know, we have here a china global investment tracker which tracks chinese investment all over the world, and i've been doing that for more than a decade, so i

would say for people here and in washington and in china in general don't pay too much attention to the short term. we're all focused on this intelligence committee report about huawei and the president's decision to block the investment, but meanwhile, chinese investment is going to set a record. arguably, it already has set a record even though we're in october, an annual record. and it's more diversified than it was in previous years when it was much more heavily in financials. if you take out the trover, this is the best -- controversy, this is the best year for chinese investment yet by far in terms of both numbers and diversity with china moving out into services and also into energy which is a breakthrough after the initial problems. so i think the negative spin is unwarranted. the facts say otherwise. if i were advising chinese companies, i don't know why we always pick this fight. you're picking a fight right before an election you never

going -- you're never going to win. somebody's giving them bad advice. if you're going to pick this fight, do it later, do it after november. huawei is also giving bad advice. i told them four years ago, you're never going to have a major telecom market share in the united states, it's never going to happen. why are you spending all this time doing this? but they keep doing it, and they keep complaining. there are certain doors that are closed in the u.s. technology is not available for chinese firms. on the other hand, land is. a lot of countries in the world don't like that. the u.s. is land rich. take the country for the opportunities that it has; land, resources, huge consumer market. don't try to take it for opportunities that are not going to be open to you and have never been open to you. that's the advice to chinese firms. and, you know, very similar advice is handed out to foreign firms in china all the time, only there are far more restrictions which is we're only giving you this, just accept it. i think there's an element of false crisis here.

chinese investment in the u.s. is doing fine, and if chinese firms know where their opportunities are, it will continue to do very well. >> arvind? or melanie. >> i've been working on this topic quite a bit as well, actually, and having some interesting conversations with chinese companies, and i would say that china and the u.s. both still have a lot to learn about chinese inward direct investment that's new. the united states, actually, does not have comparative national policy on inward direct investment in this country. that's something we're only just now focusing on and realizing that we need a better solution and a better approach. the obama administration has made some progress on this. they have come out and said that the united states does welcome and encourage chinese companies to directly invest in the united states and create jobs. when i talk to chinese companies, they say but the only policy we see is cfius, and that's blocking our investment. so on the u.s. side we do need to do more to clarify where those investments are welcome and where the riskings are higher, and where they are

welcome, we need to create better policies to make those investments more attractive. i do a lot of work in clean energy. clean energy is really a sector where we could stand to use some chinese investment dollars and know-how because china is very strong, and there are a lot of investors that are very interested in the united states. but, for example, our investment incentive policies focus on tax rebates that aren't that useful for foreign firms. and we have a cfius policy that has recently brought in the department of energy and is focusing on the electricity grid as a potential national security risk. and a lot of the sectors of the clean energy economy involve the electricity grid. so we need to do a better job at clarifying for chinese companies from a washington perspective which sectors of these industries are simply going to be high risk, potentially no reward sectors and which are the sectors where it's a win/win for china and the u.s., and washington doesn't really have any big be national security concerns. chinese companies also have a

lot of learning to do about investing in the united states. huawei being the premier example. you know, if you look at some of huawei's past investment attempts, they've tried to do something which i have been taught you never do in washington, and that's to surprise people. you don't want to surprise people if you want them to back your deal. and huawei's, you know, always basically waited until the last minute and tried to get these deals completed before the information hit the types of people that would be weighing in on cfius. that does not weigh well. chinese people are very bad at lobbying. i think the reason in the past decades u.s. companies were doing that for hem, they were running in the halls of congress saying we have to bring china into the wto, grant them mfn status. now the environment is changing, a lot of u.s. companies are more wary about their ability to compete with chinese rivals, and china is going to simply have to get better at being their own lobby in washington. that matters both in the the big

washington policy sense and also in terms of individual deals. when you talk to chinese companies and their u.s. partners, you hear that chinese companies don't want to hire the lawyers or consultants or lobbyists, they think that's corruption. but the reality is that this is a rule of law, bureaucratic society, and it's about a lot of red tape, and the way to do that is to follow the model of u.s. companies and hire the types of service firms that can walk you through the red tape. chinese companies tend to not do that, and then they walk into big walls, and then they go home and say, oh, the united states is prejudiced against us, and we'll never make it in this market. we need to recognize that chinese direct investment in this country is a major opportunity. i think washington has recognized that, but we haven't figured out the next step which is where exactly is it a major opportunity versus where is it more risk than opportunity. and on the chinese side, just as u.s. companies had to do a lot of, you know, local market learning and cultural understanding to figure out how to operate in china a couple of

decades ago, chinese companies are actually going to have to do the same in reverse to find out how to operate in the united states in a successful way. and both sides still have a lot of work to do on that. >> arvind, did you want to add anything to that? no. i think we have time for one more quick question if there's one from the audience. in the back there. >> i have a question to melanie maybe, and my name's -- [inaudible] from voice of america, chinese branch. and a lot of science indicating that the firefighter won't be exactly vice premier. if that is the case, when chen will be the one handling the national economy. what kind of a reform path would you expect he'll take if he is going to take, going to control the chinese economy? a lot of readings i have done indicating that particularly from the american perspective that we don't have a very strong

confidence on cheng based on his background as a governing -- [inaudible] and some northeast province in china. is cheng going to be the one to handle the economy? will that be a disaster for china? >> well, you know, i've been asking a lot of people in china to try to find out what exactly is he like behind the scenes, and one thing that they've been reminding me is don't forget, he's been the executive vice premier for a while, so he has been hand in hand on a lot of things, for example, all of china's five-year plans. those are planning processes that he was very heavily involved in. the problem is i don't -- i haven't heard anything about him taking a leading role. when you talk to people like the head of the central organization department, he has some really great stories about how there are things, reforms that people were staunchly against but that he just rammed through past a

lot of opposition, got hu jintao to back him, and then it was a done deal. and he's used to going against opposing voices. i haven't seen anything quite like that. that makes me a little bit worried. it seems like the economic leader that is used to and knows how to ram things back against opposing voices would be zhen. the rumors have been that he would not be made an executive vice premier with an economic portfolio. many years ago ji denied someone else, and economic portfolio as executive vice premier because he felt that person was not a strong enough economic manager to handle it. i think it would be a same if cheng is denied an economic portfolio because he thinks he would be too strong and potentially overshadow him. i think perhaps if, if cheng is more of a steady consensus builder, then perhaps we could say that the measure of how

successful he will be as a chinese leader for the next generation will be how and whether he'll be able to pull in these focused economic talents like zhen and utilize their special abilities for the chinese people and not be challenged by that and not be, you know, too concerned about rumors in the process that they compete with one another, but rather be able to reach across and use zhene's ability to bolster what he himself can do. i think that'll have a lot to do with cheng's character and the other people behind closed doors making those decisions. >> i just want to say i have a completely different read than melanie. it's not that one of us is right, it just shows how much guess work we're engaged in. zhen is very effective at pushing bad policies, in my opinion. i don't want him anywhere near economic policy making. i can't really praise cheng, but he's done things more

encouraging in terms of reform, which he actually put his name associate with the the world bank report. so i'm not saying she's wrong and i'm right, i'm saying that if i had to guess, i would take exactly the opposite guess. i want cheng to have as much control over the economy because i don't have a great option, and i've already seen what he does in terms of pulling strings -- sorry, that's what's going on -- and i don't like it. i don't think that would be a good sign for china if he were in charge. do i know what he's going to do? no, but i'm glad he at least would put himself out front in a long-term reform plan. >> and i think that'll have to be the last word. please, join me in thanking our panel. [applause] >> thank you both. >> we're covering two debates tonight on the c-span networks. over on c-span, the candidates in new york's 27th congressional district where democratic incumbent kathy hoguel debates

chris collins. that's live at 7 eastern time. and here on c-span2, the north carolina governor's debate which pits charlotte mayor pat mccorey against lieutenant governor walter dalton. that also begins at 7 eastern. >> this weekend c-span2's booktv stops in austin, texas, for live coverage of the 17th annual texas book festival, saturday from 11 to 6 eastern hear from former abc news head david westin, douglas brinkley on walter cronkite, and texas natives lbj and ladybird johnson. and sunday, noon to 6, infiltrating mexico's drug cartels and robert draper inside the house of representatives. the texas book festival, live this weekend on booktv on c-span2.

>> senator bill nelson of florida this year faces a challenge from republican congressman connie mack. the candidates met for a debate last week in davy, florida, hosted by leadership florida and the florida press association. this is just under an hour. >> moderator: good evening and welcome to the campus of nova southeastern university. again, i'm michael williams, we're honored to have you joining us from across the state of florida and our live audience here in attendance this night. the format for this hourlong debate is simple. each candidate will be asked a question in alternate fashion, each will have one minute and 15 seconds to respond by their agreement. there then will be allowed up to 30 seconds of rebuttal, then we'll move on to other questions. we'll break it into economic and domestic policy, then later, questions fashioned to each gentleman's record and then finally, foreign policy and national security. we hope it will be informative,

we thank you for being with us. i'd like to introduce our veteran panelists joining us tonight, reporters all from south florida and around the sunshine state. they are anthony mann, longtime political reporter for south florida's sun sentinel. lisette campos, journalist from wsts-tv this tampa. and we thank all of you for being with us. we will begin with one minute opening statements. by the drawing of straws, congressman mack goes first for one minute. sir? mack: thank you and good evening. i'm a proud, mainstream conservative that grew up and was born right here in florida with florida values. and there is a clear choice between senator nelson and me. you see, bill nelson cast the deciding vote to cut $700 billion out of your medicare to pay for obamacare.

i voted against obamacare. bill nelson, he voted to gut our military. i voted to strengthen our military. bill nelson voted for higher taxes 150 times. 150 times. i voted to cut taxes. you see, i've got a simple litmus test. if you voted for higher taxes 150 times, it's time for you to go. see, the liberals in washington turn to government to solve the very problems they created in the first place. what made our nation great is not our government, but you, the american people. i look forward to tonight's debate. >> moderator: congressman mack, thank you. and is now, senator bill nelson. one minute, please. nelson: well, thank you for this debate, and i'm looking forward to pointing out what the truth is because everything that the congressman has just said is not true. and that's part of the problem

in our politics today, it's so polarized, it's so excessively partisan, it's so idealogically rigid with this idea it's my way or no way. and the way you run the government of the united states is you respect the other fella's point of view, you reach across the partisan divide, and you bring people together and build bipartisan consensus. now, i will show you in the course of this debate how i have been able to do that, and i will show you that what the congressman said is not true. let the debate begin. >> moderator: thank you to both of the candidates. and throughout this debate, by the way, you will be hearing a reference to a statewide poll. it is the leadership florida/nielsen sunshine state survey, and it came up with a lot of interesting results as we polled you across florida.

let's take a look at some of them. for example, when asked what is the most important issue facing florida today, the top three answers; 44% of floridians said the economy, 6% education, 5% said crime and drugs. again, you'll hear about the survey throughout the next hour. let's have the questioning begin. the first question, by agreement, goes to congressman mack, and it will come from anthony mann. >> politicians love to talk tough on spend, but can you name a single program or spending item that benefits the residents of florida that you think needs to be cut to help balance the budget in these tough times? mack: you know, it's a great question. thank you for the question. and this goes to the heart of what this debate should be about. it's about spending. and in washington, d.c. we've been on a spending spree. we have seen year after year after year, in fact, in the last four years we've added a trillion dollars to new debt every year. now, some of us, myself

included, believe that we need to cut spending, that we need to rein in our debt and our deficits. now, senator nelson serves on the budget committee, and for almost four years has failed to pass a budget. now, why is that significant? that's significant because if you want to control spending, you have to have a budget. the reason you have a budget at home, the reason you have a budget in your business is so you can control spending. the senator sits on the budget committee and has failed to pass a budget in almost four years. now, the question was what would i cut? there are a lot of things, and, in fact, you can go to my web site, conniemack.com, and we have a list of things that we would cut. but let me tell you this, we don't need to continue to fund amtrak. i think pbs is something else we can look at cutting. there are a lot of -- >> moderator: congressman mac? strict adherence to the minute,

15 rule, and we thank you for doing so. senator nelson, minute, 15. nelson: right off the bat i have to explain what he said about the budget is not true. not only did we pass a budget, we passed it in law last year. this wasn't a budget resolution that doesn't have the force of law, this was an actual act signed into law by the president, and as a matter of fact, it set the course of categories of spending for two years, not for one year. when you look at spending cuts, you know, there's something known as tax expenditures. it's called tax loopholes. that's basically loopholes that go out to special interests. if we're going to reform the tax code, we can go in and start taking out a lot of 'em. give you an example.

how about $40 billion to come out of the oil industry? how about another -- here's a good one -- $11.5 billion to come from not letting bp deduct their particular clean-up expenses. >> moderator: senator nelson? is your minute, 15 -- 30 second rebuttal, strict, congressman mack. mack: thank you very much. senator themson, what you just said is not true, and the people of the state of florida deserve the truth. what frightens me is you serve on the budget committee, and apparently you don't understand that we have failed to pass a budget. now, you talk about loopholes, which is interesting. senator, you put some cows on your farm to avoid paying taxes. what problems me about that is that you tell everybody else not to do it, but it's okay for you. $43,000 that could have gone for teachers -- >> moderator: congressman mack, thank you very much. senator nelson, 30 seconds.

nelson: check the record. it's the budget control act. now, i'd like to have an opportunity, and i can't do it in 20 seconds. there have been cows on that property for 60 years, since 1952. [laughter] when i was a little boy raising my 4-h club project. and they still are. and i'll expand on that later. >> moderator: we'll take our next question from lisette campos, and as we talked about in the prearrangement, that first question with a minute, 15 response from each will be directed first to senator nelson. ms. campos? >> good evening, gentlemen. this question is for you, senator nelson. my question is about job creation. in the statewide survey that michael referred to earlier in the broadcast, the statewide poll, participants ghei -- gave the lowest marks to our state when it came to job creation. more than 51% of the people that were surveyed says that florida is doing, quote, a poor job. why do you feel that you are

more equipped, are better suited than your opponent to tackle this issue and to create more jobs in florida? >> moderator: senator nelson, a minute, 15. nelson: we have a long way to go. think where we came from time in 2008. we were going into a financial be death spiral. the stock market collapsed, massive job layoffs, and that occurred for a year and a half. and then for the last 31 straight months we've had private sector job growth. what we're seeing today is the increase of the housing market, we're seeing housing new starts. in fact, they're up some 33% now in florida. it's slow, it's not fast enough,

but it's happening. and the economy is going to be reflective of a good shot in the arm of confidence if the congress can come together and pass a budget plan which i want to lay out for you in this large part is with income tax code reform. i started part of it in my answer, and i'll get to it later. >> moderator: senator, thank you. congressman mack, 1:15. mack: senator nelson, we agree, we're waiting for you to pass a budget in the united states senate. it's been almost four years since you passed a budget in the united states senate. now, what's interesting to me is, you know, there are a lot of floridians who are suffering right now, who are hurting. they're looking for work. almost 830,000 people out of work. many have quit even looking for work, senator nelson, and you've just painted this picture that just doesn't exist.

i'm not sure which florida you're talking about. there are people who are losing their homes. they're still losing their homes, senator. this economy is not one that is working. now, look, there's a small business in my district, it wanted to expand. it's a boat-building business. it took 31 different permits and fees for them to be able to expand before they could hire the first full-time employee. this is a government that's out of control. if you want to get entrepreneurs and risk takers back in the game, you have to lower taxes. not raise taxes like you have, senator, other 150 -- over 150 times. you need to reduce regulation, and you need to be up front with people and tell them that, look, these are difficult times, but we're going to put our faith and trust in you, the american people, not more and more government. >> moderator: let's move along to the next question. senator, 30 seconds for each, strict 30. go ahead, senator. nelson: well, it's just not true. here's the 150 tax votes that

he's talking about. that's just simply not true. outside fact-check organizations have said it's not true. you haven't talked about all of the tax cuts that i voted for, but when we start talking about this, let's talk about all of your missed votes this year. and when you show up, it's even worse because you -- >> moderator: senator? nelson: -- you try to take out medicare and social security. >> moderator: congressman mack, 30 seconds, please. mack: senator, your propensity to vote for higher taxes 150 times is shocking, absolutely shocking. like i said, if you voted for higher taxes 150 times, it's time for you to go. the question was about job creation. if you're going to continue to raise taxes on the very people that we are relying on to create jobs, they don't have the money to invest if you keep taking it into washington. if you continue with the regulations, they can't grow.

let's put our faith and trust back in the people of this state and this country. >> moderator: next question, and it will be addressed to congressman mack. >> good evening, gentlemen. let's talk about medicare. there's a new study out this week from the kaiser foundation that says the romney/ryan premium support plan for medicare would raise the cost of health care for seniors by about $200 per month. but also under obamacare medicare is scheduled to go insolvent within 12 years. how do we protect medicare for florida's three million seniors and save it for the next generation without massive slashes and cuts in benefits? >> moderator: congressman? mack: thank you for the question. it's an important one. it's one that i think a lot of people who are watching this debate have. they're wondering what's happening to medicare. by the way, this isn't an entitlement, this is something

that people have paid into, this is something that they've earned, this is something that they, it's theirs, it's what they've been saving for and working on for a long time. now, senator nelson cast the deciding vote to cut $700 billion out of medicare. what did senator nelson say before the vote? he said it is unconscionable to whack away medicare advantage from our seniors. but that's exactly what he did. senator, i agree with you, that was unconscionable. there is almost a million, over a million seniors in the state of florida on medicare advantage because of your vote, because of your vote they're going to lose their medicare advantage. now, you talk a good game, you say things like, well, i successfully offered an amendment. well, you can successfully offer all the amendments you want, it didn't pass. yet you still voted for it. you called it unconscionable and a nonstarter. the president called you up and said i need your vote. you chose the president over the

people of the state of florida. >> moderator: senator nelson, a minute, 15 response. nelson: i'm not going to let you get away with that. $716 billion was, in fact, extending the life of medicare. medicare was going to run out in three years. now, let's talk about some of his medicare votes. he voted to cut med tear by taking away -- medicare by taking away the guaranteed benefit and replacing it with a voucher that a senior citizen would have to negotiate with an insurance company. the lights -- >> moderator: we're going to recycle the lights -- nelson: i thought that was a pretty quick light. [laughter] >> moderator: technical gremlin. go ahead. i have a watch. nelson: how much time? >> moderator: 45 seconds to a minute, senator. nelson: social security. he voted to partially privatize

social security by putting in the vagaries of the stock market. he has a penny plan that would absolutely eviscerate medicare and social security. over $200 billion out of medicare. over a trillion dollars out of social security, and we're going to release tonight the impartial, nonpartisan congressional research service study that shows how he absolutely savages medicare, social security, and, oh, by the way to boot, $3 trillion out of defense. that's what his penny plan is. >> moderator: congressman? thinker seconds. mack: senator nelson, you know better than that, and the people of the state of florida know better than that. you can call it savings, you can call it taking the money, you can call it anything you want,

senator. you cut $700 billion which you said would be unconscionable. that's what you said. and i agree with you. the problem is, when the president said to you i need your vote, you chose to stand with the president like you do 98% of the time instead of standing with the people of the state of florida. you whacked away their medicare advantage, and you should explain that. you should explain that to them. >> moderator: senator, 30 seconds. your counter, 30 seconds, sir. nelson: well, that's just it, it's not a cut. as a matter of fact, all of the fact checkers say it's not a cut. what it is is savings. where'd it come from? it didn't come from the medicare beneficiaries, it came from the providers, in some cases involuntarily from the insurance companies who offer medicare advantage. my statement about unconscionable was when i protected florida by exempting out medicare advantage for florida until we got the correct formula that would reward our

seniors. and what it is is one of the most wildly successful programs right now. with enrollments up and premiums down. >> moderator: senator? quick rebuttal question from the moderator for both of you. every household has to prioritize. medicaid and medicare, social security and defense take up six out of every ten dollars. in order of priority just as a florida household has to do, one, two and three, which would you cut first and most in one, two and three order from the three biggest drivers of federal debt which none of you have directly, specifically touched on you. 30 seconds for you and then you, senator nelson. specifically. mack: thank you for the question, but that's just not the choice we're going to have to make. >> moderator: six out of every ten dollars are spent on medicare, defense and social security. mack: i understand. here's what we're going to do. we're going the make sure job creators get back into the game. if you want more revenue to come into the federal government, you

do it by putting people back to work. the best economic engine we have is the american people. the american people, if given a chance, they want to compete. they want to strive for the american dream, and you do that by getting them back to work, not by raising taxes. >> moderator: senator? 30 seconds. nelson: you can cut, but medicare's got to be saved. and so that's what we did. people say, well, what are you going to do about medicare, well, we already did something about medicare. and we extended its life for another eight years until 2024. if you want to cut, i'll give you an example, defense, you can take some of our troops out of europe. that was an old cold war strategy. we don't need all those troops in europe now. that'll save us billions with. >> moderator: we'll come back to deficit and budget questions. now anthony mann, and his question will first be directed to senator nelson. >> senator, what specifically should be doing about the fiscal cliff coming on december 31st that would bring huge tax

increases and deep spending cuts that both economists on the left and right say are potentially catastrophic? nelson: well, it's not going to happen. sequestration was never intended to happen. think back to what happened. first of all, we had an artificial debt ceiling that this country, if it weren't raised a year ago, we could not have paid our bills. and so a budget agreement was put together. first of all, there was a cut of a trillion dollars off the top, and then there was put in place a super committee of six from the house and six from the senate in order to reach bipartisan agreement. but the mechanism was like a guillotine over their heads, sequestration. that would have been so onerous that they would come to agreement. all you needed was one. it deadlocked 6-6, and that then

activated the sequestration. now, what will happen is after the election we'll go back -- i can tell you over half of the senate, bipartisan, is ready to put together that comprehensive plan part of which i explained in an earlier question where you can do cuts, but you can get revenue from the tax loopholes, lower everybody's tax rates and then have room to lower the deficit. >> moderator: senator? thank you, sir. 1:15, congressman mack. mack: thank you very much. it's a great question and, senator, once again this shows that you say one thing to the people of the state of florida, but you do something else in washington d.c. see, you said that the sequestration, we can't do sequestration. it's going to hurt our military. in fact, because of your vote on sequestration, you cut $500 billion out of defense. you've gutted our military. and at the same time, you continue to send foreign aid to

countries that do not support the united states of america. now, i find it interesting that you keep talking about medicare and sequestration. you voted to take $700 billion out of medicare. it's a fact. to pay for obamacare. you voted to gut our military through sequestration. i didn't vote for sequestration. it was a dumb idea. we should have never have done that. you know, and what -- i think what's important here is that you can either have someone who tells you one thing to floridians but then votes with barack obama 98% of the time in washington, or you can have someone who's going to stand up and fight for you. make sure that we put floridians first, that we protect and save medicare, not gut it. >> moderator: senator? 1:15. nelson: congressman, you're repeating the same lines over and over. what you voted against a year ago was you were going to let this country go into default where it could not pay its

bills. and, obviously, the country couldn't do that. and, therefore, we had to try to get a bipartisan budget agreement. you were in the significant minority in voting against that budget agreement. but speaking of votes, why don't you explain how you don't show up to work. why don't you explain how this year you have one of the worst voting records. i have missed one vote this year, you have missed 178. and when you do show up to vote, it's even worse. now, one of the votes you missed was the paul ryan plan. that was the second paul ryan plan. you were asked would you support it since you missed it, you said, yes. and then a later interview you said it was stupid, and you would vote no.

and then your folks corrected you, and you changed your position again, yes. so why don't you explain to our folks why you miss all these votes. >> moderator: 30/30, briefly, and then we're going to -- mack: thank you. senator nelson, let me make sure i do this clear for you. yeah, i'm going to keep talking about this because these are your votes, and you're not going to run for them. i stand in the majority with the people of this state and this country. as far as my voting record, senator, you should be straight with people. i've got a 94% voting record. you've got a 92% voting record. in fact, last year i cast 430 votes, you kansas less than 200 -- cast less than 200. senator nelson, you've got a lot of explaining to do. a lot of accusations, not a lot to back it up. nelson: how can you argue with someone who just completely pulls it out? he would have you think i voted half the time because he voted

for 100 -- 400 and i voted for 200. that's all the the senate did. >> moderator: we're going to have to take a break for our stations across florida. back in a moment with more of the debate. and welcome back to our florida u.s. senate debate on the campus of nova southeastern university. we'll get right underway with the next round of questioning with ms. campos, her first question directed to congressman connie mack. >> congressman mack, it seems that when politicians address the issue of women's issues, the campaign ads focus on abortion rights, on birth control, and yet advocates in florida tell us that domestic violence is the singlemost important issue that effects women. in fact, the centers for disease control say that one in every four women in this country will face some form of domestic violence or dating violence in their lifetime. the violence against women act has been allowed to lapse, to expire. and advocates in florida are

asking that be reauthorized. what is your position on that? >> moderator: 1:15, sir. mack: thank you very much. i'm honored and proud to have with me tonight three women that are very special to me; my wife, mary, who's here, my mother who's here and the star of our new commercials, and my daughter who's also here. and the idea that someone would harm any one of them or anyone is disgusting. and we need to do all we can to protect them. we also need to do all we can to make sure that they have an opportunity. you know, i think about my daughter and what is it going to be like when she gets older, after she graduates college -- you're going to college -- [laughter] after you graduate college, i want to make sure she has a good job. and you know what? women are worried about in this country about jobs and security. and being secure at home and

making sure that their children are taken care of and that they put food on the table. >> congressman mack? mack: like i said, i answered the question. i did answer the question. >> moderator: will you reauthorize -- >> will you reauthorize the violence against women act? mack: yes. >> moderator: senator nelson, a minute, 15 for you. nelson: well, i'm glad that he finally got around to trying to answer it. but we ought -- and, by the way, i've already voted for it. we couldn't get the votes to break the filibuster in the senate. but i think we ought to ask further why did the congressman vote against the lily ledbetter billing that deprived equal pay for equal work for women? >> it's specifically focusing on domestic violence and funding for these programs. nelson: i voted for it. >> you voted for it with changes, earmarks specifically for sexual assault.

the advocates in florida are asking for the reauthorization with no changes. they say that each state would be better suited to determine funding based on each state's needs. nelson: well, i will certainly look at a change there, but we've got to get it out of the senate, and we couldn't get the 60 votes. violence, isn't rape a violence? congressman mack voted to redefine rape as forcible rape. so i think it's pretty clear where he is standing on women's issues. >> moderator: let's move ahead to the women's issues -- mack: wait. >> moderator: if we don't, we'll never get to foreign policy. mack: well, what he just said is not true -- >> moderator: briefly. mack: senator, you need to do a better job of explaining your own record because you're really messing up my record. apparently, you're looking at somebody else. and it is a shame. senator, the people of the state of florida are tired of you saying one thing to them and

then going back to washington, d.c. and voting with barack obama 98% of the time. they're tired of that. they want you to look them in the eye and tell them what you're going to do for them instead of what you're going to do for barack obama. >> moderator: senator, 30 seconds. nelson: is that the only line that you have memorized? [laughter] mack: are you going to own up to it, senator? nelson: let me tell you that violence against women for you not to have produced it in the house where we were trying to produce it in the senate is just -- here we are in 2012, and it is true you voted for -- mack: you're not saying you're going to support it. >> moderator: you had your turn, congressman. nelson: seems to me that rape is rape. >> moderator: we will move on to the next question now, this one will be directed first to senator nelson. >> florida now leads the nation

in foreclosures, and there are more delinquent mortgages here in florida than any other state. senator nelson, you've supported the president's housing initiatives, but most of those initiatives have fallen short of expectations. what will you do, and why should people vote for you if they're about to lose their homes when you have been in office during the worst housing crisis in recent history? nelson: and, indeed, florida was the one that really got hit the hardest along with a few other states because of our economy being so dependent upon housing and construction and real estate. and a number of programs have been tried, and some of them have been successful. let me tell you one that's being successful right now. it's going to allow eight million people nationally to refinance their mortgages in 6, 6.5 down into the 4 percentile, but they never could get the banks to do it because the

mortgages -- very typical of florida -- were underwater. the mortgage value was higher than the actual fair market value of the house since it had dropped so much. these mortgages that are held by fannie and freddie are now being refinanced so the homeowner, a typical homeowner on a $200,000 mortgage, will be able to save a total of $5,000 a year in interest. that is a successful program, and it's going on right now. >> moderator: congressman, a minute, 15. mack: thank you. you know, i think it's important we kind of understand what's happening here in the housing market. you know, let me talk to you about a friend of mine who lost his job and has been looking for a new job and couldn't pay the bills. so he tried to use one of those new plans that barack obama and senator nelson passed. he tried some of those things,

and you know what he was told? he said, well, before we can help you, you have to default on your loan. he doesn't want to default on the loan. it's against what he believes in. after a while when he ran out of savings, he had to default on his loan. they changed the program. guess what happened? they said, if you default on your loan, we can't help you. now, this is a perfect example of always believing that government is the answer. the problem, senator, is when you passed dodd-frank, you made it to a point where our small community banks are afraid to lend money because you're going to shut 'em down. you know, we talk about small businesses, the housing market. it's really quite simple. small banks want to lend money, but if you put dodd-frank on tom of them -- on top of them, they're afraid you're going to put them out of business. that is not a way that you're going to get this economy going or going to help people stay in their homes. >> moderator: we'll move on to anthony mann, his question will

first be directed to congressman mack. >> congressman, you've made very clear you oppose obamacare and want to repeal it. i'm wondering if you'd maintain the parts that are popular with the public, no exclusions for pre-existing conditions, allowing young adults to stay on their parents' insurance, closing the medicare doughnut hole and how you would pay for them. >> moderator: 1:15, sir. mack: thank you very much. i think people recognize that obamacare must be repealed. this is a law, by the way, that was -- this bipartisanship that senator nelson talks about, not one republican supported it. and the american people don't support it. we need to repeal obamacare. here's why. not only do we not want a government-run health care system that has a unelected board making decisions about people's health care decisions, we also don't want to whack away medicare advantage from our seniors, which obamacare does. but there are things that we can do moving forward. one of the things we can do,

something called association health plans. let's say a small restaurant, a mom and pop restaurant with 14 employees, they can be part of the florida restaurant association, use that association to pool their buying power together to be able to afford insurance. a pre-existing condition, i think, is something that we can cover as well. but what we'll do first is we will repeal obamacare. if you want to get job creators back into the game, you cannot put stipulations and those fees and those taxes on to top of sml businesses who are trying to grow. in fact, there are restaurant groups out there who are having to change their entire business model to deal with obamacare. >> moderator: congressman, thank you very much. senator, a minute, 15. nelson: now, there you go again, same message. devoid of specifics. as a matter of fact, do you trust the independent fact checkers, politifact,

factcheck.org, part of the an enberg school at the university of pennsylvania? they said everything that he said is not correct. and then when you look at the need to have something done with medicare, it's going to run out in three years if you repealed obamacare. it's going to in october of 2015, october of 2013, it's going to run out of money. that was one of the major reasons of passing a reform of medicare and the health care system. what about the three-and-a-half million people in florida that do not have health insurance? we want to get them into the health insurance system, and that's why the health insurance exchanges are being set up in 2014. >> moderator: senator, thank

you very much. we'll take a break, we'll be back in just a moment. ♪ >> moderator: back now to our u.s. senate debate. i want a quick rebuttal question to wrap up taxes and spending. thirty seconds each, then we're moving to foreign policy. the average american according to the debt clock, every citizen in this country owes $51,000 if we're going to pay off the debt tomorrow. we collected $2.5 trillion in revenue last year. senator, why isn't that enough? why do we need taxes to go up from that? nelson: well, we don't. >> moderator: you want to close the bush era tax cuts. nelson: we need an overhaul of the tax code. there are $14 trillion of tax loopholes. there's more going out in loopholes for somebody's special interests than there is coming in to the treasury each year in individual income tax.

>> moderator: how much in loopholes? nelson: $14 trillion over ten years in tax loopholes. it's grown from the last time i voted for tax reform under president reagan -- >> moderator: congressman mack, a brief rebuttal. mack: here we go again. senator nelson is telling everybody else we need to get rid of tax loopholes, but he's taking advantage of one himself. just don't tell us the rest of us, senator, that it's not good enough for us. if it's good enough for you, it should be good enough for us. i'm the only one in this race who has a plan to balance the budget, who's willing to put that plan into the debate. senator nelson, you've served on the budget knee for a while -- committee for a while, you've failed to pass a budget. >> moderator: foreign policy now, you can do so in your close, national security including immigration policy. lisette campos, first question now goes to senator nelson for a minute, 15, then connie mack.

lisette? >> there are an estimated 11 million undocumented people living in florida. do you support amnesty, creating a pathway to citizenship while these individuals can remain on u.s. soil, or do you believe that that sets a dangerous precedent and is unfair to immigrants who have come to this country legally? >> moderator: a minute, 15, sir. nelson: i'm going to answer that in detail, but i'm first going to say not only has it been a cow pasture for 60 years -- [laughter] why don't we ask him why he takes two homestead exemptions which is directly contrary to florida's constitution that says that a husband and wife can only take one homestead exemption? >> moderator: to the critical immigration question. nelson: now, what we need -- and i've voted for comprehensive immigration reform -- what you need is you've got 11 million people here, you've got to get

them in a situation that if they're eligible to go to the back of the line, they have to pay a fine, they have to have a clean record, they have to learn english, and then they can apply. now, another one is what about children? children that came here through no fault of their own? the dream act. i have voted and sponsored the dream act. my opponent has voted against it. the dream act, a child that would upon graduation they can go into the military, or they can go into college instead of being deported. they've grown up in america, they only know that they're americans. >> moderator: senator? 1:15, congressman. mack: this is an important question by starting off saying, no, i do not support amnesty. we have to support our laws. but, you know, this reminds me of a gentleman that i met when i was a young man, a guy named

kiko. he's from cuba. he came to the united states, became a citizen, worked hard, saved his money. built a business. gave me my first job. you know, this is someone who has chased the american dream and has caught it. so when we talk about immigration, we need to remember that we're talking about people who are coming to the united states for a better way of life, and that is something that we should all be honored that people want to come so they can have a shot at the american dream. now, at the same time we need to make sure that we secure our borders, both north and south. we need to make sure that we give our employers the tools they need with e-verify to make sure people who are looking for work are legally allowed to get work. what we can't do, though, is to continue to have a system that encourages people to break the law instead of do the right thing. >> moderator: congressman, thank you.

we'll now move to our next questioner, toulouse from the miami herald, and that question will first be directed to congressman mack. >> after recent uprisings in the middle east including an attack on our consulate in libya, many americans are worried about an attack on our soil or another war. who do you think is the singlemost dangerous person in the world when it comes to americans' national security, and what would you do to stop him or her? mack: it's a great question and, you know, we have seen, we have seen just recently what happens when you have a weak foreign policy. we have seen around the world those, the enemies of the united states challenge the united states. we have seen that this administration has backed away from our closest allies around the world. we have seen this administration make it less safe in america because they're unwilling to stand strong for america around the world.

look, if i have the opportunity to b in the united states senate, i will stand up for america, america's values and americans here and anywhere around the world. what we need, what we need to do, what we need to do is make sure people like ahmadinejad in iran are not able to get a nuclear weapon. the administration has failed. they are four years closer to a nuclear weapon. you know, there are examples all around the world where this administration has turned it back on our allies and bowed to our enemies. if we want to be more secure at home, you do that by standing strong for america, for american values and for americans all around the world. >> moderator: congressman, thank you. a minute, 15, senator. and again, to the question as you prioritize the single biggest person who presents the single biggest threat to the u.s. national security. mel nell notice, he walked all

around your question. the greatest threat to the u.s. is a terrorist threat. we have just unbelievable young men and women both in uniform and not in uniform that you don't see in the cia collecting the information in order to keep us safe and to stop the terrorist before he acts in the first place. now, obviously, iran with a nuclear weapon would be a tremendously destabilizing situation, a threat to the united states, a threat to israel. the president has clearly said that he will not allow them to develop a nuclear weapon, and this is where i believe that you see the sharing, it's almost seamless of the intelligence between israel and the united states because we certainly have the common security concern here.

there are other threats around the world, but what we need to do is to make sure we don't allow the radical extremists. look at what's happening in pakistan. >> moderator: final time for that. we're going to have to move on if we're going to have time for your closings. a final question from anthony mann that will first be directed to congressman mack. >> should any changes be made in the embargo against cuba, and why not lift it completely and deal with cuba the same way -- >> moderator: same question, check me, i was in error, that goes to you first, then to the congressman. 1:15, final answers. >> do you want the question again? nelson: yes, please. >> should any changes be made in the embargo against cuba, and why not lift it entirely and deal with cuba the same way we deal with china? nelson: no, we should not lift the embargo. we clearly should allow family members to travel and to take remittances, and that has been expanded, but not lift the

embargo. now, i want to go back since we're coming to the closing and tell you we have a great pride in this state on our space program. my opponent is the only member of the florida delegation that voted against the nasa bill. we have a pride of telling the truth and being personally responsible in this state. my opponent has filed a bill for a wall street hedge fund speculator to collect $2 billion on bonds from a country that he bought for pennies on the dollar. and in addition, he has filed a resolution to void a court judgment for $18 billion for the chevron corporation which, by the way, is one of his largest

contributors. >> senator, why shouldn't we deal with cuba the same way we deal with china? >> moderator: one sentence because the congressman needs his close. nelson: because cuba is closer, and we have a lot more contacts, and the embargo has had some positive effect. >> moderator: congressman, 1:15, sir. mack: thank you very much. senator, you know, you keep talking about my record. i think you might have looked somebody else up. when you've been doing your research. nelson: there you go again. mack: because it's not me, senator. and apparently i have to keep doing it again because you just don't understand, and that's the problem. now, we were talking about the embargo. look, fidel castro and his brother raul are brutal people, brutal people, murdering their own people. you know, i talked about my friend kiko from cuba. just spend a little bit of time talking to kiko about what he observed in cuba. the embargo, lifting the

embargo, the only thing it would do would pad the pockets of the castro brothers. if, if castro wants to open up cuba, it's all in their hands. free and fair elections, release the political prisoners, freedom of speech. >> moderator: same question -- mack: wait, wait, wait, we should not lift the embargo to help fund someone who wants to hurt his own people. now, senator nelson has voted to weaken restrictions which then helps the -- >> moderator: congressman, i'm afraid we're going to have to call time on that because our affiliates are demanding we give them the hour at the top of the hour. we'll stay here as long as you want after, and i mean it. so as long as you'd like to stay, but for now on air, one-minute closings, strictly. senator nelson first. nelson: my opponent has a

pattern of not telling the truth. and you've seen it in display, and can we will -- and we will substantiate all of how he has not told the truth. he rails against the stimulus bill. he didn't tell you that he wrote a letter to the department of transportation in order to get $29 million of stimulus in his congressional district. i want to thank you for the privilege of public service. i want to ask for your vote. when i flew in space, i looked through the window of that spacecraft back at earth, and it was stunning that i didn't see any political divisions, and i didn't see any ethnic and religious divisions. we're all in this together, and that's a metaphor of what we should do in our politics. bring people together in a bipartisan way. we're not rs or ds, we're

americans. and that's what we've got to do. >> moderator: senator, thank you. congressman, one minute. mack: thank you. and i want to thank all of those who made this debate possible. and, frankly, i wish we could have more debates in this very close election. you've seen tonight why we need a change in washington d.c. our government is failing us. bill nelson voted for obamacare. i voted against obamacare. bill nelson voted to gut our military. i voted to strengthen our military. bill nelson voted for higher taxes 150 times. i voted to cut taxes. i believe in free markets, free enterprise and free people. i believe we need to renew the american spirit and the american dream. if we all work together, we can get this done. mitt romney needs somebody he can count on, and we need another republican senator from the state of florida. i'm asking you to stand with me.

i'm asking you to stand with mitt romney. >> moderator: congressman, we're going to have to wrap it up. mack: i'm asking you to vote for your vote. god bless you, god bless america. >> moderator: and thank you across florida for joining us for the u.s. senate debate. good night. [applause] >> well, shortly we'll go live to the u.s. chamber of commerce here in washington where today they're hosting their 13th annual summit on legal issues. we expect remarks from former new york city mayor rudy giuliani, former pennsylvania governor ed rendell, and former presidential candidate rick santorum. in a couple of moments we'll join a panel of state attorneys general discussing a number of issues effecting the states and the business community, that's expected to get underway in just a moment here on c-span2. quickly, coming up later president obama will hit the campaign trail again. he is heading out west. we'll have live coverage of his remarks in denver beginning at 4:55 eastern on our companion network, c-span.

[inaudible conversations] >> live pictures now from the u.s. chamber of commerce for that 13th annual summit on legal issues. we do expect this panel to get underway in just a moment. it'll be a panel of state attorney generals discussing issues affecting the states and the business community. this is an all-day, live event. we'll have it here for you on c-span2.

[inaudible conversations] >> okay, if we could ask people to, please, take their seats. we want to thank the former panel, it was a great discussion, a lot of food for thought, and i'm sure we'll be hearing a lot from the funding industry over the course of the next, the next several days. um, i'd like to now move to our third panel of the day. today's summit, as you know, is about legal trends, and one of the biggest trends has been the involvement of state attorneys general in legal and regulatory matters of importance to the business community. from health care to financial services, from energy to high-tech, these state ags

play a very prominent role not only in enforcement, but in federal and state legal and regulatory matters. so to discuss this issue, we're pleased to have three leading state attorneys general with us today, doug gansler of maryland, scott pruitt of oklahoma and luther strange of alabama. the moderator of this panel is thurbert baker who served as attorney general of georgia for 13 years under three different governors. while in office he focused on consumer protection issues and helped push through georgia's mortgage fraud statute, the first of its kind nationally. thurbert is and was a leader in the ag community. he served as president of the national association of ags from 2006 to 2007, and he is currently a partner in the atlanta office of mckenna, long and aldridge. thurbert? >> good morning and thank you,

lisa, so much for that kind introduction, and also thank you for the leadership you and your outstanding team are providing around the country and in particular issues that involve the business community. you've been a positive effect for all of us, so we appreciate your work. ladies and gentlemen, good morning and welcome to a conversation with state attorneys generals. it's not every day, i believe, that we get a chance to have an open dialogue with not just one, not two, but three state attorneys generals. so you're in for a real treat this morning, and i hope we'll have your attention. let me put in the proper context, if i can, and in america's not-too-distant pass, you know, the state attorney general was seen as a down-ballot office holder that didn't garner, quite frankly, much state or national attention. that attention was reserved for governors and members of

congress. quite frankly -- and i'm sure the ag here will agree with me -- most people thought the generals were part of the military. they just couldn't figure out which branch we belonged to. [laughter] if i had a dollar for every time somebody asked me that question, i'd rival donald trump in terms of my wealth. but, my, how things have changed. since the state attorneys generals' $246 billion settlement with big tobacco in 1998, the nation and in particular the business community, i believe, have come to recognize the power of state attorneys generals, and we see that power being exercised each and every day individually by state attorneys generals and collectively through multistate actions. some entities out there have even thought about how they enforce and create nationwide

policy through a 50-state attorney general practice bypassing congress, essentially. issues that previously were the province of congress are now being discussed each and every day by state attorneys generals in their respective offices. my, how america has changed. well, today we have an opportunity to both hear from and to talk with and to dialogue with you three of, i believe, the most prominent state ags in this country. they are well respected by their colleagues, and as we like to say, they are thought leaders within the association. joins us today we have to my far right attorney general doug gansler from the state of maryland. next to him we have e. scott pruitt, general pruitt, glad to have you here from oklahoma. and next to him my sister state ag, general luther strange from

the great state of alabama. let's give them all a round of applause. [applause] and just so that you all don't have to hit your ipads real quick to google these guys and figure out who they are and what they do, let me give you just a little background on each one of them before we get started. general gansler is currently the 2012-2013 president of the national association of attorneys generals. now, he was first elected in 2006 and then reelected in 2010. i'm told without any opposition in either party and has the distinction of being the only statewide elected official not to have opposition in either party in 2010. that's pretty impressive, doug. i don't know how you've done that, but that's pretty impressive. i wish i could have learned that lesson. [laughter] during his administration general gansler has focused on the environment, he's focused on

consumer issues and public safety issues, and he has chosen, as many be of you in this room know, the issue of privacy as his presidential initiative. general pruitt was first elected in 2010, and don't be misled by his relative recent entry into this world of attorneys generals, because he has quickly become a national leader when we talk about restoring limited government and the proper balance between the federal and state governments around this country. he will talk a little bit about that and in particular he's focused on domestic energy security and production. we're glad to have general peru wis with us. pruitt with us. general strange was also elected in 2010 as alabama's 49th attorney general, and even before he became the attorney general, he was recognized as one of america's leading

attorneys. in particular focusing on economic issues. .. association of attorneys general, which gives him a position on the coveted and powerful executive committee of the association. now, you know a little bit about each one of them. let me tell you how we're going to proceed. we are going to start with general gansler this morning. i'm going to ask each one to

have a conversation with you for about ten minutes and talk a little bit about the issues of concern. i believe they will also be issues that you are interested in as well. general gansler unfortunately has to leave for philadelphia a little bit later today, so he's going to leave a little bit earlier. but general gansler, we are going to get you to start with about ten minutes of conversation we may have a question or two for you before you leave and then we are going to move to the other two generals, give them an opportunity to converse with you for about ten minutes each and then we will do some insightful q&a. and i hope you all will have some good questions for them. so with that said, general gansler, the floor is yours. >> thank you congenital baker. and i say that because i appreciate your service. in fact i became attorney general, baker was in the position i have now which is the president of the national association of attorney general and served with distinction. it's a pleasure to be with all of you, particularly to of

maryland's great citizens, and i had the honor of representing both of you as a centrist democrat and i enjoyed that title. let me -- i guess the title of the program here is the current center of affairs regarding state attorneys general. but i will do is touch on three issues that we are working on. nationally as an attorney general on the national issues. why the mortgage foreclosure settlement, it's the one i spent the most time on right now, which in my view was a win-win for everybody. certainly a win for the consumers and those on the brink of foreclosure that are underwater or were behind on their payments. it was a win for the banks because they are getting money coming in each month where they otherwise wouldn't have inventory and houses would continue growing and it's a win for everybody because as the foreclosure begins to slim the

economy will pick up and move forward. the 49 states that participated, general pruitt and oklahoma did not. they were very bipartisan. we have an executive committee republicans and democrats to work with the banks and taylor and fashioned a resolution to the issue. we now work for the five major banks, the bank of america, wells fargo, jpmorgan coming and we are in the process of working with the next group of banks so that we can get all of the fri and fanny banks in the process and then certainly in the future the 42 pages of the standards that kick in the future so this won't happen again. it was probably the biggest thing that we've done as attorneys general sense the tobacco regulation and in the long term. the piece that i spent time on

right now making sure people balance us in the settlement and the understand who's eligible and this is not a program but a legal enforcement settlement according to the d.c. with a monitor that's watching making sure that it all gets done and we have about a third of the money go out and we are seeing the results and that the effect of that so it's been very positive across-the-board at this point. the second thing that we are involved and as attorneys general in our states is the advocacy but mostly the council with implementation and affordable care act if you don't like this obamacare, regardless it was passed by the united states congress and upheld by the supreme court. it's an interesting issue. this morning i was speaking at breakfast and about 150 people i asked if anybody in the room had actually read other than the newspaper one of the affordable care act and one hand

went up out of 150 people and i announced everybody in the room had an opinion whether it was a good thing or a bad thing and we were not in that position to decide whether it is a good thing or bad thing. our job is to understand it is a thing that is willing to happen and it's going to kick in in 2014 and we as lawyers need to make sure that the devil in the detail is done in a legally permissible way and we represent each of the agencies in the state that defecate for the areas. i for one am interested in covering the behavior of their of the pushing to try to get that as an essential benefits but we have different things that we want to see happen. we can continue on this election is over we will stop arguing whether it is a good thing or bad thing to go with something that is not going to happen.

what we are working for is the presidential initiative, so each president of the national association of the attorneys general have initiative and in a state of washington and the human trafficking. we should be able to help work with law enforcement exposing issues and involving the trafficking. it's not just privacy in the digital age we have panels on the subject. the policies i will use that as an example of the kind we are looking into, but the attorney general was always brings in a nag letter bipartisan again and this was due goal's their decision to have a privacy

policy where they look at your personal accounts, they look at every time you touch an application to develop the personal profiles about you which they use to direct and focus and target advertising to words you. some people it's not that different i guess if you look at the account and they're going to listen to you on the telephone and the question of course on the internet to allow these issues that we are delving into is where does your privacy interest stop in their legitimate business interest begin and where should that line be drawn? we are not looking at this if anybody is doing anything wrong and we are not looking at this if there are indictments to be handed out, but we as attorneys general have begun to fill the void as the sort of regulators if you will love the internet in some way, shape or form because local prosecutors as they properly should or focus much

with murder, rape, arson, street crimes fail to concerned homeland security terrorist issues and we have been getting more and more involved in the internet space. so, taking google, a company that does great things. they look -- door able to find out when this building was built more when they played basketball but by just typing a search it comes for free so it's incredible service but at the same time how deep do you want them on how much you want them to know about you? how much are they telling you, what are the privacy statements? do you know what they are doing with that information and who are they selling it? i'm not picking on google, what is that company doing with your information or how to be protected from hackers and identity thieves.

younger people don't care about privacy that much on facebook and plater and they want people to follow them. they want people to be exposed and older people have a little bit, more of a problem with privacy. i think about it in terms of flying an airplane the goal isn't to have the airplane blood and you are willing to go to a detector and they collect your belongings on the other side. you get squeamish when they want to x-ray you and have these naked pictures going to somebody in a different room, but now you do that. if tomorrow they said we are going to strip search you before you get on the plan we might take the train. so there is a line that can be drawn coming and we want to make sure that there is both transparency in terms of the privacy policies you know about them and the ability to opt out. obviously europe is much further along on the path on this issue

than we are. some other issues that we are touching on and exploring in terms of nag privacy she wore cyber bullying, the protection of intellectual property. you go on right now to do a search on rosetta stone, you want to speak french. four or five ads on the right side our chinese knockoffs. protecting our american companies from counterfeits. the drugs being sold, counterfeit drugs being sold in the mail to people in the united states, which is obviously hurting our pharmacy, pharmaceutical industry. the policy of films and music. so when the companies are following along when we are walking with your personal device here. in five years we are going to open the car getting a passport,

good to the superb market and scan items as you walked on the aisle and pay your bills with these things. how is your financial been frisian being protected from the hackers and identity jeeves and so forth? these are some of the issues we are going to be delving into looking at the issue of privacy in the digital age and try to juxtaposed the issue of the legitimate business interests along with the privacy interest of those consumers who use the internet. espinel congenital gansler i remember back in 1998 we had a summer meeting and we spent the entire summer meeting talking about this issue, and it was as i recall an extremely complex issue. i don't know that we came away with many solutions, but we all understood the complexity of the issue and really had a desire not to have unintended

consequences for things we didn't see. and we understood that many of the people who hold the jobs in the audience were the predecessors could bring to the table with a lot of information the was helpful as we dealt with the issues. it tells the audience how they may be able to input in this process because the presidential initiative is a big deal, and will impact a lot of people in this room and i'm sure they would be curious how they could provide some leadership and support as the association of attorneys general's deal with this issue. >> in 1998 google hadn't been invented yet. this is an issue that is ongoing and where are we going to go in the future where is the internet going to take us coming and the technology as you know goes literally light years faster than the law that follows it and so we are trying to stay on top

of that as attorneys general. in terms of the corporate ability to influence the panels and discussions from the corporate perspective, we have in all of our panels had corporate input. we've had panels with the general counsels of some of the major companies and representatives we try because the companies before people started regulating the internet, the companies were regulating it themselves to preserve the integrity of their own web site. so if something goes, look at ebay if people start buying on ebay and the product they are getting is and what they paid for, and each -- ebay would go into the hole. some of the companies that haven't been digital in terms of protecting the integrity of their own sites have been the ones that have actually gotten in trouble over time, but we have and all of our panel's we want a balance, this isn't right or wrong. it's where we are trying to

promote a dialogue and discussion where privacy should be and the business interest should be. talking about advertising, you may want more relevant ads when you do matt search to cite another state and all of a sudden the next time you're on the internet you get breakfast dads and hotel ads from that particular location that may be helpful to something that would be irrelevant to you so it isn't something necessarily you would opt out of but we are trying to promote the dialogue so what happens is the conferences around the country that we have, we have panel discussions on a variety of these subjects. we would then have been in mid april conference on this issue would be the harbor in maryland across from d.c. and we hope that you will all participate that and add some topics. if you want to participate we are particularly interested in

the privacy issues that we are discussing. >> general, staying on that topic, informing consumers when they are in a breach, when their information has been compromised with obviously a big concern for most who deal with this issue come into this matter is basically regulated at the state level and we hear a lot of chatter and a discussion about whether or not there needs to be some type of federal legislation or standards created with how we notify consumers. in the case of the data compromise. speak to that issue of a bit and get your thoughts as to whether or not the federal standards are needed or can we manage it at the state level? >> this is a confrontation that we have as attorneys general. we all, republican, democrat, whenever you are, we always want to protect our state rights and make sure that we have the ability to have enforcement

authority and regulate or monitor different activities. so, right now the data breached contracts, each state has that ability. we wouldn't want to lose that and compromise that, no pun intended. but we also welcome the federal insulation as well as it doesn't preempt us because then you look at the tension, the corporate interest. companies constantly tell us and for good reason that they don't want to deal with 50 different standards. they don't want to have 50 different laws they have to comply with and figure wrote the nuances of each. wouldn't it be nice to have a federal standard as a floor and then if the state wants to go further they can and if not, they don't have to. so we would welcome the federal legislation as long as it didn't preempt the state authorities. it's always an issue and a tension of the two areas that we actually are relatively pre-empted out of for the two areas we hear the most about, which are national banks and

credit cards and those are two of the areas where we really have little jurisdiction. most other areas we do have jurisdiction and we work quite well with the federal government and federal agencies. we tend to be a little bit more aggressive in some states on same issues. because what it capitol hill, they can't agree what day it is. so there are states with much better ability to actually enforce regulations and get things done. >> general gansler come if you don't mind what me see if there are any questions from the audience because i know you've got to run shortly. let me see if there are any questions that need to get asked. we are going to take them out of order if you don't mind. any questions from the audience. yes, sir. >> [inaudible] >> microphone, please. we want everybody in the room to hear as well. >> i'm from chicago. my associate is the medical and legal adviser to lisa madigan.

in your office you give experts who advise you on all of the different aspects that you relate with? >> on all issues? >> no come on the major issues like this or do you go to the public -- where do you get your information if you, yourself, or an expert? >> i'm certainly not an expert on these issues like technology i can barely do e-mail. so we go and find a different people. on this particular initiative we've learned from meeting with companies and experts in the field in the national security it is an area that we are concerned with that people come in and talk about issues that we shouldn't be discussing and what issues we should have panels on. and then i have the biggest responsibility as the attorney general was to hire good people, so the guy that i have sort of running the day-to-day technology issues here, for

example, going to law school he is young said he gets all this stuff. and who does that? she does. so we learn a lot of the issues that we have to come from within that world. on the other -- on the general rule in terms of expertise, you know, in my office we have 467 lawyers so we have to have expertise in those areas. we don't have expertise in some areas and then we hire outside counsel for that. i am one of the lawyers and i think that these two hour of the same, where we don't just hire the outside counsel. we have a problem with some business or some industry go find out what's wrong. we've never done that. but some attorneys general do and they get advised to the chamber of commerce. [laughter] but in terms of expertise, we go out and find it. but we really -- at least in our office we have an open door for people to come and.

whenever they have a problem, he comes in and talks about it and we work it out. i find that we get better results from having the companies come in and talk about something that we may not be aware of if we are looking at the problem, and then working that out as opposed to going out, having a press conference, the company or the industry learns the the problem and then you get years of litigation and it isn't able to get resolved. it's much better in my view to saddam and cure the problem. we are going to win if we do go to litigation because we wouldn't be on the case unless we did. so let's try to find the ground here and we are almost always able to do that, not always but almost. >> i think this conversation right about now but we have got to of our outstanding but we want to hear from this morning and i know general gansler has to move on. so, stay with us as long as you can. we won't be offended if you leave in the middle of our

discussion but thank you so much for being here. [applause] general pruitt, the floor is yours. tell us a little bit about what is going on in your world in some of the issues that are important to you and let's just of a question with that distinguished audience. >> one good thing sitting next to lugar is it works on the posture a little bit. i know you said you probably can't tell but he probably is. the obvious point guard, he is my center. good morning to you. it's a pleasure to be here. thank you for the invite to the general baker had asked me to talk with you about issues of federal reach, regulatory reach, and i've got to tell you before i get into those issues that is something happening less than two weeks from now in the future

as it relates to the state's response particularly in the key areas like energy and finance and we can talk about that at second. i'm not going to ask what you think is going to happen on november 6th and what general baker didn't say is the aaa baseball team yogi berra is a great philosopher and one said predictions are pretty fast particularly about the future. and i think it is when to be really interesting to see what happens on tuesday, november 6. but i will tell you it will have a direct effect on what he does day in and day out and what i do day in and day out because when you think about regulatory overreach or federal overreach or the balance that should exist between the states and the federal government, you know, we talk about federalism as an academic concept. it's real.

it's the of checks and balances. we know about the horizontal checks and balances at federal was some is what congress does every day it passes the law and invests certain responsibility and reserves some of that and there's so was the vehicle operation and our first 20 or so months in office i lived in a very personal and direct way actions by this administration and by the federal government that has affected us dramatically in oklahoma. in the energy context there is something going on and you have probably heard about or i hope that you heard about because it is a strategy implemented by the epa, not just the epa that other agencies, fish and wildlife, and congress, mike, this man in oklahoma city invited me to washington earlier this year. i came and testified with respect to the state response to this concept of free.

but agencies like the epa, it was the case in california, the authorities versus epa where it involved the rule in the clean air act, very complex piece of litigation, responsibility and the state's to adopt plans and the country and implementing a plan to comply with visibility and a static act and the law was brought in california and the consent entered into that decree the epa band assault certain requirements and obligations that didn't exist across the country including oklahoma. my friend is the attorney general in north dakota and excuse me before that was actually filed tried to develop himself in that process as was denied by the justice and the epa if there was a concern they have across the country in fact

recently 13 states join together but democrats, republicans sent a letter to the epa and in that request information as being sought with respect to communication etc with respect to our whole laundry list of environmental groups and in certain cases decrease. there are 40 plus cases in the last three years where the epa is engaged in that kind of strategy and the entry into that decree and a judgment and confessed judgment on the same day they also pay millions of dollars to the attorneys that brought the litigation pothier settled the very same day. that is the concern. i would say to you we don't know the information is going to show. that is the reason they submitted a request. it is of interest because we believe the fundamental concerns and the due process has been violated for the epa

administrator procedures act and so this information that we are trying to collect in the epa will go to the heart of the yen should the states like north dakota, alabama and others can defend or be aware of the situations and obligations that could affect us under the clean air act and other pieces of litigation. one of the areas that i will mention in the beyond energy is in the finance area. recently the state of oklahoma joined the state of south carolina and the state of michigan to challenge title number two relation under dodd-frank. as you know there's a piece of litigation pending under the court challenging note title one, title ii and title ten of dodd-frank. action was brought by the states and the complaint was amended recently within the last couple of months and their concern is with respect to the liquidation of for the that's been granted to the treasury secretary under dodd-frank. the state of oklahoma has

approximately $850 million or so in the corporate indebtedness. under dodd-frank as you are aware creditors liquidated by the treasury secretary set up under title to don't even receive notice. the state of indiana in a workout with the auto industry and corporate lost millions of dollars in that process. as you know, indiana tried to address that litigation and was ultimately dismissed because of the standing issues, but this area under title to and liquidation authority is a serious concern in the states because we have tensions and investments that have been made and entities that could be liquidated and there are due process concerns we seek to address in that challenge. and then the other area that i mentioned to you general gansler talked about implementation of

the affordable care act. there are issues pending with respect to implementation of the affordable care act not the least of which is the rule that was adopted by the irs on may 18th of this year. under the affordable care act states have two primary decisions to make come expand medicaid and as you expand medicaid i think in 2016 the population that you're covering the states will pick up the cost for those new individuals but from now until 2016 the air wing to take 90% of the cost for the medicaid expansion. that's one decision that the every area the states are making is whether to adopt a state health care exchange. there are 20 plus states that are not adopted in the health care exchange and under the affordable care act language is very particular and specific if a state doesn't adopt the

exchange to things will occur. the tax credit that individuals may qualify for don't go to that state but consequently, neither does the employer penalty for failing to provide health insurance. the irs disregarded that language this year and said they were only going to enforce the employer penalty and in all states of the exchange had been adopted or not. oklahoma of until now have it adopted the exchange. we have amended some of even the room notice but when i was elected in january -- sworn in in january, 2011 oklahoma filed an action in virginia and in addition to the proceeding in florida because we had a state constitutional amendment that we adopted with respect to the affordable care act for after the supreme court decision came down in june of this year after it came down we amended the complaint and we've now added a claim dealing with this issue under the affordable care act and the irs rule to preserve the

policy the decision that oklahoma has made it to not adopt a health care exchange for policy decisions across the state. so there are issues remaining on implementation of the least of which is involving the health care exchanges and the taxes that the irs seeks to access pittard with that congenital baker, thank you for the opportunity for the will but we play at this time, and as it relates to these issues involving federalism, these issues do affect the role in finance energy as well as health care you know those areas well but our offices are dealing with those everyday and we will continue to read some of general come thank you so much and as you can see, he is on the wall moving this national agenda and we appreciate your leadership.

i've got some questions for you the audience might house will but before we do that let's move to the next panelist and have general strange talk a little bit about this gathering and about what you're doing. i know that you have stepped in to a big issue with one of the major oil spills that we've seen in this country and you may have some thoughts on that as well we would certainly like to hear about. >> thank you very much, general baker it's great to be here on the panel with you and my predecessors prior year and sessions. i want to thank the chamber for the work they do it's wonderful to be associated and part of the panel. i will tell you a little bit about my background so you will note for line coming from as attorney general. we have lots of great prosecutors that profess on marietta employees and talk about these abilities to surround myself in the executive team, so my background as a lawyer is in the private sector. i've represented corporations, i

was in the council and ran the washington office for the fortune 500 company and started a law firm that sort of made its name and economic development and corporate work and it's one of the biggest southeastern major firms, so i've represented dozens and dozens of ceos and worked closely with the best general counsel in the country. so i say that all to tell you sort of the mind set, the legal philosophy that i bring to the attorney because i couldn't agree more on what he said. there is a long litany of cases that affect the economy. my goal when i came to the office is to surround myself with great people so i have lawyers that have come from the practice firms in the country that have supreme court clerkship experience, who have actually worked in the real world so they understand the effect of the regulations. the understand what a contract means. the understand the importance of the bill will fall. they are the kind of lawyers the

you would be comfortable hiring involving big states. that is the mentality but i want alabama to be the finest place in the country to build a business. i believe that in the free market capitalism and the rule and if you have a state that promotes that, you know the rules are and you know what's fair. the state of rights and i've represented hyundai when they looked at the plant in montgomery alabama but they are now coming, airbus recently. that tells me we are doing something right in the state. and so, one of my first cases where i was in office the state of alabama had already sued british petroleum bp for the environmental oil spill in the history in the united states,

5 million barrels spoiled gulf of mexico. our stay close covered with oil so we haven't we're mental and damages. the books will be written about it and the complexity of it is a multi district litigation case being handled under the rules in new orleans. there will be a trial in january january 14th and my short period of time in office only a couple of months we need the coordinating council for the states. there are 17 lawyers down to two but there's eight major corporations with the best law firms representing them in five states and different stages of litigation and maldon litigation the of different approaches how they handle lawyers and approach that case. i inherited the case in our state already made a lawsuit against bp when i came into

office. so i immediately evaluate the case and the situation and the first thing i did the first day in office as attorney general is that with the law firm that my predecessor hired a contingency fee basis 14% of any recovery the state of the alabama would get. no offense to a very good law firm, i made the decision was an easy decision to me to take all of that work in house. we have handled every bit of that bp work in house. we haven't spent any money on outside counsel. we don't hesitate to do that although we have a very small fraction of the number of lawyers on outside retainers that we did when i came in. but 14% of liver the settlement is going to be in this case or whenever the verdict might be on the environmental and economic damages. that is a significant savings

for the tax payers and it's the right thing to do and certainly the right thing for the state of alabama. we have been looking at some of the cases that have been mentioned. scott did a good case in summarizing some of the cases. i tell people everywhere i go i've witnessed this going back to the days i was just a private practice campaign chairman. i wanted to get somebody in office that cared about the rules law that had a philosophy of integrity so i got to see a lot of the changes in alabama that used to be a judicial tort. i didn't see that in the latest summary but i am glad to see that we have made progress there in terms of the rankings. but what happens in the courtrooms and what happens in the attorney-general has impacted every business in this country. a very significant impact. so we try to look at -- i told you what the philosophy is that the state level. nationally we look at these cases and the leadership.

one case i was going to mention in particular was a case called fire verses moles. it's a case many of you may be familiar with pity that to do with the effort to defeat removal of class-action suits under the reforms of the early 2000. we are leading that amicus effort to try to address that issue. i have a draft of it. my chief counsel over here and i would be glad to talk about that case leader if you have a question it's just a very important issue. space mentioned the epa. nlrb is a case they tried to stop them from building a plant in south carolina. all the conservative rule of law ags jump in and makes a big difference in alabama of the federal government to tell the company just because the of the right to work state they can't locate there. that's a problem for me. it goes back to the rules of

law. a of the misuse of my opinion of the regulatory process. and on the religious -- out of the obamacare that it does call the affordable care act. so you will know where i'm coming from on that piece of legislation. but there's all kind of things that come out of that. just one example we are involved in has to do with religious liberty. there is a company broadcasting network in the state of alabama called a television network. it's the largest religious broadcast company in the world headquartered outside of birmingham alabama and they provide health insurance for all of their hundreds of employees right there in birmingham. they would be under this mandate to provide certain contraceptive mandate services under their insurance and would have to pay a billion dollar fine which the state of alabama has to pay for.

that is an issue that was even discussed in the vice presidential debate. it relates to religious freedom. we have intervened on behalf of e.w. tnt and we will see where it goes on that case until the presidential cases are over. that is one of the ramifications that go to the rule will fall. i guess we could go through a list of things. enron with the congressional intent of the rule of law gets back to what started on the bp case. i don't know whether that case will settle or not. i can't comment on that in any event there is a big debate going on as to where that money goes. congress changed the rules after the gulf oil spill to amend the clean water act which is to require the exxon valdez and all of the money on baliles bills with the future spills into the big fund, so obviously when this

catastrophic spill occurred it didn't make sense to put fines and penalties into the future split hopefully there will never be a spill of this magnitude. as a congress passed the bill restores act to say we are granted a large percentage into these effect of the gulf states as opposed to the natural resource funds which go to the restoration over time and the big controversy that you can watch on the news is whether or not the administration will try to bypass the restore act, if you will into the environmental recovery and away from the penalties by congress. this is not me speaking this is a bipartisan group of senators and congressmen across the gulf coast area who are concerned that the administration might bypass the law that they signed to avoid the law that they've passed. the first thing that we are seeing more and more in that

particular case has a big impact on our state, but it can happen in a whole range of other areas. so, again, it's an interesting time to get an attorney general. it's a very interesting time to be an attorney general and i am honored to be in this position and i appreciate the opportunity to be here. >> we are going to do that in just a second because we want to use every valuable second that we have to get faults on a number of topics that they have raised and they have raised a lot of topics that will have a tremendous impact on the business community. let me go back for a minute because you started off with this whole idea of federalism and obviously is of great concern to you. we have an election coming up in a few days and i'm curious what the impact eurydice on this issue let's say if president

obama is reelected in the federalism that you've had and how can they play a role in impacting. >> the issuer's hydraulic fracturing. some folks in the country and that is a recent phenomena of the 40 plus years in the area of regulating that and the whole framework set up the stipulation of tremendous responsibility and making sure that process is implemented and we develop and produce but it's done so in a safe way for the citizenry in the federal legislation that the epa doesn't have oversight your involvement in that area but

despite that, there is more of a parisian being taken by the federal agency and the superimposed federal regulatory requirements over the states, and we take seriously that area should be guarded, and we are preparing for potential action by the administration said that's one area, general baker, that comes to mind, and the energy states and affect us in a dramatic way into the clean air act. i mentioned that about visibility and aesthetic requirements. the state had primary responsibility to adopt plans they can engage in the cost-benefit analysis to say if we invest and get this benefit we think that is the best way to improve aesthetics in the state. in our state in march of 2011 after being sworn in, lisa

jackson came in, issued a letter to the state officials say and we're going to disregard your plan and force a federal plan in oklahoma that would cost utility companies to to 2.5 billion over a three-year period driving utility reached 15 to 20% in three years. that's where federal but some matters when you see utility rates for consumers and the state which is a primary function of myself, general gansler as we regulate the utility space, when you allow the fed to come in consistent in the clean air act to this place a plan that drives the rates of to that degree and a three year period it is our responsibility as an attorney general to do something about what to take action, which we did come in and the focus actually agreed with our position to stay and the epa enforcement while we'll litigate the case in oklahoma city. the point is, general baker,

these areas of energy there's an attitude that permeates the agency right now that i think is less regulator and more punitive perhaps and we can address that later but it is an issue for the oklahoma energy space. >> general strange, and i don't want the audience to miss the point that you made earlier about the outside counsel and not using outside counsel when you came in to deal with the major spill from the bp incident, outside counsel is a challenging question for most of us in this room and it tends to be a source of discussion quite often to tell us a little bit about what your thought process was when you came and decided to go from outside counsel what you

thought the downside might have been for the state continuing to use outside counsel? >> having been in the outside counsel it's important to be able to allow the expertise to read the question was asked where do you get your expertise and it's very important the general philosophy is what the law enforcement in alabama not to hire anyone unless i could stand up in front of the citizens in the state of alabama to say this is to wife hired, this is why i hired them because they have particular expertise, this is how much time to pay them and deal with the people in the state so those sort of basic principles i make the decision in this particular case that it wasn't worth the benefit and cost benefit analysis. but they are unique situations because it wasn't a one of

lawsuit in this particular case the bp litigation there are literally thousands of individual plaintiffs. i've dealt with mr. feinberg and of the claims process was something else. there are a lot of parties in that case and there are today parties that have a common interest in the state of alabama, and so my decision there was to form alliances where it made sense to work together like you would do everything in your private practice if you found common plaintiffs make sense to work together where your interests don't conflict that is the approach that we took, but i totally -- when the occasion as appropriate we do maintain outside counsel, but it has to be to bring something to the table and it has to be good for our legal system and for our taxpayers. i know and of the body in this room knows when you join a private plane to together with

me, the department of justice or attorney general, it changes the game. so i take that very seriously when we go back to that process. and we had a lot of cleanup work to do in office when i came in to sort of look at where we were it took me awhile to get that reorganized. estimate this is the conversation with these attorneys general. let me turn to the audience now and see if we have any questions because our time is when to run out shortly. i like to get in with the audience questions if there are any out there. yes, sir. >> i think there is good reason to oppose the regulatory overreach. but for general pruitt if oklahoma has standing to challenge tax breaks to its citizens, why doesn't one of

your colleagues and another state with a more activist outstanding to challenge tax breaks to corporations shouldn't we be worried about the extension of state authority? >> i think the issue is less about the tax breaks and more about preserving the policy decision made by the state of oklahoma. there is a responsibility vested in each state in the country to make a decision about whether they adopt a state health care exchange and there are factors that drive that. there are reasons to do that and the reasons not to do that. but we have to play by the rules that have been set up by the act so the state can make an informed decision about the efficacy. if we choose x and adopt an exchange to the benefit. the benefit would be what? the fed's wouldn't force the state of oklahoma the health care exchange. but if you don't implement a

health care exchange, the affordable care act is clear in its plain language. the irs disregarded that. the affected in a way that is inconsistent with the epa by adopting this rule on the 18th. it's the state's responsibility and there may be others will join this because 20 or so states have not adopted the exchange so it's more about preserving the ability to make the decision rested with citizenry, and as we defend and prosecute that to make sure that agencies of the federal level comply with the reading of the statute after all they do what? the last time i called the ad minister lal that has been passed by congress. there is an open question whether they are doing that consistently across-the-board. whether it is an environmental energy space etc., and it is our job as the attorneys general to make sure that the state's ability to participate in that transaction is preserved.

that is why we have the lawsuit and we will see where we are headed but it is less about tax breaks for those corporations. it's more about what responsibility and opportunity has been invested by the affordable care act and preserving that as a stakeholder >> next question. >> and good morning to the line with an outside lawyer protection for lawsuit reform. in texas we have a number of statutes that allow the attorney general to impose penalties that accumulate for multiple violations so each violation may be a penalty of x number of dollars for a company that has even inadvertently violated the statute multiple times those penalties can become quite substantial. at least philosophically we become concerned with that. so, do you all have similar statutes in your state and is that sort of philosophical the an issue that we ought to have on their radar for those that

are supporting the business community and their concerns about litigation? >> that's not an issue to my knowledge i think. you have a great attorney general in texas in my opinion greg is fantastic. prosecutors tend to want to have all the tools they can possibly have in their tool box, so it is probably just an observation and would be difficult since it serves a good function. >> de want to comment? >> in oklahoma we don't face that issue either. you may be referencing some false claims act multipliers, and we don't have some of those in the state of oklahoma so it's not been an issue. there is a question that particularly health the fees or allocated as you asked the council and what percentage of

the award goes to the of side council with the law to acquire i think those are fair questions really want to say also with respect to the comment on the outside counsel it should be the exception and not the rule i think what happens to starkly with the attorneys general is they defaulted to utilize an outside counsel. on the complex pieces of litigation and that shouldn't be. there shouldn't be the default mechanism just as a rule having a slam to the kirsanow side of the aisle litigate the case to read what luther has done an alabama is used in a complex piece of litigation very important to the citizens of the state coming and he's maintained management of it internal to his office and not contract it out to someone that perhaps doesn't have the same degree of accountability to the citizens and alabama. so, as we retain outside counsel, we have to keep that in mind the attorney-general should always maintain management of the case and should always be principal and primary in making

sure that as the decisions are made that the alleged officials make a decision and as you hire outside counsel, they should be there to act as almost the subject matter expert in keeping as an attorney to assist the ags to doing his or her job to assist, and i believe that is what luther has done and i seek to do with oklahoma, and it's what third, other states across the country are looking at. >> i think, scott, you put your finger on it. if i may -- in that particular bp case it's been to be a landmark case. we have a lawyer in house who i had confidence in. so he had argued for the cases before the united states supreme court. he had a criminal law and civil law background. he was confident and have the right work ethic. everything about him was a perfect fit for us. but remember, if you have a civil law firm that has a contingency fee in a case like that involving a state, you miss the issues important to the state of alabama, and one issue in the bp case which is critical

to the states is the judge's decision to apply federal maritime law that would apply if they were covered. as opposed to state penalties. alabama has significant state penalties for these types of events. the judge made the decision we are going to do with the federal statute that on the appeal now on the fifth circuit because we feel like to put it in criminal law if somebody in factors please send in a land of and poisons someone, the state has jurisdiction over that. that is a simplistic analogy but that is the kind of state criminal state authority power issue that is at stake in this litigation and an in-house lawyer that understands that is particularly important in cases like that. the other thing it does mention and the question is where do you get the information. thinking about the impact of the attorneys general on your industry and all industries in this country the privacy initiative and was in silicon

valley and i took the time to meet with general counsels from facebook and google and apple to simply educate myself and with the trends in this industry are because information technology is going to be driving our entire economy in ways we cannot possibly understand now but as you can tell from the initiative what we are going to be looking at is significant for all industries. given the act of nature of the current administration that is for a tremendous amount of litigation and regulation to break up. i want to make sure that i understand and i hope that you guys will take general gansler on his invitation to participate in that effort, because initiatives coming out of the national law association can be very, very significant as you

all know. speed as you all can see, no longer just the down ballett office holders slot. these ags are making an impact all across the country on a number of issues and i hope that you will stay focused on what they are doing and provide them your input thank you so much. give them a round of applause. [applause] >> thank you to a terrific attorney general panel. that concludes our morning. we had some great, great remarks, and lively discussion. a couple of housekeeping items. but we are going to do right now is we are all going to move into the next room, into the briefing center for 15 minutes, ten minutes while they switch over the tables for lunch. please take everything you have, personal belongings, with you because you're going to be setting the table. i just want to give a quick word

about the giveaway contest rated this year there are six great prizes that are going to be featured as giveaways during the closing reception. you have to be there to win. a 52-inch flat screen tv, a new ipad, and iphone five, a wine basket donated by altria, ticket to athletic events here in washington. everybody who's qualified, please get your business card, one each at the front table. i'm sorry, federal government employees cannot enter nor can the chamber employees from their immediate families or our consultants. thank you, and we will see you in a few minutes.