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flags at the capital flying at half-staff today in honor of the washington navy yard shooting victims. in the house and senate members of congress commented on yesterday's events and gun violence. we begin with house minority whip steny hoyer. >> frankly i don't know enough about the facts. i lost three constituents that lost their lives working in the navy yard. two of them lived in charles county and one of them lived in saint mary's county to county in which i live. i am sure that it will renew the discussions about access to weapons that can be used to kill a lot of people quickly.

we have seen however in colorado just in the past weeks to legislators who had the courage to vote for legislation which simply asks that we do a background check so we know who is getting guns which 80 to 85% of the american public say is a sensible policy. now withstanding that these two legislators will recall in a special election. one can analyze who comes out to the special elections but it does not bode well for asking people to vote for legislation similar to that which went down in the senate just a few months ago. i am sure it will rented the debate and the discussion as it should. >> in terms of his access to the navy yard he appeared to have security clearance despite some very troubling offense in his background. the alleged shooter. can you tell us anything about

how he got that access and is that something you will be looking into? it seems like there was some significant breach of security. >> i don't have additional information but you are right it's something that should be looked into. again what we have seen in so many of these instances are that the perpetrators have given previous indication of instability, of even inclinations to use weapons to talk about violence whether they did so on a web site or -- and almost everyone of these instances we have seen the perpetrators be people who individuals thought were unstable and thought in this case apparently this guy was prone to violence. he had apparently shot the tires out of the neighbor's vehicle. he had shot through the ceiling of another neighbor.

this was something he was given a general discharge from the navy so that there was no doubt somebody had a record of instability and certainly should have been i think subject to closer scrutiny particularly in access to a facility such as the navy yard or any facility that has large numbers of people, that have security concerns in the united states. >> mr. president there are no words that can ease the pain of the rampage and certainly the deaths involving a dozen human beings who were killed yesterday at the naval yard. i hope that some small comfort that the city, this institution

of the united states senate and the whole nation mourned alongside them. to my knowledge there is no explanation for the violence that occurred yesterday. my thoughts are with those who are suffering as a result of the loss of their loved ones and also those people who are recovering from the wounds and some of them are very serious. we wish them speedy recovery. mr. president we have about 16,000 military and civilian employees who work in the naval yard complex as well as their friends come to family members who were affected by this tragedy. it's only a few days ago and the officer presiding was here on that occasion also when we as members of congress marked the anniversary of september 11, 2001. during a ceremony on the steps

of the capital but we had a moment of silence here in the senate. yesterday's shootings were the worst loss of life in the capital region and since the september 11 attacks. last week was a significant anniversary in yesterday's terrible violence are a reminder that life is fragile and precious. it's a reminder of the debt we owe to those who protect our freedom and our safety whether they serve in the military or as first responders. the sergeant-at-arms who was responsible for our safety was certainly on the job yesterday. he is a dedicated police officer. that is his goal. i still refer to him as chief gainer. he has been chief of police of the capital police force before he took responsibility as

sergeant at arms of the senate. he has been a street officer for a long time. he could've done other things. he has a law degree and he is a well-educated man but his responsibilities to take care of the senate and he does that very well. i appreciate very very much and they speak for the entire senate those dedicated police, fire, rescue who put their lives on the line to prevent a lot more loss of life on monday. in particular mr. president 308 debt of gratitude to the 24 member names scott williams who is hurt very badly in the shootings. we wish him a full recovery. and we thank him for his selflessness. >> this morning all of us are thinking about yesterday's tragic events of the navy yard

and we are also thinking in particular of the brave men and women of our military and the sacrifices they make day in and day out on our behalf. once again i would like to extend condolences to the families and friends of those who lost their lives or were injured in this terrible, terrible shooting. know that your country is with you in these most difficult moments. i would also like again to express sincere gratitude to all the first responders and the medical personnel and the law enforcement officers from so many different agencies who work together to keep all of us informed and most of all safe throughout the day. >> flags across america are being flown at half mast this morning because of the terrible tragedy which occurred out that door one and a half miles away yesterday. men and women who work for our department of defense to keep

america safe reported to work as usual on a monday morning. and then tragedy struck. a gunman appeared with an assault rifle and several other weapons. at the end of its 12 innocent people died and another dozen or so seriously injured. this capitol was in shock. it was locked down at some point to ward off the possibility that there were other shooters in more danger outside. we watched as the people who worked at the navy yard and those who worked in the adjoining buildings waited patiently for the police to do their important and courageous work. at the end of the day they showed television footage of these employees being bused away from the navy yard to a safe metro location to return home, all but 12 of them who sadly

lost their lives to this senseless gun tragedy. we read the papers this morning trying to understand what could possibly motivate a person to do this and as we read the background of the shooter it was clear there were moments in his life where he had used a firearm to shoot the tires of a car that he thought shouldn't be parked in his driveway and shoot a gun in his own apartment that went through the ceiling to an adjoining apartment. those sorts of things might've been warning signals. questions were raised. how could a man with that kind of a kind of the background and that getting the necessary security clearance for a military contractor to go into this navy yard, to be permitted to go into this navy yard? i did he get these weapons into the navy yard an assault weapon and other firearms? questions still remain to be answered. god forbid we go on with business as usual today and not

understand what happened yesterday. what happened yesterday rings into question some important values in america. if we value our right for ourselves and our families and our children to be safe if we value this constitution, if we value the right of every american to enjoy their liberties with reasonable limitations then we need to return to the issues that are of importance. there was an issue before the senate several months ago, a bipartisan amendment offered by senators manchin and to me that would have taken an extra step to keep guns out of the hands of those who have a history of felonies or people who are mentally unstable. the vast majority of americans think this is just common sense. we can protect the right of law-abiding citizens to use guns in a responsible legal way for sporting and hunting and self defense but we have got to do

everything we can to keep guns out of the hands of those who would misuse them. felons who have a history of misusing firearms and a the mentally unstable who can't be trusted to have a firearm. but today we pause and reflect on the lives lost. i hope the lessons are learned. i had a hearing scheduled this morning before the senate judiciary committee on a controversial issue involving firearms in light of what happened yesterday and in light of the uncertainty of our schedule today i am rescheduling that hearing. it's an important one and i want to say to those that are following it that it will be rescheduled but at this point in time we have decided to postpone it for today until another day in the near future. >> mr. president as we rise today i want to talk about the economy and the need to create an economic climate that

encourages job growth and strength since the middle class but before he do that i want to have knowledge as many of my colleagues at the tragedy that occurred here at the washington navy yard yesterday. we are going to debate a lot of issues and the business of the country goes on in the business of the senate goes on but for the families of the dems of that tragedy yesterday things stand still and it's important for all of us i think to take a moment and to mourn with them the loss they have experienced and to extend our thoughts and prayers to their families and loved ones it's a horrible tragedy and as we continue the back-and-forth that we have on the issues of the day here i hope mr. president that we will remember to keep in our thoughts and prayers those families. >> mr. president before a make or marks i would like to join center thune and others on the senate floor who have expressed their compassion and sympathy to the survivors and victims of yesterday's terrible tragedy in

the washington navy yard. yesterday was another grim reminder of the dangers society we live in and the danger that can confront all of us and the need for a list to be aware and do everything we can to made sure our environment is secure and our environment is safe but to those who were injured and those who sacrificed their lives those hoops what loved ones were hit me god bless their souls and god bless them and their recovery in the terrible tragedy. >> loves death and money. these are the three main human concerns. we are all keen students of love. we are fascinated by every aspect of the matter in theory and in practice. maybe not quite as much as ken starr is. >> since then we have brought you the top nonfiction books and authors every weekend more than 9000 authors have appeared on both tvs including presidents,.

>> i wanted to give the reader a chance to understand the process by which i make decisions. the environment in which i made decisions. the people i listen to as they made decisions and this is not an attempt to rewrite history. it's not an attempt to fashion a legacy. it's an attempt to be a part of the historical narrative. >> also supreme court justices. >> every single justice on the court has a passion and a love for the constitution and our country that is equal to mine. then you know that if you accept that as an operating truth, which it is, you understand that you can disagree. >> and nobel prize winners. >> for me was interesting is the moral position do no harm. love somebody and respect

yourself. all of that is reduced, simplified notions. the philosophers have spent their lifetimes trying to imagine what it is like to live a moral life and what morality is, what existence is. what responsibility is. >> we visited book fairs and festivals around the country. >> booktv is live at the annual l.a. times festival of books on the campus of ucla in west los angeles. >> there is her signature "in depth" each month. >> if you say to a child almost anywhere in this country in schools all over the country more than 600 once upon a time the child will stop and pause and now you had better cash the check. you better have more to say after that. that phrase is still magical. >> every week "after words." >> my father already in the diplomatic service his job at hand to be press attaché in

belgrade. my mother wanted me to be born in prague where her mother was and so i was born in prague and then we went back to belgrade. then my father was recalled in 1938 and he was in czechoslovakia when the nazis marched in on march 15, 1939. >> since 1998 booktv has shown over 40,000 hours of programming and is the only national television network devoted exclusively to nonfiction books. throughout the fall we are marking 15 years of booktv on c-span2. with federal reserve chairman ben bernanke stepping down in january congressman steny hoyer today discussed his possible replacement. his remarks came at a politico breakfast interview. >> the economic and fiscal matters before us starting with the next chairperson of the federal reserve.

we saw larry summers former secretary treasurer of withdraw his name from consideration over the weekend by all accounts. he was the ministry should first choice in the president's first choice for chairman of the fed. first you think it was the right thing for larry summers to do to pull his name out of consideration and obviously you are in the the house i'd bet you'd think had he gone to the senate he could've been confirmed? >> i don't know the answer to the second question. there was obviously a controversy. i had the pleasure to work with larry summers and as a secretary i found them to be extraordinarily competent knowledgeable and respected and i know the president relied heavily on him for economic license out strongly about his capabilities. i have not talked to larry summers but my conclusion is

that he decided the controversy that would be surrounding the confirmation or his appointment would undermine the confidence that we need to have in the federal reserve and so i think in a very responsible way he made a determination that he did not want to further politicize or create controversy within the federal reserve. so i think he probably did the right thing and certainly from his perspective but he is a person of immense capability and will continue to be. >> do you think janet yellen is the best pick for the president now that summers is out of contention or are there other candidates? >> i think she would be an excellent appointee. i think she enjoys wide respect and i think she would be somebody who would need confidence building of the federal reserve but there are others as well.

of course it's the choice the president is going to make and i would hope he would make it relatively soon so that we can stabilize. because i think given the other economic turmoil we are going to talk about having the federal reserve as a stable, respected institution gives confidence to the marketplace and is very important. >> do you think the president is taking too long in making this appointment? one of the arguments of the people who work supportive of mr. summers -- [inaudible] are we headed destabilizing point where this nomination not having been made is having a negative impact on the economy? >> i think certainly it's important making this in time will be important. >> jack lew discussed the federal debt ceiling and the passage of the continuing resolution and possible government shutdown.

he is introduced by club president david rubenstein. this is 50 minutes. speak and can i have your attention please? thank you very much. we are very honored today to have as our special guest the 76th secretary of treasury jack lew. jack lew has covered this job with more experience in government than anyone else who has served as secretary of treasury. in the upon administration he started out as deputy secretary of state for management of resources and then became director of the office of management and budget and then became white house chief of staff before becoming secretary of treasury. in the clinton administration and also served as the director of the office of managed budget. he also has experience in the legislative branch. he served eight years on capitol hill working for tip o'neill and the last three years as senior domestic policy

advisor to speaker o'neal. the secretary also has extensive experience in the private sector and before joining the obama administration he served as the chief operating officer at nyu and is a senior officer at citicorp alternative investment division. he is also a lawyer who practice law in washington for a number of years before going into government. jack is a graduate of harvard college and georgetown law school so it's my pleasure to introduce the 76th secretary of treasury, jack lew. [applause] >> thank you david for that very kind introduction and thank you to the economic club for having me here this morning. i want to begin by joining all americans in saying that our thoughts and prayers are with those who are affected by yesterday's tragedy at the washington navy yard. to those who lost a loved one i

offer my deep condolences and extend my gratitude to the local authorities that rule enforcement and medical teams who responded so quickly and skillfully to the offense as they unfolded yesterday. now i would like to start by talking about current economic conditions and challenges. i would also like to speak about what's at stake for our economy over the next few weeks. as we meet here this morning it's important to remember that five years ago this month our financial system is in the throes of the devastating crisis the crisis expose fundamental weaknesses in our economy and it helped trigger the worst recession since the great depression. in the months before president obama sworn into office we were shedding more than 800,000 jobs a month in our economy was shrinking at an 8.3 annual rate. the president moved immediately to stop the recession and began to lay a foundation for long-term economic growth.

he took action to repair aging roads bridges and highways to invest in education so that more young people could graduate high school and go to college and fix the health care system that is not working. to reshape the financial system so it does a better job of protecting consumers and investors and to lock in lower taxes for 98% of all americans. he took steps to make it easier for entrepreneurs and businesses to innovate grow and hire. since 2009 our economy has been expanding. private employers have added 7.5 million jobs over the past 42 months and businesses have added more than to be in jobs over the last year. manufacturing is expanding while the housing market continues to improve. posting gains in sales prices in residential construction. because of the policies we put in place or deficit is falling faster than at any point since the demobilization after world war ii. he should continue to decline relative to gdp over the

ten-year budget forecasts. because of the resiliency of our people are businesses and our economy we are in a much stronger position today than many imagined just a few years ago. but we are not yet where we want to be. too many americans cannot find work. growth is not fast enough and the very definition of what it means to be middle class is being undercut the trends in our economy that must be addressed. these trends like the increase in income inequality of the decline in upward mobility did not happen overnight and it's going to require work and focus to reverse. though we cannot do that, we cannot focus on what's important if some in washington continue to create uncertainty about whether our political system can meet its basic responsibilities and avoid creating self-inflicted wounds to the economy. i know from my conversations with business leaders this is a concern for many of you here that's why it's important for congress to work with the president to replace the across-the-board spending cuts known as sequestration with

balance policies that reduce the deficit. that's why it's also important that congress move as soon as possible to raise the debt ceiling and eliminate any uncertainty about america's ability to pay its bills. as many of you know we will soon be unable to finance the government of congress fails to raise the debt ceiling. raising the debt limit is congress's responsibility and congress and congress alone is empowered to set the maximum amount the government can borrow to meet its financial patience. it's important to notice i've done before that the debt limit has nothing to do with new spending. it has to do with spending that congress has approved an bills that have already been incurred. failing to raise the debt limit would not make these bills disappear. we reached the debt limit in may since that time the treasury has used use what are called extraordinary measures to avoid defaulting on our obligations. i notify congress in august of these extraordinary measures would be exhausted by the middle of october. if congress fails to act and

those measures are exhausted we will have to use what cash balances we have on hand to fund the operations of the nearly 4 trillion-dollar government. at that point meeting our nation's financial obligations including social security and medicare benefits payments to our military and veterans and contracts a private suppliers will be put at risk. some in congress seem to think they can keep us from failing to byfrom feeling us from failing raising the debt ceiling right before the moment when cash balances depleted. this is misguided for several reasons. for one it's just not possible for the u.s. treasury to know with precision when the moment will be because outgoing payments and incoming receipts vary from day-to-day. operating on a small cash balance creates the real danger that on a day we anticipate having a positive cash balance we actually will have a negative one. at the same time we are relying on investors from all over the world to continue to hold u.s. bonds. every thursday we will over

approximately $100 billion in u.s. bills. if u.s. bondholders decided they wanted to be repaid rather than continuing to roll over their investments we could unexpectedly dissipate our entire cash balance. the point is trying to time a debt limit increase until the last minute could be very dangerous. make no mistake if congress does not act and the u.s. suddenly cannot pay its bills the repercussions could he serious. the impact on families and businesses could be significant. investors losing confidence in the full faith and credit of the united states could cause damage to our economy. failure to raise the debt limit or even extend a debate on the merits of doing so like we experienced in 2011 is a self-inflicted wound that can do harm to our economy right at the moment when their cover is strengthened. no credible economist or business leader thinks that defaulting on the full faith and credit of the united states is good he should our economic growth. understand that the congress choosing not to be the

governmengovernmen t's bills is unacceptable and could hurt our economy. consider the words of another treasury secretary james baker who served under president reagan. this is a threat to our nation's credit secretary baker told congress in a quote a failure to pay what is already do will cause certain serious harm to our credit the financial markets and their citizens. of course failing to meet our financial obligations should he and unthinkable event. never in our history has united states defaulted on our obligatioobligatio ns. congress has always lived up to its responsibility to protect the nation's credit. those in congress who think default is an option claim it's possible to protect our economy and simply paying only the interest on it debts while stopping the delay in payments on a number of other legal commitments. there is no way of knowing they are revocable damage such an approach would have on our economy and our financial markets. his administrations of both political parties previously determined these prioritization

proposals are unworkable. they represent an irresponsible retreat from a core american value. since 1789 regardless of party presidents and congresses have always honored all of our commitments. we cannot afford for congress to gamble with the full faith and credit of the united states of america. at the same time we should never be put in a position where we have to pick and choose which commitments of our nation we will meet. how can the united states choose whether to send social security checks to seniors were paid veterans -- benefits for veterans? stuck in united states choose whether to provide children with food assistance or meet our obligation to medicare providers? as a matter of fact up until very recently congress typically raised the debt ceiling on a routine basis. the debt ceiling was raised 18 times under president reagan who had a democratic house of representatives during his entire eight year term. it was raised six times under president clinton who had a

republican house of representatives for six of his eight years and race seven times under george w. bush who had a democratic house of representatives for the last two years of his eight-year term. during that period mini-at the debt limit increases were passed as stand-alone bills. there were a handful where the debt limit was embedded in congressional legislation dealing with broader fiscal challenges that the threat of default was never a bargaining chip in those negotiations. that'll change two years ago when the issue of raising the debt ceiling turned into a high-stakes political drama. we saw for the first time the debate take lace over whether united states should voluntarily default on its obligations. some actually argued that default was a viable option. there were in fact members of commerce willing to default on her full faith and credit rather than reach a good-faith compromise. america does not want to relive what happened in 2011. that drawnout debt ceiling

dispute and brinksmanship lead to business uncertainty at dropping consumer confidence confidence in the first-ever downgrade of our nation's aaa credit rating. the resulting drop in financial markets undercut economic growth for months and anxiety spread across the country and around the world as congress debated action until the very last moment. i want to repeat with the president has already made clear. he will not negotiate over the debt ceiling. he will not accept measures that tie at debt limit increase to the delay of the affordable care act passed by congress and upheld by the supreme court. a time to make policy is before not after we have made commitments. the democratic and republican presidents made clear under no circumstances will the united states fail to pay our bills. the president is willing to negotiate of the future of fiscal policy and that is why he proposed a budget that reflects difficult choices he believes we need to make as a country. within that budget the president included reforms to entitlement

programs in the tax system that would spur economic growth and cut our debts. he made it absolutely clear he is ready to sit down with republicans and democrats to find common ground. elected leaders have responsible in to make our economy stronger not to create manufactured crises. the very last thing we need now is the fight over whether to raise the debt ceiling. not only will we face serious challenges domestically and internationally that require our full attention and not when we know the kind of damage a financial and economic crisis can cause. the truth is congress can get this done. the time to do it is now. thank you very much and i look forward to the conversation we are about to have. [applause] >> yes i pointed out at the beginning you have served as deputy secretary for the state in this administration head of

omb, white house chief of staff and now secretary of treasury. why have you had a hard time holding a job in this administration? does the president not like you? why does he keep moving around? >> my wife keeps teasing me if i could keep one job in one area we could reduce unemployment in this country. the truth of the matter is you come in the admin is just deserve where the president thinks he can do the most good. it's been my act is served to presidents the ability to say no one asked me to serve. >> you serve to presidents and maybe a future president. you worked for hillary clinton who may run we don't know. of those three who were the smartest? [laughter] >> when you line up three of the smartest people i've ever known choosing between one or another would be a -- proposition. >> on the debt limit its talk about that very serious.

you have said you have about $50 billion in cash around the middle of october something like that so that is not enough to make the government to function effectively so your message today is let's not wait until the end of the period of time when the debt limit extension is necessary to be extended. let's resolve it now and let's not wait until the last minute because we have so many obligations and we can't let people wonder what's going to happen. are you engaged in negotiations now with the speaker or others in the senate and what is going on? as the president thinking of calling people to the white house and get some negotiatinegotiati ons going on? >> just to be clear about the deadline first, there is an extraordinary desire in washington when the last minute to act is. the debt is something that is

principally impossible to give information about. as i said in my remarks your revenues and expenditures fluctuate from day-to-day. if anything as i watch the daily cash balances things have moved a little bit in the wrong direction. not dramatically but tomorrow they could move in the right direction. what you can do with the debt limit is take the risk you will not have the ability to pay hills on a daily interest payment is due and a day a social security check is due which is why set is why said it's urgent for congress to act as quickly as possible certainly by the middle of october. we have engaged in discussions over fiscal policy the white house and the congress extensively over the last several years. the president has made clear through his conversations over the years with the speaker and through the conversations he is head with a wide group of senators and congressman that he on fiscal policy is anxious to find the sensible middle ground. the problem is we have yet to find republicans who are willing to sit down and have a

conversation about it allen's package revenue reform which raises revenue and entitlement reform. the debt limit is a different question. i really do believe the world changed in 2011. it cannot be an acceptable notion that you negotiate where one part of one side believes that default is actually an option. that was never the case before it. you cannot lead 50 to 100 members of one body introduced the idea the united states cannot pay its bills. if you can't even entertain that is a notion future presidents democrat or republican cannot be in a position where they are compelled to accept unacceptable policy year after year because there is a faction that thinks default is an option. congress just needs to act. >> but they are not at game so you are the leader of the executive branch. what are you doing about a? are you rallying them or threatening them? what can he do to get something done? >> i think the reality is that

it's not what i say that matters. it's what the facts are that matter. the facts are in the middle of october we are at risk in the united states for the first time in history of not being up to pay all of its bills on time. that is subverting congress bears in congress i think step up and deal with it. i can't tell you exactly what the path is. it's not particularly helpful for any white house to take tape the specific steps the congress needs to take. i think if you look at the conversations going on right now it is clear that there is concern about both funding the government and meeting our obligations to be able to pay our bills by extending the debt limit. i think the focus on the last minute has for a while giving congress the idea that it had a little more time. i have -- hope i have dispelled that notion. more time raises the risk of unintended consequence. i don't believe there are

responsible leaders in the congress that believe the default is anymore an option that i i do. think the president should call congressional leaders of the white house and we are not leaving until we get something done? >> the process of calling leaders to the white house is something we have spent a fair amount of time doing in 2011. i don't recall that it necessarily was the best path to the finish line. this is something that the leaders of congress democrats and republicans are talking about. they then talk about the funding bill to keep the government operating after october 1 and i think if you look at the weight over the debt limit there is a kind of notion and part of the house republican caucus that it can be used as a lever to force major policy change like the delay of the affordable care

act. that's just not reality and they will have to start dealing with reality. >> you pointed out in your opening remarks that under tip o'neill when he was speaker and ronald reagan was president i think you said 16 times the debt limit was accepted? you were involved in those negotiations. did you ever say let's not extend the debt limit? did you do that in those days? >> the 1980s when we lived through them seemed like most partisan air in history and now it's almost romantically bipartisan. i just read my friend chris matthews new book on the relationship between president reagan and speaker o'neal and brought a lot of those memories back. one of the things about mr. o'neal's leadership was that he actually believed in letting the majority work its will. there were moments when house democrats did not want him to give president reagan a chance to have a phot and things passed with a mixture of democratic and

republican votes and it felt at the moment as as if maybe the democrats leadership had lost control of the house but he believed the worst thing you could do is cause the whole enterprise of government to break. i think we are dealing with a different approach at least on the part of some members of the house now. if they go back to the idea of letting the majority work its will this kind of problem would be a lot easier to solve. >> so today he would say we have to deal with the debt limit and we have talked about that and you're hoping that something will break at some point and we will have negotiations but let's talk about the continuing resolution and spending. right now and on october 1 we will run out of money for perforation bills are continuing resolution for funding next year and the government. do you see negotiations occurring on that? is that more likely to get negotiated out or where do you

think that is going? >> going? >> there are conversations going on between the senate democratic leaders in the house republican leaders. the president has made clear the frame that he is using as he thinks about it. he has made clear that we cannot have a solution that fixes the problems sequestration is caused in defense but not non-defense. we cannot have a solution that abandons our commitment to the foundations of a better economic future education and development. we have to give the leader some time to work through a solution here. i want to underscore something i said in my remarks because they think people really need to understand. the president has always been open to finding the sensible middle ground and negotiating or finding a path to an agreement on fiscal policy. it was not popular in the democratic caucus when he put a budget out at the beginning of this year and reiterated the offer he made to speaker boehner

last december. it had entitlement savings. it had a tax reform plan. it had additional revenue not all of which is possible even on the democratic side. it was meant as a basis to form a calmer commerce station and an ultimate agreement with a balanced support. across-the-board cuts of sequestration were never meant to be policy. they were put in place as you recall to have the supercommittee fear sequestration so they could reach difficult decisions. it didn't work so we now have across-the-board cuts in place. if you look at where we are in short-term fiscal policy most economists think we have done more damage reduction in these few years than is good for the economy. in the medium and long-term we don't have sensible structural changes to put us on the right trajectory going forward. the president put out a budget that would replace the across-the-board cuts with this sensible balanced approach. you know i try to always be an optimist. i have probably been more optimistic than most.

it's getting harder and harder to remain in my traditional optimism but i'm still hopeful that common sense will rule out. i do think the idea of reaching agreement on fiscal policy is entirely different than the idea of using the debt limit as a kind of lever to force another side to capitulate. on sequestration when you read ahead of omb you are involved in goucher shins and some called to the father of sequestration because you propose this and i think some people on the republican side decided it was your idea which -- would you like to clarify where that idea came from? >> it something i've said many times that it's very bad policy. to go back to 2011, we were engaged in a very difficult set of negotiations. we were headed for a fiscal crisis. there was the debt limit

deadline imposed impending at the time where it was highly credible and believed by most in the world that there was a chance the united states would go over that cliff. we tried every way to reach agreement first on a substantive basis. we made progress but we got close to the finish line in it did not work. it was unnecessary to figure out how do you bridge the gap? our preference would have been to have some kind of enforcement mechanism that put revenues and spending both at risk if congress failed to act. that was unacceptable to republicans. in a world where you could not have balance between revenues and spending the only thing that has worked in modern times is making defense and non-defense it equally exposed and that was the formula that graham wegman hollings put in place. it was something that led to the 1990 budget agreement because people feared that kind of a cut so much that they camped out at

andrews air force base and they made the hard decisions and reached an agreement. coming out of those conversations that with the last option to avoid a disaster. it was put in place not to take effect. it was put in place so that congress supercommittee would have the incentive to act. there were a lot of ideas swirling around and i actually believed there was a republican budget proposal incorporated earlier in the year. the fact of the matter is nobody should claim authorship over something that was at the time described by all parties as an unthinkable bad policy. >> to make sure before we leave this subject right now are there any negotiations going on on the debt limit between the administration and congress? i their negotiations on the continuing resolution between the administration and congress? is there any secret negotiation? >> there are none and there will

be no gauche instance over the debt limit. the president is clear on the debt limit. i've discussed the debt limit with everyone whether the committees of congress. i'm going to do so again this week. i'm doing so here today. that's very different from negotiating. there's a need for a clear understanding. everyone has to have accurate information about the schedule and what the consequences are and what is noble and what is not noble. the president has made clear we can't be negotiating with the threat of default. on the spending bills i think they are the normal conversations going on. unfortunately they tend to not come together until the last minute. i will leave it to my friend and successor the officer of management and budget officer of her wealth to manage that. to the one story circulating in washington is there is discussion that the house might propose a debt limit extension but attached a defunding of

obamacare and send that to the senate and let the senate decide what it wants to do. do you have any comment on that? >> the president has been clear and i have been clear efforts to defund or delay the affordable care at their unacceptable. that is not a path that can something that can ultimately be signed into law. in terms of procedures what happened last week was a bit of a revolt in the house where there was a way to send it over to the senate for the house gets to vote one way and the senate gets to vote another way. i leave it to the congress to manage how those kinds of opportunities for everyone to vote their conscience work. what they have to keep in mind is ultimately something has to pass the house the senate and be signed by the president and you cannot have a minority of the house dictate to others in the senate and the white house the

only path that is acceptable. i think the reality is that is not going to happen and the sooner they understand that the better. i have heard comments the last few days and read in "the wall street journal" this morning that there is a kind of growing awareness of what in some ways is very obvious. i learned this in the 1980s. we cannot control them both houses of congress and the white house with 50 votes in the house. >> it people around the world are watching what you say in their buyers of treasury bills to want to know how our economy is faring do you think it's fair to say you are optimistic that this will get resolved in time pessimistic or cautious? will would you describe that you are feeling? >> i am cautious and anxious. i hope that you know i take comfort from the fact that i don't believe there are responsible leaders who think default is an acceptable option. i am nervous by the desire to

drive this to the last minute when the last minute is inherentlinherentl y unknowable and the risk of making a mistake could be catastrophic. i also worry about frankly the time it takes for the congressional process to work these days. if you have to march up the mountain three or four times before you can get to the top you have to leave enough time to come up and down. we are getting very close to these deadlines and i think there is a need to get going. >> sometimes people say on capitol hill that the treasury has ways to maneuver more than they say publicly so you say the deadline is the middle of october but if we wait a couple of weeks you could maneuver things around. is that untrue? >> once you've hit the extraordinary measures your darling authority is gone and you have no more ability to borrow. you are then left with cash and is in a small business person knows if you are operating your

business relying on cash and the cash box to pay your daily bills if your revenue is not adequate on a given day and you empty the cash box you can't pay all your bills when the cash box is empty. i can't tell you with precision when that is but i can't refill the cash box once we have lost their ability to use extraordinary measures. that's going to happen in mid-october. a 4 trillion-dollar enterprise which is what federal government is just under four gillian dollars, with $80 billion on select a lot of money but we have individual days when our net negative cash flow is $50 billion that doesn't matter if things are operating normally and you have net positive days later in a week or later in the month and it evens it out. if you can't borrow to get from here to there for the first time in american history you are left with the inability to pay all of your bills. you run out of extraordinary measures at some point.

>> let me shift to another subject, tax reform. the chair of the ways & means committee and the chair of the senate finance committee were here talking about the need for tax reform in their desire to get it done but do do you see any evidence that tax reform will get done this year and are you working on tax reform? >> i'm working on tax reform. i think the president tried a few weeks ago to brief life into the tax reform debate by suggesting we think about is this tax reform first. the challenge in doing conference of tax reform is it tied up with the whole fiscal policy today. we do not believe you can do all tax reform unless you have an agreement of what your revenue level is that's part of the broader fiscal frame. when you look at business tax reform our goal is to reduce the tax rate on the corporate side so now we have one of the highest statutory tax rates in the world. sit dense and --

disincentives for businesses in the united states. we would like for a whole host of reasons bring down the statutory tax rate. we had to do it by eliminating deductions and credits and limiting the playing field. >> there is a debate between folks and i have yet to see the ways to pay to get below 25. we have the structure to get to 28. if we have a convergence of ideas about the importance of lowering the business tax rate and the importance of getting rid of the distorting effect of specials credits and deductions and we have a way of reaching across to the pastors by saying that he can detect the first million dollars in business expenses instead of taking over it in depreciation to detective. that is the benefit would be a file as a corporation or a -- there is an awful lot we have a

convergence and not total agreement on. business tax reform has the effect of throwing off longtime savings. as you make these changes there is a bump in revenue. if you were to cut your tax rates forever and that bump disappears you are no longer revenue-neutral. so there has been a question what do you do about those one-time savings? the president made a suggestion. why don't we see if we can agree on the things it we agree on? there's a broad bipartisan agreement that infrastructure in this country needs attention. i think there is broad bipartisan agreement that we have training and education that need attention. if we can take a one-time savings and do something good for the economy in good for business lower tax rates for businesses and make it easier for businesses to invest that would be a big accomplishment. i think there are ideas there where you still could see progress. >> do you think you can get corporate tax reform done

without getting individual tax reform done quakes do you think you can do both then is it possible just to do one? >> it's certainly possible. they argue with him -- the argument was made that you shouldn't. the president said he would be delighted if we could make it on the fiscal frame so we could do tax reform on both sides. in the absence of a fiscal agreement we cannot rewrite the tax code one time in a generation and leaf or later the discussion of how revenue fits into the fiscal solution. we are happy to do either. we are happy to do comprehensive tax reform. we are happy to work on business tax reform that uses the one-time savings to build a foundation for economic growth in this country. that leaves you with paths that are possible to cross. i know the chairman of the house ways & means committee and the chairman of the finance committee are determined to move

forward. i talked to each of them regularly. we are providing technical support as all parties are thinking through this. there are multiple paths with that we could make progress on and i'm hopeful we will. >> so you were surprised that larry summers withdrew and has the president asked you for a recommendation and windy think we will have a decision from the present on the new chairman of the fed? >> david i have kept my place -- advice on that in the oval office and i'm going to think of of -- keep that policy. >> could you tell us how you got your signature? it's been commented when you are being confirmed that you have an initial signature for secretary of treasury. have you change that on the new dollar bills coming out with your signature or are you sticking with the same signature? >> i've been working on my penmanship or 40 years and i think it's a lifelong

undertaking so no change. >> we are up in the fifth anniversary of the financial crisis as you pointed out and would you say that the chance of our going through another crisis like that has been removed by dodd-frank or do you think there's a chance something as severe as that could happen again? >> i think as we all think about the fifth anniversary of the financial crisis and how far we have come we have to start by saying how much we have done since the financial crisis as a country and as a people and an economy. we have seen the economic growth that i described in my opening remarks. we have seen repair to our financial system where we have better capitalized banks. we have a financial system where large institutions have to have plans or how to resolve themselves and not turned taxpayers for support if they hit hard times. we are seeing movement to deal with some of the new and troublesome developments in the

financial system like shadow banking. we are not done yet. we still have quite a bit of work to do this year. i have put an enormous amount of my time as treasury secretary in convening the regulators and impressing on them that by the end of this year the major components of the dodd-frank bill have to be completed including the volcker rule. i think when we are done we will have accomplished the most st in 75 years and of the you know unfortunately or fortunately we won't know with 100% clarity unless and until there -- whether we have done enough. i believe that we have taken the steps that we need to take in enacting a law that says we have taken -- we are in the process of implementing that law. as i have said when we are done we have to take stock.

the world as it exists at the end of this year in the beginning of this year and then each or after that each month after that really on an ongoing basis is the financial system the same as it was or has it changed plex is an evolving? do we have the visibility? do we have the supervision? ..

maybe it's still controversial. when all said and done. will it lose money? >> already turn the corner on the bank investments. so, you know, i must say that it is a hugely important accomplishment. when was it was enacted people were saying there's a hundred of billion of dollar never recovered. they have been recovered. one of the challenges with the, you know, people right now is that they're looking at the damage that economic crisis caused. a lot of that damage hasn't been healed. you have at lough people who can't find jobs. you have businesses that are nervous. to deal with some of the core problems in your -- our economy. in the past few days and weeks

the new study came out that showed we are a substantial growth in income as we have come out of the recession. but it's liely concentrated. it mostly went to the top 1%, and frankly, most went to the top 10% of the top 1%. and i think, you know, american working families struggling to name it to the middle class are asking what we are doing to fix the economy so they can send their kids to school have jobs that are solid ways to build a stable family. that's what the president has been focusing on. we need get beyond these kind of discussions lying the first part of the conversation about economic brinksmanship and get on with building the architecture for a strong-growing economy. >> what is their difference in working style? one likes memos. one likes discussions? can you give us any insight what

it's like to talk about economic matters? >> as you know from your experience in the white house, david, it's extraordinary to have at privilege walking to the oval office and speak to the highly informed president who presses you to the limit of your knowledge, and wants to make the right decision after taking account of the thinking he can. obviously no two people are wired the same. both president obama and president clinton are readers. sometimes a little daunting because they read more late at night than i do. i need sleep a little bit more. you are a little worried they read something you didn't read. and i read a lot. [laughter] there is a, you know, it's interesting how i really could not say more about how much intellectual each brings to what they do. they have different styles of

thinking. and president clinton tends to grind away at the detail. it's recalled extraordinarily. president obama has a lot of that. he tends to take a step back and ask strategic questions to avoid getting you pulled to the level of detail where you might lose track how the pieces fit together. t been an ebbing the record their experience to work for two people who bring just extraordinary intellectual capability to the oval office. >> when you become secretary treasury, i assume other lining call you and say do this and don't do that. have you gotten any wonderful words of advise? >> i talk to a a number of my predecessors periodically. i think in many of these senior jobs in government. people don't fully understand the way decisions present themselves and how you to think about them if they haven't been there before.

i think there's a huge benefit in listening to people who have experience and i value the time they are willing to spend with me. >> one of your predecessor tried to resolve a dispute with the dueling, alexander hamilton. that didn't work out. that's not something you consider with members or congress; right? >> i think it's safe to say i'm going stay on the new york side of new jersey if i get the invitation. >> okay. when you deal with foreign ministers of finance overseas, are they worry about our debt limit problem? do they call you and say what are you doing in washington? when are you resolving this? >> i talk phenomena ministers regularly. i think they reflect some of the view in the business community that nobody could do this again. nobody could go wack to august

2011 and create the chaos as we have saw. as we become more anxious that congress is driving there to the edge, they'll become more ankle anxious. i think the world continues continue -- counts on the united to play a leadership role. in term of demonstrating how democratic govern mans works. so it was very destabilizing in 2011 when it looked like the center wasn't holding and the american political system. it would be pretty destable idessing if we got there again. >> the comous this year, you think will be, will probably grow. our gdp will be 2.2 or 2.3? >> i stay away from point e mate? i'm bullish on the american economy. i think if you look at where we have come from. where we are, we end the war an awful lot of head winds dying down do. we absorb the end of the payroll tax cut.

the impact of sequestration is negative but being absorb. we end the year and going to next year without the kinds of draping being put on the economy. we would be growing a half to percent greater if not for the drag. you look at the u.s. com and the energy revolution we've had, the attractiveness of investing in the united states there a lot of things poised do better in the economy. the reason i have been dwelling on the decisions we have to make in washington is i believe you come washington to make thing better, not to commit self-inflicted wound. we need to make sure that washington doesn't stand in the way of an economy that is poised to grow. >> are you worried about the european economy? are you worried about the chinese economy? >> i worry about a lot of things. i spend a lot of time looking at the europe. and chinese economy. europe and china are the three largest in the world. a year ago, you know, you

couldn't get through the first hour of a morning without getting an update where the european economy of. there was a pending sense that a crisis in europe could pull down the united economy and cause a recession even. i think they have a made at lough progress since then. they have a lot more to do. they have some countries that need to have the arraignment they worked out revalued in the coming months. they have still have work to do in the banking symptom make sure they're better capitalized. they're in a better place than they were a year ago. you know, they seem to be turning the corp.er in some places that didn't think they would come out of recession this year. and i think it's too soon to say it's heeled. it's better by a long shot than a year ago. china is fascinating. china went through a long period of double bijt growth.

there's doing to -- going to be a decline to a more sustainable rate of growth. they have to make tough decisions internally in order to make sure they level off at the level of growth that borics for china's economy and china's social stability. they, i think, they know they have to move forward market- oriented policy. the distorting effect of the subsidizes and support for state-owned enterprise has hurt their ability to have long-term growth be where they want it to be. they're going face some tough political decisions when they have the meeting in a few weeks. i think they're determined to make decisions to move in a constructive dreck. in the conversation with china, you increasingly have a sen you're pushing on an open door we think is in their best understand. they understand is the best interest. they have political hurdle. the jury is out. they have some important discussions coming up. >> every treasury secretary is

trained to say or not say something about the dollar. so what can you say about the dollar? i would assume you favor a strong dollar. is there anything you can say about the dollar. >> being trained to say nothing about something you know a lot about of the job. i'm stick together policy of saying no. >> you are trained to say nothing about papering as well in. >> i focus on the core economy. and we doing everything question to make sure there's core economic growth in the united. >> would why -- the treasury secretary. first of all, few people do it for long period of time. it's probably the hardest job after being president. secondly, the president asks you to serve in the position where he thinks you can make the greater contribution when you are given the honor of being

asked to be treasury secretary. it's pretty hard to say no. >> okay. so you served in many of the government positions. there is any other you want to serve in? or you are happy with now? >> as american leader said citizens is the highest office we can hold. jack, i would like to thank you for giving us your insight and drawing tension to the deficit and debt problem we have to deal with. >> thank you, dave. [applause] [inaudible conversations]

[inaudible conversations] the congressional budget office released a budget on the long-term budget forecast today. doug discussed the news report at the news briefing. here are part of his remarks. in addition we devote a chapter report to the uncertainty of long-term budget projections. we discuss a number of source of uncertainty and present budget d of course, any projection this far to the future are very uncertain. nevertheless, the analysis shows

under a wide range of possible assumption about some key factor, the budget is is on an unsustainable path. as lawmakers consider changes in policies, that would put the budget on a more sustainable path they'll face choices about the mag attitude of deficit redugs, the policy used to reduce them and the timing of deficit reduction. economic theory doesn't say what the amount of federal debt is nor what the right amount of federal spending are. but a significant reduction in debt from the current percentage of gdp would require substantial changes in tax policy spenlding policy for both. as an illustration, if lawmakers want to bring debt down to 31% of gdp in 2038, a little bit below the 40-year average. using policy that phase in over the next decade. they need enact combination of increase in revenue and cut and spending that would total about

$4 trillion. would thread a greater accumulation of debt and increase the size of policy adjustments need to achieve any target. implementing spending cuts or tax increases quickly would economic the expansion and give people little time to plan for and adjust to the policy changes. the negative short term effect of deficit reduction on output and employment would be especially large now because output is far below the potential and maximum sustainable level but the federal reserve is keeping short term interest rates near zero and cannot lower them further to offset the changing in tax policies. you can watch the briefing at our website. you can find a link to the cbo report. visit c-span.org for more of the

videos and schedule information. then congressman aaron shk republican of washington "washington journal" is live every morning on c-span

at 7:00 a.m. eastern. when helen taft became first lady, one of the first things she did was to address having cherry trees planted. it was a mess. the japanese heard about the interests and they decided to give 2,000 trees to the united states in her honor. >> everyone was shocked. the trees sent were older and tall and bug-infested. it was decided they would be have to be burned. president taft made the decision they would have to be burned. the japanese were very accommodating and understanding and decided to send 3,000 trees which arrived in 1912. and we still have a few of those around here. watch our program on helen taft on c-span.org/first lady. or see it saturday on c span. we continue the series live next

monday. oklahoma governor and chair of the national governor's association marry fall lynn was at the national press club today to talk about education and work force training initiative called america works. this is an hour. [inaudible] [inaudible conversations] of the national press club. we are the world's leading professional organization for journalists committed to our profession's future through pramenting such as events like this while fostering a free press worldwide.

for more information about the national press club, please visit our website at www.press.org. to donate to programs offered to the public through our national press club journalism institute please visit press.org/institute. on behalf our members worldwide i would like to welcome our speaker and those in the audience today. our head table includes guests of our speaker as well as working journalists who are club members. if you hear applause i would note members of the general public attend. it's not necessarily evidence of a lack of journalistic objectivity. i would like to welcome our c-span and public radio audiences. you follow the action today on twitter using the #npc launch. our guest speech concludes we'll have a question and answer period. i'll ask as many questions as time permits. now it's time to introduce our head table guests. i would like you to stand briefly as your name is

announced. from your right janis law founder of women writers. maria, national correspondent for the fort worth star. paul marion washington bureau chief. lewis, chairman of the national press clubhouse and bar committee and the president of the oklahoma state society. peter urban, washington bureau reporter for steven media. dan, executive director for the national governor's association. skipping over the podium. allison fitzgerald, project manager for financial news for the center for public integrity and the chairwoman of the national press club speakers committee. speaking over the speaker for a moment. freelance editor and national press club committee member who

organized today's lunch. washington correspondent for "the oklahoman." warren roth "cq" roll call. kathy johnson mcmahon professor of journalism at the university of oklahoma. and tim, vice president of communications in marketing for the american counsel on education. our guest today broke a gases ceiling on january 2010 which she became the first female governor of oklahoma. since then, she's dealt with her state being hit with deadly tornadoes and taken on additional responsibility as chairman woman of the national governor's association. mary fan lynn served two terms as state representative before becoming oklahoma's first republican as well as first female lieutenant governor from

1995 to 2007. she was the second woman from oklahoma elected to the u.s. congress renting the state's fifth congressional district. politics must run in our blood as her mother and father both democrats both served terms as mayor of oklahoma where she was raised. during her first year as governor, she balanced state budget while closing a $500 million deficit and lowering the income tax rate. she saw many of her legislative priorities signed in to law including reform of what she called frivolous lawsuits and education. she signed in to law an income tax cut and overhaul of oklahoma's workers' comp suggestion. system. she's tackled -- triable tobacco impact. she also tried unsuccessfully to give communities more authority to regulate tobacco products

since both her parents died earlier than should have because of smoking. governor fallin cited job growth and retention as well as education. she -- launched an initiative to increase the number of college graduates to help the state attract and retain jobs. in august, governor fall lynn was named crb a most of the nation's governors. based on her interest the focus of the chair's initiative during the 2013 to 2014 term should come as no surprise. she said states and the businesses that drive state economy can help secure their own economic future by aligning their educational institutions and work force training efforts with the projected demand of tomorrow's labor market. today we will hear about her nga chair initiative plan for work

force development in her speech tighted "america works; education and training for tomorrow's jobs." please help me give a warm national press club welcome to oklahoma governor, mary fallin. [applause] >> thank you, couch. angela. t a pleasure to be here with youd at the national press club. i appreciate the kind introduction and essential a great honor to see so many of my fellow oklahoma begans that are here today. very surprised. before i begin my comments, i just want to say how heart broken we all are as americans as citizen about the terrible tragedy that occurred here yesterday in washington, d.c.,. and the tremendous loss of life, our thoughts and prayers and

condolences go out with those who lost their loved ones. i know, it will be a difficult time for washington, but we'll certainly keep you in your prayers as you begin the healing process during this tragedy that has occurred here today. but in the meantime, i am excited to be here at the national press club and join all of you. and excited to see so many i of fellow oklahoma begans and have an opportunity to visit with you about issues important to our nation. i'm especially i glad to see one of my fellow oklahoma reporters that i worked for many years. chris, joined us here today from "the oklahoman." you used to cover me in congress now you get to cover me a little bit when i'm as governor of state of oklahoma. chris it's great to see you and appreciate you do for oklahoma. he's done a wonderful job over the years for our state. and covering the national news and it's always interesting up here, chris. whatever is going on. it's always interesting.

i'm here to talk to you about an issue that i believe is critical and important for the future of our nation's economy. and that is developing a highly skilled, educate, competitive work force, and to close the skills gap between what employers need and what our employees have. in august i had the opportunity as mentioned to become the chair of the national governor's association, and through the governors' association we work together to our nation. we work together to identify the best practices in our individual states so we can share with each other. together we look for the innovative solutions to the pressing challenges that are facing our state. and part of my duties as chair is to launch an initiative around a topic not only

important me. but a topic i think is important other governors across the nation. i'm working to establish a national dialogue between business, education, and the public sector about how we can best prepare students, men, and women to get good paying jobs and for our nation to be to be keep pace and be exeat five -- competitive in a global economy. my initiative is about making significant changes, significant improvements in education systems, in our work force training systems, and also to align those systems with the needs of our businesses and certainly our markets. america works will also help our nation to reshore american company and jobs. governors, i believe, are uniquely positioned to foster stronger economic growth and especially that between our businesses and our education

system. they are the primary individuals the governors are, that are responsible for both public education and economic development in our state. states and the businesses that drive state economies can help secure their economic future by aligning educational institutions and work force training programs with the projected demands of tomorrow's jobs. preparing america's 21st century work force to keep pace and competitive is an issue that not only calls for national attention. i believe it demands gubernatorial leadership. and that leadership starts with recognizing some hard truth about our nation. navigating today's pathway to prosperity, remains more challenging than when my parents were do youing up. example is that fifty years ago, more than 75% of all the jobs in

our economy required only a high school diploma to get a good wage job. today the number has dropped to roughly 40% for the jobs available to high school graduates and dropouts. more than two-thirds of the jobs will be paying less than $25,000 a year. so it's clear that a high school degree is no longerred a dwoit guarantee a good job and access to the middle class life. we must understand that post secondary degree ear a two-year degree or four-year college degree or some type of career-technology work certificate is a new minimum in america for economic success. and by that, i mean, both for individual success to finding a good paying job, and for our individual businesses to be able to find workers they need. without some kind of post

secondary education, a majority of our children and our working adults will have difficulty achieving the american dream and being able to find a successful, fulfilling middle class life and beyond. unfortunately in many instances, we continue to fall short of this goal. meaning we're falling behind both as citizens and as businesses. here are some facts. they not be the most pleasant of truth. they are facts. too many high school students don't finish high school. nationally 78% of public high school students make it to graduation. those numbers are even much worse for minorities and also for low-income students. too many students go college surrender prepared, and end uptaking remedial courses. and often those students will end up dropping out of college and also meaning they will still acquire a lot of debt while not being a able to acquire a

college degree. and too many employers in oklahoma and frankly, around the country are, are saying they don't have the workers with the skill sets they need, and that colleges and universities in today's fast-paced economy are taking too long to create the type of new programs that will help the students develop the high need skill sets for today's jobs. all of these are contributing factors in a disturb national trend. once and while we once lead the world in student achievement, now america ranks 14th in reading, 17th in signs -- science, and 25th in in matt in an industrialized peer section. all of this in terms of percentage of the working adults means that in an associate degree alone in the united states and having that meant

that one out of every eight people in america will now have an associate -- we went from first to eighth, excuse me, in the nation in having associate degrees in our work force. ..

>> it was built around the notion of postsecondary education is a necessity. today in a fast-paced world where technology is ever changing these pathways must be flexible and efficient it must reflect the changing economic needs. they need to work with the employers and not for the employers. most important, they must be able to meet the needs themselves. our future economic security will require significant improvement to our education system and it also will require close working relationships among high schools and colleges and universities and her technology programs account that we face is very clear.

i wonder when to view graduates from high school are doing so. so our goal moving forward is clear and well. first, the goal is that we must get more students into higher academic standards by the end of the high school degree. a high school diploma should mean that we are prepared for any form of post secondary education, whether they are going on to college, or going on to another school, and they must be able to do that without needing remediation. second, we must create opportunities for returning adults to successfully complete a degree or a career technology training program to pave the path to a good paying job.

we have been able to collect some tangible data on this issue in my home state. we spent a tremendous amount of time and effort to use the data to identify our workforce challenges and the very specific solutions to help with that. we begin the process of collecting data and being able to compare oklahoma's current demographic with this emerging trend in the workforce needs. using the data, we identify the current education level of all of our working age oklahomans. then we identify the percentage breakdown of a degree level required with the jobs in oklahoma that will be created between now and the year 2020. a comparison of these two data sets clearly shows that there is a mismatch between educational attainment and workforce skills that are demanded in our growing economy. for example, we know now that 77% of the jobs to be filled by

2020 and the state of oklahoma will require an education beyond high school degree. however, only 54% of our current workforce are adults fit into that criteria. so that means that we have a 23% point gap between our workforce needs and the educational attainment that we have with working adults. if that gap is not closed, we know that our jobs will go elsewhere and my initiative, america works, will help to generate the level of detail data so that states can work together to identify specific policies and budgetary strategies that will allow us to realign our education system and training system to meet the needs of our emerging workforce. it will also focus on five key

elements to help states be able to make progress to overcome the gap and to create a more aligned effective education system. the five elements are, first of all, you have to have a statewide vision for being able to close the gap between education and the jobs and the economy. second, you have to have an integrated and improved data system. there you have to have a high-quality public and private partnership to work together. then we have to better align federal and state funding and other resources, and lastly, state incentives to support cost system integration. we hope to describe state will be able to accomplish with these five key elements. first of all, our papers are sticking together. i apologize. first of all every governor has articulated his or her vision

for education reform in the individual states and how they plan to improve their local economies. this will help to make it easier for these governors and certainly be able to help them connect the dots between education and jobs. all states collect lots of data and too often, the data is not used to answer key questions for policymakers and policymakers and help them be able to improve the results in their states. for example, and i will give you the things we have been doing here in our state of oklahoma. we know that in oklahoma that we have five key top ecosystems that generate the best paying jobs in the most wealth in our society. we know that aerospace and transportation and distribution, energy and financial services, agriculture and biosciences are top wealth generating jobs and

ecosystems in the state of oklahoma. what we are trying to do in my state is to connect the dots between educational attainment and the type of jobs that are employers need to be able to fill. the employees need to have a career technology certificates and they will need to meet the jobs in the marketplace. it will help our state be able to identify the best practices to do that and to be able to build a roadmap to be able to take action. government alone cannot improve the education and training system and its realignment. the needs of our employers, if we expect business leaders to be able to create these jobs, we'll need to be considered and we need them to be partners with us. we need to meet them at the table, working with us to identify and develop also the talent they need for their jobs.

my initiative also profile partnerships and encourage more states to strengthen their efforts in this area. we have all heard bill talk about that the definition of insanity is doing the same thing over and over and expecting a different result. they will identify and they will share strategies to allocate and better align our federal and state funding. finally, we will start doing the same things in pursuing the same old policies and expecting a different result. last but not least, my mission will help us be able to identify problem areas that are currently built into our education system and into our workforce and to be able to bring about a closing of that gap between what is needed

by our employers and certainly the skills that our employees have. reframing america works education training for america's jobswe hope to leverage much of the work is being done around the states and be able to share that information with their fellow governors. but to achieve this, we are going to be watching several different initiatives and activities throughout the state. first of all, this fall we are going to hold two regional senates to bring together not only our states and governments and business leaders to share experiences and be able to learn from each other. i have asked governor malloy out of connecticut to cohost an education and workforce summit with me. also governor martinez in mexico will be hosting another summit. and in her state, other governors will be joining in this process as well from around the country. i will post the final summit in oklahoma city, and we will also

dedicate a portion of our meetings to share and discuss the initiative and the results we have found. additionally we are going to provide each governor with state specific data and what will be called the return on investment as they invest in education as they work to realign education and the workforce itself and to be able to help produce the kind of workers and employers pay for their job. he will also produce case studies and in the governor's guide to highlight what is what we think is the best way to profile what works and what doesn't work. then we are going to kick off this to help them to be able to accelerate the work in their individual states have become models for other states to be able to emulate. these efforts will engage the

business and government leaders in a dialogue. about actions that governors can't hate community colleges, technical colleges, and certainly our training providers to close that gap between what skills are needed in this marketplace. in closing, as we began this initiative, we need to understand that in today's modern high-tech society with this global economy and world, a postsecondary degree is no longer the future of our state and our nation. there is now a new minimum of education that is required to be able to meet tomorrow's jobs. that is what this initiative is about. it is about securing our economic future and helping americans to prepare the workforce and tomorrow's job.

thank you so much for the opportunity to be here with you today. [applause] >> connecting states and the education workforce training systems is important in many organizations already working on this. why do you think america's governors can accelerate that agenda? >> because the governors are at the heartbeat of what happens within our individual states. we're the best at understanding what our businesses need, what our education systems need, and realigning our education and our skill set to be able to meet the demands of the jobs for tomorrow. this no child left behind with an emphasis on test results helpful or harmful to your goals

>> welcome i think that all governors believe that we must have more academic rigor in our states. that we must set higher standards for student achievement. we are falling behind information, as you compare america to the other industrialized nations am aware we bring, we are falling behind. if we want to be a competitive nation, we have to raise their academic our academic standards and we have to have rigor in the classroom, but we also have to be able to fill the skills gap that we have in our nation to be able to take care of tomorrow's jobs. >> you mentioned that business has a responsibility to call upon businesses. were you calling on them to do? >> we are hoping to tell them what we need is our skill sets. many times we visit with employers, especially small

businesses in oklahoma to tell me that they have job openings, but they cannot find the right workers to take those jobs. on the other hand, i find employees and workers are looking for jobs and being able to match them together to find the right type of skills that will be needed for those jobs. that is what we are doing in my state of oklahoma. we have established what we call in our state, oklahoma jobs at .com and the employees or people looking for a job can match those two together so we can better meet future demands of our state. >> what about funding? are you helping them pay for this? >> i think that businesses can be partners with the states. there are innovative programs that are out there. great examples throughout the nation, those whether its k-12 or it through through the vocational training programs, or higher education ystem.

businesses can be great partners with us, and we need to hear from them and they need to be a. >> in terms of money, are you going to ask them to kick in? >> well, what you find is that there are businesses that actually help support workforce training programs. we have a great career technology system in the state of oklahoma and businesses that may be retooling and could go to one of our careers systems and we could say, i need to be able to shift the kind of skill set that the workers have to be able to operate this new machinery in our state. that is a service at the state of oklahoma provides is the economic development tool to be able to get these jobs and keep these jobs and retain these jobs in our state. but not necessarily asking for money. we will take it if they want to give it to us, but this is a public and private partnership in which the state's realign their education system.

they look at concrete data of what is going to be needed within the workforce itself. we provide those. a really specific example, we have, as i mentioned, we have a large sector in oklahoma's economy of aerospace and energy. so in oklahoma we know that if someone is in the aerospace sector and they are a computer technician or maybe a welder, that those same types of skill sets are transferable and so they may need technicians or a welder or most of them may need some kind of engineering degree. we are trying to look at what level of payment we need for our core industries. >> you mentioned wanting to better align state and federal funding for education. can you give us an example of improvements you'd like to see in that area?

>> first of all, we think that we need to have the no child left behind at re-authorize, and we also need to continue to make improvements to that and listen to our governors and certainly educators not there yet. what are schools in the south and most of the funding that comes from the state, there is some funding comes from federal government. we would like flexibility with federal spending itself. i do think it is important that we as a nation continue to raise the academic standard and continue to have rigor in the classroom and continue to expect higher results from her students. >> you talk about responsibility being on the educational institutions, business, so forth. what about parents? or do they fit into the picture? >> absolutely, parents should always be involved in education. that is something that is critical to student success. but if a parent is not involved in that student success, i will

give you an example. in the state of oklahoma, we passed a law that said we want each child to be able to read at grade level by the third grade. but if that child is not proficient in reading, we don't think that they can continue to learn and keep pace with the other students in the classroom. so we had afterschool remedial reading and we also had summer programs to be able to help students. so if by chance a parent is not helping, hopefully they will be able to start helping. >> who stands to benefit the most from your initiatives? >> our citizens. they stand to benefit the most from our initiative because our goal is to help americans find good paying jobs and to be able to help build a stronger more vibrant economy with individual states and certainly throughout the nation so that we can continue to be a competitive nation and the world economy.

>> if you were to turn back time and start college today, what would you major in for the future? [laughter] >> goodness. that is a good question. well, i might major in political science. [laughter] [applause] [applause] i didn't really focus on that or speech or debate when i was in high school. so i might go back and take some of those courses now. [laughter] >> this fall the university of oklahoma will begin charging a flat rate tuition. it has been reported that it is designed to help increase graduation rate at oklahoma colleges by encouraging students to take more credit hours per semester. but the state of oklahoma feel that it is the governments duty to ensure graduation at the collegiate level? >> i do think it's important to set a goal of having more college completion and degree

completion. in fact, two years ago we launched a program called complete college america, in which, it's actually an initiative in which we encourage degree attainment in our state, whether it is great technology certificate or workforce certificate for an associate degree or college degree. as the statistics prove, we need a better educated highly skilled workforce to be able to compete as a nation. the ou has set a flat fee, as you mentioned, with the goal of hoping to encourage students to complete their degrees quicker. we know that in many circumstances that college students might take a little extra time and they might take five years or six years to complete college. but if there is a little bit more impetus to be able to finish that degree in four years, it's better on the parents pocketbook and probably a little bit more helpful to the students as well, certainly

helpful to the workforce in america. >> could universities end up losing money from charging flat rate tuition, especially if it applies to out-of-state students who paid more money than in-state students? >> well, the president of the ou believes that being able to help our students graduate on time, that we will be able to run our higher education systems more efficiently in our state and it will be more cost productive. >> the obama administration has said that once privately run career colleges to meet the standards that ensure students find jobs where they can pay back their student loans or else the schools will lose eligibility for federal student loans and grants. do you agree with that regulatory effort? >> our national governors association has not taken a position on a particular issue. but will they do agree upon is

that we have to continue to work towards raising our academic attainment levels in our nation, whether it's through public technology career systems or through a private career training school itself. but our goal and what we all agree upon, democrats and republicans, is that we have to be able to close the skills gap and raise the academic level of attainment in our nation. >> what is your opinion of president obama's recent proposal that would have the federal government we colleges and universities in word students and other aid based on national standards. >> well, once again, i cannot speak for other governors. but once again, we just continue to believe that we need to do on the weekend make sure that we have the best colleges and universities throughout the

united states. we need to make sure that we certainly put into place public policies that will help us achieve high academic standards. >> you think that there's a need to reintroduce vocational education of the high school level, or is college the ideal goal for everyone? >> as a good question. what we find in our work force in the jobs that we have in america, as i say come, the majority of the jobs will require more than a high school degree, but there are different avenues, whether it is getting a career technology certificate or a workforce certificate or a particular type of skill, whether it's going on to get an associate degree or beyond that. but there are some students would graduate from high school that may not have an interest in going to college. i think we need to do a better job, as a nation -- this is my personal thinking. helping to reach into high

schools clear down to our middle school to be able to show students the different opportunities there are available to them, especially as it relates to some different subject areas like stem education. we know that those are skill sets that are needed in the workforce right now. so we can go down to our middle schools, high schools, get them interested in further technology certificate that deal with some of our stem subjects and professions, that will certainly help boost our workforce. >> eisai oklahoma schools, we have all heard about the devastating tornadoes that hit so many people, including schools last year. do you have any initiative for protecting schoolchildren who might in the path of tornadoes? >> i appreciate your comments on that. let me just say first of all, thank you to everyone who has

been so kind to oklahoma during our turtle may tornadoes in which we had a command is loss life. especially with children that were lost at the plaza towers and the adults, and the devastation of the communities. children are back in school. i have been hosting meetings, not only with our local school officials, but also with some of our legislators and emergency responders to talk about ways that we can better encourager schools make sure that there are safety programs that are up-to-date. the plan of action, there should be some kind of a storm or any type of disaster or catastrophe that might occur and we are certainly having a rigorous discussion about storm shelters in the state of oklahoma. the way our system works in our stated that the local school board votes on bond issues to

decide how they will build schools. i encourager schools to look at putting safe rooms into our schools. we also have a lot of schools that were built in the 50s and 60s and it would cost a lot of money to retrofit it. we are working together as a group to look at ways that we can not only use our federal fema monies, but to also use some of our private sector donations and charities to be able to retrofit some of the in our schools or certainly encourager schools and communities to build safer. >> moving on to health care. many have differed in their approach to the medicaid expansion. you are one of those who rejected expansion. can you discuss how you arrived at that decision the decision and whether you think enough is being done for underserved oklahomans in light of the

decision to not take that funding. >> there certainly are various opinions on the affordable care act and how state handle their health care and their possible medicaid expansion if they choose to do that. what we find among the governors of the there is a wide variety of opinion. there is not one single answer as to what governors would or wouldn't do. that's up to the individual states themselves. what they do agree upon is governors is what relates to health care in and what is important to me is that we provide better access to care and we certainly work on the quality of our health care. that we work on helping to make health care more affordable in our states. not just as the national governors chair itself. i felt that my state with the predictions of cost, the rising cost of medicaid, which we can

country and continue to see everyday, looking at my state budget and my population, that it was not in our best interest is with 26 other states, to expand medicaid and oklahoma. i will play that we have a great program called ensure oklahoma, which is a three-way partnership between employee paying a portion of their health care costs, and an employer that pays a portion of the cost, and also federal and state matching funds. this is for low income working people or individuals. mostly in small businesses. so we had a federal waiver that we were granted back in 2005 to start this program using tobacco tax settlement money in oklahoma. and we had 30,000 individuals that have signed up for this and certainly one of our small businesses taking advantage of this program. we were notified last me we were no longer going to be able to keep our waiver.

so backa nd asked the president and terry sebelius if they would reconsider their idea, because i felt it was important for my state, not just as the governor of oklahoma, to be able to have the opportunity to keep a successful program that was doing what a lot of us want to do. that is to be able to provide health care at a reasonable cost, especially for those who are not covered in for some businesses that are lower income. i was able to get the waiver approved, about two weeks ago in our state. and we were able to continue that for another year to help our fellow oklahomans. we are continuing to work with the legislature on our health care system itself and we continue to work on health care in general, and we are working on what we can do to improve health oklahomans.

>> you expect smooth implementation of obamacare and oklahoma? >> there is no official policy by the national governors association on this. [laughter] but for me personally, you know, it is challenging right now. we look around at what is going on in our nation with the various companies that are expressing their opinions, the labor unions, certainly the health insurance companies are coming out with their rates right now. you have seen some of the recent reports with the navigators and training. it is challenging right now because it's a new system and a big system. we are watching and waiting and we are going to see what kind of rules and regulations come down and how it all shakes out in the

future. >> oklahoma passed legislation to reduce its highest personal income tax rate. a report that came out in march showed that during the 1990s mistakes, states with the biggest tax cuts have slower income growth and jobs at one third of the raid. what services do you expect to have to cut to pay for the tax cuts, and how will his cuts help oklahoma's economic growth? >> i hope that we will not have to cut any services because our demographics in the state of oklahoma show that every time over the last 20 years that we have made targeted tax cut that we can afford, that our economy has actually grown. that is why we have one of the lowest unemployment rates in the nation. and some of the strongest growth in the nation. from the year 2011 through 2012, our per capita income grew by 9%, which is number one in the nation. [applause] what we have seen in my state in oklahoma, when we let people

keep more of their hard-earned money, they reinvest that back into our economy. businesses expand. we have been very fortunate in our state to have a strong and growing economy. i took office back in 2011. we had $2.3 and a rainy day savings account. we had a $5 million budget shortfall. and i had to close the gap. for me is the governor of oklahoma, i prioritize our spending on education and health and transportation and public safety related issues. when i worked to enact pro-business, pro growth, pro-jobs, where there was reform education, workers compensation reform. huge with efficiency and we worked on some pension reform in our state. as a result of that and because of our tax cuts that you mentioned, we had one the first

year and then we had another tax cut that will take place in 2015 and 2016. if our economy continues to grow, which is at this point. we will see three tax cuts and our state. our unemployment rate went from 7% down 5.3%. oklahoma city has the lowest of any major metropolitan city at 4.9%. and that $2.3 and a rainy day savings account, it reached a high of $577 million in 2.5 years. that is helping. we like that. >> we have several questions about your neighbor, governor rick perry. [laughter] >> he is indeed a running ads and visiting our neighboring state, looking to move some jobs from here to there. what do you think about his

approach and is it constructive? >> well, there is no official policy there is no official policy from the national governors association. as governor of oklahoma, it is all fair. it is all fair. i mean, the states that are creating highly educated work forces, keeping taxes low and making government smaller and smarter and more efficient, addressing concerns, businesses cmoompive.at they wl be theob, i like to go untilok thoma sty and governor perry likes to go tell the texas story. i actually have stolen a few jobs frotetexas myself. [applause] [applause] [laughter] >> you have any trips to texas

planned to steal anymore? [laughter] >> here, here. [laughter] you had mentioned the tragedy yesterday at the navy yard. of course that raises the question that security and extensive insulation. can you talk about security and first responders in a nationwide time of budget cuts? >> this again, we'll just be myself speaking. because we don't have an official policy on not with the national governors association and the national chair. but one of the things that is important to me in to the governors is that we maintain our spending for national guard. because many times during times of crisis in our nations of individual states, international guards. we have commanders in chiefs, and certainly our governors have

been concerned about the disproportional cuts that the national guard has had to take during some challenging budget times. the financial crisis that our nation has faced as well. as far as our first responders, it is important that states fund their first responder programs and certainly their emergency programs here in the states. when i came into office back in 2011, we had a lot of natural disasters that occurred in our state and our state have not reimbursed our local counties and municipalities for the fund to be extended during that time. so when i became the governor, we pass legislation and put it in the bill to be able to reimburse those various communities forward their disaster programs. that was my state. >> in oklahoma, an australian

australian politician was shot and he set the time that the issue is not about gun control, but about murder. you think there's any gun control measures that could have prevented him from being shot, and would you favor any gun control measures such as universal background checks? >> well, you asked me that at the national chair of governors association. well, only to when you say that we have determined this tragedy in the state of oklahoma with an innocent bystander. a jogger, a college baseball player bludgeoned in his community and he was gunned down by three individuals, a group of three individuals. we're still working through the justice system on who is the perpetrator of that. but it is an issue of murder. if someone is going to kill

someone like chris lane, they could have used a car or a baseball bat or whatever they wanted to use. if you are setting out to murder someone, it's very unfortunate that he was shot and he was an innocent man. i know justice will be served in the state of oklahoma. but i think it's up to each and every individual state to have their own laws and regulations about guns in the different states that feel different ways and governors have different opinions on that. in the state of oklahoma, we strongly support the second amendment rights. as well as the rights of gun ownership. >> is oklahoma's first female governor, how would you assess the status of women's participation in state government and business and education in your home state? >> women's what? >> substantive participation. >> oh, okay. it's good. we encourage that in our state.

actually, for many years, when i was a young girl beginning to run for public office in my early 30s, had a lot of people tell me that our state would never vote for a woman to be in a statewide elected office. but i have been able to hold for different offices in our state. we should encourage more women to get involved in politics in our nation. they can certainly make a difference whether running on a local level as my mother did, or running for congress or the senate or running for governor, maybe someday we will have a woman president. >> not me. [laughter] >> we always encourage announcements to be made here the national press club. [laughter] >> is someone who successfully ran for office when you are pregnant and received criticism

in turn criticism for doing so, what do you think of the present-day criticism of yahoo!'s ursa minor for accepting the job and will we ever get past the criticism? >> you did a pretty good background check on me. have you been working with the nsa? [laughter] >> actually i decided that i was frustrated and i wanted to try to effect change, education, health, jobs. i decided that i was going to run for office and was actually pregnant at the time. i had my son between primary and general election. so there were some people who came up to me and said that you will never be effective. you will never be able to get anything done. it will be hard for you to be a young mother. i also had a 3-year-old at the same time. selection night i had an 11-month-old baby and a

3-year-old. and i took office 23 years ago this coming november. it has not held me back as of yet. not only did i served in oklahoma house of representatives, but went on to become the first woman lieutenant governor in the state of oklahoma that went on to congress, certainly now my children are normal. they are doing very well. they are very outgoing and very opinionated in their own right in a good way. so i think that women can do whatever they would like to do. as long as they work hard, certainly for me, my faith and family and career, that is the order of my priorities personally, that's what i think is important. [applause] [applause] >> now, i have to squeeze in a sports question. how can oklahoma's business

leaders achieve the same prominence as your football team >> we already have. [laughter] we already have, that is why we have one of the strongest economies in the united states. the drop in on employment rate. the new revenue growth that we have seen in our state, certainly having one of the best job growth rates in the nation, the lowest unemployment rate in the nation. we are seeing great success with business recruitment and retention and we have been working very hard to create the right climate for businesses to be able to invest and grow and expand. we also want to make our state the best place to live and raise a family. so we do have great football teams in a state of oklahoma. but of course, i think all of oklahoma is great. >> we are almost out of time. but before asking him a question, have a couple of important health care housekeeping measures to take care.

first, we want to remind you of the environmental protection agency just that we are having the will highlight the action plan. on september 26 we have mitch landrieu and michael nutter, mayor of philadelphia. on september 30 we have education secretary arne duncan. secondly, i would like to present our guests with the traditional national press club coffee mug. >> thank you. i appreciate that so much. >> and one last question. the first female president of the national press club was an oklahoman and she was elected here in 1982. is oklahoma's first female governor, what do you think is the secret for these pioneering women leaders in your state?

>> the strength of the women from the south. [applause] [applause] >> thank you. [laughter] [applause] [applause] >> thank you, governor, thank you for coming today. thank you to all of you in the audience as well. i would also like to thank the national press club staff coming including our journalism institute and broadcast center staff for helping to organize today's event. i would like to remind you that you can find more information about the national press club on our website. if you'd like a copy of today's program, you can find it there as well at www.press.work. thank you very much. we are adjourned.

[applause] >> looking for live coverage of the national book festival. authors include many featured and more coming up in october. >> many said how can you be part of this if you had gone to jail. and we wanted america to be better. we wanted america to live up to the declaration of independence. to live up to our creed and to make real our democracy and make it real. but when i got arrested for the first time, i felt free. i felt liberated.

today, more than ever before, i feel free and liberated. abraham lincoln, 150 years ago freed the slaves. but it took the modern-day civil rights movement to free and liberate a nation. >> civil rights leader john lewis will be our in-depth guest on sunday, october 6. he will take your calls and comments for three hours. also scheduled for in-depth, kitty kelley on december 1. and christina hoff sommers. on january 5, talkshow host michael glenn. >> you're watching c-span do with politics and public affairs weekdays featuring live coverage of the u.s. senate. on weeknights, watch key public policy events. every weekend for the latest nonfiction authors and books on booktv. you can see past programs and get our schedules our website. you can join in the conversation on social media sites as well.

>> a look at the u.s. housing market. on monday, the chief economist and senior vice president of fannie mae give a report about the economy of housing and the american institute of certified public accountants. this is one hour and 15 minutes. >> the thundering herd of north dakota state. it is a pleasure to be back. a couple of years ago i think i told a joke that questions the difference between accountants and congress. i actually have a collection of thousands of single panel cartoons and i own a bunch of originals. it is one of the things that i like and you can develop it. one small picture can be transformed and so i was looking at the collection and the picture of a bar and the

gentleman sitting with his back to you, the reader. two women are sitting down in one of them says to the other, you know, he has that added element of danger. he is an accountant. [laughter] >> that was public published shortly after enron. [laughter] thank you for allowing me to come back and speak with you. now, growing up on a farm, my father used to say it. but it has more than two moving parts, don't call it done. he was right. let me talk for just a couple of minutes of what has been our theme for 2013. last year when i spoke, the theme for last year was year of the political economy. and it kind of talked about why we felt it was dominating things, they were actually 65%

of the gross gdp and underwent potential leadership change. huge volumes of legislation and regulation. so in december 2012 as we were thinking things through, we observed a couple of things in our surveys of consumers, which we have been doing for three years. all the information is available to you. we do a press release each month. in november of last year after watching one question, the responses to one question, which no one else asked, which is is a good it a good time to sell a house? we decided to use the word from putting in describing housing, even knowing that the fiscal cliff still had to be dealt with. and when all of those tax provisions went into law as they were described, at that time we expected a small recession in

the first half of 2013. thankfully we did not have to run that experiment. but using those words firm footing and then thinking forward that it indicated a sort of transition to a different direction for housing. since housing is an important element, we felt it would also impact the direction of the economy. but you will notice that we put the word normal in quotes. and we put at the end of that a question mark. the reason we did that is that it wasn't we want certain there would be a transition, but we weren't certain where the transition would take us with respect to what we had thought in the past was more. what we have been doing each month when we put on our economic commentary as we are putting out one or two very short papers on a topic relates to housing and the economy and what would be normal for that in

the aftermath of the crisis. as cindy said in her opening comments, looking forward in 2008 would have been hard to predict the magnitude of the downturn. certainly that is true. full disclosure. i did not predict the magnitude of the downturn, nor did any of my peers. frankly. so given the depth of that, what will normally be, and i will talk a little bit about those things in the course of my comments. as always, and the humor will be incidental. this is basically means that although there are some of my peers here, i think that they will hold me accountable and i will try to behave pretty much, or maybe not. so for about five years running

now, we have had lower expectations for economic growth than we have for the central bank and in each of those instances, that unfortunately turned out to be true. part of that is the fact that at our company we have a lot of insights into housing that others don't have. that plus our understanding of how consumer attitudes are changing, which you will see sprinkled throughout the comments this morning, it will lead us to believe that it would be difficult to see a robust economy. so when we said that housing was on firm footing, we also said that that does not mean that it is robust. we continue to believe this year, and at the beginning of the year we thought we would grow 1.9% a year. it will probably end up being right about 1.2% in real terms for gdp. our forecast for next year is

only modestly better, perhaps 2.5%. we believe that the economy has a ways to go. in fact, if you recall, some of my comments last year, i talked about a 10 year timeframe which started at the end of 2006. as we have gone through 2007, 2008, 2000 nine, seven years in and so forth. that would imply steen until we get back to normal. as we'll see you'll see when i talk about housing, that aligns with their expectations of the palette entries of housing starts, which is the largest that it makes for economic growth. so we think of it as part of a recession, but we do not believe that it is as robust as some of the others. a lot of you come to me and say why are you so pessimistic. well, actually, i'm not

pessimistic. i'm relished it. in the long run for our country, my job is to forecast what i think will happen and not what i want to happen. and one which fannie mae would almost certainly have a little heartburn over. but the part of the fact that we are not expecting robust growth comes back to sort of this social side of economics, which is what you people do. as you can see on this chart to the far right, there has been some improvement certainly from the depths of the downturn, but certainly not robust. the personal consumption expenditures running something like one to 1.5%. the average of that from 1980 through 2007 with 3.4%. consumer spending is still

significantly lower than three to 4% growth rate. so it will just give us pause in the lower quartile in terms of our expectations of economic growth. and likewise business reflects the path and transact that of consumption will stick up, it will be unwise to expand capital investment, your ability to produce and hired laborer. and that is in one of the challenges. one of the reasons that our central bank has been in the position that they have been with regards to monetary policy, it is the slow growth in employment. certainly businesses and capital and labor in the degree has been slow. replacement has not been due to much expansion and consequently they are not expanding employment at a place that would

indicate the faster economic growth either. so give a little bit confusing. and it takes a moment to absorb what it says. as you know, one of the thrusts of productivity improvement has been the development and the importation of technological change. with this chart says is that the increase in technology has slowed, the pace has slowed, but it doesn't mean that businesses are not investing. as you also know, the real price adjusted for quality and inflation has been following and the pace at which it is following has also been slowing. so you can infer from that that we may be moving toward the exhaustion of the benefit from

additional technologic investments. i would argue that that is not true. there may be some from a very heady pace, some song, but related to that slowdown in capital investments. businesses are waging for economic growth to create opportunity for them to increase their investment in technology. listening to the former chief information officer of time warner, who is also an adjunct professor and sits on the board of several venture funds in silicon valley. he suggested that there are four firms that are leading technologic change for u.s. style firms. google, with linked in, facebook, and amazon, which i thought was really interesting. but his view is that it is still

leadership of the world, and while there are warning signs on this particular chart, i think personally it is a waste of economic vote and the resumption of that very positive trend line. as you know we still have a significant challenge from a fiscal perspective in this chart basically shows the period, 1,952,008. and we ran a deficit in terms of the deficit to gdp ratio. ..

it had been on as steady increase. it recognized that house prices have started moving up, which is important for them some --, says the median income housecoat -- household, the biggest wealth they have is the equity in their home. on the right hand side we ask this question, is it a good time to sell the house. that is the green line on the bottom. you can see, that was sticking up 1 percent per month. this chart does not go back to it, but in january of 2012, you can see in november when we made the announcement it was up over 20 percent. continue moving forward. and now for the last couple of months it sort of flattened of. consumers have been getting more optimistic, but they have

planned off as a way to, the debt ceiling debate, the question of interest rates, additional geopolitical risks in the middle east. consumers have sort of paused. is the economy on the right track of the wrong track? so two things here, the rise in the wrong track back in july and august of two dozen 11 was the last time we had the debt ceiling debate. as you can see, at the peak, three-quarters of the u.s. population felt we were heading in the wrong track. that is really -- three-quarters of americans cannot agree on anything. that is a pretty amazing thing. so what that means to me is, they did not like the debt ceiling debate. i don't expect them to like the debt ceiling debate. probably starting today. you can see, and the far right hand side, the percentage of

people thinking that we are hitting down the wrong track rose 3% last month as the news cycle started to pick up that question of what we will do with the debt ceiling. so i would expect some adverse results, most likely in our survey of this next month. but the larger picture here is, if over half of the public thinks that the economy is heading in the wrong direction, how likely is it that they are going to increase consumption, especially since the decline in house prices, not all of which has been recovered, is hitting them in the largest part of their equity wealth? it just does not strike us as likely that that is a strong economic or a psychological background for robust consumption on the part of consumers. now, obviously we have seen the

decline in the unemployment rate , and that is a positive, but also part of the reason for that decline in the unemployment rate is not as positive and is because significant numbers of people have been leaving the labor force. so if large numbers of people are leaving the labor force, that means the end, that those households will have available to support consumption is also falling. another reason that we don't see the robust growth in consumption that is being predicted by some others to drive the economy ford as the best -- at a faster pace. part of that is the bombers retiring, and that is that demographic factor. part of it is that the low level of employment growth has incurred as jagger cohorts to go back to college to add to their human capital. that is a typical cyclical

response to a hiring slowdown. in this instance we can see the dramatic run-up of dactylic -- related to that which i will talk about in a moment. some of it is history's workers having left the labour force. as you have heard from the central bank, there is a great deal of concern on their part because the longer folks are out of the workforce the harder it is for them to re-enter the workforce, and the earnings pattern almost never returns to the path that it was on previously. another reason to be concerned about the ability to punish consumption board. the per capita income growth has stagnated. this has been the slowest growth of any close to recession since world war two. mind you, we are now at about the average length of any post recession expansion.

in other words, four and a half years is the average length of expansion after each of the recessions. we are actually there. it does not feel like it. it certainly does not feel like it to the public. a question about how they will respond going forward here's a picture that shows the consumer income expectation six months ahead for ease of the last four recessions. it's fairly striking expectations today are still negative. this comes out of the conference board survey data. so we have a hard time seeing robust some forecasts are relative to ours. let's talk for a couple of months about credit conditions. this will be a big week. a lot of discussion about tapering. last year we talked about the fiscal cliff. this year it was tapering.

i'm not sure. we have not figured out of funds term for next year yet. but you're going to hear later this week on the 18th a comment by the central bank, the markets have already anticipated that the central bank which has been adding a net of $85 billion of securities. treasury security, 45 billion plus 40 billion of mortgage-backed securities to the portfolio that they are going to change that posture. if you changed -- if you sit down -- think back to your high-school class is on factorials and think about the numbers of options that the actually have for how they would do that. it's something on the order of 25 different ways that they can do that. if you think about it for a moment, what they're doing is purchasing enough securities to replace all the securities that

are amortizing so as people make their payments they simply pay off or people that refinance its -- the principal balance from prepayment or from defaults in the case of the mortgage. so they are buying enough to replace that plus to add to the portfolio and that. so the same thing on the treasury's side. as long as the debt ceiling debate goes well, there will not be a default component in the treasury peas. that is set communist to mayor. [laughter] people don't come to an economist tac toe parties. and advisedly so. they could choose to of the purchases of mortgage-backed securities constant which is what the consensus of the marketplace is, they will do that and that they will slow the

purchases of treasurys. they can still keep adding to their portfolio. but at a slower pace. they can stop adding to the portfolio and simply replace amortization. and they could to slow the purchase and not even replace amortization or they could stop purchases of treasurys. the zero options. the kindle treasury's constant and each of those things with mortgage-backed securities or some combination of all of those options on either side. they have a lot of choices of how they do this. the consensus to the marketplace based partly on a paper that was delivered at the jackson hole conference which said that the purchases of mortgage-backed securities had been more effective in providing economic stimulus than treasurys has led to the view that they are likely tax on the treasury's side by

slowing purchases of treasurys rather than or more than they change purchases of mortgage-backed securities. that is the likely scenario. our economic forecast has embedded in it the expectation that they will start slowing purchases of treasury securities in the ten to $15 billion a month rate. they will eventually also slow the purchases of mortgage-backed securities. it will stop with a net additions to the portfolio by mill 2014. that is embedded in the forecast. to be straightforward some people say if you want to know what an economist forecast, real forecast is and ask them what they're doing with their own money, last year i think i told you i bought a house in florida. so this year i have been boosting the floridian economy by remodeling it. i think i ask you the question

last year, how many people have remodeled. it is still under way. the same question. is really abysmal. but then you would expect that. anyway, this is what happened. this is a snapshot of the first of january this year until today what has happened with that ten year treasury yields. now, mortgage rates typically are spread above that yields. so if that yield goes up, so the mortgage rates, and i will talk about that in just a moment. these are all of the various statements that people made, but you can see, they're and that bottom. when there were some comments by chairman bernanke in the q&a session that suggested that there are going to start the process of tapering somewhere and there were strong job reports for couple of months, those two things together led the market to conclude that tapering would start, and so

they started beating into the market what the rising rate was likely going to be as a result of that. so in addition to rates rising, the volatility in the trading, and that volatility has raised which gets priced into interest rates, so it, too, was an impetus to push rates up. now, mind you, on the left-hand side was the fed's portfolio. and the flat part of the far left side, that would be the normal relationship which goes back about seven years. that will be the normal relationship of the fed balance sheet to the u.s. economy. to the right side, the expansion of the assets, agency mortgage-backed securities and treasury securities as well as others that have occurred in oppose crisis. it said to get back to normal

all that has to get back to the flat part. as a mess of it might be 2020 before they return to normal. that is our transition to normal question, what constitutes normal. we think that's probably normal. it will take a while the transition to get there. on the right-hand side that green card is the reserve balances being held on bank balance sheets that have to be worked off in a way it does not generate inflation. the fear is that those funds could flow and to credit markets rapidly and generate inflationary pressures. that is what the discussion is about. there is no evidence of inflation. here are the purchases of mortgage-backed securities. 40 billion a month $72 billion, mortgage-backed securities.

prepayments are defaults. -40000000000 had to buy. that's why i was talking before. same thing applies on the treasury side. so what has happened in the past when rates rose. there was a whiff of -- not panic. suppose that is an overstatement , but certainly concern about housing being on a firm footing, but rates rising, potentially reversing and bring house prices down. so there are two-time fans are there have been a rapid rise in mortgage interest rates. and wanted to talk to folks about what happened. the first was 1994, 1995. over 14 months mortgage rates rose about 240 basis points or two and a half percentage points. what happens?

home sales fell. house prices went up, just not as fast. our share of mortgages, that is adjustable rate mortgage shares bites. these are the specs and the adjustable rate mortgage share. that is what happened as prices actually went up images not as fast. so the other time firm was the 1998-2000 when over 19 months mortgage rates went up 180 basis points, pretty much the same thing happened. interest rates went up, on sales fund, house prices rose, just not quite as fast, and the arms shares spiked. does that mean that we should expect this simply because this -- the interest rates bites began about a hundred basis points and should go up some more that we should expect the

same response for the housing market. in neither of those times was the fed balance sheet anything like it yesterday. the actions they're taking are more to normalize there balance sheet relative to the economy than they are to either slow the economy, to tamp down inflation or anything like that. this is the normalization of their balance sheet. we have never experienced this because the balance sheet never look like that since the depression. so that's the first unknown. the second one is the rules for underwriting adjustable rate mortgages a been changed. today if you're going to issue an adjustable-rate mortgage you have to underwrite the bar and their capability to make their payment at the maximum interest rate that loan could reset to in its first five years of life.

and clearly interest rates are on an upward great profile. so you will be underwriting that loan at a higher rate, then the start rate on that mortgage. we have been watching to see, and there has been very little response so far in terms of adjustable-rate mortgages. underwriting changes affecting the ability of households which in the two prior * use that tool as an a portability tool to adjust to the change in interest rates. so those two things could lead us to a different results in this time from what happened in those last two time frames. all right. what is our time here? got about five more minutes. plenty of time for questions. the way i can avoid them. i'm sorry, i can answer. in washington if you asked a

question they don't like they just answer a different. [laughter] that's what they do on the talk shows. no surprise coming of the crisis, the first and that happened, household formation is now it back to normal, the family building activity picked up first. now, a quick review of their relationship between renting and owning. the homeownership rate has fallen from 69% back to 65%. we think it might hit lower than that. some people and asked if we're becoming a nation of renters. our response is no. will we are doing is rebalancing to more normal relationship between the share of tousles the rent and those that don't. our view is in the long run adjusting for demographics, the boomers demand all of that, 64- 65 percent home ownership rate is about right.

that is, households that want to own and are financially capable would result in about a 65, 64 percent homeownership rate. we have surveyed in our consumers throughout the crisis the aspiration to own a home has been unchanged. no impact whatsoever on the desire to own a home, but consumers have become realistic. it is going to be harder to qualify for credit going forward. that is not surprising given the magnitude of the downturn that occurred when underwriting criteria east dramatically, and they also recognize that it is not just your financial strength to qualify for the mortgage to buy the house, but it also requires some resources to maintain that house. so they recognize there are two parts to get themselves prepared to be homeowners. and the group that sees housing as the best investment potential is the youngest aids cohort. now, i'm not sure how this

plays. today we have the highest share of 16-248-year-old that we have never had. i'm not sure what that investment potential question may be investing in their parents' homes. i don't think either party has barely been happy with that transaction. but the younger cohorts, obviously the decline in house prices making the potential for long-term appreciation stronger. so that will eventually play out the multifamily peas picked up first. there has not been a lot of pick up in the construction space. we took some heat at the beginning of this year with our forecast. this year somewhere around 950,000 units of single-family

multifamily in manufactured housing would be produced. this chart shows our belief about what is normal. i mentioned at the outset i would comment to you about what i thought would be a normal level of construction because it is the most important contributor to gdp growth. you can see here that our view is about one-half million units should be produced annually based upon longer term stable demographics, and we think we will get to that average from 2016-2020. we will average that. this year we will produce 950,000 units. we were well below consensus on that. it took little heat. why were we below consensus? in the course of the crisis public builders had to release of land options and sell land holdings to survive. so there supply had to be rebuilt. and then just buying the land is not enough. you also have to get the permits

for construction mistakes time. you have to hire labour. mind you, the people that would have been working in this space for four years were unemployed, a large share of them. reducing over 2 million units prior to the crisis. we dropped the 600,000. a huge outflow. there were sitting waiting for the market to come back. the home-building industry will have to encourage them out of wherever there were and that probably means that labor costs my rise for them to encourage them to move into that space, and then they have to attract materials. our view was that that would all take some time, and that certainly has borne out the monthly annualized numbers. i think we are going to be pretty accurate. to get to this measure, it means that each of the next three years, the construction business

is going to have to add about 220,000 more starts each year get that. that is said to a pretty aggressive path. we feel pretty good about that forecast. it would like to be better, not what i would like to happen, it is what i think realistically will happen. it's on the right track and housing will be a tail wind, but we have a ways to go. this just shows that supply has only just picked up from the lowest level of available homes for sale since world war ii. and existing home supply is moving out recently partly because one thing that was not normal that is moving toward normal is the number of households who were under water, in other words, they owed more on their house than it was worse . there are still, by some estimates of 5 million households out there who own more on their house than it is currently worth in the marketplace. go back to our question about is

a good time to sell a house? you are under water, not a very good time. mind you, only 40 percent of households saved is a good time to sell a house. that is less than half. so there is still a way to get to rebuilds the optimism and, frankly, the financial wherewithal to deal to offer for sale the house the you have. so another reason that we are modest in our expectations of growth. that type of supply driven by the fact that there are a lot of people in the water, the low levels of new construction, the fact that there's still about 6 percent of the mortgages out there hurt seriously delinquent. the fact that in some markets institutional investors of come out and come in and swept off the low price points and turn them into rentals. all of those are supply restraints. our view is that the reason prices have been rising is on

the supply side, not the demand side. so five out of eight households who are going to buy a house have to sell one first. so if it is a bad time to sell a house, they are also not going to be on the demand side of that equation. that means just to show the difference in some of the local market. jumping board to state finance rates is to give you a little perspective, the average 30-year fixed-rate mortgage since world war ii is a the six and a half%. today rates aren't about four and a half%. it is still a very good deal from the long term. the problem is, it is coming up from an extraordinarily low level driven by policy choices. so the normalization and the return to normal is going to see rates rise in going forward, and that is a question, how much of a head when will that be, not just for the housing market, but for the economy overall off.

lending standards are still very tight. after a map of the crisis, but moving a little bit, but not very far because there are still lots of rules being put in place to the effect stronger underwriting standards going forward. as you might expect, that hundred basis points or one percentage point has significantly curtail the recent housing sales. there are still about a million households or eligible for the home of what will refinance program that have not acted that could still see significant benefits. what you are seeing is with the drop-off in the overall activities lenders are turning to those households as an opportunity to keep volumes up as total volume in the market has dropped off. as i said, seriously delinquent loans are declining. that is a left-hand charge. they are down significantly, but they are still significantly

higher than what would be normal. normal for that would maybe be about 2%. the full market today is about 6%. states that have judicial processes that manage foreclosures are taking much longer. in fluoridated something on the order of a thousand days to take a loan through the foreclosure process. that is about three years. there are few other states that have that same circumstance and those that have an administrative process of moving much more rapidly. this is the -- the number of households to have had or have under water loans. i commented on that. what does that mean for the mortgage space? it means that in 2014 you will see a drop-off in total production, and you have seen recently some companies announcing layoffs in their mortgage business as that refinance component has dropped off significantly. and the troubling thing is that

the applications to purchase from mortgage to purchase some have fallen about 17% since that rate rise. now, whether that will feed back simply with the reduction of sales of whether will hit how -- house prices is a pretty important question. past evidence with us to caveat is that prices my slow, but not fall. this is a very different environment. so 2 percent growth this year. rates ending the year for mortgages and about four and a half percent, up a little further than they are today. next year economic growth at about two and a half%. still not anything close to robust. mortgage rates up to maybe 5 percent, maybe five and a half percent by the end of next year. you will learn a lot about that thursday with the announcement by the fed at the end of their meeting on the 17th and 18th

when the market is kind of just stopping, waiting for that announcement at this point. so with that -- i'm sorry, that was -- okay. there are some tailwinds. housing is a tail wind with that caveat. and did not talk about it, but i will if you want to, energy is a huge gray spot for us if we manage that well. as a strong relationship to manufacturing if we execute on that well. technology, i commented that we are still a world leader in technology development. as i mentioned to 50, also demographics. we actually have good demographics. immigration is something we want to think about there. so long term, could place to be. how about that.

>> i hit the bottom on my refinance. >> i at this late at. he will start with labour market questions. so what about the shift to a part-time employment? how does that affect your outlook? >> that is dangerous. where you think the labour participation rate will bottom out. is it possible for elaborate participation to get down to the 1950's level, 60 percent and the like? some suggest that there is paradigm shift in the nature of work and the resulting decline of the demand for human workers. it