>> justice ginsburg's words were, i remain convinced that handedly is a consideration of race, is preferable to stealing it. and maybe that goes also to your question. if these are proxies, to what extent our schools, our schools entirely safe come even if they say, look, we know the top 10%

is a proxy for race in which is using it for that purpose and that purpose alone. our educational institutions given the distance language safe in using proxies that are intended to offer that and conceal it? >> i don't believe that the university could find a safe harbor, build themselves that they're completely invulnerable, that the use 100% proxy for race. i think the courts would look behind that decision, but there are, there are ways of classifying folks that are courts approved. geography is flexible enough and allows for movement so that you could move to another school

district, move to a close down, and, therefore, have control of whether you fit into that category or not. so geography is one that the courts would say, that's not a proxy for race. just like i can't decide -- i can decide tomorrow i can move to this lovely city of san francisco. so geography is one of those instances where it won't turn into a racial quota and, therefore, won't result in a legal challenge. >> i would agree with that. i don't think it's a care plan because it does, one of the reasons politically it was able to pass is because a lot of representatives from the rural counties across texas voted for because they recognized that their students in the small high schools that often would not be given the opportunity to go to the flagship school in the state, we're going to have that

opportunity. so the geographic diversity that it yields is also a benefit. and geographic diversity with it, the background of being from a town of 100 people as opposed to being from an open environment which adds something in and of itself. so i think you'd have to strike pretty hard to find something that's 100% proxy for race that's going to get you into trouble. >> i'm pretty sure at least five members of the court, maybe a couple more, are okay with these proxies. there's some members of the court, obviously, very, very against any kind of race -- justice thomas concurrence, but in any case i think as long as you're just looking for five members of the court, i think you're okay with most of these in proxies. >> well, absent any additional

questions from the audience, i will then close with one final question, which is as universities go forward in a post-fisher realm, are there any other pieces of advice that you would have for admission offices, university administrators, anything else that they should keep in mind in designing a process that fosters diversity in education pipeline? >> i would end by saying that a policy decision is what we're talking about here. it's more policy than law. the admissions committees are having to do the political work of engaging faculty and engaging a lot of stakeholders. their regions, their education leaders, the k-12 pipeline, the

parents, the students, the business leaders, the regulators, the white house, civil society in general, they are all stakeholders and what admission committees do. and so it is a political process -- not a partisan process. it's a political process of working out a solution that fits the needs of that campus. ultimately, it's about the university or the college being effective. and when admissions works really well, so does the campus. >> my piece of advice would be for admissions offices to work very closely with the faculty of the academic institution, to understand the mission of the academic institution, and make sure that the admissions processes are aligned in a way that supports of that mission and seeks to advance that mission. because i think more and more, the mission processes will have to be tied to that mission, and there are some law schools that don't have the nation. to law schools really need to

think about formulating a mission of the faculty and think about how diversity relates to that mission. >> i would agree with everything that dean pratt has said, and i actually have to talk to you later about some of these ideas and putting them out as vice i think to law schools. at least i didn't a lot of focus has been on law schools, and i think those of us have been in these institutions know we have spent less time than we probably should to what we're trying to achieve with policies like these and what kind of critical mass were kind of get in the classroom. and so i think a lease in terms of our own backyards, we serve should have more conversations, not fewer, about what we are trying to achieve with our mission policies. for institutions, undergrad institutions, obviously it's a much more difficult and wide ranging discussion. so i understand the complexity

of that, but really i think it highlights the need for more outreach. you know, again, in spite of what's going on, getting the message out, the welcome mat really out in terms of these institutions to people of different backgrounds. and so, so again, that's one of the things we can all do. >> i want to thank her for secrecy, dean pratt and norma cantu. and want to thank robin who stepped out of the room again it was very busy managing multiple committees for all her efforts, and thank you, the audience, for being with us today. thank you. [applause]

>> this weekend look for booktv's life all the coverage of the national book festival featured authors include kb hutchinson, taylor branch, a. scott berg and rick atkinson. looking had to october, -- >> young people come young children come up and say, how can you do in the congress, you got arrested? [laughter] you violated the laws. and i said they were bad laws. they were customs, they were traditions. and we wanted america to be better. we wanted america to live up to the declaration of independence. live up to our created. make real our democracy. make it real. so when i got arrested the first time, this book is saying that i felt free. i felt liberated.

and today, more than ever before i feel free and liberated. you know, abraham lincoln 150 years ago freed the slaves. but it took the modern-day civil rights movement to free unemployment rate the nation. >> civil rights leader and congressman john lewis will be our in depth the guest sunday the sixth. he will take your calls and comments for three hours. also scheduled, november 3, kitty kelley. december 1, christina hoff sommers. january 5, radio talk show host mark levin. >> now a look at u.s. housing market. on monday the chief economist and senior vice president of mortgage lender fannie mae gave a report about the economy and housing at a conference of the american institute of certified public accountants. this is an hour 15 minutes.

>> very much. i grew up on a dairy farm, so the whole esb greek thing, that was pretty straightforward. and yes, i am cognizant of the heroics of the thundering herd of north dakota state. it's a pleasure to be back. it's a couple years ago i think it'll some joke that question the difference between a congressman and an accountant. i thought, i have a collection of thousands of single panel cartoons. i owned a bunch of originals. it's one of the things i like, but you can develop. you can with one small picture you can transmit humor. so it's looking to my collection, there was a picture of a bar and there's a gentleman sitting at the bar with his back to you, the reader. there are two women sitting down

at the table below and one of them says to the other, but, you know, he has the added element of danger. he's an accountant. [laughter] that was published just shortly after enron. so i would run with that. go with it. they're going to give it to you. anyway, thank you for allowing me to come back and speak with you. and let's see -- growing up on the farm i figured me say before, my father used to say, if it has more than two moving parts, don't call the. he meant that. he was right. let me start talking for couple of minutes about what has been our theme for 2013. last year when i spoke, the theme for last year was the year of the political economy at the kind of talk through why we felt that was dominating things. there was 65% of the gtp

underwent potential national leadership change. they were huge volumes of legislation regulation coming into place. so this year in december 2012, as we were thinking things to observe a couple things in our surveys of consumers, which we been doing for years, all that information is up on the website available to you free. 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 it a good time to sell a house? we decided in our november press release to use the words firm footing in describing housing, even knowing that the fiscal cliff still had to be dealt with, and i did all those tax proceeds, or tax provisions went into law as they were described at the time, we expected a small recession in the first half of 2013. thankfully we didn't run that

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

sydney said in her opening comments, looking for in 2008, it would've been hard to predict the magnitude of the downturn. that certainly is true, full disclosure. i did not predict the magnitude of the downturn, nor did any of my peers, frankly. so the question is, given the depth of that, what will normal be? and i will talk a little bit about some of those things in the course of my comments. and as always, any human will be incidental. is just basically means that i will do not i was every. although there are some of my peers here that i think will hold me accountable, so i'll try to behave pretty much, or maybe not. so for about five years running now, we've had lower expectations for economic growth that has, for example, the

central bank. in each of those instances, unfortunately that's turned out to be true. part of that is the fact that at our company would have a lot of insights into housing that others don't have. that was our understanding of how consumer attitudes are changing, which you'll see sprinkled throughout comments this morning, have led us to believe that it would be difficult to see a robust economy. so when we said housing was on a firm footing, we also said that does not mean that it is robust. we continued to believe this year, our forecast was at the outset of the year that we would grow about 1.9% over the course of the. i think that's probably what we'll end up being right around 2% in return for gdp. our forecast for next year is only modestly better, perhaps 2.5%.

so still we believe that the economy has a ways to go. and, in fact, if you recall, some of my comments last you, i talk to you about it, 10 year timeframe which started in, the end of 2006. so we have gone 2007, 2008, 2009, 2010, 11, 12, 13 now. that's seven years in. that would apply 14, 15, 16 into we get back to normal. as you will see what i talk about housing, that aligns with our expectation of the path of increase in housing starts, which is the largest contribution that housing makes economic growth. so the economy we think is not near recession, but neither do we believe it is as robust as some others believe. mind you, people come to me and say why you so pessimistic? well, actually i'm not pessimistic. unrealistic but in the long run

for our country, i'm an optimist. my job is to forecast what i think will happen, not what i want to happen. that would be an entirely different presentation to one which they would almost certainly have a little heartburn over. a part of the fact that we are not expecting robust growth comes back to sort of the social side of economics, which is what you people do? and as you can see on this chart on the far right there has been some improvement over, certainly from the depths of the downturn, but still not robust. you'll see where the personal consumption expenditures running something like one, 1.5%. the average of that measure from 1980-2007 was 3.4%. consumer spending is still significantly lower than what would support i three, 3.5% real

growth rate. you'll see some more things somewhat we've been learning that just give us pause and put us in the lower quartile in terms of our expectations of economic growth. likewise, business reflected the fact that consumption is going to be picking up, then it would be unwise to expand capital investment, your ability to produce and higher labor. and, of course, that's been one of the challenges, one of the reasons that our central bank has been in the position that they have been with regard to monetary policy is the slow growth in employment. and certainly businesses at both capital and labor, the degree to which they've been adding capital has been slow. replacement of obsolete capital but not much expansion. consequently they're also not expanding employment at a pace that would indicate faster economic growth.

this starts to get a little confusing, but, or i guess maybe not confusing but takes a moment to absorb what it says. as you know, one of the thrusts of productivity improvement within u.s. economy has been the development of -- and importation of technological change. what this chart says is that the pace of increase in technology has slowed. doesn't mean that businesses are not investing in it. just the pace at which they are investing in it has slowed. and as you also know, the real prize that is price adjusted for quality and inflation has been falling of technology tools, but the pace at which it is falling has also been slowing. so you could infer from that that we may be moving toward the exhaustion of the benefits from additional technologic investment. i would argue that's not true.

there may be some slowing from a very heady days, but it is probably related -- heady pace, but it is probably related -- businesses are waiting for economic growth degrade the opportunity for them to increase their investment in technology. i was listening to the former chief information officer of aol time warner is also an adjunct professor at georgetown and sits on the boards of several venture funds in silicon valley, and and he suggested that there are four firms in the world who are leading technologic change, and all for our u.s. domicile firms. they are google, lincoln, facebook, and whose the force one -- fourth when? amazon, which i thought was really interesting. but his view is that it is still the leadership of the world and those are all u.s., some firms.

while there are some warning signs in this particular chart, i think personally that it avoids the resurgence of economic growth for we say pick up and a resumption of the very positive trendline. as you know we saw significant allges from a fiscal perspective this chart basically shows the period 1950-2008 that we ran a deficit in terms of, the deficit to gdp ratio of about 1.8% were outlays exceeded receipts. the 2009-12 period, that rose to 8.7% of gdp. and the omb forecast 2018 is that it will fall to 3.5 but that still double the pace from 1950-2008. that's going to be discussed, an aspect of that will be discussed over the next month. in fact, maybe the next two

weeks, which relates to the debt ceiling. as you will see in our surveys of consumers in just a moment, the consumers do not like that discussion. to my point about consumers not yet being robust and consumption not being up, of course one of the things that happened prior to the crisis with savings essentially went to zero for a couple of quarters. this chart kind of averages over that time to read it, but you can see the savings rate has come back up that it's not yet near the long-term trend. and if consumers are attempting to increase savings, that means that they're reducing consumption, especially if income growth is flat. and income growth has been very flat. that's one of the problems of this expansion. so here's what consumers are saying about housing. on the left hand side is the expected home price change. so housing has become a tailwind. when we said it was on a firm footing, that's been borne out. but the last couple of months,

they have wavered. their price expectations for what's going to happen in the next 12 months, as you can see, in the last month dropped back a little bit. it had been on a steady increase. they have recognized house prices started moving up, which is important for them since the meeting income household still, the biggest share of wealth they have is the equity in their homes. so this matters a lot to them. on the right inside we ask this question, is it a good time to sell a house? that's the green line on the bottom. so you can see that was taking up 1% per month. it started actually, this chart is go back to it, at january 2012. you can see in november when we made our nose but it was up over 20%. you can see a continued moving forward out until may of this year, and now for the last couple of months it's flattened off. so consumers have been getting more optimistic, but this sort of flattened off as they wait the debt ceiling debate, the

question of interest rates have risen, there's a question of additional geopolitical risks in the middle east. so consumers have sort of paused. now, on this chart, in this survey we asked them first, is the economy on the right track or the wrong track? two things. the rise in the wrong track back in july and august of 2011 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 -- if you can get three quarters of americans to agree on anything, that's 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 that's probably starting today. and we will see. you can see in the far right hand side that the percentage of people thinking we're heading on

the wrong track rose 3% last month as the news cycle started to pick up the question of what we're going to 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 says if over half of the public thinks the economy is heading in the wrong direction, how likely is that they're 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 the equity wealth. it just doesn't strike us as likely that that's a strong economic or psychological background for robust consumption on the part of consumers. now, obviously, we've seen a decline in the unemployment

rate, and that's a positive. but also part of the reason for the decline in the unemployment rate is not as positive, and it 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 income 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 are being predicted by some others to drive the economy forward at a faster pace. part of that is the boomers retiring. that's a demographic factor. and part of it is that the low level of employment growth has encouraged some younger cohorts to go back to college to add to their human capital. that's a typical cyclical response to hiring slowed down.

of course in this instance we have seen a dramatic run up of debt related to that, which i'll talk about in a moment. but part of it is discouraged workers have left the labor force but as you've heard from the central bank, there's a great deal of concern on their part because the longer folks are out of the workforce, the harder it is for them to reenter the workforce, and the earnings pattern almost never returns to the path that he was on previously. so again, another reason to be concerned about the ability to push consumption forward. and the after-tax inflation-adjusted per capita income growth has stagnated. this is been the slowest growth of any post recession period since world war ii. now mind you, we are now at about the average length of any post recession expansion. in other words, about four and half years is the average length

of expansion after each of the recessions. we are actually there. it doesn't feel like it but it certainly doesn't feel like it to the public. so a question about how they will respond going forward. here is a picture that shows the consumers income expectation of six months ahead for each of the last four recessions. it's fairly striking. expectations today still negative. this comes out of the conference board survey data. so we just, we have a hard time seeing how robust some forecasts are relative to ours. let's talk for a couple of moments about credit conditions. this is going to be big we, a lot of discussion about tapering. last we talked about the fiscal cliff. this year it was tapering. we haven't figured out a fun

time 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, u.s. treasury securities, $45 billion, plus $40 billion of mortgage-backed security to their portfolio, that they're going to start, that they're going to change that posture. if you actually sit down, if you think back to your high school classes on factorials and think about the number of options that they actually have or how they would do that, there's probably something in the order of 25 different ways they can do that. they probably won't be quite the technical, but if you think about 40 moment, what they're doing is they're purchasing enough securities to replace all the securities that are

amortized. that is as people make their payments, they simply pay off. or people that refinance and the principal balance leaves from a prepayment, or from default in the case of mortgage. so they're buying enough to replace that, plus to add to the portfolio and neck. -- a net. on a treasure site, although going to the debt ceiling debate goes well, there will be a default component in the treasury peace. that's economist humor. that's why people don't come to an economist cocktail parties. and advisedly so. so they could choose to hold the purchases of mortgage-backed securities constant, adding a net of 40 billion, which is what the consensus of the marketplaces that they will do that and that they will slow the purchases of treasuries.

they could still keep adding to the portfolio but at a slower pace, or they could stop adding to the portfolio simply replace amortization, or they could slow the purchase and not even replace amortization, or they could stop purchases of treasuries. or they could each of those things was mortgage-backed securities, or sunken nation of all of those options on either side. that i should have a lot of choices of how to do this. the consensus in the marketplace based partly on 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 treasuries. has led to the view that they're likely to act on the treasury side by slowing purchases of treasuries rather than, or more

than they change purchases of mortgage-backed securities. so that's the likely scenario. our economic forecast has embedded in it the expectation that they will start slowing the purchases of treasury securities in the 10-$15 billion a month rate. it will eventually also slow the purchase of mortgage-backed securities and they will stop with net additions to the portfolio by middle 2014. that's what's embedded in a forecast if you go out and take a look at it. to be straightforward, some people say if you want to know what an economist forecasts, real forecast is, ask them what they're doing with their own money. i think last year i told you i bought a house in florida, right? so this year i've been boosting the floridian economy by remodeling it. and i think i asked you the question lester, how many people

have remodeled? is still under way. i have asked the same question. it's a dismal. but then he would expect that, wouldn't you? so anyway, this is what happened. this is a snapshot from the first of january this year until today. what has happen with a 10 year treasury yield, mortgage rates typically are a spread above the 10 year treasury do. if the tenure treasury yield goes up, so do mortgage rates. i'll talk about that in just a moment. these are all the various statements that different people made, but you can see in the bottom point when there were some comments by chairman bernanke at a q&a session that suggested that they're going to start the process of tapering somewhere, and they never stop -- strong job reports a couple of months, those two things together lead the market to conclude that tapering with start and so they started getting into the market with the

rise in rates was likely going to be as a result of that. so in addition to raise -- rates rising, the volatility in the -- that gets price and interest rates, so it, too, was an impetus to push rates up. now, mind you, on the left hand side is the fed's portfolio, and the flat part on the far left side, that would be the normal relationship, which that actually goes back about 70 years. that would be the normal relationship of the fed's balance sheet to the u.s. economy. the part to the right side is the expansion of their assets, agency mortgage-backed securities as well as other securities. that has occurred in the post crisis period. so to get back to normal, all of that has to go back down to that flat part on the far left part

of the chart. that's going to take some time. the our estimates of it might be 2020 before they return to normal. our transition to normal, question, what constitutes normal? we think that's probably normal? it will take us a while to transition to get there. on the right hand side, that green part is the reserve balances that are held on bank balance sheets that have to be worked off in a way that doesn't generate inflation. that fear is that those funds could flow into credit markets rapidly and generate inflationary pressures. that's what the discussion is about. there is no evidence of inflation in the market today, that that's what the concern is about. here's their purchases of mortgage-backed security. net $40 billion a month but an october 2012 the ask about $72.1 billion of mortgage-backed securities because there were

$32.1 billion of amortization, prepayment, or defaults in that portfolio. to hold a constant, i mean to add 40 billion on that they had to buy -- that's not that -- same thing applies on the treasury side. so what has happened in the past when rates rose? so there was a with of, not panic, i suppose that's an overstatement but certainly concern about housing being on a firm footing, but rates rising potentially reversing that and bring house prices down. there were two time period when there was a rapid rise in mortgage interest rates, and wanted to talk to folks about what happened. so the first period was 1994-1995. over a 14 month period mortgage rates rose about 2.4 percentage points. so what happened? home sales fell.

house prices went up, just not as fast. army share of mortgages, that is adjustable-rate mortgage share, spike. a quick look for. these are the spikes in adjustable-rate mortgage shared in each of those time periods. that's what happened with prices but the action went up, just not as fast. so the other period was the 1998-2000, when over 19 months mortgage rates went up 180 basis points. pretty much the same thing happen. interest rates went up, home sales flattened, house prices rose, just not quite as fast, and the. >> host: share spike. so does that mean that we should expect simply because the interest rates spiked again about 100 basis point and if they should go up more, that we should expect the same response but housing market?

not necessarily. there are two important things that are different. one is, in neither of those periods was the fed's balance sheet anything like it is today. the actions they are taking are more to normalize their balance sheet relative to the economy than they are to either slow the economy to tamp down inpatient waiting like that. we've never expensive is because the balance sheets never looked like that. since the depression. so that's the first. the second one is the rules for underwriting adjustable-rate mortgages have been changed. today, if you're going to issue an adjustable-rate mortgage, yet underbite the borrower and the capability to make the payments 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 rate profile.

so you'll be underwriting that loan at a higher rate than the start rate on the mortgage. so we've been watching to see and there's been very little response so far in terms of adjustable-rate mortgages. so that underwriting change is affecting the ability of the households which come in the two prior periods, used that tool as and affordability tool to adjust to the change in interest rates when taking out mortgages. of those two things could leaders to a different result in this period from what happened in those last two time periods. so i think the story -- about five more minutes. plenty of time for questions. that i can avoid. i'm sorry, that i can answer. in washington, if you ask a question don't like, you just answer a different one, right?

that's what they do on the talk shows. so no surprise, coming out of the crisis, the first thing that happen as we start easy some expansion of employment and some new household formation which by the way is not yet back to normal, is that multifamily building activity picked up first. a quick review of the relationship between renting and owning. the homeownership rate has gone from 69% back to about 65%. some people of after becoming a nation of renters? our response to that is no make that what we're doing is rebalancing to a more normal relationship between the share of households that rent and those that own. our view is in the long run, adjusting for demographics to boomers and all that, 64, 65% homeownership rate is about right. that is, households do want to own enough financially capable

would result in about a 65, 64-65% homeowner rate. we have surveyed throughout the crisis that aspirations own a home has been unchanged. no impact whatsoever on the desire to own a home. but consumers have become realistic. it's going to be harder to qualify for credit going forward. that's not surprising given the magnitude of the gale downturn that agreement under the criteria were used dramatically. and it also recognize that it's not just our financial strength to qualify for the mortgage to buy the house but also requires some resources to maintain that house. sunday recognize there are sort of two parts to getting themselves prepared to be homeless. the group that sees housing as the best incest the potential is the youngest age cohorts. now, i'm not sure how this plays, but today, we have the highest share of 16-24-year-olds living at home that we've ever

had. so i'm not sure what that investment potential, maybe investing in the parents homes. i'm not sure how that works. i don't think either party is happy with the transition and would like to see the statistic change a little bit. but the younger cohorts have seen the decline in house prices, making the potential for long-term appreciation stronger for them going forward. so that will eventually play out as was the employment picked up in household formation pickup back to more norma normal level. double click on the piece picked first, not surprising. there has not been a lot of pickup in the construction space. we took some heat at the beginning of this year with our forecast that said this year, somewhere around 950,000 units of single-family, multifamily, and manufactured housing would be produced.

this chart shows ugly about what is normal. i mentioned at the outset a comment to you about what i thought would be a normal level of construction, because it's the most important contributor to gdp growth. so you can see here that our view is about 1.7, a little more than 1.7 million units should be produced annually, based on longer-term stable demographics. and we think we'll get to that average from 2016-2020. we will average that. but they sure were going to produce about 950,000 units. we were well below consensus on the. so why were we below consensus? in the course of the crisis, public builders had to release both land options and sell landholdings to survive. so their supply of develop a land had to be rebuilt. than just buying the land isn't enough. you also have to get the permits for construction. that takes time big also have to higher labor.

mind you, the people he would have been working in this space for four years were unemployed, a large share of them, because we are producing about 2.2 million units by two the crisis. we dropped to about 600,000. huge outflow, and they were sitting for four years waiting for the market to come back. the home building industry will have to encourage them out from wherever they were. that probably means labor cost might buy for them to encourage them to come into the space. and then it also have to attract materials. our view was that would always take some time, and that certainly is borne out. the monthly analyze numbers have been ranging from about 930, 970,000 starts a month going forward, which i think will be pretty accurate. to get to this measure, the 1.7 million units, it means that each of the next three years the construction business is going to have to add about 220,000

more start each year to get there. that's still a pretty aggressive path. we feel pretty good about the forecast the we would like it to be better. it's not what i would like to happen. it's what i think will realistically happen. it's on the right track, and housing will be at tailwind but we have a ways to go. this just shows the net supply has only just picked up from the lowest level of the devil homes for sale since world war ii. and existing home supplies moving up, recently partly because one thing that was not normal that is moving towards normal is the number of households who were under water. in other words, they owed more on the house than it was worth. there's still some, i some estimates, about 5 million households out their own more on the house and it's only worth in the marketplace. about to our question about, isn't a good time to sell a house? if you're underwater, not a very

good time to sell the house, right? mind you, only 40% of households say it's a good time to sell a house. that's less than half. there's still a ways to go to rebuild the optimism and, frankly, the financial wherewithal to be able to offer for sale the house that you have. so another reason that we arm modest in our expectations of growth. that tight supply driven by the fact that there's a lot of people that are underwater, and the low levels of new construction, the fact that there are still about 6% of all mortgages out there are strictly delinquent, 90 days or more. so those households are not offering supply. institutional investors have come out and swept off the low price points and turns them into rentals. all of those are supply restraints, and are the is that the recent -- reason prices have been rising are on the supply side, not the demand-side.

five out of eight households are going to buy a house have to sell one first. so if it's about time to sell a house, they're also not going to be on the demand-side of that equation. these are just to show the differences in some of the local markets. i'll jump forward to a real estate finance rates, just to give you a little perspective. the average 30 year fixed-rate mortgage since world war ii it's about 6.5%. today, rates are at about 4.5%. so it's still a very good deal for the long-term. the problem is it's coming up from and extraordinarily low level, driven by policy choices. the normalization of the return to normal is going to see rates rising, going forward. and that is the question, how much of a head when will that be, not just to the housing market, but to the economy overall. ending standards, still very tight, aftermath of the crisis.

but moving a little bit. but not very far because there's still lots of rules that are being put in place to affect stronger underwriting standards going forward. as you might expect, that one percentage point increase in interest rates has inevitably curtailed refinancing activity. that are still by our estimates about a million households were eligible for the home affordable refinance program, the harder program, that is not acted, the ecstasy syndicate benefits. so what you're seeing is with a drop off in overall it to be, lenders are turning to those households as an opportunity to keep volumes up as totaling in the market has dropped off. as i said, seriously delinquent loans are declining. that's the left and chart. they are down significantly from that very high peak, but they still are significantly higher than what would be normal. normal for that would maybe be

about 2%. in the full market today, it's about 6%. states that have judicial processes that manage foreclosures are taking much longer. in florida, it's something on the order of 1000 days to take a loan through the foreclosure process. that's about three years. there's a few other states that have the same circumstance. they are moving much more rapidly back to normal levels of delinquency's. this is, people, the number of households who have had or have, underwater loans, i commented on the. what does that mean for the mortgage space? it means in 2014 you'll see a drop off in total production, and using racism companies and housing layoffs in their mortgage business as that refinance component has dropped off significantly. and the troubling thing is that the applications to purchase for a mortgage, to purchase a home

have fallen about 17% since that rate right. whether that will feedback simply with a reduction in home sales, or whether it will hit house prices it -- is a pretty important question. prices my slow but not fall. we'll see. this is a very different embodiment. so 2% growth this year. rates ending the year for mortgages at about 4.7%, up just a little bit further from where they are today. next year, economic growth at about 2.5%. still not anything close to robust. mortgage rates up to maybe 5%, maybe 5.5% by the end of next year. we will learn a lot about that on thursday with the announcement by the fed at the end of their meeting on the 17th and 18th, and the market is kind of just stopping, waiting for that announcement at

this point. with that, -- i'm sorry, that was a dismal, right? i have to give you, there are some tailwind. housing is a tailwind with that caveat. i did not talk about what it will in in the q&a if you want to. energy is a huge, bright spot for us if we manage that well. that has a strong relationship to manufacturing. if we execute on that. technology leadership, i commented on. we're still the world's leader in technology development, and doesn't mention, also, demographic. we have good demographics but immigration is something we want to think about there. so long term, good place to be. how about that? >> all right, so speedy dual me to sit down? >> stay there. they are ago. on a personal note i just want to thank you because last year i read your slides and i hit the

bottom on my refinance. so thank you for that. >> excellent. he's buying. >> i got this late so we'll start with labor market questions. so what about the shift to part-time employment? how does that impact -- how does that impact your outlook? i'll just kind agreed with you and pick whatever one you like. >> that's dangerous. >> with the amount of baby boomers retiring over the next five to 10 years, where do you think the labor participation rate will bottom out? is it possible for the labor a participation to get down to that 1950s level of 60%, and the like? some suggest that there's a paradigm shift -- i don't know who this anwar, but in the nature of work and the resulting decline in demand for human workers, right? kind of like irobot it i guess. does that have an impact on the

relationship between technology, is what i think i'm hearing, and the labor markets? and is there any data projections showing the effects of the baby boomer retirement on the labor force, you know, to the exact amount what is going to be the effect? we want your prediction. >> okay. so let me start with the part-time question. the recent data have shown an increase in the share of job additions, which had been in part-time employment. that's out there. the exact cause of that is not clear in the way that the data are collected. it's not clear. there's been a lot of discussion of it being a result of the rules for the health care implementation. and firms not wanting to cross a certain threshold in terms of

share of their employees who are full-time because that invokes a change in their costs. i believe in incentives. i think if you put in place a structural component to their cost structure, which is triggered by changes in employment, they will react to that. i mean, i learned about marginal tax rates from sullivan richter when i was in high school. sullivan worked at the local gas station, and he would get in his 40 hours and then they would ask him, he's a really hard worker, so they would ask them, which put in some overtime? at that the marginal tax rates were so in the 50-60% range, so this question would be is this going to be cached? which he called the people's tax cut. [laughter] and it is not going to be in cash, sullivan was also a really good fisherman, so he would make of labor leisure trade-offs,

which involved fishing when marginal tax rates got too high. so i believe businesses are rational and there are, and some of them have spoken publicly about the fact that they will alter the employment practices. an important question then is, if people want to work full-time but can only work part-time, will they pick up another part-time job growth and the answer is probably yes to the question is, will the combined benefits of those to part-time jobs people the financial strength that one full-time job with its benefits would be? that we don't know the entity, but i'm sort of doubtful. that's just an opinion and not based on index. what about the boomers and their retirement? the one age group who has seen a pickup in labor force participation is the over 55 group. i'm all for that. that's good for the economy in that they have lots of experience and that generates higher productivity gains.

so replacing them is going to be a costly exercise. but the reason for the increase in that labor force participation rate is undoubtedly related to the loss of equity wealth in their homes, which is them having to go into retirement, they want to rebuild. ..

if you decrease the cost of labor relative to capital there will be a shift to labor. so our fiscal policies will have an impact on the relationship of the employment of technology and the employment of people. that should be a, an important consideration when we're altering the rules of ememployment and the health care bill, for example, is one of the things that will impact that. today we do look at this, the returns to labor have fallen relative to the returns in capital and part of that is a shift in the structure of the tax code and a shift in the benefits compensation. if those were kept in balance the improvement in technology will drive productivity gains

and it is productivity gains that drive real income baines. so there should be a healthy, positive relationship between the two of them but fiscal policy will affect that. >> okay. so i did get a question on health care reform and you kind of just answered that just in case you have other thoughts i throw it out there. >> other thoughts on health care reform? >> yeah. >> well, this is a completely personal -- >> that's loaded. >> that's loaded. this is completely a personal point of view. for me the most important thing that we could do as a society to improve, or reduce the share of gdp that goes to health care is to encourage people to be healthy, right? and the health care bill didn't have any of those incentives in it. but incentives, carrots and sticks for people to get in shape, reduce obesity, make healthier choices in food and in

their recreational activities, that to me would be the place we could make the biggest changes in reducing the cost of health care in the economy. >> personal trainers for everyone. all right. i'm going to hit some odd, we have a lot of questions on real estate market but i will hit a couple odd things first. can you comment on impact of fracking on our economy, i think you mean more broadly natural gas which some think i know something about. do you see this providing a competitive advantage for the u.s. and see up tick in local manufacturing of domestic energy situation? >> okay. i have a brother that liz in bismarck, north dakota and he recently came to washington, d.c. for a weed and he said they got on a plane at bismarck at 5:00 a.m. and flu to minneapolis and changed planes and came to d.c. and he said the plane was

noisy from bismarck to minneapolis and all southern drawls. that it was quiet from minneapolis to desee. so this was a oil field workers having migrated to north dakota for the development of the bakken shale piece. now he's, just an idea on my brother, not that you want the family insights, in 2000 census data came out and he calls me. so i see that north dakota, that is how you pronounce that, north dakota is only one of two states that didn't increase in population. i'm trying to think how that's a bad thing. that will give you a little sense what he thinks about all the southern drawls but on the other hand both of his daughters are out of the house and out of the state so he feels okay with that. the, influx of labor to develop

that shale deposit is causing some real interesting questions. one of them fannie mae had to think about a little bit, there's a difference between the development of the oil source and the extraction. so we've, get requests for financing to build apartment buildings. how long-lasting will be the labor that's used in the development of the fracking process? so would you make a long-term investment in an apartment building but maybe there is only five years of that. then extraction may have a different pace of employment. in either case, this is going to add to the employment side of the economy. it is just a little different whether you're talking about development versus extraction. so that's the first applause. if you think about the, that expansion and somewhere in the 2020 range if things go well we'll be energy independent. has a lost implications.

geopolitically very important implications. this could go on for quite some time. it could have large national implications in that way. it is also the case that it will lower the cost of energy inputs for households. so as that share of either their automobiles or their home heating, those kind of costs fall that freeze freeze up resources for consumption in other areas. reduction of the transportation costs comes with the energy piece offers advantages to our manufacturing folks that can lower the prices of produced goods because it is cheaper to get them to market. if there is a component of the goods being produced which are petrochemical-related, then that reduction in production costs will provide an advantage in terms of relative pricing to others around the globe who

might produce those things giving us an advantage in in global pricing. it is likely to lead to an increase in employment manufacturing. you can see there's a relationship between household consumption patterns, because of their energy costs, between the relative value of manufacturing here versus somewhere else and the price advantages, which feeds back to our consumers but also makes us globally more competitive. so this is a real positive story potentially. it will take us some time to get all of that developed but, and obviously taking care of the environmental factors of that as well will also be an important consideration. but if managed well, it's a very positive tailwind for the economy going forward. >> okay. we touched on this earlier and i don't think we came back to it. how historically high level of college loans impact consumer spending going forward?

>> we are concerned about the fact that college debt is i think four times higher than its previous peak. part of that is because the duration of the both the crisis and slow subsequent economic growth has made job prospects for college graduates a lot tougher, a lot less available than some previous cohorts which is meant they have extended their time on which they have borrowed to add to their human capital. really, what the most important factor going forward is, income growth. if we generate jobs and real income growth at a reasonable pace then they're likely to be able to handle that although it will take them a little longer than 2 would have. it will probably delay certain other forms of consumption like buying a house, it may delay the time but if ultimately we get a stronger path to economic growth they will be able to handle

that. one of the things that has changed in the mortgage space that we have put in place a through regulation a relation fixed ratio and debt and income to the underwriting process. to the extent these households come in to a higher level of debt relative to their income, it will keep them out of the housing space longer until they get that rash yo back in -- ratio back in balance. the real issue is income growth. this expansion has been the slowest pace of income growth since any expansion since world war ii. >> is there any anticipated effect from eminent domain actions like richmond, california, to seize underwater markets, underwater mortgages, refi's? is there any concern in your organization around that? >> well our regulator has made a public statement in opposition

to that particular theory and its application to the mortgage space. we have filed a formal document in support of that, actually under my name. so it's public. you can go read it. we provided some metrics from our perspective but it is an on going legal case. while we're not, we have not put forward the suit ourselves, we are an investor on behalf of whose, the trustees on behalf of us filed suits. i can't really comment on them, on that. >> makes sense. okay. let's go down to the real estate market then. so do you think the home prices in the next 10 or 20 years, we've seen how good you are been with one or two years -- >> ouch. >> rise the same way they did the last 10 or 20 years or was

that once in a lifetime opportunity? >> that was a bubble. hopefully what's being put in place are a series of changes which will prevent the emergence of that bubble. but the bubble had a number of sources. it wasn't just the mort space. i commented earlier positives for us is demographics. the global population is aging rapidly in some important ways. the u.s., canada, the u.k., and australia, new zealand are really the only western-developed nations who have reasonable expectations of labor force growth through 2050. all of western europe is currently will within a year or two be actually seeing declining population. russia is rapidly declining in population and japan is a long-term demographic disaster.

the birth rate for replacement, that is to hold population constant is 2.1. and japan is at 1.3 and they don't allow immigration. so that will give you just a sense. but what a lot of people don't recognize is that china, because of their one-child policy has a rapidly aging population and they have very little social safety networks. now it is within the investment advisory world, it's always a piece of advice that as you age you should shift toward fixed income instruments in retirement. so if you think about this rapidly aging population, the demand for fixed income instruments was growing at the same time as u.s. monetary policy was very easy and the investors in fixed income securities specifically real estate or mortgage

security-related investments would take a aaa rating by rating agency as prime facia evidence this was a safe investment. that was a global phenomenon. so the u.s. through technological development created essentially a mortgage machine such that if there was an appetite for the instrument at on the demand side, it would be produce irrespective of its quality. so it was combination of multiple factors that led to this bubble expansion in credit and clearly credit standards were eased throughout. so one of the things that is being changed is the underwriting criteria. and as you heard i said two things. one is adjustable rate mortgages have to be underwritten the maximum interest rate they can reef in the first five years. that was a problem. i also said there is going to be a fixed relationship between debt and income for households to qualify. so there are some changes that have been put in place regular

torely, whose intentions to hold standards at a higher level and truncate those easier underwriting criteria which contributed to the crisis. >> until we forget. >> until we forget. >> okay, so we're a couple of questions here around the relationship between increase in mortgage rates and the negative effect on housing values. you kind of said, you know, not historically but we don't really know what is going to happen. i don't know if you want to comment any further on that or not? >> yeah, let me make one related set of comments. if interest rates are rising because the economy is expanding and real incomes are growing, and this takes place over time, then the rise in interest rates and the monthly payment from borrowing the same amount of money is offset by the growth in

household real income and it has no impact on the pace of housing. if interest rates are rising because inflationary expectations are rising then households tend to view housing as an intermediate term inflation hedge and they will continue to participate in the housing market. there's essentially no impact. if interest rates are rising because inflation, because the fed has decided to get ahead of rising inflation expectations and therefore slowing the economy, employment growth slows, income growth slows and then home sales slow but none of those impact prices. one of the things about housing is that households have a nominal impact in their decision-making from the asymmetry of tax treatment. if you take out 250 or $500,000 of capital gains there is no tax consequence.

if you suffer $50,000 of loss, you can not deduct that. so housing is treated asymmetrically with regard to taxes. therefore house prices are sticky downward. people are loathe to recognize current market value if it doesn't work well in their tax situation. so that's another reason why you see the relationship between interest rates and house prices is not what people think it is. >> there's a couple questions here on regulation in the mortgage market. so, how big of an impact will the ability to pay repay rules have on housing in 2014. similarly, you have the new cfpb qualified mortgage and atr rules to be effective in 14. how does that factor into your four cast? >> well it certainly has, is a contributor to our more

conservative forecast than some of the consensus forecasts because it does constrain the ability of lenders to ease credit criteria to some degree. a while back we had observe ad lot of public officials making statements about underwriting criteria being too tight. so i suggested, if there are two male, married economists walking down the street and one of them asks the other one, so how's your wife? what is the proper response to the other one? compared to what? again, a warning about economist cocktail parties. the reason i say that is, when we talk to some of these officials and and when you say underwriting criteria are too tight what is your comparative? it implies you're comparing it to something. so what we did was take out of our portfolio of data from

different time periods and show there is a relationship between the business cycle and the credit cycle that accompanies that. so if you put six floors under, under underwriting criteria, what you might do is change the relationship between housing and the macro economy depending on how households adjust to those new fixed floors. so for example if typically as the, as an economic expansion, underwrite having eased in the past but now aren't allowed to ease some of the institutions which lend in the mortgage space have multiple executions in different credit products, credit cards, auto loans, those kind of things, it is possible they shift their appetite to lending in those other spaces relative to housing. so you could see a shift in the behavior of housing relative to

other credit products. alternatively households could adjust to that by bringing more equity to the table, right? so we don't actually know. this is kind of an experiment we've run. there is not really a history but we believe that at least in the near term underwriting criteria will be more conservative as a result and therefore our production forecasts are lower than some others. >> okay. a lot of good questions we're but we're going to have to kind of keep going. of the one question here, certain real estate markets have really picked up with prices. i think historically we've had conversations here around how there really isn't one market, there's lots of different markets. is there anything interesting, you know, from your perspective of the possibility of other bubbles, minn any-bubbles or other local markets you want to make a comment on? >> one of my, one of my keepsakes from the house price bubble days was, i was in a

meeting with the secretary of commerce and he turned to me and he said, so, are we in a house price bubble? i said well, mr. secretary, i'm in the don ho camp of house price bubbles. tiny bubbles. and, turned out to be a little bigger but turns out that was another person in the room that lived next door to don ho's son in minute in place and he got me an autographed copy from don ho of his greatest hits. that is one of my keepsakes from the house price bubble. not that you cared. in the chart that i showed on house prices and its relationship to supply, i made the comement that our -- comment that our belief the bulk of the increase in house prices to date has been a function of supply restrictions. so if you want to know where the risks, or at least one place

where we think there are some risks it is in these markets which are heavily influenced by institutional buyer bulk purchases. because those buyers, if they're a hedge fund, for example, are, their business model is not a buy and hold for 30 years housing model. and so if they, if there were a group of them that were, had been dominateing a particular market and they suddenly changed their point of view on capital gain and cash flows from that investment and dumped properties back on to the market in large bulk supply you could see a reversal of that. that's one potential risk. and of course with rising rates, that changes absolute relative yields in their investment strategy, right? so you may well see that. we think it is unlikely that, they haven't bought enough properties in reality to be broad based to drive down house

prices but in some markets they may have that impact. it's also a question in those same markets whether organic demand will pick up enough to offset that change and people are really uncertain about the huge share of purchases that are being cash. we don't really know as much as we'd like to know about all those cash purchasers. >> okay. i have, i guess we're kind of in overtime but i don't care because i'm having fun. i have a series of questions here, around the future of gses, future of fannie mae, and the like. i know historically you haven't had a whole lot to say but you know we have legislation that is kind of drafted and the like so i will leave it to you to comment in that area as you see fit. >> okay. i've been drinking a lot of water so i'm relying on natural forces to bring this to an end. [laughing]

obviously one of the uncertainties in the marketplace today, is what happens to fannie mae and freddie mac. i can't remember exactly but one time in the past year i was introduced at one event as the extinguished economist from fannie mae. that is not the kind of end he will i'm envisioning. the corker-warner bill is the in our view the first sustained bipartisan attempt to lay out the legislative structure for a change in markets structure that would replace the gse model. that is the first stage. it is bipartisan. it is getting some serious discussion. the things, there are series of questions that any legislation will have to respond to but before it takes final shape.

first thing we think that you have to ask is, should the succeeding market structure contain elements that will first 30-year fixed-rate, self-amortizing prepaid mortgage? all of those elements are part of what most of you probably have in your mortgage. it is a level payment. it is self-amortizing. it is prepayable and its interest rate is fixed going forward. so if that, you believe must be something that's provided at least to a significant portion of the population, it requires certain structures. the structure that it requires is the elements after bond market called tba, to be announced. that's the mechanism that allows a lender to sell to an investor a commitment to deliver to them in the future mortgages in a

certain amount in a certain amount with certain interest rates that allows that lender to go back and lock that interest rate to the consumer 60 days before they close the loan, or 90 days before. that's a structure that's required in order to support that 30-year fixed-rate mortgage. if you believe that has to be, you have to think about, what are the elements of that structure? after you thought about the elements of that structure you have to think, how well-capitalized does that have to be and that will imply something about who will own the elements of that structure. obviously the fact that fannie mae and freddie mac were taken into conservatorship means they were undercapitalized and capital across the entire financial services industry has been increased and that's likely to be the case for the capitalization of the subsequent structures in the secondary market. that implies higher costs to consumers because that capital will demand a return.

then as we saw in the crisis ultimately the government and taxpayers became the lender of last resort. so the question is, how do you, if, do you care if it's remote from the taxpayer? and then if it is going to be remote from the taxpayer should the government have an explicit role but remote? so you have to decide how you will put that structure in place. i think all of those things are things ultimate legislation will have to wrestle with. i think it is part of the reason it has taken as long as it has for there to be more serious discussion. corker and warner, credit to them for bringing the discussion to the table. we would like to see it resolved. our view is, for the people that work at our two agencies, it's a lot of uncertainty about career path, right? you simply don't know what kind of a structure you're going to be operating in from a professional perspective and you

know it cost employees who get tired of waiting and so we would like, our ceo has spoken recently several times saying we would like to see motion on this to get it, to g it fixed. so. >> just a couple quickies. lightning round, all right. so do you believe the omb's deficit estimates of 3.5% of deficit gap is reasonable? you know, is that -- >> omb has, that is their short-term view. they also see that deficit gap rising going forward from that time period and we would agree with that. the big question out there which no one in washington is addressing entitlements. they're simply not affordable at their current structure and nothing is being done about that. >> okay. the administration's forecasts are more rosier than yours? what is the problem here? don't you guys share data? are there political rationales? please discuss. i thought that was funny so.

>> talk amongst yourselves. well, that's, in the words of mark twain, prediction is a very difficult art especially with respect to the future. >> with larry summers no longer in contention for fed chairman will janet yellen be picked? what are your chances? >> [laughter] okay, zero would be the latter. that would be an, it is interesting that's become such a political discussion. you'd have to say janet yellen is kind of the leading current member but the administration could have sanctioned that if they wanted to but they haven't so we'll see. >> in terms of percentage, now we're going to, this is about you, right? in terms of percentages, how confident are you when you're forecasting one year out, two

years out, three years out and thereafter? because we want to know how reliable -- we're accountants. we want to know how reliable the data we're getting nice right, right. i was teaching statistics while working on my phd and i had a young student that came in and he was a smart young man and he said he was frustrated with having to take a class in statistics because it was so uncertain. he was an accounting major because he liked certainty. so i asked him to bring in a 10-q and we talked about book versus market value and things like that. i'm not sure, he may have gone into medicine or something. [laughing] i, my forecasts i act on my own forecasts. >> there gow. >> so the future is uncertain. thank you. >> all right. [applause] please join me in a great round of applause. i thought that was fantastic.

we'll go into the next segment. my apology to larry smith for stealing a little bit of his time but what am i going to do. >> fed chairman ben bernanke and the federal open market committee meets today to decide on monetary policy after the meeting mr. bernanke will talk to the press. you can watch it live starting at two 30:00 p.m. eastern time on -- 2:30:00 p.m. eastern time on c-span3. >> c-span student video competition is underway. open to all middle and high school students. we're doubling this year the number of wins winners and prize money. create a 5 to 7 minute documentary on the most important issue you think congress should consider in 2014. it should include c-span video, show varying points of view and due by january 20th, 2014. need more information, go to studentcam.org.

>> senator john mccain discussed syria yesterday and agreement with russia securing syria's chemical weapons. he was interviewed by margaret warner at the pbs news hour at the council on foreign relations. >> thank you. [applause] thankthank you for thor for thag glowing drug -- introduction. >> we spent long hours on the 2008 campaign and 2000. both of which because of her coverage i lost. la [laughter] no. i often mentioned to margaret after i lost i sleep like a baby. sleep two hours, wake up and cry. sleep two hours. and i want to thank, nice to see old friends and enemies here in

the audience tonight and i appreciate the fact that the council on foreign relations would allow me this invitation to speak and it is always good for me to be back in what i believe is one of the premier institutions on the discussion and debate in america on our national security and foreign policy and it's an honor always to be back. an before margaret and i have our conversations i would like to say a few word about syria and forgive me again for if i talk too seriously with you but it is an issue of great seriousness. and i would like to begin by saying i wish i could see the recent agreement between russia and the united states to rid the assad regime of its chemical weapons as a major breakthrough. unfortunately i can not. i derive no pleasure in saying this nor am i seeking to score political points. in fact i've sought to work with

president obama on syria at every turn and to encourage his development of a broader strategy for this growing problem. i met with him several times recently for exactly that purpose and i'm grateful for that opportunity. i supported the president's call to use force against assad regime for its massacre of nearly 1500 syrians with chemical weapons on august 21st and i worked with my colleagues on the senate foreign relations committee to pass on a bipartisan basis the authority to use force that the president sought. i admit to not being an expert on syria or chemical weapons but i do understand power and the use of power. i also understand war and the conduct of war. and the one benefit of my advanced age is the perspective that it offers. this is the basis for my deep concern with the administration's mishandling of

the conflict in syria. now let's recall that this russian initiative first arose as both houses of congress appeared ready to reject the president's proposed military strikes in syria which called into question how credible that use of force, that threat of force really was. so it's hard to maintain that the administration entered into this agreement from a position of strength. no one trusts assad's sincerity and there's little reason to have more faith in russia, especially when president putin himself still insists that the syrian opposition was responsible for the august 21 attack. that's why enforcement is so critical. unfortunately the administration's claim that the threat of force remains on the table rings somewhat hollow in light of the events of the past few weeks. once more the administration seems to have given up on codifying the terms of this

agreement immediately in a u.n. security council resolution under chapter 7 let alone one that would explicitly threaten the use of force for assad's non-compliance. russia said it won't agree to either of those things. second it may only be willing to authorize a less severe penalty in a second resolution an only after assad violates the terms of the agreement and obviously that's a major climb-down for an administration that was ready to launch airstrikes three weeks ago. it is even worse blow to those stalwart u.s. allies who were prepared to act with us. under these circumstances what leverage do we have to force assad's compliance when he starts to lie and cheat and delay using ever trick in saddam hussein's playbook? not much it appears. and the leverage we do have no longer appears credible. to insist otherwise misses the

basic reality of that agreement. it was not a product of this administration's strength but of its weakness, of its inability or unwillingness to take the military action it deemed necessary against assad. russia sensed this weakness and led the administration in my view into a diplomatic blind alley. the fact is the assad regime will likely avoid any meaningful punishment for its use. not just possession, but use. the weapons of mass destruction. that's why many of us are concerned both our friend and enemies will see this agreement as an act of provocative weakness, a blow to america's credibility that will lead others to question whether we're willing and able to enforce our own stated commitments even after the latest and gravest transgressions. i can not imagine a worse message to send to rulers of iran or the young leader in north korea or every other bad

actor that is looking for an excuse to test the limits of american resolve. there's reason to be troubled by the terms of this agreement but the bigger problem is what it leaves out. it says nothing about the underlying conflict in syria and will do nothing to resolve it. that's the greatest threat to america's national security interests. not chemical weapons per se but the conflict itself. it is this conflict that has claimed nearly 110,000 lives and counting driven millions from their homes, destablized some of our closest friends and allies in the process, emboldened iran and its proxies, transformed large parts of syria into safe havens for thousands of extremists, many affiliated with al qaeda and now has become a regional sectarian conflict that threatens to engulf the entire middle east. that's the larger problem with the russian chemical weapons

initiative. it will in no way help to bring the conflict in syria to the negotiated end that we seek. it will not stop assad and his forces from fighting. it will not stop iran from sending in revolutionary guard. it will not stop hezbollah's 5,000 troops who have invaded syria from fighting and it will not stop russia from continuing to send weapons and other military assistance to the assad regime. in fact the more destructive assad is in his war against the syrian people, the more he creates conditions of insecurity in syria that make the remove of -- removal of his chemical east-west expressway impossible. in short assad could render this agreement iniaea effective without ever violating the letter of it. not surprising assad and his forces are increasing attacks on opposition forces and civilian populations using ever tool in

their arsenal short of chemical weapons. just yesterday we read in "the washington post" that assad's fighter jets are back on the attack for the first time in weeks and his artillery is shelling double the normal rate the very same damascus neighborhood that was fasted on august 21st. indeed the post reports that more than a thousand people were killed in syria last week while the chemical weapons agreement was negotiated. meanwhile we also read yesterday in the "wall street journal" that iran's revolutionary guard are stepping up their training of shiite recruits from across the region to go to syria and fight for assad. this too should surprise no one. we can not afford to look at syria as a chemical weapons arsenal attached to a country. as awful as chemical weapons are, and as much as we want them taken away from assad, they are

just one symptom of the deteriorating conflict in syria. we need a strategy to end this war as soon as possible because the longer it goes the worse it gets. the strategy must degrade the military capabilities of assad regime, upgrade the military capabilities of the moderate opposition, shift the momentum on the battlefield and thereby create conditions for a negotiated end to the conflict and the removal from power of assad and his top henchmen. unfortunately there are real tensions between this strategy and the chemical weapons initiative that we have now undertaken. that's why russia proposed it in the first place. is assad a war criminal we seek to remove from power by supporting and arming and training his opponents or is assad a negotiating partner for the next nine months? it is unclear and that's why our own partners on the ground in syria are so dispirited.

here is what general dris the commander of the free syrian army said about the recent chemical weapons initiative. quote, we feel let down by the international community. we don't have any hope. this comes on top of the administration's failure for the better part of three years to provide meaningful lethal assistance to moderate opposition forces. according to "the washington post" the first u.s. weapons only reached the opposition earlier this month and they reportedly only reached a very small number of people. it is long past time to launch a significant training and equipment, training program for moderate syrian forces and the defense department is best-suited to lead this expanded mission. our recent debates on syria led some to conclude that americans have turned isolationist and that's why the administration has not done more in syria. to the contrary, the reluctance of americans to do more is

related in large part to the administration's unwillingness or inability to formulate a strategy on syria and communicate it effectively. instead what americans constantly hear from the administration, is how awful the conflict in syria is, and how eager they are not to be involved in it, as the president said again in his speech, to the nation last week. but look where we are now? everything the administration has said would happen if we got more involved in syria has now happened because we have not gotten more involved and nearly every option that the administration once criticized as reckless and dangerous from arming the opposition to targeted airstrikes is now become u.s. policy. yonr the american people and members of congress are deeply confused and no one wants to be involved in syria but the reality is we are

involved. we're more involved today than a year ago. we were more involved one year ago than two years ago. we were more involved two years ago than three years ago and we most certainly will be more involved next year than we are now. only then the conflict will be worse and we will have worse and fewer options to address it. but eventually we will have to address it. not because we want to, but because our interests and the security of our friend and allies require it. to insist otherwise is not some greater form of realismism but rather profound denial of reality. americans need to be told clearly what's at stake in syria. with all due respect to the administration, it is far more than an international norm about chemical weapons. which sound like political science. americans need to care about the conflict in syria because it is becoming a failed state in the heart of the middle east. because it has grown, it's a

growth hormone for al qaeda and its terrorist allies because it is now a regional catastrophe that threatens the very existence of some of our closest friend and allies who are indispensable to the safety of every american and because it is the central front of the iranian regime's battle to dominate the middle east. these are the national security interests that we have at stake in syria. it is one thing for americans to hear this from an old member of congress like me. it is quite another for them to hear it from their president. the american people are never eager to engage in foreign policy let alone themselves in foreign conflicts and that is the healthy attitude after democratic people. there are events and threats in the world that demand our attention and from which we can not isolate ourselves and it is in those times that the american people rely on our elected leaders, most of all, our

president, to lead them. to explain to them where our interests and values are at greatest risk. why we can not afford to remain disengaged. why further delay will only allow present dangers to turn into more dire future threats. and what we as a nation are called on to do. no president campaigns to get america involved in foreign conflicts. and no president prefers to prioritize his time in this way but what sets our greatest presidents apart from all the rest is that they recognize this duty when it is called to them and they took it up. this kind of leadership we need now more than ever. thank you very much much. [applause] strong letter to follow. >> strong letter to follow. let's start right out with what you are, level is the accusation

but is essentially president obama mishandling of the issue. two specifics. was he wrong to say he would seek congressional approval and when, if as it became clear he would not get that, should he have gone ahead and struck anyway without the vote and survive politically? >> i think the mistake and unprecedented move was to announce the strikes and then announce that he was going to go to congress. if he had announced the strikes and said, and i'm going to congress to get the support of congress, that is one thing. if he had struck, some of us in this room remember one morning we woke up and ronald reagan had invaded grenada. i mean it is not unprecedented for presidents, an bill clinton obviously we know acted, well, virtually every president back to ronald reagan has acted at one time or another without the endorsement of congress.

so i think that was the mistake and i think it was, from what i have read and heard, to make a decision and then announce it to the national security team rather than propose it to the national security team and have that discussion also was a technical error. so, if the president was going to strike, you know, if you're going to say take vienna, take vienna. >> wasn't he essentially challenging congress and the american people to step up to this challenge and it turned out the american public didn't want to and neither did most members of congress or certainly he didn't have a majority who did. at that point if you've been president would you have just said, well, i'm going ahead anyway? or at that point is he too far down the path of saying he would seek approval? >> it's a very tough decision

for the president of the united states and at this juncture i can't say exactly what he should do. i would have a tendency if this whole chemical weapons thing fails and, and it turns into a fiasco, i think that he should act. but, he is going to have much greater problem because he said he was going to get the endorsement of congress and didn't. if he had not said anything all along, well, he acted, people would be angry, we would get the usual blowback. so, i think that, if this, if or when this thing comes apart, which i think it is -- >> it will become apparent you think not striking and not really complying? >> right. that he is not in compliance and

there's kind after rope-a-dope going on. i mean does it give us confidence when again lavrov said just a few hours ago, we think the rebels did this attack? i mean really? i mean, where's the credibility of this guy when he keeps saying it was the free syrian army that conducted the chemical weapons attack and put tip keeps stating that as well? it is just, and lavrov made it very clear when he and john kerry made the announcement he said, we will not authorize the use of force or sanctions. he said i want to make that very clear. so where is the leverage here at least through the united nations? >> is part of the leverage though that russia's on the hook now to deliver its client? >> well, first of all i don't see how russia is on the hook.

mr. putin has now injected himself in a way that has not been russian influence in the region since 1970 and mr. putin, who obviously from his comments about this being a rebel attack with sarin gas is capable of saying anything. i mean what constrains him to honesty? and so if this whole thing fails i'm sure putin will say, we did our best, the americans -- he will say most anything but what he has done is reinserted himself in the whole scenario of the middle east again in a way since the fall of nasser has not been possible for the russians. so i don't accept the premise that he's in any danger at all. he made it very clear they would veto a resolution that authorized the use of force through the u.n. he has made it very clear even sanctions would be something they would oppose. >> they would have to come back

for a second resolution to get. >> and even then he has said there will be no, there will be, they will veto. it is interesting. the apologists for putin say, well, he is so mad about libya? he's mad that we got rid of muammar qaddafi? is that what he is angry about? >> they're angry about -- >> what did he expect? it is just nonsense to say he's angry because they agreed on libya. maybe they made a mistake but somehow then say that's a reason for them not to do, take action against this butchery that continues on unabated. >> well they of course, they say they feel, they signed up for one thing which was protecting the, a humanitarian one and it ended up being regime change but let me go back -- >> could i just say a word about quote, regime change. the only way that there is going

to be a shift in syria is in bashar assad thinks he is, can not hold on to power. that means a robust free syrian army. that reverses the momentum on the battlefield and then it is a negotiated departure. it's a geneva where he has a negotiated departure and at that time you could have negotiations about the chemical weapons at the same time. part of his departure is a turnover of all these chemical weapons that, the thousand tons or whatever it is. >> let me go back to another point you made about the president though and you said you didn't know, you're not a expert on syria and chemical weapons but you are on power, essentially on leadership and war. president obama -- >> i should have said i'm an expert on everything. >> yeah, you should have. sunday he said on george stephanopoulos's program, his quote was, my position and

the u.s. position has been consistent throughout. and his position as he stated it is, he basically thinks there's a distinction that the wider use of chemical weapons or preventing it in the world is a real u.s. national interest and that getting involved in the civil war, however dreadful it is is not. now is that where you part company? that you think the civil war is in fact as great a threat to u.s. national interests as the prospect these chemical weapons would get loose or do you expect -- >> first of all, the chemical weapons killed 1400 people. it is terrible. it is horrible, crossed lines, violated treaties that have been signed by 190 countries or whatever it is so it's terrible but there is 110,000 that have been slaughtered using bullets and knives and clubs. i mean to somehow ignore that,

these atrocityies is beyond, staggering to the imagination. and the, now he has stepped up the air attacks. now, we're working supposedly, margaret, working with russia, to remove these chemical weapons from syria. meanwhile, at the same airport, they may be flown out of, there is russian aircraft full of weapons to kill people landing at the same airport! how do you rationalize that intellectually but also morally? as long as you remove your chemical weapons, then, and obviously there's been not significant u.s. engagement that it is okay to continue the slaughter? by the way the majority of free syrian army officers are defectors from the syrian army. and i have met with them.

and their training and their indoctrination is to rape, murder, torture so they can intimidate the population. that's their training. you will hear and saw on the front page of "the new york times" some execution of some prisoners by the free syrian army and it is horrible and unacceptable but it also is an indication of how horrible war is and the war in which i fought we had a terrible thing happen. it was called the my lai massacre and it is a stain and a blot on the honor of the united states military forever. these things do happen. there is difference between acts violence, cruelty, barbaric behavior sparked by this anger but there is something else to have a doctrine and intook trin nation of your troops as bashir has to torture, rape, and murder. and that is a huge difference i

want to point out and another reason why we should be helping the free syrian army a lot more. >> is it your understanding, and you have spoken with the president and other members of the administration quite a lot lately i gather, that the u.s. is about to step up and overtly, not just covertly, provide, quote, unquote lethal aid? it will be through dod, not the cia? and if so what is the advantage of that? >> i'm not exactly sure, they have told me for two years that they're making sure aid got to the free syrian army and it hasn't happened. so my, if you will excuse me skepticism is exactly what they're doing. the only thing tangible that the free syrian army has gotten directly from the united states is a whole bunch of mre's, meals ready to eat, whose expiration date was a month later. and i'm not making that up. so in the saudis have been able

to get weapons with our vetting to the free syrian army and they haven't fallen into the hands of al qaeda or al-nusra. so, i, it has to be some proof to me, one that they're getting weapons in, and two, the right kind of weapons. they need anti-armor. they have got to have anti-armor. ak-47s don't fight well against tanks, and that armor is a big part of bashir's capability and they have got to have antiair weapons as well. >> that's what they tell you when you're on the ground, that they are being bombarded from the air. >> yes. >> is that, is that a danger to provide even the free syrian army, even if you were to accept that it's a disciplined, cohesive force, not the bad guys, isn't that a danger to start, as we did in afghanistan? >> i think there's no good options and i think there is a danger but i would point out

that the air, control of the air in that terrain and climate is critical not only for air attacks but moving troops and equipment around syria because they don't control certain areas, and, they ship, the planeloads full of weapons that fly from iran and from russia into damascus every single day. tons of military equipment that are being flown in and meanwhile we're trying to, in very devious ways to get some of this equipment to them. when you look at the disparity on the battlefield, the lack of, the total superiority of weapons that bashir has it is surprising that the free syrian army has done as well as they are. in case you missed it there is now conflict between the free syrian army and al-nusra and al qaeda. if this thing ended the right way we would have to give weapons and assistance to the free syrian army because this

al-nusra and al qaeda grows every single day. >> now this free syrian army, and i have met with some members of it as well as you have and it implies it is this cohesive force but i am told, though i could not find this today myself but i'm told by a very reputable colleague of mine, general flynn of dia said just a week ago there is something like 1200 militias, rebel militias. isn't one of the huge problems that they have not become a cohesive force, they don't have good command and control? never mind they don't have weapons, they don't have effective command and control? >> well, part of it is obviously that there is not the lines of communication that we want to have. second of all this is the same intelligence agency that has given, i think, dubious information in the past. you know, if you don't want to be involved you can always find

lots of reasons not to be. yes, there are different units around but they have good communication amongst them. they have a chain of command that they adhere to but is it, less as a cohesive army marching into battle? of course not. of and there are communications problems and there are a lot of other problems associated with it. but they fought well and they still are the majority of those who are fighting. of the as the, extremists grow every day. a lot of them coming in from guess where? iraq. >> i want to go to audience seconds in one sec so be thinking of your questions but i have many others i would like to ask you but let me ask you this. now the u.s. is where it is. it is at the u.n. they were having a meeting this afternoon to try to hammer out some resolution. what should the president and his team do now in terms of how

to make this resolution enforceable? >> when lindsey graham and i, one of our visit with the president, the president said i want to achieve three things. one, degrade bashar assad's chemical weapons capability. two, increase the support, the strengthen the free syrian army. three, change the momentum on the battlefield so that it leads to a negotiated departure of bashar assad. the president talked to the country, when he talked to george stephanopoulos, there was no mention of the other two. the president has got to, in my view, say, we need to reverse this situation on the battlefield which would then lead to a negotiated departure of bashar assad. that more than anything. it is not very convincing to say you're going to enter a conflict in order to force a nation to adhere to international norms of chemical weaponses treaties.

there has got to be a more compelling reason. >> you mean a stick? >> yes. could i just, one brief vignette at what is at stake here. the king of jordan says that he can't last, with 15% of his population refugees. lebanon is teetering on the secular conflict. iraq is now, as i mentioned in my remarks, had more killing than since 2008. and when you go to a refugee camp, which i wish everyone of us could and you meet these people, it's, it breaks your heart, breakings your heart but also, i will never forget when a woman was showing me around a refugee camp in jordan and she said, senator, you see these children running around here, all these children, thousands of children? there are a million refugee children now. i said yes. she said, they're going to take revenge on those who they

believe refused to help them and abandoned them. you saw what happened in the palestinian refugee camps? we are in danger of creating a million young people who will grow up hating the united states of america. we ought to think about the long-term implications of our failure to stop this butcher from massacring so many of his own people. >> on that note we're going to go to audience questions. you all know the drill but please wait for the microphone. we've got four circulating here. speak directly into it. state your name and your affiliation and stand up, please. and then of course try to keep your questions concise so we can get to many people. the gentleman in the back there with the red tie. >> thank you, senator. i'm bill courtney, i'm a retired diplomat. american military an civilian personnel have a lot of

experience with on-site inspection in the former soviet union and other places. if as the media says there are 45 or societies with chemical weapons around syria in the middle of a civil war, would you support sending american military and civilian personnel there as part of a international on-site inspection teams? >> i don't think i could unless there was some guaranty of their safety which i think would be enforceable. i just don't see how you could do that without some kind of arrangement that was so ironclad that since i don't trust assad, that would be something that i think would be credible. i just, the one thing americans don't want i think, may be disagreement on a lot of things that i've said but i think we're in agreement, americans don't want any american boot on the ground. now there's one other scenario very quickly. suppose that there was a

negotiated departure of bashar assad. and as i said before we negotiated a plan for an international, not just american, but an international group to go in and secure these caches of chemical weapons, i think the american people might be agreeable for that sole purpose. but you would even have to do a selling job there. and finally i would remind you what was reported on the front page of "the wall street journal" a couple days ago. bashar assad is right now moving these chemical weapons all around syria. . .

>> and most influence in the world says we're going to take, is going to take certain action, particularly where has to do with an issue such as this, you lose credibility when you don't. it's just a fact. and i hear from my friends around europe and the middle east who are really very skeptical about american leadership. and i think they have a right to be. the second part was -- >> i think you answered it. >> i think that once he stated that he is going to act -- i know what i wanted to add.

presidents from time to time have had to make tough decisions. some the things that franklin delano roosevelt did prior to world war ii. harry truman, korea, his popularity just sunk down into the low '20s. americans wanted out of korea. there were times when presidents have made tough decisions, because that's the responsibility of commander-in-chief. they have to pay for it if it's a mistake, but i just think that another aspect of this is, i don't think the president made a good reason argument to the american people when he was saying he wanted to do two things. he wanted to pause, but he also want congress to authorize an attack. i think he should've waited until the pause spirited was over, or just say that he was going to attack. i don't think americans really got a strong message.

>> is that charles right here? yes. >> thank you, charles, johns hopkins university. senator, i'm sure you've given other talks as well, and this one focuses on the president spent. i agree with most of them, but also think that if congress, and notably the republicans in the senate and the house, spoke like you did, which they don't, or happened, they criticize the president from the other angle, things would be different. do you ever go to the house to talk to your republican friends and colleagues? [laughter] to tell them what you think of them? [laughter] >> let me say, your question is excellent, particularly in that

you broach a subject that i think is going to be the subject of great debate within the republican party. i remember when the democratic party in the 1970s had a very explicit in their party. in fact, i think it was, you could argue that it was bill clinton who seem to reconcile most elements within that party, and he did a heckuva job doing it. we are seeing in our party a real split now and a great debate. and on the one side, there is rand paul, and many others, who really are sincerely convinced that the united states engages in adventurism we shouldn't involve internationally, et cetera, et cetera. and on our side it is of course the internationalists, and that debate has to be held within our party. i go back, prior, after world war i windows republicans they kept us out of the league of

nations. republicans and democrats, but also had the republicans prior to world war ii, after world war ii, the clash between the eisenhower, william taft and republican party. i could go on and on. there's always been this tension within republican party, and isolationist wing on occasion has had the ascendancy. and right now the american people, obviously as stated earlier, the american people are incredibly skeptical, has to do with iraq and it has to do with the length of afghanistan and other things, but the american people are very skeptical. they are playing to the audience, and i don't blame them. i say, with respect for their views, not with disrespect. >> you said at the end of your remarks, occasion to our world events that occurred that we simply cannot isolate ourselves from, we must get involved and. there used to be some centric bipartisan consensus on that

point from republicans and democrats. do you think that is really dissolved in a profound historical sense? >> i think that due to the economy to some degree, the length of our complex and iraq and afghanistan, the confluence of forces, the polarization of the political environment, let's face it, there are many members of the house of representatives now that have lifetime seats, or at least until the next census. and this is one of the biggest problems we have with immigration reform. how many of those who don't want to act on immigration reform have an overwhelming majority of citizens that are not hispanic in their districts? so they are listening, obviously, not to "the better angels of our nature." i really think that this debate

is going to be one which i welcome, i welcome the debate and i want -- it will have to do with candidates and programs and platforms, but the debate has to take place, and i'm confident that the american people will do the right thing at the end of the day, if they are probably led with inspiration. >> question over here. yes, sir. right on the aisle. >> hi. i'm bob lightman and i'm from bloomberg government. my question is, goes back to the credibility should and you make a great point that the president having uttered the statement about the redline and then not follow through lost credibility. would you have issued a redline statement, or would you have said basically something i want to keep my options open? >> two years ago i would have

accelerated the supplies to the free syrian army, and it would have been over. bashar al-assad was on the run, and the momentum was on the side of the free syrian army until about a year ago. that's when the 5000 hezbollah came in. that's when the iranians started the revolutionary training, equipment and increasing equipment come and that's when the russians really started flying in planeload after planeload of weapons. so i would have given the assistance that we didn't give about two years ago. and a year ago i would've done the same thing, and i would do it now. but i hamuch more complicated, the good options are gone, now we have to choose the least dangerous option of all. and i'd like just to say again, and i meant to mention this

earlier, americans are war weary. i understand that. i would like to point out two things. one, we do have an all-volunteer force. we are not forcing anybody into the military. and when you join the military you think there's a possibility he might be involved in the conflict. and the second point is, you think those million refugee kids are not war weary? you think the women who have been gang raped that i met in a refugee camp in jordan are war weary? the united states of america is, this is almost shameful in a way, that we have not helped these people more. and it isn't just that humanitarian moral side. it's a regional conflict that this is becoming and is being engulfed by. >> then why weren't more mideast countries, why didn't they step forward and publicly endorse -- >> because americans actually, number one. number two, qatar, saudis,

others have been sending weapons and doing things, but their population is small. their military capabilities are not great, but they have been assisting insignificantly. >> but when president obama said he was going to strike -- >> because they don't know if he's a serious. they don't know if he's serious. and maybe their skepticism was justified because he said he was going to strike and then obviously didn't. and supposedly there's chemical weapons treaty comes through completely done, we have removed the chemical weapons from syria. but what about the red line that said if he massacred people with the use of chemical weapons that he was going to pay? what has he paid? >> might not the ultimate be a case -- i don't want to get into -- the are two gentlemen right in the back and then the woman on the aisle.

>> i'm with al-jazeera. send you, you said the political solutions -- what would be your vision for the post assad syria that would prevent the balkanization of city given the complex situation? and also the parties involved, iran, hezbollah, and also the dysfunctional opposition? >> well, thank you. you raise a really important question, one of the recent i said there's really no really good options. there's only some that are more profitable than others. number one, we have to have the free syrian army and the syrian national council comply with commitments they've made that they will secure and get rid of chemical weapons. the second thing is that they have to commit to human, to respect human rights.

and we have to be a very big player in that. especially when it comes to the inevitable conflict between all these jihadists that are there and the free syrian army. we're going down to assist the free syrian army. third of all, we are going to have to have commitments about protection of christians and alawites, because we cannot unleash once that bashar al-assad collapse is a bloodletting, bloody massacre of these people. as you know right now, bashar, one of the strategies is to establish that crescent along the coast of there. and that is a real possibility that that could happen, particularly if the russians continue to help them. by the way, one shipload into the russian port that comes in

regularly is six months worth of supplies brought in. the way that we are bringing them into, into the free syrian army. again, i think there's a grave danger of syria -- into different pieces. that is something that will require real significant involvement on our part in assisting the free syrian army, but also in national -- international pressures to bring about, part of the negotiatenegotiate d settlement in my view it have to do with chemical weapons and cease-fire. and that cease-fire could be enforced. >> then i said i would go back over here. >> lisa massimino, human rights first. thank you, senator mccain but as usual, for your insight, and blunt speaking.

you have mentioned several times the russian arms shipment, and i wonder, what can we be doing in the united states as this is playing itself out at the u.n. to make it more costly for putin to be supporting assad? are you convinced we've done everything we can in terms of sanctions on russian banks? we should have at least as much as we have on the iranians. what else can we be doing to make russia pay a price for being assad's patron? >> that's an excellent point, and i wish that we would say to putin/laugher off -- sergey lavrov, there's got to be a cost to this continued all out assistance to bashar al-assad, and i think we have to talk about that and i think we ought to talk about resolutions at the

u.n. general assembly, which doesn't care about, at least an expression to the general assembly and condemnation of the russians. but putin, i think we have to understand him. putin has visions of the restoration of the russian empire. putin believes that the rightful place for russia is as a major player in the world. and he believes that democracy is kind of something that is for other countries, and he's going to hang on to power and is going to do what's necessary and onto power. doesn't mean he's going to have a massacre of people, although he certainly -- chechnya, as you well know, was incredibly brutal. i think we have to identify him for what he is, an autocrat that

cracks down on media, cracks down on human rights, puts a guy in jail, is responsible for the death of sergei, and at least portray him for what he is, rather than this grand illusion that we are some of going to have this real fine and wonderful relationship with them. we have to have a relationship with russia, but it has to be an honest relationship. one free of allusions, not one wink wink, nod nod, tell vladimir if i'm reelected i will be more flexible. that's not the way to approach vladimir putin, and the snowden thing was just a sign of disrespect. it was a sign of disrespect for the united states of america, that they gave asylum to mr. snowden. >> in the back, there were two people right on the aisle.

>> kevin, multiple our capital. send it to come your known to be a supporter of legal assistance to the free syrian army but, of course, the opposition truly consists of about 100,000 people, 101,200 groups, maybe 50% of them are moderates. how is -- >> not true, not true, not true. i would disagree. we disagree on the percentage spent on coding the report but it's clear there's lots of jihadists and lots of groups. how will the general achieve unity of command and the moderate factions? will that call for any level of cooperation with any of the factions on the religious side? >> well, first of all two years ago there was none of them. i think the matter what organization you talk to that was the case. second of all, frankly, i just disagree. there's about 70% still who are of free syrian army with our jihadists flowing and not just from the middle east but french

ambassador told there's a couple hundred french citizens that have gone to syria to fight on behalf of the jihadists. 5000 hezbollah, 5000 hezbollah. the point i think that you and others are missing, and syria is a moderate nation. syria has the highest literacy rate of any nation in the middle east. they are not going to submit to a jihadists or al qaeda group governing them. they will not. right now in some areas where al qaeda is, they are demonstrating against them because al qaeda is trying to impose sharia law. and that's a real convenient copout to say we don't know -- on who they are. i was in syria and i met them. i know they are. and to somehow say that there's this group out there and they're so disorganized, yes, there's 1200 units. there's about 1200 battalions in the united states army. does that mean that there not

connected to each other? of course not. so it is, if you don't want anything, you can always find reasons to do so. is it a done deal? is easy? was it a lot easier to years ago? yes, but it's very, very difficult. but i guess my answer back to you, i say with respect is the status quo satisfactory? is the status quo satisfactory with the people are being massacred and the jihadists are flowing in and the weapons are being flown in and 5000 hezbollah are good fighters, good fighters these hezbollah are. they are not afraid to die. i thousand, and they came from southern lebanon. doesn't that give us some kind of pause as to what the connection here is between iran, syria and hezbollah? and what happens if bashar al-assad stays in power? what's the message throughout the middle east?

>> the young lady on the end. >> thank you. i am with voice of vietnamese-americans but first i want to thank cindy mccain for your service in vietnam it and i think that's a huge lesson. -- senator mccain. then if we did not let go of the victory in vietnam, then we would not have to do with the situation now in the asia pacific ocean. and i think right now there was a suggestion that you would write an op-ed and put out for vladimir putin. what you just said. spispent could i just mention on that real quickly? there's too, and don't ask me, still don't quite understand. one of them was online and one of them was a hardline communists. so we are submitting it to both spent and the one to the ccp.

and i would suggest you send one to the pla as well. my question is, i feel that this stops at home. and you said that president obama was not very strong. i believe and i applaud president obama for everything is done did because i think he stayed engaged. a knockout the united nations involved, russia involved, 30 more countries involved, and he still trying to degrade the capacity of assad with chemical weapons with those nations. but would you from your point of view to get stronger, would you get back to the republicans and work with them, sequestration? because i believe without that they would be stronger speakers i think we're getting about four questions but let me -- >> very briefly, i do what's going to happen because the

bill, the constitution says spending bills originate in the house of representatives, so i really don't know what's going to happen. i do know i have seen the movies he for shutting down the government. charles krauthammer said that this idea demanding the repeal of obamacare was a suicide note, and i, on the part of republicans, and i agree with charles krauthammer. but look, this president and i have a relationship that i value. we work together on immigration reform. we've worked together on trying to get the debt issue under control. i supported him on the initial action in syria. there is not only no ill will, i had a cordial relationship with the president of the united states and i think that's important. i view myself as a loyal

opposition. the loyal opposition disagree when they disagree and they agree when they agree. that's i think we should function. and i have a lot of respect for the president of the united states in many, many ways, including his ability to communicate with the american people, as he proved in his reelection campaign. but right now as i have articulated, i think we're on the wrong path that could be very damaging, not only now but for the rest of his presidency. and i don't want that to happen. i do not want a president of the united states that is weekend. this is too dangerous a world we live in. >> i think that -- >> one more? >> great. the last brief question. i want to remind everyone this was on the record, and senator mccain has to zip away to something else so i've been asked to have everybody just wait in the seats after. >> go back a half hour while the secret service --

[laughter] >> the lady all the weight in the back with her hand out. >> thank you, senator mccain. i was wondering if you can tell us what is the u.s. has learned from past military action? for example, in iraq and afghanistan. and from the situation in -- [inaudible] >> i take lessons from bosnia, kosovo and other conflicts in which we have been involved which we have succeeded. bosnian, kosovo we did what i want us to do -- well, actually, yes, to some degree in syria where we bombed and sent their activity without sin in american troops. and after 78 days mr. milosevic decided to fold. and we did some in the name of

human rights. mr. milosevic didn't pose any particular threat to the united states of america, but he was slaughtering people right and left. and so the united states intervened and was saved i will have many thousands of lives. so when i look at, and i look at afghanistan, and we knew, we forget, we forget, unfortunately, that we knew that al qaeda and the people who perpetrated the atrocities of 9/11 came from afghanistan. what would any president deal? any president would have done what president bush did and said, turn these people over and get rid of them and bring them to justice to the taliban refused to do so. we had no choice. now, wasn't mishandled? could we have done it better? differently? that would be a subject for historians. on the issue of iraq, i think

that it will go down in history as a cardinal error to accept whatever evidence there was and turn it into an argument that saddam hussein had weapons of mass destruction, which we know now he did not. but the secretary of state went to u.n. security council, convinced all of us in congress, and the american people and others. id believe that thanks to david petraeus -- id believe that we won the war and in the words of my friend general keane, we lost the peace because we should've left a residual force behind which the president didn't want to do. and so we are now seeing, unfortunately, a resurgence of al qaeda in iraq. al qaeda moving into syria to help bashar al-assad, excuse me, to enter the fight, not

bashar al-assad. so we are seeing turmoil there that a think could have been avoided in the long run. are we a perfect nation? no. have we made mistakes? yes. this young lady was just talking about vietnam, but we learn from our mistakes. we are now friends with the vietnamese. the vietnamese are now friends with us, which -- there's a ship destroyer named after my father and grandfather. it paid a port visit to the part of the name not too long ago. that shows you if you live long enough, anything can happen in the world. so have we made mistakes and errors in judgment? yes. we have. but that goes with being exceptional nation we are and the reason why the 20th century was called the american century. we've made mistakes, but the world high believe is a far better place because of american

leadership. and the american people who have sacrificed so much on behalf of other people's freedom as well as our own. i believe in the greatness of america and the responsibilities of world leadership and often ask my friends at town hall meetings, if you don't want america to lead, who do you want to lead? somebody's got to lead. i know we have made mistakes and know we are very imperfect nation, but they don't think there's been a better experiment, and i'm proud to be, and had a small opportunity to survey. i thank you, margaret, for having me. thank you all. [applause] >> [inaudible conversations]

[inaudible conversations] >> good morning and thanks for joining us. we go live now to the u.s. senate where lawmakers will open the day with an hour of speeches before they get back to work on an energy efficiency bill. that legislation is aimed at helping manufacturers to develop

technologies for the businesses. negotiations continue on a number of amendments to be offered including one by david vitter related to health care. and live now to the floor of the u.s. senate here on c-span2. the presiding officer: the senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. gracious savior, lead our lives so we will bring you pleasure, receiving the smile of heaven's approval. guide our senators, inspiring them to do justly, to love mercy, and to embrace humility as they walk with you.

lord, strengthen them, making them eager to lift burdens and to respond to human needs. in your unfailing love, give them the wisdom to follow the leading of your powerful providence. do for theplt immeasureably, abundantly, above all that they can ask or imagine. we pray in your merciful name amen. the presiding officer: please join me in reciting the pledge of allegiance to our flag. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all.

the presiding officer: the clerk will read a communication to the senate. the clerk: washington d.c., september 18, 2013. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable edward markey, a senator from the kpholg wutsd -p -- from the commonwealth of massachusetts to perform the duties of the chair. signed: patrick j. leahy, president pro tempore. . mr. reid: following morning business the senate will resume consideration of the energy savings industrial competitiveness act.

mr. president, we've tried really hard to work on this energy bill, but it's no wonder that the news is reporting today this little -- the least productive senate in the history of the country. we have a number of republican senators, and lots of them in the house, republican house members who don't believe in government. they want to get rid of it. and they're doing everything they can to make that a fact. we're waiting now to see what's going to come from the house with the way to fund government or not fund it. as you know, mr. president, they're obsessed with the constitutional law that's been in effect now for four years declared constitutional by the united states supreme court.

the latest we got from our floor staff is that the republicans on this energy bill want five nongermane amendments and whatever other amendments are filed dealing with energy, which is meaning we're not going to finish the legislation. that's an understatement. when we proceed, we have a number of issues we're going to work on. we have one that we filed, what is called the rule 14 procedure, yesterday, dealing with continuing to allow our high-tech industry to be competitive. and so, we will move forward doing the best we can and wait and see what the house is going to do. they're still struggling to find out which absurd idea is going to prevail over there. mr. president, i'm told there are bills at the desk due for

second readings. the presiding officer: the clerk will read the titles of the bills for a second time. the clerk: s. 1513, a bill to amend the helium act and so forth and for other purposes. s. 1514, a bill to save coal jobs, and for other purposes. h.r. 2009, an act to prohibit the secretary of the treasury from enforcing the patient protection and affordable care act and the health care and education reconciliation act of 2010. h.r. 2775, an act to condition the provision of premium and cost-sharing subsidies under the patient protection and affordable care act, and so forth and for other purposes. mr. reid: mr. president, i would object to any further proceedings with respect to all of these bills that were just read into the record. the presiding officer: objection is heard. will be placed on the calendar under rule 14. mr. reid: mr. president, each year hispanic heritage month

offers an opportunity to honor the contributions of a community that has contributed to our country's progress for centuries. in the state of nevada, the influence of the hispanic americans is evident, even in the name of the state, which means snowcap. and of course our most famous cities, one of the most famous cities in the world -- las vegas -- means the meadows. it was a place in pioneer days that had, was an oasis in the desert, and that's an understatement. water, these artisan wells that bubbled out of the ground, that was the beginning of las vegas, the meadows. mr. president, the first nonnative american to set eyes on las vegas was a man named raphael rivera. we honor him in nevada. there are facilities named after

him. in my office here, a conference room i have a wonderful painting of raphael rivera looking down in las vegas. he looked so good all dressed in his finery. but in reality, he was lost, and he had been with a spanish expedition and was lost. but he was the first to see las vegas. we recognize that, and the picture is risk. you see him -- and the picture is terrific. you see him looking down at a place where there is nothing other than the meadows, but now there's 2.5 million people there. in nevada and across the nation we see the contribution of hispanic americans in every facet of our society, on the battlefield, board room, courtroom, art galleries and on the playing fields. hispanic americans have also played an important role in this

nation's armed forces serving every conflict since the revolutionary war. and more than 2.3 million hispanic-owned businesses employ millions of americans to provide critical goods and services and help drive our economy. nationwide, latinos are expected to make up about 60% of the population in decades to come. to ensure our country thrives, we must ensure its hispanic population thrives as well. hispanic heritage month should be one to celebrate but also one to retphreubgt on what we can -- reflect on what we can do to help hispanic families thrive. this year affords a special moment for reflection as the nation commemorates 50 years since the historic march on washington for jobs and freedom, the struggle for equality, justice and freedom is ongoing. but through civic engagement, hispanic americans and all americans can be heard in washington, their support for quality education, quality

health care, living wage and the right to vote without intimidation or discrimination. congress heard their calls for quality, affordable health insurance. that's why we passed, among other reasons, the affordable care act, obamacare. it was a huge step forward for hispanic families in nevada and across the country. in nevada alone, 160,000 latinos and more than 10 million nationwide who currently lack health insurance will be eligible for coverage through the new marketplaces which are going to start on october 1. congress heard the calls for opportunity during tough economic times. democrats made small business loans possible for 11 thousand hispanic-owned businesses. we've significantly cut predatory and discriminatory lending practices that disproportionately affected the spanish communities. last year congress cut taxes for 98% of american families

including every middle-class family. congress also heard the calls for fair, practical immigration reform, and this year the united states senate passed a bipartisan immigration bill that will reform america's legal immigration system and raise the deficit by $1 trillion. this measure will also help 11 million people, people tired of looking over their shoulders and fearing deportation to get right with the law to start down an earned pathway to citizenship. the senate, though, mr. president, is still waiting, as we have for lots of things, for the republicans in the house to allow a vote on the senate's bipartisan compromise. what better way to celebrate this month's importance than to pass a bill that would allow millions of families to stay together and reach their full potential. so, mr. president, i look forward to hispanic heritage month. again, as an opportunity to reaffirm my commitment to support the 52 million latinos in america through our work here in the senate.

to me, hispanic heritage month is about recognizing the incredible contributions of hispanic americans to our nation. it is also about building a brighter future for hispanic americans and our nation. mr. mcconnell: mr. president? the presiding officer: the republican leader. mr. mcconnell: earlier this week we passed the five-year mark since the financial crisis hit our country. incredibly, president obama tried to use that opportunity to take credit for the fact that things aren't as bad as they were back then. and he's back at it again today. basically his message is this o-

is this, america isn't in a free fall so everyone should give him a pat on the back. as far as deflexions go, it's pretty creative but also pretty misleading because in an effort to justify his own failed policies and preserve them, the president is papering over some pretty, pretty troubling realities. the truth is for most americans the past few years have felt like anything but a recovery. it's been a story of lost jobs and underemployment and the loss of dignity that comes with both. it's been a period of stagnant wages and an increasing disparity between rich and poor. and then there are all the young people who have been stunned to realize after graduating from college, there just aren't any jobs out there. so now is not the time for victory laps, because if this is his idea of success, i'd hate to

see what failure looks like. today nearly eight million americans who want full-time jobs can only find part-time work. that's nearly twice as many involuntarily part timers as we had throughout most of the previous administration. and of course obamacare will make this much worse. what's more, the poor and middle-income folks and those just starting out on their own are some of the people who have been struggling the most in the obama economy. the unemployment rate for low-income americans, for instance, now stands at 21%. 21% unemployment for low-income americans, right about where it was during the great depression. the president likes to claim credit for jobs that have been created since the so-called recovery began. but what he fails to mention is that there are still fewer jobs

today than before the crisis hit, while real median wages haven't gone up at all over the past five years. and even though candidate obama promised to spread the wealth around, we find 95% of recent income gains have gone to the richest among us. 95% of recent income gains have gone to the richest among us. in other words, we're again faced with the tragic irony that those on the left who claim most loudly to be standing up for fairness and equality often end up getting the worst results for those who need help the most. to paraphrase president reagan's old line about the apostles of quote, unquote fairness, maybe they are fair in one way, their policies don't discriminate. they bring misery to everybody, unless of course you're among the elite of the elite. and we all know why that is, because when government policies

hurt economic growth by stifling opportunities and drying up investment, it's the american worker who loses. it's those at the bottom of the economic ladder who suffer the most. so the best thing we can do to help the poor and working classes is to get the private sector growing again and weigh know how it's done. by implementing things like a more competitive tax code, regulatory relief, approval of the keystone pipeline, and, of course, repealing obamacare, which is killing jobs. the fact is, the policies of today's washington democrats actually entrench unfairness. and make the playing field even more uneven. even the president's allies are beginning to understand big labor wants to rewrite some provisions of the same obamacare law they helped muscle through. why? because, predictably, obamacare

is now undermining the kind of employer-sponsored plans their members like and were told they'd be ail t able to keep. and union bosses also know that the president recently agreed to delay parts of the law for businesses. now they want relief, too. why for businesses and not for unions? but what about everybody else? what about the middle class? what about college graduates or young couples trying to make ends meet while they start a family? don't those folks deserve some relief from obamacare, too? that's why senator coats and i filed an amendment last week that would allow everyone else to take advantage of the obamacare delay already offered to businesses. if companies get to catch a break, then republicans think the middle class should, too. and the democrats who run washington need to stop blocking us from even taking a vote on this important legislation,

legislation that already passed the house of representatives, by the way, on a bipartisan basis. after all, as i've already indicated, obamacare i is the bg reason we're turning into a nation of part-time workers and that so many americans will lose their jobs and the health care plans they like. it is also one of the reasons why the rate of those either working or looking for work has dropped back to carter-era levels -- carter-era levels. and that the average time that it takes to find a job is longer than it's been literally in decades. these are all good reasons not just to delay but to repeal this law and start over with bipartisan reforms that can actually reduce cost instead of killing jobs. and i have confidence we'll get there eventually, because the only person who seems to be happy with obamacare is the guy it's named after.

the guy it's named after, because when everyone from union bosses to working moms want to repeal this thing, it's hard to escape the conclusion that the people standing in the way are more interested in what's good for their legacies than what's good for the country. but, look, i'm still holding out hope. i really hope the president will take his five-year anniversary of the financial crisis as a chance to real estat reflect ane course. i hope he'll finally admit that what he's tried thus far just hasn't worked, that it's not enough to just improve the lot of those who have influence in government; that you have to work for the middle class, too. i hope he start starts working h hemmembers of both party to foot our economy on a strong footing,

so we don't leave the same kind of mess to our children as c.b.o. warned us again yesterday. most importantly, i'm hoping he starts thinking of ways to give those who are struggling in this economy a real chance to succeed, and when he does, republicans will be here ready to work with hirnlings jus him,e have since he first came to office. mr. president, i yield the floor. the presiding officer: under the previous order, the leadership time is reserved. under the previous order, the senate will be in a period of morning business for one hour with senators permitted to speak therein for up to ten minutes each, with the time equally divided and controlled by the two leaders or their designees, with the republicans controlling the first half and the majority controlling the final half. mr. cornyn: mr. president? the presiding officer: the senator from texas. mr. cornyn: mr. president, as you know, today marks the fifth

anniversary of the 2008 financial panic, which threw our country into a severe recessiones anrecessionand the s this country has had since the 1930's. so it has been five years since lehman procedures collapsed. it's been five years since the federal government seized full control of freddie -- fannie mae and freddie mac. it's been five years since washington bailed out a.i. g.i , th-- bailed out a.i.g., the giat insurance company. members of both parties agreed that one of the motion important things we could do is to fix the idea of too big to fail when it came to some of the largest financial institutions in america. too big to fail so the only alternative was for taxpayers to bail them out.

we wanted to end it. five years later i wish i could say we had succeeded. i wish i could say that too big to fail was a thing of the past. unfortunately, the very law that was passed by our democratic friends primarily, that was supposed to end too big to fail, actually codified it, actually made it more certain to occur because it gave federal regulators the power to identify something called "systemically important institutions." doesn't that sound suspiciously like too big to fail, if you're a systemically financial institution? we've already seen that systemically important firms enjoy huge funding advantages over smaller competitors, primarily community bankers in places like my state, mostly because of the perception that these large companies enjoy a

government bailout guarantee. in other words, they can -- their cost of doing business is lower because people actually perceive that they have a federal government backstop available to bail them out if they get in trouble. not so. small credit unions, community bankers in places like my state and around the country. in other words, dodd-frank rather than weakening this concept actually strengtheened the de facto partnership between washington, d.c., and new york and primarily wall street. that's the exact opposite of what i think the american people thought was happening and certainly the opposite of what they were demanding since 2008. and it is exactly opposite of what our financial system needs in order to operate more safely and to avoid taxpayer bailouts like we saw following 2008.

this is just another reason why the u.s. economy continues to slog along with the weakest recovery and the longest period of high unemployment since the great depression of the 130's. -- of the 1930's. nearly 38% of america's unemployed has been jobless for more than six months. let me say that again. nearly 38% of america's unemployed have been jobless for more than six months. those are tragic statistics because we all know that the longer someone is unemployed, the harder it is for them to get back into a job because they lose the skills, they become less competitive in the labor markets. the only reasoning tha reasons t unemployment rates fell was not because the economy was getting strong enough to create new jobs, but it was because fewer and fewer people were actually

looking for work. more and more people actually gave up. all you have to do is go on the internet and look at the bureau of labor statistics under something called "the labor participation rate" and you can see that the percentage of people actually looking for work has declined to the lowest period in about 30 years or so. a recent study concludes that america is still 8.3 million jobs away from a full economic recovery. 8.3 million americans out of work who need to be back at work in order for us to get back on track. now, is it any wonder that the pew research center, a recent poll said that 52% of people feel like our job situation has hardly recovered at all since the great recession? 52% think things haven't real

gloitereally-- really haven't gt much better. there seems to be this gap between the politically eat and main street. in an abc news broadcast, president obama said that since he took office, america has witnessed progress across the board. i guess "progress" is a relative term. but since the official end of the recession in june 2008, median household income has declined by nearly $2,500. average working families have $2,500 less to spend. so, of course, they don't feel like we've had a recovery. they don't feel like things have gotten better across the board, like the president. and, of course, that's before we even account for inflation. when we adjust the numbers to reflect the increase in consumer prices, the drop in median

household income has been significantly larger than the $2,500 i just mentioned. now, the president says he's concerned about income inequality, about the difference between the wealthy and average working families and the poor. but "the new york times" has reported that the trend of rising income inequality appears to have accelerated during this president's administration. it's gotten worse. indeed, according to one measure of the income gap, inequality has increased about four times faster under president obama than it did under president george w. bush. of course, america's income gap is mirrored by yawning unemployment gap. earlier this week the associated press reported that the gap in employment rates between america's highest and lowest income families had stretched to

its widest levels since officials began tracking the data a decade ago. again, this is happening under a president that said that rising income inequality is morally wrong, a president who believes that rising income inequality is holding america's economic recovery back. but the problem is not in his diagnosis; it's in his proposed remedies, his policies. his proposed remedies for growing inequality include more taxes, more spending by the federal government, more debt, and more regulations. it really is simple to symptomat washington knows best. but it isn't. we know because of the failed experiments of the last five years. if such policies were really part of the solution, inequality would be declining. in other words, if the president's proposed solutions

of more regulations, more taxes, and more federal spending would work, we'd be well on our way to an economic recovery. unemployment would be back to historic norms and the economy would be growing. imbut it's not. well then there's the cost of health insurance. this is another one of the burdens on particularly small businesses and individuals which are keeping the economy stagnant. back in 2008 the president famously promised that premiums for a family of four would decrease by about $2,500 if we would just pass his signature health care legislation, now known as obamacare, the affordable care act. but, instead, the cost has gone up by nearly $2,400 between 2009 and 2012. so here we have median household income going down about $2,500, but actually the cost of health

care, rather than going down, it's going up by about the same amount. for that market the cost problem will only get worse once obamacare is fully implemented, as we're beginning to see, as we swheet premiumsee what the premg i-- are like in the individual market. the national journal found that for the vast majority of americans premiums will be higher under obamacare. and that's pretty easy to understand because of the way that it's been wired. for example, someone has said it's like -- because of the guaranteed issue aspect of obamacare, you can wait until you're sick to buy health insurance and the health insurance company has to sell it to you. so someone who is said that's like waiting until your house is on fire before you actually buy fire insurance. well, that's not insurance anymore. and it runs up the cost for

everybody, as does a phenomenon like age banning, where young people my daughter's age in their early 30's are going to have to bear the cost of health care for older americans because you can't charge older americans anymore than three times more what you charge young, healthy people like my daughter. costs of health care, their consumption of health care we know won't be anywhere near that ratio. well, as projected, the president's health care law will cause individual insurance premiums to skyrocket all across america, including texas. policies like obamacare and dodd-frank, as i keep hearing from my community bankers have increased the cost of doing business and generated enormous uncertainty about the future. i was talking to a businessman in houston just