understand spoke at the first one of these sessions and, and i have introduced the usa freedom act to rein in the abuse and to put an end to spying on innocent americans while maintaining the necessary tools to enhance and insure our securitiment the patriot act had 17 provisions. i insisted that all 17 be sunset so that they would expire automatically if they were not reauthorized. after having hearings on each of these 17 provisions in 2005, congress determined that 14 of the provisions were noncontroversial and made them permanent law. ..

collection of records of innocent americans. the administration argues that a request for every phone record is relevant because the universe of every call undoubtedly contains relevant information. in her original decision authoring bulk collection, the fisc judge wrote, analysts know that terrorists' e-mails are located somewhere in the billions of data bits. what they cannot know ahead of time is exactly where. we recently learned that the administration has used similar logic to justify the collection of records related to every financial transfer that americans make. the government collects and stores these records and then

accesses them based on criteria it established with the fisc, a standard adopted in secret and unrelated to anything debated or voted on by congress. a standard that was adopted in secret and unrelated to anything debated or voted on by congress. the administration's argument isn't even a reasonable reading of section 215. if everything is relevant, then the term relevance ceases to have any legal significance. if congress intended to allow bulk collection, it would have authorized bulk collection. instead, we attempted to set limits on what the government could obtain. the administration's approach also subverts congressional intent because the fisc has abrogated its responsibility to determine whether the administration is entitled to access records.

to the extent it has authorized them. the court was meant to be a neutral arbiter that determined whether collection was lawful. instead, the administration collects everything and decides for itself whether it has the authority to access those records. exacerbating these violations is the fact that the fisc changed the law in secret. we talk a lot about striking the proper balance between civil liberties and national security, but without transparency there is no balance. the legal standard devolves to nothing more than trust us. and that's trust us but you don't have the tools to verify. senator leahy and i proposed the freedom act, not only because the intelligence community has lost our trust, but because we believe that the american people are the custodians of their government and have a fundamental right to know what

is being done in their name. title one of the freedom act directly addresses business records reforms, ending dragnet collection under section 215. title one raises the standard the government must meet to obtain a court order for tangible things and ensures that the records the government obtains are in fact relevant to the government's investigations. titles two and five adopt a uniform standard for federal collection by applying the heightened standard to pen register and trap and trace devices and national security letters. taken together, the provisions will force a fundamental shift in how the intelligence community collects data. rather than allowing the government to collect everything and then determine what they need, the freedom act requires them to show a need for records before they obtain them. not only will this protect civil liberties and restore trust in

the intelligence community, the changes will focus national security professionals on actual threats. the administration has never made the case that it needs the bulk collection programs to keep us safe. intelligence professionals should pursue actual leads, not dig through haystacks of our private data. section 702 of fisa allows the government to wiretap foreigners outside the united states without a court order. title three of the freedom act will close the nsa's back door access to americans' communications by requiring the government to obtain a warrant before searching for americans' communications inadvertently obtained under section 702. title three also strengthens prohibitions on reverse targeting to ensure the administration does not target foreigners as a pretext for collecting data on americans who make calls internationally.

as we have all seen, tighter standards are meaningless without better oversight, so the freedom act also addresses the origins of the problem. the fisc currently operates entirely ex parte, ruling in secret after hearing only from proponents of requests. our judicial system is based on an adversarial model, and the freedom act brings this safeguard to the fisc by creating the office of the special advocate. the special advocate is charged with protecting individual rights and civil liberties and ensures that judges on the fisc benefit from opposing viewpoints. title three also ends secret laws by requiring publication of fisc decisions that contain a significant construction or interpretation of law to the greatest extent possible. title six helps ensure companies who work with the government are protected.

private companies are currently barred from disclosing basic information about the requests a for information and assistance they receive from the government. with the support of many of the tech giants, the freedom act increases transparency by giving internet and telecom companies the ability to publicly disclose the number of fisa orders and national security letters received, as well as how many orders were complied with. it will also allow companies to divulge how many users or accounts on whom information was demanded under the fisa orders and national security letters. in a joint letter, microsoft, apple, yahoo, facebook, aol, google and linkedin wrote, transparency is a critical first step to an informed public debate, but it is clear that more needs to be done. our companies believe that government surveillance practices should also be

reformed to include substantial enhancements for privacy protections and appropriate oversight and accountability mechanisms for those programs. on october 31st, the senate intelligence committee voted for the first time in our country's history to allow unrestrained spying on americans. the committee created to conduct oversight on these programs has abdicated leadership and responsibility. but senator leahy and i are committed to a different approach. with over 100 cosponsors in the house and senate covering the political spectrum, i am confident my colleagues will work pragmatically to continue towards the balanced approach supported by americans, businesses and our friends abroad by passing the usa freedom act into law. thank you very much, and i'll be happy to field questions until

repressor donahoe gives me the hook. but i would ask that everybody who would ask questions approach the microphone to all of us can hear you and at the beginning, please take your name and if you do have any type of professional affiliation pleased state that also. who would like to be first? thank you. [inaudible] >> i was on the staff of the committee, on the staff of senate intelligence community when fisa was passed on on the staff of senator leahy -- [inaudible] i had a direct role in initiating the changes in the administrations written or called for section 215.

i don't recall particularly sitting down opposite the fbi general counsel and saying, you have to have a court order. you have to have relevant standard. [inaudible] it has to be relevant to all intelligence. counterintelligence. >> and you are right spent the question i have for you is how do you answer the administration's argument that in the reenactment, by providing to the congressman in secret the information necessary to understand that there was now a different intent for section 215, how that completes of how the legislative process can produce legitimate action by the cars and the court should be acknowledged as a congressional

action that expresses the legislative intent? >> first, let me say that the original patriot act did not include a relevant standard. there was a request when the patriot act was reauthorized in 2005 and 2006 to include a relevant standard engine. now, i think if practically everybody in this room with maybe a few notable exceptions would say that inserting the word relevance into a sentence that does not contain it before was limiting, meaning and restricted it, rather than expanding it. and the administration, after relevance was put and went to the fisa court and basically turned the logical meaning of the word relevance on its head. meaning it flipped the coin over and rather than limiting it, it was expanding. now, let me say that i was not party to any of this information that was given.

i have limited my participation in secret briefings. and the reason i've done that, and i've been in congress are longtime, as senator leahy as well, usually in these classified briefings we find out stuff that was even in the "washington post" or "the new york times" the previous days. and this was an attempt by the intelligence community basically to shut us up, as members of congress. because if we disclosed that information which was already in the public record, it was in a publicly available newspaper, we could be prosecuted -- [inaudible] and committing a felony. and i'm not going to get myself involved in that. early in my career i was shut up on something and i've gotten the fool me twice, shame on me type

of thing. what i can say, however, is that when i was the chairman of the judiciary committee, mr. conyers it was my ranking member and successor as chairman, and i sent twice your oversight letters to the justice department, if they were not responsive we acted like crappy professors and say, you've got an incomplete and go and try it again, to be responsive to our question. we didn't put up the nonclassified part of the answers on the committee's website jointly. this was bipartisanship that worked, period. after i left the vigorous oversight seat, then ended up at the two intelligence committees, ended up being cheerleaders for what the justice department and the nsa wanted rather than providing the oversight that was necessary. and now we are paying the price as a country for it, and we're

going to have to change the law to stop us from happening again. so i hope that answers your question, and you won't be a cry -- a crowded professor kmiec. [inaudible] >> explain how we have achieved the government of the people by the people and for the people. >> well, i thank you for that. i think the more appropriate day comes when there's a decision by the leadership of both houses to give patrick leahy and the an up or down vote on the fate of act, and i'll be willing to bet you if we get that, we will win. >> i'm an attorney in washington, d.c. i'm curious if you could speak -- [inaudible]

you mentioned evidence, there were cases where 702, bulk collection or usable data was actually prevented testimony think i saw the might be one that comes to life. i wonder if you could see that, how the freedom act preserves that type of collection? >> knowledgeable as ozzy was obvious a target. there could've been a 215 order under the freedom act and under the congressional intent that we originally thought that the patriot act had. so the answer to the question is yeah, there is the legal authority to do that. the only real person who was identified by bulk collection according to public testimony was as ozzy. i may be wrong but my recollection tells me that he was convicted not as a conspiracy for terrorism but

some type of a financial crime. when he was actually prosecuted. the thing is, if that is the case, i get a little bit worried about it because then the patriot act as is currently interpreted and section 702 can be used to prosecute people who have no relationship to any type of international terrorism. because the metadata him understand -- metadata can be used that have no relationship whatsoever to terrorism. >> i think history has shown the last 12 years the prosecution disrupt terrorist plots frequently involving like immigration violations and other non-terrorism related offenses. they don't fall under material support or title 18. i guess how does the valuable

collection get preserved under the freedom act when not all the classifications will come to light in american public will get in each of the disrupted plots but we know that it does work, it does effectively help aid in the destruction and prosecution. >> you know, my answer to that is that our trillions of records of innocent americans that are being scooped up. now, if you want to go entirely on the side of national security, yes, then let the nsa continue to do what it's doing and let the fisa court continue to do what it's doing as well. i'm trying to strike a balance between national security and the protection of civil liberties, which is i think one of the reasons which has made our country unique and has allowed us to survive for over 200 years. again, i'm trying to strike a balance. i thought that the house was struck with the patriot act. let me say, the patriot act

never would have passed in september and october of 2001 had there been any inclination at all it would have authorized bulk collections. and i'm saying that as one who is intimately involved in the negotiations. if it was authorized to bulk collectiocollectio ns it would've been shot down by an overwhelming vote or never come up for a vote because the votes weren't there for it. >> next question. we have time for one more. >> good morning. i'm a student in amsterdam universal law student and i was wondering if you see any possibilities to amend section 722 may be protect your citizens and also protect american business?

>> well, the bill does and in section seven of two. in terms of the protection of european citizens, the weekend before last my chief of staff and i went to brussels. we had extensive conversation with members of the european parliament. i did testify before a committee of the european parliament, and i also had a dinner that was sponsored by the trans-atlantic partnership network that both any peace as well as brussels representatives of u.s. businesses. i was accused of giving a vague answer in response to that question that you post that repeatedly came up. and my answer is that the european commission member redick is due to have a negotiation with attorney general holder this coming weekend. and how we perceive on that particular issue i think depends

upon the outcome of those negotiations. what i will say without an amendment to either both 215 and seven at two, u.s. businesses starting with the tech companies and the telecom companies are going to be losing an awful lot of business in europe. and that the dinner i heard about this again and again and again from different representatives. one of america's most popular exports is the information technology that has been applied to telecommunications, and it certainly does significantly reduce the u.s. balance of deficits. that's why in my opinion this issue has to be resolved if we want to protect international trade and where we have been doing the best as americans in europe. so i await to hear from both the

attorney general and the commissioner, and i want to hear from both of them so that they don't get spun into the wrong direction. that's why as a lawyer i do believe in adversarial proceedings rather than hearing a learned presentation on one side and coming to a better learned conclusion. that's usually where trouble starts. >> thank you. >> thank you. >> thank you very much. there is one i'm going to use for a moment, the privilege of moderator here. yesterday, the documents that were released showed that the e-mail metadata collection program was being conducted under the pin register and trade provisions of the u.s.a. patriot act but how does the bill that you sponsored address that type of metadata collection? >> it increases the standards for metadata collection to trap and trade and pin register as well as the use of national security letters.

to the same standards they would be required to get a fisa order under section 215 your what i can say is that when mr. conyers and i were jointly doing the oversight, the testimony was that 215 was very sparingly used during a period of 2001-2006. but a national security letter requests were rolling off a xerox machine at breakneck spe speed. and it is senator leahy's hope and mine that if we fix 215 and 702, they don't use the other types of provisions in the patriot act to do what we thought we were stopping with the animus to the of the lost. >> thank you. i hope you'll join me in thanking representrepresent represent sensitive for taking time to be here today. thank you. [applause]

>> [inaudible conversations] >> well, welcome today to what promises to be a timely and important discussion. we just heard from representative sensenbrenner about a number of the programs that have recently been revealed, section 215, section 702 for international communication prism is the name this has gone under in terms of the media. we now find a from yesterday's release of information section 402, there was a bulk collection of e-mail metadata under the u.s.a. patriot act. we've seen for leaders telephone calls and international conditions as well. in the executive branch we've seen a corresponding movement of activity. there's a lot in congress and a lot going on in the courts as well. on the executive branch we had yesterday of release of hundreds

of pages of information from the director of national intelligence. some of that was in response to a foia lawsuit, the electronic frontier foundation had lodged in california. some of it was not. it was simply to increase transparency about the process. included in this information, it's too soon of course for us to analyze and deeply about what these documents are but included are two very important opinions. won by judge colleen, the other by judge john bates of the foreign intelligence surveillance court. regarding the e-mail may be data collection program under section four '02 of fisa. there's also the release of the 1986 and 2011 version of euros sago intelligence directive 18. the government initial 2006 in support of the program and so. so there's a lot in there that's happening. in congress as we just heard, senator leahy and congressman sensenbrenner have introduced

the u.s.a. freedom act that there are actually two dozen bills currently before congress that are pending with regard to the foreign intelligence surveillance act. at the same time in the courts, there are now 16 lawsuits that are working their way through the court. yesterday, the supreme court denied the epic petition for rid of mandamus. the same day the government argued in a case before judge leon in the district that the federal district court could not review the actions of the foreign intelligence surveillance court. on friday at this week the aclu will be arguing clapper in the southern district of new york and also this week there's been the first suit lodged with the foreign intelligence surveillance act. i become half of the center for constitutional rights. so there's a lot going on in all three branches of government, it is perhaps no better than one could assume that no one that we have today and i am very much looking forward to the discussion. i'd like to just briefly introduce our panelists to you.

begin with jameel jaffer to as the deputy legal director of the civil liberties unit of the director of the aclu center for democracy, which houses the aclu's national security project, the human rights program and the speech privacy and technology project. jameel has testified numerous times before congress on issues relating to surveillance and since 2040 has been a monitor for guantánamo bay, the military commission. he has authored a book, administration of torture which was published by columbia university press. before joining the aclu he clerked for the second circuit as was the right honorable beverly mclachlan, chief justice a candidate. is a graduate of williams college, cambridge university and harvard law school. welcome, jameel, to georgetown. in an age of the divided congress it is no small feat

that our next panelist, robert litt, wasn't confirmed by unanimous consent of the senate to serve as a second general counsel for the office of the director of national intelligence in june 2009. i want to take a moment to contemplate unanimous consent on an appointment from the senate. this is wonderful. before joining odni, he was a partner at arnold and porter and use it as a member of the governing body of the american bar association's criminal justice section as was the advisory committee for the section on national security and the law. so he has broad experience in both criminal law and national security matters. from 1993-1999, he was deputy assistant attorney general in doj's criminal division and was principal associate deputy attorney general there. at doj he had a fisa applications, covert action reviews, computer security and other national security matters. mr. witt started his career as a clerk for judge edward wind

field in the southern district of new york and justice potter stewart of the u.s. supreme court. from 1970-1984 he was assistant u.s. attorney for the southern district of new york. he holds his ba from harvard college and an m.a. and jd from yale university. it's a pleasure to welcome you back to georgetown law. since august 2001, matthew all n served as the director of national counterterrorism center which is as well a senate confirmed position. nctc has two core missions. some of you may be aware of this, some may not. the first is to serve as the primary organization in the government for analysis and integration of all terrorism intelligence. so in this role mr. also reports to the director of national intelligence. the second mission is to collect strategic, strategic information operational planning for counterterrorism activities, including integrating all elements a u.s. national power. in this capacity he reports

directly to the president of the united states. prior to joining nctc, mr. olson served as general counsel for the national security agency. he previously served as the department justice as an associate deputy attorney general and was responsible for supervising and according national security and criminal matters. he also was the acting attorney general to doj's national security division during the presidential transition. so mr. olsen brings to our discussion today and knowledge not just from the perspective of being general counsel of the nsa, but also having been somebody who had argued cases before the foreign intelligence surveillance court. so he is the mother was not just the contours of fisa but how it actually works in practice. from 1994-2006, mr. also was a federal prosecutor in the u.s. attorney's office for the dish at the columbia. ..

testified before congress on many issues including access to information, and encryption policy, consumer protection, computer security and communication privacy. he is one of the most prominent advocates both in the united states and overseas. on matters that involve technology and privacy. he served on several national and international panels including the expert panels on

cryptography policies and computer security for the oecd, for unesco and the program of the itu message he brings to the program and important perspective and knowledge of both domestic and international law and policy. mark chairs the committee on privacy and information protection and is the former chair of the public interest registry which manages the dot org domain. he has a number of scholarly and privacy and human rights and the coeditor with the privacy law sourcebook as well as information privacy law. he is a graduate of harvard college and stanford law school. he served as the counsel to senator patrick leahy on the senate judiciary committee after graduation from law school and is a fellow of the american bar foundation and recipient of many awards including the world technology award in law to be a welcome back, you were here

generally so welcome again outside of class time. okay so actually, i would like to begin the panel discussion with you, marc, today. we are going to be talking through a series of areas. first i would like to play out of the technology and why we are at this point in terms of the discussion and then addressed the current legislative proposals, cases before the court and finally, the principles to guide the conversation in the future. so, marc, turning to you first the problem between governance, national security technology, foreign affairs, how has the right to privacy, the challenges that are posed all three with the new technologies? >> is an interesting technology they have certainly made possible a much greater collection of information about us. it is a characteristic i think a digitaof the digital age as we e from the analog world where events were ephemeral to a digital environment where every event was effectively recorded

and that is a profound transformation. it should also be said that in our modern age there are techniques for privacy available to us that did not exist on the analog world. and so, we turn to take the miká to recapture some control over personal data in many cases actually to remove the data. i would say as a starting point, the movement from analog to digital is profound. i would say second in our particular realm i know those who are engaged in gathering foreign intelligence to protect the nations security. they would say that many of those communications have moved from the airwaves where they could be easily captured in the past to the networks and the internet of particular.

and so, for those people that are engaged in the collection of our intelligence, their focus of interest is increasingly our water and communication networks. it's still a satellite dish, but increasingly, the isp and the telephone communication provider does companies have in their possession that they would like to obtain. >> can i turn to you to talk about how this technology has played into the threat from the nonstate actors and the general environment in which the united states is located as a global manner? thank you for having me here to talk about these issues with a great panel. i follow on technology. technology is a tool and mark follows these are a closely and understands. the challenge from my perspective at the national counterterrorism center is to understand the threat that we

face are narrowly from al qaeda, but other groups as well on the terrorism fight. and obviously, just as much as technology has enabled us to communicate and there has been a revolution in the way that we communicate it is something that we see all qaeda and affiliated groups and followers in a wide geographic area used those same tools to communicate with each other. so they've been able to use the internet and e-mail and some of the ways in fact encryption works to communicate with each other effectively so someone in pakistan or yemen can communicate in libya or mali. so it has shrunk the network in a sense for our adversaries and made it easy for them to communicate operation. as well as a basis for the platform for the spread of propaganda. the other area from the threat

perspective again is that all qaeda can reach our including into the united states with its ideology. so, we have four example the allegation that one of the boston bombers, tamerlan, and it was in part that he is a legit to have read and to have incorporated into his thinking. from a fresh perspective, obviously these tools and technology has as a concerned that is why we are looking for ways to improve our ability to kind counter. >> so how does the old dni -- odni look at these from the governmental perspective? >> i'm not exactly sure what you are asking so i will just answer the question that i want to

answer which is to make two important points. markley got the situation very well. the odni has made the point that in the cold war when we were conducting signals intelligence, we were talking about the relatively isolated networks if we want to collect the communications of russians we knew where to look and we knew we were not going to get many communications about americans. that has changed now for the reason that marc has mentioned. the job is to be able to identify and select those that are of interest to us and that is both a technical and a legal challenge. the two other points i want to make is we spend a lot of time talking about terrorism but it's important to remember that isn't the only purpose that we collect the intelligence. one of the major challenges in foreign intelligence right now

is protecting us from cyber attacks and our foreign intelligence capabilities are extremely important in that area, for stopping the proliferation of the weapons of mass destruction. so it's not only a terrorism issue. there are other legitimate purposes for which we collect the intelligence using the same techniques. finally, i want to make the point building on what mark said. there is no question that a great deal is possible. what i think is important to focus on is what is actually done. and i think that nobody should believe that we are not sensitive to the privacy implications of what is being done here. that's why, for example, in the metadata collection we don't just allow people to roam through randomly. there are controls over what we can do with it and how we can do that. so the goal is to find ways that

allow us to make use of the opportunities that mark identified for collecting important foreign intelligence in this environment while at the same time limiting that and overseeing it in ways that provide appropriate protection for privacy. >> let's go back to that because there are a dozen bills that are before congress. ten of those -- two of them what's not. all of them have some sort of additional rights that would be put into place. could you comment on these additional safeguards that have been proposed whether you support them or not? i would be happy to talk through with some of these suggestions are and i would like to hear your thoughts on whether or not these bills before congress would actually help.

>> trying to get over the buzz. so these reforms in congress what are your thoughts on this? >> we have spent a lot of time looking at the operation of these programs, and i think that there are some changes that could be made that we think could provide additional sections without unduly compromising the efficacy of the program. i don't think there is an official administration, but the bill is the representative dispirit from the senate intelligence committee is one that we actually think the cheap stuff by number one, codifying into the law a member of the provisions that had been put in that court orders, and number two with respect to that program imposing greater limits on the extent to which we can make

inquiries in the amount of time that we can hold the informati information. i do think that we do not want to see the collection program go away. we think that it manages to accomplish an important foreign intelligence service with a minimal intrusion on privacy, not no interest on privacy but given the weight of the program operates which is to say that it doesn't collect any personally identifiable political information about anybody. and the uses and the retention of the data are limited. >> this is dianne feinstein's bill that will allow the election but presents the content analysis of that information. >> and impose other restrictions on how it can be used as well. it can only be used for contact changing. it cannot be used for the kind of things people worry about with big data into the kind of things the companies do with what they collect which is a

room through and extract useful information. it can only be used for one narrow purpose. >> let's look at the bill with potential but that was before the court and deal just with the changes to fisa. what is your position on dianne feinstein and's bill, senator leahy, senator sensenbrenner, where do you stand on these bills? >> since bob got to answer his own question i want to answer mine. i just want to push back on a couple of things that matt and bob said earlier. i think bob said during the cold war we knew where to look for russian agents and the implication being now it's different. i think if you think back on the history of the cold war it is quite obviously didn't know where to look. that is the whole history of the cold war this sense on the part of many members of congress for example they are ashamed agents

hiding under every rock to be at the fear is there were agents we couldn't find. we didn't know where they were and what they were doing and the question that we had to answer is what are they going to do about that. they will not be able to find them otherwise. i don't think that there has been a shift in the way that he suggested there has been. something that said that terrorists use e-mail, they use the web. terrorists use those tools like ordinary people do. terrorists also used snail mail when everybody was using it they used to use snail mail as well but we still have to ask this question how much privacy are we willing to give up and allow the government to read every letter,

are we allowing the government to collect every correspondence that we engage even if they are not reading every letter? so that needed to strike that balance is not something new. it isn't something that is presented for the first time because of the threat of terrorism. and then finally, the statement about the very stringent controls there is room for disagreement how stringent the controls are not the court set on the government's collection and use and dissemination of information. one of the remarkable things if you go through the opinions the obama administration has quite justifiably released over the last few months if you go through the opinions of the court, evaluating the government's compliance or not with the stringent requirements that were set by the court, what you see is abuse over and over and over again. they collect too much information. the wrong people get ahol a holf

the information, they use it for the wrong purposes they want to keep using it even after they have collected in violation of the court orders. that happens over and over and over again. that isn't because of the people in charge right now are particularly malevolent but it's just that you have to go into these debates understanding the reality that these programs will be misused and implemented in the wrong way. they will be abused by people who mean to abuse them and accessed by people who shouldn't have access to them. that is just reality. that happens every time. with intelligence programs like this, especially very comforted and large-scale intelligence programs like this. so you have to take that into account. to answer the final question about the legislation -- >> before you do that, do you want to respond? >> sure.

i have my lawyer here, that's a good thing, a lawyer to help me deal with these issues. i think there's a fair amount of comment round with what jameel said in my current job at the international service and center and my past job as the council after justice where i worked on these programs. the common ground is that these are really complicated statutes that are extremely computed collections programs. and in implementing these programs where you have a very dynamic environment and technology, the internet is constantly changing. and you have a legal regime that is always trying to keep up with the changing technology that's always behind the eight ball when it comes to the law and technology changes there may be compliance issues and mistakes. where we part ways is using this use and abuse of intentional misconduct.

they're really have not been instances or very few instances of any intentional misconduct in the intelligence community professionals. they were identified by the agencies themselves reported to a very energetic court and reported to congress and dealt with the way that compliance programs and compliance problems are dealt with whether it is in the intelligence community or outside of the intelligence community. i think that the record that jameel refers to is one that should give all of us a significant degree of confidence in the way the oversight programs look. >> can i add one thing here? if there is something that people that read the newspapers for the last few weeks should

understand, it's a competitive technology system that don't necessarily work as you would expect them to and i think using the word abuse in the context of the operation is a little bit like saying that the department of health and human services is abusing people because the fact of the obamacare website don't work properly. they are complicated. they frequently have a disconnect between the lawyers and the operators. but there has never, ever been any finding was that just an in using these programs that are intentionally trying to circumvent the rules. >> i want to take a bit of a step back here. first of all, let me say to bob's credit and the administration's credit, there has been in the last few months much better transparency about the activities of the fisa court

and the publication of opinions and orders and i think that we are all very grateful for that. i'm not sure that would have occurred without certain publications in the guardian. but however these things have come about, i think it has helped promote a necessary and perhaps overdue debate in the united states post-9/11 about the scope of government surveillance. but i do want to take a step back and propose another way to understand oversight. there's there is a tendency thae this is an abuse, how do we measure and abuse? voice been fascinated by the original wiretap act passed by congress in 1968. it followed two significant supreme court opinions, one that is very familiar and the other i suspect you're not. we'll talk about the u.s. is pushing the reasonable expectation of privacy. but the same term the court also decided in burger versus new

dork and that is the case in which new york state won the early states actually wrestled with the question of how to regulate these new electronic surveillance authorities and establishment procedures and affidavits and so forth. the fourth amendment requires more of you offering this technique to ensure that privacy is protected. and what followed in the next year was a remarkable articulation of the type of safeguards that you could put in place to establish accountability. and it's not just about the scope of the legal standard. is it relevant or something in between. as congress debated in which circumstances is it appropriate to use electronic surveillance and which is that not.

there's about a half a dozen crimes initially the predicate acts though one would permit the electronic use in the united states but over time that increased dramatically. but if they started with a very small category, they said there was great to be public reporting. we are going to be finding out how this authority was used and whether it was effective, what it costs, which were or inclined in data extensions and decided there would be noticed to targets after investigations were concluded. we don't want to jeopardize and once it has been completed we should let people know they have been subject to surveillance by their government. you look at the 1968 act and say to yourself this is an elaborate structure of oversight and protection. the aim isn't to certify the hand of government investigators treated rather it is to create accountability and what is potentially an inbounded investigative technique.

i think that we are at the point today that is almost as far on the spectrum from the 68 act as you could imagine with the current fisa authority. we are just about at the point of unbounded technique. this is certainly true if we talk about the case in the briefing and some of the arguments put forth by the solicitor general. i have no argument about the extraordinary internal oversight mechanisms that have been established at the agency or for the fact that he is accountable to congress shall oversight committees. but so much of this is secret and so much of it is unaccountable and up until the last couple of months people like me have been following this for 20, 25 years and knew virtually nothing about it. this isn't what the congress intended when it considered the question of how we allow the electronic surveillance in the united states.

>> to clarify something i said earlier, my argument isn't so much that these authorities have been intentionally abused up until now. there is evidence that they have been. my estimate is that you have to take into account not just the possibility that the certainty that they will be intentionally abused at some point in the future. i know that he says this in good faith, to make sure that the con trolls -- controls are complied with. but remember, edwards snowden is somebody that wasn't supposed to have access to all of the information of this was this wan that the government was protected and the most sensitive information the government hasn't yet here was a person able to get the information and make it public. we have different views of this was a good thing or not. but this is something the

government wanted to protect and tries hard to protect and was not able to protect it. all of this information the government is collecting now about all of us, very sensitive information

what do you think are moving forward that might address your concerns? >> the provisions you described are crucial to the bill and for that reason, the aclu strongly supports this legislation that sensenbrenner and legislation. one thing it's got to be the beginning. it can't be the end of reform in this area because there's a lot of surveillance that goes on outside the scope of these provisions being addressed. there's a lot of surveillance that goes on under some of the

documents that has to do with that surveillance and then there are structural issues that have to be addressed if you are going to ensure that surveillance is used in th a way that it ought o be used. for example you need to have stronger protections for whistleblowers and make sure that people that see these views are protected in bringing it into light, then you have to have a way to ensure that the courts can review what the government is doing. find a way to ensure that the courts can bring the constitution to their on these activities and in the past over the last decade, the standing doctrine and the safety first doctrine have been used essentially immunized the governments surveillance activities from review by any ordinary federal court. and there are some proposals floating out right now to address that. >> you put on the table predicate acts to target and

jameel put out the protection standing as well as the particular showing prior to the collection of information. what are your responses to these proposals and what would you like to see in terms of any reforms that might be put into place? >> i guess i would take a step back and get to that point, but i think marc, sort of taking a step back, i've always viewed in terms of the accountability question that there was a deal struck with fisa and the intelligence committee that there was an understanding that much of what we do in the intelligence community that comes to surveillance is by necessity secret and needs to be secret. in 1978 today created a court that basically operates in secret in a classified setting instead of the intelligence committees to hear classified information to understand and

then said that these are the accountability provisions and these are the ways the government is going to ensure the brand is accountable for what it does. in addition in the executive branch and former counsel to the locality of the programs and inspector general said there is a regime on the branch site as well so the idea always was the accountability would be achieved through the mechanisms that would appropriately balances the need for secrecy. so opening up that question is that accountability mechanism i think jameel would assert that is not enough but that is the regime that we operate and we continue to operate. in the proposals, bob has laid out where we have been. 215 has been effective and i

would like to see us continue to be able to collect the bulk data on telephone calls in the way that we've done and there are ways that we can limit the collection in the period but it is a missing question to think this is the governments rolling through data. the controls limit the circumstances under which the government can have the data. if i can take another minute to answer the question, think about a semi-hypothetical. say there is an attack in a major american city following a marathon so the boston bombing. in a few days of that you have a suspect or two. very quickly identified. and you have a cell phone on at least one of those suspects. can the government of then take that number and inquiry the data to see the phone call that number has made and the numbers needed to that phone call.

one way is to go to each of the providers and ask them individually for that information and kept that information long enough to be relevant to provide the information you need whether three months, six months or a year. the other way we did this using the 215 program to collect the data and limit it to circumstances we can use it but then have a database that can be searched under strict control to see what number that number has called or have been called from. when time is in the essence are there other bombs or perpetrators or associates it's useful to think about how the program actually can be useful to achieve speed and agility from the counterterrorism perspective. >> a quick question.

why was this ended? was it not helpful, what would you like to see with regards to that? >> i would have to look an at se what the document says. the internet metadata program has been publicly stated and was ended because the state determined to be operational benefits were not sufficient by just continuing the program. >> that is the trade of the e-mail. it's internet and e-mail. >> metadata is the way that we characterize it. >> can i pick up on the thoughtful and i mean that seriously, and i think it is the right way to frame the question.

number one, the need for secrecy. if the representative said we have the right to know what is being done in their name and it would shut down the intelligence community because we cannot conduct activity to protect if it is all done in public. and to my knowledge no other nation has a degree of transparency or oversight in the intelligence activity that we do but you need to take into account of the foreign intelligence collection and a wiretap on the context where you are in the title iii contacts and no suspect investigating a known criminal activity and it's easy to focus that foreign intelligence by its very nature consists of gathering a lot of data to analyze it and find the things that you don't know yet.

what is the right degree of oversight? what you do in the criminal context isn't going to translate directly what you do in the foreign intelligence context. >> before i break out into a round of coup by -- asthmatics at a moment ago there is no dispute about the need to have a separate procedure for the foreign intelligence collection as opposed to the routine, no investigation. so i guess i would agree with what bob just said. as much as i hate the phrase strikes a balance i would say that congress struck the appropriate balance in 1978 with the passage of the foreign intelligence surveillance act which was an attempt to take what was understood to be a special case, the narrow circumstance, the agent of a foreign power operating within the united states and construct

a statutory framework with some judicial oversight, some public reporting very minimal, but again as a special circumstance. i think that the reality in post-9/11 america is the special case that has literally swallowed the rule because if you track the number of title iii warrant that are issued each year. they go -- you'll see the crossover act in 2003 there were issues in the title iii warrants. they were in perfect, but i think that it's actually in some respects accurate hell he understood the use of the surveillance authority in the u.s. and moved from the much higher standards established in the 68 act which i talked about that congress created in 1978

for the special circumstance and if we need any further evidence of how far we have come from 1978, and i do hope that we will have time to talk about the expectation, you look at the order signed by the order from the foreign intelligence surveillance court issued under the foreign intelligence surveillance act for the collection of foreign intelligence and it is addicted to words a u.s. telephone company for telephone records on u.s. customers concerning the domestic communication. you can't imagine i'm at least i couldn't imagine a greater distance between the intent of the framers of the 78 act and the current use of that authority. >> mark has said a lot of whitei was going to say. but i just have to take it one more step. there was a deal struck in 1978

which perhaps makes sense given what kinds of surveillance people were contemplating at the time and what kinds of questions people were contemplating in the court that would actually address. but the idea at the time is that the fisa court would evaluate individualized applications to the government was as marx had identified a suspected foreign agents inside of the united states and the court would evaluate whether the government had shown probable cause and if they have demonstrated probable cause they would authorize surveillance of that particular person. but that kind of analysis is very different from what the court is doing now. if you look at the opinions that have been released over the past few months, the court isn't just saying therefore you can wiretap his phone. broad interpretations of the federal statute of the

constitution and authorizing these dragnet programs that implement the privacy not just of the foreign agents but as everybody. it is a jarring and sobering fact that over the last decade, some of the most significant and far-reaching judicial opinions issued by american courts have been issued by the court that meets in secret and allows only the government to appear before it and doesn't publish its positions. that is i think a world apart from what anybody had in mind in 1978 season if you accept that the deal was the right one, we are now in a different world and i think it is kind of time to ask whether we need to ask if this is the right metaphor and strike a different balance. >> the question do the panelists agree oversight is necessary and accountability and what jameel is troubling genius of constructors are sufficient or not. what are your thoughts on this e demise of the concerns about the foreign intelligence court that

have come out into the movement letting them do the reasonable suspicion and looking at the makeup of the court. any changes that can be put into place to ensure the oversight. this pic i think that it's odd that in the consecutive people can see the court meets in secret and only reason the government into them can point to the opinion of the foreign intelligence surveillance court and how they basically wire brush the nsa for its compliance activity. i think that -- i'm not going to ask max to comment what it's like to appear before the judges of the court, but the way the court is structured now they have their own legal advisory staff and there is a back and forth between the government and the court. i think that the judge is the chief of the court wrote a letter to forget whether it was

terminall -- leahy that the applications the government submit get returned by the court for supplementation or modification and that includes not only talking about the programmatic thing that double of the workload is the original title i individual target that was talked about. so i think that by and large it does provide very effective insight again in an area that we are talking about the collection of the foreign intelligence that has historically prior to 1978 was not subject to the judicial oversight at all and the judicial degree is unique. having said that there is a sense that the public would be more comforted if there was an opportunity for some -- another

independent voice to be heard before the court. we have to support a proposal to allow the court when it is presented to the difficult issues of law or completed a stint that being the privacy to go outside and get a lawyer to come in and appear in the amicus and argue the other side of the supporting as the case may be that they need the voice to be heard by the court. >> this is the voice of the obama administration to president said he would support a special advocate of some sort to endorse one or another in the various ways that it is presented. her hips you could comment what it's like to practice before the court and the camera so that we can move forward with discussing how that can be addressed great. >> we are 19-years-old and practicing for the fisa court. [laughter] i was a prosecutor for 12 years here in dc and had a lot of cases differ the district court here particularly did title iii

wiretap applications as well as the search warrant applications. so there's a lot of similarities from around the country that sit on the fisa court so there are a lot of similarities and a lot of the procedures in the substantive standards between are similar between the article three criminal court and fisa court including the probable cause standard. but there are some differences. obviously, all of the fisa court proceedings are classified and by and large ex parte. there is a sense of the heightened responsibility and duty of candor to the court beyond which the government prosecutor might feel. and that is both born of the nature of the proceeding as well as the fact that these are an

ongoing relationship that exists over time. so, the lawyers in the security division always present all sides of the issue. now of course they are government representatives on behalf of the government. so, the one check on that, though one aspect of the court practice that makes it a little more like an adversarial proceeding that the court has legally kaisers who are professional staff members who are well steeped in the wall that the court is applying and they serve as a sort of check on the government perspective. so i would say it is a very vigorous practice and there is a duty of candor that is heightened on the government side and judges are very demanding and this is actually now being revealed in the opinions that have been made at this point. >> when bob mentioned tha above letter that actually was to the

chair man and senator leahy about the pushback, which the fisa court does give to the applicants seeking authority, but he also noted that there had been no position from any party up on whom an order had been served in the history of the court which of course which we think is significant because there is the one opportunity provided for by the statute for an actual letters. to raise the question as to whether or not what the government is seeking ex- exceeds the statutory authority and th that provision has never been exercised so i think that it's a bit of a problem. the other thing that i will say it again, fully respecting the role both as a criminal prosecutor when a criminal prosecutor goes ex parte before a judge to discuss title iii applications there are obvious reasons why you don't want to tip off the target about the pending investigation, but the

key to the structure is you have someone in mind. you've met some probable cause standard and now you are evidence against the person. what is problematic about an outlet sizing that strategy to the fisa court is that you have the authorities were both collection. there is not a particular person that you have in mind. you are simply saying to the court we have met the legal standard to gather the telephone records from verizon or someone else and we can't let people know we are doing that. my question is why. who exactly are you investigating that you are afraid that you are going to tip off. the analogy collapses under the collection. >> you don't have to believe that the government lawyers are intentionally misleading the court to come to the conclusion that process is inadequate.

if you look at the rulings that have been released by the administration, the rulings are riddled with claims accepted by the court it wouldn't have been accepted if there were not an adversarial process and at the very least would have been tested more vigorously had there been an adversary. i will give you a few examples. so the government told the court in 2006 and again in 2008 and this is essentially consistent between 2008 and the metadata wasn't sensitive. there's a debate to be had about how sensitive and precise the metadata is but it's categorical and if they had decided to the e court it's not that simple, you would have at the very least seen the analysis and the decisions. the government told the court the call records issue was by smith versus maryland, this case

in which the supreme court upheld the installation of the pen register on a particular, will suspect over a two-day period and at the least if there had been somebody on the other side of the court would have had to grapple with this individualized short term metadata surveillance into the kind of dragnet souvenir program to the government's engagement right now. finally, this is the most fascinating of them. if you look at the decision that the judge issued and i think 2,008, the program -- at the end of 2,008, the call records program had been in place and then the government attorney figured out that there is actually a statute that on its face prohibited the government from using section 215 to get the call records. and so the government went back to the court and said listen, we have just identified a statute that on its face is in the hurdle to what we ask you to authorize three years ago and what we have been doing for the

last three years. and they said it to the court as a way to read the statute to allow us to keep doing what you're doing that by the time they went to the court. they asked judge walton to find a statute for close to the closm from continuing was asking the judge to say that he had been wronged years ago and would have been the court was invested by the time the government raised that argument. so again in the those issues would have come out the other way and maybe they wouldn't but at the very least they would have been tested had there been an adversary. >> so the constitutional and there have been concerns raised. do you see any changes they should be made to the court in order to account for this in the proceedings and concerns about these areas? >> we could support the idea of some kind of proposal for the

individual cases. i am not sure what more you have in mind. if i understood correctly, when you're talking about programmatic activities there is no need to keep it secret because you are not putting anybody off. that's not correct. we are able to conduct programmatic surveillance because of the fact that people use communications facilities they are not necessarily focusing on the fact that we can intercept those communications abilities. they are focusing on it as a result of what has been leaked. we know that and we see that in the communications that we intercept. there is a famous story that may not be hypocrites .-full-stop was once asked what he thought of the french revolution and he said it's too soon to tell. that is the way we are with respect to the long-term impact of the revelations, but our people are going to change the communications pattern, we don't

know but we know they are thinking about it. the court is going to have to operate in secrecy. there is no way that we can disclose what we are collecting and where and how we are collecting it and whom and maintain an effective intelligence operation. >> luck, i mean i think again there's always a bit of a risk with what becomes an unbounded rationale. if we accept the argument, i don't see why we can't make the same claims with regards to financial records if they can't make the same claims to travel records and all the details locational data but becomes increasingly available. i think we need to be able to draw some lines. it was crossed in the act to authorize programmatic surveillance as it was contrasted.

it went ahead and i think it went forward over not only the objection of the civil liberties groups, but surprising that members of congress as to its application. to the extent the government is engaged in those types of surveillance activities i think the secrecy claim has to be diminished because the alternative is the secrecy claim can go as far. >> one point in response to what mark said, -- marc said when you talk about no challenges to what's been done before the court that doesn't include the amendments act, but the predecessor into the protect america act because there was now as it has been disclosed a provider that challenged the protect america act which is essentially the predecessor to the amendment act and basically

includes the same type of provisions to allow the government to target non-us persons overseas. that challenge was taken before the court and the distric distrt level and then it was a challenge at the court review in an opinion that was disclosed and classified back in 2009 which laid out the fourth amendment on a statutory basis for the government's collection. this is the case the government went before congress and said we want to restore the original intent to allow the government to collect against non-us persons overseas using the advantage of going to us-based service providers which is essentially the 1978 law allowed certain types of activities from the definition of electronic surveillance area went to the court and openly explained that

largely into the law was passed in the challenged and upheld by the district court level within the structure by the fisa court and unclassified opinions. so here's the case where there was transparency. they knew exactly what was going on and that was then revealed with which there was really nothing new in this article at the government was doing. i guess i would take issue with the notion that was done secretly or without the understanding of the congress court. >> i think that mark has gotten to the point of the critical inflection point and as marc noted after the commission,

there needed to be greater oversight of intelligence activities and that was set up in the intelligence committees. there are decisions not only an indian intelligence committees that the judiciary committees and i'm sorry if wonders of the judiciary committee don't feel they can attend classified briefings come if they want to learn about the act. the intelligence into the judiciary committee. it's determined that its most effective to conduct oversight of the activities that must necessarily be secret throughout the intelligence and the judiciary committee. it's not that these activities take place entirely out of view. to enable the necessary classified activities to take place while still ensuring that they are watched over this through the intelligence into the judiciary committee.

that's the way that we determined about to be done and that has been followed today. >> i think that bob and matt have to get on the same page. there is transparency -- >> i agree with everything matt says. matt says that we told the public how it would be used and we told you that this is a dragnet statute and bob says we can't tell you how these things are going to be used if we tell you, then they can't be affected. i actually think that on the question, it's not true that the government was sort of of of the board about how the statute was going to be used through as they are -- there was a lot of smoke and mirrors and when we challenged the constitutionality of the district court and we said this is a statute that can be used for the surveillance of

international communications, the governments response to me and you can read this in the priesthood the government responsresponds cities enjoy cin way that this is all speculation you have no proof that we are going to use it this way and you can't even show it can be because you don't know the technology and that is their position all the way up to the supreme court. and if you read about justice decision for the five members of the court who joined the majority opinion, justice alito accepts the government's statements that the aclu contention that the law can be used for dragnet surveillance in the communications was too speculative to justify standing and on that basis they kicked the case out and it was a few weeks after that that edward snowden released this and the aclu said all along it was what the government was engaged in debatbutdebate tonight at the ad established.

>> how do you define for dragnet surveillance? the dragnet is a large fishing nets that the driver drags behim sweeps everything up and then you pick out the fish that you want and throw the rest back. that isn't what we do under 702. so i'm not sure what you were talkinaretalking about. >> maybe you can ask claim what you do under 702 because the story that's out there right now have been reporting on the "washington post" is that the government engages in precisely that under 702. you should collect the record. >> i'm not sure what you are referring to i is it allows us o target non- u. s. persons outside of the united states in the collection of foreign intelligence and that's what we do. we target them on u.s. persons outside of the united states. >> the distinction isn't non-us persons. it's specific persons.

there is a requirement that we target that isn't dragnet surveillance. >> we did a brief under the case to the court and it was an empirical brief that wasn't actually a legal argument. it was in the capabilities of the national security agency and we basically outlined for the court in support of the aclu contention that people had good reason to believe that the communications were subject and we provided based on public records what we could detail about the nsa capabilities and justice breyer took note in his dissent we don't have access to the documents that mr. snowden made available.

i had an opening joke on the case and now we are heading towards the end that the significance of the order which established without a question how that authority was being used. but i just wanted to come back to the use of the term dragnet. it strikes me almost precisely correct in the application of 215 because what you do when you come to the telephone company as you literally collect all of the data that you were able to gather and then you go through the data that you have acquired under a fairly stringent eaters but nonetheless, post-collection and determine what is of interest to you. my question is if that is not dragnet surveillance, what is? >> i was responding to jameel's question. it is a program where we collect

in bold because of a schilling made to the court that is accepted by the court that that's the only way that we can get the information that's relevant. it's not an approach that we routinely use in exercising authority that was done in a specific case based on a particular showing and based on a particular set of restrictions approved by the court. >> i would add to that something about the practice before the court and of course now they've approved the 215 program they don't grapple with these issues and i can attest to the grappling that goes on by the court and the government we've taken the position we would be open to looking at ways to increase public confidence through the amicus role.

.. whether it should be a button or 13 judges. >> make a brief comment on this because i uncovered this brilliant piece is published prince senior back in 1971 on

the right to privacy in america. this is seven years before the enactment and he talked about the need for a court of national security warrants. that was his phrase. he talked about the legal standard and the necessary showing and also the composition of the board and he suggested it be appropriate for the president and congress to make nomination to the court of national security warrants. at the very good or postal, you know, from a college student who by the way with samuel alito. >> i really don't have a perspective on this question. again, my experience practicing before the court, these judges have been nominated and confirmed by the senate. i don't have a hit on the way to

select the judges. >> said the critique is the town of the 11 are republican appointees currently. 17 is the last. 20 have been republican nominees. the fisk review course of a republican nominees, two of whom and the one who brought down a lot tonight the constitutionality of five that the first place. there is bad denial at the application for the last 10 years at 18,000 some odd applications. eight have been denied. 463 modified and 26 with john by the government. i think these have given momentum now considering reform of the court exactly how it's appointed. it's not clear to what extent this would actually have an impact. jameel. >> you know, i'm not sure the current election process snakes a lot of cents. i could probably serve to governments interest to have a

fair one that resulted in more representative court. that said, i wouldn't put this problem at the top of the list. i don't thought the problem is we have the wrong support. the problem is structural. in a different sense, the problem is the way to fisa court has its expert say on process. it is the kind that the fisa are addressing, that was supposed to address when it was set up in 1978. and then, you know, all the secrecy surrounding all this has allowed his entire body of the two buildup without the kind of rigorous oversight by congress or by the public that usually happens that ordinary judicial opinions are ordinary court. you know, if the court in the southern district of new york issues a ruling that, for example, construes the mda very broadly, the national defense authorization act to allow the

government to engage in detention of people who are suspected terrorists, that opinion is splashed over the front pages about the national newspapers and people can debate it. congress can debate it and it gets an airing the decisions of the fisa courts have peered in the decision they are likely smashers are groping dark forest and no one sees them and tell eight years later when they are overgrown and have got all of these -- i'm probably taking the analogy too far already. but the fisa accords don't get that oversight, that kind of area. and then you can't like last night when these opinions came out, i think that there was genuine surprise across the political spectrum amongst illegal deer risk and academics about the courts first amendment analysis in the court's analysis of the statute.

people across the spectrum that this is not an analysis that makes any sense. even people who supported the government is actually doing. that is the result of the secrecy and i think i secrecy us to a large extent unnecessary. although i think everybody on this panel agrees that some degree is necessary if you have foreign intelligence surveillance at all. >> matt, response? >> i mean, i think jameel's perspective is absolutely fair. hidden knowledge is there needs to be some secrecy. the question is, you know, how much can we afford to provide? how much transparency can we afford and maintain the operational effectiveness of the programs? i agree with the idea that in 1978 it wasn't necessarily contemplated that the court be looking at programs like 215. nonetheless, i think the record now that's been revealed is pretty convincing that the court approaches these questions with

a degree of seriousness and false familiarity with the case for this controlling and really does an impressive job. >> so is the final point on the court's construction you know when the statute is set up for them to be drawn from at least seven of the districts. once you serve come you cannot serve again. there are other structural protections built into the statute itself. any final ones before removed to the litigation? >> no. >> already peered litigation now. we have a number of suits working their way through the courts. i would like to first give mark an opportunity to comment, partly because yesterday the supreme court denied if you would like to comment about the ones working their way through the courts and a fast he might have on them.

>> i first wanted to think the justices for their exquisite timing because they turned on the petition the day before conference today so they could talk about it. i thought that was very thoughtful and we are grateful for that. a little bit more seriously, i think the petition, which a distinguished group tried to the supreme court comic teed up almost exactly the right issue. they gave this lot of thought and just by way of that round, the defining moment was the public release of judgment since april 25 quarter of this year, compelling a verizon company to turn over all the telephone records on all of its customers for among other things, solely domestic implications. i read that order multiple times. i actually thought of as an attachment for privacy law to identify that some awful. i said i can find it. it is this provision right here.

i realize this is an actual order for me fisa court. we did everything we could to bring this issue to the one court that we actually believe, still believe has the authority to overturn that order. i also want to take a moment and thank our appellate counselor who can overcome this case and other similar cases and for georgetown's students looking to do some very interesting medication, we have openings for clerkships. so please follow up with alan. >> we have job openings, too. just to be clear as to the legal argument and there's really two simple points here. one is that we don't believe section 215 s. currently written authorizes such bright document

protection authority as the court believes it has. we don't believe it is logical for as many of the same reasons congressman sensenbrenner made that the term relevance can be unbounded in this respect. so that was her substantive claims. posted the question of why did she go to the supreme court first? question is who looked carefully at every other courts and we concluded this was the only court that we had a basis to bring this matter to. we were joined -- i have to thank laura, who did an extraordinary job gathering up legal scholars and former members of the church community, who basically argued we were right in the court should take our petition. we were joined by experts on the court jurisdictions and experts on the national security law. we were joined by randy barnett, who of course was involved in the challenge to the affordable

care act, who brought the ocean additional lanes with cato. i know they are very important and other charges been pursued in the courts any think these are critical. i still think ultimately the u.s. supreme court will need to answer the question asked of this inferior courts application of law and precedent that the court itself clearly has the authority to make the final determination. we're at this very strange time actually in american legal history, where the substantial legal opinions, and they are clearly substantial, are coming out of the fisa court, interpreting statutes, interpreting constitutional law, almost a final judgment de facto because no one else would know about them. i don't think you can sustain a judicial system in that way. so ultimately, the court will air this. >> jameel, i will turn to you.

their 16 cases like this one of them submitted to the surveillance court. you are arguing on friday and clapper before the southern southern district of new york. could you comment on the jurisdiction come is standing and other questions will be addressing. >> a lot of the issues are pretty dry, so i won't address them. you know, the standing question, which may be found dry is actually crucially important. the case i was referring to earlier, the one at the supreme court this year which was called amnesty the clapper, clapper be amnesty and the supreme court. that was a sad a challenge to 702 and the government's theory in that case with our client lacked standing because they couldn't show their communications had been collected under the law. we made the argument that the law allowed the collection of prior clients communications, that they had to take costly and burdensome measures to protect its medications from the

possibility of surveillance and that gave our client standing. but that was an argument that the court rejected. but the important point of that case is that the government's argument was the complaint in black standing because they couldn't show collection. now we are back in court, arguing that the call records program be constitutional in a court order that shows their communications were collected because the aclu is a verizon subscriber and a set turn over all your records. there is no doubt our communications were collected. we satisfy the standards of the government said we hadn't satisfied and clapper v. amnesty. there is a new theory, which is that it is not to show collection. you have to show the government reviewed your records. on that basis, they say they still don't have the challenges. you know, is interesting because it shows the kind of litigation

games the government is playing too insulated surveillance act to reduce or judicial review. but i also think is worth thinking through the implications of accepting that theory. if you accept that the government surveillance is immune from judicial review until somebody can show their communications were actually reviewed, if you accept the collection is enough, that review is necessary, there is nothing would stop the government from recording every phone call, from copying every single e-mail, from creating a huge database of location information on that jury monday the information might be relevant and on the day the information becomes relevant in the government wants to review it, on that day the government will finally become answerable to a court for a set dvds. but you would be accepting a whole lot of government surveillance, limitless government surveillance and you would be accepting that

surveillance without the oversight of any court because by definition, surveillance that doesn't cause an injury and that the government's arguments about surveillance of information that's not actually reviewed. surveillance that doesn't cause an injury, doesn't create a case or controversy under article iii. it is quite a radical theory under the sort of dry ruprecht is standing at the governments are doing. on the merits, our argument lines applet what marc was describing earlier. >> top, jima to comment? remix of actually the government there is a bit practice of not talking about matters that are currently in litigation, particularly the one jameel knows will be argued on friday. i don't necessarily agree with jameel is characterization of the government's arguments. i think it's best to just set on that. >> jameel, i'd like to push back on the jurisdictional question

yesterday in d.c., judge leon was very reluctant to find the district court had jurisdiction over the foreign intelligence surveillance court case that might come up in regard to that. how are you answering this challenge? >> we are not asking the court to review the order of the foreign intelligence surveillance court. we're not asking for the relief mark was asking for the supreme court. i'm glad mark wrote that case. it was a case in which i think was asking the supreme court to review with the fisa court had done. we are asking in our case for ordering joining executive action, not an order relating to the fisa courts at all. it is joining the government from conducting the program. there's lots of authorities of a proposition that ordinary federal courts have jurisdiction or have authority to review the

constitutionality of government surveillance, even when the surveillance has been authorized by the fisa court and does in criminal cases every year. federal courts around the country review the constitutionality of fisa court orders that offer foreign intelligence investigations. so it's nothing new. one of the arguments that the government made in response was that marc should've done that the aclu did it on to the federal district court in the first place. the government has conceded the court has jurisdiction to hear our case. i'm not expecting that is going to be the hurdle. >> okay, not. >> i will pick up on bob's point and say i really can't comment in one comments on the litigation. i guess the one point i would make a little bit to push back on jameel is i don't want to leave and contested the idea that short of civil litigation

that the government surveillance is unbounded. i think we just spent an hour plus talk about all the ways in which the government surveillance and intelligence act dvd is bounded by executive ranch structures, oversized or congress in a number of ways. the executive branch follows the law. the assert is civil litigation is one way to enforce, but not the only way to enforce restrictions on government. >> okay, thank you so much. we are going to open it now to questions from audience members, from people who are here. yes, please, calm down. they've come to the mic and if you state your name and affiliation, that would be great. thanks. >> my name is joanna slater. i am an attorney in washington d.c. and to follow up on that point, my question is what actions are you taking to ensure that data collected under fisa, which is

used in criminal investigations and subsequent criminal cases is review to the defense? >> well, bob, you may have more to add to this as well. certainly the fisa statute enclosures the information in proceedings. particularly criminal proceedings. so i'm not as well speaking of that was years ago when the circumstances. where it is to be used in a criminal prosecution is an obligation to disclose that. >> bob. >> no, not got it right. >> it might be worth noting that between 2008 and about a week ago, the government never gave notice to any criminal defendant, even though it now appears that faa fisa asked for use in many criminal prosecutions. there is actually a great story about this by charlie savage in "the new york times" about the fact that the solicitor general,

when he argued to the supreme court and amnesty v. clapper represented to the court that exactly has not said the amendments act of criminal defendants receive notice when the government is prosecuting him on the basis of evidence obtained or derived from the fisa amendment act. it was under the impression it was the policy and turns out not to offend the justice department's policy. the policy for five years was to deny defendants notice, even in circumstances in which they were entitled to under the statute and the constitution. seems they change the policy, which is obviously a good thing. >> marc, what you like to comment? the magazines there is between the justice department and security agencies about what has to be released and what can be done to ensure what you have

sad, especially about past prosecutions to ensure that that data is in fact reveal to the defense. >> i don't think there's any disconnect between the department of justice and intelligence agencies. the interaction of cortisone by the department of justice. they're the ones who make the decisions as to what is disclosed in what is not disclosed. there was never a case in which evidence -- first of all, what we're talking about here is only by the amendments act. there's never been an issue with information obtained under the other provisions in the fisa and never an issue when amendments from the fisa act was introduced. the whole focus is on what fisa derived in this context. the department of justice has made a determination as to when they are going to notify the department of justice. you know, it's about the

intelligence communities: department of justice. >> to the department of justice had to work with the agencies in determining what data was actually used in the prosecution? >> day now. it's their prosecution. >> okay. >> i actually want to question. i think you are raising an important point and i was actually just on a panel with mr. weinstein who is on the head of security division and pursuit fisa applications also. he was describing a procedure for the use of fisa direct evidence in criminal investigations that struck me as a little bit troublesome. i want to push back on bob and that's a little bit and ask if my recollection is correct. he was saying in fact there are circumstances where the government did not want the defense counsel to have access to derive information and there were procedures within the act to provide affidavits to the

court in support of the kind of information that it can obtain to establish whatever legal standard was necessary to go forward. is that correct or am i misremembering waterside quick >> there is an information of providing notice and what happens after that. it is true throughout fisa that there are materials and to under the classified procedure at their materials provided to the court that are not necessarily providing the defense. >> so there will be circumstances where there's evidence not available to the council. >> is the difference between the provision of notice and what happens after that. there have long been circumstances where there is information about that fisa derived evidence that is not provided tiered >> obverse understating his case here. i don't think there's been any criminal prosecution since 1978

in which a criminal defendant has obtained access to the underlying affidavits and warrants. the warrants and affidavits underlined with fisa surveillance. this is routine and for intelligence prosecutions that defendant don't have access to the information that would allow them meaningfully to challenge the constitutionality of the surveillance used to prosecute them. >> thank you are rematch. another question. >> can better share with the ap. a question probably mostly for mack and bob. in the documents released last night, the dmi revealed about are other thinks that there were some oversteps, including 200 analysts from cia, and ctc, et cetera are given access to reports to record information that should have been walled

off. how have you changed that process and that we are glad the older court cases now over the past six months that have been released piecemeal in which nsa turns itself and for violation? has it gotten any faster from flash to bang to protection and reporting it to the fisa court? i mean, if you are trying back the public's trust, can you show that you are getting better at policing yourself under these laws? >> so i mean, as you know, as a result of the compliance matters that have now been publicly released, the nsa substantially revamped their whole approach to compliance. they put in a director of compliance. they now have a staff of making 300 people who are devoted entirely towards policing

compliance. i think nsa has made substantial procedural improvements. they now i think are in the process of hiring a privacy officer as well. see the answer is yes. i think they are doing better. are they perfect? no. number one coming of a system run by human means that are going to make mistakes. number two, you have stepped this immensely technologically complicated. i used the analogy of everybody has computers and you know every other day you get a notice from some program to assess and update is now available, please download the update. every time a communications provider updates his processes, it may have an impact on how msas lawful collection interacts with that. there will always be compliance problems. nsa has a good structure reporting on the correct amount. >> you would've been at either nsa or nctc when that incident

happening. can you shed any light? >> i'm not sure which one you are referring to. i would say having been at nsa and before that at justice and nctc, that this is something that happened over time, the nsa has improved structures and as bob referred to there is not a compliance officer responsible for the programs. overall, they're a couple of angles. when bob reference the complexity of the landscape. the others over the course of the last 30, 40 years, which nsa does has increasingly touched on the domestic side of those communications and that it's also been a challenge. having worked at nsa, he would be hard for us to find more conscientious and roll down it is really an extraordinary place. i was quite proud of the work that was done at nsa and have a lot of confidence in the

ability. >> jameel, marc, i would invite you to read by. >> i think it is remarkable how many violations there have been given how broad the rules are. but i think it is important to keep both of these questions in mind. not just are they compliant with the rules, but what are the rules and are those the right ones? >> just to take a brief step back, we are in middle phase of a three phase process regarding fisa reform. the first phase was this very long period of secrecy, people like me that the fisa court and rubberstamp. people walk in and get orders approved. i was drunk. from the disclosures i understand there's a lot of real dialogue. so we have the publication. we are learning more about how the agencies upgrade. we learned more about how the court court interprets legal opinions. this is simply a middle phase

you see because there has to be a third phase in which we are now able to act on information that is not been made public, that we are now debating to put in place reforms necessary and this actually comes back to laura's excellent work in the purpose of these meetings. your question is kind of a middle phase question. what do you think about what happened? it's interesting like a lot of other stuff we find this interesting. the more interesting is what it's like to happen next. >> thank you your next question. >> hi. paul walker, jack with the navy. the statements regarding the vast chasm, i just wanted to address that and turn it to a question that may set up your next panel regarding the future. you know, in the last 35, 34

years, 70, 79, smith comes a year after fisa is passed. this fast as any referred to develop extranets or judicial interpretation cases coming before the chorus here the third party doctrine is not limited to just business records and informants. you know, someone who is clerk of the district court level and judges, i don't find the statements that judges would not look at that and analyze that opinion and that decision on what is developed since then to be fairly credible. ..

in light of jones where at least one member of the supreme court has called into question you know, the feasibility of maintaining that position on reasonable expectation of privacy. where do you think jameel and mark that the court might take this jurisprudence in the future? >> well first i would like them to. i disagree with you on one poinu know what the law has said until jones. i don't think that smith either

controls this case. i don't think it controls the section 215 records program. i think that was a narrow targeted surveillance of a single person who is suspected of a crime over it today period with criminal technology. we are talking about something very different now so i think there's room for reasonable disagreement about how to evaluate the constitutionality of the program we are talking about now but the idea that smith controls this case, i don't find that credible. >> i think that's an overstatement. >> there is no case up in which the supreme court has said dragnet surveillance remotely resembling this as a service. we can debate that for a long time but let me just go to the second part of your question about jones. you know that i would say five justices and jones it's not just

justice sotomayor but justice alito's opinion recognizing that there is a new threat to privacy presented by the aggregation of all of this information that we make available either to the public in some sense or third parties and i think there are five justices in jones who are basically saying that the mere fact that you release information that you surrender your information to somebody else or even the mere fact that you surrender your information to the public doesn't mean that the government can aggregate all that information, analyze it without worrying that the fourth amendment will be vindicated at all. i think jones stands for the proposition. those five justices endorsed the proposition that the fourth amendment is not indifferent to that kind of aggregation and analysis. now what that means in practice and what it means for the fourth amendment to have been implicated with that kind of

aggregation and analysis is an open question and something to lower courts are going to have to deal with and it's a question i think we will have to deal with that in this case because the constitutional question here is whether the government and i know bob doesn't like the word but dragnet collection and analysis of this kind of information implicates the fourth amendment even if the narrow surveillance and smith versus maryland doesn't. >> i think it's important to note that even if you asem jones is in fact a law what jones is talking about was a very different situation from what we have here. jones is a situation where you are -- what was different in jones according to the justices is whether you are collecting so much informatiinformati on about a single person that person might have had that person's reasonable expectation of privacy might've been invaded. what we are talking about here is a situation where you are collecting information about lots of different people but in

terms of the fourth amendment law, if the question is as to each of them has their expectation of privacy been violated and i think it's a very different proposition to say that my expectation of privacy is invaded because information about jameel and other people in this room is collected. the fact of the matter is that in every case since smith v. maryland including last week a case in california directly talking about the 215 probe it in a criminal case has held that there is no reasonable expectation of privacy protected by the fourth amendment. that is not to say there is no privacy interest. there isn't as i said that is why we have restrictions on the collection but the law is quite clear that for fourth amendment purposes this is not protected information. whatever may be the case in the future. >> so just a few brief points. you asked a great question and

it is a looming question i think as we move into the substantive realm of the future the fourth amendment. i don't have much doubt when the court reconsiders smith versus maryland is going to reach a different result. and you see that not only in what is sometimes described as the majority in jones which is the concurrence of sotomayor and the alito opinion and you see it also injustice kagan's interesting concurrence in this smith case where she tries to bridge the reasonable expectation of privacy doctrine with the physical trespass doctrine familiar to justice scalia. i think the court is anticipating that in fact there will be a change. i will also say personally i worked on this in the amendments to the wiretap act back in 1986. we were well aware of the smith decision and the place of the pen register or trap and trace division came from was an effort by statute to overturn smith versus maryland so exactly quite odd to me 25 years later to see

this tangible records provision that in fisa being used around congress, what congress thought it had addressed in 1986. but here is my last point and i think just to pull a couple of key issues together, i think in our modern digital age and noting the value that this information does have to the government in the conduct of surveillance, a wiretap act is almost upside down. we protect the content of communications for historical reasons. we get the transactional data associated with communications minimal protection. the content is increasingly of less value. it reveals less about us. it is not as the sleep process. it doesn't show the networks, the timing and the sequencing of events which in the digital world turns out to be much more revealing. i think over time, we as a

society to congress and the courts as well will need to confront the fact that it's actually the digital data that poses the greater privacy risk than the content. >> thank you. that was an excellent explanation. >> so we have reached the end of our time here. i would like to give each panelist one opportunity to say one more thought before we leave the panel. if there is anything that hasn't come up that they would like to address or anything they would like to emphasize, we will start with jameel. >> i think i've said what i wanted to say but maybe i can respond to whatever bob says. [laughter] >> he is reserving time for rebuttal. >> just in 30 seconds from my perspective to an operational side and when i was in law school in my first year towards professor said it's always better to make up the law than to look up a love which i thought was a really inspiring thing to say to law students that kind of the dubious thing to say as the dubious lesson to

those of us on the practical side now. so our job is to protect the country. that is what we do at the national counterterrorism center. we need to take advantage of the legal authorities that are in place to do that and it's very useful and i applaud georgetown and you are a and very thoughtful to have mark and jameel here to think about where we are going here and that's really important to do. in the meantime we need to be able to, we in the government and in the intelligence community need to take advantage of these authorities as they exist and we need to have some certainty about that. that is what i'm concerned about right now is we are in an unstable place and mark and jameel made that point. i'm concerned as some of the operators may be reluctant to go up to the line to take full advantage of the legal authorities we have because of the controversy now swirling so i look forward to a time where we have the full faith and trust of the american people in these

activities and we can go about the business of protecting the country. >> thank you. lot? >> i think that what i would like to suggest we need to consider is what's the best way on one hand to get the intelligence community information it needs to protect people and on the other hand to protect privacy and civil liberties together because the history of the intelligence oversight is a pendulum swinging back and forth between why didn't you do more to protect us and you mean you are doing quite? and we are swinging towards the latter side of the bow but it's going to swing back. it always does. the model that -- there is one model that would say the way to achieve these both as by putting strict limitations on what the intelligence community can collect and saying you never get to look at this information. there is another model which i

think as a model we have applied so far which is allow the intelligence community somewhat broader scope of collection but impose fairly strict limitations on what they can do with that information in appropriate oversight to make sure that they comply with those rules. neither of these systems is perfect. either is a way of getting and acquiring information or as a way of protecting privacy but i think those are the two competing models that we have to balance in terms of what the proper way to go forward is. >> thank you. mark. >> just going to close with a comment and express real gratitude and respect for matt and bob's role. it's kind of easy at least for folks like me to have opinions and express them and so hold different world to actually be responsible for the outcomes and i do understand that. but at the same time let me tell you really what concerns me. i think there are institutional dynamics and powerful

technological change that are driving us towards certain outcomes, where mass surveillance becomes a factor decision-making is the logic of those decisions is increasingly made secret. and i think if we don't take this moment based on the information we have obtained, to put in place some robust safeguards and structural reforms, what might e. golf over the next you know couple of decades will really be quite scary. to give you just a little, little flavor of this what we do over at epic we try to understand for example why do certain people get aside -- pulled aside for secondary screenings in airports and why do certain people qualify for pre-check and others don't? there are good reasons behind those determinations that they are largely kept secret and they are applied to a large number of

people simultaneously under various national security counterterrorism theories. that logic can expand just like the government's logic that having a lot of data in place when you need it justifies gathering all the data before you actually have an investigation underway. and i think we have to take this moment to anticipate that problem and tried it% it at that point. >> thank you very much. i hope you will join us in thanking our panelists for an excellent discussion. [applause] [inaudible conversations] today in washington d.c. the potomac institute hosted a discussion on the threat of lone wolf terrorist attacks like those in oklahoma city at fort hood and what the u.s. can do to reduce the risks.

counterterrorism consultant michelson criticized the government's response and suggested a zero risk society is an achievable goal. >> let me just say however i want to go back to question number 22 can a society survive, and i raised baghdad as a model of a society that somehow continues to function under the most horrific conditions and certainly there are others around the world as well. and the question has been raised you know, what if that were to happen here next the united states is arguably the most resilient society in the world and yet we are probably one of the societies that is least willing to confront the issue of resilience in the face of actions like this. 9/11 did not destroy the united states. 9/11 wasn't horrific event. the economic consequences probably got magnified because of our reaction, but the event itself and i say this with all

due respect. i lost friends on 9/11 like many people in this room did. 9/11 itself was a very small blip in terms of the american economy, the american -- america's ability to do the things america needs to do and get it dominates every conversation we have had over the last decade for perfectly good reasons. don's wife is british. don's wife's people, the brits survived the blitz. they survived two world wars which reduced many of their cities to rubble and they -- what's the expression? they survived the irish. to the extent anyone survives the irish but again at the end of the today added nation we need to be prepared to understand that all the efforts that go forward whether it's being able to effectively

identify the telltale signs of a proto- radicalization, whether it's being able to successfully dip into every internet search on the web, whether it's being able to look for just to have the ultimate filter of filters going through metadata, things are going to happen and the degree to which nsa and the fbi and our media and our politicians and others have defined our response to terrorism for her actions towards terrorism as being a pursuit of a risk-free society, insuring the prevention of any act. first of all we set ourselves up to fail. we have created in unreasonable expectation in our population and i would argue we have done a disservice to the population of this nation by suggesting to them that somehow we can have this risks the -- a risk-free future and paid prices and not having that

discussion about what those prices are, yeah i have no respect for richard snowden but i will say this. he has gotten a conversation on the table. [background sounds] ♪ ♪ [background sounds] on november 25, 1963 approximately 1 million people

lined the route of president kennedy's funeral procession from the u.s. capital to arlington national cemetery. millions more watched the live television coverage starting tonight at 8:30 on c-span2 watch nbc's coverage of president kennedy state funeral. >> during the president's historic trip to china mrs. nixon accompanied him. zhou en lai noticed how mrs. nixon was looking at the package of cigarettes in the cigarettes had pandas on them and the package was -- and he said i understand you also admire the pandas at the zoo and she said yes, aren't they dowler darling? he said we will make sure you have pandas to go home with. it was important for her to uphold and support her husband. just her being there would ring so much goodwill and there was always times at the end of the trips were news reports would talk about the president this way but they would always say

what a wonderful job pat nixon did. see the "national journal" and the atlantic held a discussion on friday looking at u.s. fiscal policy. americans personal finances and the state of the financial system five years after the market crash. the speakers included former federal deposit insurance corporation shares sheila bair along with various financial industry experts. they talked for about two hours and 20 minutes. ♪ >> good morning and welcome. my name is elizabeth baker keffer and i'm vice president of the atlantic and i would like to welcome you this morning to the session on fiscal future on behalf of the atlantic and "national journal" and my colleague ron brownstein who is

the editorial director and also on behalf of the allstate corp. which is our partner for this series the heartland monitor poll and in particular thanks to sanjay gupta vice president of corporate relations for allstate. we have had a terrific heart worship dating back to april of 2009 working at what is happening with the middle-class in these months and years since the economic downturn and 2008. the middle-class is obviously central to the customer base at allstate so has been an inspiration trying to understand how the middle-class is faring through a series of polls that we call the allstate "national journal" heartland monitor polls so what you will hear this morning is the result of the 19th of those polls and interesting data comes just about five years after the financial downturn, so in this particular poll what we are looking at is holistically how the middle-class is feeling about the economy, how they're feeling about how they are faring and how they are feeling

about the future as well. also interesting that today's presentation, on the day after we have set a new record in the stock market, the 40th year to date of the tao cresting 16,000. the dow up 22% this year and the nasdaq up 31% so an interesting backdrop to this conversation about the middle-class and now the middle-class is faring. in addition to you will hear we have livestream viewers watching along with us so welcome to those audiences and welcome to the c-span audience as well. we are delighted to have you with us. we encourage everyone in the audience and at home or in your offices to tweet and join in the conversation. that way you will see the tweets happening on the screen here using hashtag h. m. p. fiscal future and you can follow us at atlantic underscore life at nj live events. we will have time for q&a throughout the morning and we welcome your questions and would

also ask if you don't mind to please silence your cell phones. i would now like to introduce sanjay gupta acid that could vice president of marketing innovation and corporate relations for allstate. sanjay is a marketing executive with years of experience who joined allstate last year from allied financial where he helped to lay the global branding effort that was also behind a lot of the rapid growth of the consumer deposit business. prior to allied he was a senior vice president of global consumer and small-business banking at bank of america where he spent seven years and prior to that was in key marketing roles at syquest and federal express so again many thanks to allstate and now welcomes sanjay gupta for his opening remarks. [applause] >> good morning everyone and thank you elizabeth. thank you for joining us today right before the holiday week is coming up on us. elizabeth -- have been wonderful partners of ours and it's been something we have been doing for many years and in fact this is our 19th.

much like when we turn 19 there are things to be concerned about and things to look forward to. there can be no question that today's poll reinforces what we have seen in our previous polls. that a country perceived to be headed in the wrong direction with a president and congress falling to new lows in public approval ratings. most of our poll results point to the growing sense of mistrust and lack of optimism regarding the economy. 88% of americans said the economy is in fair or poor shape. and despite the booming stock market has elizabeth referred to and the recovering housing prices, over half the people still believe we are in a recession. and what is worse is nearly half also believe that the actions

taken by the white house will decrease opportunity for them moving forward. but when it comes to their own personal finances and responsibilities it surprisingly far more optimistic. to be expected, the pessimism has been fueled in no small part by the current clinical stalemate especially the inability should show direction on the federal budget. and in the wake of the federal shutdown nearly three in four americans are not in the least confident that congress and the president can reach an agreement on the budget by january. so taken together we have not seen such dark clouds on the economy since we began polling on these issues back in the depths of the recession. in fact all the indicators that i just indicated underscore americans don't trust their leaders and the issues they care

most about like having access to better jobs enhance education for their children and a chance for a secure retirement are seemingly being ignored. in fact you can say the only part of government that is listening to the people is the nsa. [laughter] one could say that the overwhelming lack of confidence is having a direct impact and itself becoming a tremendous drag on economic growth recovery. well are polls indicate people are dispirited some are still hurting, if you turn to a micro level of analysis specifically on our own personal finances we get some very positive numbers. according to a recent survey most americans feel self-assured in their ability to successfully make their way through these uncertain economic times.

they believe they have the necessary knowledge to make the right financial decisions, be realistic in what they can afford in hope to save and they are meeting their financial obligations. let's take a look at some of these numbers. 80% of americans said considering all aspects of their life from personal finance to family life to their health, things are going well, surprising. s. far as the majority surveyed believe it's realistic for them to fail to pay their day-to-day bills make their monthly mortgage payments and pay off their debts. moreover when it comes to the american core values of fiscal responsibility and individual initiative they have remained remarkably resilient. 84% of americans definitely have a financial plan to manage their personal finances even if things are going according to that plan. half retire in personal savings rather than government programs in more than one in three

preferred to handle their own finances. so an astounding 89% of americans feel confident they understand the information they need to make the right financial decisions. so despite this i find it remarkable that the american people are so vigilant and quite frankly it is this american trade and tradition of individual american responsibility to control one's financial decision and destiny that makes this country unique. and the foundation of a culture political and financial system. this personal optimism and core values could be -- so imagine if suddenly you had less partisanship, more compromise and actionable policies to generate sustainable growth. poll numbers on trust and

economy would rise dramatically. and shadow those clouds of pessimism. while we all are deeply troubled by today's findings they do provide a basis for encouragement. the question of washington is finally -- and the american people want them to put aside their narrow interests and work towards the greater good of the country i've confidence this is still possible. this offers us hope and a sense of optimism that things can change for the better. thank you again for joining us this morning and i look forward to hearing from our keynote speaker and the panel and i will turn it back to elizabeth. thank you. [applause] >> thank you so much sanjay and thanks again to allstate for this terrific partnership. we are going to kick off this morning with the headline interview with mark ramstein and sheila bair the former chairman

of the federal deposit insurance corporation. ms. bair served as chairman of the fdic through 2011 in what we would all agree was one of the most tumultuous periods in the history of the nation's banking system. she was working there to bolster public confidence in the financial system and to bring more stability to it. prior to joining the fdic she was the king's professor financial regulatory policy for the isenberg school of management at the university of massachusetts amherst and she has received numerous awards including the john f. kennedy profiles in courage award. she has twice been named as the second most powerful woman in the world by "forbes" magazine and she was named by harvard university and the "washington post" magazine as one of seven of america's top lawyer so we will hear from sheila bair. she will be interviewed by my colleague ron brownstein. ron has had two stems with "national journal" and with atlantic media darigan between he was national affairs

columnist and national political correspondent for "the los angeles times" and while there was twice a finalist for the pulitzer prize for his coverage of presidential elections. he is the steady hand behind the editorial coverage across her company and writes often for both the "national journal" and the atlantic and has a weekly column in "national journal" and is covered lots of -- especially in washington and was west coast correspondent for sometime as well so welcome to the stage ron brownstein and sheila bair. thank you. [applause] >> thank you elizabeth and thank you sheila bair for joining us. somehow it seems appropriate after your tenure in washington to catch the latest adventures coming out but you know i am not to steal at reilly's founder who's going to the pole in some detail but the big story really

in this poll is virtuous. if you look at roughly the top third of the socioeconomic ladder people with a college degree, people and families above the median income people and families with a full-time worker in them they are feeling pretty good about the financial system and they have the feeling that it's a reliable pathway toward getting to where they want to go in their life and they are investing and participating in 401(k)s in the market. below that there is still enormous skepticism that comes through in a the poll for people without college degrees and below the medium income. ..

are problematic to so i think they're both right and their perspectives and is testament to the the nature of this economic recovery. >> so what do you think the most important thing we can do through public policy to widen the circle of people who are achieving some level of financial stability? >> well, i think we need to focus on jobs. ready to focus on making our economy more competitive than this global o'connor. we need the personal tax reform. i think there were huge inefficiencies in the tax code that has skewed allocation of

resources that is not helpful to our economy. there are ways we can p. in this century or through local energy costs, better infrastructure, legal certainty, political certainty. a developed economy, including the u.s. that we're not really focusing on them and growing the economy, producing things and other people in this world will want to buy. we are still trying to go back to the broken auto were used prior to the crisis at cheap credit and are just not a sustainable. >> inebriate the question, raised concerns about whether in fact monetary policy is discouraging people. >> i think it is. we had significant distortions in the market. i think it is true and it makes me very conservative with my own personal finances. i think if you are a corporate ceo and look at your share

price, you're saying this is nice. how much of that is me in the real value of my company quack that makes you conservative. it makes you uncertain. you don't want to make investments. you want to sit on your piles of cash and lots of people are doing? >> talking us to look in the poll, you really feel the uncertainty about what people, to the extent they have money, what do they do if it? you know, one of the things that's pretty striking, one of the sharpest of urgencies in full is those without college degrees, does can be very leery of the stock market, which has as you pointed out comeback in favor of her year thousand. should we be encouraging tax policy or do we want a word or circle of people investing in the market? >> you know, traditionally, younger people with a long investment horizon can take the ups and downs of the stock

market. yeah, i still think if you have a very long-term horizon, that makes sense to do. getting in now for 60,000 doctors which are larger money and because it will go down and it will come back up eventually hopefully it will. i do think they're a couple problems that a lot of people aren't make enough. you need some sound. you can put small amounts and to be cost efficient. you need some minimum amount of money that a lot of people just don't have. so also coming up, the lack of understanding, as well as some of the well-publicized aberrations the stock market pricing i think are problematic. we do have a lot of market fragmentation in the stock market right now. you know, you see technical glitches sending stocks into a short-term deathspiral and people see back, read about into the papers and by what i want to

put my money in my casino? the well-established fund companies, long-term investments still make sense. i can understand why people worry. the distress of wall street still as much of it is justified. i can understand why they are fearful. >> you know, another experiment in social policy that we ran really 20 years over the clinton administration and the bush administration was a concentrated effort and systemic effort to encourage more people to own their own homes. in fact comeau did have an increase from 64% up to a high of 69% in 2005 and outcome back substantially since the crash and has fallen faster and further among african-americans and hispanics would also see the larger decline in well to the point where colleagues have documented the widest it has ever been since we've been

keeping stats. so given where we are now, do we want to try to encourage people to go back up that hill? do we want to get the homeownership or should policy be encouraging again more families, particularly at or below the median income to buy their own homes? do we want to get that back up? >> the first final at jamaica's vacancies supporting mortgage supporting mortgage finance with homeownership. so yes, we did get the homeownership rate up by a significant percentage. but let's face it, the vast majority of subprime or refinances. they were purchase mortgages. they were concert due to generate cost refinancing with a high introductory rates of 9% or even higher, 13% to 14%. you have to keep racing ain't seen. so people get a little cash and not fulfill consumer spending and i was a significant

interpretation to the economy. but it is not a sustainable value. to the judicial model of owning a home or by making monthly payments, but in the equity built, yes, that is still a smart thing to do for people who are ready for a home, who understand what it means to make the regular payment, to be responsible for the repairs, insurance when they're ready for it, yes. at all income levels, that is a good thing, a good way to accumulate wealth. but there is a different between federal programs with financing those that subsidize homeownership accumulation. i hope we will not make the same mistake again. >> just to be clear, do you or do you not see the effort to increase homeownership? did that contribute to christ with? >> i was a rationalization for the crisis. i think a lot of mortgage originators, securitize nursing for a while censor while

investors of gics, everybody was making a lot of money and rationalizing us in helping poor people get mortgages. a lot of the african-americans and latinos who lost their homes did not become new homeowners in the subprime craze. they probably have saved 30 or 60 rate mortgages that have refinanced out into the slums. some of them actually even own their homes and were pushed market it, get some cash and take out this mortgage. so look, i don't want to go back. i would repeat my earlier point. before going to support homeownership, doing it through fha and even with low debt payments is fine, as long as there's counseling and history of making regular utility payments were what can show you that people are ready for the next step. you don't do them any favors by giving them a mortgage and home that they don't understand they can afford, can't handle. it's a lot of heart ache for them and their families and it's not the direction where want to

go. >> again, in the theme of the great divide, one of the biggest emergencies we've talked about his attitudes for credit. again, use credit as a positive force, allowing them to in effect borrow for future earnings in newmar now. low that still enormous doubt about really the entire system of debt and whether or at least the phrase more risks and opportunities in their life. you had a remarkable experience to write about with a credit card. tell us a little bit about that and the broader left untreated advanced the >> first of all, i understand why people worry about that. unfortunately, the credit products available to low hospitals can be quite sensitive and quite abusive. i think it is good that they worry. yes, those that are financially sophisticated -- i'll put myself

out there because it's an important lesson for me and i wanted to share it i had this hardly ever lose. i am not used to paying the bill because i hardly ever use it. so did bill clinton. i paid the bill. they misread my handwriting or whatever. is that a $2 charge that their skin are $2 or whatever. i would not accept the late fee on the $2 charge. so i got annoyed and just ignored it. i should've called customer service and told them to correct it and let it go for a few months. so later, my husband and i were for a property we just bought. they pulled my credit report. another problem, i don't regularly check my credit report.

it was just amazing to me. it had taken forever to get it fixed. there's no human interaction, no people look at things anymore. you've got your lender, the credit card issuing company, the retailer. you got the credit reporting agency. all these missing pieces. you have to get everything fixed on. i thought it was an import my thing. you can ignore this stuff. even if they're treating you badly come you still have to deal with the system. but i think too, this automation and which is not just a prevalent disturbance, but particularly for large financial institutions. >> ladies and gentlemen, please direct your attention to the black watch for the black watch played at the white house. [laughter] >> and automation.

>> so yeah, they're everywhere. there's too much. this kind of thing is just really -- then ask her what kind of great do you get so far to the consumer finance protection? >> i give them a good grade good idea. they've got the mortgage lending standards. still a lot of pressure on them. i hope they hold their ground. they're starting to examine nonbank credit providers to low income people typically use these can sometimes do quite good things and others are quite high cost and borderline abusive credit products. there was not a regulation and mortgage originators in particular. most of the mortgage brokers were not banks affiliated with banks. so we needed more. we needed some supervision of these nonbank providers.

i think it is a healthy thing and i wish banks would stop beating up on them because of retirements is having a more level playing field of consumer protection. >> more broadly, dodd-frank, what are you most optimistic about the way? >> i think kerry gensler did a good job getting it finalized on derivatives. we see more to centralized treating facilities. my own agency has done a great job with implementing the lion share of what we have to do, which is a title ii resolution mechanism for large systemic institutions in progress i'm not. eliminating the holding company to get too large financial institutions. i don't think it's much less likely they'll get financial support going forward. the consumer bureau has done a great job. those are just some of the highlights here the fed has done a good job with the stress test. none of the big rules they deal

with, the system stability for large institutions, what they call the liquidity roles are all a work in progress. they really need to get finalized. i would hope that is based in particular that we have more prioritization of getting the rules finalized. of course the poker rule is ridiculous. >> what is your feeling after yesterday's move on the filibuster? good thing? >> yeah, i supported her. i don't agree with her unmonitored policy. you don't need to agree with someone on everything to support them. she's a highly intelligent, highly qualified, open-minded. she listens to people and i hope she will continue to listen to the responses you get in your surveys to keep drilling. is this really helping main street? and very skeptical it is. again, it's creating a lot of risk in the gershon. >> you know, another red flag

and i'm certainly not the first one to show this, but it is just reminder of how it benefits of the countries participating in really saving for retirement at this point as we move them to find benefits defined contribution. only 37% of people said they had an employer-sponsored 401(k). almost half are behind where they should be for retirement. again, the big apple for big apple for all you start looking at the lower two thirds of the latter. on the other hand, we have this long-term pressure in the federal budget, not only the deficit, but the fact that the expenditure is shifting towards entitlement programs for the elderly and is becoming to have to define money for investing in kids. something's got to get here. how do we at the same time we have a public strain on our ability to fund retirement and we are seeing these numbers seem like a train wreck coming down the road in terms of individual ability to save on their own. how do we square that circle?

>> how much more time do we have? book, i think we need entitlement reform. it's still going to be a while before the medicare trust fund our research. and so, do it now. accumulate the savings over time. you can do it with a combination of revenue increases, slowing growth of the future benefit increases. that's what we did in 1983 when we're faced with problems of social security. we need to deal with it now because if you wait until then, they will be more limited in much harsher. for younger people, that's the other reason. i worry about my kids paying for all this if we don't start dialing it back. we are not investing enough long-term and near futures, had this horrible problem of short-term assam, where we'll make do with problems right in our face and we don't get smart and deploy federal dollars in a way that make long-term

strategic sense. we fund the tax code, get rid of the special benefits. >> one is the way investment in chemistry day, right click >> absolutely. personal and corporate for personal i would get rid of preferential treatment of capital gains. there's no reason why somebody who has earned the laborer -- earned your money through labor that investing money. why should you pay a higher tax rate? that makes no sense at all. if you could broaden the base, get rid of loopholes and exceptions, you could get the top rate down so they hit would be less severe. maybe if you are worried about the middle income folks, everybody gets $5000 of capital gains tax-free or something like that. you could do something like that. but overall, given the fact these hedge fund guys pay tax raises half of what you and i pay. i just think that's ridiculous. >> one last question.

among the many provocative ideas that you've put out over the last several years, one was that regulators should face a lifetime ban on returning to the companies. i want you to talk about that. but i also want to get your thoughts, given the former treasury secretary at a private entity firm, tim geithner. >> i think especially with the examiners coming to need to have some very come in very tough post actions. i think everybody tries to do a good job. i don't think people are writing rules are examining banks. the people impacted by my actions later on. but it starts -- you start clicking an entity is way that you -- the business is to regulate companies thursday in the world as they see the world and excuse her judgment. also of longer-term your career

path is that industry, you want to make waves, controversy connected a reputation as a troublemaker. i'm sorry, but even the best people, it can impact their decision-making. persecutions he regulated, no i don't think they you should work for them. i would like to see the lifetime column pay them more, train them better, give them internationals. that would be used to have more give-and-take between u.s. and non-us regulators. there's a lot of distrust and understanding of each other, which creates a problem during the crisis. with 10, i wish him well. everybody, let's face that everybody in the financial sector will be a one way or the other. i wish him well in the world of the revolving door doesn't really give me a lot of heartburn and i wish them success. >> let's go to the audience were some questions. microphones. we have a question over here first maybe. go ahead.

>> my name is dr. caroline coughlan. my late husband was marty slate who ran the pension and if it corporation. and the clinton administration. i've been a fan for a long time. my question is, how would you go about taking the money that splashing around in the stock market, the money we've quote, unquote invested and moved it from the financial casino into the real economy? also corporate profits. companies are just sitting on that. and you're not investing in the production of goods and services. >> it's a very good question. i think monetary policy, if you are a ceo when you sit there looking at your share price, is it me or is the fed? i think they need to get out. there's going to be some pain. i don't see it as anyway to get around it. we need to find out where we

really are and start focusing on growing this economy, the real economy. not through credit and asset bubbles and making things and more efficiently a better quality and cost than some of our foreign competitors. that's where we be focused and that needs to happen. the answer really is the president and the congress. the fact that they can even find a budget, much less put together a strategy for economy, making our ecomy mo competitive quite compelling. perhaps we need to start with reform of the political system. all of this takes time. there's experimentation in the west coast of getting rid of primaries. that goes to the final election and i think to be more centrist and not process. short term would just the leadership. when i worked in the senate in the 80s, we had the 81 tax cut

into deficit reduction act, tax reforms, fundamentally changes and leads to a lot of additional economic growth. those who weren't necessarily popular, a lot of individual constituencies were really angry out a lot of those things. everybody says were going to put the country first and we did it. i think even this day in the environment, you can succeed if we have a principl ecision. explain it, articulate and execute on tha i think you can still get reelected for office. they're really rning scared right now and created lots of functionality. >> another question. >> hi, my name is rollie smith appeared i'm a retired official from california. as you say, this takes time. i'm wondering how much time. i'm wondering about really the income gap. i'm reading joseph stiglitz. i just read tom hart and then i

just ordered his book on the crash of 2016. i really wonder how much time we have and how frightened should we get the american people or how concerned should we get the american people on this issue? >> it is problematic. when we did 2009, i'm not a fan. it was more short-termtock. let's give the economy a little boost and things will be good. we taled about infrastructure spending then. i would take too much time. we would've had the the better waterways. so we need -- we need to gt up to short-term thinking. we need to think long-term. same thing with entitlement refor the action are going to be much more limited andng ireany direc. what is the most local government or solutions that can come out of washington to some of the problems were describing?

>> i think in the near term we shouldn't look at washington. the state governments are doing a lot better job. we're going to have to step in and fill the void. corporate leadership on this would be nice, too. look, i think for wealth accumulation and lower income families, first and are most better wages and ask where to be hard to do. i think other research shows automatic saving for a certain amount is automatically taken out of the paychecks. we do not another 401(k) bank of borrowers for you. we encourage banks at the fdic to offer these very, very low savings accounts for income people to have the automatic direct deposit an automatic savings vehicles. there are things we can do through leadership in responsible banks, to the ngo community. i wish corporate america would

look at their model. there's a company called cosco, which a lot of you are familiar with. they keep their ceo $250,000 a year. they have good wages for workers, give them health benefits and they seem to be quite profitable in doing a good job for their shareholders. what you pay your employees than what you pay your top management and really, don't you get more value out of the project today by giving folks a better wages and peace of mind with health care coverage. or has corporate america and business schools could rethink how would make corporations more productive and maybe that stars with paid employees better. >> thank you. sheila bair, great conversation. [applause] i would also encourage everybody here and watching that we have extensive coverage through our partnership with allstate. all of the issues he discussed

on our economy site. now i'll turn the station a colleague, michael hirsch discussing our first case study with mary dupont i stand by me. with that, michael, the stage is yours. >> good morning, everybody. let's get started. okay, great to be here today to talk about stand by me. i am the director of financial empowerment for the state of delaware. stand by me is a statewide financial empowerment program that's a priority as governor jack mark out. so when he came into office, he decided that this was going to be a priority of his

administration. we worked together and formed a partnership with united way of delaware, which is also a statewide united way, to create a financial empowerment strategy that's available to all delaware hands. so we are not strictly focused on what went on delaware and. this is available to everyone. okay. these are the types of issues that we are seen since we started and may of 2011. we've worked with about 3000 individuals, providing them with personal financial coaching. and these are the kinds of

issues that we are seeing. people have a lot of sense for a variety of things. medical, student loans, credit cards. we see people supplementing their income with credit, very low credit scores, rack of access to financial services. a lot of people using the french financial site, payday loans, title mounts, rental furniture, monthly expenses that exceed income. the ability to just pay bills and make ends meet. no savings or safety net. and this all adds up to relieve debilitating stress. over these issues. that interferes with other goals in life such as advancing on the work for us, getting ahead in

school, raising a family. these are the kinds of things that wake you up in the riddle of the night. i think it's interesting to look at the median income because what we are seen as the national household income. we have income disparities across the races. the median national income for weise's 57,000. in delaware, were doing a little bit better. it is 62,000. for african-americans, it is

33,000. in delaware, it is 42. 39,000 for hispanics, 35 in delaware. and 68,085,000 for asians and pacific islanders. i think it's really interesting to see that what we're talking about during the conversations were sheila bair. we are talking about two thirds of the population that's really struggling. to make ends meet. so stand by mean is an initiative where the governor is at every involved and using the leverage of the office. we been able to engage all of the different sectors throughout

the state of delaware. we're working with employers, nonprofit organizations. the k-12 college is and targeted constituencies. child care providers in the most amazing thing to me before coming in the government i did work in a nonprofit sector. this is not a jot the nonprofit or can do alone. we have to have state government involved in order to get real muscle behind this work in order to bring everybody to the table. so this is why stand by me as. this is what we offer, personal financial coaching. we work with people on

budgeting, debt, credit, basic money management, make even me. we offer workshops in a way to engage people, their interactive workshops. we do a lot of work on financial services, helping people to just navigate the financial mainstream. but mostly, helping people to get out of payday loans that they are tied up in. a lot of people, to multiple payday loans that are totally out of control. we offer an array of his humor from a financial products to try to provide alternatives to this. we also help people with navigating the whole financial system as it relates to postsecondary education. as we all know, those with a college degree are ultimately going to be old to learn more. getting a college degree today is so complicated.

just applying not only for college, but also paying for it and getting financial aid is on deck. again, this is something that is a real problem. and then we make a lot of referrals to local nonprofits and organizations with issues such as debt consolidation, foreclosure assistance, tax preparation, et cetera. so how are we going to use this model to jean's what's going on in our country? the empty seat at the table is how i look at it. until we are really able to affect the engage state government. there are a lot of cities that have gotten involved. states need to be involved in this. i can't tell you how amazing it

is to work in the state where when people know that this is important to the governor, automatically the doors open. automatically conversations are being hot with employers with postsecondary is to share school districts. everyone is suddenly interested. not just in how do we offer financial literacy because it not about any illiterate d. it is about one-on-one, helping employees, helping students to understand more about how to get through the system. doors open when governments are involved. obviously, governments are important people and have lots of things to do. the governor doesn't have to be on a day-to-day. but just saying, making this the priority makes a big difference. so in delaware, the way that

were really looking to change the tide on this issue as everyone has collective ownership. this isn't just the nonprofit sector that has to do with get this job done. this is walgreen is. it is shoppers supermarkets. if the hotels were working with. it is the community colleges. it's the high schools. we are all working together and all the different agencies and state governments are coming together to work on these issues because ultimately the financial security in the financial success of our constituencies is going to influence success but equal organization house. so if employees are waking up in the middle of the night or they're not able to get to work against the car broke down and they don't have money to fix it, or if students in college have to drop out because you're not

going to figure out how to pay for living expenses as well as for their tuition and books. these organizations are suffering. so i think it is that moment. if anything good has come from the crisis, it is that everybody is turning to recognize that this is important to all of us. so this is how our program is structured. we actually have raised money through the private sector because when the governor came into office, his first job was to cut state services and to start to cut down because the state of delaware, along with most other states in the country was in a major fiscal crisis. this is a priority, but we're going to have to find money through the private sector. so through the partnership with the state and united way, we've

been able to raise the money and we've contracted with one nonprofit partner in each of our three counties as a small state. then we partner with businesses, where we offer stand by me as an employee benefit. we partner with community colleges where we offer stand by me as a resource to students and their families as well as to the staff and were also in the high schools were noncollege access programs. so you can see we are working not only with large companies, but also childcare centers where we've integrated stand by me into the state's childcare quality system so that as child care centers brings stand by me and offer it as an employee benefit, they also get credit of increasing quality of their childcare is enter.

so what we've tried to do was integrated stand by me as a part of other priorities the governor has. one of them is college access, so we were quick k-12 and the department of education. child care we work with the office of early learning. the governor is a big advocate for people with disabilities. so we have a full-time financial coach that works at the division of vocational rehabilitation, helping with people with disabilities is there going into jobs, helping them to put together a budget. this is the condition of the -- constituency where we are serving. 53% have little or no control over their finances. 57% report being extremely to somewhat worried about their finances. interestingly enough that they said, everyone is invited to

participate and we are everywhere. make it easy for people to access. get 72% are women. i guess we are more willing to ask for directions when we get lost. 52% are african-american. we are also singing that although we have no income guidelines, the majority of the population that we are surveyed are low to moderate income. these are the services we provided. we help people at and see how it's grown. the program has been up and running for about two and a half years. we are helping people with all of these different service is. and here is what we are seeing. what are the issues that people are working on? the big one, credit and debt. credit and debt is a major

problem that not only are we seeing any credit reports in the way people feel about their financial well-being, but it's also about being able to make ends meet. savings is lower down on the scale, but we're also helping people to put together a budget so they can have a monthly plan where they can pay their bills and also hopefully save. we have developed a financial wellness strategy called the finfish challenge were repaired people points and prizes like a health wellness programs that are out there today. and i personally think this is in the future the third leg of the stove. you know, we've been focused on green energy to address our appears of natural resources.

we focus on health wellness because of our bad lifestyle habits in america. and now we're going to have to be focused on financial wellness. it's going to be some day we all have to participate in. i think my time is up. >> we have time for a couple questions. i was wondering what kind of strange services do you see people resorting to and have you been able to make any and rose, particularly with the new consumer financial protection bureau at the federal level. has been improved improved any? >> well, first of all, the french financial or is mostly controlled at this a bubble. what vfp be can do as they can educate consumers about these issues. in delaware, one of the big

economic development strategies about 20 years ago was to invite the credit card companies to delaware to create jobs. the way that we were able to attract those businesses was to eliminate usery law. so that's why all of your credit card does come from delaware. and that's why you're paying 25, 30, 40% on your credit cards. unfortunately for payday lenders, title lenders in these fringe financial services in delaware, as in most states, there's a lot of them. the problem is that most people are not able to go to a regular bank because their credit score, because they have no savings. so being able to get a consumer loan, like you might do is difficult for a lot of people. so they do have to resort to

payday loans. >> let's open it up to the audience, questions for mary. anybody? okay, don't see any hands right away. but me just ask you. i am curious about whether you are getting any kind of pushback or help from particularly the financial industry. i know that in the run-up to the financial crisis, you know, the sub remortgage bubble, some states that he tried to crack down on predatory lending got a lot of pushback from big lobbies representing wall street, representing fannie and freddie and so forth. what has been the reaction coming in now, to this program in delaware? have you gotten help or hindrance? >> for the most part, under cra, this would ease and eligible at

dignity. so we do get a lot of support. we have a lot of partnership with local institutions to help to fund the program. unfortunately, when it comes to providing financial products, it is more challenging because the regulatory environment. we need a lot of exceptions to the regulations in order to be able to offer products to people who have difficulty or have had difficulty in the past maintaining a bank account or with their credit. >> we do have a couple questions. the lady on my right here. >> national press foundation. it sounds like a great program that you have in terms of education and helping people manage their money. i wonder what the minimum wage is in delaware on whether there is movement to increase that so people have more money to

understand and manage. >> well, that is a good question. i will be honest. i can't answer you and i don't know what the minimum wage is. whatever the minimum wages, not just the minimum wage, even if it was $10 an hour, it's not enough. what we find is that people are working more than one job. a lot of the people that we are working with in the businesses that we are serving, they have multiple jobs and they're using their credit cards to supplement income. so when you look at wages over the past 20 years, the wages are stagnant. but the cost of living has gone up. so that is i think something in terms of public policy that we really need to have a look at. >> right over here.

>> hi, tisha jepsen with columbia codas d.c. board member. it sounds like you get a huge amount in delaware. to what degree are the other states looking in your direction and deciding about whether they are going to move forward with a similar sort of organization who are you going to reach out and expand to the greater country? what is the view to the future to expanding your success? >> we are very interested in reaching out to other states around the country. we really think that having, as i said, having the governor really makes a difference. there's so many different state agencies and the ability of the governor to influence the other sectors throughout the state. we've just put together a playbook for national replication. the national governors association is doing a case

study that is going to be distributed to the other states. we just completed an eight team that the valuation and in the valuation and the work place. these are materials that we are going to be able to provide the research and documentation and actually the model to other states who are interested in replicating. so we do have some conversations. the governor and i are talking to some people here in washington and hopefully we will be working with nga as well. >> well, i am afraid we are out of time. thank you very much. absolutely fascinating presentation. now i'm going to surrender the stage to add riley, global chief executive officer of strategic communications for ftc consulting who is going to present a very, very vivid data in the polls that really

underlies a lot of things you are trying to correct with your program. [applause] >> thank you all very much. i'm going to try to quickly move through this survey so that it brings to light some of the discussion that we pat. just by way of introduction, i would say this is the 19th or they would turn over the last five years. we begin this project with the support of all state back in january of 2009. our goal then was to begin to document and to look at the changing circumstances that americans were dealing with given the global financial crisis we are in the midst of. one of our areas of initial inquiry was to figure out whether or not this might create lasting changes in terms of people's behaviors, attitudes and perceptions about their own

economic security or whether this is merely an event or blip and people would refer to more normalized behavior. we can save today come in 18 surveys into this that we've seen some lasting changes, both in terms of people's attitudes and opinions, but there've also been lasting changes in terms of the reality that they are living with in terms of their own economic security in a sense of opportunity for the immediate future for them and their families, but also the next generation. so we thank national journal for the partnership an opportunity to work with them and particularly allstate for the support they've given to the project as we been able to look at these important issues going forward. the survey we will go over today was fielded outré november 2nd and 6th. we surveyed 1000 respondents. they are adults the age of 18 plus. the margin of error of plus or

minus 3.1% as we talk about this. in terms of key summary findings before we jump in, the political and economic indicators are at or near their low watermark since we began the series. most americans believe the u.s. economy is still in recession. americans believe they can handle their daily financial obligations. however, they are less sure about meeting long-term financial milestones that one would normally set out in order to achieve financial security. most have faith in the financial system, but many see it as risky, participating in the market cannot, participated in long-term investments. those things continue to raise concern for many americans in the aftermath of the crisis. finally, americans believe the fiscal troubles that manifest themselves here on the stage in washington d.c. has had a direct in acton hurt their own personal

finances. so with that, let me get a quick snapshot of the political overview, which does set some context for how people view their own economic circumstances. i am going to contrast where they are today to where we were one year ago. in terms of right tack contract or the country, you will see we are in 201310% to the negative right track, wrong track as well and now 242% in the negative. in terms of the approval rating of the president, and i was 12% to the positive one year ago. it is now 17% to the negative. in terms of the approval or disapproval of congress, it has moved from 51% towards a unanimous view of a- 75 into the negative. very chilling numbers as we look there. as a look at president obama

facing questions from different constituencies, you can see among white households, white americans that it has moved approval from 12 to 13, 14%. the african-american households by a percent. but hispanic households in particular, a very key constituency in his selection campaign down 26%. with republicans, not much lower to go. down 4% from 11 to seven. with independents and democrats down 19% and 17% respectively during the last year. also, will talk about the divide of noncollege and college-educated households down 20 with noncollege educative household and daddy love in with college-educated households. so again, a very significant slip. just building on this, if you look at the chart from the first line is the president's approval

rating down from november 2012. the people's belief that the economy will improve over the next 12 months. you see a slide down on that, but a little bit of a band that back to the positive. consistently down, the policies of the current administration will increase opportunities for you, for people like me. you see that is basically split down and bottom to where it is right now in the congressional approval rating usage dropping. with all this macro growing the craters come to see the site down. however, if you look at this one i'd amend this speaks to a constant whining, all around you is that. all around you is slipping. but how do you view your own personal situation and will it improve over the next 12 months? you see while that has slid down a little bit, it is basically remained constant.

not a great number with 40% saying they are confident they will be an improvement in their own financial situation. but something that speaks to a core belief we found from the beginning of this that while the question the leadership cost of the country, while i question whether or not my neighbors can do what the financial crisis that we are in the middle of, while i question whether or not the political class can come up with solutions i think i will do okay. assertive individual sense of confidence that i will navigate my way through this remains a constant. this is a little bit of a difficult. think of this as a square pie chart. this basically takes a look at some of the groups that we will talk about is to go through the survey. 61% -- segments of the american public based on indicators see that 61% of households have at least one full-time worker. income levels and education. that is actively in the

workforce right now. 39% fall into another category. so you see the top was full-time households, full-time worker and over $50,000 a year of not household and a college degree. makes up 23% of the sample. the next group down a full-time working households without a college degree and represents 15% of the sample, earning $50,000 plus. the next group down which represents 6% is a full-time working households, earning less than $50,000 a year and have a college degree. these tend to be younger households, people just entering the work force, have a college degree still under $50,000 a year. and then you see full-time households earning less than $50,000 a year. no college degree represents 14%. 16% of the sample are households that are retirees.

no one actively participate in the workforce and they are retirees. 21% do not have a retiree and do not have a full-time worker. these are individuals who are working part-time. these are individuals who were unemployed, have somebody in their household who is not fully participating in a full-time job in the workforce. and then you see this hard-core households with an unemployed person. you see that where both people, they are in households where neither -- where no one is hurt in full-time in the workforce, but also you see they stretch out into the other group noted by the deadline of where there is not employed member of the household, but they might have another full-time worker. they might be in household earning over 50 k. college degree. you might see the arabian household earning over 50 k. a

year with no degree, et cetera, et cetera. so one of the things that we are beginning to see in the survey is there is this hard-core group of people that are not participate in the economy. they do not have steady work and they remained a serious problem. then, this very busy chart -- let me make one digression here. this data -- they will not be a test and i'm done number one. number two, the data is online, the entire series. for those of you who find an area of interest coming to be able to tell yourself and obviously would be willing to help. throughout the survey, the data shows college-educated americans who are in full-time employment. these higher income households and everyone else. if you look at the center, which we highlighted here, these are full-time work in households, 50 k. plus in a college degree. 30% of these as opposed to 40%

as a whole are age 50 plus. they tend to be younger than the sample as a whole. 64% identify themselves as being in the middle-class. 49% actually earn incomes greater than $100,000 per year. 24% are nonwhite versus 38% of the total sample. 82% of this group owns a home. immediately next to them are the full-time households who earn 50 k. plus. but there is no college degree. one thing i would draw your attention to, of those households with a college degree, 49% of them earned $100,000 a year or more. of those without a college degree, only 24 -- excuse me, 25% go above the $100,000 mark. so while the non-college degree households coming good middle-class family, a lower ceiling income in terms of what is available to them.

another group to look at him that is interesting here is the retired households. one of the things that we have found throughout the survey some of the people who are felt most capable of negotiating the current turbulence have been those who are already retired, those who are already on some type of a program. obviously, 98% of them are over 50 years of age. 52% identify themselves as being part of the middle-class versus 45% of the sample as a whole. 19% of them are nonwhite. this is a much whiter population group, which has other impacts as we look at this. sunday 7% versus 63% of the whole own a home. again, these three groups in the middle clustered around the highlighted group in the cold i represent those who are more comfortable with dealing with the future than the rest of the

population. however, while high-income americans have a better feeling about the personal finances in the moment right now, they don't necessarily share the financial optimism of those of lesser means. those with a little optimism, talking about improving from a relative date. they might well think it's got to get better because it's pretty tough where i am right now. but it does speak to the lack of confidence that those who are achieving in terms of looking at improvement of their finances in the near-term future. again, focusing on that group of 50,000 k. plus households, 66% of that group through their personal finances are in excellent or good shape. only 36% however say their situation will improve in the next year as opposed to 39 and of the sample. so again, if you look at those three columns in the center, while they are the ones who are most confident about where they

are today, they are also the ones who have the greatest drop off in terms of where they will be in the next 12 months. again, those with the greatest of msm are $50,000 a year or less, have a full-time worker in the household and have no degree and those from unemployed households, with 41%, no full-time workers and retirees, those participating in the labor force on the margins or plus 9%. in terms of looking at this in terms of confidence that those who are winning about the next 12 months, it is a very frail situation at this moment. we also ask people, you know, most americans think the financial system today, we ask them a paraphrase question. ..

if you look at those that are on the margins they have the least confidence abouconfident about . so again, those are retired and earning about $50,000 a year when a college degree or non- degree household are the most confident are most concerned about a financial system providing the real opportunity for them as they look to the future. interestingly in other questions when we talk to them we don't

look at the financial system. home ownership comes up as number one as the means of building wealth and other people talk about hands on ownership of to and including gold. they have a physical assets to be much more important than what they see as a shaky market. interestingly when we ask do you think the economy is currently in a recession or not, 53% of americans believe that we are still in a recession. 41% believe the recession has passed. this has ideological cuts to it all so that i would note while republicans by a margin of 56% to 40% believe that we are still in a recession that is sort of interesting because that pushes against the other findings of who is optimistic.

the republican hopeful 57% of republican households are not about $50,000 a year yet you have a finding of a somewhat ideological that we are still in a recession. independence, 58% to 36% and closer and with democrats, 51 be leaving that we are out of recession but by a slim margin. looking at that by income group there are not as many surprises as you would expect. there is this one ideological piece as to whether or not we are in a recession that if you are a republican regardless of your income level. those that believe we are in a recession are likely to disapprove of president obama's job performance and are skeptical of dissipating in the financial system. the disapproval of the job that

the president is doing. 41% tracking right along with the sample as a whole 5341 beliefs that the system is safe and reliable or risky. if you believe that we are not in a recession, you are more likely to approve of the president job versus the sample as a whole dramatically and you were much more likely to be beneath the financial system is safe and reliable. the contours of those who belief that we have recovered, this upper third that ron talked about who are feeling okay that is behind us now versus those who feel that they are grinding through the result of the events of 2008 and 2009.

we have responsible for the zinc plated for the future in nascar realistic wha would each one ofu be to meet the following giving her financial circumstance. if you are faced with that decision today you can basically negotiate these day-to-day financial realities. playing medical bills down to 71 making your mortgage payment 68%. if you ask them to begin to think about the future putting things aside for the future maintaining a comfortable standard of living during retirement down to 59 saying that isn't realistic. investing your money for future needs. 58% say that is unrealistic and 39% say that is not realistic. six months of expenses on emergency, 50% and even split,

50% say that is realistic and 48% say it's not. paying for college education, 45 and 47. what's interesting about this is if you look at this again, what are the sort of basic financial tools that you have at your disposal? maintaining a checking account, 94% of college household chops to 7% from a savings account 84 d-delta 684down to 65 and a none household and down to 51, life insurance, 70 down to 50 with a safer retirement 45 down to 19. with 36 down to 19. again, seeing the sharp divide on that college degree household and with a college degree

usually means in terms of household income. how important. we then ask americans how important each of you think the following financial activities are for you to meet your own personal financial goals. paying off and avoiding new debt, 94% top of the pile. sticking to your monthly budget, 94%. maintaining emergency savings, 88%. saving for retirement, 84. state planning for the future 83. purchasing life insurance, 78. you see if tracking down. those things that are immediate at the top of the list, longer-term begin to go down and looking at investing in the stock market only 38% be leaving that that is something that's important in terms about their own financial activities as they move forward. then in asking the question whether or not you think you are

ahead, on track with behind in some of the areas of financial performance. 75% say they are ahead or on track of paying off new debt. 80% say they stick to a monthly budget that they are ahead or on track. 64% purchasing life insurance. down to 52 when you get to saving ahead for them on the essential items in the future. down to 49 when you talk about saving for retirement. down to 46 when you talk a boutf contributing to a four o. one k. or ira. fifty for maintaining an emergency and saving for your kids education, college education out of 32% on the ability to stay ahead or beyond track in that area. again you see in terms of the large numbers of the population who feel that they are either

behind or just fighting to keep pace with meeting with what they recognize as the demand of the future or paying off for staying afloat on a day-to-day basis in meeting their financial obligations. all that said, and this is a purposeful confidence americans have about themselves, if you have an important financial decision to make today, how confident are you that you have the ability to understand the information, to gain the right information to make the right decisions? 89%. 49% say that they are confident of the total saying that they are very confident to make those decisions right decisions about buying a home. 77%. 50% believe that they are very confident and not. planning for your retirement. 75% say that they are very confident that they have the tools to do that. 35% say that they are very confident to little more

ambivalent but still striking confidence that people believe they have the ability to do that and then the state planning setting up longer-term stuff for children inheritance and 64% say they are very confident in the total with 30% saying that they are very confident. you know, so my question whether or not this confidence is well placed that this has been a consistent theme throughout the survey of americans basically saying i am best able to trust myself, my family, my neighbors to guide me on these financial decisions. this graph, the dark blue color who say that they have a solid plan for your finances going forward. the lighter shade of blue say they have a plan tha but they he some questions. they are looking for a little more support and those are to say that they do not have a plan and really need some guidance. so again, when you are thinking

about your money and how you handled your personal finances, do you feel like you have a solid plan but you need some help or are you really need some guidance. 55% say that they can use help and 14% say they don't have a plan and they could use some guidance here. looking at us again by the demographic breaks that we have talked about, interestingly the most confident group are those who are you full-time worker, household of a $50,000 a year on the average but do not have a college degree at 66% and also retirees at 71% who spoke about that earlier. they are obviously into executing the plan. so an overwhelming majority of the retiree households, 71% say that they are confident and have a solid plan and they are executing on it.

lower income households have not full participation on the labor force and these issues of concern are long-term programming is quite pronounced. americans are split over whether or not we ask a question about in terms of financial regulation, transparency and financial institutions. our you looking for increased information what is the best way to go about this, is that consumers and the public should put increased pressure on companies to offer more information, 32% roughly one third. they required a regular to reinsert 31% close to one third with financial services company this should be an issue of competition. the market will sort this out. the ideological break on this you do see that 43% of democrats

support the regulatory fix and that is the most popular with them. you see with republicans that 37% are most supportive of the market six. they should bring about a better performance by businesses. finally, turning a little bit to how americans believe the dysfunction that we are seeing in washington dc and the state in the fiscal issues how much do you believe of the deficit and national debt affects your personal financial situation and almost three out of four americans basically believe that this affects them a great deal in only 26% say that they are sort of not impacted by the fact. do you believe the federal government situation has a positive effect and no real affect on your personal financial situation, 62% say that this has a negative impact on them. only 37% say that this has no

effect for 26% say no effect in 11% say positive. i don't know who they are. finally, what do you the lead is the most likely impact on you of the large federal budget deficit and debt in terms of your own personal financial situation? and again, what i would draw your eye to it as the two top scores here, far and away that they worry about that would mean higher taxes and therefore no disposable income in that uncertainty and fewer opportunities for jobs or wage increases so again, the issue of disposable income in the household they feel is greatly challenged by this current set of circumstances. i hate to leave you want something that isn't very optimistic that the final slide looking to the future, the

near-term future in terms of where we are, how confident are you that the congress at the president's ability to reach an agreement about the budget and avoid another shutdown before the january deadline, 73% of americans are not confident and that cuts across all of the political party identification and all demographic groups. there is very little confidence that this will -- that they will make progress going forward and that obviously has an impact on not only political attitudes, but also the consumer behavior. with that, we are going to show you a couple of videos then yes -- then yet of some of the respondents with americans talking about how they experience these issues before we move onto the next step of the program. thank you. [applause]

♪ ♪ i would consider myself to be middle class. we have a mortgage and we have a car payment, but we ar that we o pay everything off each month. >> from poor to excellent i would rate our situation as good. >> i'm married and i just had a baby. there's a lot of cost being a new parent. >> we can go out and say i want to buy this shirt. i know people who can't do that. they have to budget everything they stand. i have to pay for lunch and my

gas and i'm sure that a lot of america has to do that. i'm pretty confident that i know everything i need to know to make the right financial decision. it is necessary for my retirement. >> i am very concerned about planning for my retirement. >> people should contribute if they have the opportunity. >> i don't have enough savings to last me. i would probably have enough to last a month and a half or two months. >> i have enough savings i would be all right for maybe a couple months. >> i definitely do not have enough to access a year. my husband works seven days a week and if we were to lose her job it would be devastating. >> it is very important to pay off my desk each month. it's like my ocd or anxiety if something isn't paid, i get really stressed out about that. i hope to get ahead.

we will eventually. we will pay down any kind of death we have. we over $100,000 in student loans. >> i feel the country is headed in the wrong direction. >> the country is in the wrong direction. >> i don't approve of the job that iraq obama is doing. >> he is battling with a congress that is so completely difficult. >> converts is getting in on excusable bad job. >> i think we are still in a recession. unemployment is off the charts. >> if we were not in a recession i feel people that have a degree would be able to find work and at this point it seems like regardless of what degree you have, you are out of work. >> in the next year i'm hoping it will start to get better. >> i hear that it's supposed to be improving but i can't tell you how many people around me

are unemployed and struggling. the federal deficit affects us in a personal way tremendously because everything trickles down. >> ththe effect of the higher deficit i think it's higher taxes. >> it is more difficult to get a salary. >> iit is a federal deficit with fewer job opportunities. >> i fear for my children if this continues to go the way it is. >> it can cause people to lose trust or a sense of security in the government. >> i think the federal shutdown made everybody looked down and the disappointed people even further. >> i do see optimism in the future of america. we just all need to get on the

same page. >> we pretty much stick together but that will get us through it. >> the country is going downhill. if the american spirit, human spirit is a positive to always try to find the silver lining and it's who we are as people so we can't really focus on anything. that is what gets us through. >> we just aggregated into those numbers. my job is to turn it over to nancy cooke from the national journal. [applause] >> thanks so much. before we get to this outstanding panel that we have, we just want to get some audience participation to get a sense of how people are feeling about the poll numbers. we would like to get the

opportunity to weigh in on the questions to you and you can text your answer to 22333 or tweet @poll. >> what is the way americans can improve their financial situation? the first response is through their own personal efforts such as paying off debt and making sound investments. and if that is the answer that you belief, text 664812 to 22113 or tweet @poll. americans can improve their own financial situation for government efforts such as significant reductions of the federal budget deficit and debt so that the answer that you prefer, text 664813222333 or

tweet @poll. the results are going to be tabulated in real-time right behind me. let's see. okay. so it looks like the majority of people here think that it looks like the top one wins. americans are going to improve their own financial situations through their own efforts paying off debt and making sound investments which is interesting and seems to really go a long with a lot of what we heard in the poll. i want to introduce a panelist they are all wonderful and excited to welcome. first we have eleanor who is a consumer advocate of the consumer board and we have matthew greenwald whose the chief executive officer of the research. we have heidi who's an economist at the policy institute and we have and wallace was a senior

director of consumer financial services and the president of the identity assistance corporation of financial services roundtable. so thanks for joining us. [applause] >> there is so much to did in two. heidi, something that came out through the poll is that americans feel very frustrated about their financial futures. even though the recession technically ended a few years ago. you are an economist. can you give us some sense of why this is happening? >> i wasn't surprised at all to see the big shift of people who still think that we are in a recession. we are not. we are officially out of the recession. the recession officially ended in june of 2009. >> how long ago was that? four years ago? but since that time, we have seen very little improvement on the ground.

so, having been deteriorating since then that we have the sort of my god we are all going to die period we kind of fell off a cliff. so 2010 we have been adding jobs for just enough to hang on for just enough to keep up with growth in the normal working age population, not enough so until we fell off the cliff and we have sort of been bumping along at the bottom of that very deep hole for that entire time. >> succumbing yet we are not in a recession we are definitely in a recovery but it is so slow that it's not surprising people are feeling like it's improving but it's improving so slowly right now. >> i would add to that of the busy significant amount of job uncertainty when people are worried about losing their jobs in a major portion of people are it leads to a feeling of insecurity and the economy is in serving them well. >> one of the points i found fascinating is how confident people were in their ability to

guide their own financial futures and the fact they felt they could get advice from family and friends. as a financial planner, do you think that is a good idea? were you surprised by that? >> i really am not. we are very aware of this at the board in terms of able do go to their family and friends to ask for advice and i think also where you know that people link to their friends to higher birdie made -- bernie madoff us we need to educate the public about what the options are and that is certainly a major priority of the board to increase the standard of professionalism in the financial planning industry. so people do go to their family and friends, but they also go to themselves. we saw that that was interesting in the polls. but it's the same area to me it

may be the same issues you ask how many of you are above that rich driver. you would find more than 50% of you would raise your hand but if you are a statistician, you know that the answer is you are not. so they are more confident in their ability then maybe they are more than they should be. people do need advice, and it's our job that the board make sure that his top-flight. >> if i could pick up on that, i was surprised by the confidence people said they had in their own ability to make financial decisions. but i feel it actually is an opportunity which some of our companies o are our member companies using to leverage social media to get the information out in the community

of people that you trust. so we have seen a number of new financial advisory tools that are based on a sort of good information into whether it is facebook or some of the more specific social media groups and allowing people to have access to the sound information so it's not just what you pick up at the barbershop sort of thing but really good solid information from the financial planners. >> absolutely. not only the distinction between the financial literacy and financial decision-making. there is no question that people need more financial information. they need to understand the basic vocabulary and concepts of personal finance. but what is also needed is the judgment. why do we have the baseline of information, you also need the

capability to put that information together to apply it to a specific individual and make a prudent judgment. you know, many people are not necessarily capable of doing that. we can't do our own brain surgery. in many cases we need someone to help us with tax choices and investments and retirement planning. ..

so the employment environment, the educational environment, wherever people are is the ideal place to be doing that. another thing i was struck by the retirement. how few americans are prepared for retirement. how few americans feel confident they can look to the future and plan for it. i know, your research firm has done a lot of polling around social security you know what -- how have you seen it change over the years you've been doing that research? >> one of the things my company does with the employee-benefit

research is the retirement survey. we have surveyed the public annually since 1991. one of the striking things is the drop since the great recession in people's confidence to live comfortably in retirement inspect 1995, 8% of the public said workers said they're not confident they can afford to live comfortable throughout their retirement. it was 10% not confident in 2007, and this year it's 28 percent. three times as much. and in response, we also see the plan longer. in 1991 we found 11% of workers plan to work to 66 or longer. and now it's 36 percent. but the difficulty is that -- we measure 40%, wind up retiring earlier than plan to usually because of poor health or disability.

there's a response to lack of a confidence. that's a risky response. a final point, a lack of confidence is not necessarily a bad thing. it's a wake-up call in reality if you are overly confident you won't often take action. a lack of confidence is a first step trying to do more. i'm hoping in some way the lack of confidence will be translated to greater efforts to save more and do a better job of planning. >> one of the things to me, the poll numbers underscore, the great recession hit different age groups very differently. when you think of young workers, they weren't in a position to have a ton of assets that took a big hit. the way the great recession is hitting them is more in the weak job opportunity. older workers, they just by where they are in the life cycle they are the ones who had the assets that took a major hit. most people who arrive at retirement if they arrive at retirement with any wealth at

all, it's the value of their homes. and so people saw massive hit in their retirement security because of the bursting of the housing bubble. here the interesting thing you hear a narrative out there that older workers are staying in job. they're not retiring, they're not making room for young workers to come in and you see a generational warfare sometimes. it's not happening. when you look at the data doing an estimate of number of missing workers. it's a big thing. we know the unemployment rate has declined a ton since the recession began. but a huge portion of that improvement has not been for a good reason. it's because people are dropping out of or not entering the labor force. because job opportunities are so weak. you can dig in and see who are the missing workers? they are missing workers who are age 55 plus. so in other words, as a group people age 55 plus are in the

labor force than would be if the great recession hasn't happened. t smaller as a share than of younger workers, but there's still -- it remains just a case that fewer older workers in the labor force than there would be if it weren't for the great recession. we are just not seeing job opportunities so strong for that group that they're able to really stay in and shore up their retirement in the aftermath of the great recession either. >> if we can pull back far second, you know, some of the poll was about building the future. and people's inability to plan long-term across retirement and paying off debt. and people are responding to the short term financial needs of their families. how are people going build wealth if wages are stagnant. the housing market is great in washington, d.c., but not in other places. how will people do that in the future? >> there's a mechanism in the workplace found to be effective. that's --

[inaudible] defaulting people through savings. it hasn't been use opt matily. a lot of companies put 3% and keep them there. now we know it works we can encourage people to opt people in at 5% and 6% and escalate them a percent a year. people with always opt out. it's effective. i'm not denigrating education, which is important. i think we have to use all the tools available. we have a tool that recently found to be working. we can use it more effective and more often. >> australia has done that. i know, a retirement model a lot of people do -- >> yes. i agree get them enrolled. i think they need -- even young people today are not investing in the stock market in their 401(k) plans. getting them to understand, you know, the long-term. what is happening here is that i think this poll shows plain and

clear that americans are still paying for yesterday. they're not paying ahead for tomorrow. they either can't or they won't. you know, and again, it's a short termism that is affecting both consumers as well as, you know, our politicians as well. job responding to the immediate crisis. but i think also, you know, consumers needs to understand it use tog that the goal of life was to retire. even i as a financial planner spent a lot of time. that was your major financial planning goal. was what i'm saying. even i as a financial planner spent a lot of time helping people build the necessary egg. figure out how we retire. now we have enter student loans, which is a nut as big retirement nut you have to fund. think about health care costs, particularly of the elderly and caretaking.

that's another huge, you know, nut. suddenly we have, you know, consumers are between rocks and hard places everywhere you look, because they have so much work to do. it's not just the tiermt. again, it takes a comprehensive approach to, you know, turn to a young person and or to an older person and help them make the trade-off. and oftentimes we have to work at the margin, you know, a change here. a change there. retirement and financial planning essential is no longer just about what is the best investment. and so often people confuse us with, you know, being kind of stock jockeys where in fact we are more comprehensive looking at the 360 degree picture. it's so important that we get consumers thinking about all these conflicting priorities. >> i would just add to what matthew said where i totally agree we have found -- we have found a mechanism that works and works quite well.

and so, i think it's clear to at least at least in the financial services industry, it's something that should be expanded. it should be supported, and the obstacles that, you know, could keep employers whether it's large employers or small employers from offering these plans ought to be, you know, smoothed away. we hear a lot of concern from small employers, you know, that it's expensive, that they're worried about liability. there have been initiatives here in washington to redefine a whole concept of fiduciary which, you know, the employment community, the employers are concerned about because they may -- they are worried because they're going there have -- if they're trying to help workers save, they're going to be held to a higher standard, and, you know, if anything is, you know, sort of wrong public policy, anything that stands in the way of the employment

community fostering, you know, financial planning, retirement planning, savings, and so forth we really ought to take a long hard look at. >> i'll add one more thing. i agree with everything the panel has said that the signup, the financial education, and the other thing i think is a key backup here is if you're living paycheck to paycheck it doesn't matter how much you're getting. how much financial planning. if you don't have the wages that would even allow the possibility of saving, you're not going to be able to save. the other sort of leg of the stool is -- we need good jobs. we need to deal with the job problem not just in in the aftermath of the great recession. but the 30 years leading up to the great recession we saw the economy getting richer, richer, the share of jobs that are good jobs that you can raise a family, save for retirement. that just remains flat. you're not seeing most people

sort of reap the benefit of that economic growth. i think that's the other piece here that is the thing that will make all of this possible for a much larger soil and water assessment tool -- of the -- >> i agree with the importance of job. even now the survey indicates that most people not saving can't afford to save by their own omission. and people saving can afford to save more. if you save for more retirement what would you have to give up? and the answer is identitying out. [laughter] the main thing we would lose is cholesterol. [laughter] the miles -- peoples can be packed at home. we lost a culture of thrift. we can save more easily. not everybody, not people without jobs. but most people even people with modest jobs. so it's important to have jobs.

i think we have to address the basic issue. >> and you've done some interesting research looking at, you know, apart from just retirement. some of the other financial issues baby boomers will face as they get older. can you tell us a little bit about that. >> sure. we have to teach everybody to cook simple meals. we need a cooking course. [laughter] at the round table, one of the things we work very hard with our members on is older americans and issues like fraud and financial exploitation. and these issues like cognitive impairment, and we've done some work in the federal reserve, actually, did a terrific paper on the financial risk and anxious -- what is making older people -- and they define older americans as 40 and over. what is -- [laughter] what is making people anxious and and, you know, exploitation. and in the family context, you

know, very real challenge of cognitive impairment as people age, we know their ability to make -- the ability to make financial decisions is the first skill to decline. sooner than the communication, the social skills, the ability to, you know, to talk rationally but the ability to manage your money is the first skill to go. and i know you're nodding because it's -- >> absolutely. the last thing to go is the omission you can no longer drive. [laughter] but it's -- this is a huge issue, and with the aging of america and then it spills over to a younger generation because the people in the, you know, 40s to 50s are taking care of these elderly. and what is the cost to them? of, you know, lost wages and

benefits. t not just the hard cost of medical. so this is huge. it brings up, again, this fiduciary responsibility, and, you know, i want to speak to the fie -- fiduciary aspect of a financial planner or adviser, how critical it is to be working with, you know, to have professional who are abiding bay standard that puts at clients' interest ahead of their own. because that's a vulnerable population. not above 40 but maybe above -- [laughter] whatever number we finally settle on. but it's so key. and people are also aware of that. be we published a -- a self-defense guide for seniors against financial abuse. it's one thing not to are the money. it's another to have the money taken away and how important it is. so i totally con cure on that

regard. >> back to the point for a second, another thing that struck me is interesting how focused in people were in paying off the debt. as opposed to, you know, as if carring a little bit of credit card debt or student loan debt is worse than saving more retirement or building a nest egg. and i thought it was fascinating. do you see that as a change? is it because of the sort of political climate and the emphasis on debt? has it always been there. >> what is new is student debt. it's higher than. before. people are entering dpult hood with might be considered in many cases a crushing burden. which affects them psychologically.

>> have you seen a change there too with the emphasis on paying off debt immediately? >> well, yes, you know, certainly people in the affluent , you know, segment of society they are wanting to pay off debt because it's the best use of money right now rather than investing in it ten basis points in a saving loan or whatever. so you do see that. so i think paying off debt has become more important because of the job situation. why? because with the bad, you know, debt record, you -- employers are now looking at your scores. we're urging it to young people. you have to take care of the debt issue if you're not, you know, if you're not paying regularly in a little bit more than actually what you're told you owe. because it's going impact your

ability to get a job. and until you get a job, all of in other ability to save for, you know, the education and the medical and, you know, everything else it's moot. as we saw in the polls. >> just let's go to high die. real fast audience q q & a in a minute. >> i'll be quick. i think the other thing there about why people are more concerned about rising debt is not just student debt is probably higher than it used to be. so is the other kind of get. i think it's probably underlying credit card debt. home equity loans. people eating their homes. now after the bubble crash they are in real trouble. one of the reasons, i think we saw sort of looks back around to the jobs thing one of the reasons i think we saw get

increasing so much leading up to the great recession is because the job quality wasn't there. people -- the way people continue to see rising livering standards they were able to eat their homes instead. i think that's one of the backdrops here to this thing. people are holding more debt than they used to. >> that's great. >> questions? i think we have one right here. susie. [inaudible] [inaudible]

i can totally -- i have some many things -- you're absolutely right. here is the thing, people -- savings rates are very low right now. it goes up in a downturn. we saw it here. it comes down as you're in a recovery. savings -- they're down to 2004 levels. people are spending the money the money that is coming in, people are spending it. that -- so -- but consumption is low. and now i sound like a broken

record. they don't have jobs. so they're spenlding what money they have. but many people are unemployed and the people who have jobs, the high unemployment is hurting their wage growth -- high unemployment puts huge pressure on wage growth and tuition is totally straightforward. your employer doesn't have to -- when they know you have no outside options. the high unemployment is hurting the wage growth of people with jobs. and a lot of people don't have jobs so family incomes are low. so they are pend spending the money they have now. savings rates are low. but people don't have as much money as they did before the recession began. >> i'm dr. carol -- i'm a physician. the question to the investment -- the financial planners is about timing. we're always told that timing doesn't matter.

but someone refer to the fact that 40 percent of the people over 50 have to retire. it's not when they choose to retire. what happens about what the market can -- longer than remain sol vent. if you happen to be laid off at the wrong time. >> hopefully we get to people before this happens. that's what planning is all about. they have the emergency funds. they have the ability to get through a situation like this without going in the 401(k) probably last place you want to go to. you know, certainly timing is important, but the more we get people planning, the less

sensitive we're going to be to that, you know, timing issue. but you spoke about retirement, there's no doubt about it that when you -- when we're living longer, and we have a retirement nest egg that is no longer being managed by our corporation or a government pension. we're managing it ourselves, and we're also responsible for taking the money out. this is a huge problem for a lot of people. where advice is really needed. how do you take it out in a nation is tax efficient and make it last. there's no doubt about it if you take more just when that big, you know, 2008 event hit, that can wipe you out.

there's lots of tbeeks we have to make. it's not just about getting that right. timing does matter. but our goal is to help our clients and help the american public be less exposed to those timing disasters. so before we start our next panel. we're going do another once of these alout audience to participate in a poll tps. the same deal as last time. text your answers. the question this time is how confident are you in your ability to make important financial decisions like

planning your retirement and buying a home? after the last question. so if you are very confident, we can text 664808 to 2233 or tweet@poll. if you are somewhat confident, you can text 6647809 to 2233 or tweet@poll. let's see what happens. so people are not confident. that's -- oh. oh. okay. it looks like we have a tie. [laughter] people are not -- oh. still moving.

it seems very close like it's not very confident -- that's rising. i think it's a bad poll result. i think people are not super confident in their own ability. that is interesting it seems to contrast what the poll says. i want to introduce our second case study. we have timothy frack. and i want to welcome michael her issue back to the stage. thank you so much. [applause] good morning. i want to acknowledge you are here until the bitter end. i appreciate that. i will promise you two things. my take on a lot of discussion today has been at least some has been kind of depress. ive. i promised you some optimism as we go to the final round here. i promise you i'll talk really fast. okay. all right. great. so let me make sure i'm using the clicker right. just a word about what is door

ways to dreams funneled. we're a non-profit organization. our mission to strengthen the financial security and low and moderate income consumers through innovating, ink baiting and stimulating new financial products. shorter version we're a laboratory. primary focus has been on savings which is relevant to the conversation today. you can see some of the folks we have the privilege of working with or getting support from. my way of getting started. savings is fundament to a lot of themes in the conversation today. whether you're talking about paying down debt or long-term. financial planning and preparation or the emergency fund part of the conversation. a lot comes back to that personal discussion and ability to set aside some money. right. so that's what we tend focus on.

and a lens to think about that problem is two halves. one is the landscape that we all operate in. do we have a good set of product choices and public policies and other tools to help us build financial security. and then the second half, though, is all the great tools in the world if we don't have some ability to navigate those tools to make smart choices. they're not going to be successful. we try to think about those two halves. let me run you through some specific examples. ly say part of the prior conversation was a government problem, a private sector problem. i think what we'll see in our comments it's both. and there can be a little bit of each. let's talk about one more public sector focused. how can we make saving easy? anybody know what the single largest transfer from the federal government to individual household every year is? that's probably true. [laughter] and second is social security in

the context of low and moderate income households particularly it's tax season. the irs sendous $300 billion every single year for house hold that a what with we might call working core, this is almost without exception the single largest financial event of the year. you can get 20% of your annual income in a refund that comes typically in february. that time of year. huge financial event. if we care about financial security and helping people save. we need to think about tax season. so what this illustrates since 2006, the irs is offered all of us the ability at the time we file our returns to say take this part of our refund and send it to a saving destination ira, savings account on whatever it might be. it's huge. you can make the decision once. the moment you find out how large it is. if you are a single working parent, maybe making $25,000 a

year, through a couple of part-time jobs grow your tax preparer you get $22 00. how much would you like to send to savings. that's the question that can be asked. what we found is a lot of folks don't necessarily have a savings product to send their money to. since 2009, after we ran a series of pilot tests. the irs now offers you the ability to put some of the funds directly to inflation-protectioned u.s. savings bonds. and that was an announcement that the president made in 2009 that the irs would begin the service. this is lead to life today for the three or so years four years the policy has been in effect, about 170,000 people have saved collectively, $65 million. importantly, 80% of those come from house hold incomes less than $75,000 a year. so while these are small amounts, on an individual household level, they are -- we think, the beginning of a saving pattern for a lot of people who had a difficult time beginning that pattern of

saving. we are now starting something new, which is to suffer a national promotion to bring awareness to the saving opportunity called save your refund. so i encourage you to check it out. if you save part of your refund through the splitting mechanism, you can win up to $25,000 for the choice to do that. it the result of education called saving act which is designed to preserve the set of policy and modernize it. all right. how many people enjoy saving money? all right. there's a chuckle. okay. let see. which one? okay. so we -- i'm glad we get a little bit of a chuck. it ill separates an important point. it in the trade-off or the tension between saving and spending with, the spending forces have a lot of advantages in their calling. spending is fun, it's immediately rewarding. it's also backed by tens of millions of dollars of marketing

effort. and really we haven't done the same thing when we think about marketing financial security and saving. so this is led us to an idea we call prize linked savings. and the basic insight rather than offer you a certainty of a modest return on your savings. i'm sure those who have savings account now modest it is in the current environment. what if we offer you a chance to win a life amounterring return. many of us are interested interested in making that trade. that possibility of a large return is much more appealing and more motivating to us than that certainty of a modest return. you know, behavioral economists will tell us we're not good odds estimators. it's using the insight so benefit ourselves. and, by the way, we spend in this country $60 billion a year on gaming. on lottery sales and similar products. 80% of which has been estimated comes from house hold living on

less than $50,000 a year. this is lead to a product called save to win. which is offered in credit unions. we ran that as a pilot in michigan with eight credit unions in 2009. saw a strong consumer response over 11 sthowrks people showed up and opened account. saved $8.5 mlt. it spread year date. we have 42,000 people across the country. where the pocket is offered open account and saved $70 mlt. this is lead to policy change in eight states trying to replicate the conditions that allowed this product in michigan. and a broader interest in this use of problem listic returns to make it save and make it frankly a little less painful and more exciting. we are seeing the possibility of state lotteries being engaged in offering savings products. which a quick factoid there are approximately twice as many locations to buy a lottery

ticket as bank bridgeses. when you think about the locations and who we are trying to reach the low, moderate income there's a -- appeal there. all right. as i said at the outset. the landscape matters we have seen a couple of examples of that. but we also need to make smart choices. what can we do about that. we've had some conversation today about financial education. financial advice. all of these things are relevant . in fact, sort of these which would you prefer? what do you think? are you more likely to be drawn to the pile of advice books or the game? i'll leave it as a rhetorical question. our insight has been that the game is probably going win for many of us. i don't know if we have a representative group in this audience. but most of us enjoy something that is fun and lead us to

create what we call financial entertainment. to be contrasted with financial education. financial entertainment is the use of new media, especially casual video games. to offer financial learning in an attractive, fun, and behavior-changing oriented way. we have a library of six financial entertainment game titles, you can find them online at financialentertainment.org. these are casual video games that are easy to pick up and play without a lot of time invested in learning what the game is about. one of them is available on a mobile device so you can be waiting for a bus and have a few minutes and open up and play a little bit of celebrity calamity. what we have done is take the broccoli and dip it in chocolate. if you want to reach millions of people with important financial lessons, that lead to new action and behavior change, we've got to think about this problem

differently. workbooks and earnest well-intended volunteers and highly specialized financial planners are not going to be the solution to getting an entire country to think differently about their finances. with our non-profit level budget we've been able, as i said, build six of these titles we put them online we've had over 400,000 show up and play the games. we don't believe that the best metric is hours of financial education. it's a lame metric. we were delighted to realize when we ran the numbers, that with average play times between 20 and 40 minutes per game -- it's voluntary. people show up and get excited. they spent 25 minutes on a game. we delivered 90,000 hours of financial education through the mechanism. we have evidence that it leads to changes in people's -- preand post tested knowledge. their attitudes how confident they feel about being able to make decisions and pull through to different actions. different choices they make.

of course the holy grail is new patted earn of behavior over time. looking forward, the agenda here to go more mobile. i mentioned one of the games is available on the apple iplaid form. we'll another one coming out this year. and increasingly breaking part the component of games. a term sometime -- [inaudible] and i believe ready to wrap up. thank you. [applause] >> well, i have to ask a question that appears on everyone's mind. how does celebrity calamity work? [laughter] >> in celebrity calamity you play the part of a run away spendthrift celebrity. you are their manager. your job to help those celebrities achieve their football goal -- financial goals without going insole vent. in some ways celebrities can be

a useful negative role model. >> absolutely. and picks up our target audience for the games were young women between the a i thinks of 19 and 32. one of the choices you to make is the motif. we thought it was a motif that would a broad -- >> we have almost ten minutes left for questions. let's open it to up the audience. anyone? in the back. >> hi. i'm dr. -- again. and all these are clever gimmicks. this may not be the right question for you, but the government subsidizes rich people who save money for retirement in ira and things like that. they get a big tax expenditure. does the government do anything like that for people who don't pay taxes which is half the country. don't pay federal income taxes.

they don't get any tax benefit? >> i think you're a right. what i can contribute there's something called savers credit. it is targeted to house holding, i believe the cutoff is 50,000. it's a policy design, as i understand it was to be a refundable credit. for people who do not have a tax liability, they can still, in effect, receive some sort of incentive to save money. the political process the refundability fellout. i mention it because i think it provides a team late for what might be what you're suggesting. a set of federal policies that provide a clear financial incentive for working poor households. i would add to that doing in the context of the tax code has a lot of benefit and, you know, back to my schematic of a -- if you sprinkle in a powerful financial incentive on top of the set of pipes and plumbing, you really have a recipe for

turbo charging by lowering income households. the second thing, quickly, there are people who spend a career studying this issue. there are a number of public policy incenttive make it hard for folks to save. so if you happen to be receiving public assistance, which, you know, food stamps there's been a lot of coverage. a lot of people receiving food stamps so you asset limits that mean if you exceed a certain threshold of savings you lose your public benefits. while we can understand where it may come from. the practical realty it creates exactly the wrong message and set of increfntive for people to build their own financial security. >> sure. >> question? all the way in the back. >> hi. james -- [inaudible] i'm a consult assistant -- i was a bankruptcy attorney in a past life. i want to go back to the point you made. interesting about the tax refund.

is a policy -- i was appalled i had client has that had large refunds during the beginning of the year during the bankruptcy filings. is the better policy to have adjust and have more per paycheck instead to have the saving screams that you had suggested? >> thank you. >> yeah. that's a great question. i guess i would answer this way and whether we think it's good or bad policy. the evidence is pretty clear it's a strong consumer preference to, you know, ineffect over withhold and receive large refunds. one piece of data on that there was something -- are folks fooling with the earned income tax credit. it's a -- you can take an advance on the earned income tax credit which was a policy designed to peek the idea. twont be if you could gate little all yearlong rather than waiting for a random event at the end of the year. and the answer was people didn't want to did that. they like the idea they don't know how big it will be but there will be some reward.

i think it's a fair question to ask what we might want to do to adjust policy. in the meantime, you know, our focus has been trying to make the most of that reality that people really want to see those large refunds and decide what to do with them. >> i think we have time for one more, perhaps. yes, sir? >> henry. research -- i wonder if the government can take a lesson in this like u.s. savings bonds. the rates for savings is very low currently and projected to stay that way. in time it might change. however, years ago it paid a fairly decent rate. times have changed when i was a you know man. people got savings bonds but after that say that shifted to the ira if they could afford to put money away. however many of these older programs are still available and maybe the lottery angle might help. you can have an annual prize tied to savings bonds.

try to help the government balance its budget in a way. >> well, we're big believers in the savings bonds program. it's sort of fallen out of fashion, but inflation protected bonds are paying -- compared to i won't say the name of my bank. i think my savings account is paying five. there are good savings product with no fee finance doesn't matter if you've had a bad credit history or bad history with the banking system. there are tens of billions of americans who cannot open a bank account or a savings account but they can buy savings bonds. i think it's fallen out of fashion. unfortunately there's no marketing budget left for the saving bond program. i think the it's a powerful opportunity. to extrapolate at slightly bigger message. the government is spending. i like the observation we lost the idea of being a country of thrift. when john wayne and bob hope and

the federal government were telling us we should buy a savings bond there was a message that saving was a prudent thing to do. i think that's a sort of extra layer we can get by reinvigorating that public savings program. >> great point. >> anybody else? i think that brings us to the end. thank you very much. [applause] i want to say thank you to our participates. i thought it was a great day. and also to your audience both in the room and watching via live stream on national journal.com. a special thank you to al state and sanjay for supporting this important conversation and fti and ed riley for the poll presentation. have a great weekend and a great holiday. thanks. [applause]

with news over the weekend about the u.s. and iran's nuclear agreement, british foreign secretary william heying said he'ded you line the details of the plan that would lighten economic sanctions on iran and exchange for constraint on the country's nuclear program. he spoke before the british house of commons and talked about the behind the scenes efforts to reach a deal. and he warned against the countries taking any actions that undermine the agreement. [inaudible conversations] >> thank you, mr. speaker.thankk thank the foreign secretary for -- [inaudible] it is my turn to expy appreciation to the secretary for the personal interest which

you put in which i know iranians are the tot negotiators. they extract every last ounce of negotiations in the world. if he accepts, it is crucial that what undermined the agreements which we have made between 2003 and 2006 -- there was a desperate patch that was developed between hard-line and hard-liners in washington. situation where they were replaced by president i meant in a job. can i ask this? it is that prime minister --anyahu's efforts and then

the united states congress, invented president obama from continuing with the negotiations. will he make clear that in these circumstances, the u.k., germany, france, and the eu will have to detach themselves from america and reach their own conclusions? >> i agree with them. i agree with his remarks. it is important to maintain momentum. over the last two weeks, during the 10 day cap the between negotiations that we held -- it brought to a great deal of criticism. both within iran and within the u.s. congress and elsewhere in the world. this could easily have made things complicated. they reached this agreement this weekend. so, when one considers the work

that needs to go into this agreement and the comprehensive and final agreement, it is vitally important to maintain that momentum all the way. that the united states have made can all be implemented by executives. that does not mean that the debates in congress are over. what happens in the u.s. congress is up to the united states. you can be sure that the administration is extremely strongly committed to this. the leadership and persistence of secretary kerry has been crucial. the clarity of president obama -- it is very clear. we do not need at this point to start looking at the other scenarios. years ago we were listening to

the crystal ball and thought that some, you know, college campus would be streaming, you know, threat -- netflix on an iphone to watch a movie. i think this is happening we have a huge issues out there that the technology and -- again, you know, you know, not wanting to date yourself. i remember in northwest ohio, you know, depending on the day if the attenthat on the top of the house was working right you had two channels. sometimes you didn't get any channels because you depend on the wind and the light and everything else. and we have -- the industry has changed so rapidly. and i want to make sure that we have things out there that within the regulation and the laws on the book that insure this innovation because if i'm not mistaken we have created on that end of the industry just on the cell phone side about 3.8 million jobs. technology issues in front of the current congress.

tonight on ""the communicators" at 8:00 p.m. eastern on c span two. -- c span -- c-span 2. ♪ ♪ on november 25th, 1963,

approximately 1 million people lined the route of president kennedy's funeral recession. millions more watched the live television coverage. starting want to at 8:30 on c-span2, watch nbc's coverage of president kennedy's state funeral. last week the "the wall street journal" ceo counsel held the annual meeting in the nation's capitol. among the speakers was paul ryan. he's been mentioned as a 2016 republican presidential candidate. he talked about the current budget negotiations. as well as an immigration bill in the house. this is a half an hour. ladies and gentlemen, the chairman of the house committee on the budget, paul ryan. [applause] and the editorial page editor

vice president of the wall street journal. [applause] hello. so -- you can -- well, welcome, congressman. thank you for being here. we know you a friend of the co counsel before. it's great to have you here. so i want to bounce off you at least a start a couple of things the president said. get you to respond. he -- spoken pretty strong terms about the problems we've had with government by -- governing by crisis. i think he's refer together shut down and so on. he expressed some optimism about this budget in particular avoiding a repetition of what happened the late unpleasantness. can you tell us, right now, here that there not be another shut down or another debt limit --

>> i'm pretty comfortable in saying how we avoid the shut down whether or not patty and i can go to agreement with the budget agreement. or we just have what we call a continuing resolution that keeps going. either one of those two scenarios will prepare and therefore we won't have a government shut down. the debt limit is later on. we don't know the timing of that. i don't know if you had jack lew here or not. we did. >> he was able to do what we call more extraordinary measure. it can be the end of the surmt as late or spring. but i do not believe -- >> the debt limit. >> it's going go on later. these are discounterred events and i don't believe you have a kind of theatric surrounding that as well. >> why do you think it will be different this time within your own conference? because the speaker didn't want the crisis that happened the last time. i think and correct me if i'm wrong, i don't think you did. >> that's correct. >> so but yet you couldn't control your own members? >> well.

how can you prevent it from happening again? >> obamacare is here now. [laughter] so, you know, the reason this happened from, from our perspective, was now people understand why we fight obamacare so much, i guess. you have to understand the mind set of a house republican going to this. we were doing the oversight hearings, getting the testimony, seeing the program was not ready for prime time and seeing the damage that was coming to the people we represent and want to do everything we could to stop it. now many of us didn't think it was the right way to stop it. it's very clear that a government shut down does not stop obamacare. the government did shut down and it didn't stop obamacare. i don't think that's going to be repeated. because that is in the past, and it's clear it won't stop obamacare. the thing that we feared would happen are now happening, and we fear that the worse is yet to come with respect to obamacare. that will not get in the way of a government shut down. we will keep the government funding at current levels if need by at the day and not have

a government shut down. >> it won't fire up your members rank and file and say we have a greater -- >> no. does not -- disconnected. obamacare is entitle element, discretionary spend. they're not related. >> okay. you're negotiating with the senate democrats and their position is one of their positions is that all you need to do to get a deal, or at least to get them to move on entitlements it to eliminate tax expenditure that tax subsidizes they call them. for many -- for example, carried interest. raise from the capital gains rate to the normal income tax rate. if that is what you -- all you need to go do to entitlement reform. why not put together the deal. >> it's not what they're saying. any significance whatsoever even with that. they're not suggesting it.

point number one. they're signaling they're not interested in entitlement reform of any shape, form. >> that's not their official position. their public position is you give us the tax expenditure we'll give you something on entitlement. you're say -- >> i adopt see that. >> you don't see that. >> let me back up to what i was going to say originally. which is if this becomes about raising taxes we're not going get anywhere. the president already got another big tax cut in january. $600 billion the number is higher now that we're a year in it from fiscal cliff. point number one. point number two, we are serious about tax reform. ways & means committee is moving tax reform legislation. max baucus is working on legislation. that's where it should be dealt with. we don't want to shortchange it. if we take tax loophole and put them in the process we are shortchanging it. our goal to get our rates down. our goal for businesses to get

to a 25% rate and internationally competitive system. we don't want to shortchange it. the loopholes are needed to bring the rates down in order grow the economy and get people to back to work. on the spending side, we are willing to trade some spending cuts that are across the board in crude which is sequester for smarter spending cuts in the other part that is unreformed. that is trade we're willing to look at and discussing right now. >> you are willing to ease the sequester limits in the near term -- >> if entitlement reform. >> is there any progress on that? >> we're in continual conversation. we have made progress. it we better -- farther where we were when we started. we have defenses of opinions. you mentioned one of them. we are going to try to work our differences. the way i look at this. the wot -- bottom line what we ought do is something good for the deficit. are we reducing it or not. that's point number. number two, more than happy to

cut spending in a smarter way to replace the crude across the board cuts. and do in a way that produces more deficit reduction. that, to me, would be a step in the right direction. it shows that it can work and function. if and only we do that i think it's probably a good sign of confidence. i think it would be nice to show they are on a basic level. we're not raising taxes in order to do that because we think it's bad for the economy. hurts tax reform, and takes pressure off the fiscal christ plin -- discipline we have here. not on the grow part of the budget and like to bring some reform over there if we want to ease some of the discretionary problem.

growth reduces deficit. faster economic growth bring in more revenue which reduces the deficit. we have tried the bureaucracy summers playbook for five years now and look at the anemic growth we have. the sort of demand side spending stimulus it is not working. it brings higher deficit which means more tax increases and puts them on the future. and done at the expense of prow growth policy like lowering tax regulatory reform certainty. so all of this sugar high

temporary stimulus adds to the uncertainty facing businesses props up our tax rates, raises our deficits which adds to more uncertainty and the fact of higher taxes. real pro-growth policy is what we rye to produce through ways & means and the house. the competitive tax code that would be growth. look at the incredible energy boom we can have in the country. energy probing on federal lands is going up. it's going up on private land. what if we can respond with the federal lands and regulatory certainty which stop from happening. those things we think are growth. those things produce faster economic growth more jobs and more revenue and lower deficit. >> you are not pry paired, then, to declare victory at least in the short term on the deficit. you think it has to be a priority for your party in the government? >> yes. but we don't see them as trade-off.

.. one minute we hear the speaker said no votes this year. somebody else as well there might be votes this year and yes we still want to get this done before the election but maybe not until after the primary. the final season for republican candidates. where do you stand on immigration reform? is it something that you can see getting done with maybe starting with some votes in the house this year?

>> i am for immigration reform and i'm for what we call the house version of immigration reform. we won't take the senate bill. i think this is also pro-growth. i think, look i can go until holt ng about earth rates and labor markets in future workforces but the point is we are denying our country from having a lot of intellectual capital. smart people who are being educated here to help us create jobs. if we do immigration reform right that too is progrowth policies so i'm advocating moving forward on immigration reform in a step-by-step way and we will do it in the process that guarantees we will not come out with the result of the senate bill. that is what the speaker was talking about the other day which is the way the house is going to work and proceed on immigration reform is a step to step approach. no offense to the administration, we just don't trust their word on this. it has to be actual and verifiable more and interior enforcement for the things can be triggered.

we want to move from what we call a chain migration family relative based emphasis to economic base of people come here for talents and skills to create and fill jobs and we want to make sure that we have a system that does not grant amnesty that does not create a moral hazard and helps respect the rule of law would dealing in an intelligent way with the people who are documented. we think there's a way to do that in this step i step approach which is in the second bill. it is an amnesty and transforms her system from a family-based system to an economic system and that is seven or eight pieces of legislation. i don't think -- look i wanted to do this knowing the schedule as they do being involved in budget negotiations which we will take up early december. there is literally not enough time. >> so you don't think there will be any votes? >> we do not have the time. >> so when does it start?

the longer you wait the harder just to get done in the closer you get get to november then all bets are off. >> i agree with that and i want to get it done this year. it's not because we don't want to do it. we are literally losing our time because we have budget negotiations that have not been resolved and we have a farm bill that's out there so we literally don't have the space on our calendar to do it but we are serious that the house will, we want to proceed with immigration reform. we will do it in a way that i just described and do it in a way that guarantees we don't come out with a senate proposal. >> is there a majority in the house republican congress, majority of republican members for a pathway to citizenship for the 11 million people who are currently undocumented? >> i would say no because the way you describe that is as if we are giving somebody a jump in line as if we are getting an undocumented person it halfway where they can go in front of a person who is here legally. here is how i describe how i

think we have the majority and i don't mean to be too long-winded here but what we have been envisioning is a person goes on probation and like any probation period they set aside the terms of their probation, assimilatioy a fine, english civics, can't be on wealth or for at least a decade, have to have always had a job and after the borders verify the secured e-verify is up and running after that time after period of say five years then you get out of probation and during that time you get a work permit. you can keep the work permit and if you want to get in line to get a green card like any other immigrant you can get enough line no special line, a line like any other immigrant only you were at the back of that line because when you want to preference the person he came here legally and did things right from the get go but we don't want to give a person a came beer by overstaying

therapies for a jump in line. that is not a path to citizenship and that's not denying that person. who gets right with the lawn doing the things right to get a green card. >> once you get it green card that is a path to citizenship than half of your conference will call what you just described amnesty. >> i don't think that's amnesty because it's such a laborious process. it respects the rule of law and the reason we want to map it out this way is because we do not want to create a moral hazard where we are telling people you can wipe yourself clean and decade. we want reform to make sure we are not in the same place years from now. we never had enforcement they came with illegal immigration fixes so we won't be enforcement guarantee that it works and is actionable along with the change in the legal system from change economics a system for the undocumented to get right with the law but in a way that does not reward them for having broken the law. we think that's the way to do it this is my opinion, i believe

it's very different than the senate approach in that way i think the majority of republicans will vote for it because the alternative is amnesty and we won't do that. you're not going to be of the find 11 million people and deport 11 million old and that is about a 15 year timeline before you can become a citizen under what i just described. i hardly call that an amnesty. >> you watched i'm sure the virginia governor's race ken cuccinelli the republican candidate won the white vote by 26 percentage points it lost the election in one reason he did was because the chair of the electorate was 7% when it was 78% four years ago, reduced by eight points. can republicans continue, they regain the presidency without doing better among minority voters and how does the republican party do that?

>> well, forget about electoral college. forget about demographics and what republicans should do. what is the right thing for our public policy? that is to fight for every single person's vote. those are the ideas that work for everybody so where i believe we have a lot of room for improvement as a party is to show we have better answers for fighting poverty. we have the 50th anniversary of the war on poverty and it's not working. poverty is winning. 46 million people in poverty the highest in a generation. you and i have known each other for a long time. better ideas for fighting poverty in revitalizing our cities and we have to be constructive on immigration reform that works is good for the economy and respects the rule of law that is inclusive and brings people here. immigration is a good thing for our economy and it's that's what the country has been built upon so i think we need to speak to all of these issues not because it's good for some political

calculation but because it's the right thing to do and it's how we revitalize the american idea. it's how we get back to pro-growth equal opportunity upper mobile society which is what america has always been. we have to show solutions that speak to that and speak to every person a matter who they are or where they come from or what the color of their skin or their gender is. to me that's the right thing to do and if we do that then those political benefits hopefully will improve. that should be the reason why we do it. see you were a national candidate last time. there is a lot of discussion among republicans and you hear it all the time that the next republican nominee for president in 2016 has to be a governor, has to be somebody like chris christie or scott walker john kasich. do you agree with that? >> no. [laughter] next question. >> why not?

let me play devil's advocate here. you have this mess in washington. your approval rating in the congress not yours personally but is 12%. the predictor of another public electorate looks at that and says i don't want to redo that. just change chairs with somebody else from the other party. let's get somebody who has a reputation for governing and put them in the chair. >> a resume is not as important to me as the person, their ideas and their track record of reform and i would like to make sure we get a person who will be a standard there that can go the distance. i am familiar with what's going the distance means and it means a lot. it is not easy to do but also somebody who is going to be a good standardbearer who is going to be strong on principles it is the bomb ideas and gives what i

call full spectrum conservatism that speaks to each and everybody. i believe this country has a handful of years before we go down the european path before he becomes a social welfare state. we have got to turn this growth engine back on. the good news in this is it doesn't take a lot to turn things around to get this country growing again. i don't think we are going to have it with this administration we just won't. i don't think the president has the philosophy or a disposition to do that. i'm hoping we can do a few things to make this divided government work but to fundamentally fix what he is fixing is doable but you will have to take somebody who knows how did do it -- that could be a governor or someone from the federal side. who are they and what are their gifts and abilities? that is what matters to me. >> you were out in iowa recently no doubt investigating the ethanol program. you did say you would look

closely at making a -- of yourself. what is your mental check list? what are you looking at when you decide to make that decision? >> i was not there putting my toe in the water. i was keeping a commitment to governor branstad to -- almost a year ago. >> that's what they all say. >> wisconsin is close by. the way i look at this is this. if i'm going to do a job in the majority is the chairman of the budget committee as the leader of my party trying to fix these current problems i cannot let my mind because it with personal -- because if i do i think i will make the right decisions that i think are necessary for governing. the point i'm trying to make is i'm going to make those decisions later and right now i have a job to do for the people who elected me. i'm going to focus on that and

after that is done then i will take a look at those things into the soul-searching it takes to make the decision. i have policy ambitions. the question i will have ask is do i have president sized political initiatives? >> that is the question a lot of people would ask of you. to win the white house and get the nomination you have to really want it and people say we don't know if he wants it. >> i've got a young family. i've been a policy guy in congress. i focused on my family and policy ideas in congress and what is the battle of ideas. you can do that and be a good family man. that has been very important to me. jan and i had a long talk about going on the ticket whether we could still balance that and we believe we could. it is an 88 day race so we will have to make that decision but the point i was making from the beginning, that i made in the

beginning was i have important work to to do and i need to focus on that work and i don't want to cloud my thinking based upon what this would juxtapose me to this person in new hampshire or iowa. i want to do my job right now that's what i want to focus on right now. >> do you have a timeline? >> not exactly, no. >> without one only get a few questions from the audience. questions for congressman ryan. none at all? he has to totally convinced? yes, please. right here. get the microphone. >> governor christie last night spoke directly. governor christie spoke directly last night about the need to

reach across the island if you do get get 70% of his agenda passed in a compromise that was moving the stated his case 75%. listening to your comments on immigration it wasn't clear that there was a mindset on a bill that i think on an issue that most people in this room would see is quite critical for the future, that there is that spirit of a willingness to compromise and get 70% of the republicans agenda in 70% of the democratic agenda in order to get something both sides can live with. do you see that spirit in willing to compromise? >> we talked to democrats and we understand their. there are certain bottom lines that are important to us just to pass the bill. more important to maintain our principles so yes do we believe we need to address visas high school close killed agriculture? absolutely. do we believe we need to get the enforcement interior enforcement

border enforcement? absolutely. do we believe we have to have a viable -- and do it in such a way that protects the rule of law does not reward a person for cutting in line? villa and i think there are democrats who agree with us on that. those basic principles i believe the president and his party would be crazy to walk away from and so i think there's a way to do this but again it goes both ways. we are not going to just -- with the senate bill. we have made it very clear we will not take that bill and we won't take a process where it leads to that bill. we will do a process like we have described which by the way i think the country prefers that we do these things step by step so they and we know what we are voting on. look at obamacare. these multipage bills to the floor and no one reads them and look what happens. we don't want to do that with any issue but a gun -- little on immigration reform. >> then why not try to do what you can do, the d.r.e.a.m. act

for example why not do a stem graduation? even if you can't get the grant enforcement provisions and so one just do those. if you would get three or four of those it would be tremendous for the economy in the country. >> that democrats will not support and go with us if we just do that so working with democrats they won't even support our stem bill if we don't bring other bills along with it. but we want is a step-by-step approach which brings these bills coming out of the judiciary committee still working on bills there and do it in a time where we can deliver it. if we are trying and rushed just because it's the calendar year we don't think that's responsible. we don't really have the time to do that but the other part of it is there are big problems that need fixing across the immigration system. we will do it in pieces but we want to show all these pieces integrate and work together so we are doing it in a way that

smart. we want to do it in a way that we can make sure that we won't jam the senate bill so the process matters as well. >> the next question. yes please, in the back. >> hello. kloss kleinfeld. when the debate, when we shut down the government and had the debate around the debt ceiling it sent shivers down the spine of almost every business leader around the world and i think also many consumers. now we have resulted it only to shift it so come january, come the next deadline would we have to expect? >> that is why wasn't a big fan of the way it was done because it was just a canon kicking exercise. here's what sends shivers down my spine. is that we go into next year with the federal reserve begins

to taper and begins to normalize policy and perhaps interest rates began rising and we will have not taken advantage of this low interest-rate interest rate, to get a down payment on our debt. we know from the cbo that are debt is about to take off in a few years and never come back down if we don't do anything about it. we have 100% increase in entitlement population is 17% increase in the working population paying for the programs and the cost of the programs they use are growing 68% a year. that's a whole lot faster than the economy wages or inflation so this is our concern which is what we get from the president is just give more debt give more debt without dealing while the dead is rising so fast. we want to get a down payment on our debt row bums and the reason we want to do this is because if we do it now we can do it on her own terms as a nation. if we wait until we have a crisis it's just like europe. we are in panic mode cutting the safety net reneging on promises

at a higher interest rate format and doing it in a crisis. we want to get ahead of our problems and we also think that's good for growth. we think if we get debt reduction under control now that that's going to bring certainty to the credit market hits and interest rates will normalize at lower rates than if we otherwise didn't get a budget agreement they the only kind of leverage we get with this kind of the divided government that does not want to reduce the debt, that does not reform the drivers of our death are entitlement programs is this. that is why we want to have serious conversations about what is going to take to get a down payment on this problem. i put in op-ed on paul's page two months ago saying there are all these type -- entitlement reforms that the president put in his budget. that will give us a start. means testing. that makes sense. we are for that.

the problem is we do not have a receptive audience from the other side of the aisle for these small minimal thing things that we have to look where the leverage is to get the down payment on the debt. we think that's that center nations interest and if we don't do that, if we lose three years not getting this debt under control which is good for growth in credit markets and good for certainty, then that's three years where we are digging a hole even deeper and the ultimate solution will be that much uglier when we get around to fixing the problem. that's why. >> we have time for one more right here. >> bill with high marks health. can you envision your party, the republican party party, coming forward with an alternative to the affordable care act that incorporates many of the provisions, the popular provisions are provisions that you think will work that could be a viable solution to some of

the problems that seem to be on the rise with the law? this year? >> well, -- this year? many of us are working on alternatives but it's literally a function of running numbers and getting them in shape. i don't think this year big reforms are ready and that's just a logistical point. the republican study committee has a bill were complete obamacare replacement that has been released that has 100 sponsors already. tom coburn and i had complete alternative patients and to reforms that we offered when obamacare was being delivered so before during and after obamacare it was delivered in past we put out comprehensive patient-centered market-based plans and i do envision is doing so again. to the other part of your

question i believe we can come up with a system that has guaranteed access for affordable health insurance for all americans regardless of whether a person has pre-existing conditions or not. without this costly government takeover without this big weather database without government running health care without government mandating what you can and cannot do. the problem the president has izzy jammed through a one-party rule and there are plenty of republicans offering to work with him at the time for a bipartisan solution. now we have what we have so can we have a system where people with pre-existing conditions have protections? cs. can we have a system where we get equalized tax benefits for people who are low income or on medicaid can get access to affordable health insurance? cs and can we do that without this big government takeover without government forcing you to buy the insurance that they want you to buy? villa.

i don't know if we'll get that with this president that the republican party will clearly offer a better system. the health care inflation and access to affordable care regardless of your health condition. congressman ryan thanks so much for joining us. >> thanks for having me. [applause] is my great honor and privilege to be here with larry summers.

when larry summers was two years old his parents took him to his pediatrician who happened to be my father and according to larry's father a story he told my father's retirement party's larry's parents expressed concern that larry wasn't talking very much a two years old and supposedly my father's response was i wouldn't worry about it. once he starts, he will never stop. [laughter] so with that. >> moving right along. >> if we have been able to pose questions i would have asked you this question on the screen but i'm going to ask for a show of hands because it's relevant to what i want to talk to larry about. if you had to pick the top priority, the single top economic priority for the u.s. government right now and i gave you a choice between reducing the long-term deficit, and doing

something to spur growth in the short-term and the long-term, deficit or growth and you only get one vote, how many people would choose the deficit overgrowth? how many people would choose growth over the deficit? larry, i have inherent in washington for 30 years and for much of that time we have been obsessed with reducing the deficit and that has been particularly true in the last few years. do you think that's a idea and a lot of -- so do a lot of people here. why? you guys are right, they are wrong. we have had 10 bipartisan budget processes. we have had zero bipartisan growth processes. we have had budget summons up the yang yang. we have had no growth summits. somehow and frankly the business community is complicit in it he could they have been substantial

financial supporters and encourager's update. we have gotten the idea that addressing the deficit is the defining challenge facing the country. there are three relative realities. first on the current forecast the debt-to-gdp ratio will improve over the next decade. the debt forecast looked just about right on lying with the way they look after the 1993 budget deal. for 10 years this problem has -- second basing policy on these forecasts is longer than that is kind of the crazy thing to do. if you take the confidence around the deficit forecast, not 20 years out, not a 95% confidence that five years out

at a 90% confidence interval that confidence interval was 10% gdp wide. it's plus or minus 5%. of the global climate change people were telling us that it was negative three degrees plus six degrees we wouldn't be acting on the problem. we do not know what the deficit is going to mean in the third thing in the most important thing i think is that if you take the longest run deficit, you take the official forecast if we increase the growth rate by two tenths of 1%, two tenths of 1%, you solve the entire fiscal gap problem. i'm here to tell you that in a country that is stifling entrepreneurship in a variety of ways, in a country that is starved for public investment that lets kennedy airport languish in the way we do, in a country that is missing a huge opportunity on immigration

reform, and a country that is maintaining a regulatory and tax environment that surely doesn't write nice to confidence is cheapest form of stimulus, increasing the growth rate by more than two tenths of a% is easily attainable. the truth is if we get past our current perhaps protected doubt with secular stagnation and get the growth rate up, the debt problem will stay in control and if we continue to be a country that doesn't increase the fraction of adults that are working, that doesn't catch up with its gdp potential, that grows at 2% or less we can have all the entitlement summits in the world and we are gradually going to accumulate debt and have a serious debt problem, and so we just have gotten our focus to the wrong thing. we should he focusing on growth

because growth creates a virtuous circle which creates more growth and a growing economy employers were carted to train the next generation of workers. in a growing economy there are more ladders for kids to get on which puts them in a better position to lead 10 years down the road. a growing economy there are more profits that can be in -- be reinvested in r&d and long-term capacity. a growing u.s. economy is a stronger world economy which is more likely to be a successful world economy. that is where our priority should be and we have just in my view i'm sad to say, lost track of it as a country. >> why is it wrong to say that we know we have an aging societt promises that are going to be expensive to keep an wouldn't be

prudent to do something about growth in package that with things we know take a long time to save money and do it now rather than bequeathing the problem? >> there were some real problems in the kitchen -- they were just the wrong problems to be working on given management only had so much attention that it could devote itself to. it's the same thing. it would be better to be thinking about a range of long-term adjustments about 2035. it would be but we really can't do very much. we have a lot of difficulty passing any legislation so in that context the right focus is what on -- what is most important and what is most important is that things that contribute to growth. what is surely necessary as things that contribute to growth. i think the odds are that we are going to need to make entitlement adjustments but given the uncertainties in the

forecast, these forecasts are wrong by 5% of gdp all the time. they were wronged by 5% of gdp on the right side. they were wronged by 5% to gdp on the low side. they were too optimistic in this period. they are wrong by 5% of gdp all the time and when people are talking about entitlement reform they are talking big numbers. they're talking about 1% of gdp. they're talking about 1.5% of gdp so yes it's the right thing to be inking about but it's not nearly as important to spur growth and one other thing that we should remember. again it's the right thing to be doing but you know if you contribute the maximum you are legally allowed to every year from the time you are 19 until the time you're 65 your social

security benefit is less than $40,000. and so yeah or maybe a case that we need to adjust the format in various ways but how excited should you be about the central national project? cutting those benefits for the best of the social security recipients from $38,000 to $36,000 rather than figuring out a way to grow the economy faster so they can be more benefits? the right debate to be having is not a debate about what the best way can to contain a budget deficit is. it's a debate to be having about how best to spur growth. >> you gave frightening phrase in your answer about secular stagnation. do you mean that we are at substantial risk of having an economy that perks along a 2% growth and has one in six men

between 25 and 54 along the sidelines of the labor market for years to come? >> i'm not predicting it but i don't see how you can look at the data and not say that is a substantial risk. four years ago right now financial repair had happened. the tarp money had been repaid. credit spreads had largely normalized. there was no panic in the air with respect to banking solutions. it has been for years. we have not grown to share of adults who are working in the united states at all since that time. we have not gained at all on the potential of the economy, and so the growth machine we predicted,

the forecasters have been consistent. absolutely consistent. a return to accelerated growth months from now has been accelerated forecast. it has always been wrong and it might be right this time. it could be the residual thinking could be right that i don't see how you could be certain that it's right great and if you look back there is a troubling feature that seems to be experience before this crisis and that is what is cause me to become more alarmed. think about the 2004 to 2007 years. we had what consensus opinion now thanks were excessive budget deficits. we had what consensus opinion now thinks were substantially excessively easy monetary policies. we had what universally is regarded as having a massive improvement to excessive set of

credit expansion. we had what is universally regarded as having an inordinate credit bubble or housing bubble which created a false impression of wealth and created fast and excessive infrastructure. you might think that with all those things going we would have an economy that would be overheated. but if you look at the unemployment statistics, you look at the inflation statistics, if you look at the growth statistics the economy was bubbling because there were bubbles all right but the underlying real economy with the huge support to demand from all of that was not overheated by any stretch of the imagination. and so it has now been a decade since we have grown at a rapid rate in a remotely healthy and sustainable way.

that it seems to me has to be the deep concern as you look to the next decade. things happen. i mean when i came into the clinton administration in 1993, we did a comprehensive exercise. the treasury was part of that, the fed was part of it, the imf was part of it. we asked all the outside forecasters, looking to the long run there was a debate. there were pessimists who thought japan would grow by 3% a year over the succeeding 20 years and there were all dennis who thought it would grow by 4% a year over the succeeding 20 years. it has in fact grown by about .6% a year over the succeeding 23 years and so gdp is only slightly more than half today of

what we universally believe then because permanent stagnation was kind of inconceivable. now in japan what happened was growth was very slow and then after a while everybody got used to it and stop calling it a demand gap and they started saying it was all that could be done and to some extent that became true because after all those years the companies didn't reinvest. the companies lost their mojo. they warn in a position to compete side of certain point supply came down to demand and you just got used to the idea that japan was a different kind of growing company. country. we are already defining our aspirations as measured by potential gdp way down so a few ask is there a risk of this, absolutely. does the risk --

does the prospect of the same is likely or more likely than the high optimism scenario where we go back to an era of 4% growth? i have to say between the pessimistic scenario and the hi brock domestic scenario i would choose the pessimistic scenario. i have the idea that things have a way of working out in my guess is that it will be better than that at the things policymaker should be obsessive about is the risk of the secular stagnation. that is a much more urgent threat to every american interest than anything about social security benefits in 2035 that is a much greater risk to american interest than any in about the emergence of hyperinflation coming from monetary policies. that is where the concern not to be.

the gap between winners and losers in our society is wide by historical measures and has been widening. a, should we worry about that and b, if so what should we do about it? >> we surely shouldn't worry about it. if the only thing that was happening was that, i would argue that we should be worrying about it that i would understand why other people would feel that is what the market is doing and you shouldn't make that be a preoccupation. but here is what is really scary. for 240 years since george washington, it has always been true that we became a country with more equal opportunity every generation. that is no longer true in the united states. the gap in life prospects between the children of the rich and the children of the poor has

widened over the last 40 years. the gap in the college attendance rates between children of the rich and the children of the poor has widened over the last 40 years. it's not that we don't know how to make progress. if you look at the achievement gap between black and white students, that achievement gap in 1970 was twice as large as the gap between the children of the rich and the children of the poor. if you look today, the achievement gap between the children of the rich and the children of the poor was twice the gap between blacks and whites, so we know how to make problems with 40 years of effort. we have a long way to go but with 40 years of effort we have made enormous progress with respect to civil rights but it

does dubois said the problem of the 20th century was the caller line, the problem of the 21st century is the class divide them what it means for opportunity. so a widening income distribution combined with more and more ways in which the fortunate can advantage their children i think is poorer -- profoundly corrosive. what is it that should be done in? we need to find ways to ensure that the educational opportunities open to every kid are like the educational opportunities open to the kids of the people in this room and we are not close to that as a country. we need to make sure that where there are slots to be given

whether it's the government giving rights to spectrum or mining rights or whatever it is, that those processes are open and inclusive and open to everyone and are not processes that award the fortunate. i have written a lot papers about the important incentive effects of taxation and i believe that we cannot punitively tax and we cannot go back to the tax rates the country had in the 50s and 60's and the 70s, but i am here to tell you that there are substantial set of loopholes, special interest privileges and the like that distort the

allocation of resources, and make the economy functioned less well and also act to reify and to reinforce inequality and serious tax reform that went after those inequities could both make a fair economy and make an economy that was --. >> my last point corporate taxes ought this is something that people care about. what would you do if he could write the corporate tax thing and how would you handle the question of overseas earnings and what's the right way to do that for the economy? >> in dole's rate for a minute if you will in an analogy. suppose you've got a library and the library has got a lot of overdue books. one thing you could do is you could have amnesty where people got to bring back their books and they didn't have to pay a fine. that would make sense.

another thing you could do is you could say we are never going to have amnesty and you better bring back your books because no longer -- i matter how long you keep your books you will never have it. that would be harsher but that would make sense too. a really idiotic and to do would be to put a sign on the door of a library saying no amnesty now but stay tuned, there might be one next month. that would be the dumbest imaginable thing to do. what has been the u.s. corporate tax debate for the last five years? it's been exactly that. no break on repatriation now. the constant hope that there may be a break on repatriation in the not-too-distant future and so why would anyone bring back their money in the face of that? what should we do? i think the principle is clear. you can call it territorial with

a minimum and there are a lot of different things you can call it. we should eliminate the distinction between repatriate profits and nonrepatriated profits and we should establish in a balanced-budget way a minimum tax on global income. and so whether the rate would be in the neighborhood of 15%, you pay that if you brought your money back. you would pay that if you left your money in ireland and there would no longer be an incentive to keep money offshore and if you did it right there would no longer be -- they would not be any revenue loss to the government. but look, there are things we need to fix to stimulate investment in the country. but i don't know that much about multinational business but here's something i think i do know. if you measured it right, the

places abroad where the american companies make the most profit would be places like china, japan, germany and france that have the economies. but if you look at their tax returns, the places that show up having the highest profits are places like the netherlands and ireland and the cayman islands. and that really shouldn't be that way. it really doesn't need to be that way and it's not only making the country more competitive for creating jobs to have it be that way. so the principle is don't try to raise more money but try to raise money in a much better way and certainly don't keep a set of uncertainties that all but forces everybody to leave their money abroad. >> i can keep going but do you have a question of?

healthcare.gov is a disaster. how much damage has that done to the trust americans have in the ability of the government to do anything? >> we will see. he can't be good. [laughter] look, this is an unhappy tale. many of you know from your own experiences that the right general rule on large i.t. projects is take what they say, double it and then move to the next time so days become weeks and weeks to come on. i can continue this sequence. and that is true when it's done in the private sector and there is no organized constituency. when it was done in the public sector there was a massive

organized constituency that organized as best it could by objecting to the procedures and so forth. it was an extraordinary difficult task whose difficulty was massively underestimated and i don't think there's any legitimate excuse for how badly it was underestimated and i think you have to say that if you look at the capacity of government to do things you have to be less optimistic about that than you are today. i think it's a huge imperative to do something that will give confidence and as i wrote a few days ago, the great danger in a moment like this, the great danger for a football team that is down by two touchdowns early in the fourth quarter is that

they will abandon their playbook and start throwing hail mary's in every direction and usually that's a good way to end up down by three touchdowns. the great danger in a moment like this is it will promise days when you'll have for salts and he will make confident things about what's going to happen next and you will try to jerry rig something rather than recognizing that given the depth of the whole you were and it's going to be very difficult. i think this is going to take, as difficult as it was to do this right in the first place it's going to be more difficult to fix but i think it is hugely important that it effects. at the same time, i do think that we do need that kind of compact in this country where we debate things and we debate things and then only come to the conclusion for a while everybody tries to make them work and if

they don't work then at a certain point we draw lessons from that but those who try to bring about failure and then say look we saw failure in that therefore we cannot rely on government i don't think they are performing in a way that they should be proud of either. so i don't think there's anybody shinkman who is emerging as a winner from how this appears and i do if i may say so, think that those of you who i suspect is the majority of people in this room are of a more conservative and then i, do need to recognize that of the several strategies that could have been pursued that would have resulted in universal health care, the one

that was in fact pursued was the one that was most respecting of the traditional market, was the one that went the most with the grain of the current system, was the one that was closest to what had been proposed by republican think-tanks like the heritage foundation and implemented by conservative state administrations and so if this kind of combination of government operating on the edge rather than taking over the whole system is too difficult to make work that is the only conclusion. there are conclusions from that could each ron in both directions but my hope and my

expectation would be that this will over time be fixed and made right and i think it is worth remembering just as a general matter having been around washington things for quite some time, it was only two months ago, less than two months ago that the budget deal around the budget and the fact that the republicans were facedown on the debt issues meant that they could have been seen as being in deep terminal difficulties and that now is completely out of everyone's mind and no one remembers that is an important event all of six weeks later. so it's a great mistake to think that whatever the mood is right now that is what the mood will be three months from now but alone three years from now.

there's a larger universe of possibility. >> you mentioned japan, slow growth over more than a decade now, two decades. in the new economic roaches three arrows monetary fiscal and restructuring. we see one of the arrows fired and one of the second is in the quiver and one of them is not out of the talking shop yet. what is the economic policy and the likelihood of success? >> you now it's a little bit like pulling the goalie and a hockey game. it's not that when you have a minute and a quarter to play pulling your goalie out is that great of a stretch. it's just that if you don't pull the holy out in the clock runs out you lose for sure so you have to try something new. i think the basic thrust of a

substantial commitment to expansion was the right one. i think there have been some encouraging signs so far in growth, increasing growth expectations and the reduction and deflation expectations and so i think prospects for japan look considerably better than they did a year ago and that is attributed to policies but i don't think we will know until nine months from now. if nine months from now they would have put the value-added tax in and either the economy will have weathered that and continue to be growing in a reasonable way or as has happened in the past there will be a run-up up growth until they do that and then there'll be an air pocket of spending afterwards and they will be back in the soup and i can't possibly predict between those two

possibilities. both i think the real possibilities. >> did you raise your hand? >> you talked about the secular challenges to long-term growth. could you talk about the role of labor in society? it feels like the combination of globalization automation. we have wonderful discussion at lunch which says even at the university level there will be increasing pressures on traditional jobs maybe not at the top universities but many others. it seems if you're at the very top today's world offers more opportunity than ever to contribute globally and if you are not at the very top the very top of pressures from middle-class jobs and other things are just enormous. do you see an underlying trend here and what you think it means in terms of long-term growth and the end piece of society that you described? >> it the issues that i call

secular stagnation around lack of demand in all of that are the issue for the next decade, the issue for the next half-century is the issue that you raise. there were some guys -- very distinguished economist who wrote a book not long ago about technology and its them that unemployment in one of the most striking passengers was they said computers can do some things that computers aren't going to be able to do other things. an example of something the computer was not going to be a will to do is to make a left turn against ongoing traffic. reuchel nailed that one within less than a decade. one of the things i've done spending a bunch of time out in silicon valley and a set of things for which they are

developing capacities to do is mind-boggling. now it has always been true before that the jobs were eliminated in one sector by productivity increase and they went somewhere else and the people thought it couldn't happen. that is true with respect to agriculture. that's true with respect to the luddites and it's always been true before. the fact that it's always been true before, was always been true before the house prices in america have always gone up so it's always been true before is not a conclusive argument. i think our chances are maximized if our educational system is preparing as many people as possible to be as creative and flexible as

possible. i think we are going to have to recognize that in a world where the potential rewards and leveraged leverage to the most creative are larger that we are going to have to find ways of having redistribution from the most creative to everyone else. an example i like to give is george eastman had fantastic ideas about photography and he was very successful and along with his success the city of rochester supported a thriving middle class for two generations. steve jobs equally equal fundamental innovation storm o. o. -- more fundamental innovations increased shareholders but there was no middle-class comprehensive job creation and

that is what we are going to have to work through. it's going to require us to be much more imaginative and thinking about various kinds of service work and thinking about the quality of jobs and the dignity of jobs associated with this service sector. i am all for doing everything we can and there's a lot that we can do that is still undone, to bring about a renaissance of american manufacturing but china has gained competitiveness, gained share, innovated and raised its efficiency as much as any country ever will and there are fewer workers in chinese manufacturing today than there were 20 years ago. let me say that again. there are fewer workers in chinese manufacturing today than there were 20 years ago. so success if and when it comes

is going to come from various kinds of service work, various kinds of greater customization. look, it's a tragedy that on the one hand you were saying and you are right and i understand why her you are saying it, that there may not be enough work to do. on the other hand, there are several million kids in this country who profoundly need individual attention and mentoring of the kind that they are not close to getting. and we don't have a way of bringing the people who want to work together with those and i don't think it's traditional government that's going to do it that i also don't think it's going to be turning a country into some kind of libertarian paradise. see with that, join me in thanking larry summers.

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