so it is a much better tool to allow institutions to adapt their own methods. 9% to go to for profits. >> so will you try to block this? . .

more than i expected from the stage today. she's one of the democratic legislators talking about the idea of a debt-free public higher education that they should be altered within a public institution and emerge debt-free. no specifics yet they would've brought the discussion.

is the next debt-free from harvard in torch down. >> that's what i was talking about a minute ago. >> they are ordinarily free, the average grant is 30 to 60 and the average tuition is $3,300. in california, texas and florida the average grant is more than the average tuition so it's already free. so i would like to see the politicians. >> the governor noticed that community college already was essentially free. so he found a way to say that

community college is very for every high school graduate. that was such a surprise to students to learn that it was free. so when we have all this talk a lot of people stay home and we say did you know that two years is essentially free. and did you know if you want to go to georgetown for us to find out what your family can pay and benefits and borrow as much as you want for a car you can go to georgetown? we don't say that to people and i think that every political season politicians run around saying you're going to solve your student loan problem hoping they get the votes. i would like to say we've made it easier than most people

think, and we have politicians who are making it harder. you don't hear many people saying what i'm saying now. >> we have time for one question if we have anybody that needs a microphone or i will ask you. move yourself to the microphone quickly please. the chairman has to go yield the gavel. >> i'm a student at american university and this is actually a question for both of you and the under-secretary that is here. you mentioned how the department of education is most reliant on for information. other times they are also the people that are giving us loans. the u.s. will earn about $107 billion from financing

student loans. is there any effort to make sure that it goes back into our education and future or is it too soon to know? >> there is an interesting difference of opinion about that there are two ways that the congressional budget office decides what student loans cost and the proper way to do it they said is fair market accounting but you may not pay back your loan and that doesn't sound like a logical thing to do. if you look at it the way that i just described then the taxpayers are subsidizing the students with the student loan reform that is needed in 2013. the way the law says it is the way it was a bit sad. so the right way to do that i

think is the way that i described that it would be revenue neutral and that the money that the students borrow from the taxpayers is as natural as we can get it based on the system. sometimes you hear the senators say they loan money to banks at 1%. why don't they do that for students? the federal money loans the money overnight you probably want to student loan for a day. it's a typically it is ten years what would we try to do but we look at the student loan and we did this in 2013. the president was very effective in pointing this out. we asked the congressional budget office please tell us what our language will do in terms of making it written in a journal so the taxpayers are not subsidizing the students and the students are not subsidizing the

taxpayers and we try to come as close to that as we could. >> if i can ask you real quick on the reauthorization when the expect that? >> i hope it's there before the end of the month or early next month. but we give credit to patty murray for being able to work with her on the secondary education act has been good. we just had partisan bills and she suggested that we do a bipartisan bill and we did that. the short answer is by the end of the month or sometime in july if we are able to pass it the house house will be able to pass one, too. the president doesn't agree with everything we've been doing but he's been very constructive and

we try to accommodate suggestions he's made as well so it's a good process. >> thank you. [applause] please welcome the association of colleges and universities the city college in chicago, director on higher education reform and the strategic advisory and cofounder and the moderator staff correspondent national journal.

>> it's great to be here today. thank you so much for coming. we've had a great conversation so far and i have a million questions to ask. but we don't have a lot of time and we have a lot to talk about so i thought we could dive right in. and i wanted to start with you. i hope that's okay because i think we've been talking a lot about the things the federal legislation and the government can do to enable innovation at the college level and i know that the city colleges of chicago you look over a whole lot of innovation over the past few years. so i think that from what i've

gathered basically in about three years you've been able to double the graduation rate. is it about 14 or 15? which is high at the community college and they've managed to do that by doing things that seem like pretty commonsense innovation making it easy for the students to select courses etc.. so, do you think that there is anything that the federal government could do to encourage that kind of innovation at the college level? >> yes but i will translate that in a different way. i think that there's a lot the federal government can and should do to hold institutions accountable for those types of outcomes and whining by that i think that there should be more performance-based outcomes. i think community colleges and higher educational institutions and the federal government should look at how they measure success, and it shouldn't be measured by enrollment which has been the traditional way that

higher educational institutions in particular community colleges have measured themselves. i think the starting point should be how many are completing their area of study which is very much different than many institutions. 90% of students were employed. 80% employed before so are they employed in the area of study? i think i heard them talk that the accrediting bodies. i think that the federal government should look at how institutions are credited very differently and employers should be a part of the accreditation process and then last week i think higher educational institutions have been divorced from the real world for too long and that they need to be relevant. their programs need to be relevant and the department of education can support and empower them to become more dynamic institutions that respond to the marketplace and

the city colleges that are very data-driven. we have a five-year plan with measurable outcomes that we hold everybody accountable to and i think that should be the focus now. there needs to be a cultural shift in higher education. >> i want to skip down because the work with state college presidents of the time. do you agree that there needs to be more accountability, more of a connection in the market or is that something that's more unique to the community colleges and the role that they play? >> as a state institution we are a public college and university and we've actually been engaged in accountability in a number of different ways, certainly at the state level in the performance funding where they are requiring the the college's indian diversities to report outcomes.

and that the american association of state colleges and universities, we have now over a decade of data because we have over 200 of our campuses that actually voluntarily participate in something called a voluntary system of accountability where not only do they report out specific demographic data that will help inform students, help inform political leaders, community leaders and business leaders about the institution but we also look at some of the learning outcomes but we are beginning to look at not just a one-size-fits-all in the colleges and universities in defining their outcomes so it's

something that we've been quite engaged in. i would say that when you're trying to match the educational degree. if you are a liberal arts major perhaps you may major in english which could kick you into a number of provisions but it is teaching or journalism or working for a corporate company so some of them are focused on the liberal arts or soft sciences there may not be a quick track. it was a sociology major if we really wanted to go in and on a specific professional degree

area. we do offer a lot of professional degrees of course. cheryl's analogy lines right up with nursing. the profession for example some of the degree professions but it is engineering or whatever. we have to be a little bit open because you are moving into a lot of brass divvied co- breath and depth in the majors and the arts and sciences. >> i want to move forward. we don't have a lot of time and i have a lot of questions. you touched on two points i want to go back to later. one is the value of collecting data on outcomes and publicizing and number two, the fact that there is incredible diversity in the college system in the u.s.. i do have a couple of questions

about the strategy for using federal aid. when i first hear that there are some very concrete strategies the government could use to take on some of the risk. can you walk us through a couple of the ways that they could structure the risk sharing program? >> i think that it's important to start by acknowledging the status quo and the incentives. we hear this from campuses around the country. they tend to be islands of innovation and progress the reason that the cases because the incentives are not therefore

the average typical college necessarily to focus. it is the measure of what% default and as long as you push people over the three-year window it's a less meaningful measure for other protections. so one of the people including chairman alexander is that they would put people on for the risk of default or the lack of payment. and the beauty of this is that it sets up an outcome based sort of framework and says to the colleges you should get there however you want to if it isn't a top down here are the

indications you have to implement that says here's what we are going to look at accountable for. you do your best to meet those and one is to improve the incentives for the colleges and learn learn a lot more from successful colleges about how that will institute a success since holding the coaches financially responsible for the loans that go unpaid by the graduates. >> at if the cost is a major issue is there any sort of risk share this promising to you or does the whole approach to seem to be enough where we are going? >> we should start by acknowledging some of the big news in the last couple of days and when we talk took that risk sharing or accountability more broadly here's an interesting

example where students really led the charge for accountability and we were happy to see the department of education step in and provide some relief. obviously we should preserve those protections are found at the gainful employment. but as we think more broadly or congress sharing we very much agree that is an important part of any kind of higher education reform is thinking about how schools have some skin in the game and is one of the things we've looked at is based on .co work in the repayment rates. it should be as if not better than when they graduated from high school we should be able to show some advantage from that and keep in mind the risk is already being borne by taxpayers and by our country when we have

schools that fail to do their job as far as giving kids a decent education. so we think we are interested in looking broadly at the repayment. we think any kind of risk sharing should take into account not just tuition but the broader cost of going to school which we know are very dramatic and finally any proposal to do risk sharing which would in part depend on the data being able to better understand command we will talk more about it but eliminating the band of the record is important but also we shouldn't undermine the protections that we already have, so things like in full employment the 9010 rule that we can see are already starting to work. >> that we need something that goes beyond that. >> i want to get back to that fought at first i have a

question for you. i know in the conversations that i've had it's been very clear that the organization has been very interested in making sure that students have good information in general but in terms of what institutions are doing to serve the more diverse student body. when we are talking about the questions of accountability and student making sure they are getting a degree that's going to help in the work force what kind of information do students really need to make the decisions and how much money they are going to be taking out. what kind of information do they need and what are we getting right all of the different private and federal vehicles and getting the students information in that? >> it needs to be very practical and very real but for the

senator's comments but i think any student regardless of where they live should have the means to not only believe that act on the college as affordable and too many students in the term that we like to use as post-traditional students are still left navigating a catalog of materials for an institution where loans and grants and scholarships. so that's something that's very plainspoken about the difference between the loan and grant. it's quite different in i've been doing this long enough that i do remember when we use to talk used to talk about financial aid to come and it was a. for the population that they focus on over the course of the years that we've been setting up sometimes it looks like for good

reason because when you graduate with that kind of loan debt life is very challenging. and we are now talking about it universally so i think at the very least, the information that the federal government and any large entity provides needs to look at what does this mean when the student graduates and one of the practical ways i used to do this when i was a recruiter i used to look at the entry salary because i was looking at the doctoral education and i used to say what is the potential of first-year salary as an assistant professor asked that the most your loan debt should be when you graduate because if it's anything greater than that you're talking about buying a car, having a mortgage, having a family and all those things become difficult. 20 years later as a country that's what we are talking about

one of the things i found interesting is that he's passionate about the idea that college is affordable and misleading students. but on the other hand i think that it's very real. this is a question for the whole panel. do you think that the college is affordable? >> i do think that college is very affordable. i think that community colleges in particular are extremely affordable. that's where i got my start. i graduated from one of the community colleges and now i am responsible for it. however, i think any investment in time and money students should know what that their return on that investment would be. so i have a degree from a community college but i have two advanced degrees from the

tradition that was very expensive but i do belief that it obviously paid off and so i think that transparency and keeping education affordable but also having transparency so that students can understand exactly the investment that they are making. well that's a degree or that credential from that institution pay off for me? >> are you able to figure that out in the information that is available to you or do we need something like a student record system? >> i think that will help however i don't want city colleges off that hook because it doesn't exist. i have a team of researchers who do nothing but study data. there's enough data in the world the problem is that it's so spread out that it's confusing for the students to put it all together so institutions have to

take the responsibility to put the information together show exactly if you go to the college's website you can see the southern industries that will dominate the region over the next decade and the credentials needed and the places that are hiring. your starting salaries and how our classes and credentials aligned with that and we create structure by structure pathways to make that easy so they need to understand what their opportunities are and have institutions like ours to act on so that they can understand where they should make that investment and where it will pay off. >> and this gets a big question that to the big question that we were touching on in the green room earlier. the higher education act is a very important piece of legislation that there is so much that can be done at the local level and state level to make sure that the colleges are serving the population that we are concerned about well. do you have a thought about that? >> this isn't an academic

debate. just go talk to the american people students borrowers. there's a recent poll that shows cost of college was the number one worry for parents. sono, obviously colleges not affordable and you can look at the way in which it has spiraled. there is a reason why nearly 15% of graduates are default on their student loans because they are not able to come out with a degree that can hold them succeed. >> that is a two-sided issue at the college expense and also the folks going to college are less well off. >> i think the data will be helpful in that but when we look at the way the states have consistently cut funding and since the recession of the 47 of the 50 states still have not returned to pre- recession level. they are effectively privatizing the system of higher education and i think that the idea of a

federal state partnership could do a lot to help incentivize the states to continue to make the investment. >> we need to go to questions but i think that is screwed up the elephant in the room so if anybody wants to comment on that in the program we propose the matching incentive program to help address that because the states do need help. they are not just saying we don't want to help in higher education and support, they really do need help. quickly on the student loan repayment issues and whatnot i also think if we think about the rules, we have to make sure that everything is included. for example we don't know about private loans to students take. we don't have access to that information.

you can go out and take it private loans. we don't have that information in the database and so we don't know if they've done that and that does happen quite a bit. so i do think that we need to take into account and also keep in touch with students when they sign up for the loans. we don't have any way to kind of hold that students. they may or may not give us their address and we are chasing them round and default rates are going up and we are not able to inform them. when students get into a challenge often times the only thing they know how to do is just walk away. so when we think about putting these kind of guidelines into place we need to look at it from everybody's perspective including the institution's perspective as well. >> did he want to add you want to add something quick >> i think the question is if

college affordable for you. we are having the conversation but who is making that determination and i think that the students are the ones that ultimately their families are the ones that are going to make the decision if it is affordable for them and in this conversation about both the federal role and also the societal influence i definitely think that as we are moving towards a more vocational way of framing the impact of higher education business sector has to be in because they are the beneficiaries of the success and i think that as it begins to become aspirational i do think that the business sector has to take up its leadership role in investment because they are not only accepting of the graduates.

so far it's been critical in the isolated institutions in terms of the leadership role that's where i think that right now in this congress and this h. e. a weenie to higher education be talking about the business roles involve the tantrums of investors. >> we focused on price as the key definition but what matters is whether what you're paying for pays off. so credential he you are studying for it and it's not worth anything that you've lost the opportunity.

>> so it's just changing peoples minds. people's minds. it's an odd conversation we are having a rare talking about how great higher education is for the economy. more people should go into the same time we are having a conversation about how bad it is for the economy. so the fact that we have a lot more student that means a lot more people have gone to college. so the notion that that is somehow the economy of strikes me as being -- >> i don't think it's the notion that there's more student debt so there's more people that's going to college. i agree that's true but i think what you said is what i try to emphasize. if more people go to college and got credentials are relevant, we have more employers at the table

and we can guarantee them some sort of a success for that investment that i'm not so sure the student debt should be going up as much as it is. i question whether we have more people going to college and graduating with credentials that are not relevant, meaning are they finding jobs are they transferring to institutions where they are continuing on to that advanced degree, how well his college paying off for them? that is my big concern and that is what i push at the city colleges and that's what i think we should be holding institution is accountable to. how do you guarantee that for a student? so i get a little concerned that we have about four people going to college. but the projection of the skills gap is continuing to rise and that concerns me. >> because people are not studying the things that would close the fiscal gap.

>> they can study what we don't offer. is it being offered in a way that is structured enough so that they can go on and get that education and still juggle family work and everything else. the structure of the institution matters as well. all of that matters. >> that was touched on in the earlier panels about making sure they had access to college and also making sure the colleges were serving students while and that shows up when we are talking about performance-based funding of the state level at the state level because basically if you were saying two coaches you need to reach they would say we are going to become more selective in our admission in order to meet that. do you see that as a big concern? do you think there is any way that federal dollars can be used as a lever to make sure that access is maintained even as we

go forward in the states go forward thinking more about the account of the? >> i think that it has to stay and play to continue to make sure that it's still there as an important tool. that was so important we only had one year with that and we saw a great return from that one year so that would be wonderful if we could get that wraparound back. so i think other than that a lot of the responsibility to release that part of the tension lies with the institutions but i think the federal government could help us be consistent don't be afraid to raise it and make it available year-round. >> part of the issue here is that we provided a lot of colleges access, we provide access on the ability to pay it

back and i think we need to ask questions of whether that's what we meant by access when we first passed the higher end act. we've spent a couple of years now on the fact that for-profit colleges were not enrolling people that were likely to be successful and so that strikes me as a problem across the board if we are numbingly leading people to go into debt that our unlikely to be successful the system is hurting a nontrivial proportion of people then we should rethink the way that we do it. >> we have a question from the audience. >> my question i thought it was interesting earlier have been mentioned the higher education act on the desk. since then we know that the tuition costs have been rising and we know that college is more expensive for students. my question, luckily i go to a private university with an

organization that sponsors it. my question is are we going to be be able to put ourselves through colleges that over four is that a possibility in the future? there seems to be an assumption that loans are necessary. >> sometimes there's a disconnect with elected officials who believe you can just work a summer and not pay for your college tuition. i don't think that the days of working while in college are over. we have a program that we've proposed expanding it dramatically and improving how it's targeted to switch targeting the right students. we've supported expanding sort of career pathways to connect the students between colleges and education afterwards. i think workplace a huge role

because it's one of the things that's going to help you have a successful career after you leave. but i think that the way the costs are going it's increasingly becoming unrealistic to think that you could just pay for it over the summer like maybe my dad did. >> a lot of people might say we have an opposite problem where students are only attending part-time because they have to work to pay for that. >> that would be my population. the days of working and going to school are very much here but i don't think that many of my students are working to pay for school. they are working to feed their families and many of them because of that have to go to school part time which takes them way too long to complete a two-year degree so that is another reason why we've taken a very structured approach of the city code which is what our structured pathways predicted

scheduling so that now students can actually know exactly what time they are going. their classes are picked for them and they can work now and go to school but you touched on a very important point. is providing financial aid year-round simpler and will that help pay for some of this? but also there's a lot more skin in the game institutions can have. i'm always putting accountability on the institution to help students. we paid for the summer classes of students enrolled in the 15 credit hours because that helps them get to the two-year degree quicker. and we have over 3,000 students doing that right now and we are one of the states that do offer the free two years which will be starting in june and so programs like that to me paper themselves

and i think there's just more skin in the game as an institution. i think students are working i just don't think they can afford to work and see their family and pay for college. >> the majority of students in america work or go to school. that is a fact to ask the question if it's possible, students are doing it every day. you're talking about the tension. the tension i find in these discussions as we are talking about the anomaly. that is what is happening. and the question with any leadership moment is how are we going to recognize that reality cracks i know that part of the data and how we respond to that opportunity to say they are pursuing higher education how are we enabling them that's the opportunity in a discussion like

this and in the discussions we have before us and in that respect, i find students are navigating in a very unjust railway. often times we talk about them not getting it right. if i have a bone to pick with the obama administration on this discussion about under matching i think that yes it's very important students go to the best institutions they can be admitted to but honestly they are pursuing higher education in every way that it's presented to them. >> you asked if loans are now necessary, just an assumption and that is a really good question and i think we've limited ourselves in thinking about how would we get to the place where they are no longer necessary. there is lots of different ways to think about bringing the cost of college down and they are not just sort of declaringfree and moving on. there is what we would ideally have is where theyompete

with one another on what really matters which is the value of the credential so places are inexpensive where you could work your way through but delivered a huge returning huge return into those would be popular for that reason.e this place of last resort like they often are now. >> i think we are operating on a deficit model when we think about this experience in the colleges or universities and i think that we've got to take all of these issues and try to figure out what it's going to be in a model of prosperity. how do we take all the shortcomings, held we take off the attributes, how do we bring innovation to the table so that we can begin to say to the americans to go to college it is possible and here are the ways that it can happen to you. we really have to stop thinking -- and i am saying this from a public institution point of view

i think we still have to work our way through that and figure out and bring the foundations to the table like everyone said we have to bring all of those and bring in the right policies to help us think about the prosperity mark. this country needs people to get a college education and we've got to figure out how to we help them move to that model and understand that it is possible and doable? >> we are running out of time but i want to ask one last question to get to the root of what's next america is all about. we hear a lot about the nontraditional and post-traditional end of this idea that the more diverse student body is heading to college than ever before and i was wondering particular the folks that work at colleges or work closely with students today, what are some of the

things about the students are going to college now and the struggles they face the people in washington just do not get because i think the conversations operate on a level of assumption about what college should be which is based on the four years of his tedious school and then you go on but that isn't the reality for most. >> just going back to the issue of cost they think it is just tuition and cost and it's not. you've got transportation you've got to be able to purchase your books and supplies that support the experience depending on what the profession requires either you have to be out in the field for internships or externships. you have to have a way to get there and get back. you do have to be able to in many cases support your family. so that's not a narrow focus that is just the cost of tuition and everything is all set.

so students know that and that's what they run into. we also have to understand when students say they don't have to enter the dollars that's the one thing that's keeping them out it's real to them and if you don't have the $200, you're not going. so i think trying to understand the reality that students are certainly facing. so this whole idea of going to college is hard work. it's a job and it's not just something you go in and we put the information in your head and we walk out. we are not doing brain surgery yet. i still think when we think about innovation, we need to make sure that we are designing experiences that lead students along a clear pathway. and i'm really happy to see colleges and universities coming back and laying out clear pathway is to the degree. i think that is going to make a huge difference whether you are an adult learner or a 17 or

18-year-old. knowing where you are going and how long it's been to taking and what it's going to cost. >> i would agree with the point that it's hard for policymakers to understand the range of economic challenges facing students in part because they don't understand how diverse the student body population is. we just did some research on the number of young parents. about 25% of students are actually parents. so thinking about things like child care becomes a huge concern. we have a proposal to expand child care and schools which could alleviate some of the challenges and then finally, students are going to college for cupcake of reasons partially to get a job and get ahead but also to become more knowledgeable and become a responsible citizen. so i think sort of how we balance those two concerns is

something students are going to focus on a lot as we think about higher education. >> thank you so much. i think we are out of time. we went a little bit over but that is because we had such a great panel and a lot of folks and not a lot of time to talk about all the things we wanted to talk about. [applause] >> thank you so much to the panelists. a very special thank you to the bill and melinda gates foundation. we will be sending a survey in the next couple of days and we would like your feedback as we like to improve the national journal events. thanks so much and have a great rest of your day.

>> [inaudible conversations]

publican trent kelly became the newest member of congress. last week he won a special runoff to fill the seat of the republican who died in february. congressman kelly will represent mississippi's first district for the remainder of the two year term which began in january. here here's the swearing-in from the house floor today. the honorable house representative to have the honor to transmit.

the mississippi secretary of state indicating that according to the given a result of the special election held june 2, 2015 the honorable trent kelly was elected a representative to congress for the first congressional district. >> for what purpose do you seek recognition? >> i ask you now must consent that the gentleman from the great state of mississippi the honorable trent kelly be permitted to take the oath of office today. the certification of election has not arrived but there is no contest and no question has been raised. >> without objection. will the representatives the representatives and the members of the mississippi delegation present themselves in the house quick >> will the members rise and the

representative raise his right hand. do you solemnly square that he will support and defend the constitution against all enemies foreign and domestic? that you will bear true faith and allegiance to the same and take this opportunity without any reservation or purpose of evasion and that he you will well and faithfully discharge the duties of the office on which you are about to enter so help you god? of moscow >> without objection the gentleman is recognized for one minute. >> thank you very much mr. speaker.

>> friends and colleagues i have the honor of opening the new representative from mississippi's first congressional district. for me that means he will be representing the neighboring district in the northeast corner of the state but which most of you are familiar with but for others this means he will be representing the birth place of ... presley. a kent kelly is from mississippi -- >> the gentleman will suspend. the house will be in order. the gentleman may proceed. >> thank you mr. speaker. trent kelly is from the little town in mississippi. the local folk the population

3,393. he knows the district while having served as the district attorney for the largest district in the area. the representative has also served in the national patients military and has spent 29 years in the mississippi national guard. [applause] the representative will be serving up the term who passed away in february. as we step into the seat we hope that he will follow the example of service and dedication to the people of mississippi. our colleague will now join me in welcoming our friend from mississippi. >> mr. speaker is my honor and it is my honor and pleasure to welcome the newest member of the body congressman kelly.

i'm confident trent kelly will carry on the legacy of his predecessor our late colleague, one of impeccable services and an annual income is of to this country and citizens. i look forward to working with the representative as he serves the first congressional district and the people in the great state of mississippi. congressman i am so honored to stand here and welcome you to the floor of the house of representatives. [applause] >> to the rest of the mississippi delegation and most importantly i would like to

thank senator corcoran who were present. thank you to my family which would include my mother and wife and three children. my brother who cannot be here. thank you to my friends in the gallery above. thank you to the citizens. thank you to my fellow members. i'm honored to i am honored to serve the nation in this great capacity. thank you and god bless you.

this is a vowel that script onto this captured its now been positioned into the diseased valve and it will be deployed in just a second with a new valve inserted inside of the old calcified stomata golf.

and as you can see here the delivery system is being withdrawn and then the wire will be withdrawn. what we've seen of this pictorial display is replacement of the diseased valve in a manner that does not require open-heart surgery. so we are becoming smarter about predicting who will get disease and become smarter as to identifying the most effective means to prevent or attenuate disease and then the smarter about folding up over a longer period of time. so we are currently in the era that we are trying to harness the problem of the human genome research project that's now been in existence for more than a decade with all of the informatics that can be driven by the giants of the industry like google for example and information about sociology

geology demographics, where you live, where the railroad tracks are in your city your likelihood to get diabetes on the basis of your educational background and with your likelihood of developing some in like dvds and hypertension if you live in a certain part of the city where you have less access to the right kind of food so if some little things like that. to discuss the monetary policies including quantitative easing into the purchase of government bonds. they examined the effect effects of the policies on economic inequality and social mobility. from the brookings institution, this is three hours. >> our mission is to improve the

fiscal monetary policy and public understanding. we will hopefully not be judged by performance but it seems to us that one of the most vexing questions that comes up on monetary policy is this is a very aggressive bond purchase on the quantitative easing that contributes and if so how much. our intent is to build on that and ... and to think through the extent to which it is true and if so how did it work and if not why is it that so many people think that inequality is resold from the quantitative easing. we have pre- papers to present this morning. all of them are already posted on the website.

and the plan this morning is to have each of the papers presented. we have them and then we will take questions for a few minutes after each paper and then at the end we went to the panel discussion with the federal reserve now the stanford. it it seemed to me as i was reading these papers some of which are technical they are two important things to keep in mind. thursday's get all the federal reserve did was increase the stock price is in than they really wouldn't be much to talk about. obviously they are more widely held by people at the top and people in the middle and at the bottom and if not they benefit more. but as josh points out in the paper that he will deliver in a moment, house prices are pretty important factors in all this.

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>> >> end do that compared to one question what would have happened if the fed did not do quantitative phasing? -- easing then susan u.s. ted interesting work on this subject then they will enjoy me and then we will go to the paper which i will describe when that time comes. josh?

>> good morning. first of all, things for the invitation to participate in this conference who made it better than it would have been but it period don't know the api for europe's is about the rise of inequality end it has strong roots and intentional policy decisions so with that monetary policy and was intrigued but with that successful macro is strongly progressive to have bigger benefits so that expansion should that be

different but quantitative policy has been very different how it is implemented and the tools that it is used daily and it is basically what david talked about in the introduction you want to specify where you are judging begins the monetary policy and the asset purchases in pop -- so compared to a fiscal policy stimulus with economic output so that is one. the second baseline is no stage of the other stimulus at all. the fed decided not to do those asset purchases if nothing else happened the first baseline that is the equivalent boost is more

interested in it and academics worthwhile canadian initiative a keen observer to monetary policy and frames the question is for use fiscal policy as set of monetary policy would that switch have consequences? there is the couple of problems rights out of the gate there is no such thing as a generic fiscal stimulus but think about tax cuts with that distributional place could be different we have the 2001 and 2003 tax cuts that were justified but in realtime they are justified lot those were not progressive and 2008 tax cuts as part of the economic stimulus act is much more

progressive so it is hard to characterize those applications. transfers and their nature focus from the bottom to fit the of the income distribution as a way to fiscal stimulus will be strongly progressive and then an important issue concerns the benefits of direct government spending with investment increase the theoretical models and empirical research about policy that is effective in government spending comes in and really strong so we want to know the implications. the cbo allocated in two ways with direct spending on a per capita basis as the al lung spot -- a lump-sum or to allocate to the

distribution of income but it is very progressive as lump-sum spending and then of course, it is very different depending on the spending that we've talked about other than grants to provide bus service source school construction so the punchline and it is hard to think of a generic fiscal policy. so i decided to try to find a particular fiscal policy intervention that is equal to the estimated impact with economic activity and it turns out it is a stimulus provision that would push back with the bush tax cuts.

and lot overblown get the two columns of the right to. the stimulus portion that is a 2% payroll tax cut with expanded unemployment insurance and the extension of the refundable tax credit basically have almost the same effect on gdp as the impact of the asset purchases has a lot of variation so this is rough orders of magnitude that why you compare it to the fosse -- but the estimated impact was large of the asset purchases. i am not willing to say that is linear to scale them up.

i don't think that works like that but why don't we push back the high end a stimulus? it is very small that a full range of tax cuts might have been day but that would not have been. -- have been. so this is day intervention that i would compare to the lsap's the distribution from 2010 with the office -- the cbo data to understand where the money went so that first column of the payroll tax cut says the sheriff total payroll taxes paid so the bottom fifth of the income to to be ocean pays 5.6% the

95 percent paid 11% but then that is the overall income so the payroll tax cut is mildly progressive. the extension the way that called measures the non social security cash transfer i will say that is of a good proxy for whether those extensions wented is definitely be concentrated in the middle 3/5 and then the refundable tax credit they are stopped -- strongly important than those portions have dash federal income-tax rates that is where i a allocate those so

that impact is pretty progressive particularly the refundable credit of the payroll tax a little less. so now what does a large-scale asset purchases due? the idea that the lsap holding the from the top that second point is true it is just a of measure of total capital in calms to see the top 1 percent said they claimed 38% there remain 57% of the bottom 90% so this is the root of the concern. but looking at the attempts

those are smaller than are characterized in the popular press play to do robin hood there are three reasons the fed tightening that they're not that different from monetary stimulus and the impact of housing but that timing issue is basically they will boost prices now but at some point that will put downward pressure with the index fund of the stock market's to go up then come down with the marginal impact. stocks are incredibly concentrated but tomorrow's stock owners are not even middle-class but pretty rich people as well.

in with conventional monetary stimulus to find short-term magistrates florida that decision and that is how it was supposed to work but lsap doesn't have that link but the goal of both that they cannot go down if you don't push the asset prices so it is not that radically different but the impact of a given decline as a result of the lsap is less arms stock prices than conventional monetary policy. the party is ready measure the effect by definition you

measure that did a fragile and weak economy. but housing is the asset the price can be affected by the lsap and is very important is the portfolio of the middle-class. the broad middle-class you can see housing accounts for 60%. but lsap is comparable to the stock prices than most of the estimates of the effective lsap on housing prices are greater than the impact of the stock prices. so that a bride distribution

is another thing but another important phase that fiscal verses the real world is it true fed decided not to do as much that fiscal policy makers what -- say the we will jump into the gap? that is what happens to government spending and that line on the bottom basically since the trough of the recession that line goes up for the american recovery and investment act and is starting at some point fiscal policy is not right dried and that is astonishing.

with this recovery and fiscal policy is a drag on growth. output stabilization is progressive and effect is true that the. >> host: keep unemployment over then it has strongly progressive the facts. with that macroeconomic stabilization on the phillips wage with the change of nominal wages but that time period of the unemployment rate with the 50th and 90th percentile is you can see those wages are much more sensitive to changes that is why it is

transparent and there is a strong equalizing effect with the low unemployment rates the past to factor largely if you think the lsap helps to stabilize the economy but this says it is progressive. but that centcom since the great recession with monetary policy and for that military policy the necessarily because of that it is much more reliable and effective fran the distribution of outcomes to have the consequences with a history of the federal reserve actions that should

affect a strong way and that will have regressive implications of what happened i think the fed policy has been strongly progressive and i a matter of time. thank hero. [applause] >> thank you for inviting me today. first i will congratulate josh john an interesting paper on behalf of quantitative easing and lsap in particular. he took us through a lot of the theory and empirical evidence that presents to the interesting counterfactual what would have happened with the fiscal policy and had the fed does nothing?

refine that helpful for anyone to read but to expand on the overall contention but those that have worsened but no one is disputing the fact we have seen increases of that inequality is the united states not only since 2007 but the long-term trend tenuity economist of the aggregate consumption is 70% of gdp growth comes from spending but that that said of i agree there is very

little evidence the federal reserve monetary policies contributed significantly to this. en then to the impact of low interest rates of asset prices. read ted that he found for equity prices there is very of little evidence of the first point is many people tend to forget that at the end of 2008 equities lost 35 percent of their value. global equities lost 37%. so those increases first of all, to put it into context was the deep hole. second you need to look at

the theory of through what mechanism should lower interest rates boost equity prices? the most direct is to a dividend pricing model so with those cash flows to lower the interest-rate lower the discount rate that should boost in the present value. so there is a direct mechanism there are problems with the argument if you are the investor you should realize quantitative teasing is a temporary policy for to go ted years out whatever is the current short-term and long-term rates. but investors should use the overall cost of equity not only risk free rates but also the premium.

but to find it is as stable figure over many decades the this holds true since the recession even if investors believe the risk has gone down that the rates will increase. and there is day substitution n defect the when you look at investor behavior there is very little evidence that either retell investors that the equities of the fixed income fund. so that quantitative be seeing me be has to spy percent at most from our

there would have then. then why have they increased corporate profits are at all-time historic highs and companies are sitting over $1 trillion of cash so there are good fundamental reasons to believe equity prices have gone up. with that earnings ratio you can see they are valued only very slightly over a long so while they do think it is true that those of housing prices are a much more direct channel because people buy housing with mortgages so has the cost goes down it should have supported housing prices. but they have fallen to radically on average for go with the evidence is civil

would be even slower to recover pretty rugged is a more direct effect like farrah the variable rate. venture said that low interest rates may have supported you cannot have to actually take a vintage of the low interest rates. but we believe housing prices have been supported with the broad middle class and not the wealthy were the top 10% housing represents only 10 percent of the wealth portfolio with the broad middle class it is the main financial asset. the more direct impact of quantitative easing in our report is interest earnings and payment so here is a very direct effect on the

one hand and a lawn with a lower debt service ratio for households you can see that includes the cost of interest payments as well was interest payments is that a low-level of the early 1990's that reflects both a reduction of mortgage debt for the leveraging but also the very low interest-rate anyone with deposits of banks or certificates of deposits have seen very low returns. so we looked at a figure of the net interest earnings which lets out the lower debt service payments from the income earned on cash deposits you can see there is a clear effect so those households headed by people

under age 54 have benefited because they have more debt and it is linear those on average have benefited by $59 per year the a group 35 through 44 benefit 1700 per annum of 2% but then on the other end households over 75 are losing through lower interest earnings and they're losing $1,900 per year so there has been a generational impact for sherbert overall is hard to see how this were since inequality per by want to end with the open-ended questions and choose spark discussion. compared to a day had been

but to what extent are the old trilled lower interest rates product of the monetary aid policy? and to see those fall quite dramatically. with the ten year government bond the nominal rate on the 10 year bond fell from 14% to 2% on average. with the supply and demand for funds although long before the recession on one hand we have the rise of surplus savings with commodity exporters but if

you look at the growth investment rate of the u.s. and other economies you see a secular decline in physical capital. so that reflects that capital goods cost less. so that companies don't see investment opportunities use cs share buybacks may have started to return that cash to shareholders because they don't see where it is coming from. if we're living in a world of stagnation that our investment opportunities then there is the question even with large-scale asset process bond dash process when we will see interest

rates rise. and for years to come of may be outside of the control and i am out of time. [applause] >> that's what happens when you don't read the directions. thank you to have the clear and succinct statement said will keep his short so we can get to the rest but just intuitively i wondered if it seems that all the monetary

policy did a great job to get us closer to full employment then you say that it doesn't have much impact on the stock market's to have those bad effects on distribution if that quantitative easy and has such a big punch how could it have such a small effect? >> i definitely think the direction but i don't know the basic klay it is 2 percent of the peak defect poillon dash defect but my

bigger point is that any positive impact has strong consequences that even if the fed actions didn't have enormous impact that channel works very well. >> so to read about this in the mckinsey report so shares that have made it easier? >> yes. thank you for remembering one of those was a direct beneficiary. it is true with the bond was

the neighborhood of four and a half years now and has extended maturity and then to have those monetary policy decisions if it did enable the u.s. government have a healthy fiscal government than it would have otherwise. >> is it the view that there is no reason the federal reserve had it done less that congress would have done more? >> i am not a political scientist just to look back.

>> you don't have to be an economist to see that. [laughter] >> is the important question of media and real household income has dropped since 2008 it is hard to believe it is part of a structural trend so what they said at the beginning with policy designed is the right answer and it is in the full measure of the labor market but we should be cautious to not exaggerate how much improvement. two points you mentioned the

stock market goes up but then later monday withdraw the lsap comes down. i think partly that to drop in the aftermath of the recession is the recovery to a normal level. it is not necessarily the case ending the lsap could have of all in the stock market is a policy closer to its level quickly. that is the policy decision to bring employment back quickly. the other plaintiff is that we are comparing to a fiscal alternative i don't think that is the right comparison

one is the tool that has been used as kiley has sonometer call work to look at the differences there are differences in how they work. there is a strong argument the extent that the fed did not use guidance and tell around 2013. it was the extended period of language that said we're only nine months away from liftoff. so did the same way you are critical of fiscal policy could ask questions what is the counterfactual if the fed would have introduced more for word guidance? >> 70 think there is said to

regional difference with for word guidance? >> that is that what has to do with the of short rates we could talk about that during a coffee break with the other operative not considered in the united states but has been elsewhere is how those that provide credits and small businesses and are critical of distributional issues that the monetary policy helps large corporations get their debt obligations and has not helped. read notice that has not improved so you could compare but their other other possibilities that could have been considered for the future. >> to be clearer there is no

way my contention with of the demands of the recession and. in we did not do that. so somebody stumble that a man with a way. but to go back to the earlier question how could we be sure to back to better if they did not be so aggressive? if they spoke strongly that fiscal policy is a drag the yet there is no response from congress with those counterfactual and other ways that our better than what we did i totally agree with the way to figure out a way with that ability to provide $500 to every

buddy's checking account. they cannot do and now but that is great for future recessions. we did is say key transition mechanism because so many could not refinance because so this is not to say the fed did absolutely everything right. but would day did you did get pushed in the right direction. >> i think the literature on former in it - - guided his more open to debate it should those economic conditions change for the better or the words it is more than any other central bank of the world's. but europe has been the most

with the securitization and i know this because we do research on it to. those results are quite astonishing so take that e.u. in the west that are roughly the same size of the economy with gdp the u.s. with a steady at of london has $3 trillion of outstanding credit and europeans have $1 trillion for those of despite that it has not been successful. clever it has done right it is dramatic. >> the the question is what could we have done

different? we will take one more question. we will come back to these as the day goes on. >> i am from "the washington post". this strategy is that works for blackstone had a commentary in which he encountered the following with the low point of 2009 the stock market valuation has increased its $13 trillion and he attributes 3 trillion to the federal reserve policies. that is a major part of the increase with your appraisals baghdad day

modest effect of the stock prices and why i take that arithmetic to be typical so why is there such a large gap in those are watching people in the market. >> so pick. >> definitely go with the economist. [laughter] but they fell 35%. but that analysis is no more than 5% so if had been radically worse how bad

could it have been? the for the reses that i explained i think that low rates through said debt service payments. but the where the companies have done very well that explains the al performance. but i will not take a look at those calculations to say where we come of. >> i would like to take a look but i occasionally see traders over estimating the impact but that is because they live in a short-term world but if you look at the event steady and did you

stop there you could give a dramatic effect than the price goes up said june jet that effect rather than that day that is the trader view of the world days to save purses' the entire time span >> after all people who bet of the stock market than to make more money than those who don't. if he was right as you discuss would that have made the big difference? >> the real horse race is between what it does choose stock prices that are concentrated at the top for those of our distributed if there is a much longer than

they need to be modified. >> that that but the university as a chicago firm in new york fed but what did the cat is okay it is great for housing prices. but if you are you would not have the luxury to refinance. >> so why don't rigo sit down? and then we will come back. >> and i think it is a little different than the other papers because we're

not talking as much about people as we are spays. where does monetary policy have more of the bite those places doing relatively bad or good we know there is so large amount across different types of places within economic performance with the unemployment rate and las vegas got up to 13% and dallas peaked. that same type of scenario where spade and it is harder than in germany so think about monetary policy there is the interest rate of a policy tool the cousin of talking about that

definition of the member union. so but we ought to think about is that spacial component is the results of variation to reelected a to boost the stock prices are the home prices it lowers the cost of credit to expand investment that may cause them to hire more workers but to that extent given monetary policy action to reactivate is dependent upon local collateral values ended differs radically with monetary policy to have the differential impact across

space. i will assure you this with the day than that the places where collateral fell a is the most depressed sometimes see the least amount of response to a given type of monetary policy. i will spend almost all my time today with just dave that to show you that the because i believe it is different than other types but we can date it exactly and i can show you the response of different regions to some type of collateralized lending but the point is of more broader type of lending and monetary policy to use in a case

study in the of financing channel with their vote with surprise me that how that would translate into aspects of spending. the second part the rebel maya spent much time on today with that quantitative model that tries to put in the collateralized lending channel. one is a shock to a local income or productivity to have a guess do it worse than dallas. they could be correlated it could cause the house prices to change more than other places or it could be arbitrarily un correlated but it is between the two

but that aggregate effect to lower interest rates than the people in the country that want to borrow the most with the most demand for credit are not able to get that and make monetary policy less effective than otherwise. that correlation with productivity shocks or another local driver is a key correlation that determines the aggregate effects of monetary policy. but that is the key insight from the model. from the miracle par we use a lot of data and i will measure as a case study to refinancing behavior to use data which the mortgage

application activity and is able to get the tempo response with the mortgage activity takes place you also use data from equifax that has the credit risk data set that verges credit records tuesday applications of the word did origination so we could see the large amount of the borrowers and though loan to value ratio at the time of refinancing. but those are the main to.

the first pitcher you should see here is the solid line of from the brokers' association the dash line is of average overtime at the moment every picture i assure you the rest of the day that redlined will be the announcement of the first quantitative easing program in november 2008 the regret that moment mortgage rates fell and activity increased at that moment. now the second pitcher shows how much of that activity was due to refinancing or new originations and and almost all of that responded after the first was in refinancing. there wasn't a lot of new home ownership buying at

that time but it was existing mortgages. that is so we will focus on for field in the back of your mind we should know what defines space with the value of collateral that these locations will have the moment quantitative easing takes place. it is a loan to value distribution of five different u.s. cities at the moment the first took place the bottom line is lost a guess it is how many borrowers have at least 80% equity in their home and at the moment it takes place in vegas only 20 percent tebet least 80% equity within their house at a time where a comparable number in philadelphia is 70%.

so you to see those amounts of farmers out desk to radically across cities at the inception of the first monetary action that we focus on. second the correlation between how many borrowers are under water on a vertical access have loan to value ratios above 0.eight the change of the employer rate up to 2008 is high and a corrugated the places hit hardest with real activity were those where the most borrowers were under water so there is a strong correlation between real activity with the employer rate and house price decline that makes borrowers under water.

measured by a loan to value ratio november 2008. a the bottom line will include the up and then say like was vegas with there is a lot of borrowers under water i will refer to those as high loan to value ratio places the topline is the lowest quartile to include philadelphia and seattle with these metrics and at those moments you see a spike of free france the activity to trend very

similar that is much larger in parts of the country better doing relatively well. it will be the low loan to value type of place this is in the application and data using a high-resolution data because they spike immediately after the announcement and deferentially in the parts of the country that are doing well. this is on origination date i using equifax merging of credit records and you can see that increase of activity even with that data set with the hyatt to loan to value ratio because it takes time for when we apply to a mortgage and when it closes. so this is origination even though the policy to place

in november you say big effect in january because it takes time from application to origination. what about people removing equity? you are basically losing your job the economy is suffering you have some equity you want to refinance you may remove some of that to use for current consumption. the amount of equity removed from the refinancing process in response to the quantitative easy was much better -- bigger than those that had equity so they removed it during that process more so than the cash out.

recap talking about the effect of monetary policy on house values but the key thing to keep in mind is house prices were falling know what of all areas of this period in monetary policy may have stopped it from falling more but it still did not cause people to get equity in their house. people in vegas still had no equity in their home november 2008 monetary policy may have stopped it to be less but the key difference is it did not help to put equity back into people's houses as prices continued to fall over two 1/2 years from the start of the recession. this is a measure on spending one measure is the new automobile purchases. of between the high and though quartiles with their

purchases tracking nearly identical. there is a little delay because by the time the origination started it took about three months before it showed up in spending which is what we would expect if they were the pretty constrained before they could increase spending then you could see a big difference measured by new-car purchases from the places that have equity in their whole or did not at the time of the monetary policy extension. >> i have two more slides before i conclude this is a common feature? the answer is we don't find evidence so now i am comparing the 2008 recession about the correlation change with the changing of the unemployed rate is a strong

relationship with unemployment growth and how much prices change at that level of msa that was not bear in the recession in was so weak correlation between house price growth and changes at the local level during the recession. looking at differential behavior based upon not how much equity they have been there wrote -- of their own read joe's a differential response between the two regions in this recession. if anything it might be a stronger response with a higher unemployment rate. is the correlation between collateral shock and unemployment that drives that differential during this recession. so just to put back of the envelope numbers on some of

these as we go through to look at how much to the cash out or mortgage resets we have variable rate mortgages , home-equity lines of credit and ways that households can get cash into their hand through the interest-rate change from qe and with the total effect of cash out home-equity lines of credit and refinancing cash out is about 15% went to the bottom quartile so you could see that the distribution effect would help more for those places ever doing relatively better versus those doing relative