we brought in people from the aclu, from the marijuana project, from the national bar association, from your organization, from the international association of chiefs of police. we brought in 100 different stakeholders, listen to them got them to talk and put together a bill which i think

was as good as any piece of legislation like this could be. it was for 18 months, $14 million. that's like one helicopter $40 million. we could get these minds together, show was for the first time since the commission in 1965 how we can streamline and improve this process. we finally got it on to the senate floor in october of 2011 having worked on this for almost five years. and we hit the great stone wall of filibusters that preceded the 2012 election. we got our partisan support but we had 57 votes. we needed 60 votes to break a filibuster. we got only 57. we had four republicans

including orrin hatch by the way was a strong supporter of this but we lost the legislation on the floor. the "national review online," which as you know is a conservative publication editorialized that it had been insanity for the republicans to filibuster this commonsense approach. but the good news is that we brought this issue out of the shadows into the place of public debate where republicans and democrats, liberals and conservatives could come together and talk about it. and again one of the reasons i wanted to come here today was to express my appreciation for the national sheriffs' association for having listened and contributed and only in february of 2011 decided to support this approach which i believe we still need. there are other areas where i as someone who prides myself and

working in a bipartisan way as we did on the g.i. bill which we develop the leadership model during my time in the senate and 16 months were able to pass best g.i. bill in history. and on this issue there are other areas where we need to be working together and listening, and i would be grateful and honored to be working with your organization in the future to make sure that we can look at these issues in a continuously creative way in order to enable our law enforcement officials to do their job, and at the bottom of this to work toward harmony and respect that we need in our communities. and with that, i'm happy, john if you want they want to sit

down and spend the rest of this time in discussion. thank you very much. [applause] >> i'm sitting here. you can sit here -- >> but on the camera i'm on the left and you were on the right. >> it really is a pleasure to have you here. as you know c-span has reached out come using a multitude of its viewers. this is a great opportunity as well, cisco and verizon are pushing this out over the web so we are pleased you're here. as we talked about we have a number of questions for you. some of them in are going to push the envelope because that's what i think we have to do in this country. when we asked the membership come when asked what you want to ask these folks that may run for president? these are not my questions.

i think they are excellent but let me start off with the first one and then i think we'll go out to the audience. senator, in the evolving war against terror, what role do you see for local enforcement in protecting the homeland? i'm going to add a twist to this. anything they need to do that they are not doing that you would suggest to them? >> i believe in terms of the structure of the nation it's important that we look at local enforcement as a supplement to what our federal law enforcement, and in some cases, military people, are required to do. and i think the classic recent example is what happened when the aircraft hit the pentagon on 9/11. i was actually in the pentagon that morning having breakfast with commandant of the marine corps. the first word we got when they

came into the breakfast room was that a missile had hit the world trade center. that was when seen in first broke the story. and commandant jim jones at the time said they want to come to my office and catch up on cnn? i said no, i think i will go to my office. i got in my car and drove down the road and found a plane hit the pentagon. if it were not for the first responders and the local law enforcement we would've been in a real pickle. i watched that for three days from my balcony. those kinds of functions i think have been increased. i think the training levels have been increased, the types of equipment going to local enforcement has definitely increased. i think the rule is there. it's beened. the one hesitation, the one concern i would want to pass on his, we do not want to give the

impression to local communities that we are militarizing our local enforcement. there is a difference between being an infantry officer at a police officer. i have been infantry officer and i couldn't do the job of a police officer. and police officer, most of them, are not going to want to do the job of an infantry officer. when you see in some of these communities our local enforcement had beaten up with basically military gear -- heavy up -- with military vehicles on the street, you would only want to be doing that in the extraordinary situations. the best role for our local law enforcement people when it comes to regular community relationships is that all of harmony and protector and guarantor, when you know when something goes wrong, the community is going to be on your

side. so basically my view is we want local enforcement to be the supplementary force, but at the same time we want to make sure these two roles are 30 defined when our communities look at them. >> i'm going to turn to the audience. we have a question from chester county, south carolina. that's an interesting statement going to ask sheriff alex underwood to present you with the next question. >> senator, you have voted in the past to continue funds for declared sanctuary cities since march 2008. as president of the united states would you expand on the scope of these cities, or would you leave -- or would you leave the influence up to the states? >> we are getting into a think a fairly complicated area of how you define the mandatory role of

local law enforcement people when it comes to the federal missions. the bill that we voted on, i looked it up when someone asked me about it it was one of these rush limbaugh amendments. basically it didn't say you were voting to continue the motion that was voted on said we will cut off all federal help to local enforcement inside any of these sanctuary cities. that's kind of absurd. wasn't really an illegal immigration type of deal. but at the same time the concern is when you of high density immigrant populations, many of them illegal, which is actually what we have about two blocks from where i live in falls church. when you have that sort of high

density population, and if you're saying to a local enforcement the first thing you're going to do is go in and check some of his papers, you'll have a tendency among the people who are living there not to call for help. you might have a domestic abuse situation or you may have a robbery or gangs. there was very heavy gang activity in this area for instant. the notion of the century cities was for local government to decide they would not require local enforcement to conduct activities that were basically federal activities. and i respect that. i don't think you should be cutting off funding in other areas if local communities decide to do that. i think it actually in most cases, works toward more effective work by our local enforcement people.

>> thank you. >> senator, the next question came via the web. so senator, as long as our country's immigration problems to unsolved, the sheriffs will continue to bear the heavy costs of handling many of the illegal aliens causing our border and overcrowding our jails. until comprehensive immigration and border security reform is accomplished, how would you enforce the current law of the land? >> i think the difficulty that we all have is the knowledge that in many ways this federal law is broken and there are areas, there are a lot of reasons why people come into this country illegally. a lot of them come because they want to work, they want to become a part of the system. we see huge numbers in that

area. some might come to conduct criminal activities. this is particularly to in terms of how the south of the border has turned into is in danger of turning into a narco state, you know, a lot of drug trade come across the border. some might be coming for purposes of international terrorism and these sorts of things. it is proper to do our best to enforce the laws as they exist. we want to try to work toward a system that recognizes the realities of where we are under this simpson mazzoli act that was passed nearly 30 years ago now and is proven to be lax and ineffective. but the reality of a system that will working under right now is that the president has declined to prosecute certain areas those particularly in areas i mentioned the people who would come here to make a better life.

>> you a great? >> i will talk about that in a minute. i'm happy to comment on that but the congress is basically declined to legislate. they are paralyzed. we saw that in the 2007 at 10 for some sort of immigration reform and the reality is that there are millions of people here because of the weakness of the law that are going to stay here. you are not going to send the numbers, probably much higher than 11 million, are not going to round people up on buses and send them back. so if under the current law, i would support the process of identifying people who are illegal, discouraging border crossings for a lot of reasons

security being one of them crime being another. i would want to see our foreign policy focus more heavily on solving the problems in mexico and central america. we are spending all of his energy diplomatically and financial and militarily over in places like iraq and afghanistan, in that part of the world. the greatest problem, or the greatest challenge that we can solve is to work to stabilize the governments in mexico central america so that there is a different environment down there and you won't see the same sorts of immigration patterns. with respect to the president declining to prosecute, and i think what you're seeing from some of the people, i think we're to be careful about timelines. when i was in the senate when

they had the immigration bill up in 2007, i introduced an amendment which said, from the date of the passage of this legislation come comes from that date if you've been here more than five years, if you can demonstrate that you put down roots in your community, java, language, education, there were a list of them and you should have a path toward citizenship. and for those others, we will be able to separate who's come here and settled in under this law and who should not be allowed that pathway. but we have to fix realistically the problem we have now. then we need legislation that can truly create fair immigration laws and that's the next step.

>> i know this this is going through the minds of the number of shares in the audience because i was just down there about a month and a half or so ago. is this a chicken and egg problem or is there one that comes first? >> the other -- >> is it security first or should we fix the law -- >> we should always emphasized our security. you know, the notion of being activities, serious criminal gang activity, not kids on the street hanging out on a street corner, but the series nature of gang activity. we raised that during the hearing when i started to get all the different pieces of criminal justice on the table. so we should never be stopping back. at the same time with the people who are here there's a game going on. both parties have been accepting

of the people who are here in that third category. the democrats usually the ones who are accused the most of accepting it, they see it quite many of them see it quite obvious as a benefit in terms of the percentage of the vote they might get. at the wall street republicans like it just as well. "the wall street journal" is an advocate of totally open borders. it's not just a democratic issue, it's not a republican issue. what we have to do is have a rational policy and get people to admit it and move forward. >> last comment, just on that topic and then will go out to the audience. as you formulate your decision, right, and you're probably traveling quite a bit. i know from my discussions with some folks that you've been along the border. in my visit it was i had been

down there several years ago and what i saw was stark dramatic, incredibly difficult terrain. i want to encourage you you are a number of shares along the texas border as well as the arizona border. i would be remiss if i didn't say what i'm about to say, and that is if you go down see for yourself. don't let the federal government tell you what you see. don't let them bring out the dog and pony show. show. these guys work their tail ends off down there, the feds do, don't get me wrong. see if the we need to see and which is one on one with these folks, because they are living this nightmare every single day. [applause] i want to turn to the share from davies county, kentucky. >> senator webb, i want to add to what has already been expressed this morning, and that is out appreciation for you being here.

your presence speaks volumes to the spot but also want to take the opportunity to both personally and publicly thank you for your service to this great country, particularly at a time of our history when the service wasn't all that popular, so thank you very much. [applause] >> senator webb, you have noted in the past that there are four times as many mentally ill persons in our prisons as an art in our mental health institutions. i know that to address the disparity and similar problems as you mentioned in your opening remarks that you sponsored a national criminal justice commission. although that did fail in 2009, 2010 and in 2011, i'm encouraged as are many of my peers that there is bipartisan support that continues to this very day. i'm also concerned with the fact, the statement he made during the course of your opening remarks that the naysayers out there, the

political advisers had indicated this was political suicide. i'm interested in what kind of leadership with the emphasis on that word leadership, is needed to change this national discussion, then needed dialogue on reforming the criminal justice system. >> thank you. the first thing i would say is, if you're looking for the kind of leadership that can change a national dialogue on this discussion we've shown it. we did it. nine years ago when i started talking about this, people were saying it was political suicide. by staying on this and you indicate that the bill failed in 2009, 2010 in 2011. the bill didn't fail. we couldn't get on the floor. we were listening to organizations as i said across the board, including your

organization which in 2011 finally agreed to come on board after a lot of questions and dialogue. so the type of leadership that you would look for, i hope is the type that will take on controversial issues that other people don't want to talk about stand up, ask the questions, take the hits show a way forward, which we did when we finally created the concept of the commission and put it income in this case put into the national dialogue. it's there. it's a success story in terms of the issue as opposed to the bill that we passed. justice kennedy became a supporter on this. the american bar association actually offered to pay for it $14 million. and now you see members of the other party who wouldn't touch the issue of criminal justice

reform, putting it into their platforms. the american conservative action conference here in washington made criminal justice reform one of their top three topics this year when they wouldn't have touched it with a 10-foot pole six or seven years ago. so i believe in a lot of different areas. i've approached a lot of different issues this weekend my life. if you talk about problems that maybe other people aren't going to talk about interest and the end half of the facts show a way forward, you can make a difference. i believe we have done that. the issue of the mentally ill in our prison system, it's first of

all the result of some well-intentioned cases, judicial cases that took place back in the 1970s when there was a lot of concern about putting people into mental institutions against their will and the standard became much looser and their were a lot of people who truly need help them out on the street and so many of them have ended up in our prison systems when they put it in other institutions receiving different kinds of care. we need to work on that as a country. we need to be providing the right kind of assistance to people who have issues like that, and not simply the brutality and inattention that's so often goes into being incarcerated. and i think also we should be

putting mental health parity as one of the issues that the congress should pass come in terms of how people receive medical care and insurance coverage at those sorts of things. so there are a lot of things we could do in that regard. >> i'm going to turn to one of my colleagues here in the front row. terry is the executive director for the michigan state insurance association, and i know he's got a question spent i did have and to he asked if. [laughter] .com and send it to come up with a person thank you also for your service to our country and a willingness to continue to serve. in such above and apart from the other candidates that you are at least here listening to our issues and are concerned and answering our questions about those concerned. if i could echo back the question, in fact i would like to congratulate you. in 2010 in national alliance on

mental health awarded to the legislator of the year for your work in criminal justice in helping the person suffering from mental illness. if i can piggyback on that, and you touched on interaction slightly. our jails have actually become the de facto mental health institutions as a result of those deforms your chalkbot from the '80s and '90s. our prisons are overcrowded. our jails are overcrowded. reforms needed need to be looked at on a continual basis. what exactly, if you're elected can we get your commitment that he would continue to work toward reforms and keeping people in our criminal justice system who have had their backs turned on them by the mental health system, can we get your commitment that you will continue to do that? frankly one of the largest things you could do in that new capacity would be ticket to medicaid reform so that those persons coming into our facilities can continue to get the continuity of care if

they're in the mental health system before they come in they can maintain the system, maintain their medication maintain their treatment. our jails were not designed to equip, staffed or trained to deal with mental health issues. if we have a silver bullet in our arsenal of dealing with overcrowding, i believe giving with the mental health and issues dealing with mental health is our solution. what would you do to help us with that? >> well, first of all as i mentioned, i think in society at large i think we need to focus on mental health parity in terms of medical care. people tend to forget that mental health issues are just as disabling as physical conditions and certainly i worked on that in the past and would continue to. the second thing is one of the

things i know i would do very quickly, i am not a believer in executive orders the abuse misuse of executive orders but i think it's a no-brainer to issue an executive order and get this commission on criminal justice reform going. it's almost a no cost and is a huge benefit to get these minds together and get the dialogue going in to work toward a holistic approach about all these different things we're talking about interact into a healthy criminal justice system. with respect to the overcrowding, the other area, kind of the alpha in the bedroom year that we don't talk about enough is the number of people for incarcerated for drug offenses. if you do a timeline, if you do a timeline back to 1980, i think 40,000 people were in prison on drug offenses. that is probably more like

500,000 on drug offenses. a great percentage of these are for nonviolent crimes. just as in mental health issues, i don't think it makes a lot of sense to put somebody in jail when they have a disease when they have an illness a physical illness. there have got to be better ways for us to approach the issue of drug use in america. one of the most fascinating changes in our society in my adult lifetime has been the approach toward cigarette smoking. think about this. we did make cigarettes illegal we just got the information out there and educated people about the potential harm. when i was working on the committee, on the house veterans committee when i was right out of law school, we would be in a meeting, even probably right now, people would be lighting up cigarettes. everybody would smoke to a three cigarettes in the space of a couple of hours.

and if somebody likes of the sacred, of course it's against county ordinance, but in general you would say what are they doing? that is actually a success of education regarding your health more than punitive law per se. there has to be some approaches when it comes to drug use. >> let me turn to somebody is equally impressive. psr national sheriffs' association sheriff of the year. he is here with us sheriff john glen howard from shelby county ohio. >> thank you for your service to the country and especially as a former veteran, thank you for your work on the g.i. bill. >> thank you for your service. >> yes sir. we have, through some troubled times the last five or six years in regards to their blue-collar, the great recession for whatever.

put tremendous financial impact on local enforcement, police departments but as a result of that as before we've had lots and lots of unfunded mandates from the state and federal government, especially through homeland security. do you think that we should be offended by all those unfunded mandates coming to his? your thoughts sir? >> i think you're right to be concerned, and certainly there are a number of suggestions that i would have, our reactions that i would have, looking at the issue itself. the first one is kind of a sense of irony from what i was just talking about a little while ago with these sanctuary cities question. i support the notion of local communities, local law enforcement communities having

to make decisions about the best way that they can enforce laws in their communities. and the sanctuary cities concept was designed to do that. educate have a federal law coming and say you have to check someone's resident status. you have to do this. you have to do this when that is essential a federal function. you have the same thing with these mandates, that they are mandating from the federal or state level that something be done, and then they are taking away the discretion of local law enforcement in terms of how they should utilize the assets and the people that they have. i think that's a legitimate question. there's another question from the federal level that kind of hit me when i was thinking about

this and that is if you look at other congress works. you have two different types of committees in the congress. you have an authorizing committee and then appropriating committee. i was on armed services committee. we would authorize programs. similar in nature, not specifically to what you're asking but authorize the program and then the appropriations committee had to appropriate the money for the program to take place. if they didn't even though that program had been authorized it wasn't going to be put into place. you would have a similar argument here if that were federal mandates that were not funded. but in general i would say i think there should be respect for the discretion of local enforcement in terms of how to use their assets, and we should be very careful in terms of requiring local enforcement to conduct activities that belong in the federal or state level.

i hope that answers your question. >> thank you senator. senator, we want to thank you. i know your schedule is getting hectic by the day and we have a very special gift for your that we would like to present you this morning. on behalf of the national centers association, i want to present you this -- national sheriffs' association, i want to present you this flag that actually flew over fort mchenry yesterday in honor of you. it's a representation of our support for you being here. i wanted to you on a personal note before we finish, a couple things. we realize in the green room before we can that we worked in the same administration many many years ago. i'm going to say this from the heart. i hope it comes across as such. you've taken a lot of heat you've taken a lot of hits both physical and political. as you look out over the

horizon, i know that you're having a lot of people say do what you got to do and run. by being here today give committed to us at least that we come sheriffs in his august are worthy of listening to talking to him want to thank you so veryvery, very much spit thank you very proud of having worked in the reagan administration edited one of the great accomplishments of the administration would bring good people in and allowing them to leave. and we are probably going to get a lot busier over the next week or so. if people want to help us out, we appreciate that. >> if you missed any of the presidential announcement, as of 18 men and women have announced their money for their party's nomination to on friday we will show you all of them started with texas senator ted cruz, the first announcement all the way through new jersey governor chris christie, the latest. so far 14 republicans and four democrats are running.

i can back this friday at 10 a.m. eastern on c-span. >> lucy hayes was the first first lady to earn a college degree, and during the civil war soldiers serving under her husband called her the mother of the regiment. she influences her husband rutherford b. hayes. to switch from the whig party to the anti-slavery republican party it as first lady she host the first annual white house easter egg. lucy hayes, this sunday night on c-span's original series first ladies can influence an image examined women to fill the position of first lady and influence on the presidency from martha washington to michelle obama "sundays at eight" p.m. eastern on american history tv on c-span3. >> tonight on c-span conversations with some of the leading executives and regulators in the tech industry.

the event gives an insiders view on the business deals and trends shaping the internet. here's a little of what chairman tom wheeler said about the public response during the net neutrality rulemaking process. >> one of the most surprising things over the last year was the massive outpouring of public comment. up front, we surprised at the amount of comments that came in? what was your fault when you are like this is bigger than most policy debates are at the fcc? >> there was a day early on when we had 100150,000 kind of comments being filed come and hugo weight. -- and you go wow. that's why this debate this decision was so damned important because, because those for many people who are fighting with us, not all of them were probed it

was about three quarters were probed that still leaves us only people who didn't like the idea which is a nontrivial amount. but the point of the matter is that this proved the power of open internet to free expression. and it just happened that the issue being decided and the ability to communicate using that technology happened to coincide. >> more from fcc chairman wheeler at the tech crunch district conference on c-span tonight at eight along with others like entrepreneur alex klein to describe this product computer design kit for children children. >> it's a computer. you just happened to make it yourself. it has the playability, the

intuitiveness and accessible a perhaps a toy but it is powerful. kids around the world have used to make service, space station to automate the position of solar panels. kids using this kit have shared over 5 million lines of code. the idea behind the project is more to build a new kind of computer company from one that puts creativity in the front seat rather than consumption. it starts with a simple kit but from there you are building a hardware system with speakers servers, radios. you're hooking it up to the internet. i think it was inspired in many ways by the notion that making learning and playing are all intimately connected and all of us have this curious and creative spirit of a nine year old inside of us. all you need are the sort of simple steps, stories and affordable tools and you can break out. play can often become one of the greatest accelerants of contention in our view.

>> our coverage of the annual tech crunch disrupt nato conference begins tonight at eight eastern on c-span. >> live coverage on c-span today about it in the afternoon at one future and rick perry lays out his economic plan, talk about how to fight the cycle of hopelessness and lost opportunity to make americans feel trapped in your that slot at 1 p.m. eastern the president obama speaks about the economy to the university of wisconsin for those remarks at about 2:30 p.m. eastern. again that his life on c-span. >> how does the debt crisis in puerto rico compared to the one increase the a panel says greece position as a sovereign state and puerto rico's position as a u.s. territory will ultimately

affect other countries there. from the american enterprise institute this is two hours. >> ladies and gentlemen, if everybody could take their seats we will begin. thank you. and good morning. are we ready on our tv back your? thank you. i'm alex pollock, and it's my pleasure to welcome you all to our conference on "a tale of two debt crises: is puerto rico america's greece?" as many of

you have told us it seems our timing for the conference was pretty good, and i need hardly remind you current events, headlines and debates make us quite timely. we have the prospect for 20 faults, that's a line from the "washington post" this morning, of course closing week banks, weekend runs on atms new kinds of photos on the grandstand in front of the atm. the governor of puerto rico publicly saying that cover the debts are not able. speaking of a debt moratorium. lots of debates about possible bankruptcy for puerto rican government entities or financial control board be imposed. a new depreciated currency for greece or as my friend desmond has called, and exodus for

greece from the euro. further credit downgrades and all in of to keep us busy thinking about this. it is an entertainment and comic relief as part of this. since rating agencies and officials have announced that a default by greece on debt the government would not be a default. at least they wouldn't be called a default. and we have the president of the united states and the secretary of the treasury urging europeans to find an agreement. i'm sure they really appreciated those helpful urgings. then there is the sober truth which is that troubled bars can keep playing as long as the lenders keep making new loans come and a new loans go to pay the interest on the old ones, even though net, nothing is changing except that debt is

getting bigger. when the lenders stop lending more, it's the end of the extent and pretend game. invite you both greece and puerto rico are fine examples of debt finance to governments centric noncompetitive economies, which in margaret thatcher's wonderful phrase, have now run out of other people's money. let me share a quotation with you all. the history of greek borrowing is to live constantly beyond its resources, this begins. it continues, the debt burden was plainly beyond greek capacity, but for a long time they found new debt to furnish funds to pay the interest on the older debt. however, this aid came to an end. the greek government been declared a pending further negotiations that would pay only 30%, interest on its debt.

for far years of the creditors committees and the greek government engaged in stubborn and negotiation without issue. finally, on the initiative of the german government provisions were written into agreements whereby greece entrusted to an international financial commission the duty of controlling the revenues set aside for debt service. however, greek opinion was profoundly hostile to this arrangement. the subsequent record of greek borrowing has a reputation as the repetition of an early historic this was written in 1930 describing events in the 1890s. but of course they are remarkably appropriate for june 30, 2015. in both greece and puerto rico in their government accounts have shown and notable ability to keep a debt. there are two numbers on the slide, i know but if you get a

chance to look at it on the website, it shows the biggest tenuous estates by debt including such notables as illinois, and compares it to puerto rico and then converts it is to per capita product and per capita debt. and we find that the average of the 10 biggest state borrowers have 11% stated invisible to the gross product whereas puerto rico has 69% a remarkable three times the debt burden of illinois. when i showed this number to our colleague, thank you he said that the puerto ricans don't have to pay federal income taxes so they can pay more to service the municipal debt. nonetheless, there is a huge level of government debt in puerto rico. as of today something the greek and puerto rican government have

in common are standard & poor's come in with standard & poor's on the panel, so using their ratings are asia ratings of ccc- with a negative outlook for the government of greece and ccc- with a negative outlook for the puerto rican government. of course, when you have a negative outlook, there's one step down is the fault of various kinds. and it is important always to remember that although people talk loosely about the death of greece and the debt of puerto rico, in all cases -- debt to russia were talking about the death of the government, it's the governments of debt that is at issue. and in these cases it all boils down, ladies and gentlemen to alex pollock's law of finance, which is loaned which cannot be paid will not be paid. so the debate, therefore is really about how to divide the

inevitable losses among the parties. and for governments in particular its about how to obscure the losses which are being taken and to keep the public confused about what's going on for as long as possible. now, our expert panelists are going to enlighten us further about the past, present and perhaps the future of these two broke big time government borrowers. let me introduce him in the order in which they will speak. first, dave hitchcock, senior director at standard & poor's and has served as prime analyst for major state and for the commonwealth of puerto rico. he's been with standard & poor's for 35 years which means you have seen a lot of debt crises in that time, as have i. date is past chairman of the municipal analyst group of new has served on the board of the national federation of municipal analyst at the controller

general advisory council on comment auditing standards and received the first team all-star a board in 2014. next will be john mousseau who is over 30 years investment management experience and is executive vice president director of fixed income and portfolio manager for municipal bond investments at cumberland advisors. he is a nobody national federation of municipal analyst, a new york society of sutured analysts and his writing has appeared in the bond buyer and "the wall street journal" and "the new york times" and he was last with us on this panel to discuss the bankruptcy then looming of the city of detroit, and we welcome him back to discuss some more like to say interesting issues. our third panelist as my colleague andy co-organizer of the conference desmond lachman to specialize in the global macro economy come exchange rate policy, the u.s. housing market

and multilateral institutions. previously managing director at solomon smith barney and deputy director in the international monetary fund. desmond has written extensively on the global economic crisis, a dollar, estranged of the euro area and on the greek debt crisis in particular, about which he has been an unrelenting and correct pessimists. next will be bert ely who has been a consultant and prominent commentator on banking issues. since establishing his own consulting practice 40 years ago. bert especially analyze conditions in the banking sector and we've asked him today to include his abuse of the banking systems of greece and puerto rico in his remarks. bert has often testified before congressional committees and is interviewed by the media on a regular basis, and he often attends conferences at aei and

is a prominent questioner of the panel, but today he will have to answer your questions. our final panelist will be whitney debevoise -- it's hard for me not to say that the french way -- who is a senior partner at arnold and porter in which she rejoined in 2010 having served as u.s. executive director of the world bank from 2007. whitney's experience includes brady plan restructurings at the end of the 1980s global debt crisis, and debt restructuring of the belize, greece and argentina, numerous privatizations. we should have some of those coming along out of these debt problems. as well as eurobond financings. he has written extensively on the securities regulations, debt restructuring an international banking and sovereign immunity. we are are delighted to this truly

knowledgeable and outstanding panel with us today. now each of our panelists are going to speak from 12-15 minutes. after that we will give them a chance to react to each other or to clarify points that they have made. after that we will open the floor to your questions and we will adjourn probably at 11:00 expect promptly. things are being with us. >> thanks. so as it turns out when you talk on puerto rico and greece you have to be quick on your feet. i supplied new slide yesterday afternoon to the panel here updating greece, but i could not at that point update the slides for puerto rico.

celebrity one of the slides is out of date having passed about 12 hours. so let me start. i just want to make a disclaimer. i am a puerto rico analyst analysts why not an in depth expert of greece. i'd be happy to connect you with our greece team, but i am passing on the comments from our sovereign ratings grew. i've been asked to talk about similarities between puerto rico and greece, and differences. and so well the first thing is that we look at different criteria. i just want of a disclaimer. we are not using exactly the same criteria, so when i point to some metrics it's not necessarily weighted the same for even evaluated the same from one to the other. one is a territory of the u.s., the other is a sovereign nation. however, we also have additional criteria come in our ccc

category, which reflects short-term factors and short-term liquidity and they both come in under that and, indeed, a ccc- reflects the timeframe that we are looking at over six months for potential restructuring. and i will also point to some other longer-term trends. so this is still accurate because their criteria doesn't change. you can see within the ccc criteria we have different traditions with a plus or a minus or without either, and so the ccc+ which we had although it is on credit watch negative until yesterday basically reflects that we don't have a clear path identified for a debt default for restructuring.

a ccc on the other hand, indicates that we deal that it essentially is going to happen within the next six months. for ccc+ we're looking over 12 months or longer for potential restructuring. maybe not a specific path. the ccc we see a likely default within 12 months to six months, particularly with some of the governor's comments in puerto rico yesterday. we believe there will be some sort of restructuring within the next six months is nearly inevitable. so i guess i can slip pretty quickly through the slide and i said i would read a little bit a couple of the bull appoints from our release that actually came out this morning. so basically we feel that

default, distressed exchange retention of the commonwealth of death is inevitable in the next six months absent something anticipated. we believe that the report that came out yesterday or was released yesterday, that was commissioned by puerto rico, people refer to it as the kruger report, but it actually does have a formal title, they embrace about bided administration in puerto rico indicates in our view that they will pursue some sort of debt restructuring. the governor said something to that effect last night in his address to the commonwealth on television. and so we do it is our understanding that puerto rico has adequate money to pay its debt today. add-on july 1 and that it intends to do so.

and that we are not aware of a particular default that's been planned. however, we do believe that they will pursue a restructuring of some sort shortly. in fact, under current projections we believe that they will have to. typically, puerto rico is needed to sell about 1.2 billions of external cash flow notes within the fiscal year which ends june 30 for. they typically get most of the revenue towards the end of year particularly when income tax comes in. and they need cash flow financing in the fall. so while they may pursue various measures to boost their liquidity in the short run, and bills have been introduced to tap the retirement funds of the state insurance fund the for liquidity purposes, they might sell trans--- trans for

liquidity. we believe that even those with relatively temporary, and in our opinion come this fall or perhaps earlier they will have a very severe liquidity problem which is within our six month timeframe. so that puerto rico. -- that's -- this slide was updated yesterday is still accurate, and it's got some pretty small type, but basically we feel that greece is going to for political reasons prioritize payments other than to debt holders, and that it's relatively inevitable that there will be restructuring in the short run it at one point greece was rated lower than puerto rico, but we feel with a six month timeframe encompasses both ratings at this point.

so let me talk a little bit about puerto rico's pressure points. so first liquidity. they really need the market access as i just talked about particularly in the fall to carry them through the fiscal year. without that they will have some severe issues on liquidity. and then there's some longer bound issues. in the background, i'll get to the economy but both greece and puerto rico should a declining economic trend which brings these issues to the floor but we should all bear in mind that these short-term issues on the result of a long-term trend, which is underpinned primarily by economic weakness. in particular the pension systems are puerto rico are at risk. they have been underfunded and far years. they cannot can afford to fully fund them on an actuarial basis. i have seen some commentators point out the fact that

essentially on an actuarial basis they have no assets in their main employer's retirement fund and expect payment to boost. that's not quite true because they sold some pension bonds a few years ago and they can use the cash for that so they can actually write on a cash flow basis pensioners with a negative actuarial assets which is what we would expect in the short run. but that can only last so long to we do expect that when that's exhausted to go to a pay-as-you-go system and to have to substantially boost their payments into the retirement system if they are to fully pay promised benefits to pensioners. the health care system has very large, rejected deficits in the next few years and that's driving actually some of the biggest part of the out year gaps that were projected in the report that came out monday. we have been aware of that for some time. and some of that is that they

are frontloading some the payments they got from the federal government under the aca and they will exhaust of those in the short run when we start getting into fiscal 2018. out years we see very large gaps starting to approach the size of the revenues they are projecting. so that would appear unsustainable. the debt service does increase perhaps not as rapidly as these are the things i'm going to in out years. there's increased in general fund debt servicecommand before they get to the general fund, a lot of the press reports that people don't take into account what the lookup increase in general fund, behind the that there's cofina, a sales tax financing corporation which takes one off the top before it gets to the general fund. they have a lot of debt. that goes up about three to 4% a year. and then although they have lowered operating deficits, they are still having ongoing

operating deficits. they are projecting this year in the last disclosure statement about 190 million offering deficit for fiscal year 2015 even though the 2015 budget was balanced on paper. we feel there's operating implementation risks. even if they 2016 balanced budget is enacted on paper we feel there's still implementation risks. i can go into some of the details of that if the panel discussion gets into it. ..