uncovered -- i have a copy of his lab results that he voluntarily sent to me. i will post this document on madison star moon facebook page following this hearing. did this come from chemical spray? how can we know if local, state and federal be agencies refuse to take ownership of the issue to provide testing and usable data and, ultimately, regulate when required? the whole burden of investigation cannot rest with the epa. it must be shared with other agencies and congress. however, there must be clear lines of authority so that the public is fully informed and protected. the stated purpose of this hearing is to consider the full range of pollution generated by aircraft. the desire for investigation into chemical spraying has become a worldwide phenomenon. we are counting on you as the protectors of the environment to act. no more run around for citizens deeply concerned about the health of the world and the individuals that inhabit it. thank you.

>> thank you for the opportunity to speak today. my name is david baake, i'm a fellow and attorney at the natural resources defense council. nrdc is a national, nonprofit organization that works on all manner of environmental issues, and we represent 300,000 members nationwide. eight days ago administrator mccarthy laid out a powerful case for acting on climate change. she said: climate change is one of the most important issues we face as a country and as citizens of the world. it affects everything we know and love; our kids, our communities, our ability to earn a decent living. it impacts our health, our safety, our livelihoods. one thing is crystal clear, acting on this challenge is a moral responsibility.

administrator mccarthy is right. the united states has a moral obligation to rein in dangerous climate change. epa has already shown tremendous and admirable leadership in going after emissions from cars, trucks and now power plants, and we need to see the epa exercise the same leadership when it comes to regulating aircraft. airplanes are the largest unregulated source of greenhouse gas emissions in the united states' transportation sector. they're responsible for 11% of transportation sector emissions, 3% of total u.s. emissions and 0.5% of total global emissions. and these emissions are skyrocketing. we expect -- epa expects nearly 50 increase between 2015 and 2035. in light of these facts, it is indisputable that aircraft emissions cause or contribute to air pollution that may be reasonably anticipated to endanger public health and welfare within the meaning of section 231. and epa should quickly adopt

this proposed finding. there after, epa must take bold action to reduce these dangerous emissions. the united states, under president obama, has pledged to reduce economy-wide emissions by between 26 and 28% between 2005 and 2025. we must make good on this commitment. it is our moral responsibility as administrative mccarthy reminded us. but as the world resources institute has shown, we cannot do so without taking meaningful action to reduce aircraft emissions. and i include a citation in my written comments, but wri has projected we would need to reduce aircraft emissions by 2% to meet that target. given the urgency of the climate crisis, epa should propose standards that go far beyond the options currently being considered by icao. we would welcome meaningful

international standards, and we encourage epa to continue pushing icao toward greater stringency, and in particular to encourage icao to adopt coverage of in-production aircraft as others have urged epa to do today. but given that icao has already committed to adopting a technology-following standard and has already ruled out the possibility of regulating existing aircraft, it is clear that the united states cannot deliver on our commitments if we simply rubber stamp the icao standards. epa and must do more. can and must do more. fortunately, the clean air act provides clear authority to rein in emissions. as epa recognized in 2008 in its advanced notice of proposed rulemaking on regulating greenhouse gases under the clean air act. section 231 of the clean air act authorizes a fleet-wide averaging system that applies to both new and existing aircraft. draw canning on this

authority -- drawing on this authority, epa should propose a system that is sufficiently stringent to stabilize u.s. aviation emissions by 2020 consistent with industry's commitment and reduce them thereafter. we know that this can be done. in 2010 at the request of then-senator kerry, epa develop canned a scenario for stabilizing aircraft emissions at approximately 250 million metric tons per year by improving fleet-wide efficiency by 2.2% between 2015 and 2030. epa noted that airlines have historically improved their fuel efficiency by 2-3% per year and concluded that similar improvements would be achieve bl between 2015 and 2030. the agency cited improved operations and new aircraft technology including geared turbo fan engines, lighter airframes and blended wing/body design as possible contributors to such a reduction.

these operational, technological improvements are clearly achievable as well as cost effective. and we believe that epa should use this 2010 study as a baseline in setting its proposed domestic standards. finally, epa should also consider the opportunity to retrofit existing aircraft. industry leaders have already taken significant steps with cost effective, safe retrofits. a key example here are winglets which are wing attachments that reduce drag and improve efficiency by 3.5-4% per flight on trips over a thousand nautical miles. alaska airlines is an industry leader, and they've recently introduced, i believe this is pronounced scimitar winglets. a technical term. and they reduce emissions by an additional almost 2% per flight

which brings you up to about 6% total reduction. since this technology is safe, technically feasible and cost effective, epa should propose to require it across the entire fleet. and epa should also work with the faa to develop comet presently -- complementary standards to produce jet fuels that reduce emissions compared to conventional fuels. industry leaders are already using these fuels on a commercial scale. for example, alaska airlines has been using low-carbon biofuel on regularly scheduled flights since 2011, and united recently invested 30 million in a project to convert household trash into jet fuel which is expected to supply enough fuel for 20,000 flights per year at a competitive cost. building on this work of industry leaders, epa should develop a low-carbon fuel standard to complement its 231 emission standard. in conclusion, epa should adopt

its proposed finding as expeditiously as possible. the science here is indisputable. next, epa should continue pushing icao toward greater stringency, including coverage of in-production aircraft. however, it should also prepare to propose standards that go far beyond the options the organization is considering. specifically, epa should propose a fleet-wide averaging system that is sufficiently stringent to stabilize u.s. aviation emissions at 2005 levels by 2020 and reduce them significantly thereafter. epa should consider retrofit options including the possibility of requiring airlines to use winglets on their entire fleet. and epa should work with the faa to develop a low-carbon fuel standard. thank you very much for the opportunity to be heard. >> thank you all for your thoughtful comments. i'd like to invite up our last two registered speakers for

today, patrick roddy and max bliss. patrick and max? [inaudible conversations] >> good morning. >> good morning. >> good morning, okay. >> go ahead. >> my name is patrick roddy, i'm a san francisco-based anti-geoengineering activist and researcher, and i run stop spraying us-ff.com. today's hearing is supposed to address whether greenhouse gas emissions from aircraft endanger public health. but when you mention greenhouse gas, most people think of carbon dioxide, a harmless trace gas that's essential to all life on earth. but co2 represents just 3% of the planet's greenhouse gas. 95 percent of it is water. even preschoolers know overcast skies make the nights warmer and

the days cooler, reducing the temperature range of the night's lows to the day's highs. which wrings me to -- brings me to contrails. all but the willfully ignorant know our skies have changed dramatically over the last few decades. the dark blue skies of our childhood are replaced with a milky-white haze with contrails stretching from horizon to horizon and spreading out to cover the sky. these trails can stretch for thousands of miles and can be seen by anyone visiting nasa.gov. these trails persist regardless of altitude, temperature, humidity or other atmospheric conditions. persistent contrails used to be rare but have now become an everyday phenomenon all over the world. if physics hasn't changed, what has? so what makes these trails form and stretch thousands of miles? which condensation nukely eye are they forming on? geoengineers propose spraying

tens of millions of tons of reflected articles into the atmosphere in an attempt to reflect sunlight back into space and thereby reduce global warming. this is known as solar radiation management, oral beta modification. in this process is quite simple. tiny particles sprayed from jets would act as condensation nuclei attracting water vapor to form contrails which would then spread out and form artificial cirrus cloud cover. when geo-engineers discuss solar radiation management in public, the only substances they say they'd consider spraying are sell fates or -- celphates. highly toxic nanoparols of aluminum -- particles of aluminum and barium should be used instead, and when confronted, they doggedly refuse to admit the impact of their

proposals. other engineers are more candid. stanford admitted in an interview in 2006 that it was discussed putting pathogens in clouds to wage chemical and germ warfare on civilian populations when he worked at a government weapons lab. it's no surprise that the public doubts these scientists have their best interests at heart. last month i brought this paper to the paris climate conference addressing the human health impacts of proopposed geoengineering -- proposed geo-engineering solutions. it documents the dramatic increase in alzheimer's and respiratory failure since the 1990s. i could include that these persistent contrails are, in fact, artificially nukelated with the same metals outlined in raytheon's patent and that the program has deployed since at least the 1990s. weather modification research is nothing new. the earliest patent dates back

to 1920. raytheon's patent proposes reducing global warming by injecting ox sides in the 10-100 micron range into the stratosphere using jet exhaust. the u.s. navy proposed other methods including airships, rockets, chimneys and slurry pipes. the best known proponent is dr. david keefe. he told the 2010 annual meeting of the american association for the advancement of science that aluminum oxide has four times -- [inaudible] as does sulfur and 16 times less the coagulation rate. sulfur particles quickly fall out of the stratosphere. he also said a fabrication study proved it was very simple to spray high quality aluminum particles from a plane by injecting aluminum vapor into

the exhaust. his 2010 paper for geo-engineering proposed spraying 50 nanometer thick discs of aluminum instead of celphates, also concluding the part -- particles are much more effective in a 2010 perspective. the material safety data sheet states that -- [inaudible] an irritant to the respiratory system, can cause pulmonary disease, tumors and should not be released into the environment without proper governmental permits. alzheimer's disease rose to the sixth leading cause of death in the united states between 999 and 2013. in 1994 it didn't even make the top ten. now people in their 20s are showing signs of alzheimer's. research shows aluminum accumulates in the brain, bones and kidneys, accelerates brain aging, increases inflammation of the brain and is seven times

more available when inhaled and ingested orally. barium is much deadlier. according to its material safety data sheet, exposure to barium salts can cause pulmonary arrest, vomiting, diarrhea, convulsive tremors, shock, convulsions and sudden cardiac failure. barium targets the cardiovascular, nervous, castro intestinal, hematology, reproductive and renal systems as well as the adrenal glands and liver. it is an irritant to the skin and should not be released into the environment. in 2011 respiratory failure overtook stroke to become the third leading cause of death in the united states. at a time when smoking was at an all-time low, emission standards on vehicles and power plants were at their strictest and heavy industry had relocated to china. hundreds of papers thoroughly proved the toxicity of aluminum and barium. according to epa, particulate pollution can cause early death from heart attack, stroke, congestive heart failure and

chronic obstructive pull pulmony disease, asthma and inflammation of lung tissue, cancer and reproductive developmental harm. it canning lower life expectancy by one to three years. water and ice have refractive indices of 1.333 and 1.309 respectively. but in recent years a formerly rare phenomenon has become common place, a 21-degree halo completely encircling the sun. some argue these are sun dogs, be i nothing can change -- but nothing can change the retractive hay toes of water and ice. much tighter halos. aluminum oxide, for example, has a refractive index of 1.762-1.778 while barium has a refractive index of 1.636.

my contention that these incredibly rare sun dogs are, in fact, formed by salts reinforced by rainwater analysis taken during a 30-day period when i recorded 21 of these halos in march/april 2015. i collected rain water in clean glass bowls on the roof of my san francisco apartment building on april 5th, 6,000 miles downwind from the nearest factory, power plant, freeway, quarry or mine. i sent it to a lab, and they recorded barium at a staggering 160 micrograms per liter. less than one gram will kill an adult human. an earlier test collected in january '14 recorded 190 gallons per liter. i submit both of these for the record. san francisco's air should be pristine. we've got prevailing winds off the pacific ocean. why is it left to concerned citizens to pay for our own rain water analysis, and why did the epa stop publishing on airborne

aluminum back in 2002? let me take this opportunity to formally submit a freedom of information request for epa to release the historical results of all metal tests in our air and rain water from the 1980s to present. i have recorded hundreds of time lapse videos showing the progression of these persistent contrails since 2011, documented the alarming increase of these persistent contrails. oh, sorry. thousands of others worldwide have also documented the alarming increase and been met with deafening silence from supposedly green organizations like greenpeace who are a proud member of, in the solar radiation management governance initiative and all governmental agencies including epa. your mandate is to protect the environment, especially the air we breathe. i wouldn't expect you to have met the existence of a program as covert as the manhattan project even when blatantly obvious to an increasingly aware

and outraged populace. but when a geo-engineering program is causing millions of premature deaths per year, you must be more than passive back and forth between ore three-letter agencies. do your job. history will judge you on your action or inaction. >> firstly, i would like to thank the organizers for making this hearing possible, to thank the other contributors and a very big thank you to those that have helped with the vital funding to make my trip possible. my name is max bliss. i am no scientist. in fact, i'm a general builder who's worked outside to all my life. after moving to the southwest of france in 2009 to a region famed for high sunshine hours and big, blue skies, i became increasingly aware of the incredible increase in contrails and associated cloud cover. i began to notice this daily, and this greatly troubled me.

i started photographing and film the sky for four years. barely a day goes by without seeing various contrails, some thick, spreading, but most alarming is watching spurts within contrails, some -- watching and then watching the sky blot it out. subsequently, i wanted to learn more and became an avid researcher and a passionate environmentalist. i have attended and participated in various high-level climate change and climate engineering conferences. with respect to this hearing on the proposed finding of greenhouse gases from aircraft cause or contribute to air pollution that may reasonably be anticipated to endanger public health and welfare, the major component -- 95% of greenhouse gas is water vapor from exhaust or ejected particulate matter from aircraft form contails. haziness and cloud blankets which eventually -- which certainly do affect changes to

the weather or rainfall, altering temperatures, inducing droughts, reducing frost, etc., and ultimately affecting climate change. when the planes were grounded following 9/11 and later in the u.k. in 2010, there were obviously no contrailings. the sky cleared of clouds, a natural clear, blue sky returned confirming aviation is affecting cloud cover. according to various investigations such as the 1998 subsonic contrail and clouds effects special study, they have noted that apart from water and co2 there are metal particles including zinc, aluminum and titanium, also soot, sulfates, etc., found in the exhaust blooms contributing as nuclei for ice crystals to form contrails. a 2010 study for the wright patterson air force research laboratory entitled nano-sized aluminum-altered immune function opens the abstract of this seasons sentence. on the basis of their uses in

jet fuels, munitions and the most likely scenario is inhalation. the u.k. civil aviation authority responded to the concerns of fume incidents. the 2004 investigation into carbon air quality found that the peak particulate matter found in the air ducts was aluminum. although the study does hypothesize that this may be from the heated engine lubricating oils contaminating the air supply via the air bleed valve, it is worthy to note that 50% of the cabin air comes from the atmosphere, and as planes often fly through contrails, all the aerosols left by other planes are investigating into the presence of nanoparticles although very difficult must be initiated as soon as possible. many hundreds of pilots and frequent flyers report -- fliers

report illnesses. there are many new studies emerging on the links with aluminum and alzheimer's, dementia and various other serious ailments in humans, animals, whales, fish and even bees. plants, trees and all life is affected by aluminum toxicity. recently, the media has announced that one in three seniors will die with alzheimer's. it just becomes clearer with research that nanoparticles may already be in jet fuels and are certainly planned for implementation in the near future and also, for that matter, in biodiesel. aluminum oxide not only has potential negative health impacts, it is also known to contribute to making clouds as it is used in tracer rockets for nasa. aluminum oxide has been suggested by geo-engineers for solar radiation management but is known to damage the ozone. aluminum is a -- [inaudible] and is mentioned in weather

modification patents although there are hundreds of patents using various methods and ingredients. in a 1956 u.s. patent, 2756097 for weather control, the office states: we have discovered quantities of very dry, superheated water vapor will disturb the thermal and electrical balances of cloud formation causing dissipation or precipitation. we accomplish this process of our invention by injecting water or water solutions of ionic salts into heated exhaust gases of a power plant such as internal combustion engine, jet engine and the like. the investigation into the huge, disturbing increases in contrails, associated cloud coffers and changes to the weather -- covers and changes to the weather, one will be left wondering if this, indeed, is intentional or deliberate as the extra contrails and cloud generation is depressive in correlation -- excessive in correlation with the increasing,

growing aviation use. i have taken pictures of nozzles in line with the engines on pilons described as oil drain masks, but some patents state ore material can be evacuated from them. even if oil was leaked out into the has exhaust plume, smoke would be generated, and smoke is used for cloud seeding for weather modification. a 1970 paper by wallace b. mcclay on the possibility of -- mcclay on the possibility of aircraft contrails, he describes how the ice chris calls formed effectively can seize cloud decks below, increasing cloud cover as effectively as dry ice cloud seeding. he writes: possible consequences of this are are considerable. in fact, it seems probable that one of the projects for modifying the global climate discussed by fletcher in 1965 -- namely, modification of cloud cover over the north polar basin by cloud seeding -- is already

underway. up until the mid 1970s, documents suggest the establishment desire was to intentionally met the arctic sea ice, to free up shipping lanes, access rich resources and open up vast regions of ice-locked land and adversely climate changes could likely be blamed on the anthroprogenerallic global warming to instigate the beginning of global governance through united nations' sustainable development program to create the new world order. interestingly, when one begins to research the history of weather modification, it is surprising how far up the power structure the desire for developing a program was from presidents eisenhower, jfk, johnson, onwards and onwards with a high priority put on these possibilities. the johnson administration was using weather modification for geopolitical leverage with india and pakistan in 1967. would we be naive to think that the interest just went away

because of the treaty? look up owning the weather 2025. in conclusion, pollutants from aircraft that need prohibitions such as sulfates or the use of any nano particles which can travel via the air from a source of combustion into life organisms is causing serious negative health impacts to many forms of life. this needs to be tightly regulated and ultimately stopped. the notion that the climate science is settled is often repeated over and over by interesting stakeholders such as those looking for lucrative funding in the burgeoning climate change arena, be it academics, politicians or entrepreneurs looking for success or to get rich or, more darkly, hoping to implement a one-world government system. climate has always had natural variability and weather extremes. however, these days some weather extremes can be stimulated with technology. it is appropriate -- is it appropriate to reassist the global warming theory and replace it with climate change is manmade by using covert

weather and climate modification technology known as geo-engineering for geopolitical ends? we do not knead to be scientists to -- need to be scientists to observe the sky and see the obvious negative effects aviation is having and research the spiraling health impacts. just start looking up and wake up. we do not use weather modification or the despotic new world order. god bless and peace for all. >> thank you both for your comments. i believe -- unless there's additional registrants that have come in since a few minutes ago -- we have concluded our hearing for today. on behalf of the whole panel and the epa, i'd like to thank everybody for your thoughtful comments and suggestions today. i want to remind everybody, as i said at the outset, the comment period officially closes on this action on august 31st at 11:59, so i encourage, we encourage written comments, we want

additional information and anything you can provide. thank you all for taking the time today. we appreciate it, and we'll hope to hear from you soon. thank you. >> coming up live today here on c-span2, pulitzer prize-winning journalist ronnie green will be at the politics & prose bookstore in washington, d.c. to talk about his new book, "shots on the bridge." it examines the real-life case of six unarmed citizens who were shot by police in the aftermath of hurricane katrina and the events that followed. that's live at 7 p.m. eastern on c-span2. ..

welcome to the event. i'm joined by my colleague ben bernanke and mark muro. there's a lot on the table and we are going to talk about everything from defense's role and short-term economic policy

and growth and potentially aiding and defense spending and budget and the budget deficit. my job this morning as moderator is a couple of the broad considerations here. we'll spend about half of the time doing that and then we'll go to you for your questions. i think you know the interest in the question and the subject right now. congress is soon to return home to washington and to face the question of how to reverse a potential shutdown. for those who are watching in

c-span, none of us are running for president. [laughs] >> we are going to talk about broader economic strategy and broader national competitiveness let me, before i introduce ben and mark, let me just say a couple more words, and i'm going to try not to overdo the statistics. i think a couple of them would be useful, and as you probably know, some of you, defense is now representing the defense sector, it's representing little less 3.5% of the growth. that's a downward slope at the

very end of the bush year, early obama year and we are headed downward to 3% of gross domestic and projections declining further thereafter. by historical standards this is a burden on the u.s. economy. in the clinton years we were also around 3%. in the reagan up close to 6% in gdp, and as much as the 1950's and '60's it was 10%. 15% of the federal budget. it was much reduced reduced fron earlier period.

and therefore, this is one of the ways the federal government interacts with the broader economy. if we explain those things in those terms, you get a sense of important of the sector. a few more statistics then the real show here. it can be a lot more in certain parts of the country. that's certainly one of the things mark is going to talk about and i'll say why, virginia has the highest defense concentration or dependency of any state. by the way, when i say defense in this context, i'm including the intelligence community i'm including the nuclear weapons, not including veterans affairs. just to be clear on the definition. you can bring those discussions

if you wish a little later on. here in dc, defense is like 6% state and local economic output. so substantial. defense's role in manufacturing, research and development. here the defense sector is a bigger share then 3% gdp number would imply. for example, a national manufacturing, about a 100 billion a year. 5% of national manufacturing output and a lot more in certain sectors like aerospace, space launch. research and development by some metrics defense and related activities are 20% of all national research and development. i'm not going to bore you about the details right now.

it's probably fair to say that has a fraction of overall national research and development the defense sector a-- attributed to 10%. also to some extent the defense money of defense contractors as they are look to go promote new ideas for the future. as you can see, there's a lot going on. the technologies cyber, advance materials, nano technology, a number of things more broadly defined. that's why today subjects are important and we are grateful that you came on an august morning out here. he's a harvard grad, and spent a lot of time in arizona. that's going to be one of the

things we talk about today. he worked as a journalist, one of my favorite studies is called launch! and it's about colorado. national government, public sector, universities can work together for the competitive advantage that colorado has. he's also done a good deal writing on advanced industries more generally on the united states and green technology and a new other thanks. ben bernanke needs no introduction. as you know, he was chairman of federal researve in 2006-2014. we were both born in agusta,

georgia. he was one of the most encouraging professors back then and his personality has not changed despite the fame he's generated since that time. he was on the congress of economics and had other role. he was at princeton. his ph.d was at mit. for those who haven't yet discovered, you should check out ben bernanke's blog. i was reading his views on whether alexander hamilton should be taken off the bill. i'm sure you can say later on if you wish.

he also blogged about the washington nationals back in july. [laughs] >> so before you launch any questions, let me -- since we have the opportunity here to thank ben for his service to the country, let me please ask you to join me in doing that right now. [applause] this is not a sneak preview of his book. he wrote essay on the great depression. this book will come out on october 4th, and it will be i'm sure much watched, different abouts -- about that. today is not one of them. i want to begin by thanking you

again by this discussion. how do you think of the size of the defense budget from an economic per spect -- perspective? >> thanks for inviting me. i followed mike's work. also, i am not a defense expert. i am an economist and i hope to be able to bring that perspective to help us understand military difs in -- defense in the u.s. economy. you cited before a whole bunch of numbers, total spending. obviously those numbers are important for the amount of resources that are being used in the national defense, but i guess i want to start by saying those figures are not measured

the capabilities and potentialities. well, the united states spends more than the rest of our potential competitors combined, therefore we are military secured. there's a mistake. we have different goals and needs. in particular, there's exchange rates. if i'm comparing the living standards of the united states and china, i don't want to look simply at exchange rate adjusted gdp for person. i want to take into account that labor is much cheaper in china, therefore her cuts -- haircuts

are much cheaper. it needs to be taken into account, the differences in costs. the things that applies to military and the comparison labor to u.s. and china, we did a little bit of work to get numbers, we worked on this a little bit, the best that we could find that the u.s. military calculates that we spend $110,000 for each active member, pay in benefits. we are not talking about trading, not talking about equipment. 90,000 for each civilian of the defense. in comparison, the proworker --

in urban worker in china earns $90,000. obviously a lot less than 110,000. this is an example as to just looking at dollar figures can be deceptive, and this is something that the defense industry that defense specialist understand. they do calculate comparisons and you find that under ppp comparisons. so these comparisons are important. you know, i think we should understand and i'm the right person to say that economic can only take us so far. in the end in thinking about the size of the military and resource expenditures, we need to think about the foreign policy goals, the thrush we must

face and the budget constraints that we do face, but, you know, this is just a small pitch for thinking about utilityiary. >> let me ask you first about something that you had to deal with in the last five, six years, defense money coming down when you were trying to fig -- figure out how to get the united states out of recession. how much did they affect the way you look at the problem? >> so defense spending is connected to growth, different mechanisms. in you're thinking specifically of demand size mechanism, how much spending on military

function, how much does it affect the total demand in the economic. it's a situation where you have high unemployment. recession. increase spending will increase activity by adding to the demand for goods and services. generally speaking, i think it's best to keep, you know, the military separate. not to say that they're not important. the example world war ii, national effort brought the economy out of the great depression and had an enormous impact on total output and lasted beyond the war. a more negative example would be the 1960's when the vietnam effort led to inflation in part that we saw in 1970's.

so it can be important, but there's no sense necessarily which changes and defense spending will be lead in the direction that you want. recently you know, military spending is now much smaller than it was obviously in the '40's or '60's. they were mildly negative. starting in 2010, the decline, drawdown in military spending were a negative in growth in gdp. that was in turn partly due to drawdown of wars in afghanistan and iraq, but also part to the budget cutting that took place

in 2010. in fact, the first year of adverse affect in terms of fiscal contraction in the effects of our economy. i would summarize by saying, first that the effects on demand growth last few years have been mildly negative. part of it was understandable. but the other part, i think, us the self-inflicted wounds, all these cuts were made for economic reasons but mostly in the wrong direction in the sense that they were a mild negative in the economy that was trying to recover. we'll come back to it, i'm sure, but you know, many other connections between military spending and the defense of

establishment and economic growth, but this particular case , defense spend spending is part of the economy. military spending which were not motivated by defense needs, were actual a negative in terms of our economic recovery. >> you mentioned about specific sectors and getting into that, i wonder if you have thoughts on which technology sectors were more important where the defense contribute or generally how to think about this problem in you were talking about earlier that in previous -- everything from nuclear technology, helicopters, jet engines, the invention of the internet, many other things.

defense was crucial and nasa contributed as well, a smaller fraction of overall research and development. do you still think areas that are particularly important? >> so broadly we were talking about the growth connection through demand. most important by far the most important military spending are on the supply of the economy. training and other things. by far the most important certainly in the united states the defense, military, appropriations and broader technological trends. that's one of the major sources in the u.s. over time. so it's important to try to understand the relationship between what military is doing

in terms of what is happening in terms of productivity. that's a critical issue and we need to understand that. now, from an economist point of view, there's a standard argument which says that the government ought to be conducting basic research. the argument basically is that scientific research make tremendous economic returns but very hard for scientists, engine to capture because it's basic search. there's a case for the government to sub -- subsidize direct activities and so on. so that's kind of the case for -- for government research. the fact is that if you look at the composition of federally

research, most of it is not basic, basic, you know, fundamental science. most of it what you call mission-related research, studying the basic properties of items, you know, most of the federally funded how to incorporate nuclear forces into a missile system or whatever might be. so given that we have much more focus on mission-related research as oppose to basic research, what the connection does and the private sector does -- you pointed out that the federal government rds are big and about half of that being military. it's coming down over time but still a very big component. now if you look at the area, a lot of what you get is great stories going back to manhattan

and so on and many examples of -- of military rnd. an example that i like is laser technology as military application. there's 55 patents related and the things that come out bar codes, dvd players and a whole range of things that have come out of that. so obviously there are plenty of examples of where military technology has been extremely important for the private sector and growth of the economy. there's some that work in both directions. on the one hand, the spending by the government can -- can create

capacity in the economy, you know, create more training for science and engineers, can work in military and nonmilitary areas. and there's a lot between the things that happened in the military sector and nonmilitary sector. for example, a lot of is secretive for classified, you know, reasons that can't be shared with the private sector. in some cases it uses up scarce resources, obviously used up by the military and not available for the private sector. so it goes in both ways, but a summary would be that the studies looked at the relationship between rnd

spending and the military show positive relationship. positives are somewhat stronger than substitute effects. every dollar, probably has 20 or 30-cents because of the things that are learned in the military application. if you want to make the case that u.s. military comparatives and spending have made a positive impact on u.s. growth, it will probably be through rnd leakages and seem to have been positive and beneficial. i think that's an important finding. again, the economic case that is very strong, but finally just to wrap up, i think that whenever you talk about spending money --

if the same money would be spent on science, that would be a better strategy. military spending has had positive spillovers on private sector. >> but i wanted to ask your thoughts on manufacturing, and please correct me if i'm summarizing incorrectly, u.s. manufacturing output has been a small upswing lately, but over time, a number of manufacturing jobs has gone way down, largely because of robotics and automation but we've been concerned, so to what extent

does the defense play into this, does it help counter that threat, is it only going to be helpful in certain specific areas like aerospace? >> it's important to understand why manufacturing jobs are going down. the rob -- robotics comment that you made. it actually has not changed all that much over time. we remain a very big manufacturing economy and exporter but manufacturing jobs are going at a loss because manufacturing product activity has blown up so quickly that it takes far fewer workers to build an automobile than 30 years ago. the number, you know, particularly low skilled are very reduced.

if you think about the relationship of that to defense, other than the course that defense is indeed a major try and has to be unsure, most of it has to be unsure, it's important to understand, again, that what's happening in u.s. manufacturing, it's not as being gutted out. what's happening is that we are increasing product i have, lowest number of jobs that are created, and also moving up the value added chain. we don't make a lot of simple manufacturing. we make -- we make more sophisticated machine tools and specialized equipment and so on that has a couple of consequences. one we are no to provide jobs for low-skilled people. what that means, is that the

relationship between defense and u.s. manufacturing is probably mostly complementary one but the same one in terms of rnd that to the extent the defense manufacturing leads to more sophisticated products and technological advance, it's going to probably support u.s. manufacturing broadly to some extent but not take us back to the world of 1950's when you had assembly lines with hundreds of workers, you know, building a car. it's always a question of where is the money going otherwise, but it's not taking us back to the pre-- pretechnological revolution of labor extensive

manufacturing. >> you just touched on manufacturing and production of equipment. again, most people in this room will know that three broad categories 1.4 active duty uniform personnel, i think about 1.4 million. almost 800,000 civilians employed by the department of defense. there's about part time sold -- soldiers, marines. how do you think about defense's role in the labor market? >> we are used to thinking of job creation as a good thing, which, of course, it is, but you

know, the creation of jobs through expenditure by the government is creating jobs, yes, but workers is in some sense -- is not contributing to the standards of living. it's contributing to a different outcome. so clearly the fact that we have 1.4 active duty, their services are being used for defense purposes, not obviously contributing to the private economy. we shouldn't be confused, the more people we employ the better. obviously on the one hand you are creating jobs, on the other side, they are not contributing to standards of living. it is a real cost to bare the

military, maybe good reasons, it's a cost, not a benefit. a related question that i think is important goes back to the issue about the leakages because defense spending and rnd, computer or scientists or something, so it's an important question that economists have looked in great detail, what does army add to skill so when they go back to private sector they bring back skills that they otherwise would not have had. now, a lot of real interesting studies of this. the evidence appears to be,

though, that it's not an advantage. if you go into the military at age 18 versus a person that stays in the private sector and takes a private sector job, ten years later, you leave the military, your skills and wages are probably not going to be quite as high on average as the private sector person. but one of the great studies, he did a great paper where he looked at people based on their draft lottery number. mine 235. i was like thank god. if you had a very low draft number you had a high chance of being drafted. you had a very high number, you were not going to be drafted, and so by using that as an instrument he was able to figure out how otherwise similar people

in terms of long-term labor marketing experience, what he found that people that, you know, went into the wharnly -- army and came back out, that they were -- their skills were below counter parts. and probably some difference between having, you know, being trained in combat versus being trained in electronic. unfortunately there sunt seem much evidence that the training implications are all that positive from the military. so, you know, overall the markets, the people who go into military have similar or worst

outcomes. for example, if you have a veteran who left after 2001 your current unemployment is about 7.1, 7.2 as oppose to national 5.3%. if you are a veteran of age, unemployment is lower than that. so i think the best way to think about it is that military takes our young people for quick purposes, but it's not really adding much to the private sector through training or other experience. last comment, there's a whole interesting area that has not seen much research and is worth looking at reserves on the one hand they don't leave the private sector. they do work experience. on the other hand, duty is

disruptive by calling. what's the right combination of active duty versus reserve military, and i think that's a question we don't really know the answer to yet. >> one last question to you, ben, in this round. i will ask you later or others in the crowd of the issue of political sensitivities. when you think about the nation deficit which, of course, has come out temporarily and our debt is big compared to gdp and the defense's role on that, what is your observation on the size and projected deficit?

>> first start off can a couple of general operations. tax revenues went down by so much so the ratio of national debt held by the public to our gdp to 35% before crisis and recession about 75%. a big increase in the amount of debt outstanding. now, but the other thing a couple of other faults to understand, one while a lot of talk about the problems in the deficit -- like i said, estimated about 75%. in ten years about 77%. it will be pretty flat. two and a half percent which is

pretty low. we are not looking at a big increase in the next ten years or so. beyond that time the office has increasing more significantly. the answer to that question of why is that the case, the federal government is an insurance company with an army. [laughs] >> the projections of big increases in deficit in 10-20 years down the road is connected to medicare and medicaid and based on the projection that it will continue to rise in the last 20-30 years. that turns to be the key issue. if healthcare costs do not grow so quickly, then deficit will not be a problem during our

lifetime anyway. if it continues to be bigger than that, that's going to be a constraint, the ability for the government to provide services. but i think the bottom line to draw from this is that -- i think it was wrong, a mistake that efficiencies, steps taken to correct the deficit in the very short run that it probably had long costs in terms of canceling systems and that sort of thing. so i would just conclude by saying that there's nothing in our deficit prospect that would make us defense planning in the near term and we should make our decisions based on media consideration and based on what makes more sense on terms of efficiency and achieving our

objectives, that will have long costs. deficit is a long-run issue and we should think about it in in the long run. >> i just wanted to ask you requests but also specifically bring your interest and focus on the defense industry and key geographic sectors, partnerships that you written about may involve defense as a player, how you interpret on research development and manufacturing. >> thanks, mike, for having me. so i appreciate the focus on what it is here rather than

bumper stickers. i'll just add that to begin with, no doubt it's an important component everywhere for the most part, but i do want to make the point that that there are four thousand bases across the country. defense itself -- you know, you touched on it. if you look at the projected defense by industry and state, you do get variation of importance of this. again, you touched on this a little bit. we don't think where defense doesn't matter very much too often. oregon, minnesota, virginia is

less than 1% of the state gdp. as you alluded, virginia, hawaii, mississippi, dc, alabama, kentucky, alaska 6 to 6.5%. multiple conversations when we talk and it's not a uniform, you know, it's not flat across. it's spikey, hugely important and a short list of places massively crucial in some places like virginia, for instance or kentucky. many places actually have right to be thinking, many places not so much. i'm less worried about these aspects of the economy, the

defense economy to the extent that u.s. military expenditures thinking about our economic base remains significant suggested of high value activity specially technology. while the effects maybe declining over time, we're talking about 70, 80, 90-year-old history of investment and experimentation that has left us with a critical set of industries, but we need to think about -- first we think about the size of the the military posture and consider the economic strategy to ensure that we protect and build those industries. you know, my group identify the

nations advanced industries 50 high stem, industries that anchor the economy, it's not just a claim. they drive innovation, product i have, growth, experts and so on. only about 10% of the economy in terms of employment but a significant driver of our -- our global prosperity. you know, so from aerospace, manufacture device, manufacturing, number of energy initiatives, renewables, high-tech services, computer systems.

so the point here is though these reflect decades of productive interaction between the military tanned -- and the private sector including spillover knowledge, maybe inefficient, maybe not. so i'm here i'm looking at a different channel of reactions. so in the absence, consistent urgent nonmilitary strategy such as many exertors, germany, south korea or japan, industrial policy. for better or worse, i'm arguing on balance, they have been helpful.

the defense budget has turned out to be the only place that one should argue for and deliver certain kinds of useful economic industry innovation because beyond criticism for a long time. since world war ii this has been the steadiest technology progress,, you know, i won't bore you but world war ii, scientific research, manhattan project, national lab system, one of our most important distributed networks of innovation system.

establishing in respects the start-up. sophisticated kind of initiative. i think not just in spending, you know, structural approaches, and thirdly, invest heavy investments whether it's computer science, followed atomic movement, data analytics, robotics. it's huge procurement budget. this is different in the sense not just early stage rnd but creating markets for new technologies. my friend dan from the state

university addresses the special attributes of innovation. you know, this is a purpose mission, enduring time to the private sector has been a distinctive feature of the military enterprise. and then this world as an early customer for advanced technology whether processors, data analytics, to some extent the military continues to not just make early investments but to be strategic customer. so that's what i'm worried about. and the question isn't simply to maintain the military effort at its size for, perhaps, inefficient to maintain inefficient innovation in

industry benefits, but it's -- you know, making sure that we look at the overall economy and consider other civilian interventions that are parallel. >> you make a very good point, which is in an ideal world we have have government-sponsored research. the system is not good in investing in long run -- >> right. >> making long-run investments with uncertain payoffs. the political impact of military rnd is that people can concretely see the effects that military spending as a privilege place in the political system. it's unfortunate in a way, we would have a much broader program that would look at military and nonmilitary uses.

this appears to be one of the main functions is to create political basis and support for -- >> i think necessary intervention to its budget. i think the request here or the call here very much is to have a broader where it's a component. i don't think it would be. [inaudible] >> it sounds like you're impressed by the way the defense sector has contribute today national economic growth but also at least two innovations, one it is coming down, it is not going to be as adequate it is it

would have been, because i read your report and you're not that happy about where we stand internationally or competitively right now. am i correct that what you would like to see defense not throw away, keep that part but complement it for a stronger civilian strategy? >> from a defense economy point of view, the question is are we going to man -- maintain an economic stand. this is not an argument for policy, but it is about, you know, a degree of public investment create i --

>> one follow-up. a couple of the highlight that is -- i would just think that make it concrete you can look at the excellent report. >> yeah. we came on the scene there at the time late 2011, concerned about discretion and found development officials, u.s. military leaders and democratic governor, very concerned about a print range complex of basis that harbor significantly

high-end data missile preparedness communications capabilities. it created, you know, an extremely -- the kind of side effect. you know a major aerospace complex and had begin evolve away. we arrived at this and, you know, recommended, you know, academy -- move off the goal and

into international space, a location where they have companies that are delivering observation, technologies that you all are using on your cell phones, maps, for instance, majors companies, where services are being hung off of technology and launch capability is allowing significant commercial growth. the strategy emerged there. this is a state that, you know, it wants to make sure that it continues that evolution. it wants to protect the base but move to diverse strategy. the other factor which will be

response, huge federal activity, this is a state that created an industry champion to both watch the military budget but also worked with working among the various industries, created 200 billion-dollar program, small start-ups. this is another factor that we are going to see, a national response to changing divisions of labor, quite productive, may represent the new division of labor as the defense budget sh rrk -- shrinks.

>> basically the motivation where parts of the country are looking for additional federal funding also at the expense of all the taxpayers. it has to be part of what's going on. at the same time i'm not really trying to disagree with what you are saying because technological change are events that involve networking among groups, defense and so on. it has to happen some where, i think i agree with you. but as we try to evaluate these types of projects we have to take into the account the region al benefits vis-a-vis national benefits. >> the desire to diversify and identify engagement

opportunities. i think the -- we see this all across the country. many with 6% costs share into the company and defense. >> lets go to you. please wait for a microphone. the third row. please identify yourself and please just ask one question, if you could, to make sure we have enough time. >> thank you so much. reporter of tv network in china. [inaudible] >> do you think there's any

anything like thattive -- negative impact to the economy? [inaudible] >> thank you so much. >> any question he doesn't want to answer because it's not pertinent -- [laughs] >> it gives him the right to defer. [laughs] >> certainly. you know, in some sense what china is going is what we asked them to do is have marketplaces play and we are seeing the chinese currency appreciated

because it's tied to the dollar and put pressure on chinese economy, so this is realization that moving in a direct more market that the u.s. has asked for for a long time. next question. >> mark, in your finding what impact the universities had on the growth of the economy and high-tech such as aerospace, how do you leverage to contribute to the national defense as well as economic growth? >> great question. let me provide one note of prehistory, which is that to an extent in a number of circumstances the military actually created university departments, for instance, in computer science, for instance, or invested in building the high-level academic knowledge.

that's another beneficial set of activities. in this ongoing interaction between, i think i think -- the government and the military and private universities, it's absolutely crucial in creating much of the ip that filled this system. i think it's actually crucial. i think that has been a continued dynamic and we see the interaction also between defense early purchasing and early program developments has been a way of employing people coming out of the universities.

.. and i think that it is now becoming a standard way of operating. >> thank you so much. to what extent do you think the middle east situation in the middle east and also africa by

celinda boko haram and these groups to what extent have they affected the defense spending and military budget of the united states? >> i would ask you to jump in on this mic. mike has done great work on evaluating specific threats and object gets to the military pointing out the different types for different situations. one of the obvious things about warfare in the last few decades is how little of it between large national armies and how much of it is warfare of various kinds dealing with lack of information and embedded -- and those sorts of things. the youth -- the u.s. is going to smart drones monitoring so the sort of military strategies have to adapt to the nature of the challenge and we are seeing

a lot of change there. >> two points. the economic observation is if you had told me 20 years ago or 30 years ago you could have this much turmoil in the middle east and oil prices would have taken a dive to sustain that i would have been flummoxed and i would have said secretary bernanke what is it about your course? that's one observation which obviously we know some of the answers. but, is still going to go in the dollar direction certainly general odierno who retired last week as army chief of staff lamented to some extent the degree to which the army is running these productions and that hasn't changed. i think the rise of isolating your question was primarily about the last year or two years

in the dynamics and that would be the second . my final point is however pushing somewhat in the other direction i would expect rand paul and bernie sanders notwithstanding that most of the political energy in the next year and a quarter in the presidential election is going to be the push to the right and we will see major candidates of both parties advocating at least modest increases in spending recognizing the threat has gone up a bit. as chairman bernanke just said we don't have to be so rushed and are concerned about bringing down the deficit as to ignore what might be needed for broader national security purposes. i'm not suggesting we are going to have a 2015 or 2710 equivalent of the reagan buildup but i think we will see modest growth proposed by either party's presidential candidate once we get through it. the lemmings sequester frankly

i'm a little surprised that there hasn't been a better effort by the two branches of government responsible for this to make sure we have sequestered at this juncture. please find a way to avoid sequester because we donated and i would be counterproductive. >> over here in the third row. >> thank you. michael mark. chairman bernanke thank you for your time. i like what you said about how the government is not too good at uncertainty over time and i've spoken to some people in the start community who are unhappy with the federal procurement process. how do you think we could make the case that defense spending is better to fund promising projects quicker and make sure projects don't continue longer than they need to because startups have a very short lifetime. they need money really fast in the federal procurement process

can take too long for them. how can we improve the federal procurement process on the startup model? >> i think, i don't know the answer to the question but i will try to answer it with the following. u.s. before about the parallels between the defense department of federal reserve and one of them if i may, one of them is the defense engaged in a technically complex activity with long-run implications, the same as the pentagon in that respect. the way the fed has managed a relationship of congress is that at least ideally the fed is what is called instrument independent which means it gets them make the decisions about how its objectives are met however the congress had three objectives. congress ideally does not interfere for example of interest rate policy directly but it says well we are charging you the fed with achieving maximum employment price stability of the fed has to

explain how it's going to achieve those objectives but using technical knowledge in a long-term perspective to achieve that. i do want to pretend they can use the same model for defense. the objectives are more complicated and harder to evaluate and much less be back from the fence but you can't really say to the pentagon you decide how to do it. we can't do that obviously but i think we could move in the direction of congress and this oversight bodies testifying particular objectives and goals and capacities that it wants the military to have been giving more scope to either the military itself or impartial missions or other groups to sort of make some of those decisions so that you are not having politically determined locations and politically determined procurement decisions on those things. i'm not naïve enough to think we are going to get all the way there but we could move in that

the direction. an example of having more independence objective analysis is subject to an up-or-down vote or a single decision by the congress so what you are describing again is more flexibility to the military planners to beat their objectives subject to this constraint and so on that there would be more opportunity for them to have that flexibility that otherwise too much intervention in those decisions is walking. >> i would just jump in, their hands in the fact that these are mission oriented agencies that may provide and end toward where this could go with much more focus on actual delivered capabilities. i would also note that within the defense corpus there have been successful experiments, sometimes famous ones for

instance inc. you tell that the cia kind of ventured effort that actually do this that have short applications quick cycles and are built on speed and in fact wall influencing other agencies and the private sector so i think so much has been spent, so much has been attempted in the military history that is to some extent the answers are within the military system as well. >> you know it's a complex subject and the answers could bury it away from what type of technology you are talking about one to another. we haven't been on acquisition reform at brookings in april and i asked how well the think we are doing and he said we are doing okay on the other hand he

has put out three successive better buying power roadmaps are how we can improve in these trying to energize the pace for form but he basically said i would put it at a b+. if we go to worby of the best in the world and i asked bill is in question. build question. bill had been the deputy secretary of defense and the obama administration so their teammates by bill now runs a small company the u.s. arm of the italian aerospace company. those that i think were pretty good with the big stuff like secretary candle set in the cost overruns and delays are sometimes unfortunate but it produces a great system and the end. anything concerning electronics so the kinds of things that are on your mind asking that question those specific technologies were a bill thinks we need to find better ways and there are legal codes that allow you to use some commercial procurement practices. we don't do it very often.

military tends to get conservatives in these kinds of situations so anyway there is a million dimensions to the problem and a million answers but i would just begin by saying some parts of the problem are more serious than others. the overall system is not fundamentally broken. there parts of it that are broken in my judgment. way over here on the far side please. >> international news for dr. bernanke. it's been said that the u.s. ability to project power is very closely linked to economic power so in your view at what point does the debt to come such an issue that it actually impacts

u.s. ability to direct abroad? >> u. said u. s.? i said earlier that i didn't think that it was right to distort near-term military planning and defense planning because of the deficit because the deficit is a longer-term issue and dead is a longer-term issue but that being said in the long run to a first approximation whatever additional spending we do we have to pay for somehow and essentially with higher taxes in the end and clearly with the higher debt-to-gdp ratio our resources are more constrained than they used to be so i can keep you number this is beyond a certain. there's a very sorry history of trying to his picks specific numbers were where things will go wrong. it doesn't really work but i'd

certainly didn't mean to imply in the end we don't have to think about a long-run national capacity and our resources and again i don't think we are at the point now. i don't think we should be distorting near-term decisions that we do need to think about over a period of decades what objectives we have is a country for foreign policy and military objectives and understand that those things are constrained by our economic power. it's a very complicated relationship between economic growth and the military. we have been talking about some of the positive relationships but we also work on rights of all great powers would great powers which is beyond a certain point you can be overextended and commitment of resources to military purposes can actually be very negative for your economy and are long-run ability to project power. so what i'm trying to say is short when i think we are find but over the longer term we have to think about a resource

constraints in our economy and make sure we are not undertaking commitments globally and militarily better economy can't sustain a long-term. >> and i build on that by asking how you look at things in a crunch period around 2008, nine and 10 and to what extent was this question on your mind? obviously her main concern was to prevent the great recession from becoming the second great depression and you were a firefighter and trying to find creative ways to save the economy. i don't know if you were thinking in terms of long-term national power but in our foreign-policy world a lot of people at that moment were thinking about how china was perceived to be rising in the perception was growing faster than the reality partly because of the great recession. to what extent did any of those enter into your calculus method? >> i was certainly thinking about the short-term and a long-term and one of the reasons we have so much doubt and i think there still is in the political arena lot of doubt and

angst, was because we didn't really know in 2008 in 2000 we didn't know how things would come out. we did know but was about recession or something much deeper and longer so obviously there was a lot of question about what our long-term was going to be. what we have seen is a lot, not all but a lot of the decline in output we saw after the financial crisis was cyclical. that is a significant recovery, not complete but significant recovery in output and employment and so the longer-run implications are i think less than we were worried about in 2008. in particular one point it did make very consistently an actual real time was notwithstanding the scary deficit numbers we were saying, 10% of gdp is a very big deficit or something close to that early on. that was one of those scary

numbers and as i said at the time i didn't think 2008, 2009 and 2010 was the right time to be going into fiscal austerity. we need to think about long-run fiscal constraints but in the short-run we needed to get the economy a chance to recover before we started cutting. in the short-run by advice to congress at the time was less let the economy recover and let's not go into austerity mode yet but obviously at the same time we are thinking about a recovery and the contribution of fiscal policy for recovery we also need to be thinking about the long run administration we are facing that was the right trade-off i think at the time. >> with that a couple more rounds. we will take to a time now so we can ensure we get a few more questions then before we run out of time so why do we do this gentleman here in the black shirt in the fourth row and then we will respond to those together. >> there has been a recent bush -- to. >> name please.

>> ryan told. there has been recent push in the fast food -- to raise the minimum wage. in contrast the military newly minted officer with a college education or it's in the low 30,000 and new enlisted military personnel is about 18,000. would you discuss how that raised in minimum wage would impact the military cost especially with 1.4 million active-duty personnel? >> we will take this question here as well please. >> the name is john. can you talk about the consolidation in the defense industries and whether you think that on balance good or does that consolidation lead to megaprojects that have a life of their own and just the economies of scale that would ring and how do you actually politically address those?

>> on the minimum wage, how much that minimum wage constrains demand for labor depends a lot on local conditions. wages are different for different parts of the country and in some parts of the country that wouldn't be very far from the low pay the workers to get another parse the country would be very high. would probably squeeze some workers out of employment. so obviously the military has done maintaining competitive wages. i haven't done a study and i can't give you the exact numbers but my impression is that military pay is pretty competitive, that the military is able to attract on average pretty good quality recruits and relatively skilled workers, so i would turn to my colleagues on this one but it's not my impression at this point that the labor market constraints are preventing the military from

meeting its needs and i don't think that some increase in minimum wage whatever the benefits are for that i'm not going to address the broader question i don't think i would be a major concern and if necessary the military could make adjustments. >> that's right. there's a quadrennial review of the military compensation that you are probably familiar with that comes out every four years and the last one looked across various strata of the defense demographic and what are and what a basically sound as if you compare a typical person in uniform to a person of the same age and experience educational level test proficiency in the private sector military pay for hosted personnel is at about the 85th percentile. in other words they make 85% more or more than 85% of all people that are similar and that includes allowance for housing and health care benefits. it does not include military pension calculation.

it's a separate ethical and moral question if we are doing enough for them or we send them off to war but in terms of how we are handling the labor market so far it's been okay but you raise a good point hypothetically if we go to a higher minimum wage an economic recovery that chairman bernanke continues you may have recruiting issues in recent years we really happen so we have to keep our eye on that carefully. do you want to try the defense industry consolidation question? >> that's mark's question. >> i could say one thing we have certainly seen again between places and you will see consolidation into certain places that will -- at a geographical level that will profit from this and others not but i think the larger question is the structure of the economies and industry that exists to deliver a mission-critical product. i think the question is about

maintaining sufficient competitiveness and there has been a lot of consolidation already. i think mike can talk about you know the question is what is the right spot. >> sector by sector we are down to five or six major shipyards. that's probably okay great it's not five or six separate companies. we have basically two companies making fighter jets, two companies making fighter jet engines. there is a single consolidated production line or a single effort associated with nuclear propelled submarines and aircraft carriers. some of the work is shared across two different shipyards in two different states. so sector by sector we usually have a couple and that's not shoot every domain. we have got a big decision looming in the coming weeks or months which is about the long-range bomber. as you probably know their two main competitors in boeing and

lockheed are involved in one and northrop and the other. boeing and lockheed are making a lot of fighter jets today in northrop-grumman makes a lot of drugs but they are paid as an aerospace company that hinges on the balance of who owns this competition. how would we feel if we lost in that space? i would be somewhat concerned so i think that's the place where you go from two to one or even three to two or you have to ask yourself hard questions and maybe you are willing to pay a premium in terms of having two separate production lines to retain independent design and production capabilities. if you can find a reasonably economically to do it. with aircraft carriers we don't do that so there's only one place to build them in virginia and that's it for the country and we just have to hope new port news shipbuilding continues well but i have to say they do deliver well but that it carrier cost two and a half times what

the old carrier does and i'm troubled by that trend. this is where we worry about losing competition and the problem is there's no perfect answer. as we continue to have defense budgets stay about the same or shrink a little, the average cost per weapon keeps going up because of high technology we will have more and more of these decisions to make so the next one is long-range strike bomber and again i'm still sorting through the economics of the national security dimension of that. let's go in the back here next to the camera please. >> hi, creighton jones future sites foundation. my question is getting back to this topic of raging the relationship between the defense and the civilian economy what do you think of the prospects of while maintaining the inputs that we get from defense and r&d and manufacturing bringing more final expenditure of that activity domestically, such as their through expanding the role of the army corps of engineers in terms of size and scope are

creating programs for returning soldiers to engage in actual nation-building types of activity such that you start to close that cycle of import of input and output but actually the final product is expended here in the united states itself. the multi-trillion dollar infrastructure gap that we currently have. >> let's take one more question before we go to responses. we will go in the back. the gentle with the tie. here comes the microphone. >> i appreciate her comments so far. i noticed the principle of draconian measures in the budget balance gets to be a very serious issue with the gdp which may occur. i wonder this sequester as we heard following that if that's a problem. what to do, 1939 fdr was faced

with the problem of britain and the situation in europe and they told britain we will give you what you want but the supposed cash and carry. by january 40 when we were out of money and we moved into land at leasing currently we are providing a great deal of weapons to countries and don't charge them a thing. i'm wondering how long this can keep up and this is the right way to proceed? >> white only take one final question and get a final round. why do we take one final question. >> you spoke earlier about the implications of all of this for labor and for workers and he talked about the debates over how much the training benefits workers and i'm just curious as you look long-term and to consider maybe the cutbacks are in the future increases in defense budget and defense spending what other implications does that have for workers, for the quality of jobs for

low-skilled folks, for higher skilled folks in the navy talk about different metro areas and the differences in different parts of the country in terms of that issue. >> i can begin with the first two questions. on the first two questions, very fair points but i would point out that in broad terms we are doing pretty well by the standards you identified. in other words american defense manufacturing is largely an export oriented center. they do export a fair number of weapons abroad. most of the money in the defense budget is spent by and for american firms and most of it is spent in the united states. we downsized over seas bases more than we have domestic races so there's always room to look at another example to say we could do better here but we also have to maintain a sense of fair. because we are trying to continue to persuade customers to buy her stuff and if we never

think about buying bears you know it's hard to maintain the culture that says we should be open and fair. overall the less concern about the broad picture, and they do think defense trade is an advantage for the american economy right now. we do more exporting that we do importing and on this issue of a related question of where we are giving away weapons you know there is some good debates to be had but they only concern three or four important countries, three or four chunks of money so we are getting a lot of security assistance to egypt. myself i think it's too much because i don't want to support president assisi's as much as we are. and we then we have afghanistan where we fund their army and police and have to do that for a number of years. not so much high technology weaponry although a little bit of both. we give a lot of ongoing help to israel but israel makes its own decisions about where to buy weapons and often makes its own

weapons and the gulf states in the middle east they buy weapons with the money that they rent from the oil economy. the same thing for east asian partners in the same thing for european allies with -- obviously they make their own revenues in different ways but they are all capable of paying and they intend to pay so you can have good debates about them a foreign-policy point of view should we be giving as much money to afghanistan to egypt into israel and to some extent to iraq but we are not giving very much right now. i don't think it's fundamentally big problem about most of our defense exports depending on taxpayer largess. the defense industry is competitive and is winning a lot of contracts largely in the middle east, east asia and europe already today. i will leave my answers at that. >> just with the last one about cutbacks, again going back to the question about the dead and so on having a large military is

an economic word and ultimately for the most part. it uses up resources and tax money that could otherwise be used that to the extent it has benefits one of the ones we have identified today is on the spillovers, productivity spillovers and in particular his marquis pointing out it seems politically easier to get some of those funded and supported in the context of defense spending that would be in a more general civilian context so i think that's an important consideration. we want to make sure we remain technical logically competitive than that -- technologically competitive than that affects different workers differently of course but that does affect the overall prosperity of our economy and ultimately affects most workers, the ability of our country to produce at a high level with higher productivity. it's the main thing i feel uncomfortable about it because we are in fact reducing our

reliance on federal defense oriented that has been coming down as a share of total r&d but there is a good economic case for government support for basic research and research for a broad-based spillovers to the extent to cut back military and cut back that research as well. i think that's something to be concerned about. cole. ..

the technology manufacturing base to an extent where it is now much more competitive than it was. so i think there is a real transition for this the transfer for the defense budget rescue budget and/or others delivering these services, leverage. >> these final words. we have not come up with an industrial policy