i think it's really an open question who's going to win the presidential race it's begun to heat up. and it promises to be very interesting. i think we're going -- we might be surprised. we might be surprised. but we'll just see how it plays out. the military i think it would be the military is going to play a prominent role for years to come in egypt as it has from latin america to turkey. it will take a long time to disentangle the military from public life again. i at least have been re-assured by the military's initial relationship with the parliament which is noisy at times, but has been fairly successful so far. >> thank you ambassador, pat person. what's the status of bahrain as

a banking center for financial services? is there still investment inflow in that area and what in particular would you advise u.s. business at this point? >> most certainly bahrain remains one of the strongest centers of banking and financial services in the gulf. despite the unrest of last year and perhaps even more impact of the economic crisis of 2008 and competition from the other cities in the gulf most particularly dubai for the service they still remain a very attractive place for banking for financial services. and we see an inflow of those companies along with worrying outflow from some of the banks. a couple of banks have moved. some of the other banks have established offices in other

cities. and also quite frankly as a fall back position should the situation in ba ran deteriorate again. i do believe it's one of their strongest sectors and it will be for years to come. assuming, as i'm doing today they do find a way forward on the political side. >> unfortunately i'm getting the sign that we're very tight on schedule. we're unfortunately going to have to wrap up the q and a for this panel. i want to thank you again for being here. just extraordinarily informative. thank you again for your service to the united states. hope to see you soon and your countries and you're always here at the national uso chamber. thank you very much. [ applause ]

we're going to have three quick photographs with the ambassadors, the arab ambassadors and our sponsors. >> we'll have more live events coming up later today. join us at 3:00 p.m. eastern for a hearing looking at the impact and treatment of traumatic brain injuries. federal, state and private efforts to prevent and treat such injuries will be examined. again that's live at 3:00 p.m. eastern here on c span 3. the road to the white house winds through illinois tomorrow. saturday we'll see a primary election in louisiana and next month washington, d.c., maryland, wisconsin, connecticut, delaware, new york, pennsylvania and rhode island hold contests. while may includes indiana, north carolina and west virginia primaries. and don't forget to make cspan.org your clearinghouse for all things related to the campaigns. watch the latest video of republican presidential candidates and president obama from the campaign trail. search in the candidates on the

issue section for video of the major issues. the economy, the deficit, national security and immigration. again, that's all at cspan.org/campaign2012. >> the strong support we have in our region of the country from whenst this movement originated gives us an excellent beast to go forward on november the 5th will. and we in my judgment will go forth with at least the 107 electoral votes that comprise the states of the south and border and when you couple that with just a few other states in the union, then you have the 270 odd electoral vote necessary to win the presidency. >> as candidates campaign for president this year, we look back at 14 men who ran for the office and lost. go to our website cspan.org/thecontenders to see video of the contenders who had

a lasting impact on american politics. >> there's been honest contention, spirit of disagreement and i believe considerable heart arguments. but don't let anybody be misled by that. you have given here in this call a moving and dramatic proof of how americans who honestly differ close ranks and move forward for the nation's well being shoulder to shoulder. >> c dan.org/thecontenders. >> treasury secretary tim geithner spoke at the economic club of new york last thursday about the health of the u.s. economy. after his remarks he took questions at this 45-minute event. mr. kbiet ner is introduced by the chairman of the economic club andrew tish. >> timothy geithner and chairman of the economic club of new york, andrew tish.

[ applause ] >> good evening. i want to welcome you to the 419th meeting of the economic club of new york. 105th year. the economic club of new york is the nation's leading np economi. more than 1,000 speakers have appeared before this club in more than a century. establishing a strong tradition of excellence and importance. this tradition supported by the contributions from 158 members of the club's centennial society. their names are listed in the program and i thank you. tonight, we are pleased to welcome back to the club treasury secretary timothy geithner. secretary geithner last spoke to the club in june of 2008 when he was a club trustee and more

importantly he was president of federal reserve bank of new york. secretary geithner was sworn in as the 75th secretary of the united states treasury on june 26th, 2009. he previously had served in the treasury department under three administrations. before coming to the federal reserve, he was at the imf. earlier in his career, he worked for kiss jer associates. secretary geithner graduated from dartmouth college and the john hopkins school of advanced international studies. we are pleased to have secretary geithner deliver his remarks which we followed by a question and answer period with two designated club members, please welcome secretary timothy geithner. [ applause ] >> thank you, andrew. good evening. nice to see you all. thanks for coming.

it's a pleasure to be back here at the new york economic club. a great forum for national debate about economic policy and to be here at a time when we face some fundamental important choices about politics and economics. it's nice to see so many former colleagues here. cayou. i want to particularly pay tribute to my formers colleagues at the new york fed who are here somewhere. [ applause ] they are as i hope you know an exceptionally talented group of public servants, brave and creative in crisis. it was my great privilege to work with them. as you know i left new york for washington in november 2008 at a particularly dark moment in american history. my timing was not good. the u.s. economy was contracting at an annual rate of 9%. growth rarnd the world was collapsing. the actions taken by treasury secretary hank pahlsson, the

federal reserve, the fdic authorized by the congress earlier that fall were essential to stemming the worst of the financial panic, but the economy was deteriorating at an alarming pace. you'll remember that our banks and financial markets were still in a state of shake sucking more oxygen out of the economy, helping push the u.s. and the world into the worst crisis since the great depression. businesses were failing at an alarming rate. those able to survive were laying off hundreds of thousands of workers each month. house prices were falling rapidly and remember in early 2009 they were projected to fall another 30%. so as the president prepared to take office in january 2009, it was clear that the situation was very grave. and the president understood that additional actions were urgently needed. he did not sit around hoping the

crisis was burn itself out. he was not paralyzed by the complexity of the choices or the terrible politics of the potential solutions. he decided to act early and forcefully and his strategy to stabilize the financial system combined with $800 billion of tax cuts in emergency spending in the recovery act, the restructuring of the u.s. automobile industry, the actions of the federal reserve, and the coordinated global rescue he led in the g-20 were very effective in restoring economic growth. now you may recall from the political storms of those early months in 2009 that, how should i put it? people were not fully confident then that our strategy would work. i remember when i got my first letter of concern and sympathy from a friend in february or

march and this friend quoted teddy roosevelt's famous line about the man in the arena. i don't know how many of you know these words. it goes if you summarize it, it's not the critic who counts, credit is to the man who if he fails at least fails daring greatly. i was touched and moved by that letter. but then i got five more of them. and i thought, wow, they seem to be worried about me. but i believed at that time that we had a very good plan. and that plan worked better than any of us hoped. within three months after taking office, the pace of declining growth began to slow. by the summer of 2009, the american economy was growing again. let me state it starkly, in about six months the economy

went from contracting at an annual rate of about 9% to expanding at an annual rate of about 2%. a swing of almost 11 percentage points in a remarkably short period of time. we were not just able to avert a second great depression, but also to begin the long, long and fragile process of repairing the damage and laying a stronger foundation for economic growth. so how has the economy performed since that early start? i believe that by any measure the president's policies are making the economy stronger. since the summer of 2009, the economy's expanded at an average annual rate of 2.5%. over the past two years the economy'sed a added 2.9 million private sector growths. growth has been very broad based with strength in agriculture and manufacturing services and high tech. and growth has been led by

business investment in congresswomen and software which has risen by more than 30% overthe two and a half years. by exports which have grown about 25% in real terms over that same period. productivity is risen. households have made significant progress in reducing excessive burdens of debt. bringing the savings rate up. leverage in the financial sector has declined very substantially. our fiscal deficits have started to decline and our current account deficit which measures how much we're borrowing from the rest of the world has fall on the half its precrisis level as a share of gdp. overall, the total amount of income and output of this american economy is now above the precrisis peak. millions of americans now have health care with better conch because of the affordable care act. and health care costs are rising less rapidly. we're becoming much more efficient in how we use energy.

more reliant on clean energy sources of energy. less dependent on foreign sornss of energy. in communities across the country we're seeing promising reforms in education to improve the quality of teaching in science and math and to improve access to higher education. the early shape of the expansion we should all find encouraging for the future trajectory of the economy. because growth is led by private demand with the strong gains in investment and exports. we've made real progress eliminating the economic imbalances too much debt among individuals, too much leverage in the financial sector, too much construction in residential commercial real estate. the problems, tim balances that created the unstable growth that proceeded the crisis. the balance sheet of the business sector is in remarkably strong shape and the economy as a whole is more productive than before the crisis.

these are promising developments. but we still have a very tough economy and still face some very tough challenges ahead. unemployment of course is very high and improving more gradually than any of us would like. while we're seeiomonn the housing market, we have a long way to go there. pension values have recovered much of the losses in the crisis, but of course as you know house prices are still very low. and these are the tragic legacies of that financial crisis. in addition to these legacies we still face a dangerous and uncertain world as the recent rise in oil prices demonstrates. americans of course can now feel the effects of higher gas prices. there's no quick and easy fix to that problem. but it re-enforces the importance of more progress to develop additional sources of energy on all fronts. if you look at that expansion in historic comparison, this recovery is fasterhaeshat follo

last two recessions. but it's somewhat slower than previous recoveries from very deep recessions. what explains this? what accounts for this? recoveries that followed financial crises are slower and more protracted as famously written. they are slower and longer and harder because the causes of financial crises typically a large rise in borrowing by house holds and the financial sector and too much investment in real estate those act to hold down growth as they are unwound as people bring down their debt burdens and raise their savings rate they spend less. as banks are forced to reduce risk and restore more prudent lending standards they lends less. these forces work against the impact of lower interest rates, dampening the orewise potentially powerful effects of monetary policy. there's a paradox in this in that the changes that are necessary to unwind the causes

of the crisis and lay a more lasting foundation for growth in the future those changes necessarily slow the pace of expansion. the president inherited very large fiscal deficits well bond any experienced since world war ii. the dramatic erosion in our fiscal position since twun and 2008 in the size of the physical deficits made the american people and their elected representatives uneasy about stimulus and this diminished our capacity to legislate significant fiscal actions beyond those in the recovery act. state and local governments have had to make severe cuts in employment and services raise taxes offsetting part of the substantial stimulus for the economy provided at the federal level. of course, in addition, no 2010 and 2011 we were hit by a series of very substantial blows to growth from outside the united

states. the european debt crisis, the oil shock and japan's debt crisis. these three shocks took a percentage point off gdp growth in 2011. on top of this finally, and remember this, the fear of national default provoked by the debt crisis did terrible dang to business and consumer confidence. the fall in confidence was quick and brutal as large as the declines in confidence you typically see in recessions. these are the most important reasons why the pace of expansion slowed after those first few quarters of recovery. without those challenges, without those forces, without those factors, the recovery would have been stronger. but looking forward, the question is what's the right economic strategy for the united

states? what's the mix of investments and reforms and policies that will make growth stronger and economic opportunity broader in the future? the three most important imperatives we face today are to support economic growth now, to make the right investments in reforms, to make our economy more competitive over time, and to restore fiscal sustainability. these imperatives will require that we resolve the fundamental political divide in this country that exists today over the appropriate role of the government in the economy. first, important to remain focused on this we have to stay relent esly focused on strengthening the economy in the short-term. even though growth is gradually getting stronger, of course we have a long way to go to repair the damage caused by the crisis. we face the additional challenges of europe facing a severe and very protracted

crisis. and the world engaged in the critical struggle with iran, which is adding to upward pressure on oil prices. for these reasons we think there's a compelling need for additional action by the kronk to strengthen growth and help get americans back to work more quickly. we'd like congress to act on the president's proposals to rebuild our nation's infrastructure, to help small businesses, and to prevent more layoffs of teachers and cops and firemen. we need to help americans refinance their mortgages to help families who can afford to to stay in their home or to transition to more affordable options. the president will continue to use his executive authority to help. for example, by streamlining approvals for new infrastructure projects or streamlining regulations whose costs are large relative to their

benefits. but these measures cannot substitute for action by the congress. now again, recoveries that follow financial crises are necessarily more tentative, more uneven, more protracted it's going to take years to fully repair the damage caused by this rye sis. this is why it is so important still that policymakers continue to work to get the economy growing faster in the short-term and not shift prematurely to excessive fiscal restraint or shift the focus of policy entirely to reforms with only long-term payoffs. now is second economic imperative we face is to build a foundation for stronger future growth. this crisis as you know came on top of the set of economic challenges that took a long time to build up. they've been building up for years. among those challenges are a long-term erosion in the

relative quality of education for many americans. a long period of stagnation in real median incomes. diminished confidence in the ability of americans to exceed the economic achieveness of their parents. a substantial ongoing shift in the risk and cost of health care and pension security away from employers to employees. poverty rates much higher than those that presail in any economy with comparable weather and a deteriorating public infrastructure. these are relatively new and unfamiliar challenges for this country. we were remarkably successful as a country for a very long period of time in achieving much better economic outcomes than we saw in most countries around the world because we had leaders who put government policy to work in providing health care and retirement security for retiring americans universal primary and secondary public education, the

g.i. bill, the great public infrastructure projects of eisenhower and others in the last century. large investments in scientific research and sensible safeguards over the financial system. these long-term challenges for us as a country are more difficult in part because other nations around the world like china or brazil are getting better at making their economies grow and develop. and their success, though it brings huge opportunities for our country has put a huge amount of pressure on large parts of the american workforce who are engaged in making things other countries are getting better at making. now the president's strategy for meeting these sets of challenges is to focus on reforms and education, investments to support innovation to encourage public and private investment and to expand exports. these challenges are not challenges the private markets can solve on their own.

in education the president's working to make it more affordable for people to go to college working to improve the quality of teachers to improve training opportunities across industries where we are short of people with the necessary skills. these investments in educational reform need to be matched by greater investments in innovation. the economic case for government sport for scientific research rests on the reality that private innovators, private nstors can't always capture the full benefits of research and development. so they tend to underinvest relative to what would be optimal to the economy as a whole. these investments entail risk and they need to be designed to focus primarily on research and to maximize the role of the market in determines which technologies ultimately prevail. and these programs support innovation should be combined

with longer term programs for promoting public and private investment. infrastructure investment is one of the most efficient means we have to create employment. to improve the overall productivity of the economy over the long run. and alongside the strong multiyear program in public infrastructure we need to improve the incentives for private investment to modernize the framework of institutions and incentives that help allocate those resources more efficiently. this of course requires fundamental reform of our business tax system. that system as you know today is a complex and unfair mess of subsidies, temporary and permanent with a very high statutory tax rate and huge differences in the effective tax rates across companies in different industries. the president's proposed to reduce the overall rate to a

more pettive level by reducing or he nate corporate subsidies in the tax code. we want to system in which businesses compete on the quality of the products and the services they provide not on the creativity of their tax engineers or their lobbyists. along with these tax reforms, we need to restore what were the great strengths of the american financial system, the highest standard for consumer and investor confidence many the world and the most creative and efficient model available for channelling savings to finance investment innovation. in our judgment as a result of the reforms the president has put in place our financial system is much stronger shape today with much larger cushions of capital against risk, greater transparency over firms and markets and is now in a much stronger position to be a source of credit for an expanding economy. wre need to work to expand trade

and exports. we've been aggressive in using the safeguards within u.s. trade law to protect american companies from unfair trade practices. we want to see the market share of u.s. companies expand overseas and we want to see a large part of the growing demand in the emerging market economies met by things that we create and build here in this country. now this economic strategy, which is focused on education, innovation, investment and exports is in our judgment the most promising path available to us as americans to create broader economic opportunity and stronger future growth. but of course these reforms if they're going to be effective have to be combined with long-term reforms to restore fiscal balance. without more substantial steps to bring down our fiscal -- future fiscal deficits, then over the long run, the incomes

of americans will grow more slowly and future economic growth will be weaker. these fiscal reforms are essential to ensure we have the room for the investments we need to improve growth and opportunity in the future like in education. in this era of more limited resources, we have to be able to target those more limited resources to investments with the highest returns. we have to make sure we can meet our changing national security needs in a more dangerous -- a still dangerous and uncertain world. and we have to agree on reforms to make sustainable -- make more sustainable, more affordable our commitments to protect health care and retirement security for the millions and millions of americans retiring in the next two decades. now, this debate about how to restore fiscal sustainability began with the bowles simpson

recommendations for balanced increases and spending reductions. this debate will likely end there. the debate will result in legislation that has roughly the same overall dimensions of those proposals. that is because the case for blabsed for a balanced mix of tax reforms and spending savings should be obvious. we need roughly $4 trillion in savings other the next decade. about $3 trillion on top of the cuts agreed to last summer. and to do this we propose an overall mix, an overall balance of roughly $2.5 of spending cuts for every dollar of revenue increases. the president's plan like any credible plan will force savings across the government in programs we can't afford so we have room for