national income that goes to wages. we tried for two decades, and actually for three decades going back to 1980, we tried to have a low-wage, high-consumption economy, and it simply can't be done. and the can't be done part is what we're living through now. now, the result is this vicious cycle. the vicious cycle is what austerity policies in the face of prolonged recession produces. you start off with mass unemployment, falling real wages and falling housing prices. that's kind of where we came in in 2008 and 2009. that was the situation president obama faced on the day he was inaugurated. that situation means that consumers, you and i, have less money to spend and to pay taxes with. it naturally produces budget deficits. add on to that depressed housing

prices that keep financial institutions weak. the things that they have on their books, their loans, aren't actually worth what they say they are. weak financial institutions don't lend. this is what was referred to in japan in the 1990s as zombie banks. i had a lot of fun in the congressional oversight panel asking tim geithner if citigroup and bank of america were zombie banks. no question in my mind that they a are. now we come to the bad policy. government austerity policies meaning cuts in public spending cut back on public investment. they lay off public workers, teachers, fire fighters, park rangers and they reduce the incomes of the unemployed and the poor. that's how you get -- that's how you implement austerity by doing those things, and when you do those things, unemployment rises, consumer spending falls, housing prices fall with it.

people default on their student loans and back you go to the top of the slide. this is what we've been doing for the last couple of years, all right? this is -- this is bad policy par excellence, and, again, this is how we got the great depression in the 1930s and how we stuck with the great depression in most of the world through the 1930s outside the united states. and just -- in case you didn't think that mass unemployment was serious enough as a problem, let me suggest to you that there are a few other problems that are coming. we see -- we see it in europe but don't see it in europe only. i would suggest we see it in arizona, too. the rise of the politics of hate against the backdrop of -- going to get some political science terms, political fragmentation, delegitimatization which means people don't believe in their government anymore and paralysis. we were talking about paralysis when molly was talking. there's a great quote from

william butler yates about this, that we live in a time where often it seems that the best conviction and the worst are filled with the passion and intensity. that's why i feel better about listening to molly because i feel like we have some conviction among the best. now, the rise of the politics of hate, and by the way i mentioned arizona. it was unfair not to mention alabama, too. emerging markets lack -- emerging markets, china, india in particular, facing this economic crisis lack political institutions to manage economic hardship, so it's not clear what growth level is necessary for social stability in china. social stability in china is very serious thing. it's not clear the world economy could take the consequences of social instability in china in a major way. and finally, and most importantly, we've created a

political and economic climate or environment where we cannot address climate change. we cannot afford not to address climate change. [ applause ] now, i don't know if you need this thought but we need a virtuous cycle. instead of a vicious cycle, we need things to go in a positive cycle. we've got to start by putting people back to work. how are we going to put people back to work when no business person has confidence that there's going to be anyone to buy their products and services? that's the reality of what the problem is here. the way we put people back to work is through public investment, right. that's how we solved the gordian knot. public investment means -- it means universities. it means schools. it means -- it means pre-school education. it means infrastructure of all

kinds. it means the public -- it means our collective wealth. investing in public investment, dealing with our $2.2 trillion old-fashioned infrastructure deficit and our need to invest an equivalent amount, another $2 trillion to build the infrastructure of molly's generation. if we do this, it creates jobs, boosts demands for goods and services and makes us competitive, and we'd better do it because our international competitors are doing the same right now, and they have got a big head start on us. public investment creates jobs. secondly, got to fix the housing mess and the student loan america and i confess that i left the student loan mess out of the slide which is the kind of thing that molly was talking about earlier. we've got to fix the housing mess and student loan mess through principal write-downs this. will actually lead to stronger banks, not weaker banks and healthier household finances. we have to -- those things

putting people back to work, dealing with the financial mess through principal writedowns and through restructuring student loans will rise to consumer spending. people have rising confidence and banks will lend to businesses which would be a great surprising and positive change. the notion that we can get banks to lend to businesses. if those things happen, then more investment leads to rising productivity. ah, now we need a little thing called worker bargaining power, because if we don't have worker bargaining power productivity makes the rich richer. tried that for the last 30 years. doesn't work out too well, but if we get the wealth we create distributed to the people who create it a little bit, then we actually get stronger demand, people can pay taxes, tax receipts go up, expenditures to keep people going unemployed go down and the result is a healthier more balanced budget, the kind of thing republicans

want, right, and a growing economy that can support further private and public investment which creates more jobs and further increases productivity, and then you go back to the top of the slide again. and this time you're a lot happier going back to the top of the slide than you did on the vicious cycle slide. now, that's our choice. vicious cycle or virtuous cycle, and now along comes the fiscal trap. the fiscal trap is what we face this fall. the worst possible thing that you can do in this situation, where we are underinvesting in public assets so that we're endangering our country's competitiveness and we have an economy that's sluggish with mass long-term unemployment. the worst possible thing that we could do would be to impose austerity in the short run and cut taxes on the rich in the long run. that is a recipe for immediate economic pain, political

instability and national decline, and -- and surprise, surprise, that's the republican agenda. their agenda is to use the threat of something called the sequester, sequester is an automatic ax that's going to fall and cut $1.2 trillion out of the federal budget at the end of the year unless something comes along to change it. half of that money comes out of domestic discretionary spending. half comes out of the defense budget. republicans are going to come along and say oh, can't have that happen. can't have that happen. and on top of that, by the way, the payroll tax cuts that president obama passed that have kept our economy alive, they expire, too. republicans will say we can't have these things happen and we don't want to raise taxes on anybody to make up the 1.2 trillion, and so they are going to say we won't -- we won't do anything. we're just going to jam everything unless the president

agrees to a long-term extension of bush tax cuts for the wealthy and deeper cuts in domestic spending. domestic spending means things like education and parks, you know, the good things in life, unless the president agrees to extension of the bush tax cuts, but they are going -- they are going to pile on more and more domestic cuts. now, this is -- this is, as i said, it's not just that it's cruel, because it is. it is going to be cruel if that kind of stuff happens, and unfair, and it's not just that it will line the pockets of the wealthiest among us who don't need the money, but it is a recipe for national decline. it is a recipe for ensuring that we don't educate our children, that we don't enter the new age of energy technology, that we don't fix the roads and the potholes that are outside this door, right? that we don't do anything about the fact that in every major american city it takes two to three times as long to get to the airport than it does in the major cities of the rest of the world. those things matter, and we're

not going to do anything about them if this agenda goes through. but this is not the only threat. we also -- it's not just that you have this really hard right, you know, reactionary redistributionist agenda coming at us from the republican party, it's that we have something else called the inside-the-beltway agenda or as congressman schakowsky discussed the simpson/bowles agenda which avoids the expiration of the bush tax cuts and cuts social security and medicare. remember the vicious cycle, cutting the incomes of poor people in a recession, cutting social security and medicare, that's what that is about, and -- and in my mind the worst thing about simpson/bowles is that it guts our corporate tax system through a sneaky little trick called territoriality where we don't tax offshore

profits. you know what happens when you don't tax offshore products but you do tax onshore products? everybody goes offshore where they don't have to be taxed. somebody thought that was -- somebody in the simpson/bowles commission thought that that would be a way to address our revenue problem. now, that's the setup. that's what we've got to worry about, and now the question is will democrats, because we know what republicans are going to do. the questions is will democrats start making unilateral concessions? we've heard a lot of things about the democratic party but we have a little weakness which is the tendency to make unilateral concessions so just give things away and hope that people will love us better. and we now know where that ends. all right? did that work out so well last summer? all right. now, never let it be said that people can't learn, so today as

we stand here president obama is not making unilateral concessions. he's sending the right message, and his message has been pretty loud and clear, pretty tough. no more extensions of the bush tax cuts for families making over $250,000 a year. that's the top 2%. none! [ applause ] and by the way, as far as i'm concerned, most people making over $250,000 a year is a millionaire. a millionaire is someone with more than $1 million in assets. a millionaire is not somebody who makes $1 million a year. somebody who has assets of $1 million. people who make $250,000 a year typically are worth more than a million dollars. $250,000 a year is five times as much as the typical american

family makes. and the other thing that president obama said, and this is krit cal, because otherwise you just get gamed. president obama has said if the republicans want to go over a fiscal cliff meaning to trigger the -- the sequester, if they want to go over the fiscal cliff for a few days and see how that feels in order to protect tax cuts for the wealthiest americans, president obama has said he's perfectly happy to negotiate the next day after the public can see clearly what the congressional republicans are jeopardizing in order to keep the wealthiest even more wealthy. now, we have an agenda. there is an agenda, and the public supports it, that will do what our country needs. by the public support, it i mean that -- at the afl-cio we have this giant polling database, and the polling on these issues is

generally over 70% positive. some cases it's over 80%. the public supports massive investment in infrastructure, rebuilding manufacturing and rethinking our trade models so that we can be competitive in the new globalized economy. the public supports a tax system where the wealthy pay their fair share and the public supports the notion that that means higher taxes for millionaires. the public supports accountability for the banks to broke our economy, and the public supports, although you'd never know it if you lived here in washington the public supports protecting and expanding social security and medicare, and by the way, that -- [ applause ] -- the american labor movement thinks that given the pension system has been destroyed and taken away from us and robbed from us and that it's been replaced by -- by essentially savings accounts that have no money in them, that we might -- that what might be in our

nation's interest is not to dismantle social security, which is actually close to 90% funded and is the healthiest part of our retirement system, that dismantling social security is not what we need to do as a country. we need to strengthen it. and that medicare is not the problem. medicare is the solution. now, just to illustrate, again, the short sightedness and the self-centeredness of the aged. the other bullet that is involved here is that education, higher education, is a right and not a privilege. now, i'm going to conclude by saying this. this is in substantial part and drexally the agenda that president barack obama stands for. this is substantially and

directionally the agenda of the congressional democrats. but what it needs to be is an agenda that our political leaders pursue at scale. when we talk about infrastructure, we need to be talking about trillions, not billions. when we talk about a tax system where the wealthy pay their fair share, repealing the bush tax cuts is not enough. it doesn't even begin to be enough. i can't -- i mean, they are waving the sign at me, but i can't even begin to talk about what accountability for the banks means. the problem -- why is it that this agenda which has 70%, 80% public support, why is it that this agenda is like nowhere to be seen in washington? i mean, not nowhere to be seen. obviously seen on this panel and obviously seen here at campaign for america's future over the next couple of days, but why is

it that we are not reading editorial in the "washington post" calling for this agenda? why are we having to have even a discussion about scale. what has gone wrong? the fundamental challenge that we face as a nation after our collective bad bet on finance over the last 15 or 20 years is how do we overturn the political power of the winners in a losing game? you can call this, by the way, the mitt romney problem, or you could call it the jamie dimon problem. what is jamie dimon doing at senate hearing wearing presidential cufflinks? that's an agenda -- that's the agenda that really faces us. the public -- the public knows where to go here. the public knows how to make sure that we prosper in this century. we've got an obstacle, and it's the entrenched power of money in

politics, and it's time to move that obstacle aside. thank you. >> okay. thank you, damon. and it's -- it's important to remember, insightful and powerful as his analysis is, he's also speaking for a -- a very important political movement in the united states, the american labor movement. our allies, and it is good that we came to this tutorial about the economy from the point of view of elected officials who are going to be running for office and taking this -- this battle to the political system in the fall. thank you, jan schakowsky. and it's crucially important that people like molly katchpole translate this into the real

flesh and blood, real message and real life experience of average people, whether they are young or old, whether working in factories or working in the service sector. we have to build a movement that makes this economic program not only obvious in washington but makes it inevitable in our political system, so thank you all. let's all get out there and work, and let's go on to the next set of breakout strategy sessions. thanks -- thanks to all of our speakers. [ applause ]

on tomorrow morning's "washington journal" npr political editor marilyn geewax and tim tankersly discuss where u.s. financial markets are headed. university of baltimore law school professor charles tiefer examines the executive privilege claims concerning attorney general holder and the fast and furious case. and roberto ramirez from the census bureau and mark lopez from the pew hispanic center talk about hispanics in the u.s. and how they fare in education, employment and income. "washington journal" live at 7:00 a.m. eastern on c-span. senator john mccain continues to

criticize the obama administration for its approach to the syrian conflict. the ranking member of the armed services committee is calling for the u.s. to more actively assist the syrian opposition. he spoke monday at the american enterprise institute in washington, d.c. one estimate puts the death toll in syria at about 15,000 since t the start of the uprising. >> good afternoon. i'm michael rubin, the american scholar at the american enterprise institute and it's my distinct pleasure to welcome john mccain, the senior senator from arizona. senator mccain is the ranking member of the smart armed services committee and he served 22 years as a naval aviator before entering politics. when it comes to syria, he has taken leadership on the issue not only within the u.s. senate but within the entire u.s. government.

he has certainly distinguished himself as the conscience of the senate on this and other issues. thank you, senator mccain for joinings and we look forward to your remarks on syria. [ applause ] >> thank you very much. thank you, michael. it's a pleasure to be here and back at aei, and i notice from faces in the crowd there's a number of interns here who are spending summer. i've always thought if there's such a thing as reincarnation, i wanted to come back as an intern here in washington in the summertime. i know that most of you are spending a great deal of your time over at the library of congress on the weekends as well. it is a pleasure to be back at aei. one of the foremost institutions in america and the world that i think has contributed so much to the dialogue and discussion and decision-making that takes place here. it's great to be back among many friends.

i usually try to begin my speeches as i just did with a joke or some kind. when we're talking about syria, it's too horrifying, too heartbreaking, and too exasperating. for 15 months now the syrian people have faced an onslaught of violence from bashar al assad and his forces. it's now estimated that as many as 12,000 lives have been lost. some suspect that figure's even higher. and there's no end in sight. to the contrary, assad appears to be accelerating his fight to the finish. amid all this violence it's important to recognize that the clear trend is toward esclalation, both in the nature and the quantity of killing. assad has gone from using infantry and snipers, to takes and artillery, to turning loose special units and plain-clothed

militias to massacre men, women and children as happened last month in the town of houla. we are now seeing a rapid increase in assad's use of helicopter gun ships. whereas his forces once sought to clear and hold ground, they now appear to be under orders just to kill anyone and everyone they deem a threat. there's every reason to believe that assad will continue to escalate the violence, more massacres, more use of helicopters, and perhaps worst weapons after that. meanwhile, assad and his forces continue to be re-armed by russia and iran. there are reports of iranian operatives on the ground in syria to help assad with the killing while russia apparently continues to ship heavy weapons, including, as secretary clinton has stated, the very helicopter

gun ships that assad is currently using to bomb civilians. whether these are new helicopters or old ones that assad sent to russia to be refurbished and have the blood washed off of them is a distinction without a difference. there are now reports that russia has dispatched twoships and the unit of russian marines to re-enforce their naval base at tardusz. to help the assad regime. clearly this is not a fair fight. amid all of the violence in syria, we cannot go numb to the human tragedy there. in april thanks to the special efforts of the turkish government, senator joe lieberman and i visited a syrian refugee camp in southern turkey. i've seen my share of suffering and death. but the stories that those syrians told still haunt me. men who have lost all of their children. women and girls who have been gang raped.

children who have been tortured, and none of this, mind you, was the random acts of cruelty that sadly occur in war. syrian army defectors told us killing and rape and torture is what they were instructed to do as a tactic of terror and intimidation. so if i get a little emotional when i talk about syria, that's why. when it comes to the administration's policy towards syria to say they are leading from behind is too generous. that suggests they are leading. they are just behind, and it's desperation the administration now appears to be placing its hopes in the russian government to push assad from power in a yemen-like transits. this is the same russian government that continues to provide heavy weapons and moral support to assad, that refuses to authorize u.n. sanctions on

the regime and even blamed assad's recent slaughter of civilians in houla on the opposition and foreign powers. the more basic problem with this approach is that the administration has already tried it and moscow rejected it and shut down the u.n. security council. what has changed to make things different now? what the president does not seem to realize is what president bill clinton came to understand in bosnia. that a diplomatic resolution in conflicts like these is not possible until the military balance of power changes on the ground. as long as a murderious dictator be it slobodan milosevic or bashar al assad believes he is winning on the battlefield, he has no incentive to stop fighting and negotiate. the same is true for the regime's foreign supporters. for whatever the reasons and despite destroying russia's

reputation in the arab world, the russian government has stuck with assad for 15 months. what makes us think that president putin will change course now when assad is still the dominant power on the ground? we are now approaching a major point of decision. kofi annan's plan, which does not even call for assad to go, has been a failure for months. the head of the u.n. monitoring mission in syria has suspended its operations for security reasons. assad's increasing reliance on helicopter gunships is giving new impetus to calls for a no-fly zone. russia is unlikely to ever support a policy of regime change in syria. the administration's approach is being overtaken by events. furthermore, the opposition inside syria is increasingly forcing the hand of the civilized world to intervene on their behalf because they're growing more effective militarily.

this is no thanks to us. public reports suggest that some of our friends in the middle east are now arming rebel groups in syria. this may explain some of the recent reports that opposition forces have been able to destroy some of assad's tanks and prevent his forces from retaking and holding some key terrain. some will try to interpret these developments as evidence that the united states should maintain a hands-off approach to syria. this is wrong. first, the fact that the opposition in syria is doing better militarily thanks to external support seems to validate what many of us have been arguing for months. that opposition forces have enough organization to be supportable and that our support can help them to further improve their organization and command and control. this is an argument for doing more not less to aid rebel fighters in syria. second, while it's good that so