this was the form of economic rent. we went to the second best. we went to all of these institutions. they all came about to try to get around this problem of only state banking. and they all started with very limited missions. to provide liquidity because the banks were ill liquid. and the word liquidity is the most mis-used word in the english language. we'll see a little bit about that later. we created these things, they didn't work for what they were supposed to do at the time. they expanded to new missions later on. deposit insurance was the worst solution to the wrong problem.

>> the bigger banks that were diversified didn't fail. we did it anyway. the big banks didn't want to do it because it was a cross subsidy to the small state banks. the savings&loan refused to go along but they refused to take their own and ensured next year. the second thing is we tax equity before you can pay the equity holders. this is a huge incentive for all the banks. to leverage as much as possible.

and so the bank capital went down from 20% to 5%, the regulatory minimum, immediately. and those sentives still exist today. so in the post-war period, america was on the winning side of the war. we had a lot of economic stability. in the '60s, the homeowner ship rate, to act 65%. totally funded by private savings&loan deposits and mutual savings banks. now, the homeowner ship at the time was considered a very good thing. there were no political incentives that we can speak of. america was the land of opportunity.

either they had the zipging house or they continued to save. they didn't take cashouts. it reduced consumption and benefitted everybody. 80% of the small businesses that were formed in the country, almost every servicemen came back and performed a gas station. he got it through his homeowner equity. so this was incredibly beneficial at this time. now, what happened? the political bargain changed dramatically. regulation alms morphs into a financial repression. so the political bargaining started in savings and loans. give us cheap money. give us low capital requirement. then the building side said give us fixed-rate mort gangs. then, when swres rates started to go up, the grey panthers came in and said we're not going to accept deposit rate ceilings. we give them that, too: in this

political bargain, things are doomed to fail. and they always do. and they did. the new political bargain at commercial banks was we introduced the cra. this was a little bit of economic rent. in the '80s, it became a bigger deal. this was all to get the position to merge or to open branchs. >> we would charge banks a fee. we'll give you the right to do what you should do anyone.

this was the ability to merge across state lines. you still needed regulatory permission. even after it was made legal in order to branch. because it was so important, the banks in the '90s combined $7 million. how much was $7 trillion? all of it. no one bank knew what the other ones were doing. it was just trying to get an advantage to grow and take over the market. frannie may was a zombie. how many watched the walking dead? you can't kill them and they live off of the living.

this is what happens to zombies. they can distribute good politics. so they passed a law that said we have to spread that around a little bit more. it added on the homeowner ship of 70%. now you had to raise it to 70%. the gses had to make a major push at the bottom of the market. they had to maintain a 50%

market share from competing with the private lenders in this market. they're taking enormous risks. the housing bubble just kept on inflating. it couldn't have inflated without a zombie to kill that bubble. this part of it is not officially understood. the rules were never changed. most of it was zero down. or very close to zero down. when we get close to zero down, we get excess leverage and mall investmented and end up with a

crisis. it is true that they didn't bear the biggest part of the loss, but they were instrumental to growing to systemic portions. we wouldn't have had the bubble if we had normal housing and payments. it was officially modelled after the core operation. that he did exactly the wrong thing in the wake of the depression. so the purpose of this decision was denial, operate and cover up. it was beautifully done in that regard. it suggests doing exactly the same things that have gone wrong, doing more of that in the future. so we've gone through the achker part of this.

>> that's what the fed does. remember, franny mae was a zombie. it's the franchise value that bails it out. not the reported costs on the budget. those are a joke. so the biggest bailout myth that was exposed was that somehow government securities that are backed by filsinged rate mortgages are liquid.

we did a lot of short term financing. we've always got to bail out main street, too. and there were a lot of ad hoc mechanisms to try to do that. and once you give franchise value back to these banks and bail them out, then you can take that back through the context of penalties through the legal system. bank of america subsequently saw no illegalities over $200 billion. some of you lawyers might disagree.

>> so what did the new dods frank system do. it tried to maintain all of the same elements in terms of banking orientation. it didn't address housing policy. it didn't address the gres or fixed rate mortgages. all of that was left for the future. the nature of that discussion is not really a policy discussion. it's political bargaining going on in town about how much economic rent can we get these zombie institutions to get it.

and who's going to get it? it's all the same as before. dodd-frank really tried securitization. by historical spenders, that would be pretty low. so i'll just summarize this. we started with a fraction system that was too fragile. and we ended up with a croney system that was exactly what the founding fathers were trying to avoid where we have banks that were too big to fail and we don't have effective control them.

where's the money? how much of it is there and how do i get my hapds on it. in the private sector, where's the money? i'm going to ask you that question. here, historically, 1 where the money came from. capital funding came along a little bit later. so we've had the fed printing

money for nbs. you can see the retirement sa savings are starting to shrink. we should have had skyrocketed savings. instead, it plum etted to zero. why did that hatch? when the government provides a service, people tend not to save.

i have no doubt that sat down over a few dripgs. the trust fund was a counting figment. it never happened. the savings never happened. so where else did we get the money? we got it from abroad. how much did we take? we took all of it. so i'm going to spend one minute on this side and then i've got to move on. our monetary system was out of control and janet yellen responded using the speech macrodegeneration many times.

it's a total oxymoron. what we tried to do in the short run is the same thing in the long run. we tried to inflate asset value so people think they're rich when they're not. the people at the fed do not create wealth by creating asset bubbles. so we're right back where we started. a deficit problem. i wish i could talk about it more. the fact is we could not tax our way out of the deficit.

people at the top half are paying 50%. if we want to grow out of the fiscal problem, we're going to need to have more business investment. that's not going to happen. so none of this adds up. or we'll confiscate all of the private wealth as sets. there's no easy way out of this. so when we get into the acceptance range, we don't have the savings to fund that

mortgage finance. this is an existential threat because it says that really, all of this political interference creates more hassle. we need more productive work. we need more savings. we need to go back to a market system with market incentives for savings, borrowing and insurance. i'm not saying it's easy. one way out was that we could default by inflating. but all of those claims, those liabilities that i would like to fall are index to inflation. the second reality is the depoz sit insurance is here to stay. so we've got a fixed bank regulation.

nobody does fixed rate mortgages anymore. implications for the borrowing rates. i'll tell you what he says. it won't raise in his lifetime. which is at least 30 years. the bad news is we have stagnation for the next 25 years. or, if you have economic growth, you're going to have rising interest rates. and you could take those same

revenues and use them for homeowners mortgages. the problem is that would have to be transparentally done and it would take the economic rents out not for the borrowers, but for the politicians and all the other economic rent seekers. you ought to go back to the down payment system. i would say that i don't think the benefits will exceed the cost, but i doubt there will be any benefit of it. it's created against market interest. the u.s. obsession with capital markets. all of this took place when we thought the money was in the retirement system.

we're way too focused on what they say we need. etc.'s never happened. wall street decided. earning about real interest rate. making 8% interest rate. >> thank you, mark. [ applause ]

well, thank you, kevin. it does take place within a broader reminder and should certainly emphasize that there are at least a does mpb different things. i'm solely going to talk about mortgage finance. but no way is that excusing the rest of them. let me first start out in touch. if those of you have ever been at a distance related to mort gang finance policy. it's about homeowner ship, apple pie. you can't talk about it without that. i want to very quickly put the story out there.

homeowners vote more. their children are more likely to graduate from college. correlation does not equal causality. there's been nothing in the scholarship that causes these outcomes. is it nor likely to have homeowners become more responsible? so you move to dallas to find a job.

we've had more people stuck in place riding it out rather than moving to other parts of the country. >> so, again, there are a number of empirical conclusions. that's a find and it's in the literature. >> also important to keep in mind, not the same person. even if homeowner ship is correlated on average, that doesn't mean that the marginal, that is that homeowner who would not be a homeowner other than

for the policy information is going to be the same person as a homeowner. that means i do something and you shouldn't do anymore of it. the evidence is fairly clear for homeowner ship. you can think about this as do you live next to somebody who, you know, mows their lawn or doesn't keep trash in the front. that said, those actualities are local. i'm not getting the direct benefit of it. so, again, to the extent that these are positive real

subsidies to the extent that they improou outcomes, they are very localized to the community in question. every other person who comes in the door says how great of a thing it would be and how many jobs it would create. they are grossly exaggerated. it take it is same amount of people to build a condo than an apartment to rent. and the point is is that we hit

long term trend homeowner ship rates in this country by 196 o. the growth, they had single digit marketing shares. so it's fine to say we want to do things for homeowner ship. the lower bar is the after rang loan-to-value for the house. this is, in some sense, ancient history.

>> we have delivered getting their households swimming. again, that's one that we clearly accomplished: all of these institutions were created in the '30s. but if you were in texas, a bank was limited to one location. that means if the biggest employer in town goeses belly uch, it's pretty clagsic that

the milk is going to go uch. by contrast, canada, which had the same if you look at the gdp here in the u.s., look at canada. they didn't have a fed. they didn't have fdic. >> i think bank of america is at 489 states now. it's interesting enough that there are two big banks able to fail. so i would argue to some extent

the lack of access gets the lack of geographic diversification. we certainly need to remember that the federal reserve purchased a trillion dollars. i would submit that we can end franny and freddie and lead the world in socialism. one of the questions i'm often asked is if we don't have franny and fred dee, who do we have?

we realistically shoumd be more thinking about a six or zempb trillion dollar marketing habit. also important to keep in mind, average originations are about a trillion dollars a year. all of these have transition peer dwrods. at that rate, we can continue to force it is entire market. >> the securitization system we have is connected from main street to wall street, but still came from other financial institutions. this is a bit of a simplified example.

>> why would you have that round about process? bank of america still takes the interest rate risk. by cutting their capital rules, they can you want their mort gang. my back of the envelope is looking solely at the institutional. the crisis was levelled 60 to 1

just absolute lack of care on the system. i would propoeds going back to -- >> yes, there are lots of crisis. some of those things we've asdrezed. some of it we still need to adretsz. it's kind of the problems i'm going to make you alone. do i think if you're going to pay me back or not. >> so the lender has a sense of are you going to lose your job.

i mentioned earlier, not really driven by the real economic benefits of the activities. it could actually reduce foreclosures. you've lost your job, but i know your employer is laying off or he's going to get hired again. one of the things to do is to see who can get back on their feet if adjusted. you can make much better decisions. you don't have to get into all of these negotiations with the mort gang backs.

also, keep it in mind, whether it was overnight lending, these things aren't as sticky as deposits. deposits, joe, they stay within the banksing system. one of the things it's not guilty recognized, it's just increased tlout the financial crisis. they were not putting them under their pillows. so, again, it just means that the position sits to managed banks.

>> let me also note we fund a lot of 5:00 tities. the whiter line is autosales. and the red line is housing starts. unsurprisingly, they followed each other down. we basically went back to trend. but the point being here, despite the fact that we doebt have a gse for auto-loans, but that said, that doesn't help the housing mashlgt at much.

the other chart is consumer borrowing. it recovered along with the rest of the economy whereas the mortgage and housing company did not. housing markt continues to be weaker. >> they're obama slightly bovr rates. the tip dal life of a mortgage is 30 years. and so the fact is we can manage that interest rate risk for some amount of time:

>> the oil loan is an interesting area. the autoloans are pretty much off the waterer the second you drive off the lot. funny how that incentivizes people to pay. i believe the immediate time is a thousand days. three years of free rent sounds pretty damn attractive.

it might actually change a few inseventhiv inseventhives. i can move to dallas texas and try to find my own job. you can do it in a way that does not lock them in place. those things would be far more effective. >> this is one of the great frustrations as an economist. they spebt a lot of time debating and argue ming.

and then everything is fixed. i'm the first to say we should have le jit mat realistic real world markets of models. it is not an all-knowing social planner. first of all the, all insurance premiums are going to be underpriced. we've seen it with flood snumpbs, mortgage insurance, social security social security. any system is gingrich to be procyclical.

and guess what, my experience on the banking committee staff is that the frnl regulators, largely within their discretion, bend to the will of the orr sight committees. the system in itself will look the other way and then the system will overreact and clamp down: uf to have people who have incentives to bring pessimism. for every one person who came in my door, i had a hundred people

saying there's this great miming making machine. >> again, also another thing to keep in mind, and kevin touched on this with social security. what we do with those premiums is put them in the treasury. there is no asset ins there. only empty promises. they were throwing off lots of excess cost which they could

spend. i turned out being right, they turned out being wrong. it doesn't make a difference now because all of that money has been spent. again, this has got to be the way these programs are run. the budget pressures aren't reflected on the budget. one way to do that is you create con tin jent lieblts. there's no better way than mort gang finance. >> the event was not a tail event.

the competition and guarantees don't rent. so if you have a system and i think one of the reasons that we had a crisis was we went from the world in the '70s and '80s where the banks were very unpettive to a world where morlt gang finance became increasingly competitive. they all had guarantees. n . >> now, i'm a big fan of competition, but we can't have both. if you have vigorous competition, you will pay out at some point. guarantee.

we haven't fixed the housing cycle. we have to assume that we're going to see another bust again. part of the problem here to me is fundmentedly what he's done with guarantee of creditors as if we had dwovt recklation sushs constitute. so just think about it. so, to me, there's just very weak incentives. i would challenge you as any regulator. my favorite example is there is no regulator who did a worse job in the crisis than the new york federal reserve. we gave their president a promotion to treasury secretary. good for him.

people who lose that money will have far greater incentive to pay attention to this system. what you're seeing here is a five-year moving average. the point here is you see pretty wide swings in housing. the argument has not been true, never been true. it's a risky investment. but you shouldn't go into it thinking it's going to be a win-win with no problems.

i want to make a quick point. point. we're not talking any prepayment penalties. in the far other corner, we can see that they're agt times more likely to default. the point here is it doesn't do fig about fico. almost all the attention to dodd-frank for product features.

those things are coming to the credit score and down payment. we have learned you can make loans to poor credit borrowers fw there's a sizable down payment. you can also make loans with no down payments if it's a prime borrower. if you can make a low payment loan to a sub prime borrower, you will not get your money back. that's been repeatedly proven over and over again. >> we are the only developed country in the world someone with a history of not paying their bills, and be able to get a mort gang. we are massive lid borrower frechdly. that's fine. but i think we should be open to the rapifications of it. what this tells me is we do not need guarantees for down

payments. that is what the complete debate is about. so some of the policy principles i will leave you with is reform. and, again, i'm happy to talk about those as we go forward, even though i think for this congress, they're essentially dead. so i hope in the future, what's born in mind is if you have a federal charter, you hold the same amount of capital as everybody else. i do think we need to get away from picking winners and losers in which sectors of society. you want to see wages go up,

bidding up the housing prices does not make workers more productive. build a plant. build human catchal. those are things that at least have a chance of increasing wages.stagnation. risk bearing should be transparent. i don't think we should use finance as a tool for redistribution of income. if you want to do budgets, do them appropriate. there's a variety of ways to do them honestly. hiding them, in my opinion, will blow up at you. with that, i'll turn it back to john. i think we have time for a few questions. >> we do have time for a few questions. maybe one or two. >> i don't like regulation. and i agree with you that the moral hazard risk is the high aspect here.

are you advocating any positions to one, increasing the duration and amount of clawbacks? and using -- i realize that it came from jack reed, the concept of continge nlt capital. >> let me start with, if any system of insurance, whether it's public or private has moral hazard. we all know that. the question is if you have created that moral hazard with a government guarantee, how are you going to control it? my position is not you should give the guarantees and look the other way and hope it all comes out welg. you can't do that, so you have do the efforts of how do you align the incentives back in an appropriate way? and to me, the principals i follow, i think it's first got to be simple, so i'm in favor, as long as we have government guarantees like deposit insurance and implicit guarantees, i think we need more capital in the system, it needs to be clearer capital. i would have a flat leverage

ratio that can't be gamed and i would be the first to say basel three has moved in a better direction. even if i think it is insufficient, what is capital has to be real capital. i remember fannie and freddie were solvent for months only because we counted deferred tax losses. that's absurd, that's a fraud to the american people. i am sympathetic to clawbacks. for institutions that go belly up, certainly clawing back. i am, again, i only use it as an example, i don't mean to pick on fannie may, but the fact frank ryan walked away with $90 million and left us to clean us his institution is obscene to me. i apply that to executives also. i want to emphasize, there's a big variety of cultural aspects at different institutions. the corporate culture at wells fargo is not the corporate

culture at siti bank. you have to let them fail, be reorganized. how many more times do we have to bail out citi? it's pretty clear they have a poor corporate culture. >> claw backs. >> i think clawbacks are a reasonable approach. i wouldn't rely solely on that. if you structure them correctly, they can be simple and transparent. i am sympathetic, the tension with convertible capital, i start from the premise, and as we know, there's debt on this side, equity on this side. it's a continuum, you have different places on the line. i'm against bailing out creditors, but if we're in a world where they're protected, it makes sense to have a layer of creditors, whether it's subordinated debt, whether it switches to equity, that's a reasonable approach if we don't think we're going to go into bankruptcy. one of the real mistakes made during this crisis was in several financial institutions, the subordinated dent, and

subordinated debt is sold to the public as something that if this institution gets in trouble, you're gone. this isn't super senior. you're the first line. we bailed out subordinated debt holders in a variety of situations and that's undermined decades of effort to build markets. i think convertible capital, there are ways to do it badly, ways to do it well, but i'm sympathetic and supportive of it. sorry for the long and convoluted answer. >> i'm currently interning at a start-up bc fund. i'm originally from the university of iowa. my question goes to the whole panel in general. we've seen a lot of government financing in the housing system, and that is why, you know, the housing market got inflated and the bubbles happened, and through financing, through fannie may and freddie mac, the bubbles got bigger. as a university student, the biggest thing i see is increasing debt within our students. do you see a similar trend in

the university debt system where the government is subsidizing debt and making the tuition bubble even more? >> i think, you know, it's interesting to me that because a lot of the mortgage subsidies i talked about did not increase ownership. the of the student dent has increased participation in college, but just like in the housing market where mention of the subsidies captured by the providers, it's the same in education. you look alt trends of how many classes faculty teach on average and you see that every 20, 30 years. it's unusual for senior faculty if they're teaching class as a master, and the same thing, the number of university presidents earning over $1 million, i'm not picking on university presidents specifically, but much of the subsidies have been captured by the universities themselves and not the students. i very much worry we're relieving people saddled with

tremendous amount of debt they'll have to pay off. what we need to do is in the housing market just as the education market, if you're going to find subsidies do it in a way that doesn't run up the cost of what you're going to subsidize. kevin may have something to add. >> nine universities and never had to go to a faculty meeting. again, student education is paid for by cash up front from past savings or subsidies from government. now you're leveraging it. whenever you have leverage, you have malinvestment. the problem is people can look back and say an education is historically always paid off. and that's true, that was also true of home ownership, and it was even true of people making low down payments in a particular environment in the past. prospectively, that doesn't mean it's true at all. you have really changed the equation in terms of the amount of leverage you've put in. when you put that in, others are going to capture those benefits.

so i believe that there's incredible rent seeking on the part of university faculty and university administrators that end up giving you very little value relative to money spent. and that's why the unemployment rate is so high among so many grads, especially the new grads who are more towards political science. i don't mean to make fun of it, but unless you're coming to capitol hill, a lot of those guys are waiting tables right now, and it's a big problem, and there will be a student loan bubble that bursts. >> the one hopeful difference for me between education and housing, at least on the surface, there aren't a lot of people who tell you we shouldn't try to make education more affordable, and again, if you remove the subsidies, the pricing is going to fall. and again, there's not as much resistance to tuition falling. all the arguments i often hear for keeping mortgage subsidies is we can't have housing prices fall. that's going to destroy the

balance sheets. there's much more opposition to doing things in the housing sector that would bring the cost down. i'll say very clearly, just as i mentioned i think competition and guarantees don't mix, one of the fundamental problems in housing policy is this confusion of we want to be about consumption and investment at the same time. we as a country don't want people sleeping on a heating grate, which i think, that's not something we want as a country, but fundamentally, if you want housing to be about consumption, you can't be about making it more expensive. the only way you make an investment a good investment is by limiting its supply. anything that is widely, freely available, is not a good investment. so i think fundamentally, and this is where i'm going to channel my inner progressive. housing to me is a basic necessity of life. it is shelter. why do we spend all this time coming up with policies to make housing more expensive? i would like it be cheaper. i want to live in a world where people don't spend more than 5% on housing. we have a world where we have

convinced people housing is the best investment in the world, get into it, make a lot of money. we should accept the importance of housing is a roof over your head, not some, you know, casino you can campbell in. i emphasize, you cannot have it both ways. we have to make a public policy choice, consumption or investment. >> we're a little over time, so why don't we cut questions off now? if you have saquestion that wasn't answered, i'm sure our scholars will stick around. thank you for attending and please join me in thanking our scholars.

coming up tonight on c-span3, transportation secretary anthony foxx talking about the importance of infrastructure investment. after that, president obama awards the white house medal of honor to a former army sergeant who served in afghanistan. and later, the british ambassador to the u.s. discusses nato and trans-atlantic security issues. transportation secretary anthony foxx today called on congress to come up with a long-term investment plan that would meet the country's transportation needs. he was speaking at the national

press club in washington, d.c. the highway trust fund is set to run out of money as early as next month without action from both chambers of congress. this is an hour. >> our guest today has been in his post as the top u.s. transportation regulator for just over a year. since he assumed the job of u.s. transportation secretary, shipping oil by train has become a hot button issue. the u.s. suffered its first fatal commercial aviation crash in more than four years and the pot of money that pays for roads and bridges in this country found itself on the verge of running out of money. anthony foxx is the head of the u.s. department of transportation, which is sometimes overlooked, but which in recent months has been at the front and center of the news. when transportation runs smoothly, no one pays attention. but when bridges fall down, trains derail, or more people die in traffic crashes after years of decline, it's the transportation secretary who

hears about it and has to try to figure out a solution. foxx previously was the youngest mayor of charlotte, north carolina, elected in 2009 and serving a single term. when the city slipped into financial crisis shortly after he was elected, foxx looked at transportation to revive the local economy and he later brought thousands of visitors to the city when it hosted the 2012 democratic national convention. the father of two won a rare unanimous confirmation from the senate, and he keeps a reminder at home, a carolina panthers helmet in his office. please help me give a warm national press club welcome to u.s. transportation secretary anthony foxx. [ applause ] >> angela, thank you very much. i also want to thank your current president for welcoming me here and to thank all of you

for taking time from your busy schedules and days to be here at the national press club. you know, almost since i assumed the role of u.s. secretary of transportation, i have been ringing the alarm bell about the looming crisis with our highway trust fund. the federal source that is used to pay for highways and for transit. it is unfortunate that it has taken months of ringing this alarm bell. traveling the country in april on a bus tour, putting up a trust fund ticker on the d.o.t. website, meeting with dozens of governors and mayors across the count country, putting shoe leather on capitol hill. to get to the point where just last week u.s. house of

representatives passed a measure to avert the immediate crisis of our highway trust fund. and to pass in effect a ten-month patch on the system. later this week, the u.s. senate is expected to take up a similar measure. if this short-term patch passes, it will not be time to celebrate. it's hard to imagine that congress will not push the snooze button on this issue again. until crunch time. come may 2015, if we're not careful, we'll be right here again with the shot clock set to expire, looking for an easy solution to patches for a few more months, leaving the real conversation for another time. and i can hear folks on capitol

hill now, gosh, you know, this transportation thing is really important. but we just can't figure it out right now. so let's just do what we can and keep moving. well, today, and until congress passes a long-term bill, i'm urging the american people to say no more delays. no more gimmicks. no more short-term patches or band-aids. build our country. put us to work. and get america moving again. and help future generations move forward in the process. because folks, if we're only building for the present, we are building for the past. that's just the reality. it's a sad commentary that we're in effect managing a declining system, a system that is crumbling before our eyes, a system that is growing potholes.

a system that is creating longer commute times and a system that will cause us to lose jobs we have no business losing in america. why? you know, if this system were a patient, we would want to look at what the symptoms are and we would want to figure out what the underlying disease was. on the surface, our system suffers from chronic underinvestment. an old project delivery system that makes projects take too long and cost too much. and a set of priorities that are more like model ts, a set of policies that are more like model ts than steslas. beneath the surface, the american people are confused about who to hold accountable, even as they sit in longer and longer traffic jams.

even as those traffic jams are expected to get longer over time. what i am saying in effect is that america needs more than just an incremental adjustment. we need a transportation reset. and it's got to be big. so let me talk about the symptoms. first, our chronic underinvestment in transportation feels normal. you know, we treat it like it's just the way it is, the way it's supposed to be. when we talk about the infrastructure deficit as if it's the normal course of things, and every year, the cost of catching up grows farther and farther out of reach. the american society of civil engineers, for instance, estimates that at current spending levels, we will fall almost $850 billion short of

transportation needs nationally by 2020. but you don't have to just look at a big aggregate number like that. go to rhode island where i was just a couple weeks ago. and talk to governor chaffee and his d.o.t. director, and they can show you that at current levels, even if we get a patch, even if we get 50 more patches, at current levels, over the next 20 years, roads in rhode island are going to get worse. and rhode island is not by itself. just a few weeks ago, pieces of the brooklyn bridge fell to the underpass below, closing the underpass. and i could go to nashville and point to three bridges that are doing the same thing. this is happening all over america, and we have no shortage of high-profile bridge collapses in this country, including up in minnesota and washington state.

and as the president says, we have 100,000 bridges old enough to qualify for medicare. so we're piling up deferred maintenance, and it's not a surprise that our system is falling apart. so i characterize the first symptom as we have a big problem that we're treating like a little problem. that's the first symptom. second, we are understating the cumulative effect of the short-term measures on the system. over the last five years or so, we've had 27 short-term measures passed by congress. so we get into the 11th hour, congress shuffles around, tries to find an answer. we patch ourselves together for

a few months. everything is supposed to be okay. but it's not. you know, i used to go shopping as a kid, i would go with my grandmother a lot of times and she would take me. and i would get to a store and i would like a toy or something, and i'd say, let's get this. she'd say no, put it down. we're just browsing. well, i learned later what browsing meant. browsing meant we have no intention of coming back to get that toy. right? that's what congress is doing. every time they do another patch, they're just driving another nail into the idea that america is going to solve our long-term transportation problems. creating less confidence at the state and local levels. this is something i know a little bit about. i was a mayor. and i can tell you that when you're trying to put millions of

dollars on the table just to plan a project without knowing whether the federal government's support is going to be there, it gets harder and harder and harder to get those projects going. so instead of ramping up transportation construction, we're actually ramping down. and that has consequences. without planning, you can't design a project. you don't design it, you can't engineer it. you don't engineer it, it doesn't happen. it doesn't happen, there's no relief. it's a big looming problem in america. and that's the second symptom. which leads me to the third one. in addition to stockpiling a huge infrastructure deficit, chilling activity at the state and local levels through short-term measures and

indecision, the circus mirror in washington is started to make the most practical answers to these questions seem impractical. and the most impractical answers seem practical. it's like it's upside down. what's right is wrong, what's wrong is right. the american people are wise. when we explain the facts to them, they make the right choices. but, and i have talked to them. talked to many of them over the course of this past year. you give them a choice between a temporary imperfect, more expensive solution and a real, lasting, cheaper solution, they're going to take the latter just about every time. now, that's exactly what we've tried to do with the grow america act. i'm sure all of you have read

it. if you haven't, i would recommend it to you. it is a bill that we put forth in this administration to end the hand wringing on this issue and to put america on a long-term path to growth. let me describe the bill for you in summary fashion. it not only stablealizes the highway trust fund. it actually increases investment in the highway trust fund to the tune of 37%. $22 plus billion over a four year period of time going into our system, creating jobs, creating the kind of activity we need. it's substantially investing in critical repairs, it puts in place money to build a national freight network so we can capitalize on the growth in manufacturing activity we're seeing. it would help deal with the complaint that projects take too long by streamlining the federal

permitting process and incentivizing states to do the same. reducing costs and creating more value for the taxpayer dollar. it brings rail into the dedicated funding family along with highways and transit. it strengthens buy america and local hiring, and even helps by directing some dollars directly to state -- directly to local communities so they can get projects moving. and the kicker is that congress can pay for the grow america act without raising deficits or rates. by just doing some commonsense pro-growth business tax reforms like preventing companies from moving profits overseas. so this bill or something like it ought to be a layup. it ought to be easy. but when you talk to members, essentially the argument against it is, we can't do it because we can't.

ladies and gentlemen, the idea that congress can't pass a multi-year, forward thinking transportation bill is one of the biggest self-fulfilling prophecies in american politics today. and by the way, it is killing our transportation system softly. one of the building blocks of our economy. so here we are, we're on the eve of another patch, another short-term measure, another cloud of uncertainty that will certainly grow our infrastructure deficit and roll the drawbridge up just a little more on the next generation. meanwhile, our congress is running out of mattresses, out of child seats and rocks to look under to patches for just a little while longer. and that brings me to the disease. and it's congress, but it's deeper than that.

i said this before, but i really believe abraham lincoln was right. when he said that the american people, when given access to facts, will do the right thing. i'm paraphrasing. but when they don't have the facts, they can get stuck. well, on this issue, the american people need the facts. now, in reality, they know something is wrong because they're stuck in traffic. they have been patiently awaiting the new biprasz or the new bridge or the new transit project or the new rail passenger service for years and years and years. and unfortunately for them, they can't put a finger on who to hold accountable. there's not like a sign on the freeway that says your commute would be shorter if congress just took action. the dots aren't connected. and it gets even more confusing.

frankly, when you hear -- when they hear that congress passed a bipartisan measure to keep highway funding going, because it sounds like something that ought to happen. but they're not told to read the fine print. in the fine print, it says this fix is temporary. it's not really going to fix what's broken and it's not really going to do what we need it to do. if they knew these facts, if it were put squarely in front of the american people, they would demand a solution. clearly, we need a moment of clarity and a moment of political courage. and that will not happen without the american people raising their voices. now, the good news here is it's starting to happen. we've got governors, 30 of them, who are republican, by the way, who are asking for a bill that allows them to plan more than ten months out.

they are not alone. last week, 62 associations including the national association of manufacturers joined together, calling on congress for a long-term proposal. they are not alone. 11 of my predecessors and i are joining to push for a long-term solution. secretaries lahood, peters, and mineta, slater, pena, skinner, card, burnly, dole, coleman, and boyd, taking together, the 12 of us have served 35 years standing watch over our nation's roadways and railways and transit systems. five of us served under democratic presidents, seven of us served under republican presidents. and while i'm sure there are issues on which we may not all agree, there is one issue on which we are united.

and that is for america to reach her potential, we have to have a long-term transportation investment plan, and we need it as soon as possible. and so today, we're releasing an open letter to congress, calling on congress to do just that. if the 12 of us can stand together, congress can stand together and get something done. but we won't stop there. i won't stop there. i'm not going to stop inside the beltway, pushing this issue. i'm going to do everything possible until this gets acted on to make sure the american people know they are in charge. we're going to convene leaders in all 50 states and make the case for ending gridlock on this issue. right now, washington is dictating outcomes to the american people. but in our democracy, it should work the other way. so we're going to let the

american people decide whether their futures are worth fighting for. as a department, we recognize the trends and challenges that are coming around the corner in america. and we're going to work hard to make sure these trends and challenges are more clear to the american public and to policymakers. we have to look past our noses, and to do that, one of the tools we're going to use is a 30-year transportation vision that's going to look at the trends and challenges and by the end of the year, we'll have that available to the american people. so we've got a plan for the future. and the american people, i believe, are on our side, particularly when they have access to the information that is so critical to this issue. and that's why i believe we're going to get progress on this long-term plan. i think the moment is in front of us. why do i believe it?

i believe it partly because from lincoln's continental railroad to eisenhower's highway system, we are a yes country, not a no country. because we're not a country that looks backwards, we're a country that looks forward. because we're a country that is not stuck in our past. we're a country that is ever focused on the future. and with that, i want to thank all of you, and i look forward to your questions. thank you. [ applause ] >> thank you, mr. secretary. as you can imagine, we have a lot of questions on a lot of topics. starting on the topic of surface transportation funding, are you confident that the $10.8 billion patch that's now moving will keep the highway trust fund adequately funded through next may as it's supposed to do? >> um, i think from a funding

standpoint, the answer is yes. but again, i want to reemphasize that the system we have is really a system that depends on certainty. and while there is a patch potentially that congress passes, that's not going to really help the certainty issue. we have a big project that takes multiple years to get done and you're in the middle of a planning process, do you go for the longer term or don't you? you know, with a ten-month patch, you don't know what's on the other end of that ten months. that's the problem we have on our surface system right now. >> you're releasing the letter today, the bipartisan letter with hopes that will spur congressional action. do you see any signs that this congress will work to pass a longer term transportation bill? or any signs that the congress likely to be elected in november would do so?

>> well, let me say it this way. we really don't have a choice. i mean, honestly, the gimmicks and smoke and mirrors and the things that have been used in the past just to patch us along, we're starting to run out of those options. and we're reaching a point where, you know, we're going to have to do something big or we're going to have to fold the tent. you know, knowing this country the way i know it, we don't fold the tent. we don't stop building bridges. we don't stop repairing what we've got because it was given to us by previous generations. they paid for it. and they bequeathed it to us, and we need to bequeath it to another generation following us. otherwise, our kids are going to be stuck. and not only as the transportation secretary, i'm duty bound to fight for this, but i'm a father, and i'm a concerned citizen, too.

and we've just -- we cannot allow our politics to screw up a system that was given to us in good faith by previous generations. >> one of the things you didn't mention and that president obama has made clear he will not support is raising the gas tax. why has the obama administration been so adamantly opposed to raising fuel taxes for the highway trust fund in the long term when the other solutions aren't getting passed either? >> well, what you've heard me say about this is that number one, we have a proposal that we believe is a 21st century bill. that is paid for through pro-growth business tax reform and can be done by congress without raising rates, without increasing deficits. we've also said that we're open to other ideas that emerge from congress. and have been very clear not to rule anything out. but let me say this, too.

the gas tax itself has some challenges. no matter where you set the level, the curve of the gas tax is actually downward facing. and that's because vehicles are becoming more efficient, good reasons. but that is a structural challenge with the gas tax. secondly, historically, there's been an 80/20 split between transit and highways using the gas tax. and as we reach into the 21st century, it's becoming increasingly clear that this idea that surface transportation is just highways, just transit, without rail, is a question that i think we need to grapple with as a country. and that's one of the reasons why the grow america act actually folds rail into a trust fund. but the way we get there is that

we use a different source of revenue and we add money to the pot, so to speak, so that we're not robbing peter to pay paul to get the system going. that's, i think, a conversation that needs to be had, and frankly, even our stakeholders sometimes get mired in the system we've had and aren't focused as much as i would like to see them focused on the system we need in the future. >> shortly after ray lahood stepped down as secretary, he called for raising the tax gas, which of course he hadn't done as secretary. will we some day see a former secretary, anthony foxx, doing the same thing? >> i didn't hear the question. i really didn't. [ laughter ] >> oh, look. i'm going to say this a different way.

when our system was built in 1956, there was only growth in the foreseeable future, in our revenue stream. we now know that that growth is actually changing because of the increased efficiency and so forth in our vehicles. and we're at a pivotal point where our transportation needs are here and our revenue is there. so our proposal introduces the idea of a new way to pay for our transportation system on a long-term basis, but i think we'll continue to have these questions about how to do it long-term, and there are many ideas out there in academia and even pilots happening around the country that are interesting, but they're not ready for primetime yet. so i think -- i don't know what i'll say. i'm sure i'll say a lot of things when i'm not here anymore. >> what about vehicle miles, travel tax? as you said, vehicle efficiency

is increasing, therefore gas tax collection is declining, but the amount of driving is not plummeting. would that be a viable option or at least something to consider for this administration? >> i think the crisis that we're in right now is one that has to get dealt with as soon as possible. and i think, you know, on the scale of solutions that seem more likely or less likely, i think vmt is something that is not very likely. but at the same time, you know, there are pilots out in oregon and other places, and you know, i'm sure that in the future these things will be looked at. but right now, we need an answer. and we've got one that we think is tailor made for this congress to pass, and we want to see congress do it. >> moving on to the malaysia air downing. are there other areas of the world, given what happened last

week with flight 17, where the faa should restrict flights by u.s. carriers? >> um, let me say this. we are constant ly in touch wit our intelligence community, with our national security team on these issues. and when they're issued by faa, they're not coming out of a vacuum. they're coming out of credible information that is gleaned from sources that we trust. and there are no tams in other parts of the world that are active right now. and we continue to monitor the international situation to insure that u.s. commercial carriers are given the best guidance possible. >> when the u.s. banned commercial flights over crimea, why didn't it extend the restrictions at that time to

other hostile areas in ukraine and at this point, do you regret that the u.s. did not do that? >> this is a point at which i figured you were going to ask me some of these questions about malaysia. and let me just say to your question that even when the no tam was issued back in april, there was also general guidance that urged caution among u.s. carriers. but more generally, on these questions, let me just say a few words about it. the president spoke this morning and made clear that this is an evolving situation, but that time is of the essence. and our thoughts and prayers are with the victims and their families. at usdot, safety is our top priority, and we're working closely with our partners in the u.s. intelligence agencies and law enforcement communities on a

continuous basis to monitor and analyze intelligence. when the agency receives specific and credible actionable intelligence of a threat to the national air space system, the u.s. civil aviation and its passengers, the agency provides guidance to carriers and/or institutes, flight restrictions, including notice to airmen or no tams or special aviation regulations or svars. in april, the no tam warned about the hostilities generally and urged carriers to take extra caution, as i said. a number of operators chose voluntarily to alter their routes other than restrictions in the crimean peninsula. we also altered it to follow the eastern ukraine. my comments are confined to what i just said. so you can keep asking, but that's what i have to say.

>> u.s. criminal investigators as well as transportation safety investigators through the ntsb have been sent to ukraine to lend assistance. is there a role for d.o.t. in the response and investigation as well? >> we stand ready to help, and i stand on what i just said. >> in the 2000s, the faa in partnership with dhs spent millions of dollars studying the possibility of equipping commercial planes with counter man ped systems. what is the status of that effort and would these measures have been effective against the missile fired last week? >> this is obviously as the president has already said, a very fluid situation. there's a lot that we still need to know. the international community needs to be access to the -- to the site of this horrible crash,

and you know, any kind of steps beyond that, i'm not going to comment on at this time. >> what about studying in general of the equipping planes with anti-missile technology? was that project ended in the previous decade or is that still ongoing, absent this particular incident? >> i can't speak to a decade ago. but i can tell you that we continue to monitor the situation, and any statement of what we will do or not will do would be premature. >> questioner asks, when will a u.s. aircraft be mandated to be equipped with gps srs so they e located at all times worldwide? >> well, this is an area that sort of gets into our next gen

effort domestically. we continue to make progress on next gen. i was in houston just a few months ago, weeks ago, and we just rolled out about 60 or so new functions that are next gen oriented functions that move us closer to the performance based navigation system you're talking about. even if we get it deployed in the u.s., there's still a lot of work to be done around the world to see this technology advanced and deployed, but we are very bullish on this technology and look forward to working with the international community to see more of it get deployed worldwide. >> speaking of next gen, we heard the president mention air traffic control as a source of jobs if the system is modernized, is that a message we're likely to continue hearing out of the administration? >> it is, because we think next gen is really the cutting edge

of transportation. the intersection of technology and the way our airplanes move hold a lot of promise to not only make the air space move more efficiently, make airplanes move more efficiently in air space, rather, but it has strong environmental benefits, and also huge fuel savings for our carriers which hopefully would reduce costs and maybe some of those costs get passed on to passengers, too. the statistics i have seen show that next gen will reduce airplane delays for passengers by greater than 40%. but it is dependent upon getting us off of a world war ii radar system and into a 21st century kind of gps technology. >> moving from the air to cars. general motors has, of course, recalled 25.7 cars in the u.s. this year and the auto industry

has recalled a record 40 million vehicles. should drivers feel safe, and are regulators doing enough? >> well, look, on the latter question, i have to say that the nhtsa has done an incredible amount of work over the last several years. i think over the last ten years, there have been about 1200 plus recalls affecting 95 million vehicles. that's not counting some of the more recent recalls. that's pretty significant. and our toolbox has actually improved over that time, in the wake of the toyota situation a few years ago, we developed, along with ibm, some analytics that allow us to be more predictive in identifying issues before they emerge, and we continue to look to build a better mouse trap, so i think that when it's allsa done, nhtsa has done an

incredible job over the entire trendline. in terms of the autos and whether they're safe, you know, look, we have through our work on the gm issue, if you're asking about gm specifically, we issued the most stringent penalty the agency has ever issued. and if grow america passes, we would be able to pass even more stringent penalties because we would lift the cap from $35 million to $300 million. in addition to that, we were able to force gm into settling with us, with some additional requirements that allow us to focus them on changing the culture at gm and fixing some of the things that were broken, that a penalty or a fine won't solve. and so i have high confidence in our time's ability to make this work. and we'll keep working not only with gm but also with other

automakers to insure that our system is as safe as possible. >> gm, as you noted, has come under harsh criticism for the recalls, and so far, 15 people have lost their jobs. has anyone at nhtsa been fired or reassigned for the agency's role in not connecting the dots? and if not, how do you respond to lawmaker whose last week called the agency's inactions the, quote, nhtsa shrug? >> well, i think you could sort of cite my previous answer to this, but also, i would add that, you know, we and i are willing to check our own math here. i mean, i've asked our inspector general to go through and do an after action on this gm situation to see if there's anything that we didn't do that we should have done, or did that may have been done better. and we will learn from that report.

and until that time, we have our team intact and we're continuing to not only focus on gm but the massive other automobiles out there that need our attention. >> the "new york times" reported last week that gm failed to assess the root cause of several deadly chevy cobalt and saturn ion crashes in its correspondence with nhtsa. why did nhtsa accept what essentially was a no comment on the cause of the crashes? >> well, that's actually -- i disagree with the premise of the question because there was -- there was activity ongoing at nhtsa to see if there was a data-driven reason to step up the level of scrutiny. and as i have said publicly

before, had we been given a t e timely heads-up by gm, that would have coupled with what we were already doing, triggered a heightened level of investigation at the beginning. i have no doubts about that. so i don't agree that nhtsa just took the answer for granted. they were looking for data to suggest that there was a problem, and had they had the information from gm, it would have been material to the outcome. >> this questioner asks, does d.o.t. and nehtsa now consider stalling to be a safety issue for vehicles? if it does, what prompted the change? if it doesn't, why not? >> clearly, it's an issue. and it's one that we -- that our recent experiences giving us even more information on which to look across the industry to insure that these issues are

being addressed across the system. so it's absolutely something that we're focused on. >> the pace of technological change in the automotive industry is getting faster. model life cycles are shorter, they're significant in the areas of safety. how does nhtsa remain relevant as a standard setting and driver of safety standards in this new automotive environment? >> i think nhtsa is actually really focused on this. and let me add another footnote to that. this whole idea that vehicles in the future will communicate with each other is a really big deal. it's a big deal for safety. and it's a big deal to our team, because it's an opportunity to engage the automobile in the work of insuring collision

avoidance, not only between automobiles, potentially, but also with pedestrians, and there's even technology that allows the automobile to communicate with the infrastructure around it. a few months ago, we announced that we're going to be doing a rule making on vehicle-to-vehicle technology, and we think this will be pace setting in terms of rule making because it will basically provide the ground rules on which industry will then enter in and do what they do best, which is to innovate. so this is not an issue that we, you know, we think there are lots of opportunities for our nhtsa team to engage in, not only following the trends in the industry but also setting the pace and setting the bar high for safety in the future. >> in terms of that rule making, you have said you would like to

issue it by the end of president obama's term. is that still the plan in terms of the timeline? and what needs to happen to make that rule making possible? >> i would like to issue it tomorrow. but you know, the process is what it is. we're on pace, and i feel like we'll keep working as hard as we can. if we can beat it, we'll do it. >> at nhtsa, are you concerned about the perception of a revolving door where top officials have left jobs at the agency to go work for the automakers that they were regulating? do you think there should be a ban on that practice or at least a cooling off period? >> we have fairly strict ethical requirements in this administration that really put a silencer on folks coming back into the agency and trying to influence outcomes immediately after they leave.

and i think that's an effective way of dealing with the problem you're identifying because if the concern is undue influence over the agency itself, we have ethical requirements that really guard against that. >> moving over to rail, rail executives have expressed concern about an upcoming crude by rail rule making that is rumored to include speed limit restrictions as low as 30 miles per hour. is that provision included, and given the rising volume of crude sent by rail, how do you meet the needs of commercial shippers with the need for increased safety? >> are you asking me to comment on a rule before the rule is issued? >> yes. >> okay. look. i think it is undeniable that we are in a country that has a chance to build a new economy on our energy production.

it's really one of the drivers of our economic growth today. and really will probably be so for the near future. but one of the things we recognized as an agency and had my full attention since i came in is that in order to realize that future, we've also got to step up our game on the safety front. without getting into details, i can tell you that what i know about this issue is that it has to be dealt with comprehensively. it can't be dealt with, you know, so many folks out there are saying, well, just figure out what the tank car would look like. that's one piece of it, but you know, speed is an issue, and you know, there are several other components of this that matter. and we're working as hard as we can in promulgating a proposed rule so the public can comment

on it. and i hope we get that done very soon. >> as part of the rule making, will you require that producers of oil from the balkan region take steps to stabilize their product before it is shipped? >> i'm not going to comment on what the rule says or doesn't say. i will say that what we're finding in places like the bakken, unlike in parts of texas, let's say, where there's an industry built up around oil production, refining, separating material, using all the pieces of the material that are separated. we basically have infrastructure in north dakota that's excavating this material. and so the question of stabilization is an issue that is at the forefront of my mind, but i'm not going to comment on

what our approach is going to be on that yet, but it is an issue that i'm very well aware of, and that we as an agency are very well aware of. >> how is the oil industry responding to d.o.t.'s request for more information on the chemical properties of the bakken crude, and has d.o.t. been satisfied with the response and the amount of chemical data that is available? >> well, the information that we've received from industry has gotten a little better. we've gotten some information that is consistent with what we've -- what we've seen in our own studies. we've seen some information that is entirely inconsistent and isn't apples to apples, the same type of study that we would have undertaken ourselves. there is a fair amount of

confusion, i think, that's generated when the industry says, well this is just the same type of stuff that's being pulled out of some other part of the country, because there are a couple things that are different. number one, you pointed out in some parts of the country, there's more stabilization that occurs before it's actually transported. secondly, there's also the fact that these trains are moving in huge units. sometimes 100 at a time, and so the sheer scale of the impact of these trains can be a bit of a challenge. so we are very focused on this. we're pushing as hard as we can. everybody in the administration is working hard on this. and i look forward to getting something out very soon. >> on biking, this questioner asks, how do we make american cities more like copenhagen for biking, and do you think that is a worthy goal?

>> um, okay, so true confession. i have been trying for the entire year to figure out how to bike to work. and i finally got it figured out so like two weeks ago, i finally biked into work. i was very proud of myself, and i just wanted you all to know how proud i am of myself. [ applause ] thank you. thank you. let me say this. when you have 100 million more people to move around over the next, i don't know, 35 years, we're going to see more congestion if we're not careful. a lot of that population is concentrating in metro areas, which usually has a city in the middle and suburban rings and

rural areas around it, but i really believe that this -- bicycling is part of the transportation ecosystem that we're going to need. part of th transportati transportation we're going to need this. if you look at folks younger pan me when will aring this communities and many are trying to locate in central areas so they can use bicycles more. i was with the republican mater from indianapolis. his city is is boole oit. he was invited to speak to portland, oregon's community. one of the things the mayor said

to me, i think is instructive. he said there was a company that insisted on being near the bike path. you will find out that it's happening more and more. i think it's happening. that's one of the things i'd like to dos secretary is help with the growth this but also ensuring that folks are as safe as we want them in other modalities to be. >> a recent report said the faa won't be able to incorporate the use of unmanned air vehicles into air space by the 20 -- 2015

deadline. what will you do to make sure the faa reach reaches its deadline. >> as i understand it wur on track to meet our 2015 deadline. we will keep work towards that. it's a convergence of technology and we got to figure out thousand do it safely and that's what we're working towards. >> passenger rail. any comment on amtrak removing them from high speed next gen procurement. >> that's an interesting question. i would have to get more clarification on that question because that's mixing rail and

air speed to me. that's an interest convergence. >> we're almost out of time. before asking the last question i got a couple of house keeping matters to take care of. i would ask the audience remains seated before the program conclud concludes. second, i'd like to remind you about upcoming speakers about the national, we have the doctor at the center for disease control who will address key disease issues. we will have the press of congo who will discuss peace, security, and oil investments in his country. on august fourth we le have his

excellencive jacob zuma, president of south africa. >> i would like to present our guest with the traditional national press secretary mug. it can go in your office right next to the panthers helmet. finally, one last question. i understand that your daughter is kwie the constructive krit ri, critic when it comes to transportation. i'd like to here what useful ideas she's given you lately. >> very interesting question. so my daughter is ten. i brought her to work one day and she went off into another part of the office while i went and did meetings and she came back and she said, daddy, you

know, do you think that you can a bill? . she knows this because she's seen the school house rock stuff on how bills get made. i see maybe, i don't know. she said well, i have some ideas for you. >> we had just come back from a vacation in baton rouge. she said here is my bill. number one, airplanes should not have first class the everybody should should big seats. number two, the bathrooms need to be cleaner. three, when you land they need to come up with a technology that prevents your ears from

popping. that's the advice she has given me. thank you very much. it's been great to be with you. [ applause ] >> thank you mr. secretary. we are adjourned. secretary fox talked about the highway trust fund. that's an item that could be taken up by the senate later this week. next a look at what else to expect from congress two weeks out from their august recess. wr congress, full agenda wit >> it's a back to week work for congress. a full agenda including hearings

we'll be covering on the tax code system. the senate financial committee holding a hearing on that:house and senate committee on iraq. joining us is ed. let me begin with the headline and the status of the immigration bill. house speaker john boehner raising doubts that the they will be able to meet the president's funding requests. has anything changed? >> no. it might have gotten more complicated on with a exactly caused the influx of ingrants in the last few months but we detailed pretty cleared what the administration were being told and what they were doing. many fwlef was ip sufficient and done in a way that was

unprepared for this. we don't know what republicans in the office will do. the republican from texas is supposed to be putting together some quote/unquote policy recommendations for john boehner and his leadership team. they have yet to produce those recommendations and there's no real sense of agreement. it might upset other people. we will see if it materializes. the appropriators believe they can come up with numbers very quickly start moving a bill through and get it over to the senate. there's nearly unanimous agreement in the democrats that they want necessarily want to make changes to immigration

policy, they just want to give the president the money he needs in order to do what needs to be done down at the border. >> ed o'keefe, what happens to the nearly 60,000 illegal immigrants that are in detention facilities or military camps elsewhere if it is not funded. >> i understand they would stay in those facilities but they would run out of money because they need funding to pay for the employees that are manning these places. they need to be able to shelter and clothe these detained immigrants. if they have relatives in the country and get them processed.

that's why there's a belief that something will materialize that allows them to pay for this. it will be something and done slap dash right before they leave. >> a lot of hearings. walk us through what's going on in the senate and house. >> i don't have my list of hearings in front of me. i know the big one that's coming this week for sure is the veterans committee where they will be having a new confirmation for the new secretary. that will be closely watched to see how the new leadership team can carry out matters in the wake of the scandal going on there. that will be closely watched. beyond that, you said you have a list in front of you. we will be covering the senate finance committee. looking a