he knows the great sacrifice that is being made by the population and the military in pakistan. can he discuss the importance of effective cooperation between afghanistan and pakistan, particularly in a combating extremism? >> to my hon. friend who is an expert, we wish to work with the pakistan government. we have done this in that territory. we want to work with them to deal in those areas where there are problems with the afghan taliban. we want to see maximum cooperation. we want to see more effective

cooperation between the armed forces of those countries so that in the end, we can have joint measures that will help protect these areas. cooperation is " to be very much more important in future years and i am grateful that we have the level of cooperation at the moment. we want to see further cooperation and security issues. . . the months to come. >> mr. speaker, it is good to hear that our groups in afghanistan are getting more equipment. at the expense of what? because a recent review set up by the former secretary of state says the defense equipment program is unaffordable. is that right? >> mr. speaker, we have increased defense spending every year. year. we 10% over the last ten years. in addition to that we have provided for the equipment needs

and the other additional needs associated with the campaigns in iraq and afghanistan. it is because we have matched additional money from the treasury reserve to pay for the equipment that are going in vehicles, additional helicopters able to go to afghanistan. we have meant all the requirements of the military forces on the ground to enable them to mount campaigns within afghanistan, and i am sorry the conservative members are trying to dispute that. the fact of the matter is that all urgent operational requirements of the ministry of defence had been met and will continue to be met. >> a further 26 speaking to catch my eye. as usual i should like to be able to accommodate everyone. in order to be able to do so short questions and short answers will be required.

>> allegation a few weeks ago. we are extremely grateful for the efforts being made by the country on their behalf. however, i can't say publicly what was told to me in private. women feel extremely vulnerable in that country. raised the question several times in the past. the u.n. has criticized the afghan government for not doing enough to protect women. this particular woman is in danger. i would ask the prime minister if he would raise this, in the situation of women during the afghan conference. it is one of the reasons we went into afghanistan. >> you're right. we made representations about the family law that was discussed in the summer. the president insured the some of his parts were removed as a

result of international pressure i realize that the rights of women are an issue we must devote at all time when we are discussing the future of afghanistan. it is true that as a result of what has happened over the last few years where no girls went to school there are now two-and-a-half million girls going to school. i believe for the future of afghanistan and that is a vital change that is happening and increasing the numbers. it is a vital part of the program. at the same time paternal mortality is among the worst in the world. one in eight births resulted in deaths. i am told the recent research suggests that 100,000 children are now surviving to the age of five who would otherwise not do so as a result of the improvements in tackling infant mortality and child health. these are achievements as a result of bringing health and

education to the people of afghanistan. she is absolutely right. we must never forget the importance of these issues, the social and economic improvement of the condition of the population and we are talking about the future of afghanistan. >> the announcement by the prime minister of the additional 50 million pounds with three years of counter ied intelligence is very well. will that money come as an operational requirement from the treasury or will it be within the existing defense budget? >> prime minister. >> the chancellor reported in the pre-budget report that expenditure on afghanistan from the reserve is something on the order of 600 million pounds three years ago. it will be nearly four-and-a-half billion pounds over the next two years. that is a result of additional money made available by the treasury. >> very recently seven taliban attacked a convoy that would be protected by 300 members of the

afghan army. the 300 almost all of them fled the scene immediately. one of their generals said that they have no motivation to risk their lives for an election-rigging president, their own country, or for the international community. the afghan police are a lawless bunch of depraved thieves. does the prime minister really believe that we can build a solid security service on these collapsing foundations? >> there are two views to take about afghanistan. he takes a different one from mine. the first view is that the taliban has a huge amount of support afghanistan, and the afghan people will not resist the taliban. the second view, however, is the one i take, that the taliban have very limited public support and the people of afghanistan. all opinion polls and evidence that we have is that the public do not want the taliban to return.

they know the damage that they did in the past. they know the threat to women's rights. they know the damage that was done to children's education, and they know that justice that was meted out unfairly particularly against women. our best estimate is that the people of afghanistan by a very substantial majority do not want the taliban to return to government. they want to be assured that there is security guaranteed by afghan forces and by the alliance forces working together. over time they will want to see the security kept by afghan army, afghan police, and afghan security services. that is what our strategy that we have been applying for some time is working toward. so i don't accept his initial premise that the taliban have anything like the support he suggests. >> may i ask the prime minister, is it a responsible policy to find at least partial the cost of current operations by waging

future defense abilities? >> mr. speaker, i think he has got to understand the total amount of additional minister on top of the budget that has been spent in iraq and afghanistan is 14 million pounds. that is on top of the defense budget. that is additional to a rising defense budget, and i think he has also got to understand that the skill of the investment that we made in equipment is on the order of 5 billion pounds. so i would say to him that he should look at the overall amount of money that has been invested in afghanistan. a billion alone in the new equipment for vehicles as well as the extra investment in helicopters and ied equipment. the total sum for equipment 5 billion pounds, much of it spent in the last two years to make for better vehicles. we have allocated, as you know, in the pre-budget report of the chancellor, sufficient funds for afghanistan in the coming year. i don't think his criticism should be that we have spent to

too little or invested to build and the safety of our forces. we have done whatever is necessary. >> jeffrey robins. >> his trip to afghanistan. in particular his direct conversations with president karzai. the number of troops they are committing is encouraging, but the quality will be very important. could be, perhaps, a stark progress by some reorganization of the kandahar future government. >> i talked to president karzai about the governorships of kandahar and also helmand and about the appointments he is going to make to his cabinet in the next few days. my honorable friend is absolutely right. it is the quality of the local government on the ground and the quality of the afghan army and particularly over time the quality of the police in afghanistan that is going to be

so vital to the success in the future. what i saw yesterday was afghan recruits training at a high level demand from the british trainers and acquainting themselves well. what i also see in helmand is a government that insures the content and resources directed to the people and build up a system of law. wherever that is not happening actions should be taken and we would give our views directly to president karzai. >> mr. speaker, the prime minister did not talk on the inappropriateness. does not believe the defense secretary's remarks were inappropriate on condemning war. >> this is a statement on the european council. there is an inquiry that is being set up to look at all issues effecting iraq. >> the prime minister is well aware that all wars have to end

in some kind of political settlement or negotiation. we are now in our ninth year of this war in afghanistan. billions have been spent. thousands of lives have been lost. at what point does he envisioned some kind of political engagement with those in afghanistan who are not supporters of karzai and his corrupt government who want some other solution. >> i think he draws the wrong conclusions from this remark. britain cannot be saved from terrorism unless we do with problems that exist that just in britain but on the borders of afghanistan and pakistan. we do not take on al-qaeda and prevent them from having space in afghanistan with the freedom of movement to plan operations in britain we jeopardize the security of people that he represents in london and people who have had to suffer from terrorist plots being organized from that border. yes, it is right that in afghanistan it is an infant democracy where problems existed

in a very big way during the election campaign. it is better for us to build afghan forces that are under an afghan democracy and to build security services that are under an afghan president that is elected by the people, and it is better for us to build up local government in afghanistan and to give up and to allow those people, to allow those people who didn't wanted us to take the action that is necessary to win this argument. this is about security. >> people, the prime minister, he said, he would provide more equipment in support of the armed forces. can the prime minister reassure the house that the future defense budget will be fully funded, whilst explaining to the house to was response will for the deficit which has occurred over a number of years which is highlighted in a devastating report by the in nao which was

sadly embargoed until '99. >> the time that the defense budget was cut massively was under the conservative government between 1992 and 1997. defense expenditure has risen in real terms by 10% since 1997. i keep repeating to him that the urgent operational requirements of our defense forces when they are in action abroad and have been in iraq and afghanistan are met by separate claims from the reserve. i think you should look at the arithmetic of what is actually happened, and you will see that extra urgent operational requirements have always been met by the treasury. i think it is unfortunate. i really do think it is unfortunate when he can see the additional resources be made available, the reserve claims, the urgent operational requirements to try to tell the british people that our armed forces have not got the equipment they need. they have the equipment for the job they're doing.

>> mr. speaker, the states are already suffering significant effects from global warming. they have produced national allocation plans, but don't have the money to implement them. will he ensure that money is available from the e.u. funds for this adaptation now? without that the implications of global warming will only continue to get worse. >> i know from my honorable friend's word that she knows her well the challenges that are faced. she also knows that some of the countries who are present at the commonwealth conference because she has very strong links with them, and i know very well that countries from the maldives to bangladesh look for answers at the climate change conference in copenhagen for the problems they face as a result of immediate and urgent requirements due to time a change. the purpose of the european contribution, two-and-a-half billion dollars a year, 2010,

2011, 2012 is to contribute something on the order of $10 billion and we know the problems are urgent and have to be addressed the next few months. >> the prime minister, does he recognize he does not need an inquiry to know that his thank you to the british troops will be all the more stronger if it contains a policy for the failure to exhaust the war in afghanistan properly in their early years because of the folly of going to war in iraq? >> i am sorry the liberal party is trying to subscribe to a ma yth that the afghan campaign has been underfunded.

this is totally wrong, and i hope the conservative party will in the interest of the unity of our country facing the terrorist threat recognize we're spending more on armed forces than we ever did. we are spending more on meeting operational requirements than we ever did, and we have taken the view that is held by the vast majority of british people that you cannot simply defend britain against terrorism by the extra money we're spending on security within our borders. he extra money we are spending within our borders. you cannot operate a fortress britain strategy when you have problems arising in pakistan and afghanistan that bring terrorist plots to london and to our country from the bases in afghanistan and pakistan. it is right to take the action that we did. that action has been properly funded, will continue to be properly funded, and i do say to the opposition, if they continue

to perpetuate the myth that there is inadequate funding being provided for our resources this will mean the public will lose support in the effort we are making. that would be a very unfortunate outcome. >> sir nigel griffith. >> the great welcome for the additional money on climate change in developing countries on top of the .7%. does he also extend that anyone who believes there will be full legally binding agreements on climate change clearly comes very late to this subject and will be better persuaded the on the fringe in europe to stop climate change legislation? >> mr. speaker, i tend to think the conservative party are better at the opportunities that they are on policy on this issue. they have no, they have made no commitment. [laughter] they have made no commitment at all. they have made no commitment at all for conditionality. they have made no commitment at

all for conditionality. they seem to think the climate change debate as a joke. it is a serious matter and we're going to bring it to a conclusion. >> thank you, mr. speaker. will the prime minister accept the afghan peace is not made the same progress as the afghan army? just paid their lives because of a police incident. would he accept it will be irresponsible to accelerate their recruiting , vetting, and training? >> mr. speaker, the tragic incident where five of our soldiers lost their lives is something that must be properly investigated. we must get all the answers. that is right for the families and also right for the future cooperation between the afghan forced police and the military and the british police and the british military. i have to say to him on the ground in afghanistan our troops are working day-by-day with afghan forces. they're working in joint exercises with the afghan police

and the afghan military. he would be making a great mistake in just simply staying the status quo and did not move forward with partnering with afghan police and afghan military. i believe that the scaling up of that which is agreed as a result of the recommendations of general mcchrystal, something that we advocate months before that and something that president obama is now putting resources in is the right way forward for afghanistan. the other strategy, the one he proposes, would make us at a standstill and not get the progress that we need so that afghan forces could take direct control themselves over their own security. >> the european council discussed economic cooperation. was there any specific discussion on what to do if they continue to deteriorate the way they are? >> mr. speaker, it is the intention of the european union

to maintain the fiscal stimulus and to show that we have deficit reduction plans for the future. it is the intention of each of the countries of the european union to show that they have deficit reduction plans as well as a commitment to protect themselves against the recession. that was the base of the discussion in the european union. >> my nephew has just returned from a six-month tour in helmand with royal engineers and tell me what was particularly frustrating is they would spend all day detecting and disarming ied. the taliban would come out during the hours of darkness to reseed the fields again without ied. there is not going to be a curfew. someone has to secure the ground. the taliban are taking back then ground engineers has been all day risking their lives retaking. >> i appreciate the difficulty.

if he has specific information he wants people to look at i am very happy to look at it myself. the truth of the matter is, the truth of the matter is that there is enhanced surveillance of what is happening on the ground. where there is changes made in the land during the course of the week or the day we are able to detect it in many cases and there is security important security work being done to ensure that where ied are planted we have more information about them and more and information about the people who are actually putting them in place. i agree this has been a problem i think we have better security measures that we have before ..

in september last year, just after a 2000 british troops, just delivered a turbine in a daring mission. 15 months later, that has yet to install because the other equipment cannot be got there because of dangers. he promised he was going to get more involved. will they get the european nations to secure the road so hearts and minds can be one >>

there are three generators there. the third generator has not been brought into use. the decision has been made that diesel power is a better way forward to meet the gap that exists in that area. as far as my meetings with the people in afghanistan yesterday, i believe that the extra work that we will do on economic development, that is, getting the people a stake in the future will include not only the work we have done but also giving farmers the opportunity to benefit from the week to harvest and grow we. i think that will help around 40000 farmers over the next ye year. >> the european union council meeting, there are many heads of governments who thought the recovery was now so secure, that it was the right time to bring in savage cuts. >> mr. speaker, every member of the european union that was

present wanted to maintain the fiscal stimulus, and said that it should be maintained until the recovery was assured that only the conservative party is so arrogant to believe that it knows better than almost every country in the world, and every political leadership whether right or round the world. the answer, the answer of course, the answer, the answer of the conservative policy would be small businesses while more people losing their homes and a higher deficit and higher debt. >> we should salute the work being done by the pakistani army, it remains the case that a large portion of the pakistani army is deployed along their border with india. those troops would be better deployed going after the afghan taliban and pakistan. does the prime minister have with the pakistani military to encourage them to redeployed their forces? >> prime minister,.

>> he will know a number of pakistani armed forces have been operating in the squad i. you also know that about 3000 of the pakistani forces have been and are in waziristan taking on the pakistan taliban there. and therefore there has been a considerable change in the amount of effort that the pakistan authorities are making in tackling the terrorist threat within their own country. however, i do agree with him that if there were less tension in the relationship between pakistan and india, and if there was less need for troops to be on both sides of the border, then it would allow pakistan to do more and to tackle the terrorist threat within its own borders. that requires india and pakistan to work more closely together. we are determined to see what we could do to make that possible. i have both talked to prime minister singh and president zardari about the. and of course, if we can get a closer working relationship between india and paxton, even after the bombings, it would help greatly the campaign

against the top and also al qaeda in pakistan. >> i've read in a response to my colleague, about the plight of the island. the speaker of the island told as i left the plane, thank you so much for coming and thinking about a pic please do not forget as. and that's the message i would like to get to my right, honorable fred as he goes to. >> i am long-term interest in the problems that are faced operatively by those island states where the possibility is that we could be dealing with climate change refugees and climate change in the not-too-distant future. and therefore, copenhagen is important because it can allow us to make a commitment to help immediately those island states that are facing needs among

difficulties and help them get support to do with their adaptation that is necessary. we will not forget the challenges faced by these island. many of them are part of the commonwealth and it is a portal that we come to the aid of countries when they are in need. >> mr. speaker, why was the prime minister's statement completely silent on the consul agreements for a tangible e.u., a single space and a security system and what he calls a common asylum system by 2012? says labour ministers argue against all these policies against the negotiations of the lisbon treaty, as i saw for myself on the european convention, does the prime minister regret having to support them now and pretend that he was always in favor of them? >> i don't think you've moved on since he was at the european convention. that doesn't realize that we have secured all our red lines

on these issues when we negotiate the treaty. the original plan for the convention was abandoned and we have a treaty that now needs the interest of the british people. so much so that the conservative party have abandoned their widely held policy and no doubt he will support them when they decide they don't want to be on it any more. >> in relation to copenhagen and climate change, can the prime minister indicate whether it will play a major part of the negotiations of the agreement reached at copenhagen because there is some doubt about that? >> it must be central to an agreement to copenhagen. and as we know, one of the great problems of the previous agreement was the number of countries who were not involved in it. it is absolutely, it is absolutely crucial, it is absolutely crucial that china plays a part in the negotiations that they are one of the biggest if not the biggest now and it is

crucial also the india which is also going very fast as a country, plays their part in the goucher should. i will be meeting the primary and hopefully also over the next couple days talking with the prime minister singh and we will try to work together to secure the agreement that is necessary. >> can the prime minister explained how there will be 30000 allied troops in helmand province when the hellman operation began there were 3000 british troops landed to 60 percent per head compared to 10000 british troops there today. but what lessons have been learned? >> the number of troops in afghanistan has risen substantially. but the equipment available to these troops has also risen substantially as the needs of fighting a guerrilla warfare against the taliban have to be met. i do say to the conservative party, they're making a huge mistake if they believe that they can persuade the british people and it's in the interest

of the british people that they need persuaded that our troops are underfunded and not properly equipped. that was a campaign run by a certain conservatives over the summer that it is a campaign thatr we are bringing in the best support to deal with the new threat that has been caused by the taliban, and i hope the conservative party will rethink the position which i believe will do damage to public support for this exercise. >> i am sure it gave a lot of comfort and support to our troops. can we also show support to the afghanis who are trying to seek asylum in this country? is it right to remove people to

a country that is unsafe? country that is unsafe? >> the application for asylum is dealt with on its merits. and he knows that as chairman of the committee. and that is a position the government will continue to use. >> thank you, mr. speaker. thousands of families including raf, why is the prime minster not being up front about his preference for conventional defense cuts rather than scrapping to try nuclear program which would save 100 billion pounds? >> he knows that strapping the program would lose hundreds, a great deal of many jobs in england and scotland is what. so he should know that we have funded the aircraft carriers which are being built partly and scott. we've increased the defense budget every year. and we have also, of course, increasing the urgent

operational parts that are necessary for our airports as well as our navy and army. i think what he looks at the record of enhanced expenditure and investment in our armed forces, both in scotland and in the rest of the united kingdom, he would know that the government is doing its job. [inaudible] can i ask them also to support about -- >> mr. speaker, it's very strange that the conservative party automatically almost without thinking about it came out against the global financial transaction tax. is now being discussed in all countries in europe that it is being investigated by the international monetary fund. the european union are going to do a report on it as certain people around the world who are esteemed in the academic profession as economies are supporting this.

they are interested in one form of tax, and that is the tax avoidance. it's about time, it's about time, it's about time we heard, it's about time we heard whether the deputy chairman of the conservative party after 10 years has honored his promise to pay tax in the united kingdom. >> mr. speaker, with the prime minister join me in paying tribute to our armed forces, not just those in combat, but also those providing humanitarian work, working in areas where the agencies cannot operate, building bridges, building schools and so forth. can i ask the prime minister, does this work towards the target in the gdp? >> it is international aid that is helping underdeveloped and low income countries, that it is possible that it will count to international aid and that is the right thing for to happen that the whole purpose of

overseeing is to help the poorest of the world and allow them through better provisioned through health and education and economic development and to raise their living standards and to take themselves out of poverty. the achievement of the international develop an aide and all workers began with developing countries will be that many millions more people are taken out of poverty. >> next year the united kingdom will pay 4 billion pounds more to the e.u. than it did last ticket in the pre-budget report the chancellor announced that tax on jobs, that will raise 3.1 billion pounds. is it surprising that the people in this country are fed up giving money to the e.u. rather than protecting frontline services? >> mr. speaker, we are part of the european union of 27 members. i know that many people on the opposition benches don't like that fact that one of the response of membership is that we provide the sources for all members of the european union did dependent on our ability to

pay. that is the agreement that has been negotiated. and these agreements are in the interest of the country which trades 60 percent of its goods with the european union and. has 3 million jobs dependent on the european union, has 750,000 companies with a european union that if he wishes, then let him do it but i believe that all of the british nation sees the importance of our relationship in europe. >> could the prime minister say we are now training afghans and in the use of robotics and other equipment to do with the ied's? and it as we start to draw down and withdraw, if we leave the afghans with the necessary equipment to do that job? >> yesterday i saw our british forces training the afghan forces in the hands of equivalent necessary to detect ied. most of the work we're doing with the robotic equipment on

ied's is done by british forces. but over time, it must be our aim to train the afghan forces so they can take responsibility for the security of these districts and provinces. and that i believe is the proper strategy for afghanistan. and i hope that there will be all party support for it. >> given the disclosure today of documents confirming the great strides in developing its nuclear weapon capability, it is not the reality that the european union visits israel sooner rather than later, to repel direct assistance to? >> mr. speaker, i think he should reflect on the fact that the international community is attempting to show impunity in the face of iran. and we are looking to work with china and russia and the rest of the power to do with what is a clear threat. the message to iran must be join the international community and renounce nuclear weapons, or

face with the potential for sanctions if they do not. i think it is a stronger message by all countries and all countries to get a. >> i think sending more troops to afghanistan and france and germany combined. while this country is fulfilling his response was, others are not. >> i agree with him that it is right for us to do more in afghanistan. and we are doing our best to contribute to the forces. i hope that implication of his question is not that if france and germany don't come up with numbers that we should do less. i don't think that is the case took what i believe should happen is that all countries within the alliance should look at what they can do and look at whether they can contribute more. as i said, not just eight countries that were following us that i announced a few weeks ago at the 38 countries are offering their help in afghanistan as

part of the coalition. we should welcome the fact that many countries are doing so, announcements have yet to come from other countries and italy will come from some of the other countries over the next weeks or months. i just repeat, on equipment so that everybody is clear about the money were spent on the agreement of our forces. the chief of the defense staff, >> the biggest item is the last spending bill and all the christmas tree things that might be attached to it, but there is a lot of doubt about what is going on. >> what are some concerns about getting the spending bill through the senate? but first, they have not paid

much -- they are having difficulty focusing on it. there are concerns about taxes and state taxes, that sort of thing. >> would bringing back house lawmakers over the weekend or early next week help solve the problem? >> it would not solve the problem of its expiring on ninth friday. the house speaker pelosi has been asking leaders if they would come back saturday that would help get the bill passed. it would not guarantee senate action, so it may have to come with a resolution to keep it

running. there's some talk avaya senate resolution to last until december -- talk about a senate revolt -- resolution to last until december. >> can you talk about the write- downs being discussed in the senate bill? >> on top is the debt limit increase of 1.9 trillion dollars, which house leaders say is necessary and important. conservatives have a problem with that. there are other ways to trim government costs. there is a fifth month extension, a food stamp extension, and then there are

other items of may or may not be included, including a job as part that would give assistance to governments to help with layoffs of firefighters and police. >> wire some of these provisions of priority for house democrats? -- why are some of these provisions of priority for house democrats? >> their focus now is on jobs, jobs, jobs, so they want to get something in this package when they go home for christmas. they did focus on jobs when they left. whether extending unemployment insurance or food stamps alone is going to do it or whether they are going to love to do a significant infrastructure or job -- going to have to do a significant infrastructure or job change, we will see. >> we understand pelosi is going

to lead new -- going to copenhagen. what impact will this have? >> if she goes and she is thinking of taking at least 20 members with her -- if the republicans are going to vote against the spending banal -- spending bill, she is going to need the democrats there. she is going to leave wednesday night for as many as two nights in copenhagen. she has lost her voice in the last few days, and her aides are trying to talk her out of it, but she seems to be insistent on going. what this means is they could be back by late friday, possibly saturday, before breaking for christmas, but there is also talk about possibly coming back next week, not for the jobs bill, but if there happens to be a health bill to take up in the senate. that is highly unlikely. what we have here is whether or not they are going to stay saturday to do the procreant --

appropriations bill and what is attached to it. >> thank you for your time today. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> in a few moments, president obama comments on his meeting with bankers that included their assurance they would increase lending. you also hear what the bankers thought about the meeting. in a few minutes of discussion of the federal debt and budget process. after that, british prime minister gordon brown on his recent trip to afghanistan, and then an update on afghanistan strategy from a former nato commander. >> tomorrow morning the head of the detroit economic club will take your questions about the economy in her meeting tuesday

with the commerce secretary, gary lauck. end a discussion of the health care bill regarding the importation of drugs from canada who. we will also talk with the author of the book "nickel and dimed." a couple of live events to tell you about tomorrow on our companion network, c-span 3. a house subcommittee looks of preventing terrorist attacks and protecting civil liberties. at 1:30 eastern, republican senators will lead a rally against the health care bill now on the senate floor. they will be joined by a talk- show host, laura ingram. >> now available, sees iran's "abraham lincoln."

a perfect gift for the history buff in your life. -- c-span's abraham lincoln. a perfect gift for the history buff in your life. in hardcover at your favorite bookstore and now on audio to listen to any time, available war region where digital -- available where digital audio is sold. >> present obama talked about the financial regulation bill making its way through congress. he spoke with reporters for about 10 minutes after meeting with the bankers. >> the afternoon. dnepr i have just -- i have just finished a candid meeting with the head of financial institutions.

i have come to discuss where we have been, what we expect of them going forward, and how we can work together to accelerate economic recovery. our nation's banks play an important role, so it is clear each of us has a stake in ensuring the strength and vitality of the financial system, and that is why one year ago when many of these institutions were on the verge of collapse, a predicament largely of their own making, often because they failed to manage risk properly, we took difficult and frankly unpopular steps to pull them back from the brain -- brink.

epson and three did not just to save our financial system but our economy -- steps not just to save our financial system but our economy as a whole. our financial system and stabilize. the stock market has sprung back to life. the economy is growing, and our banks are once again reporting profits. a year ago people thought we would never recover these investments, but we have managed the program well. this morning another major bank announced it would be repaying taxpayers in fall, and when they do, we will have collected 60% of the money owed with interest. we expect other institutions to follow suit, and we are determined to recover every last dime for the american taxpayer. my main message in today's's meeting was very simple, that america's banks received extraordinary assistance from american taxpayers to rebuild their industry and now that they are back on their feet, we

expect an extraordinary commitment from them to help rebuild our economy. that starts with finding ways to help credit worthy small and medium-sized businesses if the loans they need to open their doors, grow their operations, and create new jobs. this is something i hear about from business owners and entrepreneurs across america, that despite their best efforts, they are unable to get loans. at the same time we are hearing from banks that there are not enough credit worthy individuals. we do not want to see the same problems we saw last year, but given the difficulty business people are having as lending has declined and given the exceptional assistance banks received to get them through the

difficult time, we expect them to explore every responsible way to help get our economy moving again, and i heard from the effective if they are engaging in various programs like second look programs, hiring more folks, raising their target goal in terms of lending, all of which sounded positive, but we expect results, because i am getting too many letters from small businesses who explain they are creditworthy and banks that have had a long-term relationship with are still having problems giving them loans. we think that is something that can be fixed, so i urge these institutions to go back and take a third or fourth look about how they are operating when it comes to small business and medium- sized business lending. we also discussed the need to pass meaningful financial reform that will protect american consumers from exploitation and

the american economy from another financial crisis of the kind we just came out of. i noted the resistance of many financial sectors to these reforms. the industry has lobbied vigorously against some of these reforms on, so i made it clear it is both in the country's interest and the financial industry's interest to have ways to prevent excess. short-term gains are of little benefit to our banks. i have known the intention of letting reduce if they wish to fight consumer protections, as a fight i am willing to have. with the help of the american government and taxpayers, our

banks now have a greater obligation for a more stable system and a more broadly shared prosperity, so i urge him to work with us to finish the job to bring transparency to the financial markets and to insure that the failure of one bank or financial institution will not spread to the system, and to help protect consumers from misleading and dishonest practices with products like credit and debit cards with mortgages and pay loans. i should note that a round the table the financial industry experts said they supported financial regulatory reform. the problem is there is a vague gap between what i am hearing in the white house and lobbyists -- there is a big gap between what i am hearing in white house and the lobbyists on capitol hill.

i urge them to close that gap, and they assured me they would make every effort to do so. in the end, my interest is not in vilifying one person or institution or industry. it is not to dictate to them or micromanage their compensation practices. it is to insure consumers and the larger economy are protected from risky speculation and predatory practices, that businesses can grow, and jobs are once again being created at the pace we need. some of the banks and financial institutions have taken small but positive steps to improve lending to small and medium-size businesses. they have begun reworking mortgages that are now under water because of declining home values, and they have a knowledge much more needs to be done going forward. many have begun to follow our lead, switching from short-term

bonuses to long-term stock, but as i indicated, they certainly could be doing more on this front as well. these efforts reflect a recognition ultimately that the fate of our financial institutions is tied to the fate of our economy and our country, and these institutions cannot endure if workers do not have jobs and businesses cannot grow and consumers do not have money to spend. ultimately, we rise and fall together. banks and small businesses, consumers and large corporations, and we have a shared interest in working together to ensure a lasting recovery that will benefit all of us and not just some of us. i call today's meeting with this in mind, and i told workers at -- i told the group to look forward to the process in weeks and months ahead. thank you very much.

>> bank executive also spoke briefly following their meeting with the president. >> good afternoon, everyone. i am richard davis from u.s. bank. this is bob kelly and jim. we are pleased to tell you about the meeting we just concluded with the president. it was very productive. he gave us strong outlines about things he expects from us to recover the economy. we talk first about credit availability. we talk next about housing and modification. we talk about executive compensation and financial regulatory reform. to your pleasure, we aligned on both the region most of those issues, and we think we do a better job of working with the american public to make loans available and did our best to tell the story of regulatory reform and how much that matters to all of us for the great economy. finally, we agree very much on the principles of executive compensation, and we're looking

forward to seeing the good efforts we have taken in the last couple months as companies report 2009 earnings and move into 2010 in the interest of our compensation with taxpayers and shareholders. it was a very productive money and one i think that will move forward to the next level of solutions that will work together with this administration as we have in the past. >> good summary. questions? >> what was the greatest disagreement? >> there was not this agreement. there is simply an opportunity for the president to make clear how important these issues are, and while we have done a good job individually talking about how we are aligned with the principles of the and ministration, as a group we have not done as good of the job as we can to align the interests of our constituents and the american public, and we agreed there are better ways to do that, and he gave us very good ideas about how to be better at communicating that in describing that in the real streets of america and not just in press conferences. >> lot of good discussion on lending, too. >> the not understand how the --

how angry the american people when it comes to the billions of dollars taxpayers gave with loans not coming through and the executive compensation? what was his tone today? was he irritated with you? did he express anger? >> it was very productive. the bankers were not surprised by public response. we get the same letters from small business owners who want more of a little bit to credit. it is a need to balance risk and award it -- reward. it was necessary to do what was right now. we understand we are under the microscope to insure every step we take lessons to customers and i think the productive conversation allow us to align our thinking and be more in line with each other as we talk with the american public about being part of this recovery. >> [inaudible]

>> where is the landing? if you agree something needs to be done, yet he still has to call you to the white house to say where is the money? if you agree so much, why is there not more lending? >> we do agree, but there is the time and place for learning to be a risk reward measurement, so if the end of the recession, the qualifications of most borrowers are lower than a beginning, and you do not want us to make loans that are not strong and well suited for the consumers or small business, so we agree viscerally that more lending needs to be done. we are looking for the opportunities to make sure we do not put people in harm's way or base in harm's way, so it is agreement on a high-level, but it is not always aligned with the ability of the risk out there. as the economy recovers, it gets

much better. every bank talk -- talked about setting aggressive goals for business lending next year. you would be pleased to see we are probably more optimistic than the pundits might be. we're putting everything we can -- lending is what we do, so we want to make more loans. we have to find a way to qualify more people and not put ourselves and risk your four years from now because of actions we take better not well suited. >> are you saying this meeting was not productive after he called you fat cats? >> he did not call us any names, and it was productive and very serious. it was not a moment when we all went around and celebrated the holidays 3 we talked about how we can do a better job. he was very clear on those points. he wants more credit availability, housing modifications to be higher, and he insisted we do a better job of telling our story for executive compensation, and we support regulatory reform.

we have not done a great job of showing that. >> thank you very much. >> i think we are done. >> with which you have said about regulatory reform and capitol hill? [unintelligible] >> we think there's probably disconnect as well. we will do a better job to be the voice with administrative leaders. we can be more clear about that. we are planning to take a higher position. >> are you going to change your position because lobbyists are arguing? >> we are with them and have not articulated the details. >> as senators debate health care bill, there are still a number of issues to work out, including medicare, abortion, prescription drugs, and the public auction, as the budget office puts a price tag on the

proposal. follow it with our companion network, c-span 2, only network to cover the senate gavel-to- gavel. also, get reports from the roll call group.

>> ok, good morning, everybody. good morning, congressman. [laughter] thank you so much for coming to join us today. i want to welcome you all to the release of the recommendations by the peterson-pew commission on budget reform. i am the president of the committee for responsible federal budget. i think there is no question that it is a moment for fiscal policy in this country. it is unfortunately a very troubling time as we are both dealing with a recovering economy and massive amounts of debt that have been accumulated in part because of that economic downturn and because of policies

that we have been running for quite some time. i think the country as a result really needs this report and the kinds of recommendations we are putting forward and other groups are putting forward, to work on focusing attention to the critical question of how to deal with the fiscal policy challenges. the work here -- and i think our cover looks so good -- it reflects really a remarkable partnership between the peter peterson foundation and the pew charitable trusts, an economic policy group there, and the committee for responsible federal budget, whose board members made up the commissioners on this report and who are truly some of the greatest thinkers on budget policy in the country, the folks who run big office of management and budget, congressional budget office, federal reserve, and

other committees and we are joined by many of them today. a culmination of a tremendous amount of hard work. all of their bios are in the report. it is a bipartisan effort, which i think is critical at this time because solutions and only be done and a bipartisan manner and that means it reflects many compromises. there is probably nothing anybody who is on this commission thinks is perfect, but they knew they had the work together to come up with a solid framework for focusing on the economy. it is sensible, it is balance. i think it is thought fully thought out in terms of a time line, again, dealing with both the economy and the budget problems. it is a very good start on what i think we need to do to move forward. it is not easy to do the kinds of things it will to -- take to achieve the goals, nor is this a group of people anybody would describe as politically naive.

they know what is involved and it came up with a balanced plan. i will turn this over to the capable and knowledgeable david wessel, who is just off of a plane from europe. i want to thank again the peterson foundation and the pew charitable trusts for supporting their work and the work of fiscal policy. both of these organizations are taking leadership roles in dealing with these issues. and i want to thank the commissioners that really went above and beyond the call in terms of what they went into -- put into, the hours of work and writing and rewriting. and i would like to thank the commission is tremendous staff and group of advisers. i particularly want to thank victoria, damian more, and nathan for all of their hours. we are very proud of what we will talk about today and i will turn it over to david wessel. thank you. >> thank you debri much.

-- thank you very much. i was at a conference in berlin and the ceo of which a bank said at one point that it is appropriate time of year to talk about fiscal policy -- ceo of deutsche bank. usually kids asked santa for present and adults pay for them. now adults ask the government for president -- now adults ask the government for presence and they have the kids pay later. one fact is there is a discussion of the deficit in washington in a room in which there are more people than shares. that is kind of a leading indicator of things. we see it in our polls @ "the wall street journal" that public concern about the deficit has definitely reason, as had -- has opposition to spending cuts and tax increases. the ultimate dilemma here is quite clear, as doug allen north

put it, but the problem is the american people have asked the government for benefits, many retirees, that exceed the amount of money the american people so far are willing to spend -- send to washington to pay the bills. so i admire all of these people for once again trying to deal with this issue. some have been dealing with it since i was a lot younger. and i think it is important to note that not all of them are on social security. doug holz egan is only 51 but he points out the way things are going in the senate health care debate he may be soon eligible at least for paying for medicare. with that, let me turn it to the panel. this is about discipline, so that is not only fiscal but in use of time. what we are going to do is, i will ask bill frnzl to speak

about 10 minutes to outline the problem and plan and each of the other people to speak for about five minutes and then we will have plenty of time for questions. bill? >> thank you very much, dave. thank you, ladies and gentlemen, for coming to this meeting. i hope you will be as interested as we were when we were writing the report appeared my part of this is short and simple -- it is that while we were writing a larger report dealing with budget process, it became apparent that our debt was running away from us and we had to do something about this policy before we could continue our work on budget process. so this report is step one and it will be followed by a budget process report, which we hope will help the congress and the president, to some of these

conclusions that we are laying on them today. the commission has said we asked the congress and the president to work together to commit immediately to stabilizing the debt as a percentage of gdp. we understand the debt as a percentage of gdp is up a little more than 10% this year. and it is headed north of 80% by the year 2018. we are saying let's stabilize that debt. and step two, you have to develop a specific and credible program in 2010 -- that, of course, is a large order for congress. it is a campaign year. but we think it is necessary to do it as soon as possible.

step three, we say you phase in the earliest policy changes in 2012. that allows the recovery to proceed without unnecessary inhibition. but the decision we hope will be made in 2010. step four is to review the progress of the program each year. and meeting the goals that and set by the earlier commitment. the program in which, if you do not meet the goals, it triggers an effect which will reflect certain other kinds of pain above the taxation and spending cuts -- responsible indorse --

enforcement program. step five is to stabilize the debt in the year 2018. we think that is as long as we can wait for stabilization. we had chosen the 60% debt to gdp, european uses it as an international standard of sorts , it is no miracle no. but you have to have a number and that is what we think is achievable and yet it is it pretty good target for 2018. step six, which may be the most important of all and even may be more difficult than the first five, which is in 2018, having stabilized the debt at 60%, we are asking the congress and the president to go forward and reduce that debt ratio further pared -- further. we don't tell them what it should be because we cannot see the conditions -- foresee the

conditions but considerably below 60% and may be more like 40%, which is somewhere near the average of these last many years since the war. with that, i defer to alice rivlin who really knows something about this. >> i think should introduce people. bill, former republican chairman of the house budget committee. alice rivlin's resume is too long to go through but the relevant thing is she is democrat and founding mother of the congressional budget office, one of the few institutions in washington that seems to function as it was intended. alice, i am wondering if you could speak on what makes this deficit reduction set up proposal different from all the other deficit reduction set of proposals to which your name has been affixed over the last 25 years? >> more than 25. i think it is the urgency of the

problem and shift in focus from the deficit to the debt. obviously they are related. the debt is the sum total of the deficits. but those of us who have been talking about deficit reduction for a long time have pointed out that in the future we are on an unsustainable course. we have made promises under medicare and medicaid and social security that on any reasonable set of assumptions will exceed the revenue available from contacts laws. there is an impending problem. but that problem was always very far in the future. now it is upon us. and while we talked about the future problem of deficit, the current debt level in relation to gdp has been quite moderate

in this country and the range of 30% to 40%, until very recently. @@@@@@@@@ @ @ @ s@ @ @ @ @ @ @

very long time. so it makes everything that much more urgent. >> a lot of people say, why in god's name would you want to even think about raising taxes or cutting spending at a time of still uncomfortably high unemployment? are you talking about doing this stuff now? >> no, not this year. not even next year. what you are talking about is committing to a goal of debt stabilization nine years from now. the goal is fairly arbitrary. the important thing is stabilization. that would mean getting the deficit coming down as the economy recovers. and it would mean putting in place credible actions in the future, including reductions in entitlement spending and tax increases.

everybody on this group agreed it will take both. putting those in place, but not for the immediate future, because it would derail the recovery. >> doug holz-egan, among other things was director of congressional budget office and most recently a must for advising john mccain. we have been hearing that the sky was going to fall if we did not hear something about the deficit for quite some time. we have not done much except make it worse for quite some time. the sky has not fallen but in fact interest rates have fallen. the united states is able to borrow the extraordinary sums of money at very low interest rates. why should we worry about this now? what risk if any to the economy are posed by projections that show, as this report does, rising debt? . >> it is true the u.s. federal government deficit has for a long time forecast to rise

dramatically -- baby boomers and shift of democracy. but the point that alice made is essential, what used to be a three-decade problem has now become one-decade problem. spike in debt relative to gdp over the next 10 years. why would you care about that? winnowed deficits have costs and those costs are diminished economic performance, higher interest rates, reduce the kind of investment in productive capital, the minister exports of around the globe heard our ability to compete. in general, would perform less well. deficits matter because it shifts who pays the bill. kids and what the bill, the end up with financial bill both in the form of debt, that they may owe to foreigners and flow out of the country, and also ended with an economy smaller than the other. and limits to policy flexibility. if you have what we are on track, interest on the debt,

$800,000,000,000.90 years, that is money you don't have all of the budgetary objectives and limits the flexibility of the federal reserve in combating economic shock. we are setting ourselves up for not just conventional -- but germanic size of the cost. international lenders at some point will look at the united states and no longer say, hey, they've got 30 is to fix it and i trust it will do what, but they only have a decade and they don't seem too serious, i will not put money into the u.s. -- recipe for currency crisis, spike in interest rates and serious recession. we would like to avoid that. it is true coming out of a worldwide recession, financial crisis, we do not see the conditions in financial markets that would suggest that is tomorrow. but it does not mean you should just go along your way. we should take action. >> if markets are forward looking and somewhat better than governments in seeing the future, you look into the future

and you see the fiscal catastrophe, why aren't we seeing this in yields for long- term bonds? >> you have to assume two things. number one, the aftermath of the financial shock where you did see people with flight to u.s. treasurys, whether it is a -- rational or not, traditional place to go. number two, financial market accounting on the government to get its act together. the last thing you want to do is disappoint them and that expectation. like alice said, commit now to credible policies in the future, could have dramatically beneficial impact on our performance. >> thank you. jim jones, another former budget committee chairman and house, a democrat, and among things, former u.s. ambassador to mexico. doug mentioned that unlike in the past, the distant past when we had deficits and we owed the money to ourselves, that now we are borrowing more and more from abroad, largely from china.

what do you see is the international dimension of the u.s. on the verge of becoming what some might consider world's largest subprime forward? >> i guess i would say this situation reminds me of a friend who was overweight, smoked, drank, had bad eating habits, didn't exercise, and we all told him, and you've got to shape up and he said his grandfather lived into his 90s and drink and smoke and he will, too. not long thereafter he had a massive heart attack and he is in the process of trying to recover. i think that is what we are facing. we don't know where the problem is going to come from. it very likely will come from international sources. we are living a life, a fiscal life, that is not sustainable. so, to me -- again, i would go back to saying that last week

when moody's threatened the u.k. and the united states with a downgrade, that was a major wake-up call. when the premier and the president of china told a delegation led by kissinger and bob rubin, we don't have any confidence that you will be able to deal seriously with your deficits and debt problems, when the imf and the united nations say we ought to look for an alternative reserve currency, i think those are all major wake- up calls we ought to be heeding. i told the story earlier after i left congress, ceo of american stock exchange in new york. one of the surprises in getting to know wall street is how irrational financial markets can be. they go on processions, they react to where they think things

are going and this fiscal situation is something that is being perceived -- right now and is not being focused on because all markets are focusing on the global recession. but as a focus on the subsequent issues of fiscal policy, they do not see any serious attempt by the united states to get our house in order. so, what this commission report does is give us a blueprint to get our fiscal house in order. the perceptions and lack of confidence if they don't have the right perceptions, i saw also when i was an bessin to mexico. on the surface, the first year and quarter i was there, on the surface mexico had a great fiscal and monetary policy, a great economy, etcetera. the lack of transparency, the lack of candor of the monitor -- monetary as well as fiscal policy began to show through, the market's solid and they stampeded out of mexico and

mexico still hasn't fully recovered and reached to the kind of economic level they should have sensed that 1995 peso devaluation that was caused by a percentage it -- perception and lack of confidence. i think we have to have a way to get policy-makers to deal with the deficit. in my judgment, the current congress and the process and congress is simply broken. they are broken mostly because of a strong sense of growing degree of partisanship that disallows working together for common solutions. i think what this does, and a bipartisan makeup of this commission, is to show a way in which of these issues can be dealt with. they have been dealt with in other countries. for example, sweden. the past two decades. sweden and canada had an unsustainable debt and they took

care of it. they got their house in order and they made political decisions. and they are on the right guide path now. i personally believe that what is being talked about and the senate, the commission, but i've carson commission similar to the base closing commission -- bipartisan commission similar to the base closing commission, is the right answer, an answer. i think we are really messing with a massive heart attack on fiscal issues if we don't act and i think that is why we have to do it right now. >> thank you. jim makes the excellent point that a lot of this has to do with the functioning of our political system and whether there is the political will to deal with the problems outlined on the report. we will hear next from charlie -- jim russell, a democrat and republican.

what do you think will for something to happen. this cannot go on for ever, it what but how we get from here to there without a collision? charlie? >> i think elections have a little bit to do with that and that is why i am hoping that the house and senate will take a look of the recommendations and put forward a plan that they will run on for next november. one of the answers to that. but i think the significant part of this whole discussion on that answer some of the skeptical questions that keep coming up is, i think the american people now understand the difference between deficits and debt. as you build your credit card deficit, ultimately you have to pay for it. i like yogi berra's version -- that which cannot go on forever, usually won't.

in hindsight, most people know that home prices could not go up and up for ever. the market took over. you can see this evidence in many of the personal family trials and tribulations going on now as individual american families have to deal with their own debt. yet the look of the current congressional discussion going on kind of more of business as usual. a group of senators are saying they are not going to increase the debt ceiling to $14 trillion on yet the -- unless they get a commission. not a bad idea. those who argue against it said regular order of congress should prevail, not a bad idea. we are just suggesting somebody does something that gets our fiscal house on order and in the right path. and how's my blue dog democrats are insisting again on pay as you go. i have never understood how anybody who claims to be a fiscal conservative can be

against paying for that which we are asking to be done. that it was very convenient to put on a credit card and let our grandchildren pay for. we will see between now and december 24 what compromises are going to be reached and hopefully it something positive will come out. a bit -- big part of the political now is we are hoping we can get true bipartisanship and have a target of 280 votes in the house and 75 votes in the senate to put ourselves on a plan that will satisfy whom -- the same people that families are having to satisfy. did they have a plan that the income will pay for that they now know and will get us on a sustainable fiscal path. if you relegated down to the simplistic, something families understand -- and i think more families are understanding. i think the politics will

follow. >> thank you. dr. nussle? >> those who are c-span junkies or budget junkies know that charlie stenholm and i have had a few debates and disagreements over the years, just a few. but we come together on a commission like this and have proven, i think, in a bipartisan way that you can come up with a solution, you can come up with a mechanism. it isn't pretty. isn't going to be popular. it isn't going to be easy. i was at a family gathering over the weekend and part of the reasons we love each other and part of the reasons we fight is because we are sometimes more similar than we wish to admit. and there are many similarities between the parties when it comes to wanting things and not being willing to pay for them. promising things and not being willing to deal with the consequences in the short term.

that has caught up with both parties. and i think what you will hopefully see is a political hopefully see is a political solution to your problem. do. we want to be able to deal with -- deal with it. i think if you wear your

political hat -- and those of my former colleagues who might be watching it will say, well, it won't happen in an election year. it is always an election year. it is never not an election year. either waiting for a midterm or waiting for a presidential election. we've proven and are passed in a history, in many instances whether budget summit's or social security commission's or all sorts of different examples where leadership can prevail on both parties to come together and sit down and deal with a problem. the problem is coming sooner than anyone probably realized. as doug said, a gifted a three- decade problem and now it is less than a decade. we show a mechanism where as republicans and democrats can have both the political cover and the will to come together with a mechanism to deal with it. and we give them some tools for

their toolbox to approach the problem. that is what we can do. there is no question if they don't, we will be less afraid as a result. this is about our freedom. if we don't address the problem, we see what debt does to families, individuals, people who max out credit-card. we do it every single day what happens, you will be less free if we don't deal with this problem as soon as possible. that is what this commission has tried to put forth in this report. >> it is clear to me the committee shows great foresight -- everyone is kept to their

time. i want to ask questions. the commission's says the steady as she goes policies allows us to have government debt at 85% of gdp by 2018. and the goal should be to get it to 60. alice, can you tell me how heavy lift it is to reduce spending or raise revenues to get us to a lower gdp ratio over that period? >> it is a pretty heavy lift. but it is not impossible. depending really on what you think the baseline is. we have chosen a baseline that does assume that most of the tax cuts that were enacted earlier in this decade would be extended if you did not assume

that, it would be easier, but we think that is realistic and we made some other assumptions that make it harder. that means we are going to have to work hard to get on the glidepath to stability. we are going to have to get budget deficits that are likely to being even after the economy recovers, going up again at the end of the decade. we've got to get them coming down into a range of 2% to 3% of the gdp. we don't have to get to surplus. but it is going to be very hard to get to the range that it will be necessary. >> in dollars, we are talking what kind of dollars of talking?

hundreds of billions of dollars? >> yes. >> none of you mentioned the president of the united states. what role does a president play moving from fiscal -- you said earlier it is inebriation to fiscal sobriety. anybody? >> i did mention, ash suggesting -- the report asked the president and the congress to work together to make this all go. traditionally when there has been a summit, congress and the president working together in, presidential leadership has been required. it has been essential. and the president has as tough a job as the congress does in applying some of the leadership. he has to be the first actor. he's got to bring them together. he may have to lay out the plan.

but his participation is absolutely necessary to make this plan work, and in fact, in the beginning, he has to be the major player. >> i think the health reform bill that is going through the congress now will be the first test of the president. he has said that it has got either to be deficit neutral or not increase the deficit, and i think he has to seriously enforce that as the bill winds its way to his desk. secondly the president's can create -- the president can create an atmosphere nationally like no member of congress can do individually or even as a small group. i think he has to come over the next year as part of the 2010 election and beyond, really send a story that we have a serious problem and we have to deal with it in a serious way. >> if i could ask you one final question before we turn to the audience.

i know no one in this panel believes we can grow our way out of the deficit. but what role does economic growth play and how you balance the need to encourage growth with the need to have a tighter fiscal policy? >> i think you, number one, do what alice says, which is you now announce a plan to put the budget on an sustained path. that is good for economic growth. that sends a message is -- that there will not be future uncertainty about tax policy, about interest rates, -- excuse me. number two, the way we set is up is look at debt relative to gdp. if you can't find a beneficial fiscal policy that helps the economy grow -- if you can find it beneficial fiscal policy that helps the economy grow, it will not be a single solution so you should always balance two choices how to cut the deficit with the one that is most pro- growth. indeed and it is about setting

pro-growth long-term fiscal policies is that the policies fundamentally about borrowing to hand out goodies, they don't grow bigger economy. >> let us turn to the audience. a couple of rules, one is to wait for a microphone because it makes it easier for those listening on c-span. two, say who you are. 3, a question and what they? . -- a question and with a question mark. [laughter] >> the war in iraq and afghanistan the next couple of years -- the ending the warrant -- iraq and afghanistan help? >> and the decrease in spending helps. but the long run deficits are not being driven by military spending. we assume that the war will eventually be over and that the military spending will come back down. but even if it continued, the

real drivers of spending in the future are medicare and medicaid, and to a lesser extent, social security. >> and question in the back. -- a question in the back? >> thank you, i am nikole for the center for economic policy research. you just mentioned medicare and medicaid. i would like to ask a related question. what type of contributor to the debt is our private health care cost and if we were able to reduce the private health-care costs like other developed nations, how would that effect in the future? >> i think the short answer is the growth in medicare and medicaid share some common elements with the growth and private health-care costs and to the extent we get reforms that slow growth in health-care costs in general there would be bent -- but the benefit to that. -- budget benefit to that.

them over there? >> joel, education funding. one of my concerns is investing in programs like the early childhood education, college per financial aid, over the long term helps the economy and helps people get an education and better jobs. so as you are making these proposals, should there be some distinctions between spending on programs that might lead to future economic growth verses other spending? >> somebody wanted take that? jim. >> as omb and budget chairman i have never made the argument made where that wasn't the argument. for every single program policy spending item, department, organization, etc. you make a good point, there is no question. but it is almost always in the eye of the beholder. i think what we have done is we have said different from past commissions, different, from that matter, bipartisan effort, we said everything should be on

the table for discussion. all spending, both entitlement and discretionary, both automatic and those spending items determined every year, as well as all taxes, whether it is those interested in tax reform, those interested in tax increases, and those who believe tax reduction spurs growth. everything needs to be on the table and everybody needs to be at the table. you make a good argument but unfortunately i am sure just about everyone will be couching their arguments in those terms as they make their case regarding their deficit reduction and budget priorities. >> alice and then charlie? >> if you do nothing about the growth of the entitlement programs -- medicare and medicaid and social security -- it will inevitably drive out other things, including spending and investment in children. the track we are on it is shifting federal spending toward

older people. and i'm one of them. and away from investment in children. >> one of the processes that i used as a member of congress went and had a constituent s and for additional spending -- let us use education, which we all agree. i would say, it is a great idea. can you help us find a way to pay for? is there something we are doing in the education community that is less desirable than some of the other things? and that is the spirit in which the commission will be put asking all phases of the budget. take a look and come forward to congress and say every dime we are spending on education is being spent efficiently for the purpose of educating children. i doubt you can do that. and i can speak in almost every aspect of government. that is the spirit in which the commission is recommending a new look and a new process to go through. >> everything is on the table.

no and the vocalise. -- annie oaklies. who but it's a pass. everything had to be considered for our program to have the effectiveness. >> one of the key things the report suggests is establishing a goal, debt to gdp ratio. what it gives you is a way to say, no. it has to be not just good, but good enough to make a cut. we don't say no right now. >> what happens if the debt to gdp ratio continues to rise? what happens to the share of our budget that goes to interest payments. make it real. >> if you look out to 2019, you could be running a trillion dollar deficit, interest is $800 billion of that so we are close to the point getting a new credit card debt and in --

credit-card. if you look around the globe you see all these countries a poster children letting debt to gdp ratio so that they have literally no room to move on necessary programs and get cut off by lenders. >> can you wait for the microphone? >> anton with executive intelligence review. if you have about a quadrillion in derivatives and maybe hundreds of trillions of unpayable debts to financiers, and you are not going to put money into massive infrastructure development to get out of the collapse of the whole economy, wouldn't your slogan rightfully be something like, this time around we are not going to make the trains run

on time if you are going to try to force moral austerity in the middle of the collapse of the whole economy. that is the picture you are that is the picture you are presenting, really.

don't know anything about politics. [laughter] >> you demonstrate that. >> so i'm your man. three ideas. replace wessle as moderator -- [laughter]

#two, you have to find ways to unite around something good or ways to unite our something to fear. one thing you can not be -- unite around, you may not think it is fair to raise taxes to cut spending really unfair to make your kids pay for. we are handing them a diminished economy and saying now you have to get higher taxes and lower spending. you can unite around that. uniting around fear of china as our banker. i personally find it an embarrassment to our nation that the secretary of treasury goes to china and says your money is safe with us and graduate students laughed. i think it is not partisan to insure we are not last that in financial circles. >> my assumption in the 280 is majority of democrats and republicans. because i don't think you will see unanimity. congress is so fractured today right and left that getting 435 would be impossible but 280 with

a majority of both parties acting would be the goal. -- i think would be the goal. >> for one thing, the public now seems to understand the debt ratio better than it understood deficits. it got pretty hardened it to deficits and swallowed them with regularity. i think we have to play them much harder. we have to play the story of international control. our affairs being managed from abroad, which is difficult. and the important item of intergenerational fast. and i suppose the last item would be for you to refile for office. [laughter] >> for me, at least, i am not convinced this will happen magically. this is not a situation like ebenezer scrooge where he wakes up having been visited by the ghost of budget passed and they all say, we really need to get

together and talk about this, you know? there is going to be a triggering event, in my estimation. i believe there is going to be one. one of two things or combination. a midterm collapse possibly, that may be the soonest example. it may be a presidential change or a race where this becomes the issue. or it could be some kind of triggering market event and a combination occurring at that point. but i don't think, as we have seen, and it is unfortunate, there is so much invested on both sides right now in the argument that it may be very difficult, to impossible, for that to being unwound a through magic. it will require, i think, is very unfortunate triggering event. >> we will pass the microphone over here and then go over to the side. two gentleman over here. >> norman bailey.

you mentioned argentina. my question is -- and i fully support the goals of this commission and it is extremely important. i question is why do the members of the commission believe what they are suggesting is more likely to happen than the with the situations are usually dealt with by countries, which is either through inflating the way the debt or by defaulting, which is what argentina did, and as a result it went on for several years at very high economic growth and if it had saved that money instead of wasting it would have been able to pay off the debt and might now be functioning normally. >> we need to modify our metaphors and show example of coverage. i want to say a word on behalf of the irish government, which has taken dramatic steps on their budget deficit. does someone want to take the question? the fault or inflation and alternative? >> i think the commission has a belief in the political system.

we -- it may be broken right now but we have a believe if the american people are fully reform, that the political system will respond. but that has the coverage in the past. i mentioned how important the confidence or lack of confidence perception is. in the early 1990's we raised taxes and cut unsustainable spending -- welfare reform and things like that. those issues of themselves did not balance the budget, and yet we had a surplus budget by the end of the 1990's because that plan gave confidence to the market, to the private investors, to start investing again. i think if we have a plan, adopt the plan and have things serious like pay-as-you-go system, commission system, that requires congress to face the issues, i think the private sector globally will respond to that and we will be back on track. >> alice, inflation? i know it is not the desired outcome but it -- is it the

alternative to hard choices? >> it is possible in the long run, but at the moment i think the kind of triggering event that most of us would fear would be a spike in interest rates and falling back into serious recession rather than inflation but i think the basic answer to the question is, we are not a small country. we have the status of the world currency. we would like to keep it. we have the status of the bonds everybody goes to when they think safety. we would like to keep it. it is a very important to us to keep the status that we have in the world. >> in reference to argentina, and should not believe that is the way all countries in the

world operate. in this report there is a special insight -- and said that shows a dozen and a half countries that have come back in very strong fiscal position from a position about the way ours is. and it can be done. other countries have done it. we hope they are not that much smarter than we are. >> roger erickson -- just a research biologist. a quick comment on that point. to my understanding there has never been a country that the fault it was not still on the gold standard -- so we are in a completely situation. but that's a fundamental point nobody has asked, if the only way a private citizen of the united states and up with currency is as a result of trickle-down from federal level public spending, and they have to return from that through taxes, how is taxation revenue

to the government? >> someone want to try that? >> i guess the point where i disagree with the characterization is it is not true of the income is a result of trickle-down government spending. the economy is composed of a myriad entrepreneurs, a private sector that utilize the skills of its workers -- >> u.s. dollars. >> those capacities are the core of our economy and we choose to measure and exchange them and dollars, which is the currency that the federal reserve is ultimately is trying to guard. adding one of the points that is important here is that there is an interplay between what the federal reserve can and wants to do and the enormous deficit the federal government is about to run and we have to measure legitimatize the interplay. >> i am with the fiscal times,

new digital start up. budget and fiscal issues. is this a question for alice rivlin and jim nussle, all panelists say it is essential all issues be on the table, trying to figure out what to do with the deficit and the dead. for alice rivlin, on the question of medicare savings, what are areas you would look at that congress hasn't looked at already trying to finance health-care reform. and for jim nussle, would republicans seriously consider raising taxes as part of an overall solution? it doesn't seem likely. >> want to start, alice? >> i think the first line of defense on rising medical care and cost is making the system more efficient. medicare is actually an extreme

case of our efficient medical care system because it is a fee- for-service system that does not emphasize managed care. i think we could change the reimbursement rates for medicare so that they reward more efficient kinds of care and discourage treatments that don't work and excessive treatment. that is going to take time. it is going to take effort, and the problem for the administration and congress right now is to put mechanisms in place to do that and the cbo was outscored them, for good reason, because in the past congress has derailed them. the real question men's -- question is, is congress serious enough now to allow greater efficiency in medicare and also

medicaid? >> all things on the table, mr. nussle? >> it is a wise question. that is why i said to brian it does not happen to magic. not, i will up today and everything is on the table and here on my list of tax increases if you are republican -- or my list of entitlement cuts if you are a democrat. frankly i am not even sure it is fair to characterize the parties in that kind of way that one would be for taxes and the other would be protective of spending. i think there is enough to go around on both sides. that is why i believe it is going to be a triggering events. i do not think it will necessarily be there first calculation, there first and oppression, their logical place that they would immediately go. if it were me, i would look at

it how the government collects revenue, through tax reform, how it collects it, who collects it from, how we can spur economic growth. and finally use a system like this or a process like this to get comprehensive tax reform on the table for the first time in a generation the way it needs to be. if you are a democrat, you may look at the same way for a common reform, a place where i know democrats are concerned about in entitlements. yet, because of their constituency, maybe they had a difficult time putting that on the table. so using the process as a way to say, look, with a fiscal goal now for the first time -- as maya likes to say, first time through the process setting a goal. we arrive at a result currently in our fiscal process. the result of very thing we do at the end of the year, we add it up -- what we are saying now

is this is where we want to head. how are we going to get there? so instead of building from the ground up the way we do now, let us build from the top down, setting a goal and then moving toward that goal, knowing that everybody has been in the game and everybody has put everything on the table. >> on the back? >> joe, committee for economic development. mr. nussle may very well be right that we need a triggering event to deal with the problem. i think he would probably agree if we put a list of potential triggering event, many of them are too terrible to contemplate. mr. jones answered the question earlier about the role of a president, and i believe it was mr. jones, in addressing this. i wonder if the panel could think about some scenarios of how with presidential leadership we might head this mess off.

>> alice? >> well, i think it's in the administration perceives -- and they may -- )f4d'@@ @ @ @ @ @ @

in the 2010 election. >> i would agree with that. i think the numbers all point to the fact that there is going to be some sort of a drastic problem in the next few years. most likely it would happen before 2012, maybe before 2010. so i think it is in their political interest to take the lead. i think they probably know that. also the polls since show the debt -- polls show the debt is in the conscious of the american people, they are concerned about. there is a natural constituency that puts young people and retired people together and say if we are going to turn over the country, better than it was, which is the american thing to do for 200 plus years, then we are going to have to bite this bullet. .

>> but yes, i think there will be a proposals. but both sides will dismiss the

other proposals, i think, in this next year, until that occurs. >> the woman in pink. >> [inaudible] [laughter] >> i am from the british embassy. will you announce a plan now to bring, as they were taking on the challenge, but [unintelligible] with a proposal that has an announcement now and an enactment later, there's some possibility that the public could be skeptical. could you say a bit more about what are the characteristics that would make a plan credible? >> that is not what i said. i said inactive now to take effect later. if we could do this in the next year, it would be good. let me give you a couple of

examples. the easiest one in social security. if we were to enact a social security reform that product -- that brought future social security deficits down to zero, we would not possibly have anything happen immediately. if you were raising the retirement age or changing the indexing or whatever you are doing, it is one to take time. you would not have it take effect for current retirees. that is a very good example of another people talk about a value-added tax. suppose we started to do that, it would take several years to enact it. even if we enact it tomorrow, it would take several years to get it up and running because it is a complicated tax. >> i am jeff gramm of investor's business daily.

several of you talked about interest rates responding favorably if we take some action now, and negatively if we do not. i'm wondering if it would be helpful if that was built into cbo's scoring and why isn't it? just to be clear, and talking about the interest-rate -- the interest rates and the potential for a spike in the interest rates. >> it is built into cbo's and ounces of the president's budget, which is the only comprehensive -- analysis of the president's budget, which is the only comprehensive study. except the interest rate and they feed back to the economy. the problem on a piece of legislation by piece of legislation base, you do not necessarily know what all of the user impact might be. >> there's a question here.

and then there is one in the back on the right. >> thank you, i am not with any particular group. i may citizen who pays taxes and is now on medicare and has worked in health care. i want to address this question to the whole panel. you mentioned, mr. nussle, about a trigger. i do not hear anyone talking about -- and i think the trigger is here for the average american. we understand, we are not working. when you talk about entitlement reform, social security and medicare and medicaid, i do not hear anyone creating jobs to get back to work to put money back into the government. i do not know if there is the political will for anyone in congress to say no to any constituent group, which i think they should. there are wants and there are needs. why is there no discussion about jobs?

should the government tax-come individuals who create -- pacts high income individuals who create those jobs? >> i think the answer is pretty simple. number one, everything we said points toward the fact everything -- that economic growth is essential. we have to have growth to be successful. with respect to the specifics, we have tried hard with a group -- as a commission not to lay out specific policies. everything has to be on the table. you have to have a real goal, a plan, some place you are trying to take the budget, and do it in a way that is beneficial to the overall economy. >> and not tighten fiscal policy right now. >> we do not do it in the middle of a recession. >> i am very concerned that the chief justice of the united states makes only $232,000.

the supreme court of canada makes much more, as well as singapore. now, what do i do? do rego to say, well, mr. president, when you go out to camp david, you do not have to fly an airplane? if you took a car it would cost you less. where could i go to get anyone to prevent more money? everywhere i go, i irritate people. >> which member of congress wants to take this one on? [laughter] >> everything is on the table except for the chief justice's salary. we will take that off the table. [laughter] >> in the back. >> did anyone have further commentary on former presidential candidate john mccain opposed to the reaction in morning on the senate floor yesterday?

did he get worked up enough? >> you have not seen anything. [laughter] >> you are talking about senator mccain talking about the health debate? >> were you watching the senate in action on a football weekend? [laughter] >> maya, you have a question? we going to answer it, too? >> i was at a dinner party recently where i saw the best hat trick i've ever seen. somebody took off the cat at the invisible fence, and put it on their own throats and walked up to the invisible fence to see what it was like to get hit by one of those. it was something to watch. >> you go to some weird dinner

parties. [laughter] >> as a result, that has become my favorite analogy to the fiscal crisis. we do not know when the taping it point is going to happen, but we know that it is going to hurt. that is one of these scenarios, you know, you get zapped and there's a crisis. the other scenario is an ongoing softening of the economy. one thing we do not do is talk about how this affects real people who spend their day worrying about budget deficits. >> alice, are you offering to start? >> i think the crisis triggere would be that, first, their interest rates go up a lot, but then as a result of that, the job situation gets a lot worse

and the things that the questioner in the front row were worrying about get worse. the softer scenario, that does not happen, the economy recovers slowly, but we do not put our house in order -- the dollar weakens progressively, things get a bit more expensive and economic growth is slow so that we do not get people going back to work very quickly and this persists for a very long time and we are all just less well- off than we would have been. >> anybody else? >> if you were a family that had credit card debt, you understand what happens when interest rates go up and you have to make the payments. right now, it used to be that the united states owed our debt to ourselves. that is no longer true. $8 trillion of debt is owed to

others and i suspect they will want to be paid, whatever interest rate the market determines, at some trouble point. i want to make a point on three questions. as you listen to the questions, so many of us, we have our idea of what ought to happen and why it ought to happen and why it is important. that is the american system. but our political system demands that we get 218 votes or 60 votes and a presidential signature. that is what is going to play out next year. i will have one recommendation when it comes to policies in the next version of this that i will insist my commissioners' vote on, and that is, to support -- and all of you are making that recommendation now -- support the tenor bill. john tanner, bipartisan support in changing the way we redistrict every 10 years to create more competitive districts, so more who run for congress how to care what the other party thinks instead of

having a totally safe republican or totally safe democrat district. i represented a competitive district for 26 years. i found that most of my colleagues on both sides of the aisle who represent competitive districts tend to get answers to these questions of bit differently than what the party asked for. i would hope that people would take all organizations -- i would hope that all organizations are worried about this would take a look at the john tanner bill. it does have bipartisan support. if you cannot get 218 votes, it cannot happen. this is a political year. if you really want to do something about policy and having some of these serious questions answered, that is the best way. in fact, i think almost the only way that we will openly get at the perfect solution. but there may be some other ones in between. that is my recommendation and i think that is the answer i would give you right here and you right here, you misunderstood, i

think, sir. we are not suggesting that we have tax increases and spending cuts this year or next year. we are staying put in place a plan. from an individual's family standpoint, if you have that to my door banker is telling you that you need -- if you have debt, your banker is telling you that you need a plan. >> let me just add on to what charlie said. i would agree with that, the tenor bill, i would agree with the paygo. i would agree with the commission concept. and i would add that the financing of political campaigns. but on maya's question, i lived through one of those crisis situations in mexico and i saw how it affected families. we take for granted that we have hit the mountain top. we can afford a house, buy a car, etc. the mexicans thought they had finally reached the mountain top and then it all collapsed.

they were turning the keys to their houses. they were abandoning their cars. 8 million of them came to the u.s. to get a better life. where we going to go? it deeply&#@ @ @ @ @ @ @ @ @ @ spending side. therefore, we need a tax increase. and a broadbased consumption

tax, whether it is a national sales tax or a value-added tax. that is a way to go that i think is a good one. i would add a wrinkle. namely, that you have to share this consumption tax with the states. otherwise, you are competing with the states in the retail sales mr. wilson? but no, i am not in favor of a pier value-added tax -- >> no, i am not in favor of it. value added tax. it can be separate from your mention of a sales tax or a different type of consumption tax. but again, i do not think that is necessarily what we will be making as far as recommendations. it is still going to be a political decision and the people who have been elected to represent us are the ones who're going to have to be making that decision. we may have different policy recommendations, but right now, the process is what is broken.

they cannot come to a decision that is what we will hopefully be trying to give them as a firm were to arrive at a fiscal goal for the country and a process by which they can make that decision, a little decisions along the way are still going to be ones that they have to make and calculate. >> what you meant to say is "everything is on the table." [laughter] >> my name is dick musaoose andi am a grandfather who is worrying about how my children and grandchildren are going to pay for all this. the panelists all agree that medicare, medicaid perhaps to a lesser extent, social security are the chief villains in the effort to try to bring some sort of stability to our budgets and deficit.

presumably, the kind of solution that you all would like to see is going to involve dealing with as yet unresolved problems in each of those entitlement categories. one would like to think that the budget committee, the budget resolution process in the congress might be an interest -- an instrument in dealing with this, but thus far, no disrespect intended, it has proved to be a faulty electric invisible fence. do the panelists to accept that we have to have reform and medicare, medicaid, and the social security, perhaps with health costs -- all of that has to be a solution and has to be part of the solution. how does a uniform, consistent,

consensus approach be brought to bear in each of those major problems that have been so resistant? >> how do we crack the medicare/medicaid/social security not? alice? -- social security nut? alice? >> we do not have an annual budget process that deals with the entitlements at all. the budget committees deal with appropriations with annual discretionary spending. it is not their fault, basically. i think that many of us think that we need to bring the entitlements into the budget process, not that you review them every year, but that you have a regular schedule for reviewing the entitlements and the congress votes on a budget on the entitlements and if you

deviate from it, then you are in trouble. >> somebody else? >> at its essence, this is the same problem that we face in so many areas. there are narrow interests that either from jurisdiction in congress or by their desire for programs or a disk -- a particular task, if you want, it narrows the ability to get our fiscal house in order. the message you are hearing today is that we have -- we no longer have the luxury of letting narrow interests dictate where we have in the past. >> let me suggest a way to proceed. let's take two or three more questions, after question and then we will have the panelists responded. there is one of their, and one over here. ok, take those two. to bring the microphone to this gentleman in the blue shirt. after that. >> i'm with the education foundation.

to expand on jewel packer pose a question earlier, what advice you have for the governors that will be here in february and the mayors who will be here in january, and the educators and work-force development people coming in march? are they going to have to for the foreseeable future downside levels of norman at the state and local level? are superintendents of schools going to have to figure rodham ways to get -- figure out ways to get but they need with fewer resources? -- to get what they need with fewer resources? >> and this tournament over here. and then when the back. >> david dixon, "dixontimes." you all seen -- "washington times." who appeared sees -- thinks it is a swell idea truth of reform

in 2012 that they establish another massive and fatima program that would cost over a trillion dollars and according to the house abortion, incorporate a 5.4% surtax that presumably you'd want to keep on the table to help reduce -- and according to the house version, incorporate a 5.4% surtax that presumably would want to keep on the table to help reduce future debt? >> and over there. >> my question is, will it play in peoria? it seems to me that congress is in the process of passing a big omnibus bill with a lot of pork barrel spending in it. we have given a trillion dollar bailout to the banks. why will people think that it makes sense for their benefits to be cut when there is a much spending going on that seemed to be unreasonable? >> three good questions. what about what should state and local officials expect. the one about the courage -- the current health care debate and

out -- the current health care bill and how it influences this debate. and about benefits going to someone other than local people. >> state and local will have to get the message that the federal government has run out and if they're going to have to provide the services, they will have to find their own sources of revenue. >> the health bill? but i think it's clear that the health bill? >> i think it's clear that the health bill will tie our hands by taking some of the pieces of the budget off the table for a while. it will set a new entitlement programs and i think that is the wrong thing to do at a time when we are trying to get things under control. how you make a plan for peoria? it is what we're proposing or what my was worried about. -- maya was worried about. sharp recession, diminished purchasing power, a lot of social unrest if you look at

the kinds of things that happen in currency crises. in the slow version, is just stagnation as far as the eye can see. >> alice, did you want to try the peoria question? >> i thought you said i was talking too much. [laughter] >> that is not true. i said you were being courageous. >> peoria just takes us back to, is there a new level of consciousness of the debt and the deficit? some of us think there may be and it may show itself in the 2010 elections. but that is the question. we do not know for sure. the cruof what to talk about pei would suggest -- subscribe -- >>

to talk about peoria, i would subscribe to what alice and doug have said. the public seems to be getting a better notion of how bad our debt problem is and what the ramifications are if we do not change our ways. there is some hope there. one of the possible effects of how it will play in peoria is that the conservative candidates will do a bit better in this election and we will have another polarized standoff for two years. i hope that will not happen. but the citizens of peoria will have to make that decision, i believe. i support jim jones on the other level of government. you cannot keep coming back to this well anymore. we are about dry. they're going to have to find

new ways to deliver services. they will have to make resources that they have go further. some governors have done that very successfully and others who do not, they will be shortly replaced, i suspect. >> and never really gave a written how peoria thought about it. it was texas i was concerned about. [laughter] therefore, what we hope as a commission is that these suggestions will create the dynamics of some kind of a political will that will demonstrate to the people in 435 districts in 50 states what they should or should not be for. there will be those who will be opposed to a lot of these suggestions. that is part of the american way. advice to states -- i remember well and we ended revenue sharing -- when week ended

revenue sharing because we were out of revenue and that was a big deal back then because many local and state, they loved spending the money that i was having to raise the taxes to pay for and i did not think there was a good idea. many of the state spent too much, folks. much of the state leadership needed to take a hard look at how they run their budgets. that goes up and down, schools, etcetera, which is my answer to the education question of ago. with the health bill, we have not seen the final version yet. let me make this observation. on health care, if you add a new $1 trillion health care bill that does nothing to bending the curve, you are not addressing what we are concerned about today. you will address the one problem of health care, but you have not dealt with the long-term fiscal deficits. the only people in congress that seriously made an effort at that were senator biden and senator bennett in a bipartisan way in the senate and jim cooper in the

house. i hope at some point, the coffers -- the conference or somebody will go back and look seriously at the recommendations about how you try to conserve. i will not be critical of our president until he does something to be criticized on, the final version of the health care bill. if they pass a bill that is as bad as you infer, then it will become part of the political dynamics in a big way in november. >> on that happy note -- [laughter] i want to thank our panel and i want -- and i think it deserves applause for the work they put in. [applause] i thank all of you for good questions. i'm told that if you want to read this report and not want to take down any trees in the process, you can go to www. budgetreform.org.

thank you very much. [captioning performed by national captioning institute] 

this is live coverage on

c-span2. >> met with commanders on the ground including meeting with afghan army leaders. and today i've had a meeting of our national security committee with the chief of defense and the chief of our security services. and i talk to the nato general secretary. the first preface of my visit to afghanistan was to thank our brave armed forces in a year in which 100 other colleagues have made the ultimate sacrifice for our country. i wanted to acknowledge and congratulate them on the dedicated work day after day that they continue to do. and as christmas draws near, to wish them and their families well. i think i speak for everyone when i say that the thoughts and prayers of our house and country are with them. british people are safer at home because our troops are fighting for our safety this christmas in afghanistan. mr. speaker, i also wanted to assess the progress to reinforcing our campaign in afghanistan. and in my meetings with

president karzai and his team of ministers, began the preparations on the conference of the future of afghanistan that will be held in london on 28 january. an event i believe will galvanize the international effort on political and economic progress as well as on security, and to which president karzai has agreed he will present his plans for the country's future. our strategy is to ensure that al qaeda can never regain in afghanistan and to achieve that, we must weaken the taliban and strengthen afghanistan, stage by stage, district by strict as to, province by province, putting the afghans in control of their own security. but we must first address the taliban insurgency with all the resources and power we have at our disposal. yesterday i flew up on one of the newly deployed helicopters. we have doubled the number of helicopters over the last three years. we have more than doubled helicopter flying hours. we will be further increasing over the coming months.

i also saw the mine resistant patrol vehicles and the smaller but equally well protected ridgeback vehicles. incenses somewhere increased the number by more than 80%, almost double the number of ridgeback, hundreds of new vehicles, from the treasury reserve which are now every month saving lives in afghanistan. mr. speaker, aerial surveillance helps us track and target taliban improvised explosive devices. and that surveillance has now been increased by over 20%. and yesterday, i asked for and received an assurance from president karzai of the new assistance the afghan people will give us in detecting and dismantling these improvised explosive devices. afghan forces will not be trained as i saw yesterday to detect and disable ied's. there will be more local police on the ground, and we will be training 10000 police recruits. that will be better intelligence

for the afghan people about the source of ied plans, plan attacks, and encouragement not to harbor those attacks on british soldiers. i can say we will go further in providing more equipment and support to our armed forces. tomorrow the defense secretary will announce plans for more equipment on the afghan campaign. including more specialist ied support. the latest funding from the treasury will include an extra 10 million for hand-held mine detectors, to follow the 12 billion that has been set aside earlier for new explosive disposable robots. over 30 of which are now in operation tracking ied's. i can also, the ied capability, including new and enhanced facilities for training and for intelligence, and this will amount to an extra 50 billion pounds per year, 150 billion in total this year and over the next two years. mr. speaker, our strategy

involves working with the afghan army and police so that day, over time, can take security control. president karzai confirmed to me he is increasing the number of afghan troops in helmand to 10000. already in the last few days, 500 troops have arrived. once the police training that we are running in helmand and prove strength in the spring will be able to train there a lone 2000 police officers every year. yesterday i saw for myself the reality of british forces mentoring and partnering afghan troops and a new momentum that is resulting from that. the taliban are determined, they will not give up easily. i am under no illusion that there will be hard fighting ahead, but i grew great confidence from the immense professionalism of our servicemen and women, and from the telling effect they are already coming from in me and the galvanizing impact that they are having on the afghan forces they are partnering. i can report with 36 countries have now offered additional

manpower to the afghan campaign. we know that the planned increase of american and british forces over the coming weeks and months will allow us to review rages and develop a new balance in helmand. and as i said to the house, the authority for the additional british forces is to thicken holland and shift to what is hardly afghan forces. and i can report to the house that commanders on the ground told me yesterday that already in two thirds of british bases our forces but will jointly with their afghan counterparts. it is by partnering in this way first in the army and then with the police, that we will enable the afghans to step up to the challenge of dealing with the taliban and with extremism, and ultimately with the conditions are right, allow our troops to return home. i also saw from my visit and from my discussion with our commanders and civilian leaders, that we are seeing the beginnings of the clinical process which must complement our military strategy. tribal in the town elders

already providing the kind of effective accountable grassroots government which will be the foundation of any successful political strategy. so the decisions we have made in 2009, set a new framework for action in 2000. partnership with afghan forces will turn afghanization from an aspiration into a real force of progress in every district, even closer working between our military and civilian missions will allow military action to provide the space for afghan acid visions on by the afghan people to develop at a faster pace. mr. speaker, 68 international delegations will come to london for the 28th of january conference on afghanistan. all 43 powers engage in the international coalition will attend, together with other regional and muslim partners and international organizations. and they will be led by the secretary generals of the un and nato. i agreed with president karzai that this conference will deliver a new compact between afghanistan and the

international community based on priorities that he has outlined. first, security, we expect nations to announce troop deployment building on the total of 140,000 troops promised in 2010. and i hope the london conference will also be able to set out the next stage in a longer-term plan, the balance between alliance forces and afghan forces changing as their armed forces rise from 90000 afghan army and defense forces, to 135,000 next year, possibly 175,000 later. and of course, on the future numbers, also of the police intelligence services and local security initiatives in afghanistan. secondly, in london nato and isaf partners must set out a program for the transfer of lead responsibly from coalition to afghan forces and agreed a set of conditions and criteria to astonish the eligibility of provinces and districts for transfer.

and i hope we can agree in london that the process begins subject to conditions on the ground during 2010. third, on reintegration, london must secure international support and financial backing for afghan led resettlement and reintegration programs. forth, uneconomic developer, as president karzai takes forward an anticorruption program, london must provide comprehensive long-term support to the afghan economy, including two farmers and working people in the towns and villages to offer them a greater stake in the future of their country. including providing afghans with credible alternatives to poppy into the insurgency. finally, london must address the issue of international efforts on afghanistan. reaffirming the role of the un, announcing the new special representative of the secretary-general, and announcing stronger civil coordination and isaf. and it must encourage to a new set of relationships between afghanistan and its neighbors, and particularly better working

with pakistan. mr. speaker, while afghanistan and pakistan are different countries with their own traditions and history, they are both at the epicenter of local terrorism. in our national security interests require us to deny al qaeda a space to operate across pakistan and denied them the option of returning to operate in afghanistan. and one of the biggest advances of the last year is the increased cooperation with the pakistan authorities in support of the efforts of the fight against the taliban and al qaeda. and we want to build upon this in the coming months. as part of our partnership with the pakistani armed forces, it is now underway with the new u.k., baluchistan training facility in which british mentors will be working with pakistani training staff on building character insurgency capability for the lucas dan frontier corps. and as part of our partnership with the civilian government of pakistan, the new education task force focused on anthem and education reforms is meeting

today in islamabad for the first time. 250 billion pounds a develop systems from britain to pakistan is directed towards education. and as i agreed with president zardari heard of this month, because nothing is more important in addressing the root causes of so many other problems, than building a strong universal state education system, free from extremist influence, and offering a alternative low-quality schools which include the poorly regulated and extremist. mr. speaker, i turned the european council, one of the first decisions was to reiterate its strong commitment to promote stability and development in afghanistan and pakistan. a second decision was to express united europe a great concern over iran's nuclear weapons and changed it will recognize in a call from the kennedy that iran is so far done nothing to rebuild the confidence of the international community. while we agreed that our offer of renegotiation and negotiation

remains on the table, our continuing concerns about iran's nuclear program mean we agreed to begin working on options for sanctions in the new year. the council also discussed the economic recovery, jobs and sustainable growth and how europe can move forward on a climate change deal in copenhagen. we reiterate unanimously that policy in support of the economy should remain in place and only be withdrawn when the recovery is fully secured. the council also welcomed the effort and determine action taken across europe to strengthen financial regulation and supervision. and it also agreed that renumeration policies within the financial sector must reward of sound and effective risk management. following the introduction of u.k. of additional bank payroll tax, where bank and telling societies employees discretionary bonuses about 25000, the council encouraged member states to properly consider available short-term options to implement sound compensation practices.

unfortunate, the council emphasized the importance of renewed economic social contract between financial institutions and the society they serve uninsured and the public benefits come ensuring that public benefits and good times can go to the people of their countries and are protected from risk. the council encouraged the imf in his review to consider the range of fees and funds contingent capital arranges in the global financial transaction levy. mr. speaker, there are very few moments in history when nations are together to make, decisions that will reshape the lives of every family, potentially for generations to come. and our aim of the ambitious climate change deal in copenhagen that will enable the european union to make good its commitment that we have moved to a 30% reduction in carbon emission levels by 2020 compared to 1990. and the agreement in copenhagen must also include a clear

financial framework of a short medium and longer terms. this financial agreement must address the great injustice that is climate%w@@@

agreement could not have got off the ground without the strongest european cooperation. britain will contribute one and a half billion pounds. but there will also have to be additional and predictable finance in the medium term, 2020 and beyond. the figure of 100 billion euros has been set for the long-term climate change by 2020. and the council, the european council, reaffirmed its commitment to provide its fair share of this international public support. i can say to the house that from 2013, the u.k. will provide additional private finance over and above not quite 7% overseas development commitment under the european council, we have official development assistance commitment in view of the impact of the economic crisis of the poorest. there is an urgent need to promote rainforest countries, 20 percent for early finance should be allocated to force protection.

and to achieve a reduction of deforestation of 25 percent by 2015, leading to a 50% reduction in 2020 and a complete halt in 2030 will require global financial of around 25 billion. and a majority of this should come from the underdeveloped countries. so today we send a message to all of europe into the world there is work to do, we're only halfway there to an agreement. now is the time for developed and developing countries not to divide among each other, but to do what no conference of 192 countries has ever achieved before, that is to come together with a forward-looking program to advance our share of goals. this week world leaders are gathering in copenhagen, and as i have indicated to the house authority and to the opposition leaders, i will join global leaders in go bag and starting from tuesday with meetings there with leaders of the african union and the european union, the un secretary union, and also

representatives from the hard hit small island states. the agreement at copenhagen must be ambitious, global, legally binding, be consistent with a maximum global warming of 2 degrees, and ensure that there is a financial settlement of the poorest countries. mr. speaker, britt and our european partners and the commonwealth will continue to work tirelessly for the best result at copenhagen. and i commend this to the house. >> mr. cannon? >> thank you, mr. speaker. the european council covered in three main areas, foreign affairs, the environment and economic issues. i want to ask all three as was the fight of the issue of afghanistan. on afghanistan, is the prime minister knows we supported the increase in u.s. and in the u.k. troops. and that christmastime as the prime minister has said, we should all be thinking of our forces and their families that i like to pay tribute to all those charitable organizations sending diffs and cards and presents to

our forces in afghanistan. they should be on our minds for all they are doing. on strategy, we believe this is the last best opportunity to get this right. doesn't he agree that everything needs to be brought together, including having the right concentration of troops in every part of southern afghanistan? the prime minister talk today about thickening the true presence in central hellman. we look forward to hearing more about the. perhaps he can tell us when he will be able to update the house on what's being done specifically to make sure the british troops cover fewer areas, but in greater density. we believe that is absolutely vital. on the issue of the afghan national army, he like me saw it being trained at first hand and it is an currently impressive. as he grew with me that we honor as fast as we can and to go any faster that is a danger that policy of recruit would suffer. can he tell the house about what is being done to make sure that those afghan national army recruits that are trained and

then sent to the south of afghanistan actually go to the south of afghanistan, and the unit function properly? in terms of the london conference, about which he said quite a lot, could you clarify whether the new individual working on behalf of the un secretary general, does he still agree with us that it would be good to have someone over and above that to coordinate all of the civilian side rather than in the same way stanley mcchrystal is coordinating all of the military side? that is what we have been pushing for and perhaps the prime mister can clarify whether that is still the government's position. on iran, does the prime minister agree that the time now has come for the u2 take a much stronger line? it's clear that talks with iran are not moving. but the summit just referred to considering as the prime minister said options the next steps. shouldn't these specifically included three things at the very least. a tough new inspections regime on iranian cargo, a ban on any

new european investment in iranian on a gas, and serious financial sanctions like those which exist in the united states? the prime minister would have been to before, the prime minister said in june 2008, and i quote, action will start today for a new phase of sanctions on arms or lancaster can he assure the house that this time the measures will be finally agreed and put into place? on copenhagen, can the prime minister be clear about what he thinks can now be achieved? does he agree with the un's chief climate negotiator that a full legally binding agreement is no longer possible in copenhagen itself? that if he is right about this, is it not essential that we see a full political agreement this week? is that not the minimum to which the world has a right to expect? and does he agree with us that it is a vital that any agreement is consistent with keeping global warming below the 2 degrees threshold?

on the issue of funding, the prime mister gave us the figures, but could he tell us a bit more about where the money is coming from. it wasn't the contribution was written 800 million. then 1.2 billion. then 1.5 billion. can he tell us where this is coming from. if the prime ministers said on friday, it is coming from the budget. and he tells whether this will have an impact on any other aid programs? turning to economic issues, this prime minister once described the u.k. budget rebate as an ipo, nonnegotiable. that was before he gave 7 billion pounds of that rebate away. when he did so, and the reason for asking the question today, when he did so, tony blair said the government had obtained in return a review of the u.e. budgie. that was to start in 2008 and was meant to finish by the end of 2009. but it is absolutely no where near finished indeed, in the conclusion, the deadline slipped to next july, and in the final

conclusions, it slipped another six months to the end of the year 2010. at a time when budgets are being cut in the u.k., does the prime minister agreed that in reviewing the u.e. budgie, the main purpose should be to push for a real terms typed in that budget? and does he also think that while public servant in this country are getting low pay increase or in even some cases pay freezes it is completely wrong for e.u. civil servants pay rise? turning to the commission isn't it the case that prime ministers hold approach to this has been wrong from start to finish. he started by spinning tribal political capital on a completely misconceived plant to make tony blair president of europe, and ended with britain having none of the economic. indeed, the government became so dysfunctional that at one stage peter mandelson tried to land himself a job of high representative. friends of the prime minister --

he shakes his head. did he try to get the job? is there anybody in there? he was frantically hitting the post appear that the rat was trying to leave the sinking ship but he is still on board. friends of lord mandelson, said he thought the whole thing, he thought the whole thing had been budge. those were his words but isn't that the right description for the prime minister's whole handling of this affair? on financial services, cross-border cooperation is clearly by the. however, will the prime minister confirm that britain's effectively given up its on blocking regulatory decisions in times of crisis when there's a disagreement over whether there are financial consequences for the taxpayer? you didn't mention it in your state and. perhaps he can answer that. the summit conclusions also called for the restoration of sound public finances. and i asked the prime minister, did he ever expect to come back

from a european summit as prime minister of 12 years stewardship with the biggest deficit of any european economy, with britain the only g-20 country still mired in recession, and with the worst public finances in a generation? is that what he meant by leading the way in europe? >> prime minister? >> mr. speaker, i am surprised that he spends most of his time raising issues that were not even discussed at the european meeting and i think it would be better that it would be better if he addressed all the issues that i put to the house this afternoon and addressed them in a bit more detail. the first -- the first i may say, is the issues related to afghanistan. and i think it's very important to recognize that there is all party agreement on these matters. and not to exaggerate any difference between us about this particular sensitive time. when more trooper going into afghanistan, where we are

persuading the afghan forces to increase the number in the helmand province and where we are trying to extend the civilian and military cooperation so that we can tackle effectively the taliban insurgency by weakening them and strengthening the afghan state. i did say to him that we were increasing our presence in hellmann's. but so too is the american presence increasing in helmand. and that was the american troop in helmand will go up something in the order of 20000 to 30000 over the next few months. that will include of course the afghan army and self making a bigger contribution in helmand. in overtime, the balance will change between the alliance forces and the afghan forces. by 2011, across the whole of afghanistan the afghan forces will exceed the alliance forces and get on top of that of course we had afghan police numbers as well. and this is our policy for the gradual afghanization of security control, and in that

way district by district and province by province, we can have a chance of afghan control. i have to say when i met the afghan forces that were in helmand yesterday, training on anti-explosive devices, the afghan forces that i talked to came from all different parts of the country, coming to helmand, supposed to be trained and part of the more effective army for the whole of afghanistan in the long run. i did say to him that we were reporting that humanitarian and civilian issues related to the coordination of effort in afghanistan was a main feature of the london conference. now that he has resigned as the un representative, he will stay on ivy league until march. he is retiring after that and we will have to appoint in my view a full representative from iceland and one from nato. and i talked to the general secretary of nato this afternoon. so there will be a human

appointment and it will also be a natal appointment. i think it's important to recognize that all these interest must be represented, but there must be greater coronation pier as far as afghanistan generally is concerned, i hope that members of the house will feel that the measures are being taken in to deal with ied's are important in protecting our troops, but also in destroying the morale of the taliban. i have to say that when i was in afghanistan yesterday, it was reported to me that 1500 ied's had been detected and dismantled by the expertise of our forces, and particularly the engineers who do such important work. and if we can continue to diffuse and dismantle, and therefore disable these ied, that would reduce the state of tragedy that would resolve or over last year. . .

>> in the sanctions that actually work. also the issues of the european council, and i will come to that now. at the european council we did discuss the timetable for resolving the budget issues, and we did discuss the economic cooperation across europe. and we did discuss the fiscal stimulus that would be necessary

to bring the economy forward and to move economies out of@@@@@@@ as a result of the actions that we have taken. i just have to say to them. at the european council there is an agreement that we needed to take a fiscal stimulus so that the economy could move forward. there is an agreement that we should have taken action to restructure the banks. there is an agreement that the fiscal stimulus should continue and an agreement that we should all take action against unemployment. by providing government funds to do so. the only group that seems to stand outside that agreement and europe within the rest of the world is the conservative party represented on the other benches. represented on the other benches. and i have to say to them on

climate change, it is incredibly important that the voice of this house from all parties in this house is that we want the developed countries to work together to secure an agreement. that is why our offer of support is one that i believe is right if we are going to get to an agreement that shows to the developing countries that we mean business in tackling the issues that they face most of all as a result of climate change. that is why we were the leaders in a european agreement that is insured the very substantial progress, three-and-a-half billion dollars a year will go to helping the developed countries to adapt to and mitigate climate change including action of forestry. we have a great deal of work still to do because we have to get an agreement about the longer-term as well as the short term. we have to get an agreement about its immediate targets and about the issues that we undertake.

we, britain, have that the way, with the climate change act. we have led the way with an announcement that we will be active in providing long-term financing to help the developing countries. we suggested a figure of $10 billion as an initiative for both the european union and for the rest of the world to follow, and there is now a virtual agreement on that. we will continue to press for a just and fair settlement at copenhagen. why i want to go there tomorrow is to talk to all the parties about what we can do together, why i think the opposition should support is that we have led the way of developing goals, led the way of debt relief, led the way of international economic cooperation, led the way of the restructuring of the banks, and we are leading the way on climate change, something that the opposition party could never, never do. >> speaker, i would like to thank the prime minister, of course, for a statement. i would, of course, like to add my own voices of gratitude in

afghanistan. and with families, of course, across the country preparing to come together for the christmas holiday i also pay tribute to the families and friends of the servicemen and women, the enormous sacrifices that they are also making for this war are utmost in all our minds at this time of year. i am grateful for the prime minister's statement in afghanistan. i would just like to speak currently on two points. kitty could he clarify what he believes to be the role of china, russia, and iran? whether we like it about these nations are absolutely crucial in securing long-term stability in afghanistan. i was not quite sure from what he said whether any or all three of those nations as will be presented at the london conference. if not could he perhaps provide us with some detail as to how we might be engaging with all three of them to help stabilize afghanistan, not withstanding the other major differences we have, particularly with iran at this particular time.

the second point is this. we all know that the war will only be won in afghanistan if we win the battle of hearts and minds of the afghan people. that is heavily dependent in terms on that the legitimacy of president karzai and his government. the prime minister referred to the efforts against corruption of president karzai. could he just tell me how exactly he will judge progress on good government and against corruption in afghanistan by the time president karzai comes to the london conference in january? mr. speaker, given that the resources allocated to a strategy we are pursuing in afghanistan over the last eight years were so heavily influenced by the war in iraq i would also like to know what the prime minister thought of his predecessors of mission this weekend that he would have invaded iraq whether there were weapons of mass destruction are not. the prime minister supported taking us to war. so people have a right to know.

does the prime minister agree with tony blair that the invasion would have been justified even without the excuse of weapons of mass destruction? just a few hours ago we heard the talks in copenhagen were suspended. i am told just now they have been just restarted a few minutes ago because of differences between the developing and developed world in the international community. i'm sure the prime minister agrees with me that the i will if you will brinkmanship now needs to come to an end. too many players are making their commitments conditional only on the commitments others. will the prime minister now make a unilateral commitment to help break that deadlock? the committee on climate change says that to meet the european union target of 30% cuts on the levels by 2020 this country would need to cut its own emissions by 42% by 2020. the prime minister just doesn't

need to wait for anyone else to make that commitment. will he make that commitment today? >> prime minister. >> mr. speaker, first of all, let me deal with afghanistan. it is right that at the conference discussing afghanistan not only the coalition partners should be present, but it is very important to recognize in the long-term afghanistan feature is dependent on non-interference by immediate neighbors and economic and cultural cooperation between afghanistan and their neighbors. we will do what we can to advance that process forward, difficult as it has been to get some of the neighbors in to talk to each other. that is part of the discussion that will take place at the conference, and there will be discussions also in pakistan. if we can have on both sides of the borders action being taken against al-qaeda and action also does the taliban we have a

better chance of succeeding in our objectives. when president karzai comes to london we will expect that he will be able to show progress in the anti-corruption laws that he is proposing, the anti-corruption task force that he has set up. there were 12 arrests last week for corruption. obviously people will be appointed to his cabinet and district and provincial governments. he is holding a conference on these very issues tomorrow in kabul, and i hope that will show the determination to make progress. i assure you that president karzai is determined to come to london with a plan to deal with some of the problems that have been intractable over many years in afghanistan. as for iraq, i would just say that there is an inquiry. the inquiry will hear evidence, and then the inquiry will make its report. as far as climate change is concerned i think the european offer of 20% to go to 30% if we

can get an ambitious settlement where other countries join in in going to the ambitious ranges that they have set of japan and australia and brazil with their very ambitious ranges can go further. if we can see the movement to want to see from the other parties in the negotiation then our wish is to go to 30%. we will have to get not only intermediate targets as well as other countries and statements of national admissions, the developing countries. we will also, as i said before and have to get a financial agreement, a technology exchange agreement, and, of course, verification issues will be raised. there is a lot of work to do at copenhagen. i feel that he was to get a most ambitious agreement as possible, and i am grateful for the support he will give us. >> mr. speaker, the prime minister referred to pakistan. he knows the great sacrifices being made by the civilian

population and the military in pakistan. did he discuss with president karzai the importance of effective cooperation between afghanistan and pakistan, particularly in combating extremism in the areas on both sides? >> prime minister. my honorable friend, as you all know, we wish to work with the pakistan equipment not simply to work with the problem of the pakistan taliban as we have done with the small territory, but we want to work with them to work with whether those areas where there are problems also with the afghan taliban in pakistan. so we want to see the maximum cooperation between president karzai and the pakistani authorities including president zardai and of course prime minister galadi. we want to see more effective corporations. in the end we want joint

measures that will protect the border areas. operation in afghanistan and pakistan is going to be very much in more in future years and i am before we have the level of the issues we raised in my statement. we want to see further cooperation and security issues strengthened in the months to come. >> mr. speaker, it is good to hear that our groups in afghanistan are getting more equipment. at the expense of what? because a recent review set up by the former secretary of state says the defense equipment program is unaffordable. is that right? >> mr. speaker, we have increased defense spending every year. we have given defense of nearly 10% over the last ten years. in addition to that we have provided for the equipment needs and the other additional needs associated with the campaigns in

iraq and afghanistan. it is because we have matched additional money from the treasury reserve to pay for the equipment that are going in vehicles, additional helicopters able to go to afghanistan. we have meant all the requirements of the military forces on the ground to enable them to mount campaigns within afghanistan, and i am sorry the conservative members are trying to dispute that. the fact of the matter is that all urgent operational requirements of the ministry of defence had been met and will continue to be met. >> a further 26 speaking to catch my eye. as usual i should like to be able to accommodate everyone. in order to be able to do so short questions and short answers will be required. >> allegation a few weeks ago.

we are extremely grateful for the efforts being made by the country on their behalf. however, i can't say publicly what was told to me in private. women feel extremely vulnerable in that country. raised the question several times in the past. the u.n. has criticized the afghan government for not doing enough to protect women. this particular woman is in danger. i would ask the prime minister if he would raise this, in the situation of women during the afghan conference. it is one of the reasons we went into afghanistan. >> you're right. we made representations about the family law that was discussed in the summer. the president insured the some of his parts were removed as a result of international pressure

i realize that the rights of women are an issue we must devote at all time when we are discussing the future of afghanistan. it is true that as a result of what has happened over the last few years where no girls went to school there are now two-and-a-half million girls going to school. i believe for the future of afghanistan and that is a vital change that is happening and increasing the numbers. it is a vital part of the program. at the same time paternal mortality is among the worst in the world. one in eight births resulted in deaths. i am told the recent research suggests that 100,000 children are now surviving to the age of five who would otherwise not do so as a result of the improvements in tackling infant mortality and child health. these are achievements as a result of bringing health and education to the people of afghanistan. she is absolutely right. we must never forget the

importance of these issues, the social and economic improvement of the condition of the population and we are talking about the future of afghanistan. >> the announcement by the prime minister of the additional 50 million pounds with three years of counter ied intelligence is very well. will that money come as an operational requirement from the treasury or will it be within the existing defense budget? >> prime minister. >> the chancellor reported in the pre-budget report that expenditure on afghanistan from the reserve is something on the order of 600 million pounds three years ago. it will be nearly four-and-a-half billion pounds over the next two years. that is a result of additional money made available by the treasury. >> very recently seven taliban attacked a convoy that would be protected by 300 members of the afghan army. the 300 almost all of@@@ #@ @ d

the afghan police are a lawless bunch of depraved thieves. duss the prime minister really believe the we can build a solid security service on these collapsing foundations? >> there are two views taken by afghanistan. he takes a different one from mine. the first view is that the taliban have a huge amount of support in afghanistan and the afghan people will not resist the taliban. the the second view, however, is the one that i take. that the taliban have limited public support from the people of afghanistan. all opinion polls that we have is that the public do not want the taliban to return to afghanistan. rn. they know the damage that did in the past. they know the threat to women's rights. they know the damage that was

done to children's education, and they know that justice that was meted out unfairly particularly against women. our best estimate is that the people of afghanistan by a very substantial majority do not want the taliban to return to government. they want to be assured that there is security guaranteed by afghan forces and by the alliance forces working together. over time they will want to see the security kept by afghan army, afghan police, and afghan security services. that is what our strategy that we have been applying for some time is working toward. so i don't accept his initial premise that the taliban have anything like the support he suggests. >> may i ask the prime minister, is it a responsible policy to find at least partial the cost of current operations by waging future defense abilities? >> mr. speaker, i think he has got to understand the total

amount of additional minister on top of the budget that has been spent in iraq and afghanistan is 14 million pounds. that is on top of the defense budget. that is additional to a rising defense budget, and i think he has also got to understand that the skill of the investment that we made in equipment is on the order of 5 billion pounds. so i would say to him that he should look at the overall amount of money that has been invested in afghanistan. a billion alone in the new equipment for vehicles as well as the extra investment in helicopters and ied equipment. the total sum for equipment 5 billion pounds, much of it spent in the last two years to make for better vehicles. we have allocated, as you know, in the pre-budget report of the chancellor, sufficient funds for afghanistan in the coming year. i don't think his criticism should be that we have spent to

too little or invested to build and the safety of our forces. we have done whatever is necessary. >> jeffrey robins. >> his trip to afghanistan. in particular his direct conversations with president karzai. the number of troops they are committing is encouraging, but the quality will be very important. could be, perhaps, a stark progress by some reorganization of the kandahar future government. >> i talked to president karzai about the governorships of kandahar and also helmand and about the appointments he is going to make to his cabinet in the next few days. my honorable friend is absolutely right. it is the quality of the local government on the ground and the quality of the afghan army and particularly over time the quality of the police in afghanistan that is going to be so vital to the success in the future. what i saw yesterday was afghan recruits training at a high

level demand from the british trainers and acquainting themselves well. what i also see in helmand is a government that insures the content and resources directed to the people and build up a system of law. wherever that is not happening actions should be taken and we would give our views directly to president karzai. >> mr. speaker, the prime minister did not talk on the inappropriateness. does not believe the defense secretary's remarks were inappropriate on condemning war. >> this is a statement on the european council. there is an inquiry that is being set up to look at all issues effecting iraq. >> the prime minister is well aware that all wars have to end in some kind of political settlement or negotiation. we are now in our ninth year of this war in afghanistan.

billions have been spent. thousands of lives have been lost. at what point does he envisioned some kind of political engagement with those in afghanistan who are not supporters of karzai and his corrupt government who want some other solution. >> i think he draws the wrong conclusions from this remark. britain cannot be saved from terrorism unless we do with problems that exist that just in britain but on the borders of afghanistan and pakistan. we do not take on al-qaeda and prevent them from having space in afghanistan with the freedom of movement to plan operations in britain we jeopardize the security of people that he represents in london and people who have had to suffer from terrorist plots being organized from that border. yes, it is right that in afghanistan it is an infant democracy where problems existed in a very big way during the election campaign. it is better for us to build afghan forces that are under an

afghan democracy and to build security services that are under an afghan president that is elected by the people, and it is better for us to build up local government in afghanistan and to give up and to allow those people, to allow those people who didn't wanted us to take the action that is necessary to win this argument. this is about security. >> people, the prime minister, he said, he would provide more equipment in support of the armed forces. can the prime minister reassure the house that the future defense budget will be fully funded, whilst explaining to the house to was response will for the deficit which has occurred over a number of years which is highlighted in a devastating report by the in nao which was sadly embargoed until '99. >> the time that the defense

budget was cut massively was under the conservative government between 1992 and 1997. defense expenditure has risen in real terms by 10% since 1997. i keep repeating to him that the urgent operational requirements of our defense forces when they are in action abroad and have been in iraq and afghanistan are met by separate claims from the reserve. i think you should look at the arithmetic of what is actually happened, and you will see that extra urgent operational requirements have always been met by the treasury. i think it is unfortunate. i really do think it is unfortunate when he can see the additional resources be made available, the reserve claims, the urgent operational requirements to try to tell the british people that our armed forces have not got the equipment they need. they have the equipment for the job they're doing. >> mr. speaker, the states are already suffering significant

effects from global warming. they have produced national allocation plans, but don't have the money to implement them. will he ensure that money is available from the e.u. funds for this adaptation now? without that the implications of global warming will only continue to get worse. >> i know from my honorable friend's word that she knows her well the challenges that are faced. she also knows that some of the countries who are present at the commonwealth conference because she has very strong links with them, and i know very well that countries from the maldives to bangladesh look for answers at the climate change conference in copenhagen for the problems they face as a result of immediate and urgent requirements due to time a change. the purpose of the european contribution, two-and-a-half billion dollars a year, 2010, 2011, 2012 is to contribute something on the order of $10 billion a year.

the adaptation she wishes to see. there is a proposal that the island states have suffered most of all. they will get a portion of that fund to enable them to take action immediately. we know very well some of the problems that face our urgent and have to be addressed not just in the next few years, but the next few months. >> sir robert smith. >> thank you, mr. speaker. the prime minister, does he recognize that he does not need an inquiry to know that his thank you the british troops will be all the more stronger if it contains an apology to the british troops and the people of afghanistan for the failure to resource the war in afghanistan properly in the early years because of the folly of going to war to run on false present. >> i am sorry the liberal party is trying to follow the conservative party in subscribing to a myth that the afghan campaign has been underfunded. this is totally wrong. i hope that the conservative

party and the liberal party will, in the interest of the unity of our country in facing the terrorist threat, recognize that we are spending more on our armed forces than we ever did. we are spending more on making urgent operational requirements than we ever did, and we have taken a view and it is the view that is held i believe by the vast majority of the british people that you cannot defend terrorism by the extra money we are spending within our borders. you cannot operate a fortress britain strategy when you have problems arising in pakistan and afghanistan that bring terrorist plots to london and to our country from the bases in afghanistan and pakistan. it is right to take the action that we did. that action has been properly funded, will continue to be properly funded, and i do say to the opposition, if they continue to perpetuate the myth that there is inadequate funding

being provided for our resources this will mean the public will lose support in the effort we are making. that would be a very unfortunate outcome. >> sir nigel griffith. >> the great welcome for the additional money on climate change in developing countries on top of the .7%. does he also extend that anyone who believes there will be full legally binding agreements on climate change clearly comes very late to this subject and will be better persuaded the on the fringe in europe to stop climate change legislation? >> mr. speaker, i tend to think the conservative party are better at the opportunities that they are on policy on this issue. they have no, they have made no commitment. [laughter] they have made no commitment at all. they have made no commitment at all for conditionality. they have made no commitment at all for conditionality.

they seem to think the climate change debate as a joke. it is a serious matter and we're going to bring it to a conclusion. >> thank you, mr. speaker. will the prime minister accept the afghan peace is not made the same progress as the afghan army? just paid their lives because of a police incident. would he accept it will be irresponsible to accelerate their recruiting , vetting, and training? >> mr. speaker, the tragic incident where five of our soldiers lost their lives is something that must be properly investigated. we must get all the answers. that is right for the families and also right for the future cooperation between the afghan forced police and the military and the british police and the british military. i have to say to him on the ground in afghanistan our troops are working day-by-day with afghan forces. they're working in joint exercises with the afghan police and the afghan military. he would be making a great mistake in just simply staying

the status quo and did not move forward with partnering with afghan police and afghan military. i believe that the scaling up of that which is agreed as a result of the recommendations of general mcchrystal, something that we advocate months before that and something that president obama is now putting resources in is the right way forward for afghanistan. the other strategy, the one he proposes, would make us at a standstill and not get the progress that we need so that afghan forces could take direct control themselves over their own security. >> the european council discussed economic cooperation. was there any specific discussion on what to do if they continue to deteriorate the way they are? >> mr. speaker, it is the intention of the european union to maintain the fiscal stimulus and to show that we have deficit reduction plans for the future.

it is the intention of each of the countries of the european union to show that they have deficit reduction plans as well as a commitment to protect themselves against the recession. that was the base of the discussion in the european union. >> my nephew has just returned from a six-month tour in helmand with royal engineers and tell me what was particularly frustrating is they would spend all day detecting and disarming ied. the taliban would come out during the hours of darkness to reseed the fields again without ied. there is not going to be a curfew. someone has to secure the ground. the taliban are taking back then ground engineers has been all day risking their lives retaking. >> i appreciate the difficulty. if he has specific information he wants people to look at i am very happy to look at it myself.

the truth of the matter is, the truth of the matter is that there is enhanced surveillance of what is happening on the ground. where there is changes made in the land during the course of@@2 to make sure that where eid's are planted we have more information about them and more information about the people who are actually planting them in place. i agree this has been a problem but i think we have better security measures than before. >> get the opportunity to witness first-hand the tremendous contribution to the mission of afghanistan being made by the royal navy and is often seen as an army campaign and the royal navy could be without hindering either the mission in afghanistan or -- is just plane wrong. >> i did meet with the royal

navy in hellmand in afghanistan yesterday. there are people people from the royal navy working with our troops in afghanistan and doing an incredible job. i think our commitment to the navy is assured by our positions on the aircraft carrier. >> fascinating in september last year just after the 2,000 british troops just delivered a turbine, a daring dangerous mission. 15 months later that turbine has yet to be installed because the other equipment needed cannot be got there because over the dangers. bear in mind, the prime minister's promise that he is going to get more european nations involved, and with the additional aerial surveillance, will he get the european nations to secure that road so that it can be one? >> i don't want him to get the wrong impression. two generators are there.

the third generator has not been brought into use. the decision has been made that diesel power is a better way forward to meet the gap that exists in that area. as far as my meetings with the people in afghanistan yesterday, i believe that the extra work that we will do on economic development, that is, getting the people a stake in the future will include not only the work we have done but also giving farmers the opportunity to benefit from the week to harvest and grow we. i think that will help around 40000 farmers over the next ye year. >> the european union council meeting, there are many heads of governments who thought the recovery was now so secure, that it was the right time to bring in savage cuts. >> mr. speaker, every member of the european union that was present wanted to maintain the fiscal stimulus, and said that it should be maintained until

the recovery was assured that only the conservative party is so arrogant to believe that it knows better than almost every country in the world, and every political leadership whether right or round the world. the answer, the answer of course, the answer, the answer of the conservative policy would be small businesses while more people losing their homes and a higher deficit and higher debt. >> we should salute the work being done by the pakistani army, it remains the case that a large portion of the pakistani army is deployed along their border with india. those troops would be better deployed going after the afghan taliban and pakistan. does the prime minister have with the pakistani military to encourage them to redeployed their forces? >> prime minister,. >> he will know a number of pakistani armed forces have been operating in the squad i. you also know that about 3000 of

the pakistani forces have been and are in waziristan taking on the pakistan taliban there. and therefore there has been a considerable change in the amount of effort that the pakistan authorities are making in tackling the terrorist threat within their own country. however, i do agree with him that if there were less tension in the relationship between pakistan and india, and if there was less need for troops to be on both sides of the border, then it would allow pakistan to do more and to tackle the terrorist threat within its own borders. that requires india and pakistan to work more closely together. we are determined to see what we could do to make that possible. i have both talked to prime minister singh and president zardari about the. and of course, if we can get a closer working relationship between india and paxton, even after the bombings, it would help greatly the campaign against the top and also al qaeda in pakistan. >> i've read in a response to my

colleague, about the plight of the island. the speaker of the island told as i left the plane, thank you so much for coming and thinking about a pic please do not forget as. and that's the message i would like to get to my right, honorable fred as he goes to. >> i am long-term interest in the problems that are faced operatively by those island states where the possibility is that we could be dealing with climate change refugees and climate change in the not-too-distant future. and therefore, copenhagen is important because it can allow us to make a commitment to help immediately those island states that are facing needs among difficulties and help them get support to do with their

adaptation that is necessary. we will not forget the challenges faced by these island. many of them are part of the commonwealth and it is a portal that we come to the aid of countries when they are in need. >> mr. speaker, why was the prime minister's statement completely silent on the consul agreements for a tangible e.u., a single space and a security system and what he calls a common asylum system by 2012? says labour ministers argue against all these policies against the negotiations of the lisbon treaty, as i saw for myself on the european convention, does the prime minister regret having to support them now and pretend that he was always in favor of them? >> i don't think you've moved on since he was at the european convention. that doesn't realize that we have secured all our red lines on these issues when we negotiate the treaty. the original plan for the

convention was abandoned and we have a treaty that now needs the interest of the british people. so much so that the conservative party have abandoned their widely held policy and no doubt he will support them when they decide they don't want to be on it any more. >> in relation to copenhagen and climate change, can the prime minister indicate whether it will play a major part of the negotiations of the agreement reached at copenhagen because there is some doubt about that? >> it must be central to an agreement to copenhagen. and as we know, one of the great problems of the previous agreement was the number of countries who were not involved in it. it is absolutely, it is absolutely crucial, it is absolutely crucial that china plays a part in the negotiations that they are one of the biggest if not the biggest now and it is crucial also the india which is also going very fast as a country, plays their part in the goucher should.

i will be meeting the primary and hopefully also over the next couple days talking with the prime minister singh and we will try to work together to secure the agreement that is necessary. >> can the prime minister explained how there will be 30000 allied troops in helmand province when the hellman operation began there were 3000 british troops landed to 60 percent per head compared to 10000 british troops there today. but what lessons have been learned? >> the number of troops in afghanistan has risen substantially. but the equipment available to these troops has also risen substantially as the needs of fighting a guerrilla warfare against the taliban have to be met. i do say to the conservative party, they're making a huge mistake if they believe that they can persuade the british people and it's in the interest of the british people that they need persuaded that our troops are underfunded and not properly equipped. that was a campaign run by a

certain conservatives over the summer that it is a campaign that. everybody here -- everybody here knows everybody here knows -- everybody here knows that our troops have had substantial additional funding from the treasury, that the vehicles are available to them are far more sophisticated than before and that the helicopter support is available. and we are bringing in the best counter ied support to do with the new threat that has been caused by the taliban, and i hope the conservative party will rethink this position which i believe will do damage to public support for this exercise. >> i welcome the prime minister decision and indeed that of the leader of the opposition lastly. i'm sure it will give support your true. can we also show some support for the afghanis who are taking to claim asylum in this country? is it really right that we should remove people to a country that is unsafe?

>> the application for asylum is dealt with on its merits. and he knows that as chairman of the committee. and that is a position the government will continue to use. >> thank you, mr. speaker. thousands of families including raf, why is the prime minster not being up front about his preference for conventional defense cuts rather than scrapping to try nuclear program which would save 100 billion pounds? >> he knows that strapping the program would lose hundreds, a great deal of many jobs in england and scotland is what. so he should know that we have funded the aircraft carriers which are being built partly and scott. we've increased the defense budget every year. and we have also, of course, increasing the urgent operational parts that are necessary for our airports as well as our navy and army. i think what he looks at the

record of enhanced expenditure and investment in our armed forces, both in scotland and in the rest of the united kingdom, he would know that the government is doing its job. [inaudible] can i ask them also to support about -- >> mr. speaker, it's very strange that the conservative party automatically almost without thinking about it came out against the global financial transaction tax. is now being discussed in all countries in europe that it is being investigated by the international monetary fund. the european union are going to do a report on it as certain people around the world who are esteemed in the academic profession as economies are supporting this. they are interested in one form of tax, and that is the tax

avoidance. it's about time, it's about time, it's about time we heard, it's about time we heard whether the deputy chairman of the conservative party after 10 years has honored his promise to pay tax in the united kingdom. >> mr. speaker, with the prime minister join me in paying tribute to our armed forces, not just those in combat, but also those providing humanitarian work, working in areas where the agencies cannot operate, building bridges, building schools and so forth. can i ask the prime minister, does this work towards the target in the gdp? >> it is international aid that is helping underdeveloped and low income countries, that it is possible that it will count to international aid and that is the right thing for to happen that the whole purpose of overseeing is to help the poorest of the world and allow them through better provisioned through health and education and

economic development and to raise their living standards and to take themselves out of poverty. the achievement of the international develop an aide and all workers began with developing countries will be that many millions more people are taken out of poverty. >> next year the united kingdom will pay 4 billion pounds more to the e.u. than it did last ticket in the pre-budget report the chancellor announced that tax on jobs, that will raise 3.1 billion pounds. is it surprising that the people in this country are fed up giving money to the e.u. rather than protecting frontline services? >> mr. speaker, we are part of the european union of 27 members. i know that many people on the opposition benches don't like that fact that one of the response of membership is that we provide the sources for all members of the european union did dependent on our ability to pay. that is the agreement that has been negotiated. and these agreements are in the

interest of the country which trades 60 percent of its goods with the european union and. has 3 million jobs dependent on the european union, has 750,000 companies with a european union that if he wishes, then let him do it but i believe that all of the british nation sees the importance of our relationship in europe. >> could the prime minister say we are now training afghans and in the use of robotics and other equipment to do with the ied's? and it as we start to draw down and withdraw, if we leave the afghans with the necessary equipment to do that job? >> yesterday i saw our british forces training the afghan forces in the hands of equivalent necessary to detect ied. most of the work we're doing with the robotic equipment on ied's is done by british forces. but over time, it must be our aim to train the afghan forces

so they can take responsibility for the security of these districts and provinces. and that i believe is the proper strategy for afghanistan. and i hope that there will be all party support for it. >> given the disclosure today of documents confirming the great strides in developing its nuclear weapon capability, it is not the reality that the european union visits israel sooner rather than later, to repel direct assistance to? >> mr. speaker, i think he should reflect on the fact that the international community ask attempting to show unit. we're attempting to show with china and russia as well as with the other powers to deal with a clear threat. the message must be a joint international community and renounce weapon isolation within

the international community. >> sending more troops to afghanistan than france and germany combined. this country is fulfilling its responsibilities, other other european partners are not. we are doing our best to contribute to the forces. i hope the implication of this question is not that if france and germany don't come up with numbers we should do less. f o ther

countries over t i just repeat on equipment so that everyone is clear about the money that we are spending on the equipment of our forces, air chief marshal said the equipment people are using is the best that they have ever had. i hope the conservative party will listen to that and follow his advice on that matter. >> now a pentagon briefing with the former commander of nato forces in southern afghanistan who was asked about strategy, government corruption and training of security force. this is a little less than an hour.

as much as possible with the broad audience. the situation in afghanistan, especially in southern afghanistan and therefore the pressure for me to get to be here and talk to you directly. and to perhaps to generate and fuel some discussion, let me put a couple of -- up front. first, success for afghanistan overall. why because it is -- dominant there and secondly over the last 12 months the situation in

afghanistan has significantly changed. it developed from a brigade type headquarters and militaryçó efft toingñrñr on how to deliver --ñ the security at which the planning horizon was defined on how long it takes to implement and not security.ñr stabilization was the core of our planning process. besides that, with the influence of additional coalition forces "tqi át)q)s in a situation -- at 40,000 soldiers day by day. why that change? the reasons, i think we all

recognized that -- i told you before the key for success in afghanistan is a situation in afghanistan, secondly, a counterinsurgency can only be successful if you've got a force to do counterinsurgency and protect 95% of the people from the insurgents. last but not least weñi all recognized that security is the supporting line of operations. security, i think it is fair to say that the influence to have coalition forces was from u.s. forces, the operational level towards insurgency, the commander finds where to deploy his military force, which effects to achieve. the taliban is reacting to that. we significantly expanded the

spots where we were able to get -- the afghans and security. we see increased pressure on the leadership.ñi the use of e.i.d.'s and keys for success in the future is -- will be demind the how we can be successful in detectiving the e.i.d. network.ñi two last statements. first,ñiñi afghanistan is a coalition fight. the last 12 months we lost 284 soldiers. the majority was not u.s. the coalition suffers in afghanistan. secondly, nato works. although we have a lot of

discussions about the decision-making process with nato and one nation blocking decisions by 27 other nations, have worked in afghanistan because we had common nato background. we had the same structure. we had the same planning process and the same mental attitude and the same approach towards operations and we spoke the same language. from a technical point of view, every joint that had control could talk with every helicopter in the air no matter what country they were from. that's the way nato works. we were not only quite effective but quite efficient with only 600 soldiers. quite effective. so looking back in hindsight i can tell you if people asked me what impressed you the most in

afghanistan, great people, loyal, they will never disappoint you, if you give them trust. and confidence and secondly, the way the coalition worked, i think we operate as a team with the different nations and based on that i think we have a better future although next year the deployment of additional forces will be a very difficult year leading to more casualties before it will get better. open for your questions. >> i understand you have been here in washington for how long now? >> i just came in yesterday. >> ok. have you in the course of your time since you left command in early november had an opportunity to discuss with the political leaders who were

involved in developing the strategy. can you tell usñi anything abou how you think that -- how you feel about the process as it evolved and what sort of advice you gave? what sort of advice did you give forward at this point? >> i spent some time to visit some of the nations. i went to norway and to the u.k. two weeks ago. and last week i spent most of my time in the netherlands. i think the announcement by president obama based on the initial assessment by general mcchrystal is spot on. from my point of view it is very well received in europe because it shows us two things. first, there is a very clear understanding of the concept, how we want to secure afghanistan and secondly, there

is clear political will to have success in afghanistan. and i think these two issues alone have really had a positive influence on the discussion of afghanistan in europe, more at a tactical level. i completely agree with the deployment of additional troops to afghanistan, not only military force but civilians. we have learned that it is not security to deliver the effect but a comprehensive approach and youñi will never have security without the ability to support government restriction. that's key. also because it shows it is a counterinsurgency, you can't do just a little bit of counterinsurgency. you do it and you protect 95% of

the population or you don't do it at all. i made the case that counterinsurgency is a little bit like being pregnant. you are or you are not. you can't do justçó a little bi of c/u(uq)insurgency. with my succession with general mcchrystal it became clear to be able to deliver the effects and to be able to have success, it is key that you deploy these additional forces to afghanistan -- to be deployed the southern afghanistan. that is key. from that point of view, i would say i'm very glad to see the developments over the last couple of weeks, any announcement by president obamai it shows you that i think overall we got the concept right but we need to have -- a strategic -- and it is not security that will deliver the

effect in the long run but the governance i see as key for success in the long run. >> the great concern expressed by a number of officials that no matter how skfl you are militarily, if you -- successful you militarily, the ability, the pakistanis -- the whole effort will be forgot, what is your sense about the whole level of corruption and what it is going to take to overcome that problem? >> i would say that the definition of corruption in afghanistan is different than corruption in the rest of the world. we see construction as focused on the person itself, to get more wealth, more money. corruption in afghanistan is

position of the familyñr or the tribe. the definition is somewhat different. fighting corruption, however is key. because corruptionçó erodes the trust and theñr confidence of t people they have in their government and it goes back to the same issue i raised a couple of times. gaverpbance at the end of the day will be the key factor which will define success in afghanistan. i would like to make three remarks regarding governance. first, it is key that we will have a new government that is what i mean with that, we need vision and policy, especially regarding development and security. we have a development strategy but it is not implemented in a coherent way. i think we need to do better than that.

we need a security strategy which is clearly defined. we need policy -- governance. secondly, we have two existing systems of governance. a formal system with president karzai and an informal system. these two systems interfere. what we need to do sls a second step is to present options. how to merge these two systems into an effective system of governance and last but not least, we should look at governance not from a western point of view but from an afghan point of view. that is key for it has been very difficult to implement the rule of law to afghanistan because