are already born. but future per-capita benefits are subject to very -- to uncertainties. medical technology and pharmacology are advancing to previously unimagined heights with no meaningful restraint on our subsidized fee-for-service medical service, demand for advanced technologies and drugs is largely without limit. medicare trustees forecast assumptions, especially beyond 10 years, are of necessity assumptions, not forecasts. short of some form of market price or administrative rationing, the political third rail obviously, ever-rising medical services will eventually strain the physical capacity of our economy. since demand for medical services by its nature it is highly elastic, medical services share of dp has no credible

immediate upside restraint. -- their share of gdp has no credible upside restraint. by any reasonable projection, we will not have the resources. it is a morally untenable position. those who will retire in the years ahead depend on governments premises to plan their future. . . appropriated dollars. it is a physical resource crisis. if the dollar share of g.d.p. devoted to medical services is rising, so is the share of medical workers in our labor force and medical hardware in our capital stock. importantly, a dollar of the nation's scarce savings employed to finance new medical technology investment is a dollar not available to fund other critical nonmedical

cutting-edge technologies that enhance our material well-being. the health of the population, of course, must take precedence over material considerations. an unhealthy population will not be productive. but there has to be a point where diversion of real resources to medical services no longer measurably enhances longevity or reduces morbidity. our scope for increensing the size of overall -- the overall economic pie to resolve our pending crisis is limited by the pending crisis is limited by the growth of our labor force and growth of productivity. short of a significant increase in immigration, the size of our labor force in 2030 is fixed in a relatively narrow range.

and if this is any guide, so is long-term productivity growth. since 1870 nonfarm productivity gains over a 15-year period has rarely strayed outside the range of 1% to 3% annually, averaging slightly more than 2%. we and the rest of the developed world are at the cutting edge of technology, accordingly we apparently cannot for a protracted period exceed 3% productivity growth, presumably because there is a limit to human intelligence, the source of all innovation. the recommendation of senators conrad and gregg for a bipartisan fiscal task force is an excellent idea and i thought the discuss that was -- was very interestingly expanded earlier

this morning, is clearly going in the right direction. i hope that you succeed. i trust any such task force will address the very thorny issue of the acie metrical consequences of too much -- aa is ysymetricam consequences would be rained in. the dire consequences of a failure to tighten sufficiently to balance our books, however, calls for policies that err significantly on the side of restraint. i understand this is politically extraordinarily difficult to do. but our nation has never before had to confront so formidable fiscal crisis as is now visible just over the horizon. thank you, mr. chairman. >> thank you very much, chairman

greenspan. very serious, very somber, very insightful. and particularly to hear from you that this really is unprecedented in our history. it's a fiscal crisis the likes of which we have not faced before and it challenges us to respond equally in an unprecedented way. david walker, welcome back. we feel like you are a member of the family at this committee. thank you for the work you have done at the peterson foundation. really around the country to inform the public and i think inform what i described earlier as a citizen's rebellion, uprising against the debt. we welcome your testimony now. >> thank you chairman lieberman, senator collins, other senators. it's truly a pleasure and honor to be here today, especially with chairman greenspan, really an honor to be here with him on this panel. i can see that now he's no

longer the sitting chairman of the federal reserve he's very clear and very compelling on his language. you can understand everything he says, which is great. i'll remember one of his best quotes which was in the critically acclaimed documentary "our u.s.a." where he said, without savings, there is no future. and he's 110% right. and rather than having savings, we have debt. i'm from alabama. i live in virginia. >> where are you moving? >> moving to connecticut. the constitution state. let me say for the record, i am a rebel with a cause. and you and others may be forming the rebellion peacefully within this institution, and i am helping to lead the effort in the real world outside of washington's beltway, and it is working. i'll come back to that. i have the honor to testify today on behalf of the center of the study of the presidency and

the congress on the strategicish niff i happen to co-chair, ambassador david epshire is head of that institution. there are three co-chairs, former governor roy roemer from cro, also former chairman and c.e.o. norm augustine of lockheed martin and myself. it is a nonpartisan commission. a democrat, añi republican, and myself for a number of years an independent. i would like to commend chairman conrad, senator gregg, and other senators here, especially senator voinovich, senator lieberman for leading the charge here with regard to trying to bring fiscal sanity to this country. we are out of control. and we are reaching a precipice that if we do not take definitive action soon, we could pass a tipping point. a loss of confidence on behalf of foreign lend that's could have serious adverse consequences to the united states, the american people, and for the world.

our challenge is not short-term deficits. our challenge is not the current debt. our challenge represents the serious structural deficits that are large, known, and growing that are worse today than they were before the recession and the bailouts and are closer to hitting our shores and that threaten to swamp our ship of state. as chairman greenspan said, for over 200 years this country had a history of not running deficits and accumulating debt unless we were at war, faced a depression, or serious recession. but that's changed in recent years. everybody wants it all. they don't want to pay for it. and so they charge the national credit card, which at present we don't have a constitutional limit, which we should. we have a limit right now on what our credit is, we just don't know what it is because the chinese, the japanese, and

opec nations haven't told us yet. it's important that we recognize that the four factors that contributed to the mortgage and lending subprime crisis exists for the federal government's own finances, there are two big differences. the numbers are much bigger, the risks are much greater. that's one. the second is, nobody's going to bail out america. we have to solve our own problem. and we need to get started soon. chairman conrad already noted the december 7 issue of "newsweek" i noted he took out the part that said cheney in 2012 on the top of it, but-dirnl' not going to comment on that. but in any event it was pretty clear and compelling. that article is an outstanding article. i think it's important that we can still change course. we can be the first republic to stand the test of time. but we have to change course.

because we will not succeed unless we do. theodore roosevelt recognized that sometimes you have to do things differently, you need dramatic and fundamental reforms, you need to engage in movement politics. i think that's where we are here today. roosevelt recognized that the necessities of time and challenges that we face sometimes require breaking out of normal party structures, normal legislative processes in order to leap forward. that's where we are today. at the party g. partyson foundation which i'm honored to head, we have been engaging in a variety of citizen education engagement efforts, and this represents the results of the latest statistically valid public opinion survey. 80% of americans believe the escalating deficits and debt should be be a top priority. number two only to the economy and jobs. way ahead of health care reform. way ahead of climate change. way ahead of tax cuts.

way ahead of proliferation of weapons of mass destruction. not that those aren't legitimate issues, but there are relevant priorities. secondly, 2/3 of americans believe that washington is not paying enough attention to this issue. and thirdly, 70% of americans agree with senators conrad and gregg, lieberman, voinovich, and others that we need a special commission that will engage the american people with the facts and the truth and the tough choices that will make the case that we need to act soon. the benefits of doing so, the risk and consequences if we don't, and that in addition to that, will result in a vote. in the congress of the united states. one bill will not solve the problem. one act of congress will not solve the problem. but we must achieve a significant reduction in the 60-plus trillion dollars in

liabilities and unfunded promises that are growing by trillions of dollars a year on auto pilot. we must do it before we pass a tipping point. and lose the confidence of our lenders, especially our foreign lenders. unfortunately, america is increasingly being mortgaged. and to a greater extent that mortgage is held by foreign lenders. that is not in our long-term economic national security, foreign policy, or even domestic tranquility interest over time. at the end of world war ii we had debt equal to g.d.p. of 122%. but it was all owed to americans. today 50% or slightly over of public debt is held by foreign lenders and growing. we are fortunate that they'll lend us that money at low interest rates, but on our present course, both with regard to fiscal policy and monetary policy, once the economy turns around, we are likely to see

higher interest rates. the question is how much higher. i have a lot higher degree of confidence in the fed to be able to make the changes that they need to make to turn around monetary policy than i do fiscal policy. because, quite frankly, fiscal policy is out of control. in the last two years alone, discretionary spending, if the bills end up passing, appropriation bills for 2010 pass, will go up 20%? in a time of no inflation? it's amazing. absolutely amazing. so we do need a special commission. one that will educate and engage the american people and result in a vote in the congress. some have argued that the commission is not the way to go. that the congress ought to handled the regular order. if the regular order was working that would be a valid assertion. some have argued this is unconstitutional. that ignores the fact in the final analysis the only votes

that count are the votes of senators and members of congress. and whether or not the president signs the bill or vetoes the bill. all the constitutional prerogatives are protected. as everybody has said, everything has to be on the table. that is of critical importance in order to achieve a positive outcome. in closing, our nation's current fiscal path is irresponsible, immoral, and unsustainable. our children and grandchildren will end up picking up the bill while at the same point in time reducing investments in their future. at a time where they face increasing competition in an interconnected global economy. we are approaching a tipping point m american history. we are at a crossroads. we must choose the right path forward. we cannot allow america's future to be worse than its past. we must be the first republic to stand the test of time. we awe it to ourselves, our

contry, and our families to do no less. in fact, we have@@@@@@ a special committee is the way to go. >> we will do rounds of questions. chairman greenspan, you said something at the outset but i want you to develop over but. the first paragraph, for more than two centuries, we have been able to hold the level below our long-term capacity to borrow, but for the next decade or two, on some reasonable set of assumptions, our borrowing cushion sinks significantly, threatening to test our capacity to raise funds to finance unprecedented deficit, so that the end of the quote. are not just talking about the statutory debt limit.

talking about our national capacity for borrowing. i want to ask you to speak a little bit more about that because obviously if we run up against that it's as consequential, i suppose even more than extending the debt limit. what -- tell us more about what you mean. >> well, we don't know where our borrowing capacity is. we have never tested it. never thought about it. never thought it was relevant. when you begin to look now at the potential escalation of debt outstanding, not only in the standard current services projections of c.b.o. or anybody else, because that's pretty much of a guess in the longer term years, but what we do know is that the range of error that that number can hide is very

large. and when you see the daily, weekly, rise in the net debt to the public, the federal debt to the public, it's in a wholly different track than any time w through long-term interest rates beginning to move higher very significant pressures on, for example, the treasury, and auctioning off its treasury notes and bills. at that point we are already beyond the point where simple action will restore balance. because we don't know where that actual borrowing capacity is, it is essential that we take actions well in advance of anything that could occur which would disable the economy because there is no question, as

walker has been pointing out, to restore the type of balance unless we do very drastic things. these are exceptionally difficult to implement in a democratic society. >> so that the question of borrowing capacity and what the limits of america's borrowing capacity is not a question, if i'm hearing you correctly, of when it's impossible for america to borrow in world markets, it's a question of when the interest we have to pay begins to rise so much that it will compromise our standard of living and so much more we value? >> if we ever get to that point we will see it first in rising long-term interest rates. because clearly the credit quality of any entity tends to be very evident on its ability

to market long-term treasury issues, or any long-term issue. and that when you see a particular entity in trouble like the city of new york, what you saw first was they couldn't sell municipal bonds. then they couldn't sell intermediate notes, and eventually at the tail end of the process which led almost to the cliff of default, they could barely sell overnight issues. we are nowhere near there at the moment. we've got clearly time. this is not months or quarters. it is years. but once the process is underway, when you have a highly inflexible budget situation, in other words when we came out of world war ii, we knew what was going to happen to the overall expenditures. we are not going to spend militarily and it came down very dramatically. we don't have that luxury anymore.

>> take a moment if you will and explain for people who are listening, watching on tv what -- if long-term interest rates for -- that the u.s. has to pay to sustain a debt begin to rise as they may -- will once we reach our borrowing capacity, in years, if we don't do anything about it, how is that felt by average families, average businesses? what happens? >> it's felt across the board, mr. chairman. first of all, very simply if you get a rise in long-term treasury rates, mortgage rates will be right with it. and mortgages are $11 trillion market at this particular stage. as rates go up, not only in the third year which is not the biggest issue we have, but as they gravitate back towards the shorter end of the market, the

debt servicing costs become a very critical issue. when your debt is low, it is a problem when rates go up, but not a big one. but when you have very low average debt service rates, as we do now, in the context of swinging over to a very large level of outstanding debt that must be serviced, every interest -- every point of additional interest rate has a very large impact on total spending, which of course means on the deficit itself. and the critical issue that economists worry about is the spiral that begins to occur as you begin to get ever rising debt and debt service and as interest rates rise as a consequence of that, the debt service becomes explosive and

that gets -- moves directly into the budget deficit which makes the deficit begin to rise uncontrollably. >> vicious cycle. to close this round of questioning for myself. as long-term interest rates rise on our debt, and mortgage rates rise that obviously has an effect on the real estate sector of our economy, both residential and commercial, i presume it also has an effect on the capacity of businesses to borrow, to sustain themselves, and that in turn would have an effect on employment, which is to say that it would lead to more unemployment. >> yes, mr. chairman. we could go over item after item in which it would affect it. it also would affect stock prices and equity prices which are not a small issue in an economy such as ours. so i would be very fearful that the ability of the business

sector to borrow and invest is reduced, but also, remember, that as the government takes an ever increasing sharexd of our scarce savings, there is less of it available to the rest of the economy. the market based economy. and since government has the prior lien, so to speak, on the nation's savings, the more it draws off, the less there is available, in the mortgage market, in housing for investment, physical investment, and our capacity to produce. so there are so many avenues in which this process which we have never actually had to observe, there's so manyñi avenues that this carries that its devastation in eroding the economy over the longer run is a frightening expectation. >> i thank you. my time's up. you see i think it's very important for us to try to go

down that road, even though it's unprecedented, to begin to think about what the effects would be on every american, every family, every business, and our government because as we confront what you obviously correctly describe as the very difficult political decisions we have to make to turn this around, it's compared to what? and those -- what we will face if we don't do anything is, as you said, devastating. compared to the difficulty of the challenges we are going to face to try to avoid that. i thank you, senator collins. >> thank you. mr. walker, i cannot help but observe the irony that we are having this debate about what to do with the unsustainable debt load of this country at a time that we are debating on the

senate floor a huge health care bill that is in essence creating a new entitlement program that has enormous consequences for our future budgets, and that the chief actuary for the center -- for medicare and medicaid services has estimated will actually drive national health care spending up, not down. and chairman greenspan mentioned in his opening remarks just how important health care spending is to this whole debate. i know that the peterson foundation commissioned the lewin group to look at the impact of the senate bill on long-term costs for the government. could you comment on what the

analysis found and also give us your own views on what we are doing on the senate floor even as we speak. >> thank you, senator collins. it is somewhat ironic. let me just note that the lewin group is owned by united health care but they are an independent operation. they are not controlled by united health care with regard to what they do. the people that are there are former c.b.o. people and they do great work. let me also note that their findings are their findings, not the peterson foundation's. but generally we have found that the peterson foundation believes that fiscally responsible health care reform should meet four tests. number one, it should pay for itself over 10 years. number two, it should not add to deficits beyond 10 years. number three, it should result in a significant reduction in the tens of trillions of dollars

in unfunded obligations we already have. medicare alone is underfunded $38xlár&lion and growing. and number four, it should result in total health care cost as a percentage of g.d.p. that is less after the reform than before the reform. in other words, bend the total health care costs down not up. none of the bills meet that. none come close on number three or four. some meet it on number one and number two. but the question is will the assumptions they rely upon with cranking down provider reimbursements and other things actually be realized because the track record in the past is not very good in that regard. i think we need comprehensive health care reform. but, frankly, the bill that's being talked about now is a coverage bill. and the only reason that people are talking about cost is to pay for coverage. the one thing that could bankrupt america is health care cost.

we are not doing enough to really, truly be able reduce health care cost as well as the rate of increase. that's where we need to keep our eye on the ball. so far people aren't doing that. >> thank you. i couldn't agree more with what you just said. chairman greenspan, you headed a very successful commission in 1983 to deal with a looming crisis in the social security system. reflecting back on that experience, could you give us any advice as we look at the commission model since you chaired a successful model for constraining the costs of a major entitlement program? >> certain things happened. certain things occurred during that commission which really

quite different from previous commissions which ended up with a very thick report gathering dust on everybody's shelf. its recommendations were actually implemented virtually in full, as is. and the reason was that we did several things. first of all, it was a commission it was a recommendation, and the commission worked for quite a long time, but as part of the process, what we did is kept the political system coli informed as to what we were doing -- wholly informed as to what we're doing, so i would report to jim

baker, and all involve -- bob ball reported to speaker o'neill, and he and i worked very closely together, so what happened was as the various different proposals went forward, the senior leadership of congress and the administration were wholly informed so they could absorb it, react to it, and feed it back, so we did not end up with a report coming out of the end, which was take-it-or-leave-it report, with 20 different issues nobody could think about in a coherent manner, and what you avoided in that result was particular congressmen and senators dain positions with

respect -- taking positions without having time to think it through, so the process of keeping everyone engaged, and finally, when the agreement was made and we all agreed it was not non-amendable because it was a very tightly argued commission report, bob ball and i went up to the hill, and i would answer republican questions, and he would answer democratic questions, and we kept a unified position, saying, take it or leave it. we will try to explain it as best we can, but if you try to amend it, it will not work, and it turned out to be a reasonably sensible set of recommendations, which is overwhelmingly accepted. now, the existing fiscal task

force recommendations all have some of those qualities right off the bat. in fact, having senators and congressmen as well as members of the administration on that taving force -- task force solves the political problem and continuous updating which is essential. i don't want to comment because i don't really know as much as i need to know to talk about the existing structure of what can happen in this context. there are many commonalities and many differences, though. >> thank you. >> thanks, senator collins. senator voinovich, if you would indulge senator burris, he's got to preside. he's asked for the opportunity to ask one question before he goes. ok. good. >> thank you, mr. chairman. i will be very short.

i'm asking for a bernl opinion these two distinguished american citizens. i'm just concerned about the commission that would be created and whether or not we should do something about campaign finance reform in reference to the political process? i don't see us being able to get any control of the financing of programs in the federal government unless individuals who have to run for these offices are not beholding to special interests. special groups which drives up the cost of government because they want their program to be in place. i just wondered if you have given any thought, the commission, whether or not campaign finance reform should be a part of this. >> i'll start. first, i think the fiscal future commission with everything on the table which would mean statutory budget controls, social security, medicare,

medicaid, other spending, tax reform that's broad enough. i think campaign finance would be probably beyond the scope of this. i will say this. we need campaign finance reform. there's no question about that. >> you are not going to be able to do anything about the deficit and debt because politicians have to run for office. they have to raise money. the only way to raise money is make commitment to special interests and special interests drive this whole country. >> quite comment, senator. i have a book coming out in january called "come back america" talks about policy, operational and political reforms that this country needs, including campaign finance. >> mr. greenspan. >> we have a sitting house of representatives and sitting senate. irrespective of how the -- they came to office, there are some very good people in both bodies and very thoughtful people on a lot of the committees. so i agree with david walker

that clearly campaign finance reform is a critical issue. it has to be resolved. but i don't think it needs to be resolved prior to coming to grips with this issue. they are separate as far as i can see. >> thanks. senator carper. >> i thank you very much for yielding. i hadn't planned to go into his point, but i want to start off say a word or two on health care reform and the implications it has for long-term deficit reduction. i serve now on the finance committee and i have had an opportunity to work this issue on the -- on the issue. i have said countless times and so has senator conrad whoñi was here earlier, if we don't rein in the health care cost, we may extend coverage to people who don't have it but we will not be

able to sustain that coverage for long. a lot of the press coverage on what we have produced know cusses on like issues like death panels and abortions and we are going to cover the illegal aliens and stuff like that. there are a number of reforms, i just want to take a minute to mention some of what i think the most important things are part of the bill. we are trying to replicate what works. one of the things that works in delivering health care, better results, lets money -- less money, is health care provided by cleveland clinic, mayo clinic, they get away from fee-for-service, we need to move away. they focus on prevention and well anye. primary care, all the people have electronic health records. they coordinate care. there are a whole lot of smart things they are doing. we are trying to take that health care delivery system and infuse it into medicare and medicaid and other forms of health care delivery in our country. the other thing we are trying to do is to create a large

purchasing pool. we participate in a large purchasing pool, federal employee health been fit plan. we don't get cheap health insurance but it's reasonably priced because a whole lot of health insurance companies want to compete for our business. it helps drive down the cost of the health care that we buy. our administrative costs are 3% of premium dollars, much lower than what most other people pay for individual coverage or small business coverage. what we are trying to do is to allow for the creation of large purchasing pools in every state. if states have too small a population to have a large purchasing pool, they create regional purchasing pools across state lines and we create regional purchasing pools. insurance can be sold across state lines. those things very rarely get discussed in the media. what we are trying to do is replicate what works. one of the health economists who's followed this closely. if you look at the provision that is are in the bill, for

restraining the growth of health care costs, you like throwing everything up against the wall and see what sticks. my guess is some of what we are doing will stick and some won't. that's not my question. i just wanted to mention that. here's what i want to say. same question i asked senator conrad. the role of who is going to serve on this commission, sir, senator lieberman and senator collins, remember when we had lee hamilton here who was good enough to co-chair the 9/11 commission? i asked him how come you were able to get so much done -- virtually everything they recommended we did. and for the most part i think everybody on that commission, nobody was in the congress. they worked very hard. why were you so successful in presenting to us all these recommendations which we ultimately subscribed to and adopted? he said it was -- we had plenty of time. we got plenty of time to work with one another. we got to know each other. and the vice chair was a former governor of new jersey. he said tom cane and i developed

a sense of trust and confidence in one another. we infused that spirit of trust, infused the entire commission. and it led us to a very successful effort. and enabled us to speak with one voice. not unlike what happened in the commission that chairman greenspan led. question, in terms of looking for other people to serve on the commission beyond members of the house and senate, one or two people named by the administration, what -- give us a word or two on the profile? the idea of people like bob dole or tom daschle, folks like that. people who served, maybe who chaired the budget committee in the past, who have a whole lot of knowledge here and trust and confidence and understand the politics as well as the policy. your thoughts, please. i again want to thank joining voinovich for yielding. thank you. >> i think it's less important toñi who the individual members are than the process of the deliberations and how it ultimately is constructed into a

report and eventually into legislation. there are certain critical things which my experience indicate suggests have to be done, namely you cannot drop a whole report after a secretive deliberative discussions by some private group. it will go nowhere. and the reason basically is that when you have a commission, especially in controversial areas, the ideas and notions of change have to be absorbed gradually by the congress. if you force them to react immediately, they will take positions which they may be sorry about but they will not be able to reverse having taken a commitment and that ends the whole situation. it ends the whole deliberative process. so i would say it's less important who is on the committee than how it functions. >> thank you. mr. walker.

>> senator, my view without mentioning names, they need to be knowledgeable, respected, credible, and committed to making it work, to making best efforts to come up with recommendations that actually will be acted on and approved. and last, they have to be willing to dedicate the time. one of the concerns that i have is what you said before, i think for this commission to be successful it's got to do two things. it's got to educate and engage the american people, representative groups of the american people beyond the beltway, that's going to take time. and it's got to do things with elected officials and others and key stakeholders as well. you have to think about can they dedicate the time? last thing is, keep in mind, we need nonpartisan solutions. a plurality of americans consider themselves to be political independents today. the simple truth is, and i have been to 46 states in the last 2

demaff 1/2 years. the simple fact of the matter is if you got a hard d or r on your sleeve, you are going to be discounted dramatically by the american people. no matter who you are. how good you are. and what your intentions are. that is the reality. >> that's very nice of you to say. >> i was going to ask the chairman who was going to answer the independent questions. >> you did it. thank you. >> again,çó thank you for those responses. senator voinovich, thank you for your kindness. >> senator voinovich.i] >> mr. greenspan, you talked about 1983 and the unusual interpersonal relationships and -- between the president an the speaker of the house and the fact that you kept people informed as you moved along.

and it worked out. the question i have is, compare that period of time, you have done it in your testimony, when in terms of the urgency of the situation. i'd like the same comment from mr. walker. in other words, there are some people who say that we don't have an urgency. we can kick the can down the road. we don't really have a crisis that needs to be met. and i'd like the two of you to comment on that. the second question is, what do you think it will take to convince the american people and probably just as important, international community that we are getting serious about dealing with this problem? >> first let me say that the first act of the commission in

1983 implemented was to recognize thatñi medicare, whic was part of our mandate, was much too complex to handle. besides we had a quarter century before the baby boomers retired and we would run into trouble. all of the facts that confront us now -- remember, this crisis is to a very large extent a demographic crisis. where we are doubling the number of retirees, we are essentially altering the structure of our labor force. remember, it's not only ñiñiit is the fact that we're lg a large cohort of our population that is going from work to retirement, and we knew that 25

years ago. we could see it coming, and we knew the implications, but always it looked too daunting to endeavor to come to grips with it, so the solution we had with respect to social security confronted a defined benefit program, which was reasonably resolvable once claude peppper said it was inconceivable we would use general revenues to solve the problem that seemed to appear fairly quickly in the trust funds. once we had the arithmetic of the social security program, i remember tet,ñi who-considerably -- -- pat, who-considerably,

said we can all have our opinion of policies, -- whom i miss considerably, so we can all have our opinion of policies, but we either need to raise payroll taxes or lower benefits. there is no alternative. if we could get this problem as succinctly defined as that, i believe we are good way down the road. on the second issue, how will the foreigners know when we are serious? when the american people know we are serious. it is the same evidence, and they are watching us very closely, and indeed, if you learn from the fact of the reason our debt is becoming increasingly held abroad was for reasons other than the quality of our debt. our debt, remember the reason it is

occurring is in the case of china, for example, they are trying to maintain a competitive position by keeping their exchange rate down. and the only way they can do it is to buy u.s. dollars. itñi doesn't help all that muchf you are exporting to the united states to borrow euros or other types of currencies. they are building up dollar balances not because they want to invest in the united states, but because it's the only means which they can keep their exchange rate at a level which maintains in their context competitive to keep their labor force employed. at some point that has to stop and it will. it will stop because the markets won't continue to function in a manner which will enable it to do that. >> senator voinovich, first i think the greenspan commission deserves a tremendous amount of credit, especially chairman greenspan and bob ball for the leadership that resulted in the reforms in 1983.

but i think we are in a very different situation today. in 1983 the checks weren't going to go out on time. within weeks. tens of millions of americans weren't going to get theirñi social security check. there was no option other than to succeed. that would obviously have been a politically unacceptable outcome. that's not the situation today. but let's explain what is the situation today. first the trust funds are an accounting device. they don't mean the same thing as webster's dictionary. you can't trust them, they are not funded. there is no phi doucheary responsibility. if they were a trust fund in the private sector, and i used to be assistant secretary of of labor for erisa, people would be in jail. there would be fiduciary breaches. the reality is where negative cash flow in the hospital insurance trust fund.

we are negative cash flow in the disability insurance trust fund. for perpetuity, all right. without reforms. we are negative cash flow in the retirement income and survivors income trust fund at least for two more years. the medicare program part a won't be able to pay bills within 10 years. the social security trust fund doesn't go dry for a while, but again, what are we doing? we have to end up borrowing from the public, mainly from foreign lenders, in order to deal with the negative cash flow situation. within 12 years, acourting to g.a.o., which i headed for 10 years, within 12 years, without an increase in interest rates and chairman greenspan has talked about the risk there, without an increase in interest rates, the single largest line item in the federal budget will be interest on the federal debt. not defense. not medicare. not medicaid.

not social security. and what do we get for that? as we say in the south,ñi shino, nothing. that's without an increase in interest rates. these numbers are getting worse every second of every minute of every day. what does it take to -- for people to understand that, you know, we are aproaching -- remember harry and louise for health care? we face thelma and luis. we are -- louise. we are headed for a fiscal flip and we need to change course before we go over. it's as simple as that. >> thank you. thanks, senator voinovich. senator mccain. >> thank you, david. you have given me great lines. i will not give you any credit, either. i'm entertained, too, when i see these advocacies for by god, we

are going to stop this spending. we are going to really get knuckle down here. two days ago we pass a bill, six appropriations bills, three of them never considered on the floor of the senate so they could be amended. a conference report with a 14% increase in spending. and they all voted for it. majority of them voted for it. loaded down with pork barrel projects. $2.9 million to study performance of surgery in outer space. trekkies are happy all over america. by god we are going to have this commission. yet we can vote at these times for appropriations bills that have a 14% increase in spending. meanwhile theñr c.p.i. is minus 1.3%. it seems does anybody have any shame i wonder? now we are going to have a bill on the floor of the senate, that i'm going to go and debate today, has $2.5 billion to buy

c-17's which everybody knows we neither need nor want. $2.5 billion. let me just ask you a question real quick. i know i haven't got much time. how much difference does this earmarking -- in that last bill it was $4.3 billion worth of earmarks and pork barrel projects. i will not comment on the money that was being spent on irritable bowel syndrome. you were here. you saw it. you saw it grow out of control. everybody says, well, it's sort of the standard way we do business. it's not the standard way we do business. we didn't used to have these earmarks and pork barrel spending. what's your view having watched this sausage making up close? >> senator, several things. one, as you know in a timical year over time earmarks are about 1% to 2% of spending. >> therefore they don't matter. >> no, no. they do. that's a lot of money. 1% to 2% of federal spend something a lot of money. they do matter. i personally think that we need

reforms there. no question about it. a lot of these earmarks don't have a federal purpose and a number of the earmarks avoid competitive bidding. so there's a lot of reasons why they are a problem. i think there is more than a little bit of -- i could use a lot of words. i'll say irony. there's more than a little bit of irony that people are now wanting to try to get tough when last year discretionary spending went up 8.3%. the congress' budget went up 10%. this year you have already talked about discretionary spending has gone up over 10%. we have zero inflation. over that period of time. and now we are going to get tough. it's one thing to spend money on a stimulus or financial rescue plans or whatever if they are properly designed. this is the base of government. this is government that will be here for years and years. and i think we not only need a fiscal future commission, which is what this hearing's about, i think we need a rebaselining

commission. i think we need a separate commission, not comprised of elected officials, of people from formerly private sector, government, who have transformational success records to relook at the base of government on a smending and tax side and -- spending and tax side and basically start repositioning things. >> three quick questions. one, do you see any in this health care bill that really means significant cost savings? >> i think there are several things in the health care bill that are laudable. one, pilots. there are a number of pilots. if they prove to be successful, then the secretary of h.h.s. -- >> you have seen some. >> secondly, let me close up. >> let me get the second question. for you and alan. do you believe that the returned or unused tarp funds and unobligated stimulus funds should be spent for further economic stimulus or should be returned to the treasury? >> there are often appropriated

funds which don't get spent and they are automatically returned to the treasury. >> as you know there is a proposal to use the unused tarp funds. do you support that? >> no, i do not. >> i agree with the chairman. >> my final question. and i -- you probably don't have an answer to it. maybe you can help us out a little bit. in 1970 foreign investors held 5% of our debt. now it's over 50%. we have deficits, according to mr. walker now and greenspan of $38 trillion in medicare. i had forgotten the number in social security. what is it? >> a little over $7 trillion. >> $7 trillion in social security. a $12 trillion deficit. and of course $1.5 trillion this year. i guess my question is, given the path we are on, in other

words let's say we don't really change anything. at what point, alan, do we have a severe fiscal crisis which requires us to do what we did in the early 1980's only in space, debase the currency, inflation,ets, etc.? i know that's a difficult question, but i think americans really deserve to know when we are going to hit a wall here or at what point this is -- we all know it's unsustainable, but at what point could we face a severe fiscal meltdown in this country? >> in one sense it almost goes back to the very first question you raised to david, namely this issue of spending seeming going out of control. in my experience, spending is contagious. i remember years ago there was

somebody, a congressman, h.r. gross from iowa who used to get up and say, where's the money coming from? now, we also at that time had the seems sort of quaint view that government finances should be like household finances. my recollection of the period was such that i remember president eisenhower apologizing to the american people for what would now be considered to be a minuscule deficit, indeed it wouldn't pay for the earmarks. the reason he was apologizing is that the culture was that you did restrain. there is no way that i can conceive of that when you have huge amounts of moneys being appropriated for anything, that people don't want to get into

the act with a little bit here and little bit there because rounding you never see it. and i think what has to happen here is that we have got to get back to a general view that this is not a bottomless pit. we have physical resources which cannot do all of the things that everyone wants to do. and unless we can get some means to go back to a view where it is not the most important thing when you are in congress to find ways to spend money to help your constituents, i think that's critically important, but remember, we have had over 200 years of congresses in which that didn't happen. i think this has become an extraordinary country by far the

most productive in the world, a remarkable democratcy. the system works. there's nothing in it which says we have to go -- we have to be profligate in spending and creating benefits for constituents. they are not really asking for it. >> how much time do we have? >> i would say the time frame collapses very quickly if we do nothing. it's not going to be the next two years. it's not -- there's no don is sometime in the future. the critical triggering point will be the bottom line, and we do not yet see that, but when we begin to see that, that is the canary in the coal mine. >> can i just say, what would we see in the bond market that would sound the alarm?

>> it would show up as i indicated earlier, but it would show up in the longer end of the market, meaning 30-year treasurys and 10-ñiyear notes. yields would start to move up relative to one-year treasury bills. what we call the yield curve would tilt up very significantly. thatçó is the first sign something is the merging, similar to what happened in the city of new york -- the first sign something is emerging, similar to what have been in the city of new york. >> this is very important. you cannot inflate your way out of this problem. you can inflate your way out of the burden associated with the 12 trillion dollars in current debt, but the problem is thknot that. it is the unfunded medicare and

social security, that grow faster than inflation, and in the case of health care, faster than the economy when the economy grows. you have to make tough choices on health-care costs, social security reforms, spending restraints, tax reforms, but tough choices are inevitable. >> did you see any of those choices made well you are here? >> no, that is why we need a special process. they will not be made in the regular order because the regular order is dysfunctional. >> go ahead. >> unless you step through the day by day process of governing with our fiscal propensities and at this stage is that there is no limit to spending. there is no limit, because borrowing money to pay for something seems like a free

lunch, and in a certain sense, if he -- it tends to be. . desirable things. in other words, you don't frivolous bills. what you pass is something in which there's a need to do something. the trouble is if you add up all the needs, all of which are exceptional needs, you got a physical requirement that is much larger than our capacity to produce it. so there's got to be some form in which the total demand is

available supply. one of the points i made in my prepared remarks is that this notion that we can somehow just expand the economy at will or do increased productivity, the history of productivity in this countryçó -- which means you can't go faster than we think. and indeed, what we have seen over since the data haveçóñr be realistically useable in 1870 is that there is a very narrow range in which it turns into productivity and growth. we cannot do it any faster which means we have no choice but to find a way to bring down the level of demand of otherwise exceptionally desirable needs of theçó societ we justñr do not have the resources to do that. and if we try to do it, the system breaks down.

>> so in the words of the chairman, alwaysxd darkest befo it's totally black. i thank you, mr. chairman. >> even i laughed at that. even though i heard you deliver that line manyñrñi times. it's very -- do you have time for a few more questions? >> sure. >> because i want -- if senator mccain can stay, you -- this is not to the point but you make a fascinating point in here in your opening statement, and you just touched on a part of it where you essentially -- that which is to say increase the size of the overall economic pie. you just mentioned productivity has certainly historic limits. you mentioned something else fascinating. short of a significant increase in immigration, the size of our labor force in 2030 is fixed in a relatively narrow range. so am i hearing you correctly? forget the politics.

from an economic point of view, if we had a significant increase in america in obviously legal immigration, that would be one way to grow the economic pie. >> it would be but i wouldn't have immigration policy focused on the economic need to finance a great number of things. i mean, i'm very strongly supportive of the expansion. >> right. >> and i've also argued before some committee -- in fact, i think senator schumer's subcommittee that there is a very unusual pattern of our immigration in which we have a very large number of immigrants who are high school or less educated, a significant part of whom are illegal.

and then we have remarkably large number relative to domestic -- to our domestic educational system of ph.d.'s who have come to this country and contributed immensely to our economic success. i argue that both groups were actually very importantly affecting the economy in a positive way. if we tried to send all our illegals home, which one would think that's what we ought to do, obviously with respect to upholding our laws, speaking to some economists i tell you we will have a real serious problem. 12 million of them. >> yeah. it's very significant. i'm not suggesting that we increase legal imas a way to deal with the debt but it has the positive economic

implications. >> oh, it does, mr. chairman. >> let me ask you both a question because we talked about the horbles that would occur if -- horribles that would occur if we don't do anything, if we don't, for instance, set up a process which we talked about to begin to deal in an orderly way to discipline ourselves with our national debt. let me ask you both to just speculate a little bit on the other side of this. let's assume that we do create a commission. the commission does make bipartisan recommendations to congress for the methodcal reduction of our national -- methodical reduction of our national debt. what are some of the positive responses, both within the american economy and the global economy if we are able to achieve that result?

chairman? >> well, i think we saw that when we were running surpluses a decade ago. real long-term interest rates come down. the effectiveness of capital investment is enhanced. you have all of the reverse effects of rising real interest rates. and the -- the great irony is one of the things that created the huge difficulty for us was presizely that surplus. those surpluses bass -- precisely that surplus. those surpluses because they undermined pay-go because it was a quite effective program. so i want to say having budgets in balance creates a stability for the future which enables people to invest over the

longer run. it's not an accident, for example, at the turn of the 20th century we íuse sellingñi bonds at under 2% for 30, 40, 50-year maturities. and that was a consequence of having a stable fiscal system, but it enabled our infrastructure to be filled with longer term assets. and the longer the average -- the longer the average age of the assets in the society usually the more productive that society is. and so whether or not we are talking about balanced budgets or whatever, fiscal stability and responsibility has veryñi positive outcomes for a democratic society. >> and, mr. walker, i assume what chairman greenspan has stribed also then feeds through the economy -- described also then feeds through the economy in very real and positive ways

to individuals, to businesses, to families. i mean, it's likely to within limits stimulate more economic growth, less unemployment, etc.? >> correct. simply stated, if we do the right thinking our future can be better than our past. if we don't do the right thing, our best years may be behind us. you know, what's going on right now is that we're mortgaging the future of our children and grandchildren at record rates. at the same point in time because most of the budgets are on autopilot, on mandatory spending, we're reducing mandatory investments in the future, basic research, critical infrastructure, other things at a time where they're going to face increasing competition in the world. that's not right. last thing, on immigration, it's not just quantity, it's quality. we need to change our immigration policy to focus more on skilled and knowledge. we can't compete on wages. we don't want to compete on

wages because our standard of living will go down.çó we have to compete on skill, innovation, quality, value added, and that means we got to be more intelligent about our immigration policy and we need to rethink what the priorities ought to be as well as the numbers. >> well said. you know, somebody around here suggested, and we haven't actually acted on it, that as you know, i forget the percentage but somewhat close to half of ph.d.'s, particularly in science, technology, mathematics in u.s. universities are foreign-born, foreign nationals. most of whom go home. somebody around here said we ought to act on it. we ought to put a green card on their diploma. astuming they pass all the other tests, security, because it's in our interest to keep them here because they'll contribute remarkably to our economic growth. i thank you. senator collins.

>> thank you, mr. chairman. just aç'itásq final questions. chairman greenspan, one measure that is looked at often is the percentage of gross domestic product that our public debt is. and it's obviously going up. it is projected to exceed the level that it was at the height of world war ii. but many of us wonder, what is the appropriate level? what do economists believe is a level of debt measured by a percentage of g.d.p. that is acceptable versus worrysome -- worrisome? >> well, senator, i thought we did reasonably well when the percentage of debt was 20% to 30% of fwpped.

i prefer lower than that, but we can tolerate that. the major problem is notñi so much the level of debtçó relati to g.d.p. but what is a sustainable deficit? and that's a more complex calculation. to the extent the federal treasuries are drawing both the savings on the society which are scarce. it leaves more savings for the private sector to invest in far more productive investments than generally is employed using the savings of the society through government functions. >> thank you. mr. walker, do you have anything to add on that measure? >> the comment i would say is there's two debt-to-g.d.p. ratios. one is what economists use

which is the publicñr debt to g.d.p. the other is the private debt to g.d.p. we have to keep in mind that the bonds which are in the quote-unquote trust funds are backed by the united states government. they are guaranteed to principal and interest. they won't default, in my view. if you look on that basis, total debt to g.d.p. is 85%. by the end of next year will be 9 % and headed up. you know, we are the only ones that i know that have these fictional trust funds. we didn't have moneys sitting in these trust funds back at the end of world war ii at 122%. we were largely pay as you go. i think people ignore trillions of dollars worth of debtñi whic is real. i think people ignore trillions of dollars worth of debt which is real. it mite not be a current demand on the economy. a current crowding out effect. but we owe it. and i think therefore we need look both debt held by the

public and total debt. and -- >> >> finally, senator conrad mentioned the importance of everything being on the table for the fiscal future commission. and i agree with that approach as opposed to the more narrow approach recommended by some of our colleagues. on the other hand, c.b.o. has clearly warned us that to sustain the current projected spending levels would require a level of taxes never before seen in our country. i'm interested in hearing both of your views on whether there is a limit to the level of taxation that can be imposed on our economy before it starts having very detrimental consequences. i'll start with you, mr.

chairman. in the sense that as tax rates go up, the tax base begins to shrink. and clearly at 100% taxation you are not going to have any tax base to speak of. so that clearly you cannot range revenues indefinitely through raising rates. and it's not easy to calculate where that is. indeed, when you get to the point where the actual revenues very small as rates go up you've probably already gone too far. but it's very clear from the outlook here that we have no choice but to work from both the spending side and both the tax side. as much as i dislike the notion , i cannot visualize in any

concrete way how we can bring down the level of spending to the capacity of our economy to function comfortably with it. and if we can't do that then clearly we have to go to the tax side. but, again, we have to be very careful there as well becauseñi it's a different type of constraint. the constraint on the spending side is basically political. the constraint on the tax side is mainly not holy economic. >> thank you. mr. walker. >> well, a few numbers. for the last 40 years the average federalñr taxation has been about 18.3% g.d.p. the highest it's been in history in recent times, at least, is about 20.6% of g.d.p. if we don't do anything, it's

going to go up to 40%-plus of g.d.p. by 2040 if we all of añi sudden continue to doñr what we're doing now and then try to balance the budget in 2040. if we don't extend the bush tax cuts -- in other words, if they all expire, taxes will be 24% of g.d.p. within the next 10 years or so and moving up. my view is you can solve the problem for less than 24% of g.d.p. that everything has to be on the table. that the problem is primarily a spending problem but that you are going to have to have more revenues because there's a new four-letter word that people have to deal with. it's called math. the math doesn't come close to working. you can't grow your way out. you can't tax your way out. you can't just cut your way out. you can't inflate your way out. you have to do a number of

things. we want to keep taxes as low as we can. the sooner we act the lower it can be. so the miracle of compounding will work for us. as albert einstein said, the most powerful force on earth is not nuclear energy, it's the power of compounding. when you are inñi debtor it wil work against you. it also means when you act sooner rather than later the less draconian changes has to be made, the better ability to plan. so let's act sooner rather than later. taxes are going up on a lot more than those making $250,000 or more. why? mass. >> thank you. mr. chairman, i want to thank you for being at this hearing today and express my appreciation to our very distinguished witnesses. i have a feeling if we do the model of the commission that were looking at two people who

could contribute enormously. so thank you very much and i thank our witnesses. >> i agree with you, senator collins. this membership on the commission would be an appropriate punishment for your good behavior. over the years. and for your excellent testimony today. i think we are really on the verge of beginning to try to do something about this. it's a long way from doing something.ñr but i think we have a reasonable opportunity here, reasonable chance to begin the process that we're talking about that both of you have supported this morning. and then the hard work begins, of course. and your voices this morning and for a long time really bring us closer to beginning to deal with the problem and then ultimately dealing with it. so i can't thank you enough for the time that you've fwiven us this morning and for the content -- given us this morning and for the content you've given to us. we appreciate it very, very much. we'll keep the record of the

hearing open for 10 days for any additional statement or questions. the hearing is adjourned. >> thank you very much. mrs. capito: -- [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] ó  >> world leaders speak at the u.n. climate change conference in denmark. then our interview with senator jeff mbengaman about health

care. later the senate banking committee votes on ben bernanke's second anymore nation. >> the commission on wartime contracting tomorrow will look into the training and oversight of afghanistan's army and national police. witness will include representatives of the departments of defense and state as well as private contractors. that's life on c-span at 10:00 a.m. eastern. book tv, this weekend, timothy carney suggestions that president obama is really a champion of big business and wall street. his book is "o bama nomics." and then greg mortensen. he's interviewed by mary bono

mac. get the entire list as well as lists for the best books in the country. >> c-span's three original documentary on the iconic homes of the three branches of the american government. this is only $24.95. for this and other gift-giving ideas go to c-span.org/store. >> in this 45 minute segment we'll here from iranian president ahmadinejad and french president n nicholas czar cozy.

>> here in copenhagen more than 100 heads of state and government have gathered. more than 100 ministers of the environment, thousands representatives of nongovernmental organizations, many young people who together with us very much wishing, fervently wishing for a solution, wondering whether we will be able to come up with a solution of the future issue preserving an environment and finding an answer to the changes affected by climate change will. we will able to do that, not some time in the future. but in the next 2440urs. that exact sli the period of time that we have at our disposal until the owned this conference.

i'm aware that all over the world there's a lot of good will. many are somewhat disappointed and over each other's position. this is what we absolutely have to do during this time that remains during this conference to consistently and stead fastly work to bring about the solution. because when we go home and explain to our people that we haven't been able to do something, this will be good for those who don't want to do anything about property, who don't want to change their way of life. but it will be a terrible signal for all those who are expecting something from us for our world in the 21st century and who do want to give a good future for our planet. there's a broad consensus that we ought to follow our scientistsed a vees. global warming should not

surpass two degrees sells you. this -- celsius. emissions have to go back to the level of 1990. and this is what each and everyone agrees on. in my capacity as chancellor of the federal republic of germany as a representative of what traditionally is industrialized country, i say to you that of course, our contribution as industrialized colorado country has to be brought first and foremost of the table. and the european union has defined its contribution. we are willing to at least bring about -- reduce 30% of the emissions and we are ready for a midterm target until 2020 to reduce 20% related to 1990. and if other countries actually follow suit and make comparable efforts we will go up to 30%.

this is the offer that we put op the table. it is an offer to which many other industrialized country have subscribed to. i do hope many of you here in this room will also be willing to put a little bit more on the table so that we get to where science tells us we need to be, namely, be on the path towards at least 25% in 2020, half of the 50%. and that we would already achieve that in july of 2020. we will be able to do that if we work together. but we also know that industrialized countries in and of themselves cannot should they're responsibility alone. but they have to live up to the responsibility. the second part of their responsibility means for me those countries that suffer most of the climate change,

that's the poorest country. the african country, bangladesh to give you just one example and many, many others we know of. those who have not been able to ben it from industrialized civilization and those who have not been able to lift their standard of living, they quite rightly expect us to help them in technology transfers and they expect us to give them financial support. and this is why we haveer very quickly have to start with $10 billion in the next few years, 2010, and eleven $100 billion in 2020. i noted that the united states

too have made a very important step forward to such a long time commitment. so that the poorest country won't rely on this as well. and our rediction onably -- obligations that we make them binding. then i think we will be able -- that particularly the emerging countries, step by step, shoulder additional responsibilities and will also show themselves willing to bring this -- this commitment into a binding legal framework because we need to be able to compare what we do. obviously, we have a common responsibility, a common responsibility that's differentiated to countries such as china, such as india and other emerges countries. they too are signaling to us that they are willing to give

their contribution. it's very important that all of this leads to a common legal framework and that we enter into binding commitments. and this is why ladies and gentlemen, financing reduction and also the question of commit -- commitments and also of the emerging countries in a different form, but much more energy enhancing efficiency, that all of this leads to a package being brought together with where we can face all the other countries. we will not be able to work out the legal details. but we will put down a framework for a new legal framework for a new agreement to be heard -- to be agreed on later. and we have that necessary strength. there a little bit contribute

as little bit more than we can do this. germany and the european union can do that -- go that step farther. science tells us 25% related to 1990 owned by the industrialized countries is being seen and acknowledged by all of us. and we all of us have to go together because there's no doubt that this zpwreement a global agreement because climate change can only be tackled globally. we need help each other. but we also need to stand ready to change our way of living, our lifestyle. this is why technology is so important. this is why renewable energies are so important. this is why we need common a come -- -- common understands. it will be become the poverty of the other after a given period of tile. so we need to stand together.

we need to act together. and my urgent employee to you, germany and the european union are willing and ready to open their arms, to be open-minded in this negotiated process and to bring this negotiated process forward. we know in the past we contributed a lot to bringing us where we are in climate change. we are in many wies the main cause of it. but we d -- but we know we are the main cause of it. so this is a task for all of us. we need to show, the world works together. as we did in the economic crisis and in the financial crisis. so please, let us all in this period work together over the next 24 hours so that tomorrow at this point in time we will be able to meet again, in this hall, and show that we have understood -- we've understood the message. life cannot go on as it was. the world needs to change. so in this spirit, let us all work together, fruitfully and

-- thank you very much. >> president of the islamic republic of iran. >> your excellence, mr. ahmadinejad. >> all praise by to allah, the lord of the universe and peace be upon our master mohammed and his pure household. [speaking foreign language] >> to his rightfulness, ladies

and gentlemen, -- i don't have the floor. >> i thank the almighty god for granting me the opportunity to attend this important meeting. i also have the pleasure to express my sincere thanks to the government and people of denmark for this responsibility and for making excellent arrangements to host this event. the tremendous efforts of the secretary towards the success of the meeting deserves our yut most appreciation. the climate in the earth with all the presources belong to each nation to the almighty god and theer qui little bit bri yum is the ending the dynamics of life. it may cause negative implications in the entire community. the world has seriously jeopardize this blessing.

it will lead to dire consequences in our planet. allow me to draw your attention to the following facts. concentration of green house gases has increased 35% in the past decade resulting in two degrees celsius rise in temperatures. climatic decisions have led to changes in most parts of the world. destructive typhoon, food crieses continue to threaten various regions. change in echo system that seriously endanger -- eco system that seriously endanger animals and their life. there has been a sharp increase in the number of people suffering from skin and respiratory diseases. if green house gases increase

with this current pace, very soon, its concentration will exceed as much two times the concentration in the three industrial era. it means that instead of having a 30% reduction, there will be an increase of 50% in emissions. posing serious challenges in our life. excellencies by listening to these facts, you may come up with many questions and many facts. but the main question is, what is the reason? the answer is the increase in use of fossil fuels and massive interventions. however, there is a main and

more serious question. what is the factor responsible for the growing demand for fossil fuel and intervention in the functioning of the nation? i want to analyze the answer to this question at two levels. the first level which is based on the general outlook. is the phenomenon of climate change merely regarded as an environmental problem or an issue having cultural behavioral and economic dimensions? dear colleagues, social and cultural developments at least in the past two centuries indicate materialistic thoughts predominate people's mind, behavior and relationship in a large part of the world. capitalism can only survive only through constant increase

in the consumption of food and wider spread intervention in the work of the nation. a relentless race continues to provoke consumption to increase the influence of the large enterprises. development plans are based on consumerism and in some parts of the world con assumerism has become a social value. on ending campaigns to increase production for more consumption and encouraging consumption for more production have emerged as an endless cycle of devastation affecting the lives of large number of people in the world. you have seen the serious problems they have caused in the mess of the global economic

crisis by printing $30,000 billion of worthless dollar of unreal wealth. based on material outlook, maximum pleasures and individualistic interest have turned into a strategic and unchangeable goal. increase consumption and continue efforts to mo nopplies the world and indigenous markets preventing self-reliance and the groving tendency to tighten controls on the production of new technologies of the product and manifestations of such an outlook. a real thought that has an ensarbleeable hunger and seeks more profit -- insatiabl, hunger leading to mounting demands for all in the world.

they are the product of an outlook on the premises of capitalist and liberal economy that needs to show low priced fuel -- use low priced fuel and destroy the nation. the political level, the am by shon to gain access -- ambition to gain ack says energy resources in the world has always been the route cause of wars and major international conflicts and energy has always been regarded as a major political and security issue. for about a century oil has constituted the basic and strategic components of u.s. security foreign policy.

the same law, energy has played for the previous empires. during this period, oil regions of the world became the theaters of wars and military adventurism that led to foreign de nomination under energy resources. the united states having five% of the world's population consumes 25% of oil and energy, more than 80% of food and 14% of water resources of the world. almost 408% of the total motor vehicles of the world are moving in this country. by occupying and controlling oil wells in other countries. the country's budget is almost

equivalent of all the countries together. the so-called developed nation have 20% of the population consume more energy sources and therefore they play a large part in environmental o collusions. what will really happen if other nations follow the same policies and behavior? american leaders and their friends emphasize, continue increase of fossil fuel production. while they resort to various methods to hinder development of new technologies, intended to promote the use of renewable and clean energy. at the same time these countries refrain from accepting international

obligations and by making unbinding pleasures, frustrate the global determination to bring the unbrideled of gas emissions under control. clearly the current climatic conditions are the outcome of a system of thinking based on egoistic and -- beliefs that seek to maximize their interest by gaining their control on their wealth and resources of other nations. dear friends, it is impossible to imagine that the present situation that you will definitely lead to the -- from the face of the planet will continue. now the question is -- what is the solution on the basis of what i had mentioned earlier? the only solution is a return

humanitarian it. . god has shown to humans the path to perfection and love. god invited human beings to believe in his oneness and wanted him to dedicate to the cause of justice. our lord never wanted to see the world being tir ranized with injustice and discrimination. god has invited people to respect each other's rights and love each other. he wants them to reap equally progress and development and to stand together to share with each other the moments of sorrows and joys. god almighties us to consider our relationship with other human beings. he wants us to be modests, never seeking supremacy or

preponderance on'res. -- on others. we have been endowed with all these blessings. if human societies follow values and beliefs spread, undoubtedly we will be able to contain environmenta de gradation and then our planet will have a chance to remake ourself and provide more sustainable condition for life. we must be grateful that we have been endowed with all these blessings. we must avoid doing things that lead to the annihilation of our resources on the lands and in the sea.t( and in this way, we will be able to create a better environment for the world. to do so, we propose that.

a working group before from different countries, dedicated and knowledgeable thinkers, will conduct a study on the criteria for happiness and welfare of human communities on the basis of a divine and humanitarian world view, the teaching of the messengers of god. improved criteria can lead to a bansed concession thus distributing resources to the world. consumption overcomes on fair competition for supremacy. and the new economic system based on justice and human

dignity. and a consumption model must be presented based on human, real needs. and a model must be based on our real needs. three, industrialized over the so-called developed nations must accept their international obligation while measures must be taken to workout clear and effective mechanicisms to impose economic punishments against defying countries or defiant economic agencies. four, it is said that $250

billion was spent for military action in afghanistan. and $1,000 billion in the iraq war. isn't it possible to rebuild and develop afghanistan and its economic infrastructure only by spending $50 billion? suspect it possible to develop new technologies and appropriately use fossil fuels to reduce pollutants to the level of preindustrialize era? green house emissions cause massive loss of lives in the world each year and the number of victims are more than terroristic attacks.

can we realize this by spending only half of the military budget of the united states? don't you think that it would be better to spend part of military credits of countries to reduce pollutions and promote public welfare. five, all countries must gain access to new technologies to diverse fy their energy sources and be able to use clean and renewable energy, such as wind, solar, sea tide. geo thermal and nuclear energies. with low prices that could be accessible by all countries in order to secure.

six, in order to secure the needed budget for the fulfillment of the long-term objectives of the convention countries should commit themselves in the special fund established for this purpose. in proportion to their past solution. we proposed that a general can reduce the cost of production and the maintenance of nuclear arsenals which can be used for poverty alleviation and other technologies we also propose that the year 2011 be designated as the year of change in the consumption models and reduction of energies produced. excellencies, ladies and gentlemen, article 50 of the

constitution of the islamic republic of iran can see there's production of the environment, a divine value and teaching of the holy koran. and in this very connection the government has taken the following measures -- reduction in energy consumption by promoting standards in industries and products, quo tass for consumption and elimination of fuel subs subsidies in a scheduled timetable. using l & g fuels in vehicle, emergency and power plants providing fuel for 90% of citizens. why rm the scales under rated on the use of clear energy as

will -- as planning for -- using nuclear fuel to generate 20,000 mega watts of electricity. the islamic republic of iran stands ready to foster cooperation by the kyoto protocol. and we are also ready to develop bilateral cooperation and share the research and experiences on the use of clean energy with other countries. and in this relation we propose the establishment of a bank or

a technology center to be transferred to china or in a member country of the group 77 under the hospices of the undersecretary. i hope that this historical meeting will be able to reach effective agreements and make conquering decisions to respond to the needs and rerequirements of the international community. hopefully this meeting will provide the right response to the requirements of the international community. let me express my heartfelt appreciations to the lovers of the nation and to human lives and to all those who express their sentiments in this gathering and raising public

awareness on global warming. i pray to the almighty in your ever-increasing success and the spread of human divine values, justice and in the production of the environment under their leadership of the novel people. i thank you very much for your kind attention. >> you have the floor, sir. >> mr. chairman, ladies and

gentlemen, heads of government and state, first of all, a word of acknowledgement to the government of denmark for the very warm hospitality that we have received during this meeting. climate change is one of the more serious problem that humanity faces to -- to control the environment is to overcome the unacceptable social exclusion. the human development report from the undp has warned us in the year 2007 that climate change could step back wards in history. and we cannot allow that this should happen. such aç0rt1ñ to a backwardness situation. the control on global warming

depends on a collective effort. we have to implement urgently and fully the commitment of the work of the united nations on climate change. the effects of climate change, we can already feel them, mainly among the poor countries. we need concrete action and fair actions that will be supported by financial means and technological means that should be reflective. they should share -- [speaking foreign language]ñi >> this should be updated to

follow the scientific noling. the ambition to reduce 50% global emissions of green house gas effects in 2050 compared to 1990 will help us share this ambition. but this is meaningless if there's no clear cut commitment for the short and long-term. here in copenhagen there's no room for conformism. the developed countries should assume more ambitious targets of reducing emissions that will be at the level -- that they carry. according to the ipcc, the reduction should be back to the

levels of 1990 in 2020. if we want to be truly ambitious, we should actually seek the threshold of 40%. now, i don't -- would like to speak very clearly to you. this conference is not a game where you can hide cards on your sleeves if we just wait that our partners are placing their bets. we can dfer that they're placing their bets. we will all be losers. my dear friends, the preservation of the kyoto protocol is absolutely necessary so that the international regime could keep its rigors. it cannot be replaced by tools that are less demanding. the developed countries should take it as a reference to define targets to -- for deep cuts in emissions.

this is the essence of the concept of comparison of the action plan. the development countries should give their contribution to the global effort towards mitigation. many are deepening their action even in the absence of international financial resources. brazil has one of the energy matrixes most cleanest in the world. 85% of our electrical power energy is -- comes from water resources. 47% of our energy is renewable source. and we plan using the production of biofuels. the amazon is a great heritage of the people that live there. and that's why our commitment to reduce its de forest tation, 80% until the year 2020, the

brazilian national congress has just passed my bill that give the executive branch -- that has a set of action that involved fighting deforestation, energy in this industry. .

ñi change cannot be based on a perpetual poverty. mitigation is essential, but a vacation is a priority challenge for the developing countries, namely the small iban states that are subject to desertification, especially in africa. it is unacceptable to have the country's less liable for climate change will be the first ones to be the main victims. the convention has established the obligation of the developed countries to offer technological financial support for the developing countries.

it will be very difficult to deepen the mitigation initiative or reinforce the capacity to adaptation, mainly among the poor and vulnerable countries. market mechanisms can be very useful, but they will never have the magnus your or the -- the magnitude or the predictability for the transformation we all wish. brazil in this conference was a determination, but this us to be shared by all. this cannot serve as an excuse for moving backwards.

>> ladies and gentlemen, i would like to speak to you frankly. there is something we all agree on, and that is the failure in copenhagen would be a catastrophe for each and everyone of us, regardless of

our starting positions. a failure year is just not possible for all of us -- a failure here is just not possible for all of us. we will have to report back to world public opinion and to our own national public opinion after this conference. science has told us what we need to do. they told us we are the final generation able to do this. we cannot fail. and the second point, we need to change -- register this conference -- we need toñr chane track. the copenhagen conference cannot statements without ever

converging. we are not here for a symposium on global warming. çót(ñiñriñrñiñ'ixdñiçówe're hes ñicommon -- to take decisions, d i would ask to have a meeting on the main leaders from all the regions of the world, and a meeting of the main leaders to finely start negotiating seriously on a compromise. -- finally start negotiating seriously on a compromise. we have left and then -- less than 24 hours common and if we keep going on the way we are going, we are headed to failure. we need a working meeting at the decision making level, at the level of leaders. third, we all have to make compromises.

europe and the rich countries must recognize that our responsibility is more significant than response ability -- responsibility of others. can i say to the americans the world's leading power must go beyond the commitments common and even if they already signifies significant progress. ñrchina, which have already made commitments, cannot consider the the transparencyñiñr in any way3 undermines the sovereignty of each of us.

finally, it is a compromise already well known. xdñiafrica and the truth regionf the poorest countries in -- africa and the poorest countries do not need money. the $10,000,000,000.1216133661 dollars in 2020, who would dare toçó say they're against -- the money in 2020, who would face an -- there say they are against that. if we do not have an agreement, you'll be the first to suffer from it. do not let this agreement be snatched away from you. who would dare say we do not need innovative financing hamas hopeful -- innovative financing.

to save our planet from imminent disaster. who would dare to say we do not need innovative financing? xdwho would come up here and the to say from this podium -- dare to say from this podium we do not need it and we discussed the nature of the membership of such a body, but we need a body to check all of the commitments. who can say everyone has to be transparent? who would dare come to this podium and say everyone else has to be transparent but not me? who would dare say that to degrees of temperature increase -- two degrees of temperature increase will not require protecting 50% of the mission or 80% because we have the historic

responsibility? who could challenge the historic responsibility? who could deny it? who would dare state that of the money in that would go to mobilize a significant part of the channel for these countries with a common forest and were unable to look manage the resources themselvesñi? her who would dare stand up here and deny that? -- who would dare stand up here and deny that? who would claim the poor countries of africa, asia, india -- who would dare say they do not need the money we're prepared to mobilize? who would dare say they should be treated in the same way as brazil and china, the giants of tomorrow. who would dare say we should treat them differently? i hope you understand my point.

time is against us. let's stop posturing. let's really get down to negotiating. so people want to keep kyoto. let's keep kyoto. others love the multi negotiators, but let us agree on an overall political umbrella, which will include all the political commitments i just mentioned. let's negotiate hard to night so tomorrow we can adopt the agreement, and let's give ourselves six months after the copenhagen conference in order to transform those political commitments into a legal text. ladies and gentlemen, not a single one of us will succeed if we do not live up to the historic responsibility of copenhagen.

now, here are right now we need to start negotiating. let me tell you france and europe are prepared to negotiate. thank you very much. [applause] >> there is just about a month left toñr enter c-span's 2010 student cam conference. $50,000 in prizes for middle school and high-school students. just creates a great five-minute video on one of our country's greatest strengths or a challenge our country faces. it must incorporate seas and programming and enter a point of view. winning entries -- it must incorporate c-span programming and enter a point of view. winning entries will be aired on c-span. >> we will look into the training and oversight of

afghanistan's army and police. witnesses will include representatives of the department of state as well as private contractors. that is live on c-span at 10:00 a.m. eastern. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] this morning we spoke with the democratic senator of new mexico about climate change in health care legislation. he is a member of the senate finance on health committees. this is a half hour. >> senator, you know better than any of us what is happening behind closed doors in the senate. let's start with healthcare. after yesterday's' proceedings, things got very heated. what are your thoughts on where the legislation stands and what is going to happen? stands and what will happen? correct. senator reid is waitint to hear rom the congressional budget office as to the final analysis and scoring they've done on the

bill and then he's also trying to be sure that we can get 60 senators to support doing ahead with what's called manager's amendment he's been preparing to make some changes. "tp'd to accommodate some of th concerns of the 60 members that he hopes will vote for the bill and then he would offer that and we'd go through i think the republicans are árying throw up all the obstacles they can so they require us to go through culture votes and essentially filly buster to keep us from getting to a vote on a manager's packet of amendments and keep us from trying get to a vote on a final bill. ht would be a filly buster and we hope we can get it done by christmas. host: howard dean says where the bill stands now i would not vote for it's a senator.

what's your reaction? guest: i disagree strongly with his position. i think clearly the bill is not everything he would like, it's not everything i would like. i'm disappointed we're not able to include somethings in the bill that we would like to have in there. so called public option. i've supported that but we don't have 60 votes for that. that's simple reality. the bill as it now stands is going to do a tremendous amount of good for an awful lot of americans. congressional budget office says this allow us to bring down the growth in the cost of healthcare and in that significant accomplishment if we can do that, it'll also reduce the deficit and expand coverage to another 31,000,000 people in this country. so there's a tremendous amount of good that can become accomplished by enacting the legislation. it's not everything.

i understand, i was reading governor dean's comment and he you can charge three times as much for someone who is older than a younger person. he is right. today there is no i additional charge that can be put on older individuals, and in some states it is 20, 30, or more times that much, so this bill moves us a great part of the distance to where we need to be. >> it also shows -- in "the wall street journal" he says, recently suggested seniors will die sooner if they put forward

the bill of harry reid. $60,000 so you can see harry reed. my somacolleagues dismiss my con as a scare tactic and they're wrong. every american not just seniors will and should know it will reduce they're quality of life and their life-spans as well. guest: the truth is we have a system of rationing in place today. nearly 50 million americans have no health insurance coverage. in my state, 26 percent of the people living in new mexico today do not have any healthcare coverage at all. now that is rationing by most definitions in that, they are not able to access healthcare except in an situation. so i think that this fear about rationing which is not justified and there's nothing the bill

that calls for any rationing. there are no death panels as was earlier alleged. you know there's a whole raft of scare tactics used during the course of this debate that really are not related to what's in the legislation. host: one last question and we'll get to calls. phone numbers are on the screens. republicans, (202) 737-0001, democrats, (202) 737-0002, independents, (202) 628-0205. with the $750 tax penalty if you don't go, tom writes other unintended consequences can wreak havoc. when savvy consumers realize it can be the defacto premium.

it won't take long for younger healthier americans to realize they should pay the $750 tax instead of the 5,000 premiums when coverage can't be denied when you get sick. guest: e well they say some people will purchase insurance because it's required even if you don't have a penalty because there's a require to purchase. if you do have a penalty, more people will purchase. you know there are going to be people that choose to pay a penalty rather than purchase insurance and then they will not have insurance coverage and they'll be able to go to a medical, emergency room and make the rest of us pay when in fact they get sick and need substantial medical assistance, but most americans will try to comply with the law, if the law requires that everybody who is

able financially able, go out and obtain insurance and under this bill it says if you can obtain insurance, without spending more than $9 point 8% of your gross income your required to do it if you can't then you're not required to do it. host: how are you reflecting as year ends on this many months of debate with the town hall meetings and all of the discussion nationally about it? how has this process worked? guest: i think the bill today has been a better bill than we were likely to be considering had we tried to pass legislation in july, example. i was involved with the pretty extensive effort that three republicans and three democrats got involved in with the finance committee. frankly there's been a lot of

criticism of the process but we spent over 60 meetings of multi hour meetings and the bill that emerged was a much better bill than the one we started with, at least in my opinion. that part has been constructive. some of it's been unfortunately because i do think some of the proponents of healthcare reform have resorted to scare tactics trying persuade seniors this will be a negative for their benefits and democrats will decide whether or not they beat medicine but those are not justified based on anything in the bill and i think that's been unfortunate. caller: virginia this is greg on the democrat line for senator bingaman. caller: good morning and i'll

make it quick. one quick thing i wanted to tell you about. personal experience. we have a 6-year-old son diagnosed with baby asthma. it's a temporary condition and it went away and because of that we've not been able to get any insurance coverage for risk respiratory since the con"ition went away. also, we pay about $700 a month. we're both self-employed my wife and i and we make about $60,000 so you can see how large of a chunk it takes from the budget and we still cannot get anything respiratory covered from this several insurance companies we've tried. my main question is, i know there's stuff in here about not allows insurance companies to cancel or giving pre-existing conditions and not allowing them to cancel policies when they get sick and insurance company decides your too much of a risk.

i haven't heard on how you control them from basically defacto eliminating those people by raising premiums and rates so high you just can't afford it. i'm wondering when the congress and senate will understand how bad things really are out here for the average americans and how bad does it have to get and it gets worse senator, i know you have served honorable bli and i appreciate it but therqrj going to be a huge wave from all incumbents on both parties if we can't get anything done, to be thrown out. we need new mood if you guys can't get it done for the american people. guest: i was going to say at least those of us supporting this bill are trying get something done. we may be here well christmas eve and christmas day trying get it finished but i think the

concern, the example that he's given is a very real one and this legislation would correct a lot of that. this legislation would require that insurance companies, do what we call guaranteed issue. they provide coverage and that they can't write into the coverage exclusion for particular problems they've identified. this should not be like title insurance. i used to practice law and entitle insurance was a deal where the title company would come out and check the records in the courthouse and if there was risk, they would exclude that risk from their coverage and would basically say we'll guarantee the title but assuming we won't guarantee this risk. unfortunately that's carried over to the healthcare area and you've got a lot of effort being done by the insurance companies

now to say first, we will do what we call under writing which means we'll screen everybody we sell a policy too and if we can identify anything that might go wrong or lead to an illness or exclude that from a cove range. that's crazy system and wq need to change that. ho host next caller? caller: i wasn't call together talk about healthcare. i thought he was going to talk about the global warming in copenhagen. host: go for it@@@@a"@ )'rrcr"# why we supporting role in global warming mandate, and the thing

that it came down to eventually was the crux of the whole argument seems to rest on whether there was a medieval warming. -- warming period or not. if there was a warming period, but would put a wrench into the works of man-made global warming, since it has happened prior to today. today. host: william is your question what? caller: so my question is, in light of the fact that, you know that is the crux of the argument and those scientist e-mails even shju that they're trying figure out what to do with the medieval warming period, does that change your opinion on anything. are you so closed minded that

new information doesn't even tap into your conscious at all? host: thank you. guest: hope i'm not that closed minded. frankly on the issue of whether or not global warming is occurring and whether or not it's caused by human activity, on that issue i basically defer to the national academy of sciences and i think they're in a better position and they're better qualified to make that call than i am. they've concluded that global warming is o((u)ring and that it is a major cause of it rj human activity. the g)eenhouse gas emissions human activity ge'erates. as far as i know that's still their position. nothing that's come out in connection with these recent e-mails or anything else has in any way changed that position at the national academy of sciences

to that point o# view and i'm open to them telling me something else if they can conclude something else. but so far i think there's a very strong consensus among the scientist that study this issue that this is a serious problem and one that needs to be addressed. host: we've learned this morning soap soap, hillary clinton announced the united states will help to raise up to 100 bi&lion dollars annually for developing countries so that they can absorb some of the cost of enacting climate change legislation. you think that's good thing? guest: well, i don't know. clearly, it's a good thing for us to be willing to cooperate with other industrial countries in assisting under developed countries to come to grips with áhis but i think she puts several conditions on her

statements. everyone not just the developed countries but even the under developed countries need to agree to targets and monitoring so that we have some way to say everyone is, we're trying help each other. industrial countries are trying help developing countries, but we're also all committed making the necessary changes to get to a more stable situation as far as greenhouse gas emissions and - and we need to be able to verify it. that's what i understood her to say. host: john kerry is on the ground in waiting for the presidents a rival. he's quoted saying yesterday, unless there is a successful outcome in copenhagen it will put the senate debate in peril. you agree with him? guest: i do think there's not that direct of a connection between what's doing on in copenhagen and the u.s. senate

related to climate change. i think that we have a lot of difficulty getting a consensus in the senate as to how to proceed and deal with why mate change. i think it's unlikely we can beat the support in the senate to do example what the house did from the the truth is we have got problems getting a consensus on what to do in the senate regardless of what happens in copenhagen. i'd think of the agreement in copenhagen were such that people resisted its and critique did in the senate -- critiqued it in the senate, that would not help either. guesthost: let's go to our repun

line. caller: they disagree with everything you have said. why is so imperative? what is the urgency to pass this bill by christmas? is there a magical urgency i have missed? you talk about scare tactics. this 80th president obama said if we do not pass it by christmas, -- this idiot president obama said if we do not pass it by christmas, the country will go bankrupt. nobody in this country wants this health care system. the overwhelming majority do not want what you are proposing. you deliberately lied about the death penalty and the per- abortion funding -- pro-abortion funding because the house cut back. there is going to be about four illegal immigrants -- a path for

illegal immigrants. host: you made your point. about abortion and free health care for immigrants. guest: the legislation is specific. there is no documentation for illegal immigrants. public funds to be used to provide abortion or abortion services. the debate on the abortion comes down to the question of whether public funds can be used to pay part of the cost of an@jup&l healthcare policy where the individual is also paying the other part of the cost and some way to segregate the funding so that the portion the individual pays for can cover abortion services and that's issue there. i don't - i don't read the

legislation the way the caller does obviously and i think there is a very genuine need to reform our healthcare system which obviously the caller doesn't agree with. ho host he asked what is magic about the christmas deadline. guest: the only thing magic is congress operates in two sessions and we're about to finish first and i think the majority leader, who's job it is to try and schedule the activiáy of the senate, has tried very heh hard to get this completed in the first session of congress to move on to job creation in the second session. that's imperative. )áuásvif it drags into t year, then it drags into next year. but i do think that we are to a

point now, we've been working on this for a couple of years in hearings and really all of this year in p much more intense way and people pretty much, people in the senate pretty much know the issues and have settled on where they are. i hope we can get it completed. host: on to the politics. he said majority of americans are against what you're doing. two polls have shown this morning. one sites the c mark ndsango pole. 36 in favor of the healthcare and 61 percent opposed and new "wall street journal" poll said 44 percent want the bill to pass, 41 percent want it to pass and 44 percent, say don't pass it in it's current form. a number of pieces here talk about the risk politically to the two parties and in this legislation.

what do you see as political consequences of passing a bill or failure to pass the bill? guest: let me address the poling issue. we're in the middle of a campaign right now. you have ads running in many parts of country attacking this legislation. some running in favor but many more attacking the legislation and that's influencing what the polls are saying. i think that the more the american public understands about what's in this legislation, the more support there will be for it. so, my own view is that if we can go ahead and energy act the legislation, (retty much in the form we're trying to in the senate, i think it's responsible legislation and i think that the american public will come to recognize that it's a substantial step forward. host: if retaliation is used.

political conseque á/@@b@ d@ @ # those kinds of things. -- those kinds of things probably would not be able to be included if we did it through this reconciliation process. for that reason, it is a much less attractive way to proceed. i hope we can do it the way we are trying to do it. host: senator bingaman will be with us five more minutes. jerry, democrat line? caller: good morning suzy. i hope all the newcomers watch your films because you do the best of anybody. next on the agenda. bingaman i'm glad to hear you work through christmas. i want you to work through new

year's and get it to the president's desk and veto think thing. i can't say on t$e air what is. it stinks. host: why is that, jerry? president got my vote for is not coming to pass. everything. everything on the healthcare bill is not coming to pass. next thing, he should freeze all of the insurance company's premiums at the rate when he took the office. you can't increase your rate on these poor people anymore. next thing, he should by presidential decree let us buy our drugs where we want to. all the drug manufacturers get over 70 percent of their ingredients from out of this country. nobody inspects it and they love you american people, just people

senator i love being tribal nd i've been a slave in bal this country for 600 years. thank you. host: i don't know what the last comment has to do with healthcare bullet as dres how disappointed he is with what the president promise and the healthcare bill. guest: well reality is if people need to compare what we're considering now as what we're going to have if we don't enact legislation and if we don't enact legislation we'll see premiums continue to go up. healthcare costs going u( and up. the deficit growing as a result of the growth of healthcare. and we're doing to continue to see 50 million americans without coverage. more every month i would point all th out. more employ my years are fi'ding

it harder to cover they're employees and about 14 thousand people lose coverage every year. trend is clear things getting worse under the current legislation. this tries to reverse that and i think it's worthwhile for that reason. host: norma, independent from long island. caller: good morning, i'm a senior that voted for president barack obama. i hope the white house is listening. many of us are extremely disappointing us. it's on the pre-existing conditions will definitely effect seniors premiums in something as like high blood pressure. practically every senior i know has high blood pressure. let's get down to what's going on here. i think the problem is in the senate so far as senaáor reid is concerned and i'm wondering if mr. bingaman to get a book

entitled master of the senate. the authorest scrapes me. good. it's written aboutl b. j. and how he managed to run the senate and get what he wanted. looks to me joe lieberman is new senate majority leader and he's running the senate. something wrong with harry reed that let's this person remain in chair in light of what he's trying destroy anything the democrats do. bipartisan ship is simply not going to work and it's time for all senators including mr. reid to wake up to that effect. i'm calling senators today to say if they vote for this bill i'm not voting for them again. host: i apologize you're out of time and we have to get a response from the senator. guesá: let me say circumstances when,l b. j. was the majority leaders our circumstance where

is different than they are today with senator reid. he needs 60 vets to move this legislation forward and he's doing, in my view, a good job in trying pull us together to get those 60 votes and,l b. j. had more democrats when medicare and - was being considered in the senate of course he was president by then but even when he was majority leader, he had some ceramics t damages senate not have today. i think he's doing a good job trying bring us together. .

on friday, a discuss efforts soon of seen joe lieberman. we will look at medical malpractice laws with caroline engelhard the senate banking committee votes on ben bernanke's nomination to a second term as federal reserve chairman. the senate homeland security committee holds a meeting on the country cause economic future, and then president obama's remarks at the un clementine summit in denmark, and then later common -- remarks at buckner un climate change summit in denmark.

>> "abraham lincoln" a perfect gift for the history buff in your live. from lincoln's early years to his life in the white house and his relevance today, abraham lincoln, in hard cover of your favorite bookseller and now in digital audio, available wherever digital audio is sold. >> the senate banking committee voted today on the nomination of sen chairman ben bernanke for a second term. senator who bernie sanders says he plans to loan -- to put all hold on ben bernanke. >> today we meet in executive session to conduct a nomination. there are four nominations pending before the committee, mr. ben bernanke, the

undersecretary for transportation, cameras the to be -- marissa for the u.s. department of treasury and the assistant treasury for public affairs. we have a public forum. let me ask the vice of my colleagues. -- the vice of my colleagues. -- advice of my colleagues. unless someone would like to object, i would like to move those three and then move to the ben bernanke nomination. if anyone know would like to comment one way or the other? i would mess with unanimous consent to fifth consider --

consent to consider the nominations. if there is any objection? if not, all those signify by saying aye. ayes appeared to have it. now we continue with discussion of ben bernanke. i want to give everyone a chance to be heard on this. som i know are going to want more time than others to comment on this. obviously, to vote these nominations we need a quorum president, and the majority have to vote. we cannot vote by proxy for the nominee. i want to give a chance of a full opportunity to discuss the nomination in fall. what i am trying to do is put a five-minute time limit on it.

i know people have more time than others to be heard. we come to a point where i am going to lose a quorum, then what i would do is set up a time whenever people would like to listen to the comments as to why they voted for or against the nominee. i am not going to do that now, but of some point today i have to move the nomination, and i do not want to spend all day on it, but i do not want to jam this through without people who want to be heard on the matter having a chance to do so. that is how i will proceed. i have very brief comments to make because during the ñiñiconfirmation hearing i exprs myself about the confirmation, but others have longer comments they want to make, and i will have to accommodate them. have longer comments they want to make on the nominee. and i'll be happy to accommodate that. a quorum is present and i

appreciate my colleagues' understanding on that. today we vote to meet on the nomination of ben bernanke. as i've said, my intention is to pass this nomination out of this committee to the full senate. some of the criticisms of the fed chairman, have been voiced during this confirmation process. have merit. and i'd be remiss if i didn't acknowledge that. as i said in our last meeting on this topic, the fed failed in my view in its oversight in consumer protection responsibilities, allowing some of the largest holding companies to engage in dangerous risk-taking and to allow the damage to fall on ordinary americans. reflected in lost jobs, lost homes, lost retirement and lost sense of hope that many have felt. that you can't put a dollar sign on. it obviously affects this country and affects our citizenry very profoundly. however, i believe that chairman bernanke must receive credit for the critical role he played in the events of last fall. while the judgment of many is still out on that, i happen to believe that he had and others not acted, some of whom sit on

this committee, at a time of critical importance to our country, we'd be looking at a very, very different and far more dire situation in our nation that is otherwise the case. and i believe that ben bernanke deserves substantial credit as chairman of the federal reserve for helping us navigate those waters. certainly without not with perfection, but certainly i think, stepping up at a critical time in our nation's history with some very wise leadership that benefitted our nation. the federal reserve took extraordinary actions to arrest this crisis and prevent utter economic catastrophe. and i believe nothing short of that was at risk in the absence of those actionings. because he did what he did, i believe there's reason to believe that better days do lie ahead for our country as well. therefore, i strongly support this nomination. i want to be clear, that with my support comes my insistence that we carefully examine the role of the institution that runs the risk of becoming too complicated to succeed. and we're deeply involved in that debate and discussion among ourselves and this this committee as we prepare to move forward on a financial

modernization effort. i want to thank my colleagues for the tremendous effort being made to go through these waters in a very careful, deliberate fashion, to allow us to come to conclusions that i think will strengthen our nation substantial substantially. it's been proposed that the fed assume a role in identifying threats to the overall financial stability. the fed is also charged with determining monetary policy. supervising some state banks and all bank holding companies and serving as the principal architect of consumer regulation protections. and i fear that more responsibilities that we pile on the fed's plate, the more hamstrung the fed will be in taking the very kinds of actions that help to save our economy from catastrophe. i have outlined my proposals to maintain the fed's oversight responsibilities, its access to critical information and most importantly, its independence. and i can't stress that last point strongly enough. and although chairman bernanke and i disagree on many particulars of the plan that we

proposed and we're working on, i know that we share a common commitment to a strong central bank and a strong obviously american economy. i look forward to working with him in the months ahead and i thank him for his service to our nation. with that, let me turn to senator shelby and we'll move on down the line for comments and proceed in the manner that i've described at the outset of these comments. >> thank you, mr. chairman, mr. chairman, i have a lengthy statement and it will take me a few minutes to give. and i hope you'll indulge me. today the committee meets on the nomination of ben bernanke to serve a second term as chairman of the board of governors of the federal reserve system. our vote today will not only be an expression of our confidence in his ability to lead the fed out of the crisis, but also a judgment on his performance in the years preceding the crisis. after the recession that ended in 2001, which was precipitated by the bursting of the dot-com bubble, the fed was concerned about a sluggish economy and the

specter of inflation, the fed chose to hold interest rates remarkably low. the effect of federal funds rate was below 2% between december 2001 and november 2004. during most of that period, now-chairman bernanke served as a member of the boar of governors of the federal reserve and supported the low interest rate policies. in 2002, then-governor bernanke4 keep interest rates low, keep liquidity high, and lean hard against inflation pressures. by keeping interest rates low to avoid deflationary in these crises, the fed seems remarkably

unconcerned about the possibility of uniting a different financial crisis by inflating our housing price bubble. different financial crisis by inflating a housing price bubble. according to noted economist dr. anna schwartz, the easy monetary policy environment advocated by dr. bernanke represents a sin of omission. as housing prices soared and risk-taking escalated, wall street investors pressed on as if a fed put was insured. the notion was that in adverse market conditions, the fed would absorb faltering assets and flood markets with liquidity. governor bernanke at that time assured markets that the fed stood ready to use the discount window and other tools to protect the financial system. an indication that the fed put was indeed in place. promoting the existence of a fed put was i believe, an invitation

for unreasonable risk-taking and moral hazard. in 2004 and 2005, chairman bernanke and other members of the board of governors spoke of the emergence of a great moderation, a potential permanent reduction in macroeconomic volatility, and risk which they argued were a result of vigilant and adept monetary policy. in retrospect, this misperception left market participants believing that large risks had been mitigated, opening the door for even greater risk-taking. dr. schwartz argues that chairman bernanke committed a sin of omission by neglecting the growing risk. according to the inflation-adjusted home price index, constructed by economist robert shiller, home prices rose by an astounding 85% between 1996 and 2006. chairman bernanke was a member of the board of governors during those last four years of that period, when home prices then

rose 43%. this is remarkable contrast to a 10% rise in real home prices during the entire period from 1890 to 1996. i'd like to repeat those figures. in the 106-year period beginning 1890, home prices rose only 10% in real terms. with that in mind, i do not believe that there can be any disagreements that housing prices were becoming irrationally high over the following decade. as early as 2005, yale economist robert shiller warned about the outsized gains in home prices. commenting on what he saw as a bubble in real estate markets, shiller said and i quote, significant further rises in these markets could lead eventually to even worse significant declines. the bad outcome to be that eventual declines could result in a substantial increase in the rate of personal bankruptcies, which could lead to a secondary string of bankruptcies, of fnlt

institutions as well. another long run consequence could be the consumer and business confidence and another possibly worldwide recession. think about it. chairman bernanke was indeed aware of the growing dangers. however, the fed ignored risk identified by professor shiller and instead, forecasted that the housing market would eventually bounce back from what was viewed as a slowdown and that problems in the subprime market could be contained. in june 2007, speech, chairman bernanke said and i quote, fundamental factors, including solid growth in incomes and relative low mortgage rates should ultimately support the demand for housing and at this point, the troubles in the subprime sector seem unlikely to seriously spill over to the broader economy of the financial system. he followed in a speech in october 2007 by saying -- the banking system is healthy.

goodness. in october of 2007, the banking system was decidedly as we all know, not healthy. by many accounts, the system was months into the kind of post-bubble fallout that typically follows deleveraging of investments tied to massive price appreciation like that which had just occurred in the housing markets. in making the fundamental misdiagnosis, the chairman missed the clear signals -- a housing bubble, a weakened economy, instability in the credit markets, and most important -- he missed a clear chance to take action when it would not have required a massive commitment of taxpayer resources. in considering chairman bernanke's reappointment, i think we need to be mindful of the fact that the crisis of the 2008 was not days or weeks in the making. it took years. and many of those years chairman bernanke kuh%b@ r

>> stemming from the "to-big- to-fail" mentality. it was hard to see things our spilling over from the financial markets. consequently, the fed took action to open this and it was piecemeal. the fed delivered plenty of rhetoric about the importance of transparency, but did not articulate their own goals. the market was bewildered when the fed was rescuing certain firms and not others. old molly, bernanke did not convince the market that the fed had a plan. he expanded the use of the discount window, including the provision of funding to institute since the institutions to which they had no oversight.

had no oversight. the fed, as you know, also created new lending facilities to channel liquidity and credit to markets that were deemed most stressed and systemically important. the fed's balance sheet ballooned from a pre-crisis level of around $8 lunz billion to more than $2.2 trillion through credit extensions and purchases of risky private assets, gse debt and, of course tresh dee debt. some fed actions in the recent crisis were innovative ways to provide liquidity to a wide variety of financial institutions and market participants. some actions, however, amounted to bailouts. when handling failing individual institutions deemed systematically important by the fed, shareholders were wiped out and management was replaced. however, in many instances bondsholders were made hold even though they were not legally entitled to such favorable treatment. using powers granted under

section 13-3 of the federal reserve act, the federal reserve made it clear that certain institutions and activities would not be allowed to fail. the result was moral hazard on an unprecedented scale in the united states. for many years, i've held that the federal -- i held the federal reserve right here in this committee in very high regard. i had a great deal of respect for not only its critical role in the u.s. monetary policy but, also, for its role as a prudential regulator. i believed to be this nation's fings repository of financial expertise and excellence but over the years we've enacted a number of laws which demonstrated our confidence in this institution and our expectation they would use the authority we gave them to avoid financial crises. we trusted the fed to execute those laws when deemed prudent and necessary. i fear now, however, that our trust and confidence were misplaced. i believe in accountability. the senate's constitutional authority to advise and consent

can be a highly effective means by which this body can hold individuals accountable. it is a process through which we can express our disapproval of past deeds or our lack of confidence in future performance. i strongly disapprove of some of the past deeds of the federal reserve while ben bernanke was a member and its chairman and i feel -- and i lack confidence in what little planning for the future he has articulated. once again, i agree with dr. schwartz and i'll quote him, chairman bernanke advocated monetary policies that contributed to excessive risk taking, ignored or downplayed serious emerging risks, failed to use regulatory authority available to the fed to prevent housing speculation and unsound lending practices, often misjudged the nature of problems in the markets and contributed to market turbulence by appearing to act increasesly without plans and, of course in an ad hoc manner. these shortcomings stand in stark contrast to some