they were talking about spending more than half on g.d.p. on bailing out their financial sector. this isn't a conversation that seems far removed and just confined to the halls of congress and not meaning anything. there is real money here and real spillover effects. and certainly in the international space which is where i want to talk, begin our conversation right now. so armin, when you hear all of these topics and all of the countries i just threw out as well here in the u.s., there is a question of when debt does become dangerous. when deficits become dangerous. when is that? where are we right now? .

look at historically or cross country. however, there are two things here. can this number be brought down credibly in the medium term and can we take it from 88.5 to 40 percent? that is part of the medium term consolidation that needs to happen. the second thing, which i talked about yesterday's and was just referred to, we have added an additional dimension of liability because a large part of this government debt is held

by foreigners, [unintelligible] some of that is held by a potential rival to our superpower status. that is not irrelevant. the combination of high debt and uncertainty about whether he can be brought down incredibly, i hope that alice is right, plus the fact that foreigners hold a large part of it -- that is what is part of it. in terms of action, i think we need to bring this down fiscally, and that larry summers it is right. in the long run indebtedness is not compatible -- there is a problem, which means that the u.s. pattern of growth has to

become less reliant on imports and consumption and more reliant on generating exports, said that in the long run, we reduce our international indebtedness. some say that this does not matter and that may be something to it, but if you are running policy and have strategic interests in mind, you would try to do this as well. a depreciated dollar, a growth strategy that goes away from consumption and imports, to real goods and services and exports. that is what the u.s. needs. >> christian, when we lifted europe right now, greece matters of the sudden. all the sudden, spain caluses bellyaches on wall street. moody's and others are not liking this that you -- you're a

huge deficits. when did those deficits matter? their questions about whether or not ireland and greece can even stay in the year rose some -- in the eurozone. >> i do not have a fundamental answer to all of those questions. i think karen said that it is all about confidence. as long as confidence is not walls come and also the deficit, in may be a problem and not a catastrophe. when it comes to greece and spain, is difficult. spain also has big macro problems, financial policy, especially in the construction sector.

spanish banks are doing very well. the spanish problem is manageable. of little more difficult because of greece, the administration is not working -- if at all report which is monitoring the grease administration, and even the minister does not know the data, that is the feeling. that is a problem. i think it is a danger for the eurozone, but we have to keep in mind that there is a stability and growth pact. in spite of the crisis, you may say that we are quite well. we've brought down deficits and debt for most of the countries. as long as the confidence in the

overall stability and growth pact is not lost, i think that we can cope with that. but i will not deny that there are certain risks, and we have to be careful and know that there's some critical discussion starting from some european countries looking to the stability and growth pact. then we have to be alert and not let it go. >> alice, when you're talking about consumers start to can see that these numbers are real and that it could potentially be a danger and they need to be addressed right now, to do what degree do you think these have lives that we're seeing swirling by now are going to play into that? is there a question of confidence that is going to be heightened -- an issue there because of this right now? >> probably, although what i

actually said was that i thought that general unease about the economy and the economic future was what drives the average voter. and the attempt of politicians to attend -- to connect that to the government overspending were too high debt does resonate or might well resonate. but you have not gotten a number out of anybody. so i am going to give you a try. bill and i are involved in putting together a set of proposals for trying to get the debt under control. what we came out with was 60% of gdp. if we can stabilize the dead at around 60%, that would really be good. it would be quite hard to do

that. it would be cutting the projected deficits over the next 10 years by quite a bit, but why 60%? there is no magic number. but there has been an international consensus around 60%. it has been endorsed by the imf. >> is that a good thing or a bad thing? >> well, all lot of people have thought about this issue and come up with 60% being about right. that is what we're saying in this report. if our goal -- we should set a stabilized by 2018 at 60%. so there's a number for you. >> so -- thank you. [laughter]

i was not going to let you get away. but hold on. what you are saying -- and thank you for clarifying -- the growth coming from the consumer in terms of concern and the ability of the politicians to connect the dots, right? that is what you're saying. >> i think that is what happened in the 1980's. there was not an lot of understanding about that per se, but it was bipartisan to connect the high deficits to the future of the economy, and it worked. >> so when you look at the midterm elections that we are going to see right around the corner, knowing that space is you do, will they be impacted? >> i agree with alice that they could be connected with something like social security.

i think it is a matter of political will. but we know what to do. it is not complicated. it seems to be moving their and makes a lot of sense. probably i am more pessimistic about the health care. health care is a pact made by my oath -- by both state government and the federal government. i assumed that these bills are going to pass in congress. in some ways i think the debate will change at this point. i also think that probably the senate bill will dominate, given how fragile it is with the 60 votes. and you have to start a break down the -- breaking down the pieces and pulling back and decide whether you can create a framework around those changes that begins to bring health care costs down. a lot of people have argued -- i am not want -- that you have to

get all the money of the system before you can do that. everybody says they did not get the public program. i think they got more than a public program in the latest -- you have to remember what has happened if you have another 15 million to 70 in million people and medicaid. clearly with the buy and that medicare of 55 and over, if you will pick up 2 million or 3 million more. you're going to have a bye and a 7 million people -- and that provision that the states can set up a set of -- a separate program, government-run, between 133% of poverty and 300% of poverty. some states are set up to do that. and the exchanges will probably be run by the states. has that system comes florida, if you have a bigger medicare, a bigger medicaid, at fixed rates

-- and other components which will have negotiated rates. the bad news is that will take us four or five years to get this up and operating. i am not sure that there will be a lot of changes until then. but we have to start thinking about how do we bring those to gather. it may well be that medicare and medicaid might get a negotiated rates. >> we are going to see something and i would like you to respond to what we were just talking about here. but there is also the broader question -- and certainly i know for some of the under people in the room, medicare and medicaid -- something not very concrete to the average person. talk to me, would you, about what the impact would be if we see health care reform has was just suggested on research and

development, on the type of health care and the options available to the average person in the immediate term? >> ok. >> i would say that it had not been articulated in the media. or the public debate. >> someone said that you do not answer a question and give the answer that you want to give. one quick point. there was an impression that on my panel that i was a downer, a doom and gloomer, so i'll start on a positive note. i still think we are a bridge and good country. but i will say that we are probably similar -- we are the best looking course in the glue factory -- course in the glue factory, too. -- horse in the glue factory.

[laughter] it is a tough question that you ask. we will have a discussion about this, but first of all, let's go to whether that group of the uninsured out there -- and i will get back to them -- primarily the whole focus of this bill has been on the individual market and a small group, not the big guys, not the national council and all of that, but that small, individual, and that individual up young people back there who had did go out -- they would find it extremely expensive because they are not in a pool. unfortunately, and this really gets into the weeds and this is really why health care reform is so difficult, because of the rating and ban ki-moon issues -- they are pete is beating the young people out again, which is

really -- the rating and ban ki- moon -- banding issues again and i do not see that this particular bill will lower their health care premiums going for. i'm getting into the budget stuff here, it seems to me that you're talking about things that are subject to what we call appropriations and discretionary spending three research and development, even the comparative effectiveness -- i know there is a dollar amount there. but most of that is subject to appropriations. why is that important? because if you cannot think wrote -- control the entitlements and then you have john's proposal, you will continue to squeeze education,

university grants, students loans right down the line. in the long bond is circular unless we do something about controlling the entitlements and the growth of those entitlements, it will continue to put pressure on the investment programs that we need for young people today. >> when you talk about the controlling the growth of entitlements, say what you mean by that. >> it rolls off the tongue so nicely. a farm boy from indiana, who pointed out, it eliminates them. eliminate the farm programs. i do not care. that would buy you a $20 billion may be. that is not the 0.3 let's be honest about what we're talking about. social security, medicare, and medicaid. the three hardest issues that we have politically to deal with. what worries me on this one -- i think we are taking some of our degrees of freedom of the table with this bill that we are not

going to be able to come back and address those programs, and unless we set up something like john said and then tie it to alice's proposal that will come out on monday, i guess, monday, with the rising red ink -- you locking and -- i am not a formula fan but you locked in and pick a number, 60%, lockett and and if anything changes to be on the ad did you have an automatic across-the-board raise in taxes or cut in spending. or both. >> this is also in your house here as well as health care. what is your response to that? the presumption that we are going to have to see entitlement -- basically any kind of medicare or medicaid or social security slash.

>> that term bothers me. >> say what it is. >> slow the rate of growth. just to bring it down from currently two times the rate of growth of gdp or bring it brown -- bring it down to the rate of growth at would be happy. >> if you look at but the house and senate bill, about half of the financing is supposed to be coming from cuts and the growth in medicare. it is something that i think we are willing to do. the fact that aarp supports this legislation is being funded by cuts in the growth of medicare is really quite significant. i am more sanguine that we can do something in terms of controlling growth in health- care costs. it will continue to grow faster than the rest of the economy. it will continue to go up but if you look at the late 1990's, some predicted that we would be

spending over national -- 20% and wearily spending 16%. over the years, we have found ways to -- we need to control health-care costs and we do. you can go back to the early 1970's, and out of the nixon administration, there were voluntary controls in the hospital sector under carter because the risks concern that there would be mandatory controls. we saw a big dip in and inflation and health care during the managed care revolution of the mid-1990s. in the past couple of years, the distance between growth in wages and growth in health care costs has slackened in part because we are bruce deductibles and co- payments. there are ways in which we can control health-care costs. i think they will continue to exceed the economy.

if we have to come we will find ways to cut the rate of growth. they will not be pretty ways and intel reductions in benefits. i do not subscribe to the idea that it will spend out of control. having said that, we need to do something about medicare before 2017. >> that is when it is supposed to run out. >> alice, i know you want to respond to this. if you would, you were there during the clean administration when health care was at that time in the headlines, much as it is now. and it was seen as really detrimental politically, to put it diplomatically. >> it showed a president who was not able to pass something that he had put his enormous prestige and his wife's behind. they did not handle it right.

i think they did not perceive that although everybody said they were for health-care reform, they were four different kinds of health care reform, and there was no consensus. what most people mean by health care reform is i am going to get the same amount of health care for less money. it is very hard to explain to people that that is not possible. but i am with the optimists here. i think that there is a lot that we can do and have done in managed care for an example to make our system somewhat more efficient. and it is so inefficient and so high cost compared to everybody else's right now, that we can squeeze out quite of lot. in the long run, health care spending nationally is coined a grow faster than the economy. we have to figure out what to do about that. but for a while we did some of these inefficiencies out. and medicare has a history -- if

that congress will let it -- be able to -- when they change their rules, and says we're going to pay for an episode in the hospital rather than each thing that the hospital does, the private payers go along with that. and it does bring the costs down. >> it would come and share the story about how you do not think that medicare and medicaid is viewed in the true sense of what it is as the program. it is not understood as a -- quebec some sort of socialized program. >> as an outsider, what i find

puzzling -- i am with the optimists, because eventually this country will sort out the problem. here is my puzzle, and i would pose it to all of you who know this better. as alice rightly said in her excellent keynote lecture, all this focus seems to be on the spending and entitlement side. there is not the same focus on the tax side. the question is, why is that the case? yes, it began with the premise of a tax revolt. this country will not accept higher taxes. let's focus on entitlements. the problem i see -- and i see that promise as coming from something very real and very important from a least a certain section within the society, but the question i have is that if

the narrative in this country is that he essentially more government is bad government, we cannot pay for it, then i think the compromise that alice proposed of getting expenditures under 25% of gdp, but that means taxes have to go about that much if you want to stabilize its 60%. i would of thought that this crisis should help that narrative, because i hope that it will have discredited the alan greenspan fundamentalism. at the end of the day, all that you could fall back on in this government. and the fiscal package which was absolutely essential. and if that narrative comes out that this is what the society needs, that can pay bogle -- paved the way for social concessions. entitlements do need to come under control but equally, some

taxes also need to be part of the discourse. i don't see that to the same extent as i see the emphasis on entitlements. >> you don't see public support for higher taxes? why would you? >> as i was telling you, the medicare panel was talking about lots of elderly people in this country don't think that medicare is a government program. that is a problem here. it needs to be addressed. >> please, go ahead. >> 160 million americans get their health insurance not for medicare and medicaid -- and i want tighter tax issue, because i agree totally with the commissioner. we have had a tax discussion and it got blown out of the water. the quickest way as i see it to do something about the cost of health care overall is to modify

the way we handle employer sponsored in sport -- employer- sponsored exclusion. that, unfortunately, president obama attacked a candidate who is proposing something off -- along those lines. one small tax proposal which should remain in the bill, but cadillac tax, it is being fought strenuously right now. you need to take that out. it is not that we have not had a tax discussion in the context of health care reform. >> that strengthens my point that there is a problem here in the public is court -- discourse. the lawyers you agree that there's a problem, not in a conversation about higher taxes? the boilers at your making fun of it. >> i am calling it what it is. we are losing this and a lot of jargon.

and that hurts a lot of the stories that we're trying to tell here. >> let me come back to what bill was saying. most americans get their health insurance from their employer. they did not pay income tax on that benefit. if they did, that would have an incentive to say to their employer i would rather have the wage increase than the more generous health benefit. but they do not do that now because the health benefit is tax free in the ways that benefits are not. john mccain was right about that. he did introduce that and i think that president obama -- candidate obama made a mistake in trashing it, and probably knows that now. it is not that no candidate -- even a republican candidate --

to propose a tax increase. john mccain did. he did not call it that, but he certainly said we have got to pay for broader health care coverage by getting rid of the exclusion from the income tax -- which is a big deal number and would have been a good policy, i think. >> the social discourse is a little bit imbalance. >> i do think that. i think we're saying that if we have got it -- if you want these benefits, we have got to pay for that. >> we have a number of people defeated over raising taxes. that is why we do not have energy taxes are carbon taxes, and as alice add before, -- said before, you call it something

behind attacker the politics of attacks, they have bad off the table for a serious -- in a serious way for quite awhile. that is why the crisis is going to get so big. what is going happen is that we will have a value-added tax, because we have to put money into the medicare and social security trust funds and pay down the deficit. it will be all large on the bus agreement. the only question is, what happens to health care coming out the other side. the boys you did that we're going to see a bad tax -- >> you do not think that we are going to see a vat -- you do think that we are going to see a vat tax. >> for so many reasons, that

puts me in a very small place. i worry about that. >> i was a governor and i think that this is a simple, straightforward way to buy out the states by saying the federal government will collect a national sales tax or make it a vat, it does not matter, and we will share it with the states on a formula basis. and you have to play with the formula. the germans do this by the way. it would be a windfall for states that do not have a sales tax, but there are very few of them. and then you have a uniform national test. >> and you put it in the constitution. >> i would be happy to. >> you had your hand raised but i want to get the question here. we were talking about the germans having a model that alice was to speaking up. >> the what the health care or

do you want a move on? >> would you mind? >> we have a vat. at the last legislative period, it was a big political problem and a major problem for the start of the coalition. i think the vat principle is not really disputed, at least in germany right now. there are several rates -- the normal rate and a lower rate. there is a discussion on how to abolish the lower rate or increase it for subsidizing certain things like hotels a very stupid aspect of the new government program -- but in the tendency, this is not only true for germany but most european countries where you can clearly see the indirect taxes increase

the hotel revenues. if you look at mobile tax bases, -- he gets very difficult. even skilled labor is getting more and more difficult. you are really looking for taxes which are able to finance government without going into debt. this is what the new german deficit minister will do. we will say that this is your cyclical reasons to correct the next deficit all at once, now you have to see how you do with financing it, either on the entitlement side or the revenue side. and in the value -- what tax will least 10 per growth, green taxes, and one of the last things -- this is the way -- the german way of thinking. this is closely linked to the

european pact. the consumption taxes as well. there are some small consumption taxes. we should not forget about that. smoker taxation come on alcohol taxation -- small things but we should not forget about them. >> and a number of those things have been talked about on a statewide basis in the u.s.. that raises a number of controversies. how do you raise any kind of tax during a recovery? it may be a tenuous one. >> i think the best macro economic program would be to call for a vat increase in 2012. it would probably much better than a lot of expenditure for

microeconomic purposes. >> you can get it up and running before then. >> tom, you have been waiting patiently. >> because this is going back to the health care. i wanted to respond to bill's thoughts on the taxation of the cadillac plans. you have to get all your ideas into one minute and 15 seconds and i will try to do that. it gets into a lot of things. i do not have a problem with taxes on cadillac plans. i don't think it will get us very far. i don't think it gets into the real problems that we have with the current health-care system. if you have a tax on cadillac plans, it means that benefits will have to go down. one of the ways it would be likely to happen is higher deductibles, higher copays. what we know from research is that if people have to pay more, they will cut back but it will

cut back on the things that they actually need. what we want to do in terms of reforming medicare and cutting costs is not throw it all to the consumers but provide more on the providers. that is what john skinner was talking about earlier today. if we can didn't -- and conduct research to find out what is in support, give them incentive to do that, we can cut away that chafed rather than a week. -- the week. wheat. >> in terms of cost controls? >> giving them incentives to provide necessary services, not the necessary services. >> what you mean by incentives? >> we have certain programs that do that. the compromise that the

pressmen senators came up with on these elements, the medicare commission, about setting up accountable care organizations, trying to bundle payments -- just ways that you pay for high- quality care but you do not pay for low-quality care. we'll have lots of demonstrations on the spirit this is stuff that we've already tried, we just have not enacted it nationally. there is a lot that can be gained by trying to bring down growth rates and the high utilization areas. >> does that mean salaries for doctors instead of compensating for fee for service? >> not necessarily. they can set up a payment system that they want. >> one of the most fundamental changes beside the change in the tax code is to change the way we reimburse from the fee-for- service that we have today --

one doctor that i am always struck by the article he wrote, he found the most expensive piece of equipment in his office being his pan. -- pen. oversubscription. with all due respect, this -- i heard pilot studies, pilot studies for years. when do we made from pilots to actually doing something? that is my major criticism even with the freshman proposal. >> alice, did you have something to say? >> i think putting on medicare commission with teeth with actually do that. that was in the original proposal. it has been weakened in the process. but we do have an existing organization known as mahopac --

medpak, which is made certain proposals, and congress has backed away from them. congress has to figure out that they got to let some of these reforms go ahead. >> armen, i want a come back to you and start -- look at the question of when that starts to matter. put it in the context -- you threw out security concerns. presumably meant china. when you talk about national concern -- security concerns. in the financial media, we have been focusing on the dollar weakness. that is obviously playing in to u.s. influence but somewhat of a positive in that you see american goods being purchased and helping to be purchased outside of these wars. how do you balance that?

>> i have to answer the no. question, right? >> are you ready now? the less i think alice's 60% number -- internationally, it is the norm. the imf has given its stamp of proposal -- of approval, but here is the experiment i like to conduct. >> did you not used to work at the imf? you don't think it is necessarily a good thing. >> not necessarily. here's a thought experiment. supposing we had started this crisis, and went into this crisis at 60% of debt to gdp, and we've added 40% over this. one under% of gdp -- that would spook market psychologically.

the other contrast is that i have china actually going into this crisis with public debt of 20% of gdp. in some ways, but chinese were highly affected by the crisis because they were exporting so much that when the world economy collapsed, their exports will it took a beating. but because the public debt to gdp was so low, that the fiscal and listen to throw everything at the problem to recover. -- that they had the financial -- they had that this goal ammunition to throw everything at the problem to recover. i feel that looking at the experience and even in this crisis, in good times, especially if we have good growth going forward, i would be much more comfortable with something even lower than 60%. we began a 40%, so why not get back to 40%?

exactly. now coming to your question about the dollar, we have to separate the fact an orderly decline that is happening now of the dollar is what the doctor ordered. and that is what we need. it helps our exports. it helps us reduce our foreign indebtedness, which we need to do for political reasons. but what we do not not is that decline turning into a stampede. we do whnot what the united states to be, at tie line in 1997 or russia in 1998. that borderline can be very fragile. we call a confidence are whatever, heading the fiscal house in order and a credible plan along the lines that many of you said, that is absolutely essential. >> i saw lot of hands go up. you first. >> can i throw something back at you?

you started this conversation by saying you would raise the statutory debt limit next week. it is going to be thrown into a defense bill. $1.8 billion. our statutory debt right now is $12.1 billion. part of the dilemma i see is explaining something. our gdp is about $14 trillion. this is more like 98% in terms of the statutory debt limit. while i agree with alice and i have a study coming out agreeing with 60% as domestic -- while we're leaving at of this is the unfunded liabilities that are in that number for social security and medicare. and i still feel like this number of 60% -- we argued about this -- is fine as it relates to this report, but we are leading off the table all of this other

unfunded liability still hanging out there. and i do not know that the media can communicate that in one minute and 15 seconds or whatever it was. >> it helps when it is communicated from the floor of the senate or when it is clearly tracked or drill at -- clearly communicated elsewhere. and -- otherwise you are waiting for people to do the homework. give me your number, then. >> we are already at 98% of unfunded liabilities by social security and medicare. >> already. >> we are well above the 60%. i would argue for a stronger number. >> may i offer a small historical lesson? i don't know whether you know the basis of this. the 60% is because at the end of the 1980's, those european

countries that are relevant had 60% as an average level. how does it come to the other figures? you then say what stabilizes 60% with a nominal growth are around 5%, this is a deficit of 3%. these are the european rules -- 60% was the average, with the nominal growth of 5% stabilizing this. we are beyond this now, especially if we look at the preventative arm of the stability and growth pact. there's a new german royal taking into account implicit liabilities. -- rule taking into account explicit liabilities. this is also the logic of the prevented the farm, but the 60% if there. i know that many international organizations have said this. but let us be clear -- we have to go further down, and maybe

for the states, 60% is a good growth. but for germany, is clearly too high. we may go and the duration of 40%. >> that appears to be the new consensus. you are 40%. at least a year. alice. >> what is really important is the direction of change. there is no magic number, and bill is right when he says that the 60% is that held by the public. it does not count the amount that the security and medicare systems -- we are indebted to them and have to pay those liabilities. these are a lot of numbers to keep juggling. but what is really important is the direction of change. as long as this dead is rising as a percentage of -- as long as

this debt is rising as a percentage of gdp, we are in trouble. we've got to get that down. >> that are a couple of other causes. the cost of interest itself is growing quite rapidly. once interest rates move up, that is going to be significant. there are other generational issues there. there is also the other issue i worry about. because of entitlements, all of us are basically cutting discretionary. which means we're cutting infrastructure, research and development, and we're cutting education and trading. from the long run competitive standpoint, that number should be a lot lower. we are eating our seed corn here right now. that is not good long run. >> when you're just talking

there, and i want to get back and ask alice about the interest rates going up. talk about reducing greatly are stopping the rise -- however we want to praise it. slowing the rate of growth. when we talk about changing entitlements, i remember at the time, going to the white house and interviewing president bush about changing the social security program as it stands to be in essence another version of how you invest your 401(k). people would be of the day their social security money and put it into the market. i am oversimplifying to a great degree. that is essentially what we were talking about at that time. then we had a huge crisis of the past year-and-a-half. thank god we did not do that. but if you're talking about cutting entitlement spending,

what is a cushion going to look like? what form should it take? or when we talk about reducing it, it is it any longer existing? would you say -- what you mean by cutting benefits? >> you are slowing the growth. >> how do you do that? you change the program entirely? >> it would be easy for social security. you may get discretionary gain or half the cpi. those things are pretty easy. in the health-care area, it is much more difficult. are you doing it with actual been efforts are reimbursement rate? >> you're talking about his paying into it. >> or who is receiving it. >> i don't think that anybody thinks that social security

needs to be totally change. it is the question of how fast to the benefits go up. and at what age do you get them. the two most likely ways of adjusting the benefits are raising the retirement age and lowering the initial benefit, the amount you get when you retire, so that it does that go up as fast, it does not increased as fast as wages do. it is structure now so that the initial benefit of everyone here retires rises over time with the wage level. that means is a real increase in the benefits. it does not have to go up that fast. a very small change would mean the social security system could get back in balance quite quickly.

>> you've already rage the age to 67. >> we have come about our longevity has gone up more than that. >> so we raise it from 65 to 67, so people retire at an older age and there were before? >> the unintended consequences -- and at the same time, our united states congress and senate is considering changing medicare, have by and between 55 and 65. quite frankly, it by was an employer out there, i would say, goodbye. you just went the opposite direction in terms of extending retirement. by having a policy that provides the companies to say, go over

into the medicare by and and you're off my roles. i do not have to worry about paying the difference. these unintended consequences we talk about are so -- that is why this is so difficult and i am sorry for the media, is difficult to follow, is difficult for the american public to follow, is difficult for us to follow, but there are so many of these currents going on, i guess is the best phrase for it. >> i think we only have a few minutes left. i do want to give the audience a chance. are there any hands out there? do you want to ask a question? >> [inaudible] i read something that i thought was very intriguing. in light of all that i have learned that this conference and i compliment you all, the statement that i read was that obama is going to be the

american gorbachev. does that mean anything to you all? and if it does, i'll like to get some reaction. to me, in encapsulate a lot of what i have learned here today and yesterday, and that is that we are declining power with a system that is extremely stress and that we have to somehow explain to our own people into an international community that we're going to have to change. >> i do not know that he is the gorbachev, but i hope he is the nixon going to china. it is like nixon going to china, he will have to go there and really come around. >> what do you mean, really come around? >> he will really have to put on the table are production -- doing the tough decisions. put them in the box, we are going have to take on entitlements and a big way and

raise taxes, too, and it is hard to say that, we need to have to break away from his own party members. >> i think that is right. i am not quite sure what the question man. but it might mean that he was a gorbachev in the sense of being a one-time president, if it is perceived that he is the -- that he is to blame for the problems in he did not fix them or that he was the one that said we have got to face up to them and do these are things in the public did not like it. >> i think of the gorbachev phenomenon as someone who did something really good, but his people really hated him for doing them. [laughter] >> were there other questions? >> i was not here yesterday, but

we're talking big bucks here. fraud, the last time i remember -- and i may be wrong -- that government tried to investigate was during that jimmy carter's administration when he was investigating the gao, the gsa, what ever it was. i have heard, and please correct me if i am wrong, because it is a frightening number, that our medicare system has fraud in the b, billions of dollars. that would pay for a lot of them are rise. am i correct? -- pay for a law mri -- a lot of mri's. am i correct? and a big hammer investigation, paying $500 for hammers in the military and the sets. what energy and time is spent in

our government at the federal level investigating and stopping fraud in each and every department? are we spending as much time there as we spent debating issues, saving >> through investigating fraud? >> i think that we can do better on medicare fraud. and medicaid fraud. there is fraud, providers to pay for -- bill for people and patients that they never saw. we can put more resources behind that. that was actually done in the clinton administration when donna shalala was secretary. and then it slipped behind. it makes doctors very uncomfortable, but it is quite important. >> "60 minutes" has done some

important work on that topic. but i think we're cutting them -- coming up on just about an hour. thank you so much. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> ladies and gentleman, over the last two days we have commented on the fact that over the past year it, the global financial crisis has generated consensus here and abroad that the increased government spending of the last year or so was quite necessary in order to deal with some rather severe long-term consequences of governments' responses. and so the point was that too little attention has been given to the long-term fiscal consequences of programs designed to deal with the meltdown of the last year or so. i think that we have -- i hope

that we have dealt with some of those questions about providing more attention to the impact and the long-term consequences of debt and deficits, and how this country and others can govern in those situations. i listened with a little amusement thinking that at this session we were going to get all the answers to all the questions that have been posed of the last couple of questions -- over the last couple of days. harry truman after world war ii, trying to get advice and was frustrated and not getting answers, and it was said that he was in search of 01 armed economist. [laughter] the guy could never make a statement to him and then say "on the other hand."

the questions are sometimes so complex that there are no simple question -- answers. you can make a statement an encounter with, on the other hand, there are these considerations. that may be where we are today. but we have reached the conclusion of this conference. i want to thank our patron saint, more kaplan, our conference director -- i want to thank david, our conference director. [applause] and jeff, for putting this all together. [applause] this has been a very lively, productive, and engaging conference. the proceedings themselves will be archived on the miller center web site in about a week. you can go to our web site and see all of you on camera. c-span has covered this

conference last night and today. i would suggest you check the local listings. and the miller center will produce a printed report in due course. thanks again. we stand adjourned. >> all this week on c-span, a look inside america's highest court. we spoke with the nine supreme court justices about a role in history of the court. coming up next, our interviews with associate justices stephen brier and clarence thomas. and later, a supreme court reporter talks about the court's 2010 agenda. >> c-,