of those states tomorrow will also be joined by peter hart of public opinion strategies. we will gauge the mood of the country involved in the political process and to hear that political assessment. we will talk about a book that looks at women in politics. that will be tomorrow, starting at 9:00, on "washington journal" which starts at 7:00 a.m. we will see you then. .

>> the house is back in session tuesday january 12th. live coverage on c-span. senate returns january 20th and

plan to consider a judicial nomination and increase in the negotiations in the white house healthcare bill. senate passed it's bill on christmas eve but does not include the public option in the house bill. they have to agree on the same version before sending it to the president. the same is to get a final bill to president barack obama before the state of the union address some time in early february rarrfebruary. secretary of state. hillary clinton delivered a wide ranging speech on development programs this as goevent conducted two reviews. this took place at the peterson institute for international economics in washington.

it's about an hour and 20 minutes. birdsall, the president for the center of global development. and we are absolutely delighted to host secretary of state hillary rodham clinton here at the center. we are eager to hear what she will say about the administration's ongoing effort to strengthen u.s. global development policy and programs. it is really great to see this crowd. this is the day of development. i am particularly pleased to have with me here today might to co-founders of the center -- my two co-founders of the center, the light just had the honor of introducing to the secretary. as many of you know, the center is all about improving the

policies and practices of the rich world toward the world of the poor. in the rich world, no country matters more and has more on realize potential to make a difference than our own usa. and doing this well is certainly in our own interest. with my colleagues, i set up this argument last year in a book that i had the pleasure of giving to the secretary, "the white house and the world -- the global development agenda for the next u.s. president." the book includes essays from in-house >> on a wide range of issues, education, climate, huge backpack -- potential for technology to make a difference in the world, global health, trade, migration, and how and

why for the reform of the assistance programs. i am pleased to hear that it has been a much read document at all levels in the u.s. administration and on the hill, and don't mind my recommendations are reflected here today directly or indirectly. the administration has launched a few major initiatives, the first-ever quadrennial develop made diplomacy you review. it will have the potential to shape developing policy in this country for years to come. i am very pleased at these efforts of the administration reflecting the growing understanding of the wishes we have made it the center about our policy, whether trade, migration, or climate change,

and about how all of these policies affect people and poor countries and in turn affect our own security, our economy, our image in the world as we have no doubt realized once again in the last couple of weeks. but before go any biography of our speaker. that would be silly. instead, from one girl to another, i do want it correctly applaud you, secretary clinton, as the world's most powerful diplomat for using all the tools in your tool box to put women and girls at the center of u.s. foreign relations. [applause] using your bully pulpit to speak out for women's rights and women's key role in development,

meeting with female symbols about -- civil society leaders everywhere that you go, giving voice to the most vulnerable women in the congo and others by calling to an end for sexual violence and mass rape. i remember with great pride when you spoke in 2005 alongside chuck hagel to offer bipartisan support for elevating investment and girls education. in particular, that was a great speech. secretary clinton is a key player in this administration in an administration that has pledged to put development alongside defense and diplomacy for a park -- a far more prominent role in u.s. policy. that is why so many of you are here today. i and many of my colleagues here and at the center think that an equivalent role would best advance america's interests. i look forward as i know all of

you do to secretary clinton's remarks. madame secretary. [applause] >> thank you so much. i am absolutely delighted to be here and to see a lot of familiar faces, colleagues and friends, development leaders, and especially to be here with the center for global development. i want to thank nancy for her kind introduction and for everything she has done with this organization and for development overall. i want to thank the peterson institute for international economics, and of course, fred -- i learned that fred was one of the incubators for the center -- and ed scott and others who have really made development and development policy such a

central issue in their lives as well as in our nation's life. i wanted to give this address months ago, but i thought it wise to wait until we actually had an administrator confirmed for usaid. [applause] and we are so pleased that that day has come. dr. raj shah, who if you have not met, i hope that you will. it has been a long wait to find the right person, but raj was worth the months we spent thinking about how to best build and strengthen usaid. he brill's -- he brings vision and passion, commitment and experience to this critical position. he will be at the table as we make decisions about development, and i look forward to a very close working partnership. i also want to recognize, for those of you who have not yet

met the new head of the millennium challenge corporation, daniel yohannes, who is here. we're delightfed that he left a very successful corporate career. he is an ethiopian immigrant to this country who really exemplifies the american dream but wants to get back. and so we are so pleased that daniel has joined this administration as well. i see alonzo fulgham in the audience, who served extraordinarily as our acting administrator of aid during this past year. i'm very grateful to you, alonzo. we have a number of the top team members from the state department as well. this is been a labor of love working to put development front and center for jack lew, our deputy for resources and

management who has taken a particular responsibility for development and foreign aid. 4 and-marie slaughter who heads our policy planning -- anne- marie slaughter who heads our policy planning operation, for maria otero who came from the world of development basiowothjh accion, and for our economic team. i will start today with a story that often goes untold. it is a story of what can happen around the world when american know-how, american >>, and

american values are put to work -- american dollars, an american values are put to work to help change people's lives. like many of you, i have seen the transformative power of development. i have seen the passion and commitment of aid workers to develop their careers -- who devote their careers to this difficult undertaking. i have seen american development at work in a village in indonesia, where new mothers and their infants were receiving nutritional and medical counseling through a family planning program supported by usaid. i have seen it in nicaragua, where poor women started small businesses in their barrio with help from a u.s.-backed microfinance project. i have stated in the west bank, where students are learning english today and learning more about america through a program that we sponsor. i of seated in south africa, where our development assistance, thanks to pepfar, is helping to bring anti-

retrovirals to areas ravaged by hiv and aids and neglect. but i've also traveled our country, and i had been in settings of all kind. i have listened to farmers and factory workers and teachers and nurses and students, hardworking mothers and fathers who wonder why is their government spending taxpayer dollars to improve the lives of people in the developing world when there is so much hardship and unmet needs right here at home. that is a fair question, and it is one i would like to address today. why development in other countries matters to the american people into our nation's security and prosperity. the united states seeks a safer, more prosperous, more democratic and more equitable world. we cannot reach that goal when one-third of humankind live in conditions that offer them little chance of building better lives for themselves or their children.

we cannot stop terrorism or defeat the ideologies of violent extremism when hundreds of millions of young people see a future with their jobs, no hope, and no way ever to catch up to the developed world. we cannot build a stable, global economy with hundreds -- when hundreds of millions of workers and families find themselves on the wrong side of globalization, cut off from markets and out of reach of modern technologies. we cannot rely on regional partners to help us stop conflicts and counter global criminal networks when those countries are struggling to stabilize and secure their own societies. and we cannot advance democracy and human rights when hunger and poverty threaten to undermine the good governance and rule on what needed to make those rights real. we cannot stop global pandemics until billions of people gain

access to better healthcare, and we cannot address climate change or scarcer resources until billions gain access to greener energy and sustainable livelihoods. the development was once the development was once the province of charity and governments looking to gain a lies in global struggles today it's almost three strategic economic and moral imperatives essential to advancing american interests and solving global problems as diplomacy and defense. because it's indies senseable it demands a new approach suited for the times in which we find ourselves. for too long our work has been driven by conflict and controversy. differents of where and how to pursue development have hardened

into almost theological developments that hold us back. these stand offs are not fair to the experts with their lives on the line doing the critical work. they're not fair to the taxpayers that by and large want to do good work in the world as long as money is used well. so it is time for a new mindset for a new century. time to retire old debates and replace dogmatic attitudes with clear reasoning and common sense. and time to elevate development as a central pillar of all that we do in our foreign policy. and it is past time to rebuild usaid into the world's premier development agency. [applause] now the challenges we face are numerous, so we do have to be

selective and strategic about where and how to get involved. , but whether it is to improve long-term security in places torn apart by conflict, like afghanistan, or to further progress in countries that are on their way to becoming regional anchors of stability, like tanzania, we pursue development for the same reasons -- to improve lives, fight poverty, expand rights and opportunities, strengthen communities, secure democratic institutions and governance, and in doing so, to a advance global stability, improve our own security, and project our values and leadership in the world. a new mindset means a new commitment to results. development is a long-term endeavor. change seldom happens overnight. to keep moving in the right direction, we must evaluate our progress and have the courage to

rethink our strategies if we fall short. we must not simply tally the >> -- tally the dollars that we spend or the number programs that we run, but measure the lasting changes that these dollars and programs help achieve. and we must share the proof of our progress with the public. the elementary school teacher in detroit trying to send her kids to college or the firefighter in houston working hard to support his family are funding our work. they deserve to know that when we spend their tax dollars, we are getting results. we must also be honest that in some situations we will invest in places that are strategically critical but where we are not guaranteed success. in countries that are incubators

of extremism, like yemen, or ravaged by poverty and natural disasters, like haiti, the odds are long. but the cost of doing nothing is potentially far greater. and we must accept that our development model cannot be formulaic -- that what works in pakistan may not work in peru. so our approach must be case by case, country by country, region by region, and cross countries and regions, to face the transnational threats and problems that we are encountering. we need to analyze needs, assess opportunities, and tailor our investments and our partnerships in ways that maximize the impact of our efforts and resources. two important and closely coordinated reviews of our nation's development policy are now under way. the inaugural quadrennial

diplomacy and development review that i have ordered is led by officials from usaid and the state department. the presidential study directed on u.s. global development policy is led by the white house and includes representatives from more than 15 agencies that contribute to our global development mission. as these reviews are completed and recommendations are sent to the president, new ideas and approaches will be refined. in the meantime, i would like to share a few steps that we are already taking to make sure that development delivers lasting results for people at home and abroad. first, as president obama has said, we are adopting a model of development based on partnership, not patronage. in the past, we have sometimes dictated solutions from afar, often missing our mark on the ground. our new approach is to work in

partnership with developing countries that take the lead in designing and implementing evidence-based strategies with clear goals. development built on consultation rather than decree is more likely to engender the local leadership and ownership necessary to turn good ideas into lasting results. but true partnership is based on shared responsibility. we want partners who had demonstrated a commitment to development by practicing good governance, rooting out corruption, making the wrong financial contributions to their own development. we expect our partners to practice sound economic policies, including levying taxes on those who can afford them, just as we do -- or in countries rich in natural resources, managing those resources sustainably and

devoting some of the profits to people's development. the american taxpayer cannot pick that -- pick up the tab for those who are able but unwilling to help themselves. some might say it is risky to share control with countries that have not had much success developing on their own. but we know that many countries have the will to develop, but not the capacity. and that is something we can help them build. of the millennium challenge corp. focuses on countries that have met rigorous criteria, from upholding political rights and the rule of law to controlling inflation and investing in girls education. we provide funding and technical support and the country provides the plan and leads the way toward achieving it. there is a lot of work ahead, but early indications of mcc programs are promising. we're using our resources to help countries that are committed to building their own

futures. this approach highlights the difference between aid and investment to read through aid, we supply what is needed to the people who need it. be it sacks of rice or cartons of medicines. but through investment, we seek to break the cycle of dependence that aid can create by helping countries build their own institutions and their own capacity to deliver essential services. aid chases need. investment chases opportunity. now that is not to say that the united states is abandoning aid. it is still a vital tool, especially as an emergency response. but for strategic investment -- but through strategic investments, we hope to one day, far from now, to put ourselves out of the aid business except for emergencies.

our commitment to partnership extends not only to countries where we work, but to other countries and organizations working there as well. new countries are emerging as important contributors to global development, including china, brazil, and india -- nations with the opportunity to play a key role, and with the responsibility to support sustainable solutions. long time leaders like norway, sweden, denmark, the netherlands, the u.k., japan, and others continue to reach billions through their longstanding work in dozens of countries. multilateral organizations like the world bank, the imf, the undp, the global fund to fight aids, tuberculosis, and malaria have the reach and resources to do what countries working alone cannot, along with valuable expertise in infrastructure, health, and finance initiatives. nonprofits like the gates

foundation, care, the clinton foundation, oxfam international, networks of ngos like interaction, as well as smaller organizations like a sea on -- accion and transparency international bring their own resources, deep knowledge, and commitment to humanitarian missions that complement our work in critical ways. some foundations are combining philanthropy and capitalism in a very innovative approach, like the acumen fund. universities are engaging in critical research, but the so- called urgent problems like hundred and disease, and to improve the work of development, like the work of the poverty action lab at mit. even private businesses are able to reach large numbers of people away that is economically sustainable, because they bring to bear the power of markets. a company like starbucks, which

is work to create supply chains from coffee-growing companies in the developing world that promote better environmental practices and better prices for farmers, or unilever/hindustan which has created soap and hygiene products that the very poor, long overlooked by private business, can afford. i mention all of these because we wanted to a better job of both highlighting the multitude of partners and better coordinating among them. there should be an opportunity for us to strategically engage in a country with these other partners where we are not redundant or duplicative, but instead we are working together to produce better results. we believe that this will open up new opportunities and create sap -- and increase our impact. second, we are working to elevate diplomacy -- development and integrate it more closely with defense and diplomacy in the field. development must become an equal pillar of our foreign policy, alongside defense and diplomacy,

led by robust and reinvigorated aid. i know that the word in a grayish -- integration sets off alarm bells in some people's head buried there is concern that integrating development means diluting it or politicizing it, giving up our long-term development goals to achieve short-term objectives or handing over more of the work of development to our diplomats or defense experts. that is not what we mean, nor what we will do. what we will do is leverage our expertise on behalf of development, and vice versa. the three d's must be mutually reinforcement.

the experience and technical knowledge that our development experts bring to their work is absolutely irreplaceable. whether trained in agriculture, public health, education, or economics, our experts are the face, brains, heart, and soul of u.s. development worldwide. they are the ones who take our ideas to turn them into real and lasting change in people's lives. some of the most transformative figures in the history of development represent that convergence between development and diplomacy. these development giants combined outstanding technical expertise with a passionate belief in the power of their ideas they did whatever it took to convince at times quite reluctant leaders to join them, and as a result help to build and lead national, regional, and international movements for change. today we have many such development diplomats working at usaid.

they embody the integration between development and diplomacy that when allowed to flourish can amplify both disciplines. for example, a lack of support from government leaders can be stalled or stymie development projects, particularly programs that target marginalized populations like people with hiv, women, or refugees. in these cases, our diplomats working hand-in-hand with our development experts can help make the difference. they have the access and leverage to convince government ministers to offer support. development also furthers a key goal of our diplomatic effort -- to advance democracy and human rights worldwide. i remember vividly visiting some years ago the village of saam and j >> a former peace corporation volunteer sent up a village post

up supported by this program. women began to speak about the health consequences of female genital mutilation and this is an accepted practice in their culture this led to a village discussion and the village voted democratically to end the practice. men traveled to other villages to explain what they learned ability why, f gm was bad for women and girls and by extension their families and communities and then other villages banned it as well and a grass roots political movement grew and vent tli government passed a law baning the practice overall. it takes a while over there as wells in our country but the larger point is the experience in this village demonstrates how development, democracy and human rights can and must be mutually

demonstrated. development can help secure democratic gains so those who care about making human right as reality, know that development is an integral part of that agenda. development is also critical to the success of our defense missions. development is also critical to our success -- the success of our defense missions, particularly where poverty and failed governments contribute to instability. there are many examples we could point to, but consider the situation in afghanistan. many people ask whether development can succeed there. well, my answer is yes. the united states supports a reconstruction and rural infrastructure initiative run by the world bank called the national solidarity program, which is made progress even in very challenging circumstances. through this program, more than 18,000 community development councils have been elected and more than 15,000 infrastructure

projects have been completed. now progress is difficult. but it is possible. that is why, as we prepare to send 30,000 new american troops along with thousands from our allied forces in nato and the international security force, we are tripling the number of civilians on the ground. they include agricultural experts who will help farmers develop new crops to to -- to replace opium poppies, education experts will -- who will help make schooling more sensible to girls so that they can have a chance that a better future. the work of these development experts helps to make future military action less -- less necessary. it is much cheaper to pay for development up front than to pay for war over the long term. but in afghanistan and elsewhere, u.s. troops are helping to provide the security that allows development to take root. in places torn apart by sectarianism or violent

extremism, long-term development gains are more difficult. no in the past, coordination among the so-called three d's has also been -- has often fallen short, and everyone has borne the consequences. secretary gates, administrator shah, and i are united in our commitment to change that. the united states will achieve our best results when we approach our foreign policy as an integrated whole, rather than just the sum of its parts. third, we are working to improve the coordination of development across washington. in the 21st century, many government agencies have to think and act globally. the treasury department leads and coordinates our nation's engagement with the international financial system. the justice department fights transnational crime. disease kroll -- control is a

global challenge in this interconnected world that includes hhs and cdc in so many other agencies. so is the quality of our air and water ways, something that the epa has expertise in. but as a growing number of agencies broaden their scope internationally and add important expertise and capacity, even working on the same issue from different hegel's -- different angles, coordination has lagged behind. the result is an array of programs that overlap or even contradict. and this is a source of growing frustration and concern. but it is also an opportunity to create more forceful and effective programs. the challenge now facing usaid and that state department is to work with all the other agencies to coordinate, lead, and support effective implementation of the administration's strategy. indeed, this is our core mission. do our permanent worldwide presence, our strategic

mission, and our charge to advance america's interests abroad, we can help align overseas development efforts with our strategic objectives and national interests. this will not be easy, but it will make our government work more effective, efficient, and enduring. we are already emphasizing this kind of coordination with our new food security initiative, which brings together the department of agriculture's expertise on agricultural research, usaid's expertise with extension services, the u.s. trade representative's efforts on agricultural trade, and the contributions of many other agencies. we know that attracting investment and expanding trade are critical development. so we're looking to coordinate the foreign assistance programs at usaid, mcc, and other agencies with the trade and investment initiatives of the ustr, the u.s. export-import bank, and the overseas private investment corporation.

and we need to seek to build -- and we seek to build on the success of regional models of coordination like the africa growth and opportunity act. we need to ask hard questions about who should be doing what in the work of the bulk -- the work of development. for too long, we have relied on contractors for core contributions and we of diminished our own professional and institutional capacities. this must change. contractors are there to support, not supplant. usaid and the state department must have the staff, the expertise, and the resources to design, implement, and evaluate our programs. that is why we are increasing the number of foreign service officers at usaid and the state department, and developing a set of guidelines to the qddr for how we work with and oversee contractors come on to make sure we have the right people doing the right jobs under the right conditions. fourth, we are content -- we are

concentrating our work in what development experts call sectors. we have invested many programs across many fields, often spreading ourselves then and reducing our impact. going forward, we will target our -- we will target our investment and develop technical expertise in a few key areas, like health, agricultural, secretary -- security, education, energy, and local governance. rather than helping fewer people one project at time, we can help countries activate broad, sustainable change. to start, we are investing $3.5 billion of the next three years in partner countries where agriculture represents more than 30% of gdp and more than 60% of jobs, and where up to 70% of the families disposable income is spent on food. farming in these places plays such a large role that a weak agricultural sector often means a week after -- a weak country.

small family farmers stay poor, people go hungry, economies stagnate, and social unrest can ignite, as we've seen with the riots over food in more than 60 countries since 2007. by offering technical support and making strategic investments across the entire food system -- from the seeds that farmers plant to the markets where they sell their crops to the homes where people cook and store their food -- we can help countries create a ripple effect that extends beyond farming and strengthens the security and prosperity of whole regions. we are applying the same approach in the field of health. one of our country's most notable successes in development is pepfar, which is held more than 2.4 million people with hiv and aids receive life-saving antiretroviral medications. to our new global health initiative, we will build on our success with pepfar and other infectious diseases, and we will

focus more attention on maternal, newborn, and child health, where there is still a long way to go. we will invest $63 billion of the next six years to help our partners improve their own health systems, and provide the care that their own people need rather than relying on donors into the far foreseeable future to keep a fraction of their population healthy while the rest go with hardly any care at all. death, we are increasing our nation's investment in innovation. you technologies are allowing billions of people to leapfrog into the 21st century after missing out on the 20th century breakthroughs. farmers armed with cell phones can learn the latest local market prices and know when the advance when a drop -- when a drought or a flood is on the way. mobile banking allows people in remote corners of the world to

use their phones to access savings accounts or send remittances home to their families. activists seeking to hold governments accountable for how they use resources and treat their citizens can use blogs and social networking sites to shine the spotlight of transparency on the scourges of corruption and repression. there is no limit to the potential for technology to overcome obstacles to progress. and the united states has a proud tradition of producing game changers in the struggles of the poor. the green revolution was driven by american agricultural scientists. american medical scientists pioneered immunization techniques. american engineers designed laptop computers that run on solar energy so new technologies do not bypass people living without power. this innovation tradition is even more critical today. and we're pursuing several ways

to a advance discovery and make sure useful innovations reach the people who need them. we are expanding our direct funding of new research, for example, into biofortified sweet potatoes that prevent vitamin a deficiency in children, and african maize that can be drawn in drop -- grown in drought conditions. we are exploring venture funds, credit guarantees, and other tools to encourage private companies to develop and market products and services that improve the lives of the poor. we are seeking more innovative ways to use our considerable buying power, for example, through advanced market commitments to help create markets for these products so entrepreneurs can be sure that breakthroughs made on behalf of the poor will successfully reach them. here again, there is such potential for fruitful partnership between our government and the dozens of american universities, laboratories, private companies, and charitable foundations that chase and fund

democracy -- discovery. for example, with help from the state department u.s. tech companies are working with the mexican government, telecom companies, and ngos to reduce narco violence, so citizens can easily and anonymously report gang activity in their neighborhoods. we brought three tech delegations to iraq, including a recent visit by eric schmidt, the ceo of google, who announced that his company will launch an iraqi government youtube channel to promote transparency and good governance. and we're sending a team of experts to the democratic republic of congo this spring to begin the process of bringing mobile banking technology to that country. in addition is not only the invention of new technologies -- innovation is not only the invention of new technologies. it is also any breakthrough idea

that transforms lives and reshapes our thinking. but one person's belief that poor women armed with credit could become drivers of economic and social progress. homeless women in south africa who refused to be deterred by their circumstances and organized themselves to gain access to loans and materials that enable them to build their own houses and eventually whole communities that they now help lead. or the insight between conditional cash transfer programs, which integrate efforts to fight poverty and promote education and health. these innovations have now traveled the world. new york city launched a conditional cash transfer program modeled after mexico's. grameen bank has opened to bring -- opened a branch in queens. we have got to ensure that extraordinary innovations are on a two-way street that we learn as well as we offer. and we need to discover and disseminate as many of these as possible.

sixth, we're focusing more of our investment on women and girls who are critical to the advancing social, economic, and political progress. women and girls are one of the world's greatest untapped resources. investing in the potential of women to lift and lead their societies is one of the best investments we can make. you all know the studies that have shown that when a woman receives even just one year of schooling, her children are less likely to die in infancy or suffer from illness or hunger, and more likely to go to school themselves. one reason that microfinance is employed around the world is because women have proven to be such a safe and reliable credit risk. the money they borrow is not only invested and reinvested and turned into a profit, it is used to improve conditions for their families. and it is almost always repaid. i have seen for >> i have seen for myself what

micro lending in women's lives and their family and communities means from bangladesh to vietnam and sdo seps of countries in between. you know the pro verb. give a man a fish and he'll eat for a day or teach a man to fish and he'll eat for a lifetime. if you teach a women to fish, she'll feed the whole village. today the united states is taking steps to put women front and center in our develop meant work. we're disaggregating by gender to measure how well our work is helping to improve women's work and access to education and. we're designing programs with the needs of women in mind by hiring more women to reach women farmers where women health educators to improve outreach to

women and girls and we're training more women to carry forward the work of development themselves for example of scholarships to woman, agriculture scientists in kenya. this is not just an issue of the strategic united states and it's a personal meaning to me and one i've worked on for almost four decades. i will not accept words without deeds to women's progress. i'll hold agency as countable to ensure our government and foreign policy support the world's women and achieve lasting meaningful results on these. world's women and a pop -- and a chat -- and achieve lasting, meaningful results on these issues. so as we apply these six approaches, more will follow -- some new, some variations on the past, all reflecting our commitment to find, test, and embrace ideas that work and to learn from our work at every step along the way.

a half century ago president kennedy outlined a new vision for the role of development in promoting american values and advancing global security. he called for a new commitment and a new approach that would match the realities of the post- war world. and his administration created the united states agency for international development to lead that effort and to make the united states the world leader. in the decades since, our nation's development efforts have helped eradicate smallpox and reduce polio and river blindness. we have helped save millions of lives through immunizations and made oral rehydration therapy available globally, greatly reducing infant deaths. we have helped educate millions of young people. we have provided significant support to countries that have flourished in a number of sectors, including economic growth, health, and good governance -- countries like

south korea, thailand, mozambique, botswana, rwanda, and gone up. -- ghana. and we have supplied humanitarian aid to countries on every confidence in the wake of hurricanes, earthquakes, famines, floods, and other disasters. americans can and do take pride in these achievements which have not only helped humanity but also helped our nation project our values and strengthen our leadership in the world. these efforts have not been the work of government alone. most people do not realize that we contribute less than 1% of our budget to foreign assistance. the balance is made up by the generous spirit of americans and is reflected across our nation's landscape, from farms to civic groups to churches to charities. over the years, the american people have opened their hearts

and their wallets to causes ranging from eradicating polio in latin america to saving the people of darfur, to helping people who are poor in asia purchase livestock, to investing in michael enterprise. this private giving exceeds the amount our government spends on foreign assistance. today we call on that same american spirit of giving to meet the challenges of a new secretary -- of a new century -- not only materially, but about giving time and talent. so those of you who care deeply -- who care deeply about development and who care deeply about the future of our country and our world, help us enlist more americans in this effort. help us tap into the talents of the first global generation of americans -- the young men and women graduating from our colleges and universities. encourage them to volunteer, to intern, to work not only for ngos, but to lend their energy

and skill to the state department and particularly to usaid. i promise that with raj's help, we will do more on our end to make sure our doors are open to this emerging pool of thinkers and doers. development work is never easy, but it is essential. it is the work that america is so in tune with. it reflects so clearly our own values, our spirit of cooperation. the tocqueville noted it so many years ago that we join up and we work together to help others as well as ourselves. we have an opportunity now in the 21st century to not only do it, but do it better than it has ever been done before, and to do it for more people in more places, to give it to every child the opportunity to live up

to his or her god-given potential, and to help create a world that is more equitable, democratic, prosperous, and peaceful. we can succeed, and when we do, our children and grandchildren will tell the story that american know-how, american pop -- american dollars, american caring, and american values helped meet the challenges of the 21st century. thank you all very much. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> madame secretary, that was an extraordinary speech >> madame secretary that was an extraordinaire speech in it's ambitious and it's reach. i salute you for the many thoughtful ideas. the secretary has agreed to take a limited number of questions. i'm going to try and insert one that won't count [laughs] it's called the falling of it. with my breath somewhat taken away, you know so many ideas, so many ambitions, i thought it would be interesting to ask you, what do you see as key cob straintses on this administration and this state department's, this revitalized

meeting those constraints. are they political, organizational? or for a lack of understanding in the congress? are they issues, problems of - in place already? constraints because of contracting in the case of foreign assistance. anything you want to say to give us a sense as if we want to be equally ambitious from the outside in how to help and how to push, how to monitor, how to make sure that this long-term development agenda is indeed realized in the way that you expressed it? >> as to the obstacles i would say all of the above and probably some you didn't list. um... i think that there's a great commitment to development in this administration. the president's budget is extraordinarily supportive of

what we are a cement together do and we appreciate that. so, it will be important for those of you in the larger development community to make sure that foreign aid is a priority when the budget gets to the congress that we get the resources both in terms of dollars and people that are needed. to begin to realize this long-term vision. we have to do our own work inside the government and have to do a better job coordinating and frankly, we have to try to look at what works and what doesn't work in our own backyard. there are lots of changes that were done either deliberately or inadvertently that need to be, i think, undone that have under mineed the capacity of the united states government to

really drive the development agenda. we also have to have better coordination on the whole of government front. i have been in countries where i've asked to see everybody doing any development and the ambassador, nicely invited people that are on a list given to him or her. he or she has never met the people has no idea what they are or who they do and each more the people themselves have not met the people. you have more ideas and then you have all the other agencies that are providing assistance of some sort or another. it's not coordinated at the country level and certainly not at the national level or the international level. so we need your support in making some tough decisions internally to try to break through some of the bureaucratic and organizational obstacles that exist.

we need to tell a better story on the hill. there many people that care deeply about development but rather than supporting the broader vision, kind of go for a small piece of the pie a program that's their earmark or their particular concern which may not contribute to the larger need we have. we have to be smarter about the story we d tell about the efforts. it's discourage together meet people around the world that are su supportive of america's efforts particularly of our new president. we say i don't know what you spent money on, we never see it and we're spending hundreds of millions of dollars and nobody knows. then what's deeply discourageing is we know what the chinese and japanese do. we can point to the buildings they build and roads they've

laid. i want the world to know what the american people are doing to try to fight poverty and fight for education and healthcare. that's why we have to bring it to areas of convergence. i think there's a lot of work that roj is going to be facing. that we need the help of the larger community. and let me say a word about contractors. some of the best people in development are doing contract work. i know people. i know people who used to be at usa i.d. that are now doing contract work. it's not financial sustainable. we cannot continue to send so many dollars out the door with no monitoring and no evaluation and no accountability. we can save, i want to bring some of those contract employees back inside as full-time american government development experts. that will be controversial and people will say.

well you know we did it for a reason. yes, but i don't think the reasons stand scrutiny. there will always be the need for contract workers but when you have - i think it's now down to four engineers in all of usa i.d.. that makes no sense at all. when you look at the added cost we have to break this in order to bring people inside to do the work they love to do and that they're experts in doing and we'll get more results for investments. there's many problems we know we'll confront but we're willing to take them all in. we're not business as usual. the situation is too pressing and problems of people are too visible and we have to do better and we will. >> okay. thank you very much. questions? back there. one back there and up here. start with heidi, ambassador or former ambassador to the oas?

>> i speak for all of the audience saying what a thrill sit to have a secretary who has both the understanding and the commitment to the development agenda so we're all here, it's very crowded room for a reason and thank you. my question is a little bit of a narrower one. you talked a little bit about energy but not much about copenhagen and climate change and agenda assistance with regard to adaptation and mitigation? >> right. thank you. as you know, we're very committed to a program of supporting adaptation and mitigation and technology transfer in the developing world. i went to copenhagen and announced that the united states would committee to do our part of 100 billion dollars - by 2020. we worked very hard to get the building blocks of an agreement that would enable us to do so.

the accord that we finally hammered out did have requirements for verification and transparency that have to be adhered to, in order for us to be able and frankly, willing to make the investments. i think for many of the developing countries. this is a lifeline that they are desperate to have and that they will work with us as we try to sort out how best to deliver on that commitment. this is going to be an on-going challenge, and that's why i mentioned we have to do a better job of getting some of the other countries that have a role to play more committed and more involved. i mean china is fast on it's way to being the principal manufacturer of solar manufacturing and windmill technology probably as well. how they will distribute and at

what price will be a huge issue. they're going to have the capacity and it's going to be really a market that they unfortunately are going to, if not control, have a major say in how it is accessed, so we have a lot of work to do. we're trying come up with some follow up actions to the copenhagen meeting. it wasn't obviously what many people hoped for. .

those amounts would swamp current development assistance. what's the prospect for making that assistance truly additional, so it doesn't rob peter to pay paul, and secondly, what are your plans for implementation within the u.s. government. would it be teleusaid, or separate? how would it be coordinated? >> some of it would be through usaid and the state department and some would be through contributions to multilateral institutions like the world bank. we are just beginning to work out how best to deliver thon commitment.

it's a fair question, fred, how much of it is additive and how much of it is out of the current budget. we don't know that yet, because we don't know what the congress is going to do. we obviously believe that this is a critical point. we would hope that with the stimulus money, we will actually be competitive on some of the technology, american technology, which we would very much like to see used, because i know that that will be of particular concern to members of congress, but i think we're just starting to try to figure out how we're going to implement this. and the accord itself is going to be the subject of meetings through the the year, we're looking hard at that's we best format for realizing this. the meeting at copenhagen was not a particularly well

organized effort, in part because there were many countries that wanted to avoid any kind of commitment and made their voices, unfortunately, loud. so we have an enormous amount of work to do. but the commitment is real, we intend to follow through on it. state, usda and treasury will be the big parts of it. there was a piece out of energy, that secretary chu will lead on, so there's going to be a whole government effort, but the bulk of the work will come through us. >> i was very encouraged to hear you refer to the advanced mrkt commitment, the idea of spending money at home that can help people abroad. on mitigation and adaptation, i hope usaid and policy people there will take the position that 90%, maybe even 100% of the

investments are development investments. we have an excellent paper by my colleague, david wheeler, that points out that looking back at how resilient countries are to floods and disasters, the single most effective investment has been girls' education. i have several other distinguished board members here, i want to see if they -- mark brown -- former board members, do any of you want to take the floor? mark? mark, introduce yourself, i think everybody knows. >> i'm a board member of c.t.d. >> to be able to say on behalf of non-americans in this room, i think your message today, madam secretary, your team, this vision, will be hugely well received all over the world.

but let me just ask two very quick questions. first you talked about the need sometimes to do things for strategic reasons, even if the development returns are not as high as they might be somewhere else. crudely puts, -- put, that means how much for afghanistan and how much for africa. i'd be interested in your comments on how you're going to manage that important balance. the second point, as one who admired u.s. i.d. for years, one of its biggest difficulties is not -- usaid for yearsering one of its biggest difficulties is the fact that its political masters have shied away when it comes under attack buzz a development project has gone wrong an development projects do go wrong. it's a risky, difficult business. i would urge you to recognize, as i think you did in that speech, you have to fight very hard, very often with the congress and others to defend

usaid, because it gets into a raveg of a crouch, wondering what it dare do for fear that one day there'll be a congressional invest, that's led to, if you like, a lack of imagination and risk taking in development, not just u.s. development but multilateral as well, which i hope with your leadership will be corrected. >> hopefully we'll avoid making a lot of mistakes. but of course, that is inevitable in a human undertaking and we will certainly, you know, support well thought out but unfortunately unsuccessful efforts, but we want to avoid the i could've told you so. we want to avoid that. there are certain things that that's why we're focusing on the country-led partnership. we want to avoid doing something that makes sense in washington that makes absolutely no sense on the ground in the country.

so as much as we can, avoiding that, and obviously, we're all on the same team, we're going to defend our teammates, i think that the question about money for afghanistan versus africa, it was a little bit difficult to answer because we have many interests in both places. i went to africa on a long trip in august and in part to try to see what we could do and do better, but also to try to prod countries, particularly resource rich countries to try to invest in their own people. the oil curse is alive and well in countries. the failure to deal with corruption, with violence, is alive and well. and it's heartbreaking because there's so much that could be done but we are -- we're having to change the minds of both government and private sector

leaders in order to achieve the kind of objectives we're looking for. i had susan levine, and i saw byron. susan and then byron. >> hi, susan. >> hi there. such an honor to be here today, what a wonderful speech. you mentioned in your speech the idea, i thought it was really important what you said about people in this country not understanding how their tax dollars are being used, why they're being used outside the country. you talked about transparency. i wonder if you could ewill be rate a bit on what you mean. that's been an issue that we've all felt, any of us who have been in the government at some time have known it's very hard to go to my home constituent of north dakota and talk about, you know, what we're doing in countries far away when farmers are having their issues. how are you going to be transsnarnte

>> first we have to eliminate some of the myths. you've seen the same surveys i have, when people complain about how much money we spend on foreign aid, and when you ask, how much money do you think we spend? and they say 10% or 20% of our budget and we say, no, we spend less than 1%, we have to sort of set the table so people know what we're spending and what we're spending it on and how it actually benefits our country and the people of our country, but that's why i included this in the speech, because i think that's a major part of our responsibility. i don't think that raj or i or anybody else can expect to have the support we're looking for unless we make the case and i'm more than happy to make the case. i think, too, when it comes to transparency, that's why we've got to do a better job of explaining what we do, how we do it and what the results are. it's not enough for people, no

matter how passionately they feel in the development world, to say, it's the right thing to do, we have a moral obligation to do it, that's all true. but you've got to go the next step and say, here's how we're doing it, here's the results we're getting, it's not just because it is the moral and right thing to do, albeit that is right, but because it is smart and important and here's why. especially in this tight economic time, there are a lot of americans who feel that they are far more deserving of their government's help and you know, you've got to recognize that. if you don't recognize that, you'll never build a constituency that deals with the political challenges but withstands them and keeps going and avoids what happens now, particularly on the hill, where people want to earmark and slice up so they can protect one piece, because they are not sure the whole thing can be protected. we want a holistic approach to

development, that can have a constituency in both the congress as well as the country that can enable us to, you know, keep making the case effectively. and we intend to to that. >> all right, i'm going to sneak in two more. byron and then ed. >> good to see you again. so i want to commend many things in the speech, particularly the emphasis of building the capacity of governments to deliver, governments and broader delivery system, outside of government, that's so important. but i also want to ask you about a bit of a tension, perhaps, between local ownership, genuine local ownership, and you said almost in the next sentence, sort of evidence-based approaches. so take water, for example. mckenzie did some work with the i.f.c. that looked at water scarcity across the river

basins. on a business as usual basis, you have a 40% gap. also maps the marginal costs of those interventions to close that gap. but of course once you start getting down on the ground, it's a very political thing, it's not just about the technicalities or the evidence. how do you square that circle, as a matter of principle in our development work? >> water is a great example. water is going to be the source of increasing conflict and i think it's a perfect example of combining diplomacy and development. i would hope that sometime in the near future, we're able to have an international effort focused on water that takes some of the politics not out of it, but diminishes it, because it's not just about what this country is doing to that country but about what all countries are doing to themselves and that we try by using technical expertise and political efforts to begin

to make the case that if we don't have a 21st century international water compact, for example, millions and millions of countries are going to not only be deprived of water, but you'll have more and more conflicts because of it. so i think you have to move on both fronts as the same time. you need the evidence-based technical exexpertise because what will we do in order to deal with the melting snow in the himalayas and the failure to replenish the major rivers of asia, or what will we do about the continuing struggles and conflicts between pastoralists and herders in much of north africa. there's lots of consequences. but i think we have to try to take it out of the finger pointing and bilateral or regional context and try to put it into a broader one.

i'm very concerned about it and i will welcome, you know, the advice of the study group that you referred to from mckinsey, but i think it's something we've got to get on and get on it quickly. there are going to be wars fought over water in the next 10 years if we don't try to get ahead of this and look for ways to come up with as many win-win strategies as possible. not easy, but i think that, let's try to eliminate as many of theable aspects of this problem, leave -- as many of the solveable aspects of this problem leaving the hard core ones for the end game where we have to use leverage to force countries to make the decisions. >> sounds like a great diplomatic. ed, very, very quickly. >> we want to thank you for coming here, it's an organization, i know you are aware, made up of very high quality people ready to support

you and administrator shaw in this effort. when i'm asked to talk about these issues, i'm asked, if you were to do one or two issues, what would you do? i say, increase the effectiveness and status of women in the society. there's nothing that would be highly impactful than that. then i go on to say something you didn't mention in your speech that is free trade. there's a study by one of our fellows that -- on trade, which basically postulates that 500 million people would be lifted immediately out of poverty if we had unfettered free trade. what are you thoughts about that issue? >> i mentioned trade because i do think trade is an important tool, but obviously didn't have the opportunity to go into it. i believe that we've got to resume a trade agenda and the political circumstances are

challenging, but we have to try. i do, however, believe, you know, we talk about unfettered free trade. i do believe we have learned some things about the benefits from trade and we've learned some of the challenges we face, that, you know, in some of the sort of free trade agreements we've entered into the last several years, the benefits have not been broadly distributed. in fact, in several countries, the benefits of the free trade advantages have not only gone to a very small group, but they've gone to people who were imported in to do the work instead of the people from the country itself. i think we need to enter into a new trade agenda with as many lessons learned as possible. and that is, you know, my view, we're working on that in the state department and we have to make the case to our friends on

the hill that the right kind of trade agreements are really in america's interest as well. we're going to -- we're going to revisit that and see if we can't be, you know, moving that up the agenda in this coming year. >> secretary clinton, for your ambition and your passion, on this issue in particular, we thank you. join me in thanking her. >> thank you so much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] 0q

>> up next, jeffrey lacker, president of the richmond federal reserve bank on financial regulation. following that, a forum on long-term health care services. also, a discussion on the current state of the health care industry. >> sunday on "washington journal" a look at the 48 states that are facing shortfalls in the new year with the head of the national association of state budget officers. also, the political outlook and the 2010 midterm elections with

hart research associates. following that, the latest book "notes from the cracked ceiling" on women and politics. that's live at 7:00 a.m. eastern here on c-span. >> the house is back in session tuesday, january 12. live coverage on c-span. the senate returns january 20. they plan to consider judicial nomination and increase in the federal debt ceiling. watch live coverage of the senate on c-span 2. off the floor, house and senate democratic leaders are negotiating with the white house on the health care bill. the senate passed its bill on christmas eve, but does not include the public option, which is in the house bill. they have to agree on the same version before sending it to the same president. the associated press reports that the aim is to get a final bill to president obama before

the state of the union address sometime in early february. >> "in fed we trust" from david wessel on fed chairman ben bernanke. he'll discuss his book with the former federal reserve vice chair and first director of the congressional budget office. part of book tv. >> jeffrey lacker president of the richmond federal reserve bank says that the recession has ended. he also talks about financial regulations legislation making its way through congress. this eept is hosted by the maryland bank ergs association and is 45 minutes.

>> dr. lacker was involved that determined not only the fed funds rate but decisions that affected interest rates in general, foreign exchange rates, employment and the general level of prices of goods and services. many of you were at this event last year and heard dr. lacker as he started in this role. we are certainly looking forward to hearing what he has to say about 2010 and he has agreed to take questions. so if questions come to mind during his presentation, write them down and he will try to answer them for you. dr. lacker. [applause] >> it's a great pleasure to be here with you again.

i want to thank rick and kathleen murphy, head of the maryland bankers association who does a great job for inviting me back here again. it's a pleasure to stage with -- share the stage -- [laughter] >> i did catch his assertions that he nailed it. so i fear my presentation might not live up to his quality. i'm trying to make up for it in modesty. [laughter] >> when i spoke to you last january, economic activity was contracting quite sharply. and i thought it was a

reasonable expectation to see growth in the second half of last year. and despite that, though, that there was substantial uncertainty about how the cracks would play out. there -- con traction,. in the end, we did see positive momentum in the second half of last year. third quarter growth in real g.d.p. exceeded 2%. and most economists expect to see a determination made that the recession officially ended about the middle of last year. that is undoubtedly good news. the level of economic activity is still far below where it was a couple of years ago. and unemployment is quite high. many house holds and firms are making due with far less than they once did.

moreover, there is substantial economic challenges for the u.s. economy looking ahead. having said that, though, i do believe that growth will continue this year and that incomes will generally improve. in my remarks today, i'm going to focus on the national economy and outlook for growth and beyond and touch on some of the important economic challenges i think we face. before we begin, i have to do the usual thing by noting for you that i speak only for myself and not necessarily for my colleagues on the federal ohm market committee. so when i spoke last year i went back and read my remarks, i spent a fair amount of time on a list of factors that appear to have contributed to the decade-long boom in housing and housing finance that preceded and appeared to have precipitated the recession that we saw in the associated financial market turmoil. the list included strong growth in productivity which passed to

growth in real income and demand for housing, low long-term interest rates, technologically improvement in credit delivery, which lowered borrowing spreads and expanded access to credit for many americans and a regulatory regime which may not have contained the moral hazard associated with the perception in the marketplace that many large financial institutions, including especially the government-sponsored housing finance, freddie mac and fannie mae, were too big to fail. i don't intend to discuss these at length. there has been a lot of that over the last year or so. but i mention them as a warning against explanations for what we have just been through. the recession that just ended ranks as one of the deepest on record and was led by the plunge in housing construction that followed the boom. during the boom, housing prices

almost prip tripled, but by 2005, evidence was emerging that the runup had gone too far. vake cans si rates began to rise in 2005. measures of home construction and sales activity began to fall. home prices also began to decline and reduced equity in household wealth and led to rising defaults in foreclosureses. the layoffs in residential construction dampened growth in household income and overall household consumption spending. that caused the rest of the economy to slow and then the expansion officially ended in december of 2007 and turned to con traction mode. the recession was longer and deeper than we experienced since the 1930's. i can cite a slew of dismal statistics but i will confine myself to one.

number of people employed has fallen by 7.2 million through november since it peaked at the end of 2007, a tremendous number. as i mentioned earlier, the con traction in overall economic activity appears to have ended last summer. the data we received since then indicate that activity has been improving. i will discuss the sector whose improvement has shown. housing, it hit low points last year and risen mod essentially since then. for instance, single-family housing starts increased 35% and new home sales have increased by 8%. and there are signs that home prices have bottomed out as well. one widely followed index of existing home prices nationwide rose 3.9% from may through october of last year. even with these welcomed gains, however, new housing

construction remains below the pace to accommodate population and income growth on a sustained basis, but that's to be expected, given with what hindsight appears to have been substantial overinvestment in housing during the boom. as a result, while i expect residential investment and many others as well will no longer be a drag on g.d.p. growth going forward. a lengthy period of adjustment my may be necessary before any growth in residential investment is warranted for our economy. consumer purchases of cars and trucks also began to fall off in 2007 and then fell sharply in 2008. sales hit a low point last february. and then increased very gradually before the cash for clunkers boosted sales over last summer. the subsequent payback afterwards was smaller than many analysts had forecasted,

however, and sales have improved steadily in the last four months, an encouraging sign. granted, sales of autos are still well below the long-run trend that would be needed to track the stock of those growing in line with population but just as with housing, it looks like autos will no longer be a drag on g.d.p. growth and should make positive contributions as well, again in welcome contrast to the last two years. apart from autos, real consumer spending, which fell slightly during the recession also resumed an upward path last year. in the third quarter, consumer spending excluding cars and trucks again increased at 1.6% annual rate and many economists are expecting a larger advance to be reported in the fourth quarter. let me be clear here, though, consumers are by no means in a great mood. the rise in the savings rate to over 4% from 2% last august

likely reflects a combination of apprehension about future income prospects and desire to rebuild wealth that was depleted by the broad erosion in financial asset and home prices. >> consumers have a bit more confidence in their income prospects going forward. business spending on new equipment and software, which fell sharp 21% during this recession has also reversed course and registered positive gains. business spending on capital goods may seem in congress in light of the low levels of measured capacity out lization in many industries, but excess capacity in some sectors does not preclude the emergens of

profitable opportunity to employ equipment elsewhere to reduce costs and drive increases in productivity and improvements in processes and services. so i expect business and development spending to continue on an upward trend. in addition to these favorable domestic developments there wab a worldwide development which is boosting demand. real exports were falling at nearly 30% annual rate. in the third quarter, real exports increased atlanta almost 25% annual rate. so toting up all these demand-side developments, g.d.p. grew at 3.50% annual rate, most rapid growth in several years. part of that growth reflected an inventory swing. early last year, inventory lick

which dation was below final sales. it will help in the fourth quarter and first quarter as well. that addition to production will necessitate the hiring of new workers, which will add to household nks. consumers having deferred will respond. this is the typical pattern in the period immediately following a recession. we don't see any reason for this time to be different. indeed, sides of improvement on the supply side of the economy arest dent. industrial production increased significantly since the low point in june of 2009. while the--- mid-summer production did reebd. moreover, the survey based indexes that we have, the ones published by the institute for

supply management have risen substantially last year and indicates that will growth in manufacturing activity is spread broadly across different industries. the new orders components of those indexes have registered more impressive growth over that period and now at the highest level since december, 2004. these particular indexes have a 60-year track record of giving reliable signals on recovery and we don't expect a break from form here. corporate borrowing costs have declined and corporate bonds are much lower than they were last year. many major banks have sold stocks and now have the capital to support new lending even if conditions turn out worst than expected. now, granted, we do hear

anecdotes frequently about business borrowers being turned down for credit or having long-standing credit lines withdrawn. it's important to recognize, however, that many borrowers will naturally face tougher credit terms because their revenue prospects are likely to be uncertain. moreover, the proper benchmark is the ability of the banking system as a whole to supply an appropriate quantity of credit, not any given individual bank since any one individual bank could be shrinking their balance sheet while others are expanding. i'm not aware of any serious evidence that the banking industry as a whole is inefficiently con train strange the -- constraining the availability of credit. there are other areas where we face major economic challenges,

however. commercial real estate is top of mind here. construction is falling, vacancy rates are rising, owners' equity positions, holders of commercial-backed securities have taken sizeable losses with more on the horizon as more projects are scheduled for refinancing in the months ahead and some community banks who have lent heavily to commercial real estate developers are facing rising delinquency and losses. no one expects a quite reversal and business investments in nonresidential structures, what we call the commercial construction component of g.d.p., business investment in nonresidential structures is likely to be a sizeable drag in u.s. growth in the near term. more worrisome is the labor market. we received the december employment report this morning. the number of people employed has fallen in 23 out of the last 24 months.

the unemployment rate is more than doubled to a 10% rate in december. wages are under pressure. average hourly earnings in december were only up 2.2% over the previous december, half the rate of increase we were seeing in 2007. going forward, as overall economic activity continues to improve, employment will return to an upward trajectory. we have seen a few initial signs of improving labor demand such as increase in the ampling work week since october and the rate that employment is falling has declined significantly since early last year. even the most optimistic forecasters do not expect a rapid improvement in national labor market conditions and we need to carefully employment and earnings for an extended period of time. so let me put the whole picture together for you. i think the most likely outcome is the economy will grow at a reasonable pace next year.

housing should recover from a depressed state and should be stable through next year. consumers should gradually expand spending. business investment and equipment and software should make a comeback and these should overcome a continuing drag in commercial construction. i'm often asked in the last couple of months how economists can be so upbeat in the light of the obvious economic challenges we face such as the weakness in the jobs market, low level construction activity and declining level of commercial construction. my answer begins with the observation that there are obvious serious problems coming out of every recession. we have a historical record of 31 recessions to prove it. despite the obvious problems at the end of each recession, we always recover and quite often more rapidly than many expect. and if you drilled down into the details of those 1 recoverries, some common elements are

apparent. i touched on one, the end of the cycle which is boosting production. the behavior of individual consumers during recessions. while many workers lose their jobs during a downturn and suffer gaitly because of it, a much greater number of workers remain employed, many of them will take the precaution of cutting back on spending. as the recovery begins to take hold, though. these workers gradually begin more confident about their future job and income prospects and begin to spend a larger fraction of their incomes. many firms will find it prudent to reduce capital sending but as demand revives these same firms will see an increasing number of viable investment opportunities for themselves. in short, deferred spending during recessions creates pent-

up demand by consumers and businesses which will bolster spending once the recession ends. and i see no reason for this cycle to be different. there are always risks to an outlook. the future is always uncertain. the labor market could recover more slowly than many expect which would constrain consumer spending. but household incomes and confidence could rebound more vigorously. in which case consumer spending could expand more briskly. these are standard risks on either side of the outlook coming out of a recession. it is worth mentioning a risk that to me seems particularly prominent in this recovery and has been mentioned here today. firms and individuals are facing major unsernts surrounding federal policies on trade, the environment, health care, financial services and taxes.

for a business considering a commitment to a new capital spending project or new hiring, it can be difficult to estimate after tax yields for some new endeavor in an environment that is so rich for proposals with higher taxes and regulations. this uncertainty has not been so pronounced in previous recoveries could deaver new investment in hiring commitments and could be hence, a slower recovery. turning now to the outlook in inflation and monetary policy. a year ago when i was here, many expected the low economic activity to depress inflation. things turned out differently. inflation expectations, which embody projections about the future conduct of monetary policy have remained fairly stable according to the best

available measures. this has an anchoring effect on core inflation which average 1.5% last year. in my view, that is a good performance and i hope that continues. fortunately the risk of a pronounced reduction seems to have diminished substantially. during the recovery period ahead we may face an increasing risk which has occurred in past recovers. while it appears to be minimal. we have to be careful to keep inflation and inflation expectations from drifting around. what we will need to be careful about at the federal reserve is when and how to withdraw the considerable monetary policy now in place. this requires monitoring, but this time the fed will have two instruments to grapple with, not just one. the fed has targeted the overnight funds rate which

requires appropriately adjusting the supply of our monetary liabilities in order to intersect demand at the federal funds target rate. so by targeting the federal funds rate, we gave up control of monetary liabilities. varying the fed funds rate affects other rates and that's how we influence economic outcomes. since october of 2008 as the bankers in the room are very aware, we have had the authority, the reserve banks to pay explicit interest on reserve balances that banks hold with their reserve banks. this gives us the ability to vary independently the amount of our liabilities and critical overnight interest rate. essentially, we have so much reserves in the system that interest rates are driven down to this peg, this interest rate we pay on overnight balances

that becomes the substitute. when it comes to withdrawing monetary stimulus, the federal reserve will be able to raise interest rates on reserves and influence the constellation of interest rates or drain reserves which will have its own effect on the constellation of interest rates in the economy or we could do both. now, despite these added challenges and added complexities in this recovery, this new regime, the core objective of monetary policy remains the same and that's price stability. this will require keeping expectations

>> it appears to be brighter, our economy does face significant challenges over the longer term. i'm going to conclude by mentioning two of them very briefly. the first challenge that we face over the long run that i want to highlight is the path of future federal budget deficits that are applied by current fiscal policies. it should be self-evident that any government's debt can't grow faster than the economy itself grows which is implied by current law. ultimately, something has got to change, taxes are raised, spending is reduced or the real value of debt is erode td through infation. that latter is one i will

oppose, by the way. while economists can debate changes in spending and tax policy, at some point a government debt that grows relative to g.d.p. so the ratio is rising, at some point that debt will compete with private borrowing and lead to higher interest rates, slower capital aaccumulation and therefore slower improvement in our country's standard of living. when shortfalls get large enough, they would be exacerbated if there were a.m. bigity about how that was going to be resolved. failure to establish credible plans for bringing our fiscal position back into balance could dampen economic growth in the years ahead. another challenge is in the area of financial regulatory reform.

we need to establish clear and credible limits to the financial safety net which has grown in response to this crisis. i believe that the crisis itself was in no small the measure of us having no clear limits to the extent of government support. leverage and excessive risk taking were encouraged by the belief that large parts of the financial system were implicitly protected and those beliefs have been ratified in the event. if we retain a stance of official ambiguity, which institutions will benefit from support and which of their liabilities will benefit, if we do that, i suspect our susceptibility will continue to

grow and with each crisis, the safety net will become ever more expansive. a more expansive safety net will require more stringent regulation. but regulatory systems are necessarily limited in their capacity to completely offset the effects of the safety net. so just like ambiguity could limit our capacity for growth in the long run in the years ahead. once again, though, it's a great pleasure to get to speak with you. thank you very much. and i would be happy to take your questions. [applause] any questions?

[unintelligible question] >> housing activity was extremely strong by historical standards and especially in the decade from 1995 to 2005, but especially in the several years preceding 2005. housing activity as i noted has declined to a level that's far below what we need to replace the housing stock and keep up with the growing demand for housing stock. having >> i think what we should expect

and hope for is a level of new home construction that's flat going forward, the level of existing home sales have risen. there are a lot of foreclosure sales. so markets seem to be liquid. i think that liquidity was awaiting the appearance. prices appear to have bottomed out virtually nationwide. it lent some people confidence because they have a sense of confidence about the value of their house, finding it easier to price their houses. we have a housing market that's functioning, it's not in freefall where people are holding things off the market. liquidity has come back to the housing market, people selling and buying existing houses. i don't think we should hope for an expansion in residential

construction to play a major role. [unintelligible question] >> so the question is what role do i expect the federal reserve to play in fiscal policy issues ahead. there's a simple answer and a delicate answer. the simple version and delicate version. the simple version is with regard to congress's decisions about tax and spending, the federal reserve has typically acted as an institution ready and willing to offer its good counsel to congress, but it's ultimately up to congress to decide on matters of the public's purse string.

within the federal reserve system, we're acutely aware because we're in the business of intermediate and longer run projections, aware of the interplay between the budget deficit and the economy and there are a number of ways in which sustained zift can be dell teryouse in the long run. members are going to counsel and good idea it is a good idea to close the gap. the delicate version of your question has to do with the fact that the federal reserve has engaged in some activities, has done some lending that from at least an point of view constitutes fiscal policy in their own right. when we lend to a private institution, if we don't expand the money supply when we do it, we have to sell u.s. government securities so essentially we are

borrowing, we are issue ink t-bills themselves and lend money to bury a.i.g. and congress has a right to view that as fiscal policy and we're very aware that it is and so we take that responsibility very seriously. i think that there's coming out of this crisis, this lingering question about the federal reserve's balance sheet and its implications for fiscal policy and sort of the politics of central bank lending. and for now, i'll leave it at there. >> can you talk about the rention -- residential market stabilizing and mortgage-backed securities portfolio and what your outlook was on the commercial real estate scenario.

what do you see the fed doing if anything to prop up commercial-backed mortgage securities and portfolios? >> it's a good question. let me first observe that a fall in commercial construction activity and problems in commercial-backed security markets are typical coming out of recession and typically a late-veppings part of the cycle. it declines later, recovers much later. i think that has to do with the lag which is longer for a commercial build project than a residential project. now commercial mortgage-backed securities are a more prominent part of the financing of commercial real estate endeavors now than they were 10, 20, 30 years ago. having said that, they're still

not the only game in town and not the only source of financing. so the fed has one program -- well, first, let me say before this, i think the commercial real estate problems at community banks and regional banks is a manageable one. there are some banks that were heavily concentrated, chose some strategies in terms of execution and region that turned out poorly for them so we are seeing bank failures around the country particularly in markets that are especially troubled, georgia, california, florida and the like. but i think for a banking system as a whole, it's going to cost the american taxpayer a bunch but it is manageable. for the mortgage commercial-backed securities program, the government has a mortgage program -- i don't want to tell you the acronym, some

big acronym -- [laughter] >> and it's like providing a little bit of lending and leverage to private entities that want to raise their own capital to invest in commercial mortgage-backed securities but it's focused on new issues and not so much on seasoned issues. so it's not going to help with sort of the rollover and finance challenges ahead. my overall take is that knock on wood it is a manageable problem. let me go over to this side of the room. let's go with the young lady who stood up. >> your projections for the recovery seem to be based largely on prior recoverries. this recession was -- the current recovery is based a lot on fiscal stimulus coming from the government. how have you factored that into

your current projections? >> the question is how have we factored in fiscal stimulus which appears to be unique in magnitude and structure in this recovery to our forecast, our sense of how the economy is going to recover? well, it does seem as if that stimulus is adding to growth and did add to growth in the second half and will add to growth in the first half of this year. the amount it adds is going to be diminishing over the course of the year. the economics of the relationships i described, the way consumers gradually recover confidence, at least broad measure of them, the way firms growl -- gradly recover, that is the same qualitatively with or without the stimulus. the magnitude may differ, the location of the recovery groths may differ, it may steer groths

in particular sectors and away from others. but overall, the contours may be different from quarter to quarter but it may look roughly similar. and a lot of analysis in the federal reserve system of that thought experiment, what would the recovery look with or without it and that comparison and it's pretty clear we would still get a recovery. the guy who didn't stand up. [laughter] >> we keep hear comments from bloomberg about 10% to 12% residential mortgages that are 60 or more days behind. a very large percentage of those go into foreclosure. is that something we should be concerned about? >> it depends on whether you are one of those borrowers. there is a huge adjustment process under way in the housing

market of people who have mortgages that they can't afford or have mortgages that are greater than the value of their house. it's going to take a long time for the system to digest those problems. servicers are working overtime. we, in fact at the federal reserve helped sponsor these events where ap bunch of servicers come in a room and invite a bunch of mortgage borrowers that are seemingly in trouble or risk of default and try to get them into something they can afford to see what can be done. but that is a labor-intensive process because it involves collecting new data. you have to gauge the borrower's current income so you know what they can afford. you don't want to modify a loan and then have it blow up again in a few months and sort of sort through what's best for everyone combined. should they stay in the house or

not. and that's just a data-intensive process and it's tough for the borrowers to pull together the right paperwork. it's tough for the servicers to get through this mountain of paperwork that's flowing through. some servicers are doing a better job than others. the treasury has helped with the modification programs that are out there. but it's going to be months and months before we're over the hump. .

evictions are not going to put the economy in the tank. one more from over here. >> i'm interested in whether or not sips you're lookt timing issues for when the fed would invest itself in the long duration securities, whether that will have any impact on what you guys sell. >> so i think the question was about the new curve. he was asking about -- wondering about whether the timing -- so, you know, we have all these assets. we have this large-scale asset purchase program that we're about to complete in which we bought or are planning to buy one and a quarter trillion dollars of mortgage-back securities, and we bought $3hundred billion of treasury securities under that program as well, and some more agency data, i think $175 billion.

and so the mortgage-backed securities and the treasuries as well are going mature and roll off, but, you know, obviously one of the options that we have for draining bank reserves is to sell some of the securities. so that's an interesting question. in the mortgage-backed space, we've announceded this purchase program, and you'd expect market interest rates to take into account that we're going to be buying for a while and, then after that, we're not going to be buying. so myself, i'm not expecting a huge increase in mortgage rates on the date that our purchase program ends. you know, if there's a little blip, maybe that would happen, but i think expectation about the our program has been built into mortgage rates. out beyond that, you know, i think markets are going react to decisions we make and

announcements of plans we have. i think the experience we've had over the last year and a half suggests that those announcements line up pretty well with what actually happens, and so things get built into rates pretty rapidly when we announce our intentions with the asset holdings. thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> thank you, dr. lacker. we appreciate you taking time to come and speak to this group, especially time to answer some questions. this concludes our program for the year. the first friday economic outlook forum is an annual event, one that we hope we will expend every year as it becomes bigger and better. mark your calendars now for first friday, 2011. it's january 7 right here at the b.w.i. marriott. i'd like to thank our speakers,

the maryland association of c.p.a.'s, the maryland chamber of commerce, the maryland realtors associates, the gazette of politics and business, and all of our guests for making the third annual first friday economic outlook forum a success. bundle up and drive carefully. >> coming up -- a forum on long-term healthcare services.

following that, a look at the current state of the healthcare industry. and later, discussion on health insurance exchanges. >> the house is back in session tuesday, january 12. live coverage on c-span. the senate returns january 20. they plan to consider a judicial nomination and an increase in the federal debt ceiling. watch live coverage of the senate on c-span2. off the floor, house and senate democratic leaders are negotiating with the white house on the healthcare bill. the senate passed its bill on christmas eve, but it does not include the public option, which is in the house bill. they have to agree on the same version before sending it to the president. the associated press reports the aim is to get a final bill to president obama's desk before the state of the union address sometime in early

february. >> today, president obama's ambassador at large for global women's issues talks about supreme court justice ruth bader ginsburg, the changing roles of women in the law, and the rights of women around the world, at 7:00 eastern on c-span's "america and the courts." >> next, a forum on long-term care services. we'll hear about a provision in the senate health bill that creates a long-term insurance program for the elderly and disabled. it's called the class act. this is three hours and 25 minutes. >> good morning. welcome to this health affairs briefing on our new january 2010 issue, advancing long-term services and support. this is a very special day.

we are very excited about this issue, which is the first full issue of the journal that has ever been devoted to this particular topic of long-term services. the we are extremely grateful to the foundation which provided us with the funding to execute it. we stoont verge of acting probably major legislature, but historic long-term care legislation as well. as many of you are very well aware, key provisions in both the house and senate versions of health reform pertain to this area of long-term services and supports, the largers one, of course, being the provisions of the community living assistance services and supports act, or class act.

we'll be hearing later today from one of the key people who made sure that the class act was part of health reform, connie garner of the senate health committee. there are other provisions in the bill, as you well know, that pertain to long-term support and services, and we'll hear more about those today, and the fact that this is the case, that health reform will also include to a meaningful extent long-term care reform is an achievement not to be understated. as our thematic issues state, moreover, there is a lot of reforming left to do, and there will be even if the class act and the other provisions are enacted. whether the goal is advancing the quality of care of long-term services and supports, or providing the most appropriate type of care in the most appropriate setting, or providing the most appropriate care for those nearing the end of life, or recruiting and

paying a top-class, long-term services and support workforce, or figuring out how to spread the burden of the cost of all of this, all of these questions will remain with us and there will an lot of work to be done. papers in this issue tackle all of these subjects and lay out an agenda for those in the long-term care sector, as well as for those in government as to how best to proceed. as i say for obvious reasons, we're very excited about all of this. and we're also excited because today marks the debut of the new redesigned health affairs. renewed in that we have this new redesign,&a format for the physical addition of the journal. we also have and are rolling out today the early prototype of our redesigned website, which will be unfolding in its greater glory later on this year.

as of this issue, we also convert from bimonthly to monthly publication of the hard copy of the journal, there being plenty of health policy to publish over the course of the year. we have a new logo, as you see, and we even have a new motto. we're now at the intersection of healthcare and health policy. we hope you'll take a copy of the redesigned journal with you and see for yourselves what we've been able to execute. we think you will find it much more readable, much more visually interesting, and much more user-friendly than ever before, at the same time as maintains the core of the old, constant health affairs, peer reviewed, analytical, serious thought on all spectrums of health policy. now, none of this would have happened without many, many hours of loving care and a fair amount of blood, sweat, and tears. and first of all, i want to introduce to you today and say

thank you to the health affairs staff who are here today, all of whom worked hard to execute the new journal. would all of you here today please stand up and take a bow. bow? [applause] some of them are actually out in the hall is still working to get this show on the road this morning. i also want to say things in particular to donna abraham who is the lead editor on this issue. thank you very much. i went to thank mary of the university of pennsylvania who be speaking later today for serving as are out urging our outside adviser. i want to say thanks to barry wheeler who helped to engineer the publication of this issue without whom we would not be here. thank you very much.

i want to thank the foundation once again for making this issue possible. i am going to introduce to you the ceo of that foundation. he will make some brief remarks. he comes to us from california. that is where the foundation is headquartered. the mission is to advance the development of a sustainable continuum of care for seniors. it is the second largest foundation in the u.s. focused entirely on improving the quality of health and lives for seniors. before hand, he served as the director and chief medical officer for the los angeles county department of health services. that is after serving for the department's senior all medical director. in earlier he had served as the regional medical director for california health programs for the largest network models that

were planned. previously, he worked as an academic internist. if he is currently adjunct professor of medical at ucla. he served as founding jury of ucla's five-year program. please took me in welcoming him. [applause] >> good morning, everybody. it's a pleasure to be here. first let me say that we are thrilled to see this issue arrive today, thrilled to see all of you here. this is a very important moment, really, a defining moment in how we think about healthcare and particularly the care of seniors. i really want to just begin by thanking susan, her entire team of health affairs team for bringing this issue to

fruition. with when we had this idea a little more than a year ago and we came to susan and said, well, we have this kind of nutty idea, we think you should do a theme issue on long-term services and supports, and we'd like to support the development of that, doesn't seem to be a topic that you guys have covered in a long time and not one that you've covered in a really robust way certainly in a long time. and from the very first conversation, susan and the team said absolutely, this is a great topic, it is time, it's something we should give more attention to. and we're here today to really celebrate bringing together the leadership that put together this issue so. susan, thank you very much. i really want to thank the authors and the folks who helped in an editorial perspective put this issue together. many of the authors are here today, and some of them we'll actually hear from. you all have done a terrific job. many of you have worked on these topics for many, many years, and we're just thrilled

to see health affairs create a vehicle, an opportunity to bring together your thinking in a comprehensive and theme market way. now's the time. it's really important. and we think the product of all of your work, vidly and as a whole, is unbelievable. i had a chance to read the whole journal over the holidays, and it was just thrilling. we are truly at a seminal moment. if you look at the things that are contained in both the house and senate versions of healthcare reform, this is not just a bill about standard healthcare reform. and if you think about where we started out, well, it will be about coverage, it will be about access, absolutely, that is the discussion that's going on here today in washington. but if you look at the bill carefully, the reform is baked into this bill. so when you look at things like

creating an office to look at eligibles, a center for innovation, if you look at the proposals around care coordination, chronic care, if you look at the ideas around improving home and community-based services at the state level and things that would improve spousal impoverishment protection, taken as a whole, it certainly isn't everything, but long-term services and supports reform starts with what's in this bill. really cares about things like improving quality, creating more care, creating a quality of life and not as tough agenda, and the really important decisions like and in the cost curve -- it is for those who use the system. it is for those most in need for those opportunities. we think that today's issue and the comments that will be made by i by our officers will

really be here today. thank you very much. [applause] >> as bruce mentioned, several authors are also with us today who will not be presenting. it is only because we cannot have a news briefing that was three or four days long. we did not include all the others in this issue. i do want to say a special word of thanks to don taylor of the duke, diane meyer of mount sign a, and all who contribute to the issue. they were healthy to have as with them. long-term care and health care are long-term issues. there also a deeply local and personal issues. we also talked of a national perspective. we want to be conscious that help affairs is very much a local issue. we are very happy to have with us this morning from the d.c.

city council, an independent council member of the d.c. council. he was elected in 1997. he headed the committee on health care for the council. he is also a member of various other council committees including the committee on government operations and the environment. we asked him to come today particularly because he has led dc's effort to make enormous and often ensung inroads into the insurance problem here in washington, d.c. he has begun to take on the long-term services and supports issue. people from washington are as much a citizen of the country as anybody else and a deeply affected by these issues. let me briefly welcome to the podium to make some remarks from a local perspective, councilman

catania. >> good morning, everyone. thank you, susan, for that introduction. this is an issue that is incredibly important to the district of columbia. yet 19 skilled nursing facilities. we have twice as many cmf did deficiencies at the national average. three homes are rate among the worst in the country. this is an area that has long been ignored in the city. we just sent only the quality of care. do you measure quality? how you define efficiencies? a few components we are working on in kansas is a requirement for physician services on the premises. we found [unintelligible]

we have found that the first thing that our skilled nursing facilities do is called 9-1-1. 20% if you live in the district, 20% of our pms calls in the city are to our 19 skilled nursing facilities. the average more than one a day. a few of the reforms we are seeking is a physician present at a minimum of 40 hours per week. we are looking at increasing the nurse staffing ratio per patient per day. we are requiring expand its services on our side that include everything from a tie tree to dialysis. -- from podiatry to dialysis. we are making a huge investment

in community based care. we have tripled the number of placement of our elderly persons with disabilities labor. we have invested more heavily in any jurisdiction in the country with community-based care. we have to make sure we reconnect our center with patients who are in nursing homes and has seen people checking in and not checking out without aggressive front end. we are requiring within 72 hours of its mission a conference of help analysis. there'll be discharge planning under way to make sure that if the patient need to be there they will be there. if they do not need to be there, we will connect them with our epd waiver. we are looking at being very pro active in making sure that our nursing homes have no way out.

if you are in the long term care business, we pay you a hefty wage to take care of our residents. it will no longer be standard operating procedure as a privilege. with restraint in not only our use of restrictive licenses, but strengthening our petition for receivership so we can actually assume control if we are not satisfied in the way we are operating. a few other items. we are going to be eliminating the use of restraints in the district. we are strengthening family councils and forcing a greater care. we are increasing the standards for our nursing home administrators. we will test competency to make sure you can sit 3 class and absorbent.

we are improving the way in which our community whichlbg community [unintelligible] these are just a few of our items. we have policies of every nursing home. we saw that some had no procedures. what we are undertaking in the district is an effort to be the finest provider of long-term care. we have started this for steps. we thank you.

>> as we can see, much remains to be done on why our issue is so well times. we will begin our first panel which is an overview panel on you is getting and delivering care. some of our audience are encountering these issues for the very first time. we sat -- we strive to set the context. we are going to try to do it today as well. i will introduce our three panelists for our first panel. and then they will get up and presented their remarks. you also have copies of their slides in your packet. we will hear from stephen kay, an adjunct professor at the institute for health and aging

and the department of behavioral sciences at the university california's san francisco. he served as co principal investigator at the center for personal assistance services, which is a rehabilitation training center funded by the national institute on disability. he is also co-director of the university of california at san francisco's disabilities to cystic center and a co principal investigator of the specific ada center. he is a ph.d. -- ph.d. from stanford. we will then hear from carol levine who is with the united hospital fund in new york city. she directs the family health care project which focuses on developing partnerships between health care professionals and family caregivers. she directed the citizens

commission on aids in new york city previously. she was senior staff associate of the hastings center. in 1993, she was awarded the fellowships for her work in aids policy. she edited a book called "always on call." she also co edited a book called "the cultures of caregiving." she has a personal experience with being a family caregiver, having cared for her brain injured husband for a number of years before his death. we will then hear from robyn stone, and the executive director for the center of aging services. since she started the institute 10 years ago, she is developed a number of national programs including the center for medicare education, the better

jobs better care of national program. she was a political appointee during the clinton administration, serving in the department of health and human services. she also was assistant secretary for aging in 1997. she is been a senior researcher for health services research and project hope center for health affairs previously. to begin, but welcome to the podium. let's welcome him to the podium. >> people tend to view long-term care through a particular lands,

depending on what they are interested in. some people focus on specific federal programs. they might focus on quality issues or workforce issues. they also tend to focus on specific populations of elderly. as carol levine said in her article, the whole is often eclipsed by a separate part. this article is an attempt to paint a picture of that hole, although i realize there are plenty of my own biases in it. we include people receiving long-term care from public programs, from family members, from private paid workers, whether they live in the community or institutions,

whether they are elderly or of not elderly, whether they are nearing the end of their lives or perhaps have a stable and live on disability. to do that we analyze data from five national surveys conducted by various federal agencies. for details, see the article which you have that is written -- which was funded by the national institute for research. how many people need long-term ca how many people need long-term care services? well, that depends on how you define the long-term care population. it can range from -- it can range all the way up to 11 million people if you include people who need help with any kind of routine daily activity, or you can narrow that down considerably to about three million people if you use the narrow definition, which is needing help in multiple activities of daily living,

such as typically bathing and dressing. but any way you define it on the noninstitutional side, the noninstitutional, long-term care population is larger and often quite a bit larger than the institutional long-term care population, which numbers between 1.5 million and 1.8 million people. who are the people who need long-term care services? well, it's well known that women dominate, especially in institutions. about 2/3 of women. but you may find it surprising that half of the overall long-term care population is nonelderly, that despite the fact of the vast number of people living in institutions are elderly, but overall, half of the long-term care population is elderly, even if you define it rather narrow. you also may be surprised to find that half of community residents who receive long-term care services live in or near poverty, meaning that their

family income is less than 200% of the federal poverty level. who provides services to people who live in the community? as you would expect, a person's primary source of help varies considerably with their age. varies with their age. parents dominate for adolescents and young adults. by age 30, the spouse becomes the dominant helper, followed by a daughter or a son. more often a daughter and then a son. that holds true until age 75 trade at age 75 spouses start to decline and daughters and sons take their places. only by age 85 do paid helpers are really come into play.

as you can see from this chart, and paid helpers' dominate for people of all ages. 9 tons of people needing help -- 9/10's people needing help get it this way. who pays for long-term care services? that depends on the setting. on the institutional side, medicaid dominates as the pair. usually with a substantial copiague by the resident or his or her family's -- copay by the resident or his or her family's. for others, the resident pays all or most of the bill, which is typically $5,000 a month.

medicaid is not a major player on the institutional side except for early in the nursing-home stage. on the non-institutional side, things are different. you may find it surprising that medicare and medicaid are nearly equal as the players. medicare pays for home health services after a hospital discharge. that sense of being a lot of the it services in the community. often it is the person and his or her family that pays primarily for services. this pays typically last, at $250 per month. if people save money when they are hiring workers themselves by hiring an independent provider which not only saves them money, but gives them more consumer control in contrast to government agencies, nearly

always use an agency providers. oops. how much does it cost. in terms of medians, there is a factor of five, the difference between the two. about $5,000 per month for non- institutional care services. the indians cannot tell the whole story. on this -- medians do not tell the whole story. this shows that base and long- term health services are almost always less expensive than nursing-home services. nursing-home services hardly ever cost less than $3,500 per month. 87% of non-institutional long- term care services cost less than $3,500 a month. these are two very different

populations. they are very different populations, but not as different as you think. the average number of daily activities that people need help with is 3.5, compared to 3.9 for people living in institutions. there are a lot of people with rather severe disabilities in both groups. 40% on the institutional side need help with five or more activities of daily living. they are different, but not as different as you think, and yet you have this factor of 5 ratio and cost. in terms of national expenditures, we are getting an estimate of $147 billion per year and national expenditures. you can add or subtract $20 billion depending on what you want to count as long-term care verses non.

more than three-quarters of that expenditure is for institutional services, even though, as you recall, institutional services are a minority of the long term care population. 80% of those expenditures go to elderly people. half of the long-term care population are elderly and half are non-elderly. before we conclude, i think this chart shows fairly clearly what we have a long-term care system that is out of balance. most are services that people do not want. the services that people do want are often tightly rationed. i think it will be fairly hard to justify the five to one cost

ratio when we find that the populations are not that different. we feel that the emphasis on institutional services for the elderly may end up the nine non- elderly people that need long term services their share of the long-term budget. we also think that there is evidence that most people do not seem to use paid help when they have an alternative. people cannot use paid help as a secondary helper. that turns out to be very rare. we wonder whether these considerations over the woodwork and fact -- effect, we feel that these may be exaggerated. [applause]

>> thank you. i am really delighted to be here. i wanted to thank susan and her staff for working so hard on this beautiful new special issue and the scan foundation as well. i also want to acknowledge david of the united hospital fund. they set the stage very well for this. nearly every discussion of long- term care and services is important. informal care givers, family and friends are the system's back bone or bedrock. like bedrock, family caregivers, that is a term that

we prefer to informal. informal sound so casual, so easy, so much fun. bedrock is underground. bedrock is invisible. when you start to see it, you may be a little bit nervous. that is what is happening in the policy world. we are starting to see these underground workers that are starting to appear and make some demands. families have always played an important role in caring for people that are sick or aging. in the past two decades, family caregiver roles have changed. in addition to funding social support, many are now taking on demanding managerial tasks. managerial tasks are just as hard, if not harder than the actual direct provision of care. family caregivers as a large

group are very diverse. some provide a little bit of care, some provide a lot of care. my colleagues are focusing on this. people with multiple chronic illnesses, multiple medications to manage, frequent hospitalizations, high-cost. at the end of the day, for these caregivers, there is no end of the day. the institute of medicine recognizes in its 2008 report, when it recommended that the definition of the work force be expanded to include family and friends, it also noted that it was not clear how to integrate family into health care practices. one of the purposes of our paper and the campaign which i direct is to demonstrate that it can be done and give examples of how it is being done.

there are models out there. let's try this. i am going back. i am sorry. do you want to get me back to where i was? sorry. next one. go back. one back. sorry. thank you. family caregivers confront fragmented systems. fragmentation exists within the system and even more between systems. providers work mainly in one silo or a sub-silo or sub-sub- silo. caregivers move frequently between their rapid frequent transfers to acute, to sub- acute it to the family settings. we heard that this morning.

home and community-based services are sometimes described as a patchwork of different programs with different eligibility rules. a patchwork suggests individual pieces sewn together to make a whole. community care is often the patches without the connecting thread. to navigate this complicated and still incomplete system come up family caregivers are to provide continuity as advocates and quality sentinels for people who cannot manage on their own. transitional care to next healthcare and long-term services at a critical moment for quality, cost, and outcomes. there are no discharges in transitional care. the handoff is not completed until the patient is under the care of the family caregiver.

there are several models like can be shown. this includes a website, www.nextstepincare.org that is designed to improve relations between hospitals. if it is also organizing an event in new york city in which 40-50 providers will work in partnership to improve the transition and care from our collaborative design group, six months working with 14 providers. our biggest learning was getting people to prevent sending patients back and forth four years. they never talked to them about the process these. they talked about the locations,

but not the process these. -- processes. the transitional care model is one of them at the university of colorado. andy care program at johns hopkins. there are others out there as well. our article concludes with some recommendations. we want to encourage and develop information about caregivers, not just in their psychosocial state and what they do, but how they interact with the health-care system and the social services and how those things could be improved by bringing them together. we we believe that working with family caregivers in this current and future environment

has to be a core competency for all healthcare and social service professionals. this is not something that is intuitive, something that can be caught, can be learned, but it's extreme important. we want to encourage full integration of family caregivers in medical home, transitional care programs, not just by patient-family, but by explicit attention to what the family caregivers' needs and limitations and strengths are. and finally, we want to encourage creation of payment schemes that include caregiver needs assessments and support. policy makers are often moved by family caregivers' powerful stories, but these stories, supported by relevant evidence and practitioners' commitment, must be translated into specific policy actions that address the needs of the family caregivers and the people they care for so devotedly. if healthcare providers and

policy makers join forces with family caregivers, their combined efforts can be a positive force for better coordination and integration of all the elements of long-term care services. thank you. [applause] >> good morning, everybody. but also want to thank susan at health affairs, bruce chernof, and all of us collectively for putting together a fabulous volume. it is pretty cool to have the first long-term care services. i said that this was a bastard child and now we are in the forefront.

quite only have a few minutes to talk about, what i think it's a very important issue, probably the most important issue in all of this. if i start with the caveat that the article that i did with mary, to husband around for a long time, we focus primarily on the providers providing services to older adults. that is not to say that there are not other substantial issues for the provider community for persons under the age of 65. most of our work has been done in the area of caring for the elderly. the literature is much stronger in the caring for older adults. there is work and needs to be done caring for the younger

populations. i wanted to start with one other comment. that is come up who provides long-term care in many ways it depends on your definition of long-term care. we will never reach a consensus on this. what we have recognized is that the long-term care, -- a term services and support, formal service sector is somewhat unique, but embedded in the larger health-care sector. somehow, we have to struggle and figure out how to get a enough attention in that part of the service sector that it begins to get parity, not only with other industries, but with the larger health-care sector itself. i will talk about that in a minute. it is important to understand that medicare may not cover a lot of long-term care, but it

covers a lot of post acute-care. sometimes we talk about it as long-term, sometimes we talk about it as acute. whether we want to talk about it as long-term care or not, it is the long-term care providers that frequently have to deal with these issues. next in the family, they are the folks that are embedded in this mess of service providers across the acute, primary, sub-acute, primary, and long-term care sectors. they are really key, next to the family, and holding this fragmented system together. in the long term care sector as opposed to the acute, and primary, and ambulatory care sector, they are primarily the hands-on care system next to the

family. at least 70% of all services are provided by your front line. in your personal care workers. this is different than the acute-care and the primary care world. we have a much heavier a bubble of professional staff. the professional license staff, while fewer, have substantial managerial, clinical oversight and hard-core clinical and support of work that they have to do. these are the medical directors, the lpn's your licensed social workers, and the administrators. as you heard, where i live, the problem with the d.c. nursing- home is, it is the people, stupid. it is the people in these institutions.

they have not been given the support, training, the ongoing support to do their work well. it is difficult to ask for quality when you have not supported the work force to do the job. it is a very labour-intensive field. one of the most labour intensive next to hotel industries. to not invest in our workforce and talk about a panacea of quality, comes without warp -- worrying about what people do every day is a mistake. we try to make the case that this is where much of the investment needs to be. this lays out a framework for assessing work force reform in the context of long-term care specifically. with the caveat that long-term care blurs with acute care, chronic care, preventive care. it is difficult to pull those out. we have to look beyond

traditional supply and demand theory. they do not work. we have a lot of demand for services. we are going to see a lot more that has not translated into more money, more investment, and the supply and demand. does not work in long-term care. a lot of the reason for this is that we are heavily dependent on the public sector. unlike other forces of the health sector. almost all of our pay comes from medicaid and medicare. we are dependent on the public hears. what they pay is what we get. -- public payers. what they pay is what we get. our framework argues that we have to recognize the long-term care work force as a distinctive, but related part of

the health sector. every time we work on health care reform -- health-care reform, health care work force reform, it goes towards hospital, ambulatory, and primary care work force. it has been an afterthought. we have seen this with the elder care work force alliance and the others that are happening. specific attention needs to be paid to this long term work force if we are going to develop this over the next 20 years, particularly if we are going to talk about the aging of the baby boomers. we have to be responded to new philosophies and models of care. we cannot do better integrated care without the work force to do it. the social hmo, 25 years ago failed not because they cannot have an integrated system, if it failed because the people to not

know how to integrate. it is the people in those models. it is the people that need to be taught and supported and have competencies around that type of service. it is the people in transitional care. an electronic medical record will never solve our problems in transitions. if it is about the people knowing how to communicate and share information and knowing how to hand off and take responsibility and be accountable. it is about developing that support and those models. it is about developing competencies. if we do not know what a medical director has to do or a social worker has to do or a therapist test to do or a front line caregiver has to do in various settings, how can we expect those people to produce? competence is essential. the implications for a long- term health care work force are

essential. we need to expand this. i would argue without the things i talked about before, without the investment, without the competencies, it is very difficult to expand the supply. nobody wants to go into long- term care. how do we turn that on its head? just as long term care is going to be the economic driver in the 21st century in most communities, that is the sector that is growing the fact -- and to growing the fastest. where are we going to get the work force to do that? investing in work-force development, this is a serious issue. i want to say that we have to make these jobs more competitive. that is not just for the front line, which is an abomination in what we pay our front-line givers. if you look at nurses, if you look at physicians, if you

looked at social work, if you did an analysis of the wages and pay and benefit the, there is no clarity across the sector. if you do not make these jobs more competitive, it will be difficult for us to create the work force that we need. it is the people, stupid. if we want to get the quality, if we want to support economic development in the 21st century, we need to invest in the long term care work force. thanks. [applause] >> thank you, all three of you, for framing these issues in an extraordinarily compelling way. we are going to have some time for q&a for many of you in the audience. i am going to take him moderator's point of asking the first question.

as per said it earlier, we have a major provisions of long-term services in the health care legislation assuming the enactment on at least one big piece. no money goes out the door to support caregiving for five years. we have plenty of leave time to gear up the system that will be able to execute the kind of support that the class act will extend to families. there are other provisions that will kick in sooner. the class act is a compelling goal to shoot for, or least the day in which the dollars actually flow. i want to ask all three of you what you think the nation needs to do in addition of the legislation to get ready for this day. if we begin to think about the initial next steps the policy-

makers are quick to have to begin to take so that we have the kind of community-based system in particular as well as a transitional care system that you can see the opportunity is supported by the formal legislation, where do we start? we will start with you. >> i make the case in our article and i will continue to make the case, that a least in part, it is a short and long term investment in the people that do the caregiving. that concludes if i was going to write an article not our brown family caregiving. the family caregiver what have been included. the family is really the first caregiver. we are starting to see with some of the legislation, so i think

it is just the tip of the iceberg, targeted investments in this work force to prepare them and to set a standard for attracting a pipeline. in the short term, we have to deal but -- with what is, which is incumbent staff and getting people in. in the longer-term, whether it is coming into play in five years when we see the expansion of a need on the older and younger disabilities side, we need to get that pipeline ready. our educational institutions and our investments are so ask backwards in terms of preparing people to do this and supporting them with good wages, good salaries, and good benefits. at so i mean, at least creating a frame work for that is really important. >> caller, what would you say? >> yeah, i actually -- agree

with robyn a lot. in fact, i think that -- too often, the family care givers and direct care workers are perceived and actually can be not enemies exactly, but working against each other. and in fact, they are the -- they are the absolute essential partners in this. and we need to do more to make families and the director workers work better together. that's at the day-to-day, minute-to-minute level. i could never have survived 17 years of caring for my husband at home without the direct care workers i had. and i had 17 years, i had five people. now, that's, i think, probably some sort a record, but it wasn't always easy. but we worked at it. and we really need to do. that i also think that we need, at all levels, a recognition

not just in rhetoric, but in reality that the patient is not an isolated individual all alone in the world. . from every level of service it works as an individual and needs to involve the family to the extent that it is appropriate and possible. we already have two programs that are federally funded. why cannot we put more money into them? a family caregiver support program which is fully under funded. one of the queries on my article, it was 2.5 million for the life span rest but. it seemed too low.

it is too low. it is what it is. let's work to deal with but we have and then try to get people to understand that care coordination and integration of services is not easy. it is not something to say that we can give you more money and do that. we need to figure out how to do it on an operational basis. it is fairly complicated because everything is so fragmented. let's figure out the way that things can be done and make those accountable. this is my personal thanks. why do we not hold hospitals and nursing homes and home care agencies accountable for the medicare regulations and the conditions of participation and that say that you must have a discharge plan in place, you must do this, you must do that.

when i talk about having a providers, they looked at me and laughed. poor child, you do not understand. we do not have time to do that. that is regulations. why do we not make providers more accountable to do that? they just think it is not important. >> i can do a soap box, too. i wanted to say that i think the next policy step is the community choice act. i think the class act is good. it will mean that middle-class people will be encouraged to be prepared to take care of their long-term care needs or at least have been subsidized at some point in the future.

as i said, half of the population need long-term care services lives in or near poverty. i do not think that population is very likely to pay into the program. in any case, a lot of people need services now. as long as the states have optional and not required home and community-based services, they will do what is happening in california and many other states and the times of financial crisis. they will cut programs. they will not cut institutional services because those are required. health care reform is the community first choice option. it is still an option. an option is not enough, at least according to my coat- authors and me. it needs to be mandatory -- co-

authors and me. it needs to be mandatory. it incentivizes states to do this. good. maybe some states will actually do it. it is still optional. >> also want to commend your attention to two other articles in the journal. one is an up close and personal look into the lives of two cult care workers. a piece on the debate over the class act that was written by a founding member. that is an entry point issue which attempts to shine a spotlight on a contemporary policy issues, one that has crept up on the agenda, long

after we conceived the issue of health affairs as it is published. let's open it up to questions or comments from those of you in the audience. please introduce yourself by name and affiliation, that would be extremely helpful. let's get the microphone over to you. >> i would like to pick up on things that carol ann roberts spoke of. -- and rob spoke of. we are talking about care and coordination when we are talking about the formal terrace side. we're calling about the need to train the staff at all levels. -- talking about the need to train staff at all levels. we need to train the staff and

how to do teamwork. the only way we can do care well is through teams. the only ways they make change depending on the needs of the patient. and maybe informal care working with formal care. we know that these are formal combinations exist in the community. we do not have team work and we cannot train aides to do teamwork. if we do not train nurses to work in teams what they typically pass them in long-term care and to not do much else is the general approach unless it is an unusual place. we need to think about teams and we need to think about training beyond clinical training and in terms of communication and prevention. we need to bring long-term care up into the 21st century and bring hit in to make all of this

happen. >> are totally agree with that. at every lawful we need to understand what is needed and we need to train and support and reimbursed. everything needs to be tied together. right now, the incentives are not in line with a system that we would want. whether it is on the development of the workforce side or frankly, on the split between institutional and home-based services. we definitely need to have a system that supports the concept of teamwork at the individual level as a microcosm for the way that we want the system to work. it is a real systems approach and the training and education that people get, if it does not

move in that direction. long-term care more than other areas. it is so inter-disciplinary print -- the disciplinary. it is a model about how you could build an optimal system. >> what does that mean in terms of the individuals making the systems? >> probably the folks in the room that are from the various disciplines can speak better than high. -- than i. a licensed play nurse is what they call me. most of our training is not in that direction. in addition to that, there is not a focus in specific places in the long-term care sector. it is the notion that somehow by

osmosis, the focus on other parts of the sector will somehow translate into the long-term care sector. there are some competencies that are needed. there are some that are generic. we need to figure out what both of those are. in the under 65 population, there is almost no literature, except some work that has been done on the support worker side. we are a long way from having an educational and training and support system that provides the framework for a system that we keep arguing that we want quality. it always seems crazy to me that if it is sold heavily human capital oriented that you would not have the investment in the human capital and ordered to make that happen. >> another comment. let's take that here.

>> this is bob. you said that the institution can be non-institutionalized had roughly the same needs. that is a quantitative difference. is there a qualitative difference that might require greater services? >> i am sure there is in ways that i cannot tell from the data. i can tell from the fact that certain kinds of interments are more likely to be present in institutional settings. i do not know what in particular that would raise the cost that much, so i have not quite worked that out in my mind. >> some of the costs are room

and board costs, which you do not have a community-based setting. some of us have argued that the act gets to this. we have an entitlement in nursing home care which is an entitlement to room and board services. we do not have a similar entitlement on another side. the failure and growth and assisted living has been that there is no real investment on the room and board side. there is only an investment on the server side in this program. you are not really comparing apples with apples. that is part of the problem. the big chunk of shelter is only addressed on the nursing home side. that is a big part of the cost. if we are going to be honest about this and talk about the community-based infrastructure, we need to talk about the shelter piece of this.

we do not put into the cost of what people pay out-of-pocket. their mortgage and their property taxes and whenever. they are paying for the room and board over their head and then the services are subsidized. we need to get at what the true costs are. >> we will take one final question or comment back here, please. >> thank you so much. i am a dietitian. this is a very exciting issue. and most of the literature that i read, and never see the word dietitian. we deal with people's basic needs. i hope the when you talk about the work force in the future, you will, registered dietitians. i hope that you have a group

that focuses on health and aging and there are several hundred dietitians, thousands of dieticians working in long-term care. we are looking at non-nutrition. we can see when someone is failing to thrive and point that out to the doctors and nurses. we can be a team member. we are dealing with issues. -- term care is not sexy. they note that the agent group is, how do we get entry-level dietitians to come in the golan to something more glamorous? part of that is work-force development. >> we will work on making long- term care sexy and the next edition of health affairs. we will give it a shot. what we have heard on the first panel is that we have a long-

term care system of balance. we have heard from carol loving that we have patches in the long term care -- carol levine that we have patches in the long term care system. if they say that it is the people, stupid. the investment in the people will be the key part and what makes it better. @@@@@@@ @ @ @ @ [applause] it is my great pleasure to introduce our next speaker who is connie garner. she is the policy director for disability and special populations for the u.s. senate on the health committee. she has been the lead democratic staff person -- the lead person for the class act, designed to help adults with severe

functional impairments object sustain the services and support they need. she joined the late senator kennedy's office in 1996. prior to that, she was the senior policy analyst in the office of the assistant secretary for special education and rehabilitation services at the u.s. department of education. while working at the department, she was the director of the federal interagency coordinating council for children with disabilities and also served as thely aceon for the secretary of education in all interagency matters relating to matters of health and childrening cluding interests in the health care reform debate of that time. we are fortunate we have a new health care debate and fortunate that long-term care is a part of that and we have connie garner to thank for that. and we are just delighted as all get out to welcome you here today.

[applause] . tough, uphill struggle. i want to thank everyone in the audience who has worked so hard, from a family point of view, to make sure that long-term services and support stays on the agenda for long-term health care reform. i have an article that i wrote. i am here to talk about an idea and a vision that came as a result of a lot of work with senator kennedy that began back in 2003. i will stall a bit of this notion that we had a five-year resting. in the bill. the will give you a little bit of why senator kennedy felt so

strongly that this was an important issue. we had a trip up to massachusetts at the end of 2002. we went around to the western part of the state. we did stop that in number of nursing-home said and assisted living facilities. he came away with a couple of funny things. one is a joke that he told. i am not sure if it is a joke or something that was true. she told me the story as we were dropping into the parking lot of a trip that he had made with one of the presidential candidates are around the state. he got into one of the nursing homes and visited what everybody. when walking up the door, he stopped to talk to three older gentleman who were playing cards at a table towards the front door. i am not sure what he was staring at them for. he did not recognize them. if he said, do you know who i

am? he said, no. the lady at the front desk and those who all of us are, she will tell you. he thought that was the funniest thing. there was not a time that he told that that he did not break into laughter, whether it was 2002 or later on. it was a very high-opening trip for sen. he has -- i opening trip for him. he had watched how important -- eye-opening trip for him. he had watch how important it was. this is the cold core piece of this paradigm as they were trying to put out there as a new idea ted you either have to throw it out there and see how it works or you'll never try it. in the development of the long-

term services and support system, it is for individuals over 65 as well as under 65. we look very carefully at the marketability of that. we look at the connection that we will never rest this idea of long-term care. it will always be long-term services and support. it takes me back. i have a very good personal interest in this. i have seven kids that i have. the one i do have that is disabled. i know what it is like to not be able to get here until 9:00 in the morning because she has no transportation to work. as a practicing nurse practitioner, i know how important the staffing issue is. if she is absolutely correct. it goes back not only to the philosophy of where we are in this country, because it is not the same in european nations and terms of the value system of

taking care of your arm. if the other system is the educational system. i remember the first time in nursing school when you went on rotations and you go to a nursing home trade when you get hit with is how awful that particular rotation is. you hear it before you get there. you walk in and everybody says you have the bedpans over here and this is the water sank. i had been a candy striper up in philadelphia before i went to nursing school. if it is the only job i got fired from. the reason was i did not have any brothers. i have four systems -- sisters. i filled the water pitchers. i did not know the difference between the water pitcher and the urinal. i filled the urinal with ice. there was a tremendous greene became part of this gentleman's broome. -- a tremendous scream that came

out of the 10th man's -- this gentelman's room. any experience i had in that arena, it was never positive. it was almost like what happens to p e teachers when they get stuck with the special education kids. it is always dp class that the teachers do not want to have -- the pe class that the teachers do not want to have. it was what it had with his mother with rosemary. that was not the way that individuals with disabilities in this country were looked at. on the other hand, he saw his mother struggle and how hard she struggled with the dignity issue. it was not about nursing homes

being a bad place, it was about a better trust for her. living out her final days in a place that main memories for her. everybody in the hospital still wanted to stay there. we drew straws on who wanted to cover christmas eve and christmas day. when you did it, you felt like to make a difference. nobody wants to be there. people want to be home. if it needs to be a continue one that works with what ever is important to that person. we try to develop a model that was a choice model. it was the beginning of a cash model. if people had a choice to do what was important to them, if not was -- what was important to us. the other piece that was very difficult was that we were spending an enormous amount of time on disability and why is it

in this country that the number of people that we have with functional limitations, number of people that we -- qualified with people being poor have to be significantly disable before they can get what they need. why do we have a reverse incentive that this is what we force people into. it does not matter where they are in the continuum of life. if you are poor enough, you can qualify for medicaid. if you are really poor, you can qualify for the nursing-home benefit. why are we doing this? we took it all of the way back. i ask you to think probably about what we do in this country in terms of public policy. if we did what we really do it in terms of forces. i go back into that room and the gerber baby is not the gerber baby anymore. the entire family is turned upside down. what happens when they leave the

nursery? but happens when they cannot get an education, a job, a house? what happens to the family we are speaking about? that young person becomes an older person and they have the same functional limitations. they just happen to be a different age. we set up public systems where you have to be poor, if you have to hide your assets under the mattress. we have to do something with grandma's money. that is when we put people -- what happens when we put people for a general responsibility -- responsible people. the amount of tax dollars is a lie. what happens when the boss does not come anymore? the first day of the school year, up to get a social security flyer. there is not enough support for young people and disabilities to get the job. you are seeing the crisis of a

large number of young people who are going to be living with the implications of the autism sector, more than you even know. we have medicaid and social security and watching tv. these are in addition to the kinds of services and supports that we need. it becomes much more of a medical model. it should blend together. i heard a lot today that deals with the aging population. for this particular piece of the health care, for us, it does not about that. it is about the functional limitations that anybody has. how can you merged this population and the investment populations together so you can create a system that works together. there is not a person in this room that can guarantee what they will look like 24 hours from now. we have not internalize that as a guy you system in this

country. that goes from the education that people get, the value where you put your money, and the value and a long-term system. i had learned what a tough issue this was and continues to be to get on the radar screen for a variety of reasons. it is not global warming. short of dying, this is going to be me perianth this is the heart -- this is going to be me. this is the hardest part of the negotiations. we had to keep it a voluntary nature and try to make it as close to a 401k opt out. how could we make it simple so it was not complicated? you could do a cash model where

is your money. it is not the taxpayers' money. it is different than the poverty case model. this is an insurance-based model. these are the principles, these are the policy objectives. to work with people under 65 as well as over 65. we want that allegedly -- eligibility to be about function. even if it means being in assisted living and having the extra kinds of supports that you need to function in your day there, or in the nursing-home if that happens to be where you need to be. it is not about the perks and the mortar. -- bricks and the mortar. we visited different nursing homes. i talked to the nurse, i would like to see your vending area.

we did this in 12 areas. the coax and the diet sodas at work in that machine -- cokes and the diet sodas in that machine were up $1.50 per can. that was more than the allowance is that people had. . they could have blue and pink hair, a pizza delivered. we didn't see any of that. there are good models that are beginning to spring up that are actually fun and hopefully this will contribute to that being able to progress. so these are the kinds of pieces that we began to look at. we come back again to the functional piece wven the cash model. the way the bill is structured and this gets very confusing to people.

there's a difference between what the snapshot in time was, meaning the amount of money, the amount of adverse selection predicted, the amount of participation rate, the amount of degree of disability that is in the scoring of the class act. they took a 2013 snapshot in time. they scored it at $75 a day. they took it 75 years and they have different vearls that they looked at in terms of add investigate selection, participation and degree of disability. it's a snapshot in time. what's important to remember about this bill, we tried to construct it in a way that left the pieces of the construct flexible enough so that the administrator of it consider manipulate this triangle to the point it works well to do things, one, maintain the sole vensy and give a respectable benefit. i believe $75 a day is respectable. however, what's in the bill it

can never be less than $50 ra day and the administration needs to come back with a skill that is graded. so although you see this hard, this is what it is, that isn't the case. what you're seeing is a reflection of snapshot in time. there will be range according to what the functional limitation is and how the model is constructed. the next policy objectives we had was about providing services. that was a big piece. one of the big choices that we had in the development of this bill was family caregivers. we were trying to determine if family members could be reimbursed for the care they gave. that caused a huge uproar. we had discussions with members.

there are people that do not understand. they are not negative, they just cannot understand. why would you want to give money to your mom? she is there. it was hard to explain that. i said because she could be working. she could be a tax payer and contributing. you do not know what this is all about in particular. there was a genuine question as to 5 which you want to pick a family person. they are family. it is not about hanging but giving them resources that they probably could not get in other ways. that was not an easy piece to get into this bill. it does not allow you to reimburse your family caregivers.

the other piece be put in here was when it all rolls out, where do you go? there is some protection for those who need help in sorting out where they need to go. that is important. the other piece is we do not want to create new stuff. we do not need to develop certain series -- certain centers in the d.c. area. what we need is documentation that you have with your hand, you have that functional limitations and a check to make sure it continues. this is your money. we think this program will be

self-sufficient on its own. it is your money. it is not a federal strings attached to it. let's use existing agencies. it apart of the independent living system, you should use that. the combination of aging and disability is perfect. we want to use existing mechanisms that are out there. we want to pull together because there are other resources. it is similar to when i did early intervention. i went to delaware because nobody was doing anything. it has the highest rate of infant mortality. the highest rate of breast cancer. i went to the governor's office. you have a pregnant teen that could be an early registrant. you can bring all of these pieces together.

use the existing community centers that are out there already. the second thing is, robin is so right about the work force. i remember what i first went to get my master's degree. i've wanted to do long-term care of kids. i went to the prestigious university. of what to create a different thing. -- i want to create a different thing. long-term care nursing home is with older people. you cannot put that together for kids. people said it did not make sense. finally we saw that young people with brain tumors really do have

long-term needs. long-term care does not have to be just about 65 years of age and older. the curriculum's in the nursing schools are not there. i have argued a medic kit institutional place that is three blocks from george mason university. why you not bringing the special ed students and nurses over there? why don't you hire some people? there are people that are functional but because of the way society has done things, they get what and to certain places. you can kill a lot of birds with one stone.

how to you impact medicaid in a positive way? what can we do -- nobody takes medicaid away in this bill. this program does not impact your eligibility for that. that was big because he did not want to go into a certain model to get what you got paid on your paycheck for. how come impact medicaid? if for example you have a fivedl's ad;'l's that is several thousand dollars a month. if you have to go to a certain

facility, this case first before medicare pays. it is fair. they are still providing a roof over your head and other things. quality is another issue. the second piece is if you use a home community-based option with medicaid and the package of options in the state include the tough stuff such as desisted technology, transportation, personal assistance. -- assisted technology, transportation, personal assistance. you still need $1,500 to do other things in your house. whatever your acute bonus injury is, this is on top of it.

that is how we try to leave this. the last beasley tried to do is swear senator kennedy had been all wrong. this was never meant to put certain people out of business. we did a lot of exploration as to where this has been our of the last few years and where they are right now. they need a jump-start in order to work. this program is not the end all be all. it is to go together with the long-term care products that are out there.

we had the five years in here for a reason. it was to make sure that the government that the participation they needed. we want to see how many people we have in here before we make promises that we cannot keep. you really need to know what is going on. if you need to pull the plug, -- that is why we have this language in there. we are confident that you have to give it a shot. we believe people will vote for this. what we actually tried to do is say that is what the five years are for. i would be smart about three crafting rapper brand -- wraparound products.

there is a lot less risk to me covering the first five years than at the end. i would do it wraparound for people like connie 117 kids. this will help me all along. at the point where i may be significant, i and -- this will not help me there. they make it so that it is affordable. the question is what happens. there are ways and we will continue to save. we want to work with them. they have increased their market share 25% by doing something like this. that is a new struggle.

there are lots of different things you can do. the objections to the bill, interesting to watch as i look at the whole thing, the obsession with the finance industry. there has been so much focus on financing. half the time you have to wonder if it is financing, because everything is projection. you do not know how many people are going to sign up. he did not know what the degree of disability may look like years from now. it may go down. you do not know what that degree of disability will be. you do not know what the adverse selection rate is. some wondered what happened with the long-term care program. i was told there was people that

we thought were going to die did not die. what ever the projections were about adverse selection had to be a lot different. none of us know about it. until you do it, you will not know the types of the variables that will matter. a lot of focus on the financing model, we wonder what that is about. if you get below the financing and talk about what that 24 hours is like for an individual or what it is like for that individual who significantly has something on the autism spectrum. what is it like for them when

they cannot get a fair cuts. when you get below the financing, you have to think about what it is like. i think people get the little they afraid of that. can you keep a meaningful benefit and keep it solvent long term? that is what we want. adverse selection, you are going to cover everybody? we are going to have episcopal big enough to enjoy that. we do not have the overnight -- overhead cost for this. there are things that you do not

need to do. it attracts the middle-class population because we had the financing peace. we had to get the money for the premium. @@@@@@@ @ @ @ @ @ @ @ @ @ @ @ @ you have to two populations that get this for $5. the won population is a very important one, kids in school. and the reason we did that was two-fold, to make sure to raise the level of awareness with the young people that you can't guarantee that you go on that beach week that you're going to come back and you know the stories out there. you don't know whether you are going to hit the front end of the sand and that's it and you need to care about the fact thaw can't predict who you are.

and most of my seven kids are in that range, you stay up all night waiting to hear the car come home. we have the obligation to raise that issue, the same way we raise it around the ability to get control of whether you get hiv-aids. so we put that in there for the students to get that for $5. if you think about that, they have done their vesting period by the time they are out of school. as you a parent, it be hoofs you to pay that premium for them or pay some of it because you are in the window where they're not going to get the full protection that you would normally get. the allowance they have is a little bit different. that's a phone call home. most volatile decades of people's lives. we felt strongly about that.

individuals who are under poverty and working. to i get medicaid or try to continue to work? we gave it to them for $5 for that purpose as well. you have those folks covered on the sand and the middle class people covered as well. we have to see who is in the pool. we have talked to 10 ashbery's. every single one is different. except for one guy who says you need to know all of the projections. all we have to work with its current existing data.

the last issue is to say we felt very strongly that when we talk to parents, grandparents, and young people in school, they think this is important. many of it is tied up in how it is marketed. when i first started with the government's, they had a fair were you son of for your benefits. the flier for long-term care head a woman sitting in a nice garden. that did not register with me at the time. at the flyer as someone who fell off a ski lift in colorado, i may have felt differently about that.

this is about you getting a functional limitations not necessarily age related. the marketing of this together -- it needs to be marketed in a way that a guess the message out. marketing along side of what the other industries are doing. bad as important. we do not want to put anybody out of business. we want to jump-start a flat market. it is not disability insurance. this is money over and above your income.

this is not disability. that is clear. we do not know where the employers are. there is no mandate on employers to contribute. they may want to and they may not. that is how we got where we are. it is a new and different idea. i was with senator kennedy for so long. throughout his life he would call. it was not about his sister or

his mom. he realized how important it was that the care givers came to his house every day and allowed him to have what is most important in his life which was to get on that celled every day. it became of a more will issue to a people when he actually experienced it. the final phone call that i got from him not too long before he died was this has to happen. we have to put in the hands of people what they need in order to have the choice and decisions about how they want to live and how they want to die. that is the background on how we got where we got. we gave it our best shot. frankie. -- thank-you. [applause] i do not know if we have time

for some questions. >> yes indeed. [unintelligible] >> let's say somebody drops out and wants to rejoin. is it advantageous for them to see if the premiums come down or should they stay in? >> we have thoughts on what this should look like ground that. some get concerned that people gimmick the system. they will get in and get out. we have tightened a lot in terms of when you get in and how many

years of credit you can get. that is being worked on right now. it was some -- not so much they get to score better, it was more to make sure that programs that are responsible and accountable to the people that are paying into it. if the patient for five years and continue to pay your premiums, can you get out or get in? that was a big problem. we spent some time on that. >> we have a question in the back. >> be a very clear and people

being interested in having a systems with peril. in the thoughts about that? >> there is a big piece about help that is available for family members who are working with someone who cannot do it themselves. there is a big piece in there on that. one of the pieces that we have in their -- who are the people that are going to do the pay -- care? we have asked that when they submit their state plans for medicare, they have to do a survey in their state to get a sense of what is the work force look like based on what they are

offering. i think we will have to pitch in part on that. we really want to help. you need to know who is out there. that is important to community choice. you cannot make the case to the state government unless you say you do not have any people out there. you may not have anybody trained. you need to have that to make the argument to be able to support this stuff.

if it will be interesting to see how much resistance we get on this. >> one more question. >> >thanks for coming to speak here today. i hope we all take a moment to understand this. so much of health care reform [unintelligible] is -- this is the one piece that i think as a transformative quality to it. it brings a new model to the table which is important if we are going to involve.

i have a question with that in mind. what can you think are the strategies to help the long- term insurance industry see the value of this? that is an important piece of the transformation. people change jobs over time. do you have a sense for how managing my benefit kind of a for a one question. -- 401 question. >> that was one of our questions. the other was how to simplify this in a way that an employer does not have to fly, so much data on different people but how

to make it more simple. the easiest way to go is to have a whole the federal plan. there has to be a place for everybody according to kennedy. this could be good or bad. we tried to write it broadly enough. we think it is the better way to do it. there are gap products that are included in the statutory line.

i think in all of the stake holders at the table at the very first meeting. the the the but the oversight should be fine. it is targeting people to say of a. that is my suggestion. >> >> connie, to close, we know that the conferees on the nonconference committee are meeting even as we speak today to begin to discuss these things. what do you think the odds are that class is going to survive the final bill and what do you think the final bill will, in fact, be enacted? >> that's tough. i don't have any question that class will survive. it's in both bills. the focus is always on, if you have something in one bill and