some reluctance to go against the taliban? >> i think so. i think you have to understand that the word "taliban" is not just one thing in this region. for example, the pakistan government has taken strong action already against those elements of the taliban that are active in pakistan, creating an existential threat to the pakistani government. they are taking action there. however, and the afghan taliban who have moved across the border into pakistan have not posed a serious threat to pakistan as of this time. they are minding their manners in pakistan. they are using it as a sanctuary. . .

is that your question? >> there is increasing evidence if you want to break it down of the and working together, so i did not know if one girl -- one goal is to focus on -- you are

saying we have to get rid of -- >> it is very clear one goal is to help pakistan understand the taliban threat is real and to take action against the afghan taliban in pakistan korean -- pakistan kerrigan -- in pakistan. i do not believe they have moved to the point. frankly, i believe it is the source of conjecture among many people us to when they will begin taking action against the afghan taliban. >> i agree with everything mike said and would add one point. i think to the extent of both pakistan and afghanistan believe

we're going to be your and not begin to exit in 2011, the attractiveness of ignoring the afghan taliban in pakistan goes down. >> i wonder if you could tell us to the general was. >> i will tell you that we ask the question of the detainee issue, and i think it is not in any way to say the situation is confusing to our leadership and to our troops in the field. it needs to be cleared up, and with regard to the question of whether i have in the past have

a military leader referred to his lawyer, i have not in the past, and i have been on a number of trips over the years, so i find that unusual. thank you, everyone. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> and a few moments, indiana rep mike pence held a town hall meeting on them an hour and a half, the federal deposit insurance corp. moved ahead on a plan to penalize banks for the way they pay their executives. after that, the chamber of

commerce. later, the department of housing and urban development announces and investigation into mortgage lenders backed by the federal housing initiative. on "washington journal" tomorrow morning, two house members on the attempted bombing of the northwest airlines flight. the democratic rep is a member of the intelligence committee, and republican representative peter hoekstra is the ranking member. we will take questions on the unemployment rate and plans for job creation, and we will discuss education. this is live every day at 7:00 a.m. eastern. a couple of live events to tell you about tomorrow morning. the first meeting of the inquiry

commission is on c-span 2. they look at the causes of the financial situation, including testimony from the bank of america, morgan stanley, j.p. morgan chaise, and goldman sachs. and witnesses include representatives from the department of defense and state and the head of the u.s. pacific command. that is live at 10:00 a.m. eastern. >> the deadline is approaching to enter the 2010 student cam contest. top prize $5,000. just create a five minutes to 8 minute video on one of our country's greatest strengths or of challenge the country faces. enter before midnight, january 20. winning entries will be shown on c-span. do not wait another minute.

>> republican representative mike hansen -- mike pence opposes health care bill. he recently hosted a town hall meeting to discuss the issue. this is little less than an hour and a half. >> welcome. this is the building we're pretty proud of, and a lot of the events have been here. we have quite a few elected officials. i am glad you are here. and here to do the honors for us. >> all lardner able and willing will send and prayed together. >> our father, is such a

privilege to come before you in prayer. per is a gift, and we're grateful for this opportunity. we know we hassan an interesting what happened in the united states and in indiana, and we are -- we know we have been interested in what happens in the united states and in indiana, and we pray that you will continue to give him a grace and strength every step of the way, that you will be with him, his wife, and you will protect them and keep them from harm. we recognize there are things that try to get in our family's lives of her spiritual in nature or emotional or physical. we pray you will protect them. we are thankful for those in the armed services -- armed services 3 good -- armed services.

we are grateful for pro-life and the issues related to marriage. above all, we pray that name will be glorified in all that happens, and we express ourselves with love and respect. in jesus' name, we pray. amen. >> and goldstar are. if you would remain standing as officer andy ellis leads us in the pledge of the flag. >> i pledge allegiance to the flag and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all very good >> now you may be seated.

you may wonder why we are introducing a republican congressman, but it is because not only have we become good friends, but we agree on the ultimate ends. if we do not agree on the methods, we agree what is right and what is wrong. elected to congress in 2000 -- has it been that ron -- that long? a frequent speaker at our annual prayer breakfast -- to join me in welcoming mike pence. i have to leave. >> we are glad to have you here. thank you, mayor, and i want to thank those who started us off spiritually today. i came in through the snow from fort wayne.

my apologies for the tardiness, but thanks for getting us started on the right foot. i am thinking that is ellis who did the pledge for us. i am thankful for his fine son. we appreciate your leadership every day. welcome. this is our first town hall meeting here this year. i am very grateful to the diehard people of wells county, particularly those of you who drove some distance to be here today through inclement weather. i want to apologize for my tardiness. i am particularly impressed with the size and dimension of this crowd, given the difficulty we

are facing on the roads today. if this is your first town hall meeting, let me welcome you. we sent out a report about town hall meetings we have done recently. we have done them across the district kerrigan my wife says they are my anecdote to the potomac fever. by that she means things that may sound like a good idea in washington, d.c., you come back and get a little attitude adjustment. we only have two rules about a town hall meeting, and it is especially true today, because we're joined by the folks at c- span, who will be broadcasting this meeting nationally in coming days. the first rule is i appreciate if you call me mike. you are hard wired to stand on ceremony, but i appreciate if you do not.

if you call me mike, i will appreciate if you share with me your first name so i can address you personally as well. if i do not like your comments, i will need your social security number and current address. the second rule is do not feel you have to end your statement with the? -- with a question mark. most importantly i am here to listen. it is a tradition in this district we start the year listening, and more than ever i need support from the american people. please feel free to make a comment. do not be self-conscious of the press during good we will give you a microphone, and we -- do not be self-conscious of the press. we will give you a microphone. let me open with a couple of remarks on a shoe that is breaking as we speak across --

an issue that is breaking as we speak across the country. despite the fact i just returned from a trip to afghanistan, i am happy to elaborate on what i saw over there, and i know there is a report about the incident that happened on christmas day in detroit, and i would like to focus on health care reform and legislation moving behind closed doors on capitol hill as we speak today. first, i know i speak on behalf not only of my other republican colleagues in indiana but republican colleagues around the country. we need health care that lowers the cost of health insurance and lowers the cost of health care for the american people in the long term. inaction is not an option. while i believe we should scrap the current health-care bill that is being cobbled together in about hallways of capitol hill, i think the day after we

scrap this bill we ought to go right back to work and develop the kind of solutions that will lift the burden of the rising cost of health insurance premiums on small business owners and family farmers. as i come to express opposition and concern about the health care reform developed, please do not misunderstand. your congressman believes we ought to be dealing with the rising cost of health insurers in this country, and we ought to be dealing with it boldly. the alternative we have offered -- we do a couple of basic things. number one -- we would permit all americans to purchase health insurance across state lines. to be able to purchase health insurance the way we do car insurance, across the country, and allow a truly competitive market place to develop. secondly, we believe the time has come for medical

malpractice reform and reasonable caps for punitive damages on aid basis. the reality is the cost of defensive medicine, the cost of runaway lawsuits in medical malpractice cases across the country is presenting an extraordinary burden on our health care economy and a burden on interest rate payers, and we need to make many of the sensible limits we have had since the 1970's and make them nationwide. lastly, the savings the federal government will receive with reasonable limits on malpractice claims in the country could be used to strengthen current funds that exist in every state, including ours. that provide coverage for people with pre-existing conditions. i know my wife -- i lost my job years ago, and my wife was pregnant with our third, and she had to apply for the state guarantee fund. it was expensive then as it is

now, but the federal government could see it -- take the savings we make from medical malpractice reform and use it for that. i believe those remain incremental approach the focus of -- focuses on lowering the cost of health insurance, healthcare, and dealing with the american struggling with lack of coverage because of pre-existing condition. the bill moving from congress today, as near as we know, does not accomplish those things as -- in the least kerrigan the legislation -- in the least. the legislation that has moved through the house and senate would actually raise health care premiums for struggling middle class families. it is extraordinary. the crisis is the rising cost of health insurance in this country. it is crushing the backs of small business owners and family farmers, but according to the congressional budget office, health care premiums for middle- class families -- the increase

could be as much as $300 per year for individuals and $2,100 a year for family. it is extraordinary. the cure is worse than the disease for individual policyholders, and we have seen studies for health insurance companies that confirm the same, but this is a congressional budget office. this is not an interest group or an industry voice. also, the legislation includes nearly $400 billion in tax increase. at least that is the current number in the united states senate. the number may grow higher. we simply do not know, but more on that in a moment. one of my democratic colleagues who spoke out, i quoted. he said the last thing you do in a recession is raise taxes, and that is exactly what this bill

does. the reality is nearly half a trillion dollars in tax increases in the midst of the worst recession in 25 years makes no sense, and yet it is at the center of this bill. millions of americans will also lose the health insurance that they currently have. let me defend that statement. one of the assurances the president has given the american people as recently as his speech on capitol hill is if you like the insurance you have, you can keep it. apparently, the administration was not talking about senior citizens who had medicare advantage, and they were referring to that because the bills in the house and senate contain massive cuts. if people that have medicare advantage and the innovative program available to millions of seniors through medicare -- that

goes away. also, this business of creating massive new government-run health insurance exchanges and allowing businesses to not offer health insurance to their employees if they just pay and 8% tax to the federal government is going to create an incentive for you are going to see, by some estimates, maybe a hundred million americans could lose the health insurance they currently have with their employer. it is not because the government would make the employer dropped their health insurance regan -- health insurance. i think our remember the president's saying nothing in this bill will make you give up the insurance you have through your employer. i would say respectfully, it is awfully hard to keep the health insurance you have at your place of employment if your employer cancels it, and in this tough economy -- it is tough all over

in this country. businesses are paying 12% of their payroll on health insurance. if the government says you can cancel it and just pay 8% and send people to the government- run exchanges, what small business in this economy would be blamed if they sat down with their employees and said, we love you, but we got to keep the lights on and the doors open, so we are roid to cancel the health insurance -- we are going to cancel the health insurance we have then send you to the government exchange. there are many other things. individual premiums are likely

to go up -- for families as much as several thousand dollars per year. this includes job-killing tax increases in this difficult economy and also the millions of americans who lose their health insurance they have. i think it should be scrapped and we should start over immediately on sensible health- care reform that will lower the cost of health insurance for families. i would like to go to your questions. we have a microphone for the crowd, or are they using my microphone? you can you up if you want to -- can queue up if you want to. i just have one last comment. i would hope every american is defended as i am that --

offended as i am that legislation that will affect 100% of the american people is being cobbled together behind closed doors were the american people, our national media had no seat at the table. it is truly appalling after the president made repeated pledges that health care reform, negotiations over legislations of health care reform would take place on c-span, on camera, in public, but now the democratic leadership in the congress, and i presume with the assent of the administration determined to negotiate this massive government takeover of health care behind closed doors.

you need look no further than christmas eve and the backroom deals being made, special deals for individual states -- this kind of thing happens when you do not do more in the daylight. you have got to ask yourself, if the democratic leadership in the house and senate only ones themselves and a few special interests, what are they hiding? my view is this process ought to take place in broad daylight on c-span. [applause] with that, i am going to yield the balance of our time. we have 60 minutes together to hear your comments and questions. i will respond accordingly.

[inaudible] >> my name is ember, and i live in indiana and have two children. let me tell you, this health care debate has affected me and my family profoundly. just the thought of the government coming and interrupting our lives further is awful, and i have a statement here -- how can health care legislation be imposed against the will of the american people when it is clearly unconstitutional? there are strong indicators they are going to impose levies for those of us who refuse to pay. it is my clear understanding they can also take my home. my question to you is where does the government get off trying to impose such an unconstitutional tough when it is blatantly

clear -- unconstitutional task when it is blatantly clear they cannot be a legal writ of habeas corpus presented to the american people? it deeply pained me to think officials and the government can ultimately amend the constitution so the american people would be turned and sent to prison and their stake, or do they plan to charge us with a federal crime? that is what concerns me about darkroom deals >> it is obviously one you are aware of. that is an issue that has not gotten much attention.

one incentive is a mandate every american purchase health insurance, which is unprecedented in american history, and i believe it is an -- unconstitutional and would be immediately challenge dinh courts if the president were to sign this bill into law. why do i think that? it is because of the simple notion that this would be the first time in american history that federal government found they had the power to order you into a contract. people will be quick to say i have to purchase health insurance if i have a car. right, but the federal government does not require you to buy a car gets. we are in the car business now.

[laughter] do not get many ideas. if you have a car you have responsibility on the road. by virtue of the fact you're either born an american citizen or you become an american citizen through and naturalization process, but you have an obligation to spend several thousand a year whether you needed or wanted on health insurance. i think most americans do not, in the midst of all this debate, have not focused on that issue very much, but it is fair. it is real. -- it is there. it is real. my son says of his liberal friends give him a hard time. he brings of this mandate to them, and they are stunned. he says none of them have any idea when they get out of college they will have to pay

for health insurance whether they like to or not. it is a profoundly un constitutional issue. the whole question of equal protection clause of the constitution -- i do not see where in the constitution it permits the senator from nebraska and citizens of nebraska to get a better deal in medicaid. >> it is horrible. >> there are lots of problems. >> could i say one more faint. they did not think they could push it through, why even bother? if it is a plan to take it to the supreme court, why even do it? >> good question. >> in afternoon.

i am jennifer. first, thank you for your nomination for my daughter to attend the military. i have never been able to thank you in person. on a professional note, i am a respiratory therapist and have been for the last 25 years i want to spend the head -- fin the health care reform of it and ask that as we talk about health care reform, i think medicare needs to be looked at. we talk about the medicare cuts common and i think what a lot of people do not understand is when the medicare bills were written , many of the health care opportunities there when we currently have are not even part of medicare, therefore causing hundreds of millions of dollars and costing the u.s. government hundreds of millions of dollars.

because i am a respiratory therapist, i am going to speak to the profession. we all know lung diseases the fourth leading cause of all brg 's medical diagnosis, but when you looked at the reimbursement, a medical therapist cannot provide care to of home care patient. we cannot provide care to a knowles leaving nursing-home patient because our services are not reimbursed. have been a therapist for 25 years, yet if i teach the smoking cessation classes to a patient, i am not reimbursed by medicare, so not only is there an issue of medicare spending and cuts, yet where there are cost-saving ideas, they are wiped out completely because

they did not want to include things. medicare will pay for hospitals and nursing homes, get it will not reimburse for assisted living. you have millions of people who would benefit and be less cost if we could get reimbursement, so as with health care reform, we also looked at things like how can we make the system more efficient, and unfortunately, there are more professions. respiratory therapy did not exist when they were written, yet when you look at the disease processes and the amounts of dollars spent on the lung disease world, and unfortunately, we are a population of smokers, and i have amazing numbers of how many people in indiana suffer from lung disease, yet cannot get reimbursement for their

reimbursement is the ninth. -- denied. >> that is a good point. i did not think the american people want a health care plan as much as they want a healthy america plan. i think we would like to encourage the kind of incentives, the types of reforms that will encourage people to live healthier lives. we have seen a number of corporations around the country that have begun to tie their premiums based on a cool wave -- goal weight, and that lowers your premium. you are creating an incentive, and you're talking about the current systems that do not invest in the kinds of things that encourage healthy living.

>> if you allow the experts to do what we are experts of, which would be able to cost save. for me, a respiratory therapist to be able to help those residents prevent pneumonia, and the millions of dollars that would save, because nurses are busy doing nursing things. they do not want to deal with that. >> it is a powerful issue, and we would love to hear more from you. let me say to do. what you're hearing is somebody struggling in the current system that some of you already know that medicare does not cover a lot. an overwhelming amount of people feel the need for a calf policy, and part of this bill is $500 billion in proposed cuts in medicare.

everybody in washington, d.c., says that because they know they are not going to do it. so so you understand -- people who say this bill is going to save money, they are saying with a straight face fear going to cut half a trillion dollars out of an underfunded program. >> there are best practices not being used. they are not being looked at. if you would please contact mike ross, who has actually written the bill and what this bill is to amended to allow respiratory care fist to at least be reimbursed. that would be a start to dealing with part of that. >> mike is a good friend of mine from arkansas. thank you. >> could afternoon my, on this

with the health-care area -- good afternoon. my problem is with health care. when brother is lucky to be alive. i finally got him to go to the hospital with me, and it was machines heaving him alive, and now he is doing better, but he would not go to the doctor because he could not afford health care. with health care going up so much, he could not afford it. now we are looking at six digit figures for our family. i hear you talk, but i think you do a little double talking. you have had the opportunity to resolve a lot so health care issues and pass reform health care. now we have another party, and i have a problem with that. my brother is in critical

condition and will fight for his life, and he is lucky to be alive now. when we talk about health care, where i work-, 200 people lost their jobs, and the company closed their doors and filed bankruptcy. everyone of us got nailed on health care. my wife was pregnant. i got nailed for $5,000 because i could not pick up cobra because you cannot pick up cobra if you are self-funded korean if we could get pre-existing i could have got that. i could have got something to assist my brother. now my family is in hardship. we have a serious problem in health care, and if all you guys in washington would sit down and get your heads together instead of fighting so much. >> thank you, and i am glad you got your brother to the hospital.

let me say, i understand the frustration, and i want to concede the point when republicans were in charge, they did not fit this on. they did a number of things i did not agree with, beginning with doubling the national debt in the first six years of this decade, which are a strongly opposed. i want to assure you the party of no saying is catchy, but if you go to the web site you can read the legislation i have described at the opening of this meeting. republicans offered a bill but would deal with pre-existing conditions, that would deal with lowering cost of health care and would allow families like yours to look all over the country for health care that would meet their need fighting across state lines, so i take

your point. there is plenty of blame to go round, but that is no excuse for the one cited a backdoor deals right now. we may have some agreement on that. i agree strongly on that. >> i am glad to have you here to dave -- today. i retired from the military, and i do not have any problem with health care because we are covered in that theory of what i was wondering is -- in that. what i was wondering is if there could be any litigation against those who sold their souls, sold their constituents, and sold our country down the drain on this program going on now very good i

wonder if there's anything that can be done about that. >> there is something that can be done in the nov. about fat. -- about that. let me say before that, maybe i am hard-headed, and i have been accused of words, but i do not think this thing is over. i do not think this is over by a long shot. the more the american people looked at this government takeover of health care being forced by congress, the less they like it. i can say this with respect as someone who has worn the uniform -- i am reminded of a story alexander hamilton told us he was giving a french diplomatic tool -- tour of the capitol building, and he looked down on hassan floor of the

house of representatives, -- he looked down on the floor of the house of representatives, and it was unruly down there, and apparently alexander hamilton said to him, the people govern here. i believe that is still true. i believe the turnout on a day like today -- what we have seen since the last town hall meetings, and if people will continue to let their voices be heard, we can hit the reset button, and we can work together to build reforms that make sense to future generations. i have not given up on being able to stop this by a long shot, but at the end of the day, i guarantee they will be hurt by november. >> i think the concern i have is

we seem to be in a rush to do something. this has been out of control for a long time. we want to say we got it done in the first term, and i think we need to stop, hit the reset button, look at it in open light, look at it with everybody in the table. we were talking about bipartisanship in the election, but suddenly we have a president who finds himself meeting in private chambers with his democratic colleagues to discuss issues without the presentation richard representation of the gop problem as well, and i think that is part of the problem. i think we need to slow down, put the bill out in open light and look at what the real issues are. i think it is interesting -- i am going to get to a question in

just a minute. we do have the announcement of resignation of two senators who are resigning. i do not know what the nature behind that is, and i do not take a lot of stock in the internet stock feisty, but the one that concerns me is -- internet stuff i see, but one thing concerns me is nancy pelosi has purchased a new fare plan whereby she can fly from washington to california -- a new airplane whereby she can fly from washington to california, spending significant dollars of u.s. government money to be transported from washington to california so she does not have to fly commercially, as i am assuming you do and a lot of others do. i do not know what her deal is, but she is not any better than you and i are.

she put her socks and skirts on the same way the rest of us do, and i think she might be amazed what she might hear if she were on the plane with everyone assault. that is mine -- my question to regain what is the very? i know we need to reform, but what is the hurry? i know you may not be able to answer that. >> number one, i will leave your comments about the speaker and her travel. i will leave it there. i think you really ask the right question, and i do not think it is a conservative or liberal question. an interesting thing happening is how many liberals have come out and oppose this bill. this is an issue, and i go back

to the gentleman who spoke earlier. he said when republicans were in charge they did not get this done. let me emphasize, this is an issue -- a lot of people talk about one sixth of the economy this is going to affect 100% of the people are the most vulnerable time. the policies and decisions made here are going to bear upon the lives of your spouse and children and grandchildren, and it is not the same. i believe it is wrong, and it is really against any historic precedents to do this on a strictly partisan basis. when medicare practices in the

1960's -- it is pretty close to half the republicans in the house and senate voted for it. you can correct me. it was a lot area a lot of republicans opposed it back in the 1930's, but a large number of republicans voted for it. when those bills passed, they were the product of bipartisan process to achieve consensus. i am just saying it was that process. the fact that they cannot bring foreign any support -- one in

the house voted for it one in the senate. i think that ought to be a flashing red light saying this is not if. i want to refer to your statement about what the hurry is very good reason why the hurry is. i believe it is important to reflect on how significant this legislation is and why the process of achieving some consensus is the production of the american people and always has been. we have gone from a single payer debate to a single party debate, and that ought not to be the way you build legislative deals for

every american from last century or more. let me recognize this gentleman, but if there are topics you would like to speak to, but his -- please feel free >> i am glad you are here. i am the local representative of the tea party group. i am going to switch the topic to independent business. we have a lot of issues, but you talk about getting back to the freedoms and liberties but so much of this seems to be infringing upon that as far as the businessman to rise to my own efforts. i am girtin by so many things but affect my productivity, and

i commend you for showing up today. you are one of our house representative, and i thank you for the period of -- for that. i guess the thing i wonder -- isn't there anything we can do to get back to the constitution and with infringing on our rights and liberties? >> i want to thank you for your kind words but tell you you are doing it. i know washington likes to sneer at the tea party movement. i had a great privilege of addressing the key party in mind hometown this strange, and i had a profound privilege of

being able to address the committee on november 12. fox news channel reported that, but there were between half a million and 1 million people in washington, d.c., who wanted to go take a stand for freedom and limited government, and it inspired me. i said since i got off, -- got off the plane, i arrived terribly encouraged. i am terribly encouraged by men and women who like yourself who have businesses to run, families to raise, but you said, i am going to become involved, and to

see a crowd like this to seen the crowd, -- to see a crowd, to read the e-mails -- i have the gentleman say to me yesterday, let me tell you why i put on the uniform and why walked into harm's way for this country, and it was freedom. it was not to have a government take care of me. it was to have a government so i can take care of myself. keep doing what you are doing. that is making an enormous difference, and i commend you for it. >> my name is jerry, and i want

to tell you my wife and i tried to pray for you every day. my question is in regards to american citizens on both sides of the spectrum. i am wondering about the current proposals and consideration now, either from the house or senate in regards to health-care and how that would affect on warren children or citizens -- and how that might affect on board children and in terms of provisions that might include medical assistance and some type of the generative condition -- degenerative commissions, and -- conditions, and if they were

tied to a government proposal -- i heard that might be the case, and i would like to know that. i have some aging parents and wondering what your thoughts are on that. >> thank you for that. i do not take such statements lightly. we are grateful. with regards to the issue of life, i used some pretty strong language. i think it is appalling that health care legislation is taking place behind closed doors now because there are major issues being resolved. chief among them is how we are going to deal with tax payer support for elective abortion in this country. right now the house bill

housethanks to bipartisan -- the house bill, thanks to a bipartisan cooperation, this amendment -- essentially this amendment said no tax payer dollars could ever be used to support of abortion at home or abroad. the democrats stood firm against his own leader showed and fought and got that amendment passed. in the senate, there was a less successful results. i believe it was senator nelson

who was the holdout, and he agreed to language that -- leaders know the language does not protect pro-life taxpayers from seeing their dollars support a system that will provide premium support to health insurance that covers abortion. they twisted, but you're going to have a government-run system, and one will be mandated to cover elective abortion, and premiums will cover it. the only protection pro-life taxpayers have is if the election is in the bill, and right now the administration opposes that language. the senate opposes that

language, and i would love to tell you how it is going, but i do not have any idea. i actually heard their rumor but the bill may be an in the next couple days. -- may be hatched in the next couple days, but i'm a hope and may even cray said all 16 democrats who voted for the amendment vote against this bill if this language is not it -- not in it. but his only protection we have. this has been a contentious issue, but the young lady who stood up is still here. jennifer is talking about

working full-time with scarce resources. this proposal at a minimum expand the obligation of the government in public systems. we are running record deficits in debt now. congress and the next few months is going to raise the debt ceiling by another trillion dollars and more to keep our bills going so we can borrow more money from china to fund government today, and all i can say to you on the subject and the whole compared analysis question and the rhetoric around theft panels -- death penalty is the reason you do not want the government involved is because the government is using scarce resources. every day congress since then picks winners and losers. we do not cover respiratory

services. we do recover this. that is what the allocation of resources is about, so it is inconceivable to me as you expand the role and the health care economy that it will not ultimately bear upon the availability of treatment and resources particularly to senior citizens, and the president was never more candid than on that abc town hall meeting. they had a town hall meeting at the white house months ago. the president had a comment that you may be 90 years old, and you may need surgery, and they may need you to take a pill. the president said that. that is candid. the government is in the business of allocating scarce resources, and i think we ought to think -- think long and hard

and take our time before we make the health care decisions for that reason. thank you. >> i appreciate your service to our country, and a couple of comments. you talked about things you would like to push for after you defeases health-care travesty to lower health-care costs, but i did not hear you mention health care savings account, and i have a health savings account, and if i am healthy for a few years, and bill -- fills up, so i could afford to -- that builds up. another thing you talk about is we get rid of these crooked politicians in november. are you concerned that a court is in charge of the census taking, and how concerned are

you when a court has been invited in several different places for the last election, and the two college students that went into three different places and got a corn to tell them how to start and a little whorehouse -- got acorn to start essentially of whorehouse. .

floor on health care legislation. we get an update from a capitol hill reporter. >> i'm vice-president of the national chamber of commerce. if i could ask both at the back to come on in and take a seat

and we'll get started this morning. this is a notable day at the u.s. chamber of commerce, and i'm thrilled to be a part of the chamber, and lead the national chamber foundation. that's the part of the chamber of commerce that identifies emerge business issues and helps develop sensible approaches to those issues so that we can foster economic prosperity and create jobs. and you're going to hear a lot more about that from our speakers today. the first thing i'd like to do is open by thanking our media partner, cq roll call group. they got together last fall, recently merged this mighty partnership and we're thrilled that you all have joined us in sponsoring this event today. so not wanting to keep you from the reason that you're here, i will turn it over to our media sponsor, keith white, of cq roll call. it took me a minute to practice that. and thank you, keith, for joining us. [applause]

>> thank you, margaret. as margaret mentioned, we are now the cq roll call group, we merged last august and it solidified our position as not only the largest news group in washington covering congress, but we're also owned by the economists group, which gives us a global perspective and of interest to a lot of the folks in this room. cq has been dog this for years, and last year, we sat at this podium and tom dononue facing a grim economy in an incoming popular president, we had not supported, declared he would work with the administration, but vowed to fight the policy that he saw would smother the spirit of american enterprise, the power of the american dream. well, chamber was very successful in winning a number of their fights, but the president also had success. cq records that in the last six decades, no president had as much legislative success as obama, with over 97% legislative

victories. but as margaret and i were speaking earlier, if you don't like the weather, just stick around and that's the way it is in politics. unemployment is now at 10%. yesterday, obama's approval rating had fallen to 46%, and the political discussion has shifted to how many seats the democrats will lose in the upcoming midterm elections. in this environment, we once again hear from tom done you'll as he outlines the business community's plan to looks at what will be the beginning of a fragile discovery, with a quarter of the d.c.'s largest trade group, he serves as the president and c.e.o. of the chamber of commerce. he advocates for more than three million member businesses in washington and throughout the world. his accomplishments as the head of the chamber are man fold and his energy, discipline and organizational skills, he brings endeavors are such that i recommend that we listen carefully today, because whatever the outcome, his influence will surely be felt. ladies and gentlemen, it gives

me great pleasure to introduce mr. tom donahoe. [applause] >> well, thank you very much, keith, and good morning, ladies and gentlemen. and welcome to the chamber. i again would like to express our appreciation to keith's group, cq roll call, and to the national foundation and to others for helping to put this event together. keith, i was taken back for a minute, about the president's extraordinary track record, but then i remembered that the important pieces of legislation aren't done yet. at the outset of this new year, there are some encouraging signs that the state of american business is improving. after almost two years in severe recession, the economy began growing again, in the third quarter of 2009, by 20.2%.

-- by 2.2%. fourth quarter growth could be significantly higher. but we should not assume that that would signal a trend. overall, the chamber expects growth for 2010 in the range of 3%. yet, while there have been some improvements, we must add another word when describing the state of american business today, and that word is uncertainty. think for a moment about the nation's job creators. the men and women who run our small and large businesses as well as those who lead our universities, our health care facilities, an many other institutions that employ our work force. if you were in their shoes today, would you jump quickly into new investments and hiring? or would you wait for some clarity and some common sense to

take hold first? most of these job creators would like nothing more than to keep their workers employed. to create new jobs and bring some hope and relief to families struggling without a paycheck. but when you look at what's going on in washington, in the states, and around the world, somewhat do they see? they see massive tax increases on the horizon, not just the expiration of the tax cuts passed over the last decade, but has hundreds of -- also hundreds of bills of dollars in new taxes. they see health care legislation that contains a burdensome mandate on employers and virtually no meaningful reforms to improve quality and cost control. they see a climate change bill and a potential epa regulations

that could significantly raise energy prices and impose new layers of bureaucracy on their organizations. they see financial services legislation, moving forward that could choke off their access to capital, at a time when lending is already very tight. america's job creators also see a renewed push by union leaders to pass card check, and many other measures to control the workplace. they see a trial bar working with their allies in congress, and with many state attorneys general, to expand opportunities for new litigation. they see the rise of trade isolationism at home, and abroad, that could threaten their export markets, and now renewed fears about terrorism. and our job creators see the federal government planning to

expand the national debt by at least $9 trillion over the next decade. more debt than has been piled up in all the previous years since george washington. they see many states going broke as well. what will the impact be on their companies, and their employees? these are the uncertainties that job creators are wrestling with. uncertainties that call into question how quick or strong our economic recovery will be. and no one is paying is higher price than the american worker. over 7 million americans have lost their job since the recession began. 10% of the work force is unemployed. a number that saw us beyond 17%, when you add those who have stopped looking for a job, and

the millions and millions of part-time workers who want to work full time. our nation faces many big challenges. but no priority is more important than putting americans back to work. and so the chamber is calling upon leaders in government, business, labor, and across society, to unite around the ambitious goal of creating 20 million jobs, new jobs, over the next 10 years. with 20 million jobs, we can reemploy the unemployed, and meet the needs of our young people and growing population who are coming into the work force. the first -- we first articulated this goal last october. when we made it the centerpiece of our new campaign to support the american free enterprise system.

we did so in part because we were troubled that policymakers in washington seem to be focused on everything else, but the creation of jobs at that time. today, almost everyone is talking about jobs and that's a great start. but talk won't create the jobs we need and over the long term, neither can the government. in his economic speech last month, president obama said, and i quote, job creation will ultimately depend on the real job creators' businesses across america. we hear you, mr. president. and we agree. so let's talk frankly and specifically about the policies that we must have to accelerate growth and put our citizens back to work. first, we can create jobs by doubling u.s. exports in five

years, and five years again. this is an ambitious, yet achievable goal. but to get there, we need a bold and aggressive trade policy, something that we don't have today. the rest of the world is not waiting around for the united states to act. countries are busy making their own arrangements. with each other and leaving us in the dust, we all know about the political pressure against trade coming from some of our unions. but there is no excuse for america to take a back seat to global leadership and trade. washington is sitting on pending trade agreements with south korea, colombia and panama. if we fail to pass them, we will not only miss opportunities to create new jobs, we will lose a large number of existing jobs. south korea, for example, is

ready to proceed with a free trade agreement they have negotiated with the e.u. if the europeans go ahead and we believe they would, about mid year, while we continue to delay, and a very legitimate study, estimated that 350,000 more americans will lose their jobs. with millions of americans already desperate for work, how could any member of congress or the administration sit by and allow this to happen. we must also modernize our export controls, which today caused us billions in lost high tech sales. increasing these sales, allows us to create great manufacturing jobs here in the united states. we need to fix the buy american rules, which have delays, stimulus projects, and new hiring for months and months.

while also risking trade retaliation against our workers, and our businesses. we must seize the potential of small and medium sized businesses, to export. they already account, by the way, for 30% of our total exports. we can bring thousands of smaller firms into the international marketplace, if we assist them. with expertise, trade promotion, and financing. we must also vigorously protect our intellectual property. the theft of i.p. costs our nation hundreds of thousands of jobs every year, and threatens consumer safety and puts our leadership in innovation at risk. at its recent white house job summit, president obama said, and i quote, if we just increase our share of exports to asia by 1%, that's about a quarter of a

million jobs. if we increase it by 5, that's a million jobs. that fills a big hole. t@@ @ @ @ @ @ @ @ @ @ @ @ @ @ @ reauthorization of the nation's core highway bill is essential now. but it is the private sector that can be the main driver of

new innovator projects in transportation, power generation, and transmission. water systems and communications. one study estimates that there's $180 billion in private capital already available to build infrastructure projects. put this money to work, in conjunction with public dollars, and it could support more than 1.5 million jobs over 10 years. to unleash this capital, governments must clear away regulatory impediments, and legal uncertainties, and provide incentives that public agencies include private sector participation in their efforts. you know, it takes too long to build anything substantial in this country. and everybody knows that. the federal highway administration found that it takes 13 years for major

projects to go from initiation to completion. the chamber is prepared to work with governments at every level, to attack these barriers, and remove them. we can then put americans back to work, with private infrastructure investments, that add long-term value to our economy, and boost our global competitiveness. now, third, we can create jobs with major investments and break-throughs in energy. one of the great rallying cries of our day is let's create green jobs. while we share in the excitement, and have supported alternative energy projects at every opportunity for years, we must balance our enthusiasm with some realities. we urge policymakers to do the same. the united states has the talent and the capacity to invent the

green technologies here at home. but if we don't address the excessive costs in our business environment, and brace an aggressive trade policy or protect our intellectual property, the businesses, the jobs, and the technology will go somewhere else. we should also produce more american energy on our land and off our shores. including oil and gas and clean coal, which would improve energy security, create jobs here at home, and keep our economy competitive. one of the most powerful ideas, which we should jump on immediately, is a rapid expansion of clean, safe, nuclear energy. and i believe, by the way, there is a growing sentiment in this city and in this country to do so. nuclear power is a solution that doesn't have to be invented. we can use it now, and make it a

vital part of our climate change solution, because it doesn't admit green house -- emit green house gases. license applications have been submitted for 26 new reactors. if all of them were built, they could support about 240,000 direct and indirect jobs, and as time goes on, we'll need to build many more of them. but whether other countries take -- whereas other countries take two or three years to license a new reactor and less than four years to build it, a new reactor here takes five years to license, another five years to build and that's before the environmental suits start. we must address these delays, as well as the legal uncertainties and the financial risks that stand in their way. nuclear energy is not the only promising energy source facing such hurdles.

the chamber has identified more than 380 specific projects across the country, more than one-third of them, wind, solar and other renewable energy projects that have been delayed or even killed by the not in my backyard theory. it's time to end the unnecessary barriers. they cost jobs, threaten our energy diversity security, and leadership. the fourth part of our plan, is that we can create jobs by expanding credit across this country. we urgently need to find ways to ensure that business, especially small business, can get the credit they need to invest and create jobs. robust sba lending programs, a strong export-import bank, which by the way, carries no net cost to the taxpayers, and an openness to foreign capital are

all important, but the real question is how to fix and revitalize our capital markets. we must close regulatory gaps and take additional steps to protect investors and consumers. but we must not overregulate our markets and our companies, limit consumer choice, or attempt to drive all risk taking out of the system. businesses get the capital they need in very diverse ways. this is especially true for smaller companies. they use every possible source, from lines of credit on their homes, personal credit cards, asset backed lenders, and loans from family and friends. we must preserve of these credit options. that's why the focus on reform efforts on capitol hill should not be on limiting the choices available, but rather, on making

sure they are sold responsibly by registered firms. unfortunately, the financial regulatory reform bill passed by the house moves us in many ways in the wrong direction. we are hopeful that the current discussions among the key senate players will produce a better bill that can be conferenced with the house. it seems like everyone in washington is meeting with the bankers these days. first, the bankers were told to build up more capital. then they were told to hurry up and lend it. then they faced the prospect of having their loans and financial products second guessed by regulators. lawyers, judges, state attorneys general, and congress. and today, they learned that their transactions will probably be taxed. this is precisely why it's important to establish clear certain rules with strong

oversights and then get the government and the politicians out of the business of micromanaging banks and other financial companies. strong capital markets and financial services provide the fuel that willpower economic growth and jobs. congress and the regulators must get this right. our fifth point to create jobs is that we must ease the uncertainty over tax increases as well as health and environmental, labor, legal and fiscal policies. congress, the administration, and the states must recognize that our weak economy simply cannot sustain all of these new taxes, regulations, and mandates now under consideration. it is a sure fire recipe for a double dip recession or worse.

now let me say a word about taxes. instead, of this situation i outline, lawmakers should enact tax incentives, for example, preserve the reduced tax rates on capital gains and dividend income, shorten depreciation and extend section 179 expensing. adopt a permanent fix on the death tax, and address the a.t.m. tax for both businesses and individuals. now, i understand the arguments here. but you can't have it both ways. if you want to tax, you'll have a very difficult time convincing people to create jobs. responsible pension reform is urgently needed. it could quickly free up billions of dollars for payroll without jeopardizing companies' retirement plan. congress and the white house

should also seriously consider maintaining all federal income tax rates at their current levels for the foreseeable future. now, i know this flies in the face of some strongly held views. but taking this bold step would reduce uncertainty. it would boost investment, and jobs by leaving hundreds of billions of dollars in the productive economy. it would help small businesses and their employees succeed, since many of them pay their taxes as individuals. now, the impact on the deficit is clearly a worthy consideration. but remember, we're not talking about cutting income taxes below what they are today. we're talking about deferring a massive tax increase in a very weak economy. a tax increase whose clearly intended purpose is not to reduce the deficit, but to pay

for more spending. if we go ahead with these tax hikes, we will likely end up with even bigger deficits and greater economistry. -- economic misery. let me make one final point about tax increases. in the coming weeks, we expect to see numerous proposals for small business tax relief, and we'll probably support them all. but we must also remind americans that larger companies create lots of american jobs. larger companies sustain countless small companies, who are their suppliers and who provide services, to their employees. and larger companies have the greatest ability and pressure on them to move their operations elsewhere, if america does not remain competitive. when that happens, small companies get hurt. thus, it makes no sense, no

sense at all, to rob peter to pay paul. by offering one shot tax cuts to small firms, while imposing massive tax increases on larger ones. we need companies of all sizes to succeed. congress and the administration also need to find a more rational and affordable way to address our health care and climate change. the chamber supports a health care reform program and has for many years. we have offered many positive ideas to the congress, the administration, and the american people. unfortunately, the legislation emerging from the house and the senate is not reform. it's not reform when you undermine the private employer based system, while doing nothing to reign in costs. it's a prescription for fiscal

insolvency, and eventual government takeover of the american health care system. now, the chamber also supports strong climate change policy, both domestic, legislation, and a global agreement. but the bill passed by the house last year, would tie economic activity in knots and eliminate jobs from one end of the country to another. that's why a growing number of democrats in the senate are running from this approach, just as fast and as far as they can. and they share the concerns voiced by the chamber, and many others regarding the potential economic impact of the e.p.a.'s endangerment finding. america's job creators also have to worry about whether they're going to face new union organizing rules. such as card check. and a provision to have federal

appointed arbitrators force the first contract on newly unionized companies, as well as 90 other regulations being considered by the labor department, which all have the potential of upping the cost of small and large companies alike. now, we fought these ill conceived policies successfully last year, and we'll put -- pull out all the stops to do it again. the seemingly endless expansion of litigation also is a problem. it gives employers great pause as well. the chamber's institute for legal reform will continue its comprehensive program to stop lawsuit abuse. while our in-house law firm, the national chamber litigation center, will vigorously defend employees' interests in court. ladies and gentlemen, that's the chamber's job plan. yet we must also ensure that

america has well-trained workers to fill these jobs. that's why we need a number of things. first, a@@@@@@@ @ @ @ @ @ u@ @ü ℠u we're pushing states to develop rigorous standards on basic subjects, and we're strongly

supporting the administration's effort to emphasize math and science at all levels in the race to the top program. so let me conclude with a few comments about how we plan to drive our agenda forward. first, i believe this country is ready and eager to rally around the cause of creating jobs, and putting americans back to work. i'm confident we will find a hot of common ground with the administration, with the congress, and the states on this priority effort. we also understand that nothing grabs the attention of our politicians more than an upcoming election. last year, we generated one million citizen contacts to capitol hill on key legislative issues and we're just getting warmed up. this year, we plan to organize and carry out the largest, most aggressive voter education and

issue advocacy effort in our 100 year history. make it clear you understand, we never get involved in presidential politics, period. we haven't, we won't. but as america chooses a new house, the chamber will highlight lawmakers and candidates who support pro job agendas, and hold accountable those that don't. we also continue to make job creation the substantive centerpiece of our positive campaign in support of free enterprise. of after only three months officially in operation, our campaign is already enlisted 300,000 free enterprise supporters, americans from all walks of life, who believe that our economic freedoms are worth fighting for. who believe that free enterprise

with all of its faults and occasional excesses is the only system that can create 20 million jobs and lead us back to prosperity. we're going to significantly expand the campaign, throughout this year and beyond. we aim to create a new dynamic in this country. so that every time a lawmaker is prepared to take a position, or to cast a vote, he or she first stops and considers. is this going to strengthen free enterprise and create jobs, or will it undermine economic freedom and destroy jobs? some see americans free enterprise system as the last great idea. an idea that has failed in its mission. an idea that is simply not up to the challenge of -- challenges of our time. how wrong they are.

free enterprise is the next great idea. of all the innovations america has bestowed upon the world, free enterprise is the greatest innovation of all. it renews and reinvents itself every day. it is never old, and it's never tired, it is always young and it is always vibrant. that's because its strength and its goodness rest on the enduring principles of individual liberty, personal responsibility, and the basic human right of every person to be and do his or her very best. and when that happens, society is well served. thank you very much. thank you for coming. and have

.ñr

[captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] hundreds of thousands have graduated from these schools and maze kansas what it is today. we also learned investing in it was also greater economic development. ask yourself why it exists. it doesn't exist because of any tax abatement we offered any company. it exists because decades ago

this legislature made the commitment that it could develop a vet school. at the same time missouri was blarke vet school and a corridor developed between the two schools and the rest is history. if this legislature had been tight-fisted decades ago and refused to fund higher edit never would have existed. it was our 150-year commitment that made it possible. think about the national cancer institute. why do we have a chance? because decades ago this legislature funded higher ed to such a level they could develop a high level medical school. it is our 150-year commitment that makes it possible. think about the aircraft industry. our greatest entrepreneurs,

and deserve the credit. but as wichita state and all the other great schools across the state that provided the labor force that made it a reality, it is our 150-year commitment that made it possible. make no mistake about it. funding higher ed isn't just the right thing to do. it is great economic development. [applause] now the same can be said for our public schools. our elementary schools, our jr. highs and high schools. if you go back and look at kansas history, you'll find that our founders, people like william alan white and the leaders at that time made a commitment to public education

when other states were shige away from it. -- shying away from it. it wasn't a one-time commitment. our history is filled with 150 years of commitment and in fact, funding public education and creating grade schools has become an important part of what skst is all about and it has also worked. we created a world-class public school system. it is ranked as one of the best in the country. its graduation rates and test scores are consistently above the national average. it is a system that has given every child in this state a chance and provided the great labor source that we founded.ñi they also built a great transportation system that is now considered a model across the country. they built a great public safety system. a system that has kept our

communities and neighborhoods safe and they built a robust public safety net. a safety net for our elder and disabled because they understood that the true measure of a society isn't how it treats the richest of the rich. it is how it treats those that are most in need. along the way, there have been nay sayers. all 150 years there be thr have been people that run around and say you can't do all of this without taxing the state out of business and we know that they are wrong. we know that they are wrong because our leaders have developed this great state while keeping taxes in kansas below the national average. the tax foundation every year does a study comparing the tax levels of every state in the country and in 2009, its findings were the same as they have been many year before. the tax burden in kansas is below the national average. below. it is a remarkable

accomplishment. our founders and the lead hears the followed them for 150 years built this great state did so in such a cunning and frugele way that we are eible -- frugal way that we are able to keep our taxes below the national average. this recession has devastated our state revenues. we have had to cut $1 billion. we had waste in state government and that made the first $300 or $400 million in cuts relatively easy but it is a deficit and cuts grew we got well past the part of cutting waste and cut to the bone. schools have closed. class sizes have increased. professors have been laid off. we've had to reduce supervision

of prisoners who are out on parole. we have had to cut medicaid reimbursement. it is very, very difficult. now we face an even greater challenge. before i talk about that, i want to publicly thank all of you for the way you responded to last year's challenge. i asked you to set aside partisan differences and come together as kansans. we came together and we solved our problems. well this year, it is more important than ever that we pull together because this year the challenge is even greater. now we face another $400 budget fall. this isn't $400 million that we need to get these programs back to where they use to be. we have the hole just to fund

they see programs at their already incredibly reduced level. i spent hours looking at these budgets. i spent hundreds of hours looking at them and i can't find $400 million that we can responsibly cut. if you can find responsible cuts, i'm open to looking at them. let me repeat. as a person who is fiscally responsible, a person who has cut more money out of the kansas budget than any kansan in history, now is the time to stop cutting tied education and aid to public safety and aid to our elderly and disabled. [applause] thank you. here is my plan to do it.

we need to raise two taxes. first, we need raise the cigarette and tobacco tax from 79 cents a pack to the national average of $1.34. this will not only raise additional revenue, it will also reduce teen smoking. and second, for a temporary period of 36 months we need to raise the state sales tax by one cent. this 36 months will allow us to fund our programs at minimally acceptable levels while we work our way out of this recession and then at the end of 36 months i propose with roll it back and keep just 2/10 of one cent. this is by no means a big spending budget. most agencies would still be

forced to live under the dramatically reduced budgets but we would be able to make some honest enhancements and be able to restore a small part of cuts that we made to public education and universities. we would be able to restore the money that we cut out of the supervision of proehlies that were released from prison. the alternative is just not acceptable. if we have to cut $400 million from the already reduced levels that we have, i will tell you that every school in this state, that you represent, will be hurt. some will close. others will combine classes. class sizes will reach a level that it will become very difficult to teach. every university, technical school, community college, will be hurt.

national cancer institute designation will be in jeopardy. there won't be any money to superadvise prisoners let out on parole.ñr budgets for 2012 and beyond would be extremely difficult. now i know there has been up with the $400 million. closing sales tax exceptions and the possibility that the federal government will help out. i am open to all options. i ask you to look at all possibilities over the next 90 days as a responsible way to fill this gap. but what i am not open to are further critical cuts to our state programs. our ancestors fought too hard to build this state to what it is right now. now it is our turn. it is our turn to fight and it is a fight worth fighting. [applause]

now, ifñr all we did this year s protected what our ancestors have build, that would be a remarkable -- have built, that would be a remarkable accomplishment but i think we can do more than that. i ask you to consider three policy initiatives that i suggest we enact this year. first, let's ramp up the fight against cancer by enact agitate-wide public smoking ban. [applause] -- a state-wide public smoking ban. it is time to do it.

24 states, including north carolina, have enacted a public smoking ban. if north carolina, the largest tobacco-producing state in the country can enact a public smoking ban, surely we can do it in kansas. let me be clear about this. i don't want to see a watered-down ban written by the tobacco industry full of loopholes which isn't a real ban. 75% of kansasians want real smoking ban and i'm asking you to give it to them. [applause] second, let's continue to move renewable energy policy forward. we have made such remarkable progress in this area. 2008 was all about bringing wind farms to the state, all across the state. 2009, we had success in bringing green jobs to kansas.

let's make 2010 the year where we truly become a national leader. i've asked lieutenant governor finley to head a policy team that will make certain that we take advantage of every opportunity to bring transmission, wind farms and green jobs to kansas. we are the third windiest state in the country. it is our destiny to lead this country in renewable industry. lieutenant governor finley and his team will make it happen. [applause] finally, let's make sure that we never end up in this mess again. you know, there are a lot of reasons for the financial problems that we have now. we need to learn from each of them. one of them is that we came into this last fiscal year with no reserve fund. that is not acceptable.

downturns are inevitable. every business and family realizes that so those that can create an emergency fund, it is time that we did the same thing. i'm asking you to adopt the constitutional amendment that would require the state in good years the deposit money in an emergency fund so in down years we don't have to face decisions that we face this year. it is time to put the state's fiscal house in order and prepare for a solid financial future. [applause] now i want to tell you why i'm so optimistic about the future. i studied recessions and particularly the impact in kansas and what happens in a recession is that people give up. and when they give up then

depressions become possible. my message to kansas tonight is this. don't give up. don't give up. there are just too many reasons for genuine optimism. we're all concerned about jobs and unemployment and our current unemployment rate is not acceptable. the good news is that the department of commerce has had success after success in bringing new companies and jobs to the state. unfortunately, we've had a hard time keeping up with current employers who have found it necessary to lay people off. i want everyone that is unemployed tonight to know that the department of commerce and our office and i know this legislature won't stop fighting until every kansan has a job. [applause]ñi and it shouldn't be long. the changes that are taking place in the world are very

favor to believe kansas.ñi at our core we are an export state. we export airplanes, agricultural products and energy. as the emerging markets grow and they are still growing even in this recession in china, brazil and india, as they grow, the demand for our export also grow. no state will benefit more than kansas but we can only benefit if we beat this recession and refuse to give up and protect what we have and prepare for the future. now, last year, gave you my vision for kansas in the year 2030. despite this recession, that vision is fully intact. i told you by the year 2030, our aviation, agricultural energy sectsors will be strong and the animal health corridor will be robust.

the karen institute will be seen as the leading institute in this country. colleges and technical schools will be doing great as well. i told you a renewable energy corridor would employee thousand s of kansans as they make cleaner energy across the country. i the transmission would be built to bring it to eastern kansas and beyond. i told you that we would be -- we would have more hispanic americans and more asian americans and unlike other sthates foolishly shun these populations, we will recognize them for their true value, accept them as kansans and they will become an even more important part of the kansas story. [applause]

i'm more optimistic about these predictions than ever before. look at what we have just accomplished in the last year. in the last year, we have received needed approvals for transmission lines. in the last year, we exceeded our goal of 10% renewable power by 2010 and more wind farps are being announced all the time. in the last year, the first two companies located factories in the renewable energy corridor and this year will be the year that we will start construction. i want to personally invite the governor of texas, governor perry, to come to manhattan, kansas, to participate in the groundbreaking. [applause]ñi

but for all of this to happen, we have to protect what we have and fight for the future. i want to close on a personal note. 28 years ago, i started law school at k.u. and met the love of my life, stacey. second day of law school, we met. stacey grew up in west wichita. she went to goddard public schools and came here for her undergrad. i grew up in northeast wichita and went to wichita state for my education and ultimately k.u. and we did something thatçó the advisor also tell you never to do. we got married our second year of law school. we had very few material possessions. we are broke. in fact, we lived in a home but we had each other and we had big dreams for the future. and lo and behold, every one of

those dreams came true. we practiced law together side by side and had a blast doing it and then we started a business, an area that we are passionate about, taking care of the elderly and we have been rewarded in many ways, many times over thanñr we would have ever thought possible and we had three great kids and we love them all desperately. we have seen a world and lived a life beyond what we possibly could imagine in that mobile home. now i tell you this not to boast, particularly during a recession, i would never want to boast, i tell you this because we want to make sure that future generations have the same opportunity that we have had. the opportunity to live the american dream without ever leaving kansas. [applause]

stacey and i have been able to live this life because decades ago, legislatures in the very place that you are tonight made the decision that it was smart to fund public education at our universities. stacey and i have been able to live this life because growing up in wichita you didn't have to be rich to go to a good public school. we were able to live this life because going up in kansas, you didn't have to be rich to go to a great university and what i'm asking you to do tonight is to give that same opportunity to our children and our children's children, the same opportunity that stacey and i and everybody in this room has had, the opportunity to live the american dream without ever leaving the state. generations from now, historians will look back on how we handled the greatest recession since the

great depression. you have the opportunity to astonish them. you can astonish them because by your actions this session, you cannot only protect what we have built up over the last 150 years but while everybody in all of these other states is panicking, you can actually prepare this state for the future. i ask you tonight to seize that opportunity. to astonish the historians and write a chapter in kansas history that we can all be proud of. thank you all very much. [applause] god bless you. god bless the united states and god bless the great state of kansas. [applause] >> in a few moments, a discussion on the future of mortgage finance companies, fannie mae and freddie mac.

"washington journal" is live at 7:00 eastern taking your calls on education, unemployment and the attempted bombing of northwest airlines flight. and house legislative business at 10:00 eastern. a couple of live events to tell you about this morning. the first public meeting of the financial industry inquirey commission is on c-span 2 at 9:00 eastern. the commission's look at the causes of the financial situation includes testimony from the heads of bank of america, morgan stanley, jpmorgan chase and goldman sachs. and the house armed services committee focuses on china's military. witnesses include representatives from the departments of december and state and the head of the u.s. pacific command.

that's live on c-span 3 at 10:00 eastern. the future of mortgage finance companies fannie mae and freddie mac was the focus of a discussion yesterday hosted by consumer advocate ralph nader. both fannie mae and freddie mac were placed under federal conservatorship in 2008 in the wake of the housing downturn. speakers during this hour and a half portion include an advocate for privatizing the companies as well as a supporter for a complete government takeover. [applause] >> our next speaker that i want to invite to the podium is peter wallace, a resident portfolio at the american enterprise institute. the author of numerous books. the former general council at the treasury department during the first reagan administration term.

and now he is the co-director of a program in the financial market regulation. peter? >> someone asked me this morning, well, you're going to be speaking at a nader conference. why is that? and i said well, ralph, i think, has always seen fannie mae and freddie mac as poster children forñi corporate welfare and thas about the way i've always seen them too. so we've always had a common view of fannie mae and freddie in that sense and i suppose that is one of the reasons ralph has been kind enough to invite me

here. i want to start off by saying some things that are somewhat different than what sarah said when she talked about her program. particularly the motives for what fannie mae and freddie mac did. there are 26 million subprime and alt-a loans. that is other non-prime loans in our financial system today. that's almost half of all mortgages, first mortgages in the united states are subprime or alt-a, otherwise weak or likely to produce failure. why did that happen? fannie mae and freddie mac were important elements in that process. about 10 million of those loans are on the books of fannie mae and fred.

one of the problems with this is it raises questions about the usual narrative that we have heard about why we have these loans. the usual narrative is that they were made because of the greed of unregulated -- unregulated mortgage brokers or the greed of wall street. but there are 10 million such loans on the books of two agencies that were working for the federal government or controlled by the federal government and there are an additional five mifl9 on the books of f.h.a., about 15 million loans. so more than half of the subprime loans are, in fact, there because of thexd demands government policy. it is a point i want to make. now, sarah suggests that, in

fact, what happened here is that fannie and freddie were competing with wall street. about 1/3 of the total loans that are out there are wall street loans. and that's a significant number but it is a very substantial minority. sarah suggested that fannie mae and freddie mac was competing. that's why they made these subprime loans but there are some reasons toñi suspect that s not what happened. those loans increased over time as the housing regulations of the dependent of housing and urban development rose over time. they started in the early 1990's and fannie and freddie had to buy of the purchases they made

had to be to low and moderate income borrowers. by 2007, that was 57% and about half of those had to be made to very low incomeñiñi borrowers. now it was probablyñi extremely hard to meet those obligations without finding people who had difficulty meeting the usual underwriting standards that fannie and freddie pursued before they were subject to this mission which began in 1993 and i think that is probably what happened. they were implying -- they were required by law to lead the market. they were criticized for not leading the market. they were criticized for not doing any better than the private sector as bill suggested and so that's what they began to do. as a result of these government

activities, we have an unprecedented number of alt-a loans in our economy. ultimately that is the reason why we have had this terrible financial crisis. i won't go into any more of it but i was happy to hear in a sense that sarah's point was that fannie and freddie were competeing with wall street. that's why they made these loans. that means the narratives changed. it is no longer simply that these loans were forced on people by unregular late forge brokers. it is now g.s.e. greed. so we're getting to a more so test indicated -- why we have all of these loans but miest summation they were following government retirements. what do we do with fan and if

freddie mac? we know what they are doing now and essential to mortgages in the united states today. if we didn't have them now we wouldn't have a financing system for mortgages. i see four alternatives. nationalization. public utility or cooperative. a return to g.s.e. status and then finally privatization and what i'm going to try to explain is why none of the alternatives, none of the options makes very much sense except privatization and then i'll suggests how we get from where we were today to a privatized market. first of all, nationalization is ar attractive to some people because it would simply allow an organization like fannie mae and

freddie mac, maybe both of them, probably merging into a single institution doing what they are doing and allowing them to buy and sell mortgages in the secondry mortgage market. the problem is that has severe bundlery consequences if they are nationalized. if they are guaranteed by the government, that will go on on the budget each year and in a growing mortgage market, there are likely to be many more mortgages being securitized and thus charged to the federal budget than mortgages that are running off so that it will have substantial adverse budgetry effects and congress, i don't think at this point in our history is willing to take on yet another activity, another program that will add to the

deficit so although there are some things that make a nationalized program attractive to people, i just don't think it is politically feasible. so the second idea that has attracted some attention and it is an interesting idea this notion about a public utility. what we would doe is have them -- have this utility regulated significantly so it's not taking se risks and at the same time we would rate-regulate them so that the homeowners would get a good deal and that -- that is attract i ever to some people. -- attractive to some people. also we would have to have great regulation in order to assure there was a fair return to the shareholders. i'm assuming this utility would be deemed privately owned because i think the notion is to make sure that it doesn't go on

the federal budget. the reason fannie was, in fact, originally privatized was to get it off the budget. i don't think there is much likelihood that anybody is going to want to put it back on the budge in any form. if we have some sort of utility structure, it would be privately owned and then you to have a steady return to the public shareholders like the electric or water you tilt work. the trouble is -- utility work. the trouble is this is quite a bit different than electric utility or the water utility. if they are in the securitization business, which is what i think people are assuming, will be taking real risks. we know that fannie and freddie took real risks. that's why they are probably going to lose for the taxpayers about $400 billion, maybe more when we get to the end of the

line. so they will be taking real risks unlike an electric utility or a water company, which really gets into trouble for taking risks. in the case of fannie mae and freddie mac they will be dealing in a cyclical market that is in the whole business of dealing with mortgages. and in that situation, you have to have some sort of pricing that reflects risk. that is trick in insurance kind of situation. you have to have a pricing situation that reflects risk. well, how do you integrate a private system like that, that is a range for their activities, which reflects the risks that they are taking with something that is a public utility? very hard to do, i would suggest and much harder to do when they are functioning under the

watchful eye of congress. because again, the whole theory here is they are regulated not to take too many risk or the risks they are taking are carefully watched. congress is watching them and under any kind of regulatory system like this, congress is going to put downward pressure on rates. they are going to insist that rates be kept low and they are probably going to insist that there not be any discrimination in the kinds of mortgages that this entity will buy. i mean, that's just the way congress baves and i don't think we can expect them to behave any differently. so what will happen here, is that fannie and freddie, fannie, combined with freddie,ñi in a single entity, that will be this public utility, will be required to take significant risks and it will not be able to charge a

rate that compensates it for the risks it was taking. it is just the way things work when you're turned control of congress. we see this now with the f.h.a., which is also probably insolvant and probably will have to be bailed out and the reason that occurred is that over time, congre f.h.a. take more and more risks without changing any of its charges for taking that risk. so unfortunately, i don't think the public utility model is going to work very effectively and i think we ought to try to stay away from it. what aboutñr returning that -- returning them to a g.s.e. status, what they had before? i originally opposed g.s.e.'s when i started out at the american enterprises 10 years ago because it seems to me there was an inconsistency between a

public mission of some kind and private profit-making entity and what would normally happen in that situation, where there is a public mission and public support, is that the management on behalf of the shareholders would exploit the subsidy that was available from the public sector. i mean, it is just such a natural thing to and there is almost no way to presthreant from happening. that's what -- prevent that fra happening. that is what we saw happening, in fact. fannie and freddie took advantage of what they were getting and made tremendous amounts of money. at the same time they took very substantial risks. the same thing will happen if we restore them to g.s.e. stats. i happen to believe returning them to g.s.e. status is what will happen and the reason it will happen is that this is

extremely attractive to congress. it is attractive to congress because it is kind of a formor earmarking that doesn't involve all the trouble of actually going through appropriations process. congress is able to influence what fannie and freddie do because they have control over fannie and freddie. fannie and freddie are not on the budget. they don't go through an appropriations process but powerful congressmen can induce them to do certain things a those congressmen want. projects in their districts and in their states. get the benefit of the expenditure of fannie and freddie's funds which have borrowed under some sort of explicit or implicit support. from the government and helps the congressman, the senators on the one hand and on the other,

involves some, fannie and freddie solving their political problems in congress because they are doing things very effectively for these lawmakers. in that case, however, there isn't any market discipline and it would be much less market discipline in the future now that the market has seen that they were right all along. this isn't just an implicit guarantee by the government. this is as close as you can get to an explicit guarantee of fannie and freddie's. right now as we speak, as we sit here, the government is backing everything that fannie and freddie did or will do in the future and in fact, now they are being used for policy purposes by the administration to try to stabilize the housing market. so without market discipline, with unlimited amounts of funds

coming in, fannie and freddie will do exactly the same thing in the future as they have done in the past. will they have in the future añ requirement for affordable housing? it is not entirely clear. f.h.a. actually has that responsibility. they did it very wellñi until fannie and freddie started to compete with them and the reason that fannie and freddie was established to compete with f.h.a. is that f.h.a. is non-budget and so congress was limited in the amount that they could actually provide for f.h.a.'s functions by the normal appropriations process and the pressures that come to bear when you have a deficit. so fannie and freddie were created and given the same authority essentially that f.h.a. had so that they could spend much more money on the same general activities without having any budgetary effect. now they are having their

budgetry effect but while they were functioning because of pì(lc@&c+ functioning they had none and that will happen again because all of these things operate -- all of these things operate in the same general way and that is the incentives are always the same. incentives from management are the same and incentives from people in the market who are looking for safe investments and they know the government will bail them out of if there is any trouble and the incentives for congress to establish and exploilt these institutions are also the same. so nationalization doesn't work, i think the public utility doesn't work as an idea and i think the g.s.e.'s although they are likely to be the the solution congress chooses would be a bad, terrible policy idea. i'm left with only one remaining idea and that is privatization. now, we know how privatization

would work. there would be many companies competing. there would be no government )urjz drives down rates and promotes innovation and efficiency. the pricing would be according to risk and that would mean that everyone would actually get an opportunity to use the services of the private sector but you have to pay for the risks that you create rather than having cross subsidies between high quality mortgages and low quality mortgages. everyone whose mortgage is used in the private sector contest would pay for the cost of that mortgage. the problem has always been how do we get from here to do thr? how do you solve a problem of a government-managed program like we do today and turn it into a private program? one of the ways to do this, one of the ways to do this once our

housing finance system stabilizes, which will take several years, i don't think any of these things are going to happen soon, but once it is stabilized, what i think we will do is start to reduce the conforming loan limit. right now, it is i forget what the number is. i think it is $750,000 for a loan. that is conforming loan limit. we would start to reduce it over time. $650,000, $400,000 and on down. as the limit is reduced, the effect would be to allow the private sector to come in and take over more of the market above the conforming loan limit and as more and more private sector companies would come in to nunks that market and eventually you could, as congress decides, you can actually eliminate fannie and freddie entirely by bringing the conforming loan limit down to zero or you can leave it at some

very low level and allow the rest of the market to be handled by the private sector entirely. that's an easy way to accomplish this purpose but as i say, i'm doubtful that congress will abandon the enjoyment that it gets from controlling these two companies as government-sponsored enterprises. thank you. [applause] >> we have about 10 minutes. start. >> john taylor. >> i always enjoy your remarks. but i guess i'm -- i -- you started off by talking about -- it really wasn't wall street and the banks. it really was fannie and freddie because of these government rules that somehow forced them into bad loans. >> that's right.

>> maybe some day explain to me where it says fannie and freddie needed to purchase unsafe or unsound or predatory or unsavorry loans. that is not my question. >> i would like to answer that, though, when you're finished. go ahead. >> my question is the period you talked about in the 1990's, they pretty much stayed out of this predatory unsavorry greedy mall feesant kind ofñr lending practices until mid 2,000. what is interesting is fannie and freddie don't make loans. they obviously just purchase them. after bear stearns lead the way, and showed everybody how you can make money on these so-called low income loans and c.r.a. loans, a whole industry developed around that. all of these other businesses

that practice all of these unsavorry practices because they knew wall street would purchase them. at the time, wall street. ok. so here is my point. 2001 to 2003, fannie and freddie went from $2.6 trillion of assets to $1.6 trillion. they lost a trillion dollars in a 2 1/2-year period. that's when shareholders said are we going to be relative to this market and that's when they got into the subprime market. but to say that they created these loan or the government told them to buy these unsavorry loans or that the market really didn't lead this whole charge into this business is just not consistent with the historic fact. so i guess this question is in there but take your -- >> somewhere in there is the question. >> thank you. >> and what i would like to say is that fannie and freddie werec

1990's. the market was much smaller but they were leading the market then at buying these loans and the amounts, as you suggest, did get larger in the 2,000's but it was -- it was getting larger as the market as a wholeñi buzz getting -- was getting larger. still, the fact remains, when you look at what fannie and freddie bought, and what f.h.a. bought, they were important in creating the bubble and the subprime crisis that we had than wall street. you can blame wall street in being first and so forth but in fact, they were a smaller factor in creating all of these loans and why were the loans created? why did countrywide thrive? they were selling most of their loans to fannie. they were fannie's principle supplier. that's why countrywide was doing so well.

it had to go and in hand to mange make sure anglo mazillo would continue to sell him these subprime lows. >> you reported widely about him using his influence at countrywide to say to fannie and freddie, look, eert you're going to buy my loans or i'm going to go to wall street. it is the private sector. can we create the kind of regulatory apparatus that ensures these practices are not allowed? >> i think you ask an interesting question when you say can we create a regulatory apparatus? i think it is clear, at least to me, that the fact they bought more than wall street and more than wall street created, who was really driving this market. let's leave that aside. you and i will debate this every meeting we have.

on the question whether regulation can prevent this, i think the answer to that is no. and we see that -- i think one of our problems in general in public policy is we have an excessive faith in regulation. the banks in the united states with the most heavily regulated institutions in our society. they have been very heavily regulated since the federal deposit insurance act was adopted in 1991 when people were saying now we have the toughest regulatory system we could possibly have and all of these problems that came from the s & l's are now solved. we'll never have another banking crisis and now of course we have the worst banking crisis we have ever had so we have to look very carefully about whether regulation is effective with what we expect it to do. if we are going to try to rely on regulation to prevent fannie mae and freddie mac from taking

more risks, i think it is a day of hope. >> regulatory -- regulatory enforcement is as important as having the regulation. if you don't have enforcement and you have heard some like bernanke and alan greenspan say we really didn't enforce the way we should have. it isn't just having the regulation. you have to have a sheriff that is willing to impose that law for it to be affective. we'll continueñr the debate. >> we will. >> i have one question. for the american anti-trust institute which may give a hints what i'm going to ask. you started off talking about privatization and there would be many companies permitted to fail. ok. would they really be permegr to fail? especially if the many companies becomes a few large, countrywide, and a couple of

friends. won't we be back in the too big to fail problem or does your solution include some sort of cap on size of the lenders that would be permitted? if not, then aren't you back into the same probable? >> yeah, i think we would be in trouble if we had one or two such institutions that were doing this. once you get to a point where the failure of one or two out of a group of 10 occurs there would be no effect on what is really important and that is the ability to people to finance homes. if you had one or two and one of them failed, yes, that could cause congress and cause the administration to believe that they have to bail out that institution but normally, in a market where people are doing the same thing, which is secondary markets,

securitization, you can have an unlimited number of such competitors. there isn't any reason why that market should consolidate. it was forced to consolidate on fannie and freddie because of the advantages they were given by the government but in a case where there are not any advantages provided by the government, i don't think that would happen naturally. ralph? >> since we now know there are more management sponsored enterprises that are too big to fail, have an implicit government guarantee like general motors or the smaller number of larger banks, would your objection to the g.s.e. be if you were convinced that a, there could be strong capitalçó standardsñi and other more knew mair cal regulatory -- numerical

regulatory that could be enforced and b if the government wanted to pay back the taxpayer and exercise their 1,000 per share and bought the 80% or just under the 80% and went into the, in effect, business of restoring, as a regulated g.s.e., fannie and freddie, in order to increase the one cent out of 1,000, whatever the share would cost to a few dollars per share and pay back the taxpayer by then selling off the stock? >> i would be very suspicious about any system in which the governmentñi is backing any private company that is a profit-making company because there is -- i think, an unavoidable incentive on the part of management in that case and on the part of shareholders

to exploit to the maximum degree possible the value of that subsidy. and the only people in most cases, the only group in most cases that has any interest in stopping risk taking, any substantial interest in stopping risk taking are creditors. and in the case of a government-backed institution like a g.s.e., the creditors don't care because they know that they will be taken care of if risk-taking goes beyond control. so all of these -- all of these suggestion, which are perfectly good suggestions, if you believe that regulation is efficacious, would be to other people, maybe, very persuasive. they are not persuasive to me for the reasons i expressed. >> concern for risk taking to shareholders. if they were organized and if they had rights of ownership. >> that's possible. but shareholders buy shares in

order to profit from their ownership of shares. i don't think there is anything wrong with that, of course. but the way that you get more profit is to take more risks. to have more leverage. that's ok as long as you can fail. that's the control. and in the g.s.e. situation, you don't fail. >> we have one final question over here in the front. >> i just wanted to get a clarification of something you said earlier. i think you said that the f.m.'s own more subprime mortgage-backed securities than do wall street investors. i wanted to clarify that was a statement that you made and if that is the case, when did that phenomenon begin to occur? >> in the late 1990's but they don't own more. wall street issued subprime and

alt-a mortgage-backed securities. they own a substantial number which they began toñi buy in th late 1990's and bought up until maybe 2003 when after which they started to go into the business and in effect in a large way themselves, a very substantial number of these wall street-issued mortgage-backed securities.ñr >> thanks, peter. [applause] >> now im like to invite thomas stanton up to the podium. mr. stanton is the author and editor of a couple of books on government-managed entities and he is a fellow at the center for the study of americanñi governmt at johns hopkins. >> it is a pleasure to be here and ralph has arranged a program so that everybody can hear

various alternatives and really weigh for yourselves the pros and cons. i happen to be the author of a book "a state of risk" will government sponsored enterprises be the next financial crisis? that book was writtenür' 1991 so you can tell my timing was off, but, in fact, you can point out the structural vulnerabilities of an institution, what you don't know is when the stresses will hit that actually bring it down. so what i would like to do today is first talk about why they failed, fannie mae and freddie mac and then make a couple of points about the future and then leave time for dialogue, which in this kind of forum is really important. there are a number of reasons why fannie and freddie failed. i would like to highlight two of them today.

the first, was a centerpiece of this book, which was their high leverage. fannie mae and freddie mac fought to have capital standards that allowed them to operate with 1/3 to 1/2 of the shareholder capital that a commercial bank or thrift in the same line of business would have had. so they built in with their political dominance a structural vulnerability that made them weak at the point that a stress would hit. and then, of course, as we have heard, fannie mae and freddie mac, in the early 2000's made a decision of businesses to plunge into. the non-traditional subprime mortgage market, just at the point that savvier players were in