important innovations that need to be powered, i think through investment, particularly an education and having a strong ability to create a human capital that's going to produce the ownership and innovation that you discussed. with respect to the other question, i am for more transparency than less, but i think this is a place where do agree with rudy. i don't think the transfer i don't think the transfer mechanism works very directly insurance system that ought to be the central feature of >> a couple of points with respect to the transparency issue, i think that social security sent everybody a statement that says what their benefits will be under certain assumptions, but it does not highlight the fact that in 2037, or whenever the trust fund runs

out of money, there is a high probability under current law that benefits will be reduced by about 27%. that might scare some people. it might not. we all know that when you go around and ask 35-year-olds, will social security be there when you are 62 they all say no. say no. so if they really believe that, this won't really affect their behavior or their willingness to sacrifice, i don't think at all. with respect to medicare, you could send beneficiary statements saying how much medical care they used and what you would be doing is largely sending big, scary notices to very sick, very old people. [laughter] >> and you know, the second part of that was, and we could

institute a pay-as-you-go tax nor -- in other words, try to recoup some of the. but the vast majority and people with any kind of retention would have anything to transfer. so you know, i don't think that is really a way to go. with respect to, shouldn't we be more concerned about economic growth and pushing that forward, yes, we should. it's not like there's a magic elixir that we can pull out of our pocket and sprinkle on the economy and cause growth to surge. the thing that we should be doing is investing more in high quality education, research and development, to do a lot of that, maybe some deregulation is in order but also as we've seen in the past, this takes public

resources, and public resources are what we are a little shy of right now. >> so let me just mention a couple of points that i heard to end with. one thing i think is clear is when it comes to dealing with this budget, pretty much all areas of the budget are going to have to be part of the solution, but clearly we should be focusing on the drivers of growth and those would include healthcare and include the programs that are driven by aging problems in the country as well. as well as other areas of the budget that i think the second point that was made was the president's budget needs go farther than it does. i think it ministration was quite clear in saying this is further first step that it will need to go farther. but one piece is missing is sort of a public awareness of just what that means exactly the types of pauses that will have to be involved. and for any of us, or you have gone through the exercise of trying to pick a fiscal goal and achieve it, it really does take some very dramatic measures. finally, i think this point but economic growth is a critical

one that while everything is going to have to be on the table and most will have to be part of an ultimate budget deal is my prediction, you want to think about it carefully. so when you're looking at taxes we want to consider fundamental tax reform as well as tax increases. when looking at spending we want to think about protecting the areas of the budget that are most productive. and that is also going to require shifting away from a lot of parts of the budget that focus on function. i think those are important things to thi >> from yesterday, the peterson pugh commission on the federal budget and national debt. it marks the one year anniversary of signing the recovery act, the stimulus legislation. the government has been getting regularñi updates on those figures. due to the snowstorm of the last week they have been delayed a bit, but we will have those for you. the latest of the $787 billion

authorized last year, $333 billion has been committed and $179.4 billion paid out so far. but we have been asking for your reactions to the spending and stimulus on our facebook page. you can go to our website and connect with c-span as the way to do it. ñiçóçó congressional reaction continuing to come in as well to the stimulus plan.

repulacant( conference, issued a statement saying one year later, one thing is clear, the stimulus bill has failed, not one job has been created. ñicongressmanñi pence will be ñiparticipatingçó in the politil action committee meeting in washington. we will be covering a number of those events on c-span. earlier today, the president made remarks on the anniversary watch set any time you want at c-span.org. his spokesman, robert gibbs, will be üefip'÷ reporters in about 25 minutes. it is scheduled for 1:30 p.m. eastern. and again, a reminder for a repository of all sorts of information on the stimulus, our website. it is evan c-span.org/-- is at c-span.org/stimulus. >> are companies and those who invest in creating the content

are working overtime to figure out how to get the consumer's the content they want on every platform or a device they may own as quickly as possible. >> this began, head ofxd the nationalñi cable and telecommunications association on what is next for the cable industry. >> earlier this week, pakistani intelligence officials captured a significant taliban top commander. if we talked about it this morning on washington journa -- on "washington journal." from "newsweek." guest: the number to taliban in afghanistan, essentially, the national commander. anyway, he was captured in

pakistan in a joint operation by u.s. intelligence and pakistani security forces last week. "new york times" broke the story the other day. this was a major coup for the u.s. and pakistanis. he is the biggest catch we have had in quite a few years and he is now being interrogated by the pakistanis, with the assistance of the americans. presumably, we can expect the united states and the afghan government and pakistanis will learn a lot about the inner workings of the taliban. host: there is quotations in the paper saying that he is providing useful information. do we know what that is, will we ever? guest: not in detail. it is always hard to tell in

these situations how much they are cooperating. there are lots of theories about how this came about, what the various agendas are, particularly of the pakistanis. there has been a tremendous back and forth about how much the pakistanis have been helping or not been helping in that effort in afghanistan. of course, the pakistani intelligence forces have longstanding ties to many members of the afghan taliban. so is it is hard to know exactly whether this presage is a turning point in pakistani cooperation. certainly, the taliban in pakistan have been quite burgle, as a threat to the pakistani government -- a brutal -- brutal, as a threat to the

pakistani government. host: how did it, about that he was captured? do we know the back story? guest: we do not. i have spoken to some sources who think there could be more to this than meets the eye. baradar had been someone that the pakistani government has been cultivating. they come from the same family tried. there had been talk about reconciliation between the afghan government and members of the taliban. could we -co-op them -- co-op them and bring them into the tent?

it has been suggested, although there is no hard evidence of this -- and baradar was considered someone who might be open to some sort of negotiations with the karzai government, another might be a way to bring him, if not under the tent, then to neutralize him in a way to allow some sort of peaceful resolution in afghanistan. if he was open to that, would he have agreed to be captured, rather than turning himself in? that is not something he could have done politically. i only put that out there as the kind of conspiracy theory that you are hearing from some very knowledgeable people. there is a lot that we do not know about this. there is often times a lot more

behind the scenes and we see publicly. host: this is possibly a public relations strategy from pakistan and the u.s. government? guest: i should point out, there is another set of conspiracy theories, which comes at a useful time to the obama administration, who has been under attack from his republican critics for not prosecuting as vigorously the war on terror. for treating it as a police matter rather than the military conflict that it is in afghanistan. to be able to produce a big intelligence coup like this at a time when it is under attack is extraordinarily helpful to officials in the white house. host: we are speaking to an investigative correspondent with "newsweek." republicans, 202-737-0001. democrats, 202-737-0002. independents, 202-628-0205.

also a reminder, send us your tweets at twitter. you may also e-mail us. we are talking about the impact of taliban commanders capture in afghanistan. the number two was captured last week. we are talking about what sort of information we are getting from him and what was involved in his capture. this headline from the "baltimore sun" -- what do you make of that? guest: well, luck is always a factor in these things. i do not think we have a definitive account yet. i should point out, there are so many interesting dynamics to this story. one of the things that we focused on in our the classified

blog classifieddeclassified -- declassified blog about how this is going to develop. one interesting thing that has developed it iis another guy whs the operational commander in helmand province the in afghanistan, -- province in afghanistan, which has been a fortress for them. he is a former guantanamo detainee. he was captured after the u.s. invasion in 2001, held for six years, sent to guantanamo, and then he was released by the bush administration at the end of

2007, among nine other afghan detainee's, at a time when the bush administration was trying to reduce the population in guantanamo. he was sent back to afghanistan, to those to be kept under custody in a prison, but under somewhat murky circumstances, was freed by the karzai government in the spring of 2008. before anyone noticed, returned to the battlefield, fighting for the taliban, was the mastermind behind a string of roadside bombings that have killed scores of allied troops in helmand province. he very well might emerge as the replacement for mullah baradar. there are a number of contenders, but he is pretty high up. think about this political implications of that. clearly, this counter is a coup

for the obama administration, but the idea that a guantanamo detainee returns to the battlefield and will not be the operational leader of the afghan taliban create quite a few problems for the obama white house and its efforts to close guantanamo. it will remind people of the risks that can take place when you left some of the detainees free. on the other hand, republican critics are going to want to make too much of this because they are going to have to answer the question, why did the bush administration let him go? it was not the obama administration. it was the bush administration who let him go. host: when you talk about guantanamo, where will baradar go? guest: good question.

in the past, he may have gone to guantanamo. clearly, the obama administration does not want to do that. since we have closed -- president obama has closed all of the cia black presence abroad, there are not all of option where we can take them. that could be one reason when you ask, when you read the reports, it is the pakistanis who are in control over baradar, not the u.s.. it may be because u.s. intelligence, at this point, does not know what to do with him. host: we are talking about the capture of the taliban number two. first phone call from new orleans. caller: there is a difference between a conspiracy theory and a conspiracy fact.

a theory is only a theory until facts, not to support the conspiracy. that is what we have here. what i am about to bring up is fact. what are we doing fighting that, then? who attacked us? it was certainly not the taliban. -- what are we doing fighting the taliban? they came out after 9/11 and said, you supplied the evidence that usama bin laden was behind the attacks, and we will turn him over. to this day, the fbi does not have usama bin laden on their list of most wanted criminals. they say they do not have the evidence. so what are we doing there, who are we fighting? host: go ahead and finish.

caller: who attacked us? thank you for interrupting me. guest: i realize you get all sorts of phone calls, but the idea and that usama bin laden was not behind the 9/11 attacks -- it is a shame that that kind of thing gets out there. no doubt, there is no doubt about who was behind the attacks. he has claimed credit, even as recently as a few weeks ago. this is not even worth discussing. host: does the question of where your usama bin laden is, does that question still come up?

guest: it is a very good question, but the problem is, when you come to american officials about this, if you really push them hard, the answer is they have no idea. they believe he has been hiding out along the afghan-pakistani border, likely on the pakistani side. he was last known to be fleeing to for bora. -- tora bora. he is still producing these tapes, he is still active. he is likely where the u.s. government thinks he is, but the fact that there is no confirmed intelligence about his whereabouts is a pretty disturbing fact. host: miami, ron, democrat line.

caller: i have a problem with a certain whether we get the usama bin laden or the taliban or whatever, that is not the issue. the issue is what causes terrorism. as long as all the media is controlled by the propaganda, we are not going to get to the source, which is way israel is treating the palestinians. there will always be terrorism as long as we allow the destruction of palestine. host: the connection. it is a point that is brought up continuously by some people. guest: the israeli-palestinian dispute is a factor. it is hardly the only one. if you look at the usama bin laden's agenda when he declared war against the united states,

it was not one or two items that he cited. leaders occasionally envoke it because they know it plays well in certain parts of the arab world. but the idea that al-qaeda and terrorism is solely about the israeli-palestinian dispute is nonsense. host: on the capture of the taliban number two, on the cover of "the washington post" -- is this the beginning of a trend that the obama administration is on better footing now? guest: it certainly helps. we did not even mention the military operation going on now in helmand province to flush out the taliban.

you see the makings of the strategies, the pakistanis getting more aggressive and helpful as you have this military operation going on. it is ultimately -- the test will be after the troops leave, general mcchrystal said that they were going to bring a government in a box to replace it -- that is the key. can you form government on the local level that produces allegiance to the afghan people and keeps them away from that, then? that we do not know. host: sheila on the republican line. caller: i appreciate what the former two people said. i really wish the media would

stop telling us lies. republicans are not convincing because they are too busy not understanding. they are too nervous and uncomfortable. host: why do you believe and that reporters, the media -- called coke because it makes news. it is repetitive -- caller: because it makes news. it is repetitive. it is bad. we should not be supporting something that is false. host: thank you. anthony on the pending land -- independent line.

conn. caller: i disagree with everyone who has called in. ever since the obama administration took over, all these critics -- the christmas day bomber, right away they jumped on that. yesterday, you had someone from the hoover institute who said this number two taliban man was captured in pakistan and the u.s. government does not know anything about him. he did not say anything about cia being there. that was all over the newspapers yesterday, that the cia was there with the pakistani intelligence service. i am a veteran. i am upset about the politics, -- the protection of our nation

-- in respect to both parties. what we need to worry about is security of the nation. your guest yesterday totally denied everything that president obama is trying to do. host: he is referring to marc thiessen. guest: a former president bush speech writer. he has been up there suggesting some pretty strident suggestions that obama had been compromising national security because he is not following the bush administration policies. of course, if anybody watched the interview with vice president cheney over the weekend, he was clear that by the time bush's second term came in, which marc contributed to, those things were no longer being accepted. basically, a second term bush had been attrition policies are

fairly close, if not identical, to the policies of the first obama administration. there is an enormous amount of continuity, and the people who suggest there has been some radical change under president obama are just not familiar with what is really going on. host: we want to point our viewers to another story that you wrote over the weekend. it is about the blog that michael rights. u.s. intelligence prefer in the persian gulf. it turned out that u.s. intelligence may have found on numbers, photographs, etc. linking al qaeda leaders in pakistan with individuals in the yemen. guest: everyone has been focused on this baradar capture, but what we wrote about may prove to be asked to commit against -- as

significant. in january, and al qaeda courier was arrested in the persian golf on his way from pakistan to yemen. there was no public announcement of this, but within a couple of days, on an islamic jihad website used by al qaeda, there were some pretty high-grabbing postings alerting commanders in afghanistan that this guy had been captured. he had with him 300 telephone numbers, pictures, and important documents. these people on this web posting were alerting their commanders to take immediate precautions to avoid being compromised. we checked this out with u.s. intelligence and confirmed that such an individual had been

captured, he did have important, useful information on him, and if it is anything like what was described from the publishing, then it could be a remarkable coup for u.s. intelligence about al qaeda's command structure, in both pakistan and yemen. although, the bad news there is the idea that there was this kind of direct communication flow between al qaeda core leadership in pakistan and in yemen. that is pretty disturbing, when after the christmas day bombing, and the white house gave its review, john brennan gave his briefing. he was asked, what is the most stunning thing they discovered? that al qaeda in the arabian peninsula -- in yemen -- is a direct outgrowth and working with core leadership.

until six weeks ago or so, the white house, intelligence community, did not understand how close those legs were. the conventional view was that al qaeda in the arabian peninsula was a franchise, in alignment, but not necessarily working together. this seems to establish that there is a much closer relationship than what was understood by the government until recently. host: what does that mean for diplomatic efforts that president obama has tried to initiate with countries like yemen? guest: what is happening here is more than a diplomatic effort. there are drone attacks, military operations. it is very much a military conflict as much as afghanistan. host: ohio. doors on the democrat line. caller: -- doris on the

democratic line. caller: when we were first attacked, they were looking for your usama bin laden in the mountains of pakistan @ @ ' and he was on dialysis. that was many years ago. how long can a person lived on dialysis? another thing i would like to bring up this morning is that i'm a democrat and proud of it. there was an expert on fox news and if you would like to look it up where one of the people on there, he is a campaigner for pailin in hawaii. her although i asked him a

question -- her althouggeraldoña question, is she with the party, is she independent? host: leave it there. guest: there are dialysis rumors, but it has never been confirmed. there is no confirmed hard intelligence about osama bin laden's whereabouts much less his medical conditions in recent years. i've heard the stuff about buy houses as many people have covered this. i have never seen it solidly confirmed as to whether or not that was in medical problem he was facing. host: cincinnati, ohio, scott, independent line. caller: good morning, where is the endgame for all of this? are we to militarize the entire world and chase these people

instead of changing our immigration policy? the second thing, you guys had a pretty darn an article on alex jones. i know he is a little bit off the wall, but i will never understand -- and i am not a conspiracy nut -- how building seven came down. did you do any reporting on building summer -- building seven? host: we will leave it there. guest: i this is a reference to some of the conspiracy theories that still surround the events of 9/11. they have been about as thoroughly investigated as anything could, and no. what everybody saw happen on tv is exactly what happened. two airplanes went into the buildings and destroyed them. host: on his first comment, the end game. guest: that has been a question that has hung over our conflict with al qaeda ever since it began. how long is this war going to

last? how one -- how will we know when it is over? can we truly eliminate what is an ideological virus that continues to percolate in the muslim world? there are no good answers for that, but when you have people with weapons, determined to attack and kill americans, it is incumbent upon and the american government to do what it can to defeat that threat. host: west palm beach, republican line, go ahead. caller: i guess i'm just adding to the others, what is the definition of success? it seems that whatever is motivating them, which is never addressed, seems to be increasing their anchor against the u.s. -- anger against the u.s. and it seems like after 10

years we cannot train the iraqi people to defend themselves. it is turning into a meyer. the americans are tired of it. we cannot afford it. we cannot even afford this anymore. host: any thoughts? guest: the caller mentioned iraq, which has sort of taken a back seat with all of the attention on afghanistan. and i think vice president biden said the of the day that he thought iraq was going to be one of the success stories for the obama administration. we will see. troops are supposed to withdraw this year. at best, u.s. officials are cautiously optimistic, but whether or not the iraqi government is going to be able to provide the kind of a security and stability for its people and have a stable government is something we do

not know the answer to yet. host: birmingham, alabama, gwenn on the democratic line, good morning. caller: good morning, i always liked your unbiased opinions, mr. isikoff. i think it is a great impact that we captured the second in command of the taliban. it shows that some countries are working with american intelligence. that gives me some hope. and i agree with president obama, with them catching the second-in-command of the taliban, you know, we always have to go back to this. we will be further ahead in the war in afghanistan and we are now. -- if we had not gone into iraq, we would be further ahead in the

war in afghanistan and we are now. but we took our eye off the ball and that is why we are struggling in afghanistan. host: any indication that pakistan will continue to work with the u.s. on guest: this that is certainly the hope of the u.s. officials. the baradar capture seems to be a good example of that, but there are some instances where you get progress on this front and then you get sent back and a pakistanis revert to pass beater. whittlesea. host: next phone call -- we will see. host: next phone call from greensboro, north carolina. caller: this all goes back to the gulf war in 1989, i would imagine. and then let back in 2000 because we let the taliban

linder and become the thing it is today. i do not understand why we cannot detect these people. even when they buy these ied is here or there, they ought to be dealing with a person. it should not take but a ninth grade education here or someone with a little bit of military experience. guest: first of all, the pakistanis have baradar, so we do have to ask the pakistanis for their cooperation. they control the guy. but it is useful to remember at times like this that these guys, the taliban, al qaeda, are pretty resourceful, intelligent people on their own. they know how to take operational steps to protect themselves. they are enormously innovative and adoptive.

they have managed to survive despite a rather determined american and allied campaign against them for many years, and so, as an enemy they are more formidable than you might imagine they have proven themselves to be a formidable enemy. host: richard on the republican line in it new york. caller: when the last building fell, 45 minutes later was reported that it fell. you can see it on the cliffs. -- the clips. the israelis dressed up with wigs on like the taliban. it stinks to high heaven like an inside job.

host: marvin in detroit, good morning. caller: i have been watching between vice president biden and vice president cheney talking about people who were prosecuted in federal court. do you have a rough tally of how many were prosecuted by the government? guest: think the figures are some 300 were prosecuted for terrorism by the justice department since 9/11. not all of those were serious international terrorism cases. most of them were not. but a lot of them were and the tally on military commissions is 3. two of those, a guy by the name of david hicks and hamdan, who was the first when they try to

prosecute. he was osama bin laden's driver. and we wrote on our blog today about hamdan. he is back in yemen and his wife has just given birth to a baby boy and he is a proud father. this is the guy that we spent many years trying to prosecute for war crimes before military commissions. host: what is he doing? guest: he is trying to find work as a driver. i talked to his lawyer who said he is trying -- having trouble finding steady employment because tourism is not what it used to be in yemen. a canadian journalist came to the capital not long ago and -- who had covered his case, and he managed to get a drivjob drivinr around yemen. but it is a a kind of an interesting postscript on what was an enormous battle that of a

way to the supreme court during the bush years. the point is, people think that military commissions would be far tougher than civilian courts. >> "washington journal" live every day at 7:00 a.m. eastern. we are leaving this now and taking you live to the white house with -- for the briefing with robert gibbs. c-span[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> i'm going to test out taking pictures of you guys. [laughter] let me give you guys a quick read out of the president's meeting in the situation room to get an update on afghanistan and pakistan, and obviously, throughout the course of this.

i'm happy to go through what questions i can answer. president obama met with his national security team and chain of command for is regular update on afghanistan and pakistan. the meeting began with a briefing on the situation in pakistan from ambassador patterson, including the discussion on progress made in building a strong partnership with the pakistani government and people on behalf of our mutual interests. the president then bet -- and received a briefing from general mcchrystal on the status of the offensive in southern afghanistan and from ambassador eikenberry on our civilian efforts. both noted the leading role that the afghan government and security forces are playing along -- alongside the international community in the current offensive. >> pakistan has confirmed it has baradar in custody. you know if he is providing actual intelligence, or still just negotiating the terms of how he will talk? >> i did not talk about this yesterday.

obviously, the pakistani government' has concern -- has confirmed thats mullah baradar s in custody. i am not going to get into that information that we are getting from those interrogations. i do think obviously, this is the number to afghan taliban operational chief. it is a big success for our mutual efforts in the region. >> hold work today before the meeting with the president -- richard holbrooke today before the meeting with the president, said that there were talking to the taliban about switching sides, perhaps. what evidence did the president received about this in the situation room? >> general mcchrystal began in walking the president through with an update on the situation in marja.

as you know, this was how the planned and orchestrated. the effort was shaped by afghan forces and isaf forces with those on the ground, which is key in our efforts. it is clear that a lot of individuals with the taliban decided that they did not want to stay in this stronghold and just left. and without getting into specifics, obviously, the president heard from ambassador eikenberry and from general mcchrystal about our continued efforts have reintegration -- at reintegration, assuming as always, there is a renowned of the violent extremists they are tied to or the announcement of the violence, and that they agreed to uphold the afghan

constitution and afghan laws. obviously, that is part of what is going on in southern afghanistan in the helmand province right now. >> on the arrest of the afghan taliban commander, does the u.s. believe that this might encourage pakistani cooperation in this area? will they be helping in the arrest and pursuit of other militants on the u.s. hit list? >> well, one of the updates that the president got today was a discussion about our military cooperation with pakistan. and a recognition on the pakistani military side that extremists in their country posed not simply a threat to us, but an accident -- and it's essential threat to them.

they have been working productively and corporately for more than a year now in assisting international efforts and cooperatingi< in an effort o rid that area of violent extremists. i do not want to get into what might or might not come next operationally. but obviously, the capture of mullah baradar is a significant win. >> officials in kabul said that the taliban allied members and afghanistan parliament met secretly at a resort in the maldives in january. can you confirm whether the u.s. had any involvement in that? >> i do not have information. i will direct you to the n.f.c. on that.

>> [unintelligible] >> again, you have heard and the president received updates today about efforts on reintegration. you have heard general patraeus talk about efforts -- again, assuming the renunciation of violence, extremist ties, and an acceptance of the afghan constitution and the laws that govern the country of afghanistan. the efforts that were undertaken in part of iraq' and the benefis that he saw if he found willing members also in afghanistan. >> is that authoritative, the way you are announcing his name? >> that is the way he has -- it has been pronounced toomey. -- pronounced to me. >> what do most americans think

about the stimulus on this one year anniversary. t"ihe has seemed a little frustrated in comments he has made, including today, about depictions of the stimulus package. >> i have not talked to him recently about that. jake, i know that -- i would describe it the way that i described it yesterday. it is understandable, the frustration that the american people feel about the direction of their economy based on what we have gone frothrough since december of 2007 in losing 1 million jobs and when the past decade where there was virtually no job growth. in many cases, people working harder and bringing home less. we are at 9% unemployment. 9.7% unemployment. the president is frustrated with where this economy is as well. that is not to mention housing,

the financial system, there are a whole host of other events that we encountered at the beginning of our ministration. >> yes, but what does he think americans think about the stimulus package? you guys are obviously very proud of it. what do you think the american people feel about it? >> let me explain what we believe the recovery act has begun to do. i think it is undeniable that the recovery act has increased and added to the economic growth that has been reported in the third quarter and the fourth quarter of 2009. maybe the best way to look at this is, absent what was pumped into the economy by the recovery plan, economic growth rather than being + 2.2% for the third quarter for 2009, which was by the way the first positive

economic growth we have for our year, estimates range from a - 0.6% to a -1.1%. the economy would have been contracting for a fifth consecutive quarter. in the fourth quarter, the economy grew by 5.7%. economists believe that number would be 3 per -- 3% to 3.7% were not for the recovery stimulus. we know that people would not be receiving paychecks that are now. most importantly, what the president discussed today and what you have seen -- would have seen yesterday when vice- president biden travel to saginaw, mich. is we have begun to invest in and laid the foundation for creating jobs in the future. the president used today the

example of domestic electric battery capability in autos. it is something that the united states was largely response of 42% of the world's output the year before the recovery act. next year we will be responsible for 20% and by 2015, 40% based on the investments in clean energy through recovery plan. again, it is understandable, i think, that people are frustrated with where they are economically, with their personal economic situation. and it is also understandable that despite the impact of or the effect of individual components of the recovery act, it is likely that because one of the main components of the recovery act was to stem the bleeding and local and state

government budgets that actions that had to be taken at that level had impact of the way people feel at a national level. -- have impact on the way people feel at the national level. >> [inaudible] >> for instance, if you got a tax cut at the federal level, but because of record budget shortfalls and state and local government budgets, they may have had to raise taxes, right? your net impact may be that not only did you feel, but you've got because of shortfalls, a change in your taxes in a way that you did not feel was positive. chip is not here today, but he mentioned the polls that cbs news did. one of the numbers that stands out is, if you ask the american people how long you think this recovery is going to take, 70% of the american people said two years or more. i think they get that this

current recession started in december of 2007. economic anxiety probably dates back a full 10 years. it is going to take quite some time to dig out of that hole. >> again, at the same time, 40% believe that the stimulus package will never create jobs. even though even if they are just government jobs and they will clearly create jobs. do you think it is because it is almost 10% unemployment that people u are sour on this? >> i think it is a huge weight on all of this. i think when the economy does recover, people will review that efforts -- people will view the efforts to recover the economy in a different way. >> one thing that i on is that the president promised that the jobs that would be saved or created would be about 90% of private-sector

and republicans keep pointing out that it has mostly been government related jobs. even though there has been public sector jobs as well, it is nowhere near what the president promised. how you got for that? >> i do not have the latest figures in front of me. -- how do you account for that? >> i do not have the latest figures in front of me. 5añ3,qkobviously, a big chunk oe jobs is teachers, which, regardless of what category you put that in, i think there are very few parents in this country that do not buy you a good teacher. >> they sold it as private sector. i do not disagree on the private sector -- on the teacher. my point is that -- a and >> [unintelligible] >> it is what the president sold as, 9% private-sector. >> i do not have the figures in

-- 90% private-sector. >> i do not have the figures in front of me. 70% of the money will be spent by september 30, 2010. that means we still have money to go through. i do not know what the final figures would be. i think what is undeniable is about 2 million people that are currently getting paychecks would not be. what they would be doing is getting unemployment benefits. there'll be plenty of time for the political sparring and the back and forth. everyone has noticed that more and more republicans are writing letters for, showing up at, as the president said, ribbon cutting activities for these projects. i still hope to win people over. >> las vegas was one of the

hardest-hit cities in the country. some feel that harry reid and others may have been upset about the president's comments and others have said that it was taken out of context. mayor goodman said he wants an apology. should we expect an apology from him? >> i have not seen the remarks. but whether the president wants to help people in nevada understand the context of what he said, with a way. it will give you something to look forward to tomorrow. >> in spite of all the talking you have done about the opportunities that the stimulus has created, the fact remains, people do not see it. they do not see $100 million worth of job creation. >> we have not spent all of the

money yet. >> well, depending on where you are allocating the money. >> understand this, 2 million jobs fell in a hole that was 8.4 million jobs the, right? -- 8.4 million jobs deep, right? no one ever said that dollar for dollar we were going to meet the downturn in overall loss of gdp. in fact, we said that this would provide some dirt to fill that hole. but again, as i told chip yesterday, i think if a pollster calls you and you have been laid off and your wife has been laid off and you are having trouble finding money to pay for college, your neighbor has been foreclosed on, i do not think it is surprising if they ask you

about the recovery act and you are a little sour. again, this is undeniable. about 2 million people are getting paychecks that would not be. that is not 8.4 million, but it is 2 million more than would otherwise be getting them. it has led to the first quarter of positive economic growth in the year and now we have had consecutive positive quarters. we will not have job growth in our economy until we have a positive economic growth. this is not -- this was not a few -- a full cure for what ailed our economy. it is a way to put people back to work, creating positive economic growth, and laying the foundation for long-term investment in jobs. the example that i used yesterday was wind energy. in 2009, the wind energy

association believed that in comparison to 2008, the growth in wind energy would be half what it had been in 2008 based on the availability of credit. what we saw was not a 50% reduction, but in fact a 39% increase because investment in wind energy through the recovery act fixed the credit market as it related to investment in those long term energy jobs. . .

>> it can be addictive, trying to keep up, as i said yesterday, with everybody's olympic e-mail's. i spent some time with the lawyers yesterday. mark wrote specifically on this. what i write and what i tweet is archive as part of the presidential records act of 1978. people that follow me, people that read that, people that

retweet that, none of that is archive as a result of the records act. the only thing that would be our pride, other than what i produced, is if -- that would be archived, other than what i produced, is what you sent to me analogous to mail that is sent to the white house that is already archived. if meat mentioning the white house or the president in any of the normal tweets that debut is not subject to the presidential records act. >> what about comments like "i agree" or "i disagree"? >> if it only goes to me, it would be archived, because it would be the equivalent of an e- mail. but let's say both of my

followers -- [laughter] if you retweeted something and said it to both of his, it would not be in the archives. heat told me about -- he told about not having enough followers -- >> what lessons did you guys learn and the president learned from this stimulus, not just selling it, and plenty of people are in acknowledging that there are ways you could not sell this to the public, but how you presented to congress and the reaction. are the things that the white house learned from dealing with the recovery act that they would do differently in putting

together legislation and dealing with congress? >> if you look at the speed in which -- first of all, let's go back to -- >> do you acknowledge that you guys could have been better -- >> again, i acknowledge that at 917% unemployment -- 9.7% unemployment, there are -- >> do you think -- >> that would take a far more time than the computer. again, chuck, a lot of this derives from the fact that people are in this country, as the president hears from each and every day, are hurting economically. that is understandable. economists, liberal, conservative, left, right, the economists that advised john

mccain's presidential campaign, believed that what we needed was a robust recovery act. it was put together and passed in -- put together, past, and signed by the president, because what we needed was to get investment and money into this economy quickly. that is what happened. defects were -- the effects were felt quickly because of that. look, up from a pure p.r. perspective, you know, you could break out everything into its 25 component parts, spent several weeks selling component parts of wind energy, and passing it -- would it make a puerto rico difference? who knows? -- make a pr difference? who knows?

>> you guys largely of let them write pieces of -- >> does that impact the way people see it? again, understandably, 9.7% unemployment is -- sours your look on the economy. >> at the beginning -- accepting now that the ambassador to pakistan gives the first update -- >> yeah. >> did she indicate what motivation, why the pakistani government all of a sudden now decided to cooperate and give -- >> mullah baradar was what -- >> if you get into the -- >> we discussed but i cannot get into -- >> ok, if you discussed --

>> we discussed the capture -- >> operational dynamics inside -- >> the ambassador give us our robust update on both the governmental -- the ambassador gave us a robust debate on both the governmental and military side. robusta -- update on both the governmental -- gave us a robust update on both the governmental and military side. the president will sign an order tomorrow and i will figure out when that is going on. yes? >> to live, meaning -- is this before or after the dalai lama meeting? >> i think before. >> the dalai lama is also meeting with secretary clinton.

the president is meeting with him as a spiritual leader. what does it mean to also have the secretary of state meeting with him? >> i would direct you to the department of state. >> the white house did not have any consultation -- >> i would point you to the department of state. >> the president will have two events tomorrow? could you tell us about the joys of alan simpson -- choice of alan simpson -- what you were trying to project and what it will do to get republicans on board? >> week have -- we have cochairs for this bipartisan commission on the debt and deficit. you all should be thankful -- he is a guy with a sense of humor in that town that often lacks one. i think that will be fun for you

all. i think it is a great service -- >> [inaudible] >> no, no, i think he is somebody who has dealt with many of these issues during his tenure in washington in a serious way. i think that having erskine bowles, former chief of staff to the president, who helped negotiate the balanced budget agreement in 1996 -- having these individuals work together demonstrates the seriousness with which the president looks at the commission and this issue. jonathan, what the republicans decide to do is largely up to them. senator mcconnell spent a lot of time on cable television lauding the conrad-gregg

commission until he voted against what he wanted john boehner was a sponsor of the house version. they understand the seriousness with which the president looks at this effort, and we will see where they go from here. >> has there been any progress in getting -- >> well, i don't know what calls have been made today. last week, calls were made to, i believe, leader boehner and senator mcconnell. in the bipartisan meeting in -- it all boilers together -- all blurs together -- i believe the

was last tuesday, this was described. we will see what the response is. >> with the president and congress being left off the hook for the tough decisions to make -- >> because what this commission will do in a bipartisan way is to recommend to congress iin was to solve this problem. mark, you have been around this town long enough to understand that. only by working together are we going to find solutions to difficult problems such as this. this is odd way of creating a bipartisan vehicle -- is a way for creating a bipartisan vehicle for making the discussion is serious. >> will the president himself accept the recommendations? >> we will go rules and

recommendations. the president will not prejudge what the commission lands. he hopes that the recommendations will be forwarded to and acted on by congress. >> you could fill a library with commission reports that have gone nowhere. >> you could. i think the president discussed and has discussed throughout his tenure here about how to get serious with the budget situation. and had hoped that the statutory commission could be set up, buad he has taken the step of setting this up through executive order. >> will there be any coverage of the meeting with the dalai lama? >> there will be an official for

release out of it. -- official photo release out of it. whether the dalai lama goes to the stakeout is up to him. >> he has done it before. >> it would be a little more than awkward to restrict the right of speech. [laughter] and he just signed up for twitter. [laughter] >> when he meets with the dalai lama, will he talk about more independence for his people? >> we will give you a readout of what he talks about. >> why doesn't he use the number

-- >> that, again, is an estimate based on economic circumstances that changed as a result of a safety net programs like " root and unemployment extension. what that number -- like cobra and unemployment extension. what that number ends up being -- we have asked for extensions of unemployment benefits for health care. i don't think anybody is confused about that. >> is the figure wrong? how should we be referring to it, then? >> by the cbo. >> what will be happening with the general odierno today? >> general odierno and ambassador hill are in town. the president will meet with those two to get an update on

where we are as we head towards the important elections and transition our combat forces out of iraq ahead of august, and then ultimately, what the status of forces agreement requires. >> on at the stimulus, i want to give you a chance to respond to something the rnc chairman said this morning. "the other fiction we need to dispense with is this 'saved and created' nonsense. i don't know what that is. that is the reality of a lot of people now." >> i can finally school that german -- chairman steele can

put his fingers on an elementary school teacher -- no, no, no, come on -- a little bit of decorum -- that he can look at someone who, as a result of the economic downturn, did not lose his job as a result of the recovery plan. i am happy to find you the president has visited maryland, and he should talk to the solar energy executives who came today who have added jobs. continuing to deny what is undeniable leads one only to believe that chairman steele is far more interested in playing politics event in fixing what was broken in this economy over

the past eight years. >> the five largest categories of recovery act spending so far -- payroll tax refund, a tax cut, unemployment insurance, medicaid -- would you say, therefore, that a big part of the initial benefits of the recovery act or stimulus was to rescue people from situations that would have been far worse had it not been there, and that these five categories of spending are not regarded as a job-crating but saving people from all more dire circumstance -- a rescue component -- >> understand that one of the hallmarks of the bill does not seem fraud and abuse -- that has not seen fraud and abuse -- you have to set up a system where the investment in the energy company through a grant -- a

system will have to be set up. cutting somebody's payroll tax can be done by changing the rate at which the tax is levied. being able to go to a facility that provides you unemployment benefits and extends those benefits because you have lost them is not something that requires additional set up. obviously, the pacing of different activities has happened at varying times, based largely on how those services -- >> so far, what has happened is mostly rest as opposed to hard- core drop -- mostly rescue as opposed to hard-core -- >> i think that obviously a cut in taxes, unemployment benefits

, extending health care for those who've lost their jobs, happen pretty quickly. quarter by quarter we have seen an increase in different investments in different sectors of what it the recovery plan is invested in. understand, major, that one of the primary things, one of the three main components of the legislation, was, as you said, aid to states. that also goes out quite quickly. you have seen the impact of state and local employment on the overall jobs numbers. were it not for -- i forget the exact number of jobs lost last month, but i note that state and local was 41,000. removing that, you would have

had -- i'm pretty sure you would have had a positive job growth. again, there is not one, as i said yesterday, one single component that any piece of legislation can do, because we face problems on any number of significant -- >> one of the problems he thinks this recovery has said is that to many americans confuse it with tarp and bank bailouts. do you think that is one of the problems you face as people try to decide whether this is good for them or not? >> i am not sure how we could have done it differently. instead of calling it the recovery act, we could have called it "the not-tarp act." i think that people of conflated money with the banks, much of it

paid back with interest, to stabilize the financial system, or investments that had to be made to restructure auto companies, with the recovery plan. i am not sure exactly what can be done to rectify that. >> is mullah baradar an enemy combatant? >> mullah baradar is -- [unintelligible] >> and that he will remain? >> i don't have an update on that. >>ç so will the white house hae to weigh his status -- >> he is in pakistan's custody. >> can you talk a little bit about friday morning and what events -- >> i don't have that all and if it of me, but i would be happy

to get that to you. >> he has now been to maryland -- lanham, maryland, three times. is there anything he particularly likes about it? >> note, but perhaps we should bring michael steele. quite a few of them are showing up at ribbon cuttings. i do not know if they've decided it is good to make sure that you are seen being an active participant in trying to get the economy growing again rather than sitting on the sidelines and saying no. again, look at -- the unemployment rate it would be 11% or higher were it not for the recovery act. 2 million people getting paychecks today will not be getting paychecks.

economic growth would be decidedly different in quarters 3 and 4. >> we know republicans are saying things, like what eric cantor is saying today, still no job creation, and john boehner has called it open about a year of broken promises, broken government -- call that "a year of broken promises, broken government," etc. -- >> eric cantor was trying to get high-speed rail money to create jobs. >> ok, fine, but -- >> no, no, no, let's not say fine. it is hard to square the circle of what the rhetoric is that

someone says to a "new york times" reporter and what they say in virginia -- >> if you let me finish, many of them are confused about what this bill has achieved and weather is creating jobs. let me ask you again -- >> again, i don't know what message eric cantor delivers when he tells you in washington that it has not, but he tells his constituents that "i hope we get this grant so that it creates jobs." in alabama, we call this hypocrisy. in washington, we call at par for the course. >> does he have a commitment to serve from all that will be named? >> the two that will be named tomorrow -- [inaudible]

>> but he doesn't have the full complement. >>[3 we will -- we are waitino see what -- it will be interesting to see the republican reaction. >> he has republican members he has in mind -- >> we had members of the economic team -- i think tim and larry talked to -- i will find out who made calls to who -- walking them through the commission, and then the cabinet room, there was a discussion about -- the president asking senator mcconnell and congressman boehner to appoint members. >> so tomorrow he will

announce -- >> he will announce the commission and signed the executive order. >> but it doesn't have the names -- >> we will announce the names tomorrow. >> the dalai lama? [laughter] >> we are not announcing additional names tomorrow. >> could you provide to us the breakdown -- how much the local campaigns pay for the visit to colorado? >> i believe the campaigns of the dnc -- i don't know how all that works. >> the dnc or -- are you using the bush administration born in? >> -- i > not the bush administration a formula? -- are you using the bush administration the formula?

>> i am not in charge of reimbursements for your force one. let me have somebody check on that. >> [unintelligible] do you have a plan b ? >> i do not want to get ahead of the members of the commission. >> you said a couple of weeks back that he would check it timeline about whether -- that you would check the timeline about whether the president knew in advance about whether abdulmutallab would be mirandized. and it was said on "meet the press" that it was a guarantee that ksm would not be acquitted. >> the administration is in charge of presenting the case against an individual that

killed 3000 american people on american -- 3000 people on american soil. i think he will be executed for his crimes. >> [unintelligible] >> i think he is going to be executed for his crimes. >> china has made clear that they are not delighted about tomorrows meeting. does the president have a sense that this will substantively set back u.s.-china relations, or not really? >> i don't want to speak for the chinese government. i think that when the president met with president hu and other officials in beijing in t(november, it was clear that ts meeting what happened. when they renounced, we reiterated that the meeting was going to happen. in response to questions that i have gotten about whether the çómeeting was still happening, e

said yes. w3chinese officials have known about this, and their reaction is their reaction to it again, i think a mature relationship between two countries allows you to doç things like work on non- but also have disagreements. >>w3 is there any sort of subjet matter that is, up from the get go, off the table, or coulw3 8d anything be discussed? ççç>> i imagine that anythind be discussed.ç we will provide a readout after. ççqç1e>> could you possiblìc nowok and now that the reports that soldiers have been slowed by human shields, ied's --

>> we got the response from general mcchrystal that he thought the operation was going well, and a time being taken to shape it with local authorities, that extra caution was being paid to thpreventing civilian casualties, and, as i said earlier, ambassador i can very and general mcchrystal -- ç ambassador eikenberry and general mcchrystal lauded the size of the offenses, and that for the first and afghan security forces -- for the first time afghan security forces were in the lead. he said that all the men and

women under his command -- how proud he is of their efforts, how heartened we all are to see afghans in the lead. >> robert, robert -- >> [unintelligible] >> again, alongside -- persuading -- >> u.s. marines -- >> i am not in any way minimizing the world at isa -- is playing, but they are fighting alongside afghans fighting at a level not seen since the war in afghanistan. >> communities of color have been disproportionately impacted by the recession, and they say that states with greater racial

and ethnic diversity would see less of the funds in 2009. >> i would have to look at the statistic. some of that might have to do with the size of the state, some of that might have to do with the formula grants. i would hate to, without seeing what backs that information up -- >> off of the "rising tide lifts all boats," is there going to be an effort to make sure that more money is funneled into certain areas? some are saying they want urban communities to be -- >> one of the things we have seen in this dramatic downturn is that itç affectsçç -- the effects ofççç this are greatt

it is not something that in earlier recessions has not affected white-collar jobs or manufacturing and blue-collar jobs. i don't have the statistics in front of me, but the degree to which college-educated individuals of lost their jobs, far greater than what we've seen in other recessions. i think the recovery act was intended to -- has done what it is intended to to jump-start economic growth, save jobs, and more importantly, invest in new jobs for the people. >> i have a question on another note, on the snow. it is the federal government looking at pumping in communities like washington, d.c., baltimore, that are impacted by the snow?

ç>> localities like thet( distt or a state like virginia and maryland, west virginia, pennsylvania,ç1wñç, those reqs are made by the states and localities and they go to fema --

>> this tweet says -- and one last one we will read for you -- we continue to take this from you on at the website, c-

span.org. joining us on the phone is a "politico" writer, who was an article this afternoon, "stimulus war of words heats up on the hill." >> the republicans have positioned themselves against the stimulus for a long time. they've asked, where are the jobs, or are the jobs? minority leader john boehner came out with a report detailing what he thought. examples of missteps, projects that have created no jobs. democrats, on the other hand, have privately and publicly pretty much upset that this was something that stopped a sinking ship it, and many -- one of the many measures that have done to save jobs and save america from the brink of losing far more jobs than they actually did.

>> the president called out republican leaders who were opposed to the stimulus and then later on celebrated some of the spending that came from it. the democratic national committee put an advertisement on-line say much of the same thing. >> i think republicans say it like this -- i have heard it from several republicans -- if our state is eligible for funds, we will do these things. democrats are saying, wait a minute, you cannot call this waste and then go out and campaign on it and cut ribbons and the like. it is a peek at what democrats will two in november. they will say, you guys are campaigning against this, but you were not afraid to put your name on it when it came out. >> what is the ultimate sort of sign, marked that the stimulus spending in their district is

successful? >> it is tough, a point that a lot of people make on this. what the administration did is they said that there would be immediate results. john boehner pointed out at several different points in his report this morning. they quoted the administration saying that he would see the stimulus projects come to fruition and jobs being created immediately. now, that has not been the case. you could make the argument that the stimulus was a stop-gap measure that would stop things from getting a lot worse. as you can see, it cuts both ways. democrats say, look what we have done, plugged the hole and

created some jobs, and republicans say that unemployment is 9.7%. >> you wrote about it this afternoon on "politico." there is a jobs bill pending in the senate. the discontent of the jobs number, and what is ahead in legislation. >> to be honest, it is a lot of optics. the obama administration had framed this, again, that it would work immediately. that it would keep unemployment below 8%. the senate is obviously grappling with it, to put this something that democrats are going to have a very tough time getting around, that unemployment is so bad.

they said that if he passed this very pricey stiglitz program, -- that if he past is very pricey stimulus program, it would keep unemployment below 8%, and it has not. that is very tough to get around the republicans will say that by your measure, this has failed. it is a tough argument to make. >> thanks for joining us. >> thanks for having me. >> we continue to take your reaction online and on our facebook and twitter page. here is a posting from michael. i know -- a note -- "the main focus was not jobs.

jobs are a distraction created by republicans and repeated a buy the dumbed down media." go to c-span.org and you can see all of the art twitter feeds and connect with us on facebook as well. in about an hour or so, we will take you to a briefing with christopher hill, talking about the upcoming elections in iraq. 3:45 eastern on c-span. this evening at the national archives, a salute to the tuskegee airmen of world war ii. that is at 7:00 eastern. right now, we will bring you a forum that looks at national debt and the budget process, and it features three former directors of the congressional budget office. it was held here in washington. this particular section runs about 15 minutes. coat or a bag

on a chair, would you mind removing it so we can make sure everybody gets a seat, please. okay. i'm really interested to see where this panel is going to go because i think this is one of the most fascinating topics of all this. the economic, the financial, and the global component of this fiscal path that we are. and we have an all-star panel to discuss the issues. first, right here on my left we're joined by dr. martin bailey. he's a senior fellow at the brookings institution. and he is the chairman of the council of economic advisors during the clinton administration. richard berner is the managing director and cohead of global economics and chief u.s. economist at morgan stanley. he's written widely on the potential effects of fiscal issues and situations that could affect the financial market -- the fiscal situations, how they could affect the financial markets. carlo cottarelli, and i direct

the papers that the imf is putting out on this topic. many years ago i switched fields because i discovered cbo payables and how fascinating they were and that got me fascinated on the budget. recently the same thing i found is happening with the papers coming out of the imf and carlo's name is regularly on them so i really direct you to the work that they are doing. i have given them first wide range of topics to discuss. i think one of the fascinating things is so often we're on a unsustainable path and we risk a fiscal crisis but very little is understood about what that means, what it looks like and how that might play out, what could be a tipping point for our financial markets. i don't think our panelists could answer those questions but i hope they would address them. as we're moving on in the policy field, the time where we need to start talking about specifics, we're moving on in the economic and financial field at the time we need to be learning quickly from what's going on around the world and have a finer sense of how markets are watching and responding to the situation.

so please, dr. baily if we could start with you. >> and i assume we do this in 5 minutes each? >> there you go. >> or less. the title of this session, if you read it one way is what are markets thinking, lessons from overseas and that sort of sounds like a book that might come out of the brookings institution or aei. you could read that title a little differently.@@@@@ @ it suggests that, indeed, as a result of the greek crisis, although that may be dissipating right now, both the dollar went up and treasury interest rates went down, and there was a flight to safety. when you listen to the panelists and to david walker, it is very funny to think that u.s. treasurys are a flight to safety place that you would go,

since we are looking at these enormous deficits. uld go. since we're looking at these enormous deficits, we have a relatively broken political framework. so it's an odd paradox that interest rates are so low. why is it? and what does it indicate about this tipping point that we've heard so much about? i think it's probably because however bad the situation looks in the u.s., it probably looks better in some respects than many of the overseas economies. china, of course, is a different story but china is not a place where you would necessarily go to buy their debt. they're a capital market that's more restricted. so i think markets are expecting a recovery in the u.s. an economic recovery that's probably going to be stronger than in europe.

i think there also may be greater room to resolve the problem in the u.s. we start with lower tax rates than europe has. we could have the potential to institute a value-added tax or a gas tax or something like that. so i think markets, global markets, are reflecting that they're a little bit more optimistic than the message you would have gotten from the speakers this morning. now, does that mean there isn't a tipping point and the speakers were wrong? no, i think they were right. i think there is a tipping point. i don't know where it is. i know that treasury and tim geithner are very concerned about it. i don't think they know where it is. either. whether it comes with debt to g.d.p. or a deficit level. or the fact that the u.s. is so big, which cuts in two doctors. -- two directions. when we have a deficit or we're financing our deficit overseas, we're talking about huge amounts of money.

85% of the available capital in the global market in the years prior to in this financial crisis came to the united states. we are really sucking up the global supply of savings that comes into the global capital market. so i think this tipping point is there. it would show up as higher interest rates and potentially as a lower dollar. and the dollar had declined somewhat before the greek crisis. now, part of the mandate for this session is lessons from overseas. i think one lesson from the european crisis that i hope we learns and congress learns is that the tipping point really is out there. that if you go too far and greece clearly went too far, then the value of your debt starts to depreciate. and as various people have said, somebody out there may bail out greece although i don't think greece will have such an easy time with this situation.

but i hope congress learns the lesson from what's happening in europe to say that let's not push the envelope on this one. now, various of my colleagues have said to me, you know, congress is not going to get serious about the deficit until they actually see interest rates rise. so i think if that's true, what we've got to hope is that interest rates rise slowly, though we don't hit a tipping point and drop off the edge and congress does indeed react to rising interest rates or declining dollar by reining in the fiscal deficit. there was comments earlier that we're in the hands of our creditors. and there's obviously some truth in that. however, they are in our hands, too. i mean, you know the old axiom if you borrow a dollar from the bank they own you. if you borrow a million dollars,

you own them. and i think there is some truth in that with respect to china. if they start unloading debt or not taking on more of our debt, then it will affect their own exchange rate and their own ability to export. and they're probably more scared of that than they are of default on u.s. treasuries. so they'll complain a lot about u.s. treasuries but i suspect they will continue to hold and keep buying those in the future. and i think that's another reason markets are sustaining reasonably low interest rates in the u.s. there's nobody really, the europeans, the japanese, the chinese, others in asia, nobody really wants to see a collapse of the dollar. and a lack of access to the u.s. market, which is -- which is still so important. to the global economy. quickly, i'm going to slowly -- there was a question about can we grow our way out of the problem?

and in the earlier panel john podesta mentioned a number of things that had been done that gave rise to the budget deficits when he and i were in the clinton administration. and he's absolutely right. there were some very hard choices that were made around policy. but we were also helped very substantially by the rapid growth of the economy. that we had an increase in the rate of productivity growth. we had very strong employment. now, some of those things may have been helped by the policies that were followed. but we were also somewhat lucky in getting that rate of growth. are we going to have that in the future? is that going to bail us out? well, maybe. it certainly is not in most forecasts. i made a prediction that labor productivity in nonforeign business would grow at 2.2% a year. and i was talking to a reporter from the economist and he said, wow, that's a high number. well, we had 2.5 in the 1990s when we balanced the budget.

so 2.2 is not a particularly rapid rate. we also know that -- you know, hopefully employment will increase in the recovery as we get back to full employment. but the rate of growth in the labor force is not going to be all that strong because of the demographics that is affecting the entitlement programs but is also going to affect the rate of growth of the labor force. i think there are some things that can be done to increase the rate of potential growth. around technology, education, and those things have been mentioned. about encouraging entrepreneurship and having more gazelles in our economy. companies that start small and grow rapidly and employ a lot of people. but those are tough policies to do. and it's tough to get a big bump out of them. so while i certainly hope for that kind of rapid growth, i don't think we can count on it. and my last quick comment is going to go back to some of the earlier points about the nature of the debate.

and i want to say that i think we do not have an effective debate either about the budget or about medicare and medicaid, which is such crucial components of medicare. and i want to mention a couple of things. a u.s. senator was holding town hall meetings around the time of the healthcare debate and the healthcare option. and he was being yelled at by everybody in the room. some were tea party folks. some were on the left and they were all yelling at him. and at one point he said, now you guys do know that medicare is a public option. it's a government program. whereupon half the people in the room started calling him a liar. and saying no, it's not. and so i don't think, you know -- i have great faith in the american people and all that stuff. but i don't think -- [laughter] >> i don't think we have at the moment a very well-informed debate. i would also mention paul krugman and he wrote an argue in

the "new york times" last week that said, you know, this roadmap for the future is really a trojan horse to dismantle medicare. well, maybe. but i don't think you can get re-elected in the united states if you're going to dismantle medicare. i actually don't think that's right. i think it's actually worth thinking about, whether we want to create a budget. for medicare. and, you know, what -- what form would that take if we actually put some limits on the spending for medicare? and what would that mean? and then, you know, you would have sarah palin and other of my favorites in the public debate. and she says no death panels. okay. no death panels so we're going to spend half a million dollars somebody who's 90 years old alive and where he's going. okay. maybe that's right. maybe that's the moral thing to do. but on the other hand that means we need to raise medicare taxes from 2.9 to 3.9 to 4.9 to 5.9 or

whatever it's going to be in order to balance medicare. so i don't think anybody is creating the right debate around healthcare and other budget items. and until we get the right debate, i don't think anybody is going to vote for the politicians that are going to make the decisions that need to be made. and so that as the earlier panelists said is a big part of the solution. thank you. >> great point. it's really interesting. thank you. >> thanks, maya. so my homework was to try to assist what markets are thinking. and i thought i'd start by asking the question, what do markets want? and i think like everybody in this room, market participants both at home and abroad would like to see a credible plan to get back to fiscal sustainability. by definition credible means a lot of the things that bob talked about including one that does not kill the economy. so what are the thoughts of investors at this stage of the game and to answer martin's question.

why haven't we seen some of the concerns about the budget showing up in various asset prices and interest rates? well, i think investors are in between some of the tail risks that are out there for the budget. they risk the tail risking but they don't think they are clear and present dangers. they think we have a little time to do something about our budget. not as much before but it's not a clear and present danger that requires immediates on austerity like some some other parts of the world. they are alarmed by the prospects of looking at deficits as far as the eye can see. a phrase we heard some 20 years ago or more in earlier budget debates. they do know that there is no credible plan yet to really grapple with the budget problem. and so what do they fear and how are they likely to make that play out in financial markets in

the future? to answer that question, i think i'd talk about four fears that investors have that line up with some of the components to interest rates that we observe in financial markets. four components are inflation. the factors that drive real interest rates. and two kinds of risk. currency risk and just the risk associated with the uncertainty that is bad news for financial markets. in a nutshell i think there are a lot of investors out there who believe today and in the future ultimately sovereign credit risk, whether it shows up in greece or the united states, will be inflation risk. the temptation to erode the value of the deficit. and the debt. and the legacy problems that we've inherited is obviously strong in some abstract sense. and there are some economists who have proposed that we actually raise the inflation

target temporarily in order to facilitate that process. unfortunately i think in the united states at least we have three problems with doing that. first, if we were to announce a higher inflation target, that would show up immediately in nominal interest rates and would be counterproductive. second, if i'm not incorrect, if i look at the budget that we have in the united states, and the outlay side, roughly half of our outlays are either officially or unofficially linked to inflation. and you could argue that medicare, although not officially linked to inflation with excess cost growth would respond to inflation overall with even more of the same. and third the federal reserve, it seems to me, would still -- and i say still because many perceive that the fed is up against the wall politically would still respond appropriately and strongly.

and i know we're going to hear from our lunch time speaker on that score. the second risk i think relates to the factors that drive real interest rates. obviously, as everybody here has indicated, from david walker to martin baily that real interest rates are comparatively low compared to other markets in the world. and while we have massive treasury borrowing needs, the economy cyclically is in a point where private credit demands are very weak. as the economy recovers and private credit demand recovers as well, with a lag, it seems to me that there is a very real risk that real interest rates could rise very significantly. and that's a factor that i think is not right in the price today but it seems to me that it's going to be there in the future. ironically with a recovering economy. the third risk is one that

others have talked about, namely currency risk. there is diversification going on away from our debt. global investors and sovereign wealth funds and reserve portfolio managers don't need to sell treasuries in order for that that to happen. they simply need to buy less of rm.@@@@@ >> the last risk is one -- a risk premium or term premium in bond markets. that arises from uncertainty in markets. typically, we think that in markets we know how to quantify risk, but we don't know how to quantify uncertainty. the biggest risk right now, it seems to me, is the political

risk. . and the biggest risk right now, it seems to me, is a political risk. the political risk is something we can't quantify but in financial markets people have typically talked about gridlock being good for financial markets because it keeps politicians off the streets. it keeps them from interfering with markets. and so that's generally perceived in the past to have been good. right now i don't think that's the case any longer. i think that we've got problems that demand political choices and political solutions. gridlock is now -- it's now dawning on investors that it's bad for financial markets and i think you're going to start to see that play out in our markets as it is in others as well. i'll leave it there and will take questions. >> thank you very much. i was asked to give a bit of an international perspective. and i would say a few things about some basic facts, the

risks and the possible risks and the possible solutions. basic facts, the fiscal problem that the united states is facing is common to most advanced countries, not all but most other advanced countries. the emerging markets are in a better situation. not in america, asia, they're in a much better situation but much weaker in europe. but this is a problem mostly affecting the advanced countries. we project that between 2007 and 2014, the public debt to gdp ratio in advanced countries in the g20 advanced countries will increase by 40 percentage points from about 80 to 120% of gdp. second point, a small part of

the 40 percentage point increase, only six percentage points is related to discretionary actions taken by governments in support of the economy, the so-called fiscal stimulus and of support of the banking sector. most of it comes from revenue losses related to the recession, lower payments from consumers, for households, lower payments for enterprises, lower payments from banks. it comes from an underlying increase in spending in some countries like security spending in the united states and health spending in japan. and it also counts for the increased burden of interest payments. third point, even if we assume that the fiscal stimulus -- the discretionary fiscal stimulus is not renewed over the next couple of years, and even if you assume

some other reduction in temporary spending, the united states as well as the advanced countries will still be running a structural primary deficit in 2014. what does it mean? structure means the netting out of cyclical factors when the economy is back to where it should be. even at that point, the advanced country will still be running a primary deficit. a deficit net of interest payments. so revenues, net of other spending will not be enough to pay for interest payments of the debt. this in 2014 at the time as i said the gap will be closed -- we don't expect to see -- we see unemployment going back to normal. it can happen before but by 2014, it should be the case. at the time also when the

demographic shock with most advanced countries in full swing and at the time when the public debt would have risen to a level that has not been seen since essentially the aftermath of the second world war. even now if you take the g7-advanced countries in 2010, the level of public debt is back to where it was in 1950. in the aftermath of the second world war. these are the facts. what are the risks? there are short-term risk of the kind -- of the kinds of development that you see in europe, a sort of loss of confidence in public finances. but there is another medium-term risk namely that -- well, everybody agrees that public debt can't increase forever. the increase is if governments could decide to stabilize public debt in relation to gdp at the post-crisis level.

which would be about 110, 120% of gdp depending on the countries. what would be the consequences of leaving with a public debt of gdp ratio of this level? there will be consequences for interest rates. we estimate that as a result -- it would involve an increase of public debt of about 175, 180, 200 business points. two percentage points of gdp roughly speaking. there may be consequences for growth. our most recent diplomatic work will show that leaving a public debt of gdp ratio about 40 percentage points higher would reduce -- could reduce potential growth by about three fourth of gdp. so every year as long as you keep public debt at this level,

growth would be lowered by about 0.7, 0.8 of gdp so these are important facts -- important things to keep in mind. what are the solutions? i don't think inflation is a solution. as was just mentioned some economists they've argued that inflation should be brought up to say 6 percentage points for five years. we have computed what would be a affect public debt of inflation to 6% for five years. and, yes, there will be a lower public debt to gdp ratio but the erosion coming from inflation of public debt will be only about 7, 8 percentage points of gdp for the advanced countries against a trend increase of 40 percentage point of gdp so less than one-fourth could be eroded by inflation unless you want to bring inflation of very high level all of a sudden which nobody really wants. growth must be part of the

solution. growth has huge effects on the fiscal accounts. for a country like the gdp ratio of 40 percentage points of gdp like europe, a 1 percentage point increase in growth, if you save the additional revenues that you receive as a result of growth would lower public debt by 30 percentage points after 10 years. ...

>> what is needed is a tough decision on revenue and spending. first, the adjustment is launched. the debt to gdp ratio of the country projected to grow by 40% points. if you wanted to go by 60% in the next two decades, the primary structure of balance has to improve by eight percentage points of gdp. it is a very large number. it is very large but it is not unprecedented. in the last two decades, we have

seen and 12 advanced countries that managed to adjust their primary the balance by eight percentage points of gdp or more in 22 emerging market countries have managed to do so. it is not impossible. what makes it harder is said had advanced countries will have to swim against the tide, because not only will they have to swim far to reduce the deficit by quite a lot, but they will also have to do this when there is a trend increase in spending for health related to the aging of the population. we compute in the advanced countries, the trend increase in health care spending and pensions spending over the next 20 years is about 4% to 5% percentage points of gdp. it is higher in the u.s. but it is also very high in europe. çthey are critical but they wil

not be enough. w3ççbecause of the aging of te çpopulation, what can beç expd is to keep spending in these areas constant. half a percentage points of gdp are was referringç to before, have to come from other sources. this will be on lengthy process. one cannot expect to bring back a debt to gdp ratio and just three or four years. it will take time. take time, it is critical to maintain the course of fiscal policy for a long time. and this may require in some countries, maybe most advanced countries, reforms in fiscal institutions. germany, for example, has really silly and his -- has introduced in the next for five years net

of the effect of all of the recession. unless there is a recession the ballot should be the fiscal account should be balanced. i'm not saying this isn't the only solution, but i believe most of the countries to the strength of their institutions, the fact that united states there is a need for strategy for a better strategy for medium-term plans. and i think this is true for the united states and this is true for all, most of its countries. thank you. >> thank you very much. you bring up a such an important point about where we end up stabilizing the debt because i feel like in the first panel and and of the discussions that have been going on there really has been a consensus about the need for the fiscal goal, and that fiscal goal should be stabilizing the debt at a reasonable level, over and reasonable amount of time. i do think it will be pushed back at some point. when people start going through this exercise of what it takes to maybe up that level where we

start to stabilize the debt. one of the big risks there is as useful economic growth and also you have a real loss of fiscal flexibility, the kind of advantage that we and other countries had going into this crisis that we had relatively low levels at debt and were able to ramp it up to respond. if you don't break it down to pre-crisis levels you don't have that flexibility going forward. one question i have for the panel, i think when we talk about monetary policy or regularly when the talk but monetary policy, you talk about exit strategy. i think that's critical for fiscal policy. in the peterson-pew commission we did talk about weighing the trade-offs between implementing fiscal consolidation too early, but there's another component which is the global factor. you have countries around the world who are facing the same situation would have fiscal stimulus and will need to pull out of the same as at some point. to what extent does that need to be coordinating and to exit our countries working on coordinating that?

>> the fact that many countries have to implement fiscal adjustment at the same time over the next year complicates things obviously, from the demand, from the world demand management perspective. i think that the main coordinating that is needed to release a correlation between monetary policy and fiscal policy. as i would expect the fiscal adjustment takes place, we will see increases -- we'll see the less of a need for racing over the next two years because essentially interstate could be kept a bit lower in fiscal policy withdraw, withdraw stimulus. so as to be able to crowd in the private sector as the private sector crowds out.

is going to be more difficult to have coordination of fiscal policy and terms of the main fiscal arguments across countries. because this country will withdraw based on its own domestic needs. and not all countries have the same@@@@@ @ @ @ where i think more coordination will be possible will be in some political, fiscal actions. tax policy is something that i think is going to be harder for countries to take tax measures and a global economy without discussing. that is an area normal corporation will be needed in future. >> the comment i would make is

that in the period leading up to the crisis, with a current account deficit, and the rest of the world, notably china, but other countries having large surpluses. those global imbalances was one of the contributory factors. only one, but it sort it was an issue. as we get back to dealing with the budget deficit problem, i think there is a sense in which the rest of the world has a responsibility to make sure that we don't get into a global recession. the u.s. needs to have a forward growth path which is more export oriented, less consumption oriented. we have sort of done that in this recession because the assumption has dropped so much. we need to go forward on a more sustainable balance growth path

relying less on foreign borrowing. but the other side of that coin is that the adjustment of the rest of the world has to be to maybe import a little more, or sustained demand, there to mechanistically to make up for the short for what the u.s. was providing to the world economy. so that's i think the key coordination that's needed. >> i would just add a worry in the hope. the worry is that in this environment, one of the policies that might be perceived on a local basis to be helpful is protectionism. and clearly, that's not going to be helpful at all, but to protect local jobs and all jobs as opposed to creating new ones i think that's a risk in this environment. a hope is, as we see, you know, other countries as carlo mentioned who are outperforming because of structural changes and transformations they are making their economies, some of

which you can attribute to changes in fiscal policy. and i point out in some latin american countries, notably brazil, and in others, those have borne fruit. that the outperformance their overtime will contribute to an example so that others can follow. along with that, and you know, that those lessons are lessons that we can learn in the developed world. >> we have time for a few questions. yes, right there. >> thank you, maya. you guys, the commission always puts together a pretty good, a very good panel, informed. i am with america's for generational equity. i just have a question onto topics, inflation and the savings rate. if you could comment on these two.

inflation in the context of, how would you say the market is interpreting, i mean, i mean, i reluctantly agree with the imf in saying that inflation is not the preferred way of going, but would you say the markets interpretation is the only way that we are kind of, you do, kind of going out of this debt problem is to inflate our way out of this? good example is tips, the popularity of treasury inflation protected securities sales, it seems like the markets kind of like, aging on the side that we might let inflation kind of inflate our way out of it. and then secondly, the savings rate. just even we talked to a demographic shift, entitlement programs. we even talked about how people under the age of 35 are not expecting that much by the time, so shouldn't it be a rise in the savings rates? in that regard, and i would also

kind of put in the context of -- >> can you wind up the? >> greece saving rate was below and we look like japan, there debt to gdp ratio is high but if other savings rate is much higher than the u.s. so doesn't that have a lot to do also without balto our debt to gdp ratio would determine the fluctuations in the market? >> maya slipped out. she is bored with this discussion, but she made some other excuse. but anyway, dick, do you want to respond on that, inflation? >> sure. you know, you don't see, you just see a rise in break evens and the financial markets. but i think that the real key to thinking about how investors are positioning themselves for inflation is to look at things that are not so evident in the tips market. people are buying options on inflation. they are in the minority right now. they are possible powerful

forces. there. and therefore being disinflationary. and there's a lot of truth to that. the questions what is the policy response? in the policy responsibly is if you're going to bed at much higher inflation, then you are betting on taking away the power of the central banks to be and to keep inflation and price stability as it has been, a primary goal for central banks in the past that and some people are starting to bet on that, but we don't yet see it in markets. on a saving rate, you know, i think what martin said earlier is really important. namely, what we have benefited from, saving from abroad, no question. and we're boosting our domestic saving which helps to be balanced the u.s. and global economies. but the problem is the fiscal problems we face are so massive, that no amount of increase in

private saving is likely to help finance that deficit. on the contrary, it seems to me that if we were to save a lot of we would run into the paradox of thrift, in which that jeopardize our economy. and second, if anything i think as we start to see our economy come back and credit demand start to come back, we will start to see the effects of the clash between public and private borrowing show up in our financial markets with higher rates. >> one of the things that i worked on with the mckinsey global institute wasn't look at different adjustment pots, and we were struck by how short term the u.s. treasury market is at this point. it's rarely predominately under two years maturity, so inflating your way out of the debt problem is not, i think, a great solution for treasuries. now and would probably change in the morgan market and some of the private debt if you had an

abrupt rates and inflation. but i think to get out of the government debt is not very strong. i will see back to you the chairmanship. so go ahead. >> one minute break. yes, question? >> i have to question. the chief economist produced a report last week's adjusting that central bank should raise their inflation target from right to present to the four to 6% rate. is this now the official policy of the imf and dorsey higher inflation the solutions are fiscal problems? credit demand a both a household private sector is declining. we've had a big reduction of bank loans in the last six months and so on. let's look at 22012. is so there's no progress on this fiscal problem we're talking about here today and we're still looking of budget deficits, 1.21.3 trillion. how high could bond yields go in the election year, 2012, if we

don't make any progress of the budget deficits? 6%, 7%? something that might then frighten congress into taking action? >> okay. thank you. maybe i should ask my friends, next time with me. the views that he has expressed are personal views. they have been issued as part of the publication that contain in his paper, top position, presents use of individual, not view of the imf. but i would like to say that he was looking at this from a specific point of view, namely how to manage aggregate demand in case of a recession. when interstates cannot be become negative. so from that he was just lucky from his specific perspective. from a broad perspective, the issue that i was referring to was the fact that inflation, not

all is not the right thing to do, but it's not really very effective. in reducing public debt. as i said, unless you want to push inflation very high levels in a very short time which don't want to do because it would be very costly to bring it down. it would harm the poor that nobody is really thinking about that, that sort of thing. on the question of the bond yield. i have already expressed my views on this. i believe keeping interest rate, keeping public debt at a high level would have consequences for whatever applications for interstate government is paying. the basic number that we have is that one percentage point of additional debt, implies increase in interest rate of 5.6

or four percentage point increase in public debt would involve about 200 business points increase in interest rates. all of the condition being the same. than if the private sector start saving more as mentioned, obviously the effect could be lower. but in itself, public that 40 percentage points of gdp would involve and argue something like 200 business points. of higher, higher interest rates. >> david, i agree with carlos econometrics. and i'm a card carrying member of maya's club which have a part of the critical issue here is to come up with a truly incredible plan to do something about our fiscal problem. lacking that, however, i am skeptical that we will in the short run. lacking that, i think when private credit demand comeback i think we can see 10 year treasury just go to 5.5 percent in short order. and that's our view. and i think that doesn't

necessarily mean it will kill the economy, but it means higher interest rates will make it difficult to reduce the deficit because they'll push up the deficit, and in a get ever more quickly. >> just in case people don't know our people on c-span audience don't know, the announcement of the something we copied, great at the other club, we now have a long list of impressive budget people who support the notion that you need to credibly commit to a budget plan now, it didn't phase it in vasodilator, thereby binding sometime in economic space to let the recovery take hold. so i'm so glad that we have wonderful members like a decorative. we're time for one more question and we will move onto the next panel. >> i'm a writer on economic

issues for the state department's public diplomacy bureau. and the obama administration has proposed taking the proceeds of recovered funds from t.a.r.p. and funneling it into the recovery act for further standards. how do you think the markets would react to this policy? primarily, you, mr. berner and the others if you would respond. thank you. >> the administration had, if you will, you know, announced and put in place in its budget for last year, that was very large for future t.a.r.p. spending which didn't occur. since this penny didn't occur, taking that allocation and moving it to new spending, which might occur, i think markets are see through and look at that as a net increase in public spending. juno, a political judgment near-term as to whether that is dated for stimulus i think is

one thing, but nonetheless, i think markets will correctly look at that as increased spending. and at this stage of the game, i stick to what i said before, namely, if we are now in a process of working towards bad gridlock, and there is no vehicle plan to reduce that, my expectation is that's going to show up in financial markets that much more quickly. >> i want to comment about how the market, how the markets will react because the position to answer that. but the porno want to make is the difficulty of the current situation the u.s. and other countries are facing is there is still the economy is still very weak. it is clearly still very weak, and that's why the imf says for 2010, it will be necessary to continue to support economic activity through fiscal policy. on the other hand, nobody wants to have loss of confidence in the fiscal account.

so what is necessary to reconcile this too needs? and maybe need to implement an important fiscal reforms that do not have any immediate negative impact on aggregate demand. but they have long lasting effects on the fiscal accounts. and entitlement reform, and increase for example in the retirement danger, in europe, it has been computed in one year -- into your entries in the retirement age in europe, could save as much as 40 percentage point of gdp net present value of the public debt. reforms of this kind can be implemented now, even in a recession, and do not have negative impacts on aggregate amount. this is the kind of measures that are needed at the other kind of measures that can be implemented now are the institutional reforms to strengthen, strengthened financial institution. things that have medium-term but

did not have a negative on regular demand now. >> let me just add one more thing, which hasn't been brought up on this panel, and only limited on the. and that is our fiscal federalism. you know, if one started to become why that we have a huge state and local budget problem. i'm not sure most people are aware that we could have a whole inches in state and local pensions alone that could be as high as two or more trillion dollars. that is on present while you basis. that funding gap, and leslie break promises to future retirees, is something we'll have to deal with data by breaking those promises or raising the revenues is somehow to pay for them. but it's even worse than that and it speaks to carlos call for fiscal reform. and that is when you think about fiscal reform we think about the structure fiscal federalism when it comes to medicaid, which is

essentially a put by the states back to the federal government and to the taxpayer at large. so that medicaid is a program that is shared by both state and local, state and federal governments. but when we get into a financial crisis like the one we had, or even a recession, medicaid eligibility goes up dramatically and the means to pay for at the state level goes down dramatically. so when you think about that from a cyclical perspective, and they need to fill the hole, and the burden of places on the federal budget which can be long lasting, that's one aspect of it. but the other aspect of it is that these promises that were made at the state and local level, not just for pensions, but also for healthcare, are likely, in a poor fiscal environment for the states, likely to come back to the federal level. and we are seeing the dynamic, the political dynamic of that playing out in the southern debt

crisis in europe. and it's likely that we're going to see the same dynamic played out in the united states that the solution, of course, is to reform our fiscal institutions, and that includes fiscal federalism. >> yeah, i think that's an important note to end on that one of the problems we have in dealing with these huge challenges is how compartmentalized our policymaking is. and that is true in both policy areas. and i remember dick, many with you years ago when you warned me, that it will explode. and fortunately it seems like the timing of this, and potions will all take place at once. so thank you so much for the really constructive and informative panel. and i hope and i'm sure we will all hear -- i will turn to politics. >> economic growth will help. >> there is the free lunch, economic growth. and that we will turn to the

>> çboth the house and senate t of session this week for the presidents' day parade. several republican members are expected to a dissipate in the conservative session. the american conservative union and others will be present at the conservative political action conference. we will have coverage. check c-span.org for a schedule. the national governors' meeting will be at the j.w. marriott. first lady michelle obama will be among the the speakers. and lots of information online about the stimulus in getting your reaction to the one-year anniversary of signing stimulus

package. jamie rights that -- writes that -- comments from melinda -- patrick tweets us -- one more fromç tara -- just a reminder, c-span.org, you can tweet us anytime. and about 10 minutes, we are expected to hear from the u.s. ambassador to iraq christopher hill, he will be talking about a march 7 elections expected there. we will have live coverage what

it does start. this evening at the national archives, a tribute to the world war ii tuskegee airmen. we are waiting for christopher hill's comments. until then, discussion from this morning's "washington journal". ç[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] our viewers earlier today to grade the stimulus one year later. what grade would you give it? guest: i think just looking at the stimulus itself, i would give it a b plus or a in a-, actually. the outcomes without the stimulus would have been much worse in the last year. it was quite important from -- for preventing confidence from collapsing both in the united

states and internationally. i think there are other things that obama has done, but on the qjáu$e right thing. host: do you have concerns with the stimulus? guest: yes, of course, we all wish that more of that money had been spent sooner. i think more of it should have gone out in the form of tax cuts, which would have helped consumers balance sheets to lower debt. that is a pretty fair and -- would have been a fair and sensible way to handle a situation. but this is just personal quibbles. broadly speaking, the stimulus was at the right thing to do. host: president will speak marking the one-year anniversary later this morning. it will be available on c-span television as well as radio. there are a first towards a jobs

bill. they do not want to call it a second stimulus bill. harry reid has can -- has indicated that it will be smaller jobs legislation moving through the senate. your thoughts on what they are talking about there? guest: i think it will probably address the payroll tax, perhaps for smaller businesses, perhaps on a temporary basis. it will not be a lot of money, though. that is, of course, because we have such a large deficit. our debt is increasing not to levels that you would usually worry, an introductory is not good. it is also this breakdown of -- and its trajectory is not good. it is also this breakdown of working together. is the five-to-10 year horizon that is quite concerned. that removes, i think, a lot of our ability to provide for the stimulus or support the economy, to use a less controversial

term, now and that is most unfortunate. host host: president obama is expected to announce this week a security spending. what are your thoughts on a debt commission by executive order and the job they have to tackle? guest: i think having a bipartisan commission is quite important and i do hope both parties are going to cooperate with this. there was an attempt to have that commission come out of congress, but that was stalled. i think the court -- the republicans did not want to cooperate. the key issue, medicare is the key item going forward. i'm talking 10 to 20 years down the road. security is a bit of an issue. but you also have to look at the taxation side.

we do not have a very good tax system. it is not easy to scale it up. if the decision is that we need the federal government to generate a higher percentage of gdp in revenue in order to balance the medicare spending, for example, down the road, then we do not want to do it with the --@@sábn @ @ if we can get on the path to put is there, and that gives us room to maneuver. host: and mentioned a little bit about your résume may her, senior fellow --profess are at mit, former economic counselor at the imf. you also write a blog, baseline scenario. you talked a lot about too big

to fail and what the obama administration is thinking about when it comes to that. how can the financial sector, how can this administration shrink the financial sector that exists today? guest: in economic terms, it is not that difficult. you have on the books of a lot from 1994 -- a law from 1993. 4. no single bank could have more than 10% of all deposits. since then, we have had a growth of banks. the regulators did not enforce the cat in the 1994 law. had japanese to be amended. no energy -- it needs to be amended. 2% or 3% of gdp wouldç be a su

bstantial reduction. most people i talked to, are in favor of such a cap. it is not all ball rolling over and what the financial sector says. host: you talked it is not about a populist movement. in the business section of "the new york times" this morning, notes four elders of the wall street that favor a tight rein. founder of vanguard, a former chief of citigroup, soros, and the former head of the sec. guest: this is the point we have been making for some time.

i am not anti-finance. i was chief economist at the imf. you do not get that job if you are a populist, i can assure you. the largest banks should be constrained is not a view of people with pitchforks and barricades. that is a reasonable technocratic view. haddad is the view of most of the financial sector. -- that is the view of most of the financial sector. now, i understand the of the people who run the largest six banks hold -- called a lot of cards right now. -- hold a lot of cards. it will happen over the next three, five or 10 years. host: what'll happen about the complemented -- a complicated credit has swaps.

is congress getting at what has been called a shadow banking system? guest: it means different things to different people. let me deal with the credit default swaps and over-the- counter derivatives. the answer to your question is unknown. there is nothing on the table, proposed by the administration, that will constrain these markets and make them less dangerous. in 1998, with the failure of long-term capital management and the impact that could have had throw our financial system, that was very much about of murkiness of these over-the-counter derivatives markets. this is a huge problem that has to be addressed. many of the views around greece and their dad and a potential default, if that was what happens, could affect your been us, runs through this opaque market.

no one knows how -- who knows what to whom. host: how would a default increase impact the united states? guest: and we do not know. the regulators do not know. the big banks had, i think, also do not know. host: and what is the potential? guest: i do not want to scare people, this is just the potential. if the greek government a false, you will see selling pressure on the portuguese, spanish and the u.k. government. those are serious enough. that will slow down european growth. that will affect our exports. the bureau also will likely weaken relative to the dollar -- the euro will weaken. if these problems in europe damage european banks, that will

come out and hurt us. our bank system does not have a lot of capital. without a lot of capital, if you have had this happening, why are they going to do? they are for-profit organizations. they will cut back on credit. they are also being hit by commercial real a state. we could be heading for a second party a slowdown in the second half of 2010. host: here is the headline -- athens is told to fix a budget as a strike to begin. floyd, democratic line, you are our first phone call. caller: on behalf of art -- my fellow americans, i would like

to declare, thank god for c- span. as to the functionality in our federal government, could it be time for a constitutional convention? host: any thoughts? guest: that question is above my pay grade. i became a u.s. citizen and to the test to become a u.s. citizen. are like the constitution. -- i like a constitution. what comes out of this process is something sensible we face -- we face these problems before, in the 1930's, and in the early 1900's. andrew jackson faced is in the 1830's. host: tennessee, sam on the republican line. caller: thank you.

do you teach at m.i.t.? i want to ask one more question. guest: yes. caller: and another professor can be on c-span, too. how can germany out-export have united states? guest: the chairman population is over 80 million right now. -- the german population is over 80 million right now. they also need to buy things from the rest of the world. exporting is fine, but if you export more than you import, that creates an imbalance in the eurozone. much as i admire and chairman values and achievements, that attitude towards keeping inflation low and maintaining a

tight fiscal policy, is not the best policy for their neighbors. europe is grappling with the issue of how much the big countries, and germany and france, should do for themselves. were you sure that policies and the responsibilities and you try to bring everyone with you, like in the united states. host: in "the financial times" -- letting them get out of the currency. until they can make a comeback and get back in at a competitive rate. guest: he is a great economist. i think this particular piece shows you the difficulty they europe is in. there is no mechanism for any country, such as greece, to

leave the euro zone. if they were to adopt this proposal, and take back their currency, i think that would be a disaster. if that kind of auction is off the table, then there will be a big fiscal adjustment, perhaps a half percentage point reduction or an increase in taxation and external financial report -- support from the european union. host: north carolina, an independent line. caller: thank you for c-span. we talked about stimulus and jobs. on abc a week ago, $450 million and was given for a wind farm in

texas. 300 construction jobs were going to be obtained in the united states agreed to thousand manufacturing jobs in china for blades that we can manufacture -- 2000 manufacturing jobs in china for the blades that we can manufacture. and what is the benefit to us as a country? guest: i think the caller is making an important point. and for sure, china is cheating on its exchange rate. they maintained their currency undervalued for along time, using the mechanisms that are not allowed in the international economy. that forced have the imf -- it has completely dropped the ball on this issue.

u.s. treasury could take this up and unlabeled china of currency nevada -- a manipulator. i think it will not. we rely on china to buy so much of our debt. this is a strategic we need to look for new ways for. -- new ways forward. china has to start manipulating its exchange rate in this unfair manner. host: the headline on the front page of the financial times this morning -- u.s. treasury bonds fell by your record amount as china's purge some of its holdings of government debt. what is behind this? guest: china is looking for other options. there are not many good ones. the bureau has had a bumpy ride. -- the euro has ha d d a

bumpty ride. they will be buying u.s. government securities. that is a good thing in the short run, but it creates a strategic weakness for us in the long run. do we have a strategy for bringing our medium-term deficit under control? if we do, i will not worry about foreigners. if our fiscal policies are off track, reduction in our deficit and in limiting the amount of government debt and we put out there, who then we will have a problem. china will just be one part of the problem. host: how much do taxes need to be raised? guest: that depends on how much

you want to spend. you're talking about 10 to 20 years. how much do you intend to spend on medicare? >> "washington journal" live every day at 7:00 a.m. eastern. we will take you live to the state department for a briefing from ambassador christopher hill. >> -- through frankfurt, london and paris. i hope my colleagues will be returning here before the end of the day. this is a very important year in the history of iraq and the relationship between the united states and iraq. a very important election coming up in just under three weeks time. an important transition that will happen as we move from a relationship based on military presence has to a relationship based on a robust civilian

presence. during the secretary's and bilaterals in her recent trip to the region, where rock came up in every meeting -- iraq came up in every meeting. she expressed gratitude for oic, for providing election monitors. with the election coming up, and various events happening in the subsequent 18 months, with our ambassador in town, we thought it was a good opportunity to bring him back to describe what is happening in the run-up to the election. and once the government is formed, and we could see events -- or the subsequent events moving in the next 15 months. chris, welcome back.

>> thank you very much. it is a pleasure to see familiar faces. you probably want to ask me about north korea, but we are out of that business. it is a pleasure to come to the snow capital of the world. as we enter what is ahead, the last two. five weeks, before the rocky elections. -- before the iraqui elections. we met with the president this afternoon. on friday, we will meet with secretary clinton and also with the vice-president. we are here to report on where things stand with three weeks to go.

there are twists and turns to any destination. debaathification was a major and a tough issue, an emotional issue. the campaign has really started in earnest. campaign placards over every surface in the country right now. there are 6000 candidates. there are 18 million registered voters. 50,000 polling stations spread over 9000 polling centers. there will be out of country voters, and they are prepared to handle that, in 16 different countries. voting will start on march 5. we are working closely with the

un and the u.s. forces to help secure on monitoring team. these are just u.s. and non entering teams, spread out over the 18 provinces. we will have expert teams and some of the sensitive areas. there will be nine diplomatic missions, representing the overall monitoring -- the u.k., denmark, czech republic, and others. we will have six journalistic in beds. -- embeds. our teams will be deployed are b-- around march 1. it will be an election that will determine the future of iraq,

the future of the u.s. and the future of our relationship. this is a very important election because it is an important election that will enable us to continue to develop a long-term and important strategic relationship with the republic of iraq. to be sure, we have forces on the ground. harris is an important year in which we will drawdown those forces -- this is an important year in which we will draw down those forces. who will be in the energy group into advising the brigades -- security remains a challenge in iraq. politics is something one has to monitor and buckle one's seatbelt for in iraq.

we see a country that is increasing democracy. it is made important strides. we reached some oil leases have deals with some major oil companies in the world. if all goes well, in 10 years, you will see our country producing some 10 million barrels of oil per day this is a substantial amount. this will put them in the category of a country like saudi arabia. it will make them and oil exporter to the tune of four times what it is currently exporting. there are more and more in infrastructure companies coming in. i think we can see that iraq is really taking its rightful place

on the world stage. we will have continued to difficult times as we get to the election. and we will have difficult times in getting through government formation. . . >> on that last point, this morning you were talking about months rather than weeks to see a government in place.

does that represent a dangerous political vacuum? is there risk when there is not an actual government sitting, of backslide that we saw last time around? >> we work very closely with the iraqis on the issue, making sure that the interim government continues to fill all of its responsibilities, especially in the security area. secondly, i don't think it is safe to predict at this point how long it will take. there have been discussions ongoing already about what a government will look like. which party coalitions will contribute, which ministers -- but realistically speaking, it will be difficult to foretell before the election. our hope is that it will be done as soon as possible but it is

important that they have good governance and a good government. we think a good government is more important than speedily or easily put together. i would be cautious about comparing these elections to those in 2005. you recall in 2005 the sunni boycott. there are no signs whatsoever of a boycott in that community at this time. all the communities have been urging their voters and members to get out and vote. i do not think it is really productive at this point to speculate how long it will take, whether a few weeks or whether it becomes more than a month, i just do not know at this point except to say that the iraqis understand the challenge and the need to put together a government as quickly as it can, one that is never the less durable. >> can we go back to the idea of

the baathists and the band canada? you talk about the sensitivities about that issue, and i was wondering if you think there is any danger of not a resurgence of the baathists, but a backlash of supporters in terms of violence or anything like that? >> there are baathist elements very unhappy with the current status. in terms of violence come we have the government that is increasingly capable of handling violence, and we do not see any signs of insurgents a like kind we saw back in the wake of the 2005 elections. what we see our banks that have

already happened, that have happened in our judgment because of al qaeda, but we do not see that this issue of excluding baathist candidates is one that is leading to violence. they're working out a solution and it is a solution that most people are living with. >> but if i could follow up, some of the banned candidates were even in parliament previously. t think that there is a danger that they feel like shut out of the political process and disenfranchised? that is a formula for being bored and not having a lot of say and turning back. >> being board is not a formula for getting elected. it isn't -- it is important that

there are candidates that are unhappy, and that there was a process by which they were able to appeal, a sequestered panel of judges that looked at these cases, and in some cases they ruled that the people should be able to stand for office and others that ruled against. some of the candidates who were disallowed or not permitted to run, they have accepted the results and called on people to vote. we did not see a sign that this type of dissatisfaction is of the quality that would cause an outbreak of an insurgency. obviously we track these issues very closely. we really thought these things -- follow these things, and this is a rocky road, but we have

every reason to believe that we will get through the selection process. >> i am from iraq tv. president obama met with many iraqi leaders in the past couple of months. what was the purpose of this? and the second question is [unintelligible] is there any cooperation with iraqi forces to prevent that? the operations before the election. >> the iraqi forces are very busy doing all that they can to forestall the terrorist operations.

we work very closely with iraqi forces to try to minimize the risk that these terrorist events will take place. we're working on that very hard. i can assure you that general or odierno's top objective is not only to work with the iraqi forces but to prevent terrorist activities. with respect to the iraqi politicians that have been here in recent months,, during the past calendar year president obama and secretary clinton met with prime minister maliki twice, they met with mr. talabani with the vice- president, they also met with the president of kig, and rather than going to the reasons why

they met with east, understand it in the context of our senior officials being very interested and supported of positive elections, and developments in iraq democracy, and in particular being very supportive of developing a long-term strategic relationship with iraq. i think you should see those in that context. not enough to speak to the president talabani and prime minister maliki, but it is important to -- any time you're concerned about developing a long-term strategic relationship with a country, you want to develop as many contacts as you can. >> any circumstance or combination of that would delay

this? what you telling the president in this situation? any circumstances for withdrawal? >> what we say privately, our advice to the president or the secretary of state is something we give to them in private. i would say, though, that everything is on schedule for the reduction of our forces to around 50,000 by the end of august, and the standing up of the advise and assist brigades. i did not want to assist -- i don't want to deal with hypothetical questions on what would change that schedule except to say that things are moving forward. but our interest is in this election is not to withdraw troops but to develop this long- term relationship.

>> of a goat farm policy" magazine. -- "foreign-policy" magazine. >> journal or the air no accused two generals as key members of the accountability and justice commission of being clearly influenced by iran. i wonder if you agree with his comments with reference to iran's influence over this process? >> i absolutely agree with general odierno. i think the gentleman are affected -- certainly under the influence of iran. these were people, one was named by a the cpa administrator back in 2003 as the head of the debaathification committee,

which went out of existence three years ago and was replaced by the accountability and justice commission. everyone understood that their terms expired with the expiration of the committee, except for chalabi, who are rock -- to assume the role of maintaining his position in a new committee, which he was never named. the issue of debaathification came up in the context of the national election process being under way and became emotionally charged. americans need to understand that if you are an iraqi, you cannot be indifferent to the issue of debaathification, because after all, baathists destroyed that country and destroyed many hopes.

people are very concerned about this. that said, that should be a process that is not being politicized and understood as being -- as following a due process, really. this is been a question of shall be's behavior, and i do not have to relate to you or anyone else that this gentleman has been challenged over the year to be seen as a straightforward individual. i absolutely agree with general odierno on the specific contents, with respect to those individuals, and i also agree with his comments that we remain concerned about our runs behavior toward its neighbors. iran should have a good relationship with its neighbors but he could do a better job of respecting its neighbors.

>> does the u.s. government still maintain contact with chalabi? do we still talk to him? >> you track a lot of things. was he in the situation in? -- the situation room? [laughter] i think people in the embassy have had contacts, as we do with all the political figures. >> considering that he was very and called in the run-up to the war and turn to do with the administration in making the case about the war, the major political figure at the time? have you moved on from him? >> move don is probably a good way to put it. -- moved on is probably a good

way to put it. >> a lot of the sunni iraqis feel disenfranchised, and that could lead to potential instability. do you agree with that? he went further and said if there is instability, it could lead to the u.s. presence not declining as quickly as it is on track to do. >> i will say that one of the risks of the debaathification process, even though there were shi'a on the list as well sunni, one of the risks would be that the sunni would feel that this was politically motivated and targeted against their candidate. there are people that do believe that. one of our jobs were to make clear our views on this and why

it needed to be dealt with consistent with the obligations under the rule of law. i think we made our views clear on that, and ultimately the process was dealt with, and i think we're moving on now to the main event, which is the elections on march 7. we see no sign of any boycotts from any groups. indeed as i mentioned earlier, there was an agreement among the five major blocs on a code of conduct in pursuing the elections. that is where we are now. i met with the shaiekeiks in anbar, and the tribal shei khs all said that they were

in the get out the book mode. -- get out the vote mode. some of this has to do with terrain, about where the particular -- we have two a major cities there so that we need people in fallujah and an ramadi, so i did not make any major conclusions from where we are actually putting people. we do so for number of reasons. in some of the areas, there are problems that have taken place in some towns and we want to have some capability there. but we're trying to cover as much as we can with the resources that we have. we are also working very closely with the un. when the u.s. and the u.n. work very closely on issues such as iraq, we can move fast and to a lot. >> there was no sign of

boycotts, you mentioned. on the iraqis now moving toward political reconciliation? >> they are moving toward the election and they have agreed that elections are the way to solve their -- address political issues. i think that that is very encouraging. i will not stand here and say that there's not a problem that will not emerge tomorrow. we will help them solve that problem and there may be another problem the next day. we're looking forward to full participation in the election. >> that does not really answer the question. [unintelligible] however, taking part in the political process does not necessarily mean political

reconciliation. >> no. >> that had elections before but part of the problem is that you see this dramatic increase in violence since 2006, it was supposed to give this kind of political reconciliation that still seems uneasy after all these years. >> the political reconciliation issues are across the board. i think it is something that we try to be helpful with with the iraqis, but increasingly we are see the iraqis tried to deal with these issues. and to see how some of the shiite parties reached out to the sunni during the election law at issue, where we had shi'a and sunni in the same room, often times working off the same piece of paper, and it shows that the election process, difficult as it is, is making

people work together. if the elections are well done, they can be a source of political reconciliation. obviously we have other issues in iraq that need to be addressed and beyond the election, so we can have the issue of the disputed internal boundaries between the krg, the kirch -- the kurdish areas, and their many issues there. cook -- kirkuk is probably the best known. it is a tough issue but it is something that we are all committed to try to cheat. -- to achieve. after the election, we will look at who has the most votes. that party or coalition would choose a prime minister and it will try to work together, and it will be a tough issue but we have every reason that -- to

believe that we can form a government. well, thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> the elections in iraq are scheduled for march 7. you can go to our web site, c- span.org, and under the featured links section, you can find the iraq page. and later today, the national archives and the national museum of african-american history celebrates the achievements of the tuskegee airmen, the first african-american military chairman. they have a short film, "wings of this man," narrated by ronald reagan. >> your one-stop shop for everything c-span is that c- span -- is at c-span.org/store. you'll find our documentary's on

the american icons and presidential libraries. a collection of books, coffee mugs, and other c-span assessors. look for these and other gift- giving ideas at c-span.org /store. >> from new york now, this is an issue of the nation's economy and health care. this includes former state lieutenant government and appointees of the health care plan. this is about 90 minutes. >> from the time of the inauguration, we swam against the tsunami moving so quickly that it quite frankly took away much of the function of the way the american political system works.

just as an example, if a bill is introduced in congress at midnight with 2000 pages, and you will be voting on it at 10:00 in the morning, you're not going to read it or analyze it. most particularly, it cannot figure out how you want to change it, how you can conduct coalitions with your friends and allies to try to make it better or to kill it. things moved too fast, and as a result we have seen some fundamental changes to the united states that i think a lot of us here would agree are not constructive. are in fact destructive of the way that our nation has always functioned and the way the founding father said it out. what we're trying to do here today is help america recover the issues -- we're not talking about returning to principles -- but those cold, hard packed spirit of a lot of things that went on last year went on very quickly because the basic facts, the basic issues were all washed in that tsunami.

what we want to do and our military panel will do it and the other panels as well, we're going to try to blow away the smoke, wash away the mud, scrape off the bark, and get down to that hard, dark wood of facts. what we want to do today here is to get the facts through to you on the issues in such a clear and concise and decisive way that the debate can start again. because you cannot debate when you are lost in a tsunami that has engulfed this over this past year. so with that in mind, please listen -- don't just here, listen. observe, don't just see -- observed. and make your own judgments. let's get going. let's get to the facts. less defined the issues, throw

away the smoke and the mud and the dross and get back to what we need to do to reclaim liberty in the united states. herb, back to you. [applause] >> it is my pleasure to introduce this first panel, and in order to make sure that we move along as rapidly as possible, i will provide the introduction for the speakers in the order in which they will be speaking and then just call on them. but this is a very distinguished a ray of speakers so it is my pleasure to provide these introductions. the first speaker is diana furchtgott-roth. i had a great pleasure of working with her at the hudson institute where she is a senior fellow. she is the director for the center of employment policy. prior to joining the hudson institute, she was the chief economist at the u.s. department of labor 3 from 2001- 2003, she served as chief of staff to the president's council of economic advisers. she has been the editor of overcoming barriers to the

entrepreneurship of the united states, and is the author of the feminist dilemma -- when successes not enough. from 2006-2008, she was the weekly economics columnist for the "new york sun" and is now a contributing editor for real clear politics. she is also a broader for writers.com. in 1994, she read the health care bill proposal. they're not too many that did so. betsy literally change history. today she is doing precisely the same thing, with her writings and many national publications. you will very often see her on television programs talking about health care in america. betsy is a patient advocate. in 2003, she lost a committee to reduce infectious diseases --

rid. shias 6 said it in reading -- and laws in 26 case to make public infection rate is known. that means that when you have to be hospitalized, you can find out which hospital in your area is safest. from 1995-1998, she was lieutenant governor of new york state. she battled hmo abuses and push for legislation to stop drive for mastectomies and drive through childbirth, patient care bills which were some of the most eminent things that emerged from the pataki administration and led to great changes in the way that legislation is placed in the state and in the federal government. her analysis of the dangers of the health-care bills from the clintons won the national magazine award. shias taught at vassar and colombia, she has a degree of number institutions and taught at them, and she is among the most powerful people in the

health-care business in the united states. our third speaker of like to introduce his peter morici, a professor of international business at the university of maryland. prior to joining the university, he served at the dinner -- u.s. trade commission. he was working on international trade investigations and provided economic policy advice to the house ways and means committee and the senate finance committee. u.s. trade representative, and other agencies. he received his ph.d. in economics from the state university of new york. he taught in minneapolis and joined the federal energy commission, and then move to the planning association in washington d.c.. he has served in positions of increasing research and managerial responsibility and was elected vice president in 1983. he joined the university of

maine as a professor of economics in 1988, and was director of the canadian- american center. acknowledged expert on national -- international economics and agreements. he served with the reuters macro economics forecasting panel and and has served on television with the financial network, bloomberg news, cnbc, abc, fox, on and on and on. the fourth of our speakers this morning is paul wolfram. is president of the hillsdale policy group, consulting and tax policy and analysis. he served as treasury of the border trusties for university. he served as a member of the states -- michigan state board of education. he was chairman of the blue ribbon commission that has been a member of michigan enterprise and authority.

his public policy experience includes chief of staff for congressman, working under gov. come on and more. he graduated from the university of california and received his ph.d. from the university of california at berkeley and attended several colleges and universities. his publications include an introduction to markets and the political system. as written several works on michigan as well. he was named a college professor of the year in 2004, and in passing, mich. runner magazine named him as one of the top 25 runners in that state of michigan. i hope he does not have to run too fast today. in any case, we're going to start with diana, who was caught the 43 you can speak from their or speak up here, which ever.

>> ladies and gentlemen, thank you very much for attending. it is a great pleasure to be here. i would like to thank everybody who helped with the conference. i went into to kill like to thank herb london, who makes events like this, putting them together so that everybody's ideas can come out. reclaiming liberty -- a large topic. tried to strike a balance between individual freedom and the social good, and everybody knows we do not have an unvarnished freedoms. i don't have the freedom to shout fire right now if there is not a fire. i don't have the freedom to take out a gun and fired shots into the air. i don't have freedom these days to smoke, because it is considered to offend other people. nevertheless, this administration is tilting the

balance between freedom and the social good to removing freedom that harms nobody, removing freedoms that allow us to grow individually and as a society. what should be our objective is economic growth, because economic growth kids as individual wealth, which generates tax revenues to do all kinds of things that we want to do, including funding benefits for people at the lower end of the scale, national defense, clean air, clean water. i could talk all day about how this administration and congress are trying to whittle away individual freedom. freedoms that make us more productive, but i do not have the freedom to do that. so in about 10 minutes that are remaining, i would like to briefly go over three areas -- labor, capital, and property

rights. where this congress and this administration are trying to constrict the things that we do, things that would make us more productive. take labor, for example. the increase in the minimum wage to $7.25 an hour really means that an employer has a cost of $8 an hour when you count social security, workers' compensation, and other kinds of benefits. what we're really saying is that people who have skills that are less than $8 an hour are not allowed to participate in the labor market. they are not allowed to work. and this is a substantial step in the wrong direction that adversely affects the most vulnerable people among us. few people know that the african american and latino unemployment rate is about 40 piecing -- african-american teenage unemployment rate is about 40%. and they do not have the right

to work at a reasonable wage, a wage that meets their skills. teen-age unemployment is 28%. these are all people that cannot get their first click on the wrong of the latter. they cannot take the first out into entering the labor market. they cannot get that low-wage job at mcdonald's that might enable them to become a manager of mcdonald's, and later on the manager of a morton's steak house. the administration also wants to increase mandated benefits, forcing employers to provide benefits that will drive more low-skilled people out of the labor market. take another issue -- the employee free choice act. the employee free choice act would take away the right to a secret ballot in union elections. there would be instead card check, someone signing a card to say that he wants to be part of the union. it allows the possibility of intimidation.

there is nothing that can more illustrate taking away liberty and taking away their right to a secret ballot. another provision -- [applause] another provision of that same bill, the employee free choice act, would make mandatory arbitration the law. so newly unionized firms and unions that cannot come to an agreement within 120 days would go to mandatory arbitration, arbitrators being political appointees from the federal mediation service. and both sides would have to except whatever this group came up with. even if that means workers working for less than they wanted to work, that would have to do that. even if that makes employers pay more than what their workers are worth, even if it means pensions -- the pension plan's going into an underfunded pension plan,

which i can assure you there are many union-sponsored underfunded pension plans, such as the central state teamsters plan. under this new law, employers would be forced to contribute to underfunded pension plans, workers would be forced to give up their 401(k) plans for ponzi schemes that make bernie madoff look actually good. there is also in the labor area, the increases in taxation, not just income taxes. everyone can are you what level of taxes are good, but individual industries -- talking about taxing 50% of bonuses for banks. we're not talking about taxing waitresses tips, a similar form of compensation as bonuses, an extra amount on top. we are picking on one particular industry. that brings us to capital. banks need to land, but they're putting more constraints -- the

administration and congress want to put more constraints. i read an article where a tax on bank liabilities, the more liabilities, the high attacks. if we want banks to lend, then they have more liabilities. while we try to shrink their liabilities? it doesn't help any small business that wants to borrow from a bank. we have credit card regulations were credit card companies aren't as its required to take anybody that comes. there are certain types of transactions that are not allowed. this makes the interest rates for everyone to love, including the most but normal among us. then what we can do the physical capital that this administration and congress want to constrain. just take the cap-and-trade bill. where we would be charged for emissions, rules as to what we can do in terms of producing

goods, certain energy-efficient goods would be required, we would not be allowed to use of our domestic oil or our coal, or natural gas. all of these would be priced higher. and that brings us to the question of property rights. property rights, as we saw last year, the genuine predators to gm and chrysler had their property rights abrogated. they said that these creditors had to make the sacrifice for the common good. and thereby, their legitimate claims were turned over in favor of comic get sued, the united autoworkers who are major contributors to the campaign of democratic congressmen and president obama. if this happened in venezuela, we would be berating in the chavez, but it is happening right here in the united states.

another example is the blanket reduction that the administration is proposing and the right to travel. they want to lower vehicle miles per travel. and this is not taxing people to say where you public. this is a goal to reduce travel miles. there is the federal office of livability, believe it not, this federal office of livability. for them, with ability means living in smaller areas so that you cannot have cars or large suburbs or large plots of land. for them, livability means small quarters, rather than giving people a choice as to where to live. and i want to move on to betsy mccaughey, so i have not talked about health care because that is the subject of her presentation. but i wanted to mention to show how people are hypocritical.

on november 70, the assistant secretary for transportation gave a speech and how important was to reduce vehicle miles per travel. and how people should use buses and subways and trains. and afterward, she got into a chauffeured limousine. [laughter] one of the participants asked, should you not be taking the bus? she replied, "i am a hurry." so she is in a hurry, they are in a hurry, they get the pick and choose their limousine, you would not see a member of congress and washington, d.c. riding the metro are going on a bus, but they want to constrain the rest of us in order to do what they would never think of doing. this episode just symbolizes not only the freedoms they want to take away from us, but the hypocrisy that goes along with it. with that, i like to turn it over to betsy. [applause]

>> thank you. i am so glad to be here with you today. the health bill is being rushed through congress, putting government controls on the decisions of doctors treating privately insured patients. even if you have a gold-plated plan from aetna, the government will be instructed what your job -- your doctor what to do. it cuts medicare and it takes something away from you as precious as life itself. for liberty. i am going to back up these claims with specific language from the bills, so i have handed out to all of you a set of quotes that i will be referring. take them home -- this is a

reminder of what is at stake here. the president has promised that if you like your health plan, you can keep it. but the language of the bills prove that that is not true. a house bill specifically says that if you get your health plan for your employer, your employer will have a five-year grace period and then be required -- legally required -- to move you into the plan the government wants you to have, the so- called government designed plan. if you buy your own insurance, you will not have a grace period. you will be legally required to move into that qualified plan the minute anything in your current contract changes. for example, a copiague are deductible, that kind of thing you generally change yearly. 18 months after the bill has passed, the secretary of health and human circuses -- and human services will make these choices for you -- what your plan

covers, but you will be legally required to buy, and how much leeway the doctor has. that is like a banker saying sign this loan agreement now and 18 months from now, we will fill in the interest rate and the repayment terms. not quite. not only will it be of one size fits all health insurance plan, but the government will be transferring these built -- these bills transfer the decision making power from your doctor had bad side to the government. never before has the federal government interfered in what doctors treating privately insured patients do, except on very small issues such as drug safety. the senate bill requires you to enroll in the qualified bill, and then on your next slide on page 148-149 of this bill, it

stipulates that qualified plans make contract only with doctors who do with the government dictates. the secretary of health and human services is given literally on limited authority to impose whatever health care legislations are deemed appropriate in the name of health care quality. that covers everything in medicine from cardiac care to child care, with your doctor should use a stent or choose to bypass, with her gynecologist can settle for pat smear or also to a public sonogram. the controls -- the framework for this control of your doctor was slipped into the stimulus bill signed in balal last february. the stimulus bill provided a set of goals that everyone's medical treatments would be recorded in

a national electronic data base , and -- and -- the protocols would be delivered to doctors electronically about what the government deemed cost effective and appropriate care. the secretary of health and human services was given total discretion to determine what meaningful use of this system constituted, how that would be defined, and to make that definition of meaningful use more stringent over time. doctors who fail to be "meaningful users" of the system would face financial penalties, first and the medicare and then medicate. the senate and house bills, several provisions put the doctor in the situation of choosing the sock -- between what is best for the patient and avoiding a penalty. the congressional majority

claims that these bills will make health insurance more affordable. but in fact the number of uninsured is brought down largely by enrolling people in medicaid -- 60%, 60% of the newly insured will be enrolled in medicaid. in fact, if you pay for your own health insurance, if you're going to face an increase if this bill is passed through the congressional budget office has reported that your premise -- that your premium is likely to be raised to%-50% more than if this bill had not been passed into law. a family of four eligible for a subsidy "also get this. take a look at the cbo estimate of what they will pay. a family of four with a household income of $54,000 a year will be expected to pay

17%, 17% of their income for premiums, copays, and deductibles after getting the subsidy. as you can see, that amounts to $9,000 a year. people with fancy, generous, but they called cadillac plans that they get through their employment also are clobbered. the 20% -- the top 20% will be taxed at 40%, and excise tax, a sin tax in the senate bill. since when is it a sin to provide a generous health-care plan for your family? the congressional budget office has warned that employers are likely to respond to this 40% tax by either cutting back on the benefits they offer their

workers, or by passing the cost along to their workers and the form of lower take-home pay. seniors bear the biggest brunt of all. the subsidies and expansion of medicaid are paid for, in part with tax hikes -- everybody has heard about those. but also with nearly a $500 billion reduction in future medicare funding over the next decade, with 30% more people enrolled in medicare as the baby boomers reach age 65. 30% more people and a substantial reduction in dollars, those numbers do not add up. that means fewer hip replacements, pure need replacements, less bypass surgery, less angioplasty, less of those procedures that have virtually transformed the

experience of aging for americans over the last three decades. people he'd used to spend their later years trapped in a wheelchair because there were crippled by arthritis or stuck in a nursing home because they were out of breath from clogged arteries, they now lead active lives during the in the very years. these cuts will undo some of that progress. richard foster, the chief actuary for medicare, has warned that the cuts in reimbursements to hospitals and other institutions under these bills are so severe that some institutions will simply stop accepting medicare. what are seniors going to do when their local hospital stops taking medicare? and is already happening. you've already read last week that one element of the mayo clinic will no longer accept medicare because the reimbursements are so below the actual cost of treating a patient. the president has also promised that medicare benefits will not be cut, but the bill proves that

is not true. you will see the language right here in the bill, section 41 05 authorizes the secretary of health and human services to modify or eliminate preventive services currently provided by medicare -- coverage of preventive services currently authorized by medicare. these cuts are authorized to begin this year. these bills brought seniors to fund a new social agenda. there are huge giveaways -- i cannot put dollar figures on them because they are not scored by the cbo, not part of the numbers you read about in the newspapers -- huge giveaways to community organizations, for adult education courses. i thought that meant getting a job. that means lessons on romance and interpersonal relationships, right?

another section of this bill fund's sizable giveaways to community organizations for virtually anything. infrastructure projects, lighting, playground, or any kind of activity that would reduce racial and ethnic disparities or promote wellness -- but congress did draw the line somewhere. take a look at this. there is one thing the grantee cannot do. grantees shall not use the funds provided under this grant to create video games or carry out other activities that may lead to higher rates of obesity or inactivity. clearly reading is out of the question. [laughter] there is a better way. throw out this huge bill and give us a 20-page bill in clear, honest english, right? a 20-page bill that curbs the worst of the abuses, that provides support reform

despaired doctors from and meritorious lawsuits, that allows all of us to buy health insurance across state lines, and perhaps to extend cobra assistance to americans when they are laid off any temporary help to bridge back to insurance. it can be done in 20 pages. the framers only used 18 pages to establish the entire federal government. but before we did that, we need to defeat this bill, and the next battle line, perhaps, will be the u.s. constitution, we will be fighting in court. there are provisions in this bill that violates the constitution. let me briefly mentioned high. the provision in this bill that creates the independent medicare commission to cut medicare further in the future states

that that provision cannot be amended or repealed by a future congress. wrong. no congress has the power to put its work in stone and deprive us of the right to elect a new congress and and do this. no congress has that authority. secondly, a provision in the amendments of these bills allocates $100 million to, "a public university that has the only medical and dental school in the state in which they university exist." what is this deceptive language? this is a piece of pork allocated by senator dodd to win his vote and pass the money on to the university of connecticut. if they had written that provision in polish or russian to deceive the public, it would be deemed unconstitutional and this deception is, too.

thirdly, congress has the power -- congress reserves the power to require all people to buy a product nothing in the constitution gives congress the power. as orrin hatch punted out, we can do the same thing to cure obesity, require people to buy fruit and vegetables and ban them from eating anything else. fourthly, the congress -- and i pointed this out early but it is so important -- they have the authority to control the medical decisions of doctors treating privately insured patients. they take this clause of the fifth amendment which protect all the buzz from the government's seizure of our property and our ability to earn income -- the provision was designed to protect everybody,

including the unpopular, including insurance companies. but this bill puts a cap on the profit margin of insurance companies at about half of what they currently earn. shareholders and others be damned. next year, congress could argue that food is to expenses -- is too expensive, and there will be a cap on the profit margin of gross restores and farmers. your business could be next. and that's why the battle line will probably be constitutional and we will need ordinary citizens to stand up for their rights. we all remember the kosher poultry dealers in brooklyn who stood up against government meddling in 1935 and turn back the national industrial recovery act. it is time to do it again. the stakes are higher than they

have ever been. if you are seriously ill, the best place to be is in the united states. all woman diagnosed with breast cancer here has over 90% chance of surviving it. diagnosed in europe, she is twice as likely to die from it. have man diagnosed with prostate cancer has a 99% chance of surviving in the u.s. it is not a death sentence here. but in europe, went out of every four men diagnosed with prostate cancer dies from it. and that is why this fight, this fight for medical excellence is the fight of our lifetime. thank you. [applause] >> betsy, as someone experienced

in the media has to tell you, you need to be more animated and passionate. [laughter] i'm always being told to lower my voice and calmed down when i'm in front of a camera, because i tend to move around and get excited. just to add a coda to what you said, we of heard prior to this administration coming into office how progressives -- the new work for liberal, like former offender an ex-con -- president obama tells us he wants to change america. you only change something if you do not like it. what that really comes down to is we have a self empowered group of people to fill compelled to do what ever is necessary to change america in the image they think it should be, despite what you think,

because if they do not like america, who really do they not like? they do not like you. that is what it is like to live inside the potomac. it is so refreshing to be here rather than the university of maryland this morning. everyone is very polite to me there but nobody wants to discuss my ideas. i am viewed as a heretic. i am going to talk about some things that you may find her radical today as well, taking some places that are uncomfortable for conservatives to be at times. as a professor, when i was asked to do this, and i am not often asked to think about civil liberties although i think about them constantly and am fearful of mine disappearing, i said, let me go back to the founding documents, the declaration of independence, the constitution, and all that fine language about the pursuit of happiness and so forth. it is important to remember, very important, that those

documents and the conditions which gave rise to them had strong and significant economic underpinnings. george washington was converted from an empire loyalists to revolutionary, to someone who led an army against the king's army, because his economic rights were constrained. he was not a great thinker like chapter. he was a very practical man, an engineer and architect. he held when the french and indian wars, the king said down there access to ohio, and that turned him into a revolutionary. this constraint to his economic freedom caused him to act. he was one of the wealthiest men in the colonies. but to me, those freedoms basically main, basic economic things. to think as you please, to act as you please, so that you can earn a living.