playing field in this country in our lifetime. we do not set big goals like that anymore. i am the foundation president, so i can say this. it is a three year cycle. "give me that grant. we can deliver that in three years." if you are applying for a grant, you have to focus on the next three years. it had better be in the context of what you're trying to do over the next few decades. the most important thing after you set your big goal is to know what the next step is. that is all you have to know. where are you trying to get to, and what is the next step to get there. that can be a three-year contract. but if you do not know the next step, that leads to know where. that is how the non-profit sector can flourish and diversified public service leadership over the last 40 years and become the world

leader of incarceration at the same time. we are 25% of the world's prisoners. . . are 25% of the world's prisoners. i have yet to find an american of any color who really believes their countrymen are five times more evil than the average person on the planet. we cannot simply do what schwarzenegger isñi doing and ty to privatize everything to keep from filling up the prisons. we have to recognize we have a problem. talk on crime has led us down a stupid road that is impoverishing our schools. it is time to be smart on crime. it is time to be smart on crime. public safety is a civil r but what that means -- the obligationçó of that sentence is that criminal justice policies have to make us safer.

in san francisco, 70% of the homicidesñi go unsolved. stop bringing the paraphernalia busts. do you have the time to search a pocket for a joint when you have an unsolved murders in the cityi -- when you have a unsolved murders in the ciunsolved murde? when you are trying to build coalitions to amend and extend the social contract, when you are trying to transform this society and you have accepted the fact that you may not be able to make the big change before your child graduates from high school, but they will be done before your grandchild

graduates from high school, when you recognize that you are going to need 51% and may be more, you have to be wide open. the early 1990's, i was kicked out of college in columbia university for organizing student protests. in mississippi, the governor was trying to shut down the historic black colleges. it was a school to prison pipeline without the pipeline. take the school, get a prison. that pretty much was the proposition. i got down there and i said to one of the lawyers, "what

exactly do you want me to do?" they said to organize protests in jackson, mississippi. i did not realize how terrifying it was to jackson, mississippi. the consequences would be a lot more dire than in new york city. she said to put the fear of god in the governor and the judge. we have lost faith in the idea that judges made the right decision because there were divinely inspired. in our discovery, we found a document about 12 years of bad faith negotiations because they were afraid a riot would break out. rekindle that concern. i went back to doing my job. we organized street protests. we went to jail. we went to jail. as soon as we got out of jail,

we started getting death threats. [laughter] so, we said that we were planning this big protest with 16,000 students and what would be the biggest march in jackson in a couple of decades and we did not want it to be an all black march because this is about education. -- and chant about this. we said, a birthday. we know we can find some white people in mississippi on earth

day. [laughter] we fanned out to all the historical white campuses. we went there for earth day. by midnight, all the organizers had checked in, except for the organizers who had gone up to mississippi state. if anybody here is a johnny cash band, you might recall one of his songs about a jail, a place for even johnny cash was given a hard time. youñr have to go up along the br -- so many black men before them -- one black civil rights worker -- past philadelphia up to the shriners' or the sheriff

made the call to the klan to have them killed. keep going and then you are at the jail. midnight came and went and i fell asleep at my desk. i got a call that the organizers saying, you need to get down here. we have a problem. i hop in my car and drive over. they said, they would not let us speak until the very end. after the second encore of " sweet home, alabama" that is when they let us get up. everybody was drunk. we got up to give our speech and they started chanting. we had a heck of a dodge. while they are talking, there was an older white guyñi with a

sunburnt face, a white tuxedo shirtñi, gold rings on every finger -- he looked like a used- car dealer. [laughter] he was staring at us hard -- and we look around and realize we are the only black folks there. ñrif you have been toolhouse ¤a waffe were the only black folks. çóhe walks over to us. ñiñia lot of food, a lot of fat. he says, you know the boys i

have been seen in californiañrñ, chicago, st. louis -- new orleans. none of us could be calledñiñi . ñrñrwe're the; only blackñiñi hn the restaurant. i am thinking, -- ñiwe are the only blackñi folks in the re((u)ant. ñiyou can buy a concealed weapos permit for less than a hundred dollars. çówe see some former football players getting ready to jump him. we may be deadñr before we hear what he has to say. let's hear what he has to say. he said, i want to shake your

hand. if i had been born, i would be mad as heck, too. you stop fighting back 20 years ago. -- youñi stop fighting -- stoppd ñrfighting back 20 years ago. i do not know why. i own a used car lot right down the highway south of here. if you need anything, a car or money, just come ask. our mistake was that we thought we knew where our allies were and we thought we knew who our enemies were. we went looking out for our allies and we found our enemies

and we were about to offendçó - but then ourselves from an imminent attack, which was really an open hand. i went down to get that check. [laughter] i remember that wherever i go and whatever room i am in. i had an experience last year with a corporation that when i was the foundation president, i went up against them. they asked what kind of relationship we wanted to have. i said, i want to work together. they said, ok, like what? i said we had a crisis in the country since 9/11 where it is increasingly possible for -- increasingly impossible for people who were formerly incarcerated to find a job. i want you to champion this.

i think will be making a formal announcement that they will be doing just that. as a dedicated civil-rights advocate, i could have just said get the heck out of my office. yet done this and that wrong and the other wrong -- you have done this and that and the other wrong. we are fighting for free choice and some are fighting against it. we signed on -- the association is a party in a lawsuit. yet, that is part of business. it is what we do, it is what they do. at the end of the day, we are raising our kids in this country. we are all reading the newspaper and want this country to be heading in a better direction. we are more powerful than we realize. if you do not extend an open hand, even to someone you are fighting with, we may not get

thei in time for our childrenre -- there in time for our children and grandchildren to be in a better place than where we are now. thank you for your courage and ambition. we expect great things. if i can serve you in any way, give me a call. thank you and god bless. [applause] memo we want to thank you -- >> we want to thank you and acknowledge one of our alumni from mississippi. [laughter] [applause] >> hey, mayor. >> i have driven down that

highway, by the way. we want to open it up for a couple of questions. i think we have a little time. where do we start? >> go ahead. speak up. >> hello. i have a question about how you used the naacp's wonderful image to increase your membership base and how you do that from a communications standpoint. thank you. >> when i started -- when i was hired 20 months ago and started 16 months ago, we knew that we had a focus on some key things. we had been getting some bad

press questioning the relevance of the organization. do not get me started on that. answer the question after you see me discriminate against someone. we had been in the red for several years. our staff had been cut. people were doing five jobs when they used to do just one. it was one of those things -- where do you start? the young guy does not get the keys unless the cupboards are bare. and so i had to get real discipline. the first job was a communication. people do not write you checks if they are not hearing what you are doing -- if they are not celebrating your victories, if they do not understand where you

are trying to take the country. job two was raising money. job three was hiring people and deploying those resources toward our goal. it was six weeks before the national election. we have succeeded. we walked in the door with $4 million and got it going really fast. that has allowed us, through this recession, to increase membership by 10%. that was this year, over last year. it has allowed us to attract a generation back into the ranks of the national staff, people and places who are coming back.

we are encouraging people in the field to do the same thing. you have to understand that when you are trying to build membership -- everything you do is about trying to build membership. good communication, performing well, winning victories -- it is all about convincing somebody to write you a check for $30. we are having great success, despite the hard times. we're growing again. >> a i am class of 2008. you talked a lot about prisons and people coming back into communities. i am a huge advocate of children of incarcerated parents. my question is what is your organization doing for a lot of those men and women that you guys are looking to bring back

into the committee for work -- what are you doing for the kids? if you are not doing anything, i do not want to talk to you. [laughter] >> the question is what are we doing forçó the children of incarcerated parents. on the ground, a lot of our bestxd efforts are operated at state and local levels. they have programs whereñi we, e naacp chapter, takes a video of men reading stories to their children and build them back to the children -- and mails them back to the children. that is a store that does not it told. you would expect it in a women's prison, but inñr theñrái%j pris, you see a lot of parents in pain and crisis. whenever we do something that allows them to be more connected to their children, our membership rose.

on the national level,xgrw3 we t to make sure people have access to jobs. ñiit is about the kids. the best determinants of a child's future is the family ñifinding the abilityñr to makee people have jobs --w3 fighting r good jobs is a strategy that is to ensure that -- when you get out of prison and cannot get a good job -- parents have the time forñr the childñr when they have good jobs. ñi>> we are starting conversations based on of ñiñiif you thinkñr about south central, the view -- it makes sense. when i was a child, which was not that long ago.

when i was a kid, the youth chapter had a real mix to it. financially forcing families -- they're all in the same groups. çóthe patterns of not just white light or black flight have çóñicontinuedxd. people are further away from each other. when that is away from people who are struggling, it takes the chapter away from the kids who are most in crisis. i was out visiting a youth detention facility in los angeles county and the kids really wanted to get involved when they got back to their neighborhood. most of them were from -- it was clear that there would either be a lot of support or we would

need to set up a new program. we started a conversation about those seven neighborhoods and how we could create -- not just make sure that the job gets the chance of joining is only just behind bars. we wanted to invite them into the tradition of struggle in this country and allow them to be part of the solution even before they get out. that is where our conversation is going. our team it is committed to this. we know it has taken years to get to this point. we have hired a bunch of organizers and we are committed to being aggressive. i would love to hear your ideas. >> i looked at organizations and would love to talk to you. >> other questions?

>> my question is -- there is a disconnect that i find among my peers -- the 25 to 45 crowd. what are your thoughts about reengaging that group? many of us fell off and will pick it up again in 20 years. what is their plan to reengage that group and generation? >> the goal is to be ready well before 2012 and to move aggressively to bring that generation in. it is a very opinionated generation. [laughter] i am in that generation so i can say that. i turned 37 on monday. we have begun a process to make

naming the pain of our generation. we have to realize what crises our generation is in. we were on the steps of the university. it was my friends 21st birthday. we were giving a toast. the black nationalists -- public enemy -- [laughter] the styles of the time. we began pouring libation for our brother celebrating his birthday. we poured a libation in memory of our friends who got killed before we got to college. we poured a libation for those of us who had survived to 21. that was like wtf? [laughter] really? really? really?

that is an accomplishment. the wealthiest country in earth -- for a man of any color to survive to the aged 21 -- that is what we're celebrating? but it was rational. we were on the campus -- educated black women outnumber educated black men. the question is where is the surplus of educated young brothers. the naacp is doing nationally what we been doing locally for so many years. the school to present pipeline is a problem. we are developing a strategy to do avoid -- destroy the problem. we want to make sure we are aware and prepared to help advance them. we are retooling our diversity

report cards. we will do more with the financial-services industry. they are coming up against glass ceilings earlier in their careers. finally, besides making sure that we are keyed in on issues that care about long-term and short-term, just marketing the organization effectively. we become more aggressive online. we are developing a new web system to get people more involved meaningfully. we did not wanted to take 20 years to get involved in their local civic organization. >> we have time for one more question. and a good afternoon. i am from fort lauderdale, florida, and i am also class of 2010.

[applause] for the past eight years, i have been an education coordinator and a special projects coordinator for an election office. i want to say thank you for the help and support that the naacp youth council has given to the elections office. it was responsible for assisting the elections office as well as the schools for having the first early boating field trips in the country for high-school students. -- early voting field trips in the country for high school students. it was also the only county with the most registered high school kids in the state of florida. thank you. >> there is great work being done in florida being led by a woman. she is our state conference

president there. you guys are doing great work. they have greatly reformed their zero tolerance policies. it needs to happen across the country. thank you and god bless. [applause] >> i just want to say how fortunate the naacp is to have an incredibly strong and dynamic leader.

the chairman also talks about student loan bills. that is at 10:00 a.m. eastern here on c-span. >> tomorrow, on c-span, a replay

of the entire white house health care summit. we will hear opening comments from the president and congressional leaders followed by discussion on health care costs, insurance reforms, deficit reduction and expanding coverage. it starts at 10:30 a.m. eastern on c-span. at >> i come from latin america. i was never expecting to see this kind of poverty in the capital of the west. >> kike arnal all the different side of the nation's capital. >> now carl oral arguments. on tuesday, the third circuit court of appeals in philadelphia heard oral arguments in a case involving fcc action against cbs in connection to the super bowl halftime show that included janet jackson and justin kimberly.

this is the second time. this is about an hour 20 minutes. >> we thought this would be appropriate here. this is a matter of cbs purses the federal communications commission. >> thank you, your honor and may it please the court. with the court's permission, i would like to reserve five minutes of my time. as this court once again turned over the $550,000 forfeiture

imposed on cbs whereas its 2004 halftime show for three reasons. nothing in fcc versus the television stations alter's court findings that the fcc for 3 decades referred identically. victim does not affect the central issue in this case, whether the commission ever articulated or applied changed policy with respect to brief and unintended images followed to the super bowl broadcast. we abolished at the language in the decision requires -- acknowledged that it requires the circuit court, but they are made in a different context, as they were here. the rules were never articulated or applied, they were not

mentioned under review in this case or any other fcc decision for the purposes cited here. the supreme court and fox simply had no occasion to apply the decency policy to visual material. second, even if the fcc policy change were to survive scrutiny under the act, nothing may be imposed where this statement are unclear where the agency itself struggles to provide a reading of the rules. in cases such as trinity broadcasting versus the fcc, they have applied this basic principle of the process, as has the commission itself. here, but the fcc may not impose liability on cbs for a statement that went undiscovered even by the commission until late 2006, more than 2.5 years after the

super bowl broadcast. this case is entirely distinguishable on this basis alone from fox. no fine was imposed. no such argument can be made in the case. this court's decision is further supported by independent grounds that likewise are not affected, including the holding that the commission incorrectly impose liability on cbs for the independent actions of janet jackson and justin timberlake. under section 503 of the communications act, or whether it wants to define a reckless

and decency act. that is fine. there is simply no reason to encourage cbs and that proceeding, and no reason to punish them for the lack of clarity. before involving cbs in such extended proceedings, this court should first rule of the arbitrary nature of the nebulous factors that ploy to make indecency findings as well as the fact that it violates the first amendment under pacifica. has been 6 long years since the 2004 super bowl, and the effect extends significantly. we have come a long, long way. as justice ginsburg wrote in fox, there is no way to hide the long shadow of the first amendment cast on what the commission has done. going to the first argument,

nothing in fox alters this court's initial finding. the language that is quoted is in the background discussion and can be deleted without seriously impairing political foundation of what the court has decided it is language not essential to the outcome. the supreme court focused on the 2 dozen 6 orders of the fcc as well as the 2004 golden globes order, saying that those expressions of policy did recognize the expressed change from the prior policy and ultimately the court upheld the decision under the ada narrow lead because they found out the words used in fox had the power to offend, and that isolated words could be considered offensive, and even isolated words could be shocking as what the court described as a first

blow. >> to make a strong argument that the language we have identified and both parties have been identified might be characterized as background, but it is supreme court by crown, and how do we ignore it, particularly when it seems to fly directly against what this board found? let's assume we still think our initial interpretation was the correct 1 and that your reading of fox is the correct one, we still are butting our heads against what the corporate -- supreme court said about pacifica. if you could just spend a few moments to tell us why we should ignore that.

>> we're asking the court not to ignore the reference to the 1987 pacifica decision. and how those decisions got presented to the supreme court to understand what this means in light of the earlier decision. in looking at supreme court let which similar to this -- language is similar to this, this court has said that we must not be guided by a single sentence. we must find the situation that the court dictum anticipated. in this case, looking at the reference to the 1987 pacific a decision, it is important to look at what those decisions actually were. the fcc has historically defined policy with indecency with case comparison. simply looking at the sentence

that the fcc pluck out in the fox cases does not tell you what the policy was. two different complaints. 1 involving an extended discussion of sexual activity in the presentation of a play on the radio, and the second 1 was dismissed, involving brief, unscripted, and spontaneous descriptive language that the court than distinguished and said it was not going to find actionable. it was not that the fcc was distinguishing literal and non liberal, or images from a language. it was simply saying that it refers to expletives and dismisses a complaint under well-established policy. it was talking about what the commission had always been talking about in the past, and intended -- unintended, unscripted outbursts.

>> what is a literal description or depiction, and what is a non liberal expletive? where in the fcc opinions or introspection is there a depiction of how we find that the expletive could be defined as an exclamation. i did not know if it was words or there could be an image. i do not appear -- i do not know. >> you have put your finger on 1 of the problems, because the fcc had never confronted the issue until the golden globes case where it was trying to distinguish a staff decision that said the words used in that case were use to name nonliteral -- in a nonliteral way. there is nothing in the past that try to define liberal versus nonliteral, and that is why it appeared in the fox decision. on review before the second

circuit and ultimately before the supreme court, those decisions sort of got wrapped into 1. so the staff decision about bono's nonliteral use of the word became part of the court's analysis, but it was never part of the history of the fcc decision making in this area, and it certainly was not part of the 1987 pacifica order. but because the supreme court was looking at the exclamations that came back together in the omnibus quarter of 2006, it looked at this issue among liberal expletive. -- of a nonliteral expletive. >> what is the difference between liberal and nonliteral for expletives? >> as i understand it, the way the fcc has referred to it is to say if a presentation of

languages actually describing sexual or excretory activity, that is liberal usage. whereas with other context, it is not actually referring to that activity but it is using it as a euphemism, and because of that is still continued to be the omnibus remaned order. but that is where it is explains a change in policy. that is what they're trying to get to now, to say if you are dealing with images, it is necessarily a liberal image, but that is not the policy from the past, which has treated it differently. as this court pointed out in prior decisions, that is because of 1654 itself.

it does not distinguish between the two, and instead turns to utterances. so the commission has tried to say that images are different by necessity, but you will not find that in any prior fcc case. to the definite -- so the definition has become the fifth generic -- dictionary definition. >> we did say that they did not differentiate between different types of artest material, images and words. so it is treating both of those categories the scent. >> that is right. suburb relevant distinction has been, as the commission described in 1987 and route,

whether it is spontaneous, scripted, plant, whatever. the cases cited overtime break down in those categories. >> if they are treated the same, how we analyze the categories? is it the fleeting nature of images of words to focus on, or should we consider somewhat of a contextual analysis to determine whether words or phrases are actually indecent? >> i think it is important to use contextual analysis, but as that term was understood originally and applied by the fcc. >> it is not just the fleeting nature of the words. what matters is whether they are a graphic, offensive. >> is in the way that the supreme court was dealing with it and the fcc argued the case

at the time. is saying that dealing with material that is not planned, where you have a breaking event where there is no time for editorial judgment, it would not be fair to apply a policy against the broadcaster. that is the contextual factor that the fcc had argued to the supreme court and supreme court accepted, and ultimately what the contextual factor is, in the 1987 pacific order and others, those working textual. it is a content based notion of conceptual factors, leaving the fcc free to apply those factors in any way it chooses. >> that sounds very persuasive to me. that is not what the supreme court said in fox. and i think your argument is intriguing, but before we

finished through with that, could we go back to the articulation of the standard, because as you said in the beginning, either on the articulation basis or applied basis, you would prevail here@@ osh its says that repetitive use is a requisite to a finding of indecency when a complaint focuses on not liberal export of spirited -- not a literal and expletives. -- not a literal expletives. i think that what this court should do is look at the context in which the fox court was

looking. >> we are not to look at literally? >> the key is, what is an expletive. the supreme court is not talking about what an expletive is. the sec tried to say that is confined only to a literal meaning, but if you look back to the decision it has reference to an " it, the relevant distinction that the fcc was drawing was that it was unplanned, unscripted, and unintentional, not just because it is brief. the relevant factor for material policy was the fact that it was not with the broadcasters set out to do, so it would not be fair to apply the standard here. therefore, the fcc could not draw the distinction and argue that in front of the supreme

court and have the decision made. >> fox talked exclusively about language. >> i think the broadcasting is neutral. it does not cite the pacific bell language as a change in policy. the young broadcasting also supports that export to being unplanned, because the analysis of the fcc was that this was really not an intentional, because the organization brought in individuals who were going to

be nude under their costumes, who were stopped stage to perform their act. it was not always implied -- >> is it a textual analysis or a fleeting analysis? wasn't the fleeting analysis part of the contractual analysis with pandering and graphic display? and if that is right, does that not undermine your argument? >> not necessarily. what the commission said about distinguishing the cases was to say it did involve the same kind of intent were planning of exposure. but even the supreme court's preference to the order is considered to salvage the argument, it is still insufficient to apply in this

case to impose, because of what is recognized and trinity broadcasting company. in that case in cases cited in supplemental reading, they explained that even it it is sufficient to satisfy the explained change in policy, it is not sufficient to impose a penalty. >> so if the third circuit got it wrong, how could cbs be expected to get it right? >> absolutely. it really is unclear to broadcasters, to the point of viability, for them to anticipate a change in policy that did not even occur to the fcc until the third or fourth round of briefing and decision making in this area.

without reason, the differences a wall between fox and this case justify reversing the fcc. >> just let me follow-up on this for a second. was this argued before the second circuit, the inconsistent application? primarily i understand it was a vagueness issue that was the focus of the argument there. >> the most recent argument? >> yes. >> in the most recent argument, and mr. lewis can tell you much more because he was arguing that case, the most recent argument focused primarily on the vagueness issue and the constitutional question, as well, since the court and fox did not a constitutional issue but essentially invited the court to look at the constitutional issue.

>> should we wait that determination? >> i do not think it is necessary. either on the apa issue or because of the due process question, this court can come away from its earlier decision without getting into the constitutional issue. however, because of the significant issues involved, it would not be a bad thing for this court to get guidance both for the fcc and all of us on constitutional issues. >> i gather there has never been an enforceable order issued based on an image? >> actually, if you go back to about 1988, there was the first time the fcc issued a fine, as far as i'm concerned, for broadcasting, and this was the broadcast of an art-rated movie on a local television station.

the fcc issued a notice of apparent liability but quickly rescinded it based on the review of the overall change on policies and impact. 1 thing that the fcc sent a public notice about is that it imposed this fine because the images were not wasted, they were not -- >> with the fleeting nature of the words or images, we did mention in our underlying opinion, we laid out that in its 2001 policy statement, the commission described the fleeting nature of the words or images was but 1 factor, and there were others. a question to you is, isn't that

statement sufficient to put cbs on notice? >> in isolation, perhaps. the same is true for the safe harbor. it is not actionable if you put on information considered to be in decent after 10:00 p.m.. it would not apply to something that's safe harbor. >> community is what you see on television. it happened, it was for a sudden, it was cryptic.

>> for the unexpected, that is really what the policy statement was. it was not changed by the 2001 policy statement, which laid out various factors. the last time, they chided the fcc for making those references to images out of context, so otherwise the statement simply confirm the commission has treated images and words identically in the history of its broadcast enforcement policy. >> it seems fleeting, maybe, very quick. but there is fleeting, then there is fleeting. [laughter] >> there is, and in this case, it was 9/16 second, and they demonstrated that it was truly unplanned and unexpected on

cbs' part. there may be other circumstances that showed was not so unexpected, which is what they're trying to get at in the case, and that is not something unexpected. it is something that brought people into the studio. i am not trying to say that business service something that would be indecent, but something done that may not be fleeting for something in the super bowl. >> in the inconsistent application argument, my understanding of the fcc position is that yes, they have declined to go ahead and press cases for fleeting images, but in doing so, at least in the great majority if not practically all, they have done so under contextual analysis,

waving fleeting as against the graphic part and the pandering part. and that has been the reason -- >> would you please put the light off. i can see we are going to overtime here. what is your response to that? >> if you look at the places in which they dismiss complaints, it goes back to the original factor in the 1975 and 1976 pacific orders. it went unexpected. that was the entire defense for

the indecency policy, saying that they understood it was interesting on an area that may involve very significant first amendment rights, but in exchange for that lack of clarity, they applied what they describe as a cautious enforcement policy, and part was not to enforce the law in those cases where the broadcaster was caught off guard and could not be blamed for not being able to exercise editorial judgment in the short time available. so all of the decisions that you reference refer to the 2001 policy statement really drew the same line, looking at the fleeting nature in context of whether or not it was something unexpected with the broadcaster. and again, the last time you looked at the explanation, the 2001 policy statement, it says

when read in its original context, this sentence does not support the commission's assertions here. the commission has simply substituted a new rationale and the wake of the global case for the earlier decision to involve including material. >> i take it that obviously you would like us to essentially reaffirmed our original decision. if we do not agree with you on the articulation of fcc policy, then you would like us to find that they applied that consistently, and there are due process concerns there. am i correct on that?

>> yes, sir, and if the court does disagree on issues, i might take up such suggestions that we wait for the circuit to go forward. that is the county up to my answer -- caveat to my answer. if they disagree, the second circuit may be helpful. but yes, there are grounds that if the court disagrees it would still be unfair to hold cbs responsible for the broadcast. >> what about the bigness issue? you would want us to press ahead with the consideration of vagueness? >> yes, your honor, and that takes two forms.

both as a substance apa issue, because it is inconsistent and standard less. especially the set down in pacifica. >> but spent just a minute@@@@@@ -- what would make it more worthy in your view? considering the talk or the image and the pandering part and repetitive part . how would you cut this down? >> the easiest way to do that is to pattern something more like the obscenity standard. i am not saying that it has to be the miller standard, but in

applying that standard, courts applied the three-pronged test, each of which has to be met. in the fcc revision of miller -- cc revision as applied to indecency standards, it is argued that there are various factors, the graphic nature of the material, whether it is pandering. they all interrelate so you can essentially find what every what -- whatever you want. 1 factor outweighs the other. it actually requires it to be a test rather than a review of the commission, saying 1 factor simply up with another without any further explanation. battle of would make it clearer -- that alone would make it clearer. i do not know if it will be sufficient to supply the supreme court on the vagueness issue, but it would be an improvement. >> with the graphic nature and

pandering, is there some difference? >> the fcc is entitled to some deference. if we're talking about constitutional questions, then no. if we're talking an interpretation of the fcc's prior policies, then this court would be deferential, but not to the point that it except -- accept a post up rationalization for what it has done and the past. -- a post hoc rationalization for what it has done in the past. >> we decided to remand this matter to the fcc, and we decided that minimal recklessness was the standard for the fcc. the statute, 1462, a bleak, says willful conduct, which is a

higher standard. can you comment on what standard should be the correct standard, and if we should remand the case for decisions? >> as i said, our view is that a revamped -- remand is not necessary, because particularly due process questions, it is really unnecessary. that being said, if the sec goes forward -- fcc goes forward, it should first clarify whether it is proceeding under 503b1b or b1d, which would define whether or not the standards applicable applied. there is a good analysis of this issue, saying the higher

standards apply that require actual showing of intent. in the earlier opinion, talking about and of recklessness that apply, decided osborn versus ohio -- they cited that case, saying you can get recklessness from a general statute and salvage a, say, a criminal statute on child pornography. it relates to the question of reasoning, the secondary decision in osborn which reversed the conviction in that case because the standard had not been applied to all elements of the defense. this underscores a point of judgment. >> i understand that willfulness is easier than reckless, reckless conduct.

>> i was talking about recklessness in the context of actual intent or reckless disregard. the opinion was somewhat less than that. the standard should be willful blindness. i think that is the standard should apply for the same outcome. it could apply to all liability, the decision to have whether or not the court results in what the commission decides to do, it would reach the same outcome here, certainly.

i think the record fully demonstrates that whenever else is going on, there was not recklessness. they did not approve the plant or have knowledge of the live broadcast of this type. >> thank you very much, mr. corn-revere. >> may it please the court, fox confirms what the court has done all along.

there has been a general contextual analysis. the question here is whether or not there is a per se invention. so let's go look at what is going to happen until 1987. the commission had applied the first broadcast indecency rules in a narrow way. they virtually limited enforcement cases which actually contained repetition of the precise expletives that were in the call issued in the supreme court case. in 1987, the commission changed its policy to say, look, that is too narrow an interpretation.

we are going to make clear, we are announcing to our regulators that all longer but we have such -- no lager but we have such, but apply the analysis to a firm and it proved pacific itself, sexual or excretory activities. cover, it made clear that it preserves repetition requirements that they had been applying to a narrow category of words and not literal expletives. it is clear from 1987 that is what happened. you do not have to take my word for it. but it is precisely this change in explication of policy and the supreme court decision in that case.

so in page 18 07, although they have expanded beyond repetitive issues, it distinguish between a liberal and now liberal -- literal and nonliteral, but it must be examined in context, finding in decency when a complaint focuses solely on these number all acts. nonliteral acts. they created a car out for a limited class of words, and words alone. so in the case between a literal or nonliteral expletive, the point is, that is a battle in the class of words.

images were never subject to that exception. when 1 looks at the actual distinction that the commission has set forth, it went between nonliteral and descriptive. and if 1 were to try and fit images into those categories, you would put them on the descriptive side of the line. the exception only lives nonliteral expletives. images are not expletives, and they are not nonliteral. the description in pair of 13 -- paragraph 13 confirm to we have known all along. the commission expanded, and

there was 1 limited car out that was eventually eliminated. and that is why it is important to read the fox decision, because that was simply an aside by the supreme court. that description of policy was critical for the affirmation of the apa power to choose a policy. the underlying assumption talked about the agency's reason for expand enforcement. it was entirely reasonable. it made no sense to distinguish between liberal and now little uses -- literal and nonliteral uses of words. so they could not reach the decision. and the fox case, they could not

do it without describing what the park policies had been -- prior policies had been. and that background section discussion was critical. in this case, fleeting materials policies are nothing. the commission order cannot be invalid on the basis of policy. >> let me ask you a question. he said looking back that it is clear that this is words and words of love, and i am not sure where it says that, but it seems that in broadcasting, there was the opportunity, meaning in hawks and pacifica --

in young, we're talking about nudity. and there was an opportunity to say that spoken bulgaria cannot analogized to that display of a person's sexual organ. that is what you say in your first free -- brief. but in young broadcasting, the commission addressed the fleeting nature of exposure shear, saying it occurred for less than a second and was sleeping. -- fleeting. and second, we reject other instances that the commission has ruled remarks did not meet the indecency definition. in footnote 35, explains how the expletive was not intended to

pander. but it drew no distinction between an image of nudity that is fleeting and an expert to that is fleeting but instead they are all really groups together. they are the same. and not pander or titillate, we will find differently. it probably opened the door to golden gloves but did not have the opportunity to say that nudity is different. it did not. it said this fleeting exposure is different from the other fleeting expletive because here it panderers. so as to say, a spoken bulgaria cannot be analogized -- vulgarity cannot be analogized.

whereas here, they do not throw up any distinction of all. >> actually, the decision does draw that distinction. @@@@@@@@@ @ @ @ @ @ aás@ @ @ @

nudity and expletives. >> it is exception, and no further analysis needs to take place. so what we have here -- >> here is what the policy was. we will examine material and put it through contextual analysis, a number of factors. the second factor is if fleeting is relevant or words and images. in 1987, it was made clear there is a narrow exception that applies to nonliteral expletives. it specifically said that descriptive words would fall outside the exception. >> what is a nonliteral

expletive? >> basically, it threatens to use of an expletive to describe sexual activity. so that distinction, and those reasons -- like what george carlin said, which is really the context that we wanted to make clear, that it was not a diversion, we wanted to have it. but with regard to everything else, we expand enforcement and textual analysis. and there are some words as well, descriptions and depiction. so no surprise that after 1986,

the commission applied the same analysis, and that is what it was implying. so if you are going to take mr. corn-revere's argument, it took so much time to come to the conclusion that this was indecent. >> anything other than words or images that were fleeting? >> there is the example "schindler's list." fleeting images or material is a subset, and narrow subset of the indecency cases. what cbs has to show is that there was an exemption to

contest will analysis that gives them a true path, because the image was pleaded -- fleeting. it never applied to images. once you get contextual analysis, cbs does not make a serious argument if they do not have an exception, findings were in decent under the analysis. because of the other factors, they outweighed. it is easy enough to say that. people are around a table, they say, ok, we will have janet jackson's costume ripped.

no 1 could make the argument that it would have been unreasonable to find that in decent. so cbs has no objection. to make a different argument, this is confusing, and the commission has acknowledged that they know the policy was a certain way. >> it seems that the fleeting material exception seems to be the norm, not the contextual analysis. >> what was the norm was the entire cases, for reading material was not indecent. but all the cases are perfectly

consistent with the commission. >> that seem to be the case with george carlin. they all have to do with fleeting exceptions. >> the bono and richie cases were words cases, and that is the whole point. yes, they did change policy with returned to deleting expletives -- >> what case says images are different from words. the fcc said ward are different? -- words are different? >> defect is -- the fact is, they apply contextual analysis to images.

the burden is really on cbs, not the commission. this court disagrees and has come back with recognition that there was an embodiment of that , a fleeting material policy across the board. the distinction is entirely inconsistent. but in the case that came before the super bowl, its stated exactly that. down to the fleeting image. this court says that was a divergence from prior policy, but there was no prior policy.

a clearer statement was in 1987, and now confirmed by the supreme court. i think cbs had notice in 1987, but that also out that lee had notice of what can round before. -- definitely had notice of what came around before. >> if that had not been there, the fleeting nature of the image would have in just fine, right? >> the nature of the image is stuff in the background.

>> but the pandering, the titillating was the only basis on which the fcc distinguished it from other remarks in a live, unscripted broadcasting. >> yes, because there were other factors. it is not the only factor. in some cases, the ballots would come out differently. >> some words or images were fleeting, and have they been penalized, exclusively fleeting images or words? >> the fox case involves certain, isolated words. >> is this the first case where the commission has determined that the conduct was fleeting? >> it is a case where they

tentatively made that determination. but it is not often confronted with the case with the image is nonetheless indecent. >> it is just that there is a real concern to avoid excessive punishment that this spontaneous so in that way you faber the underlying opinion. >> there are two ways of looking at this case. did they really determine this about the super bowl? and they can make the argument they had no idea that the actions would cause this kind of fear and they would be in that position. there was a considerable alarm

about differences from the audience and visual script, concerns in the record, talking points about the nfl commissioner. the most important thing was janet jackson's choreographer had said there were shocking moments, and cbs had to investigate those statements. there was evidence they had the ability to impose a video delay system. on the halftime show, they have an audio delay system.

it was no good at all once he took her top of. since they had no video delay, but they had no -- they had no reason of preventing it. this intensifies both under the commission and the statute to hold cbs libel at least for failure to implement a video delay system. this court says cbs argues they had to invent the wheel. all we ask here is that we allow ourselves to explore the issue. and it footnote 13, which discusses the video delay

system, cbs site to its own press release the day after the super bowl -- >> what would be the point of remaned? >> two of them. this court was not convinced that cbs was able to use of video the way next week. 1 point would be forced to explore that question. it seems odd to say a video delay system was not available. >> it is pretty much the norm now days, isn't it? >> i do not know. he would have to ask cbs. -- you would have to ask cbs. i think that it should be the norm the second thing is with

interpretation of b1b and b1d, it does not contain the willfulness language. b1b, it does contain that. it is to mine, implicit that their approach was to take the higher standard and employ it both b and d. >> you want us to adopt that as a standard? >> i think as involves the commission of any act. the commission found the failure

was an omission, and this court has also found that recklessness satisfies requirements, if we assume it would have some constitutional means. so in this case, reckless this setup buys it. @@@@@ @ @ @ @ @ @ @ @ @ @ @ @ @

at that time, presumably cbs would take an appeal. i want to note one thing -- i do not seek of bigness -- the vagueness. >> i thought they raise it initially. let's assume that they did. >> i only wanted to say that i do not think you can make that assumption. they did not make it in their

supplemental briefs on the remand. i see cases in the opening brief that are also cited, but i do not see it in the text. if they made it, fine, obviously they cannot continue to press the. what was striking in these briefs is that there were no vagueness arguments or anything that stated that the commission authority was unconstitutional. they had other arguments they make. those arguments -- the court does not need to address those arguments. at least not until the other issues have been resolved. >> what is your position on the vagueness? >> as the d.c. circuit recognized -- this is not in our

briefs because cbs did not include it. justice ginsburg said with the majority that they looked at the issue and saw the same formulation that they did in pacifica and the upheld the decision in bus of a gun. we did not see -- upheld the decision in the pacifica. >> but that application has changed since pacifica. i am not sure you can re.ly -- rely on what the supreme court said. at least you had an exception for fleeting words. >> i think the contextual analysis has not changed.

i do not think there is any vagueness, in terms of cbs not been on notice. i do not see as a general manner -- matter or specific manner -- i built to see -- fail to see -- again, what if they had scripted this? if they had said it was entirely unclear to us that because she only did it for a second, that would-be -- >> that is another way to deal with the vagueness issue to make the difference between scripted and non-scripted material. >> i think the supreme court upheld this analysis saying that

it does not make sense with the contextual analysis to put some material off the table. if the objection is that it is vague, i do not know that the decency analysis is any more clear for the unscripted material versus scripted material. they have always found that the fleeting nature of the material is irrelevant. it does not mean it can get passed. the supreme court emphasized contextual analysis in at pacifica -- in the zapata -- in pacifica. i think the argument was closed in pacifica. even though it may not be precisely clear in every case of

the decision would come out, it has trumped it. it was meant to give broadcasters an idea of how the commission -- what the commission's remark would be. they were -- what the commission's framework would be. there is a body of law extending since that decision which explains -- which helps explain or analyze how the commission does this. it is not a close text. >> there was discussion of young earlier. if that was not scripted, it was pretty close to being scripted. in terms of the fleetingness, compared to this particular case, it would seem they were on

different ends of the spectrum. am i correct? >> i think they were both less than a second -- the actual image was less than a second. i do not know that they would agree with the characterization of it being scripted, whereas in young there was an attempt to have the performers' performance off-screen. but they were in robes, naked underneath, and i guess nobody figured out, that if you sit under a chair long enough, under hot television lights, the road does not necessarily get up with you. -- the robe does not necessarily get up with you. i do not think they intended for the performers to be exposed. recklessness could be applied in both cases. this could very well happen.

cbs had a number of indications that it would have been a very good idea to put a video delay in place here. they pushed the envelope -- the choreographer said there would be shocking moments. well they could not guess precisely what would happen, that is the purpose of having a delay. >> we will give you some more time. is there anything else? >> you might have answered this, but i had a concern about the recklessness standard. when you discussed it before, you said that cbs omitted a number of things, as it should have done. you mentioned the delay. i have an understanding of recklessness. they said that they did not care about the risk. that is the kind of recklessness

i am bringing about. you are suggesting that if they did not do a, b, or sea, they may be held reckless. -- or c, they may be held reckless. >> they explained that you must take precautions, even if you don't know when there will be nudity displayed. you bring together a volatile mix of performances. to ignore warning signs simply because they do not know or are not certain, it is as if somebody put together all whole bunch of situations and then decided to walk away and not get a fire extinguisher. them that it suggests -- >> it suggests to me that because of the people involved that they were aware that something paula todd might occur? but they did identify -- and

that's something vala tile -- sets and in bolling tile -- that something volatile might occur? \ >> they did identify something among their concerns. they were concerned about whether the visual script would be adhered to. there were questions about how long the video delay would be. it gave people a scary feeling. there were a number of pieces of evidence that should not put cbs on notice. the point is that they do not necessarily have to know for certain that something was going to happen. if they knew for certain something was going to happen, they were under a greater duty to make sure it did not. if there is evidence that they

proceeded nonetheless in taking the risk not to take available precautions, it is justified and imposing forfeiture. >> thank you very much. mr. corn-revere. thank you, your honor. i would like to make just a few points and answer a few questions you might have. to answer the question that came up earlier about the vagueness argument, the initial pages talk about the nature of the policy

and the reply brief also addresses that issue. mr. lewis i think misspoke in his last few minutes on the floor when he talked about questions that came up during the planning of the super bowl in regards to the video delay. there was discussion, as we discussed at length the last time, about imposing an audio delay. there was no suggestion of using a video delay, because no such delay had ever been used in the past. i will answer any questions you have. i think it is important to notice how the fcc argument has changed over the course of this case. when it was before you the last time, it argued that the distinguishing between images and words is obvious in policies, but unstated. now, after it has argued the fox case, it's argument is that the policy was stated in 1987, which

is not so obvious that they ever sighted in any case until 2006 in a different context. that change in emphasis is critical in understanding how the fcc is involved in the post hoc rationalization. secondly, the sec is wrong when it suggests that the -- the fcc is wrong when it suggests that the decision from the 1987 is critical to the decision on the apa. it was not. you can remove that altogether and it would reach the same decision based on analysis. >> is that the test? once we have a grant of richmond, -- grant of remand, do we need to have found that the matter before us is being argued with this central to the decisi,

or can we take an opportunity to rethink and change our mind? >> certainly the court had the opportunity to rethink the issue and change its mind. the question is whether the citation of this language goes to the issues that persuaded this court the last time. the public is that the supreme court was simply looking at that in a different context and it did not consider weapons -- did not consider whether the other images were implicated. they did not look at the citation of the language and say it was irrelevant. it would instead look at the rationale that the fcc gave in its 2006 omnibus remand order. they tried to argue that the fox broadcast would have been in decent even under its prior policy. it cited the 1987 order and try to argue that it never had a

fleeting expletive policy at all. the supreme court reached the decision that it did because it found that there ultimate explanation, where it actually acknowledged the policy, was the vision to survive under analysis. >> mr. lew was pointed out that the language on -- mr. lewis pointed out that the language on the oxygen or the court said, in finding the agencies -- on the fox decision where the court said, in finding the agency's decisions were entirely rational -- the court masaid it made no sense to distinguish between liberal and nonliteral uses of the words. does that not support mr. lewis's argument? >> it supports the decision in a box, where it was distinguishing between liberal and nonliteral

-- it supports the decision in that box, where it was easing was in between -- it supports the decision in fox, where it was distinguishing between literal and nonliteral. you could conclude that an isolated expletive was pandering. it is important to note to the constantly changing factors at play here. mr. lewis has talked about how the george carlin model was nonliteral uses of the word that the fcc and has argued several times that those words were not all nonliteral uses. there are arbitrary in their application -- defining them one

way in one case and finding them anin another way in other cases. >> is there anything else you would like to say? >> i feel like sometone being asked for his last words. >> this was very well-argued and very w sunday on c-span.

>> the seale of chipmaker intel -- ceo of chipmaker intel announced that he would buy billions of dollars of u.s. high-tech companies over the next couple of years. here is a look at his speech, just under an hour. >> good morning, i am the vice- president of the brookings institution and i welcome you to this event on rebuilding the foundations of american growth. the last year and a half have been challenging times for everyone. we have suffered through our biggest economic recession since the great depression.

that recession is officially over, but we continue to have high unemployment and there remains considerable public anxiety about the future. along with these issues, the united states faces serious long-term challenges, in terms of its overall competitiveness. we have difficulty training and recruiting our next generation of scientists and engineers. we need to maintain our excellence in innovation that has propelled our nation's past economic growth and we need public policy that enhances our long-term competitiveness. to help develop a better understanding of these important issues, we are pleased to welcome mr. paul otellini, the president and ceo of intel. it is a company that needs no introduction. it does not mean i will not provide one. it has the ninth most viable brand in the world. it makes microchips that power more than 80% of the world's personal computers as well as thousands of other electronic

devices. during its history, the company has been guided by america's leading business minds, including the company co- founders. today's speaker is the latest in a long line of outstanding leaders. he grew up in severance is go, received his undergraduate degree at the university of sampras's go -- he grew up in san francisco, received his undergraduate degree at the university of san francisco. in 2005, he became the company's fifth ceo. he has provided strong and dynamic leadership, refocus the company's efforts to innovate and grow beyond the personal computer, and led the company in becoming cost-competitive in the markets, developing new products

and adding new customers who are driving their current growth. the in his remarks today, he will share his thoughts on the need -- in his remarks today, he will share his thoughts on the need to create new business and industry. he will discuss what we need to do to help our mentation -- our nation maintain a globally competitive economy. please join me in welcoming mr. paul otellini to the brookings institution. [applause] >> thank you and good morning. with an introduction like that, you can go on for as long as you would like. i want to begin by thanking you for hosting us here today. it was one year ago this week that i came to washington and announced in my company would make a $7 billion investment in our u.s.-based manufacturing plants, specific --

specifically targeted to the most significant technology we have ever invented. you will recall that when i made the announcement, the u.s. economy was facing one of the greatest crises in our history. i call it the worst economy i have seen in my 35 years at intel, yet i believe our investment was good for our company and our country. it was a way to increase our commitment to innovation in future competitiveness. as it turned out, america and the world avoided the worst case economic scenarios. we're not out of the woods. i am concerned that we're not taking all the right steps as a nation to ensure that our economy is on the long-term trajectory of growth and leadership. we face a world with much tougher competitors, many of whom are excelling their investment in the future faster than we are.

-- accelerating their investment in the future faster than we are. i would like to provide an update on the investment that i announced last year and share some thoughts on what else business and government should be doing. it is what we must do to create a globally competitive economy. let me start with the investment we made in our stated the art -- in our state-of-the-art manufacturing plants. we have two plants in oregon producing the chips. our factories in arizona and new mexico will be in production later this year. these factories are making tiny electronic systems in betted on a silicon chip, roughly the size of your fingernail. to give you a sense of how far the technology has progressed, it is worth comparing these microprocessors to the very first one we produced in 1971. the earliest ones contained

about 2300 transistors. the ones we are producing today routinely include more than 1 billion transistors. as a result, they are far more capable, enabling faster computers, the most advanced consumer electronic devices, sophisticated imaging for medical care, the brains inside the next generation of robotics, and thousands of other applications. they do all of this while consuming far less energy than their predecessors. we believe these are the most dynamic platform for innovation that our country has -- that our company has ever produced. our investment in u.s. factories producing these ships was not a one time gesture. we invest money all over the world. 75% of our sales come from outside of the u.s. 75% of our manufacturing and our r&d spending continues to be concentrated inside the u.s.

we attract some of the most talented scientists and engineers from around the world. just last year, we invested more than $5 billion on r&d in areas that span from the exploration of new materials to create even smaller transistors, to products that we believe will transform the way that health care is delivered, to future technologies that involve augmented reality, and computing that responds to human gestures. these are long-term investments for us. much of what we were on today will not drive meaningful business results for five or 10 years. in the competitive, innovative industry, this is what you must do. there is no guarantee that the u.s. will receive all of this investment in the future. we need to address the fact that government policies can create disincentives to investing in america and the trend here is or some -- is

worrisome. global competitiveness requires making investments for the future. we must invest in things that make innovation possible, even if they did not yield immediate results. unfortunately, long-term investments in education, research, digital technology, and human capital have been steadily declining in the united states. so too as the commitment to policies that made this such an entrepreneur ial power house for more than a century. this is the bitter truth, but we do not hear much about it. at one time, we could boast about having the best students in math, science, and engineering. our research centers without peer. we seemed a generation ahead of the rest of the world.

that simply is no longer the case. over the past decade, our competitors have focused on the very things that made at americas integrated economy the strongest in the world -- america's innovated economy the strongest in the world. what i hear is that it is very instructive -- other countries have focused on investing in innovation, creating national policies to build digital infrastructure, and have moved quickly to embrace sustainable energy. .

economic performance and so on. on this scale, the u.s. was ranked dead last out of the same 40 nations. the news may sound shocking, but it shouldn't be. when you take a hard look at the things that make any country competitive, it becomes clear that we are slipping. consider the credit that we give to businesses that invest in r and d. they were once the most generous in the world. today companies find their r an d investments more valued and

more rewarded by many other countries. or think about our ability to win the global war for talent. our immigration policies seem deliberately designed to prevent us from attracting the best minds in the world. american companies are giving a tiny allotment for visas for foreign-born engineers and scientists. last year the quotas for those with advanced degrees was completely filled by april. with such policies, are we surprised that more and more top-performing students return to their home countries after studying in our graduate schools. then there are taxes. at a time when countries in europe and asia are clamoring to offer companies like intel to build factories, the tax incentives here are few. our combined state and federal corporate tax is the second highest in the world.

economists at the eocd tell us it's precisely these high statutory corporate rates that punish the most dynamic and innovative firms. lastly, we have significant uncertainty relative to the future costs that businesses may incur in the areas of /g"4@ @ @ @ @ @ @ @ @ @ @ @ @ sb

i.t. giant because of sound long-term planning. after the asian financial crisis of the 1990's, taiwan used the opportunity to invest in i.t. just as korea and japan were cutting back their spending. today the country is the undisputed center for p.c. design and intervention, exporting the computers it builds to the rest of the world. then there is india. this country has put in place an aggressive program working with several companies including intel to enable a half a billion internet users and 100 million broadband connections by 2012, two years from now. meanwhile, the country that invented the internet, that's us, has been slow to develop our own national broadband strategy. the countries of europe, asia, latin america, and before long the middle east, are going to be competing with us in every

spear of the economy in the years ahead. if you want to stay with them and remain a vibrant growth economy, we have to recommit to a strategy that drives the economic growth of the future. let me be clear. after the financial crisis short-term measures were a necessary part of economic policy. the stimulus package passed by congress last year, for example, undoubtedly steered the economy away from much more serious problems. my biggest concern, though, is that so much of the spending is targeted to occur in 2011 and 2012, well after most people believe that the crisis will have passed. other countries, most mostly china, manage to put stimulus funds to work much faster and are benefiting from that today. but stimulus spending is not a substitute for forward-looking investments that help create the underpinnings of economic growth. and perhaps the most important of those is education, an area

in which international test scores continually tell us we are failing to be competitive. but it doesn't have to remain like that. this is an area of particular interest to me. our business, after all, depends on a pipeline of highly skilled people to help us discover subsequent generations of innovation. i'm very proud to tell you that over the last decade, intel has invested nearly $1 billion in education around the world, especially in the areas of math and science education. our goal has been to create the innovation capacity for the future by preparing teachers to integrate technology into the classrooms and the learn processes. our intel teach program has already trained more than 7 million teachers world wild and more than 350,000 in the united states. the result is improved critical thinking, research, and problem solving skills that students need to succeed in the jobs of

the future. we see this as a vital investment in the next innovators, thinkers, scientists builders and entrepreneurs. this is an area where the u.s. must succeed. growth in math-intensive science and engineers jobs outpace overall job growth by three to one. think about this. according to one source, america's g.d.p. would grow by more than 1/3 if u.s. students became globally competitive in math and science. any real strategy for future competitiveness has to address this issue. president obama has made this issue a top focus for his administration. we see it as a responsibility of not just government, but of every business that depends on highly skilled employees. by the way, if you want to be inspired by what america's young people have to offer, please join us here in d.c. on march 16 to celebrate the best

and brightest as 40 of america's top young scientists display their projects and vie for more than $1 million in scholarships at the intel science and talent search. this is one way that we shine a light on what is possible to inspire others to achieve. i have talked a lot about how government can partner with business and how it can establish the strongest incentives for investment. let me also make clear that there are things that businesses must do. in fact, ought to do regardless of what government achieves. today i want to talk about two specific initiatives that i hope will raise the bar for all companies that want to make a difference and invest in the future. the first is to create jobs immediately for college students, especially majors in engineering and computer science. this is an innings dispenseable resource for the --

indispensionable resource for the united states and the in the current climate, there hasn't been enough hiring interest for these people. in the last several weeks, i have spoken with c.e.o.'s of companies to make sure we put this resource work. i'm proud to announce that accenture, broadcom, c.d.y., dell, e-bay, e.m.c., g.e., google, h.p., liberty mutual, marvel, microsoft, and yahoo! have all committed to join intel in increasing their college graduate hiring in the united states this year. most of them will join us in at least doubling our college graduate hiring leading to a total of over 10,500 new jobs from just these 17 companies that i mentioned. and these jobs will help an annual payroll including benefits of over $1 billion a

year. collectively, this is a bet on america's next generation of innovators. we cannot afford to let our future scientists and i think nears sit idle after graduation. the second announcement i would like to make looks even further into the future. i'm pleased to nouns in the invest in america alliance, a group of leading b.c. companies committed to steer investments into technologies that will drive economic growth and job characters in the united states. the members of this alliance have committed to invest $3.5 billion in promising clean technology, information technology, and biotechnology, companies over approximately the next two years. as part of the alliance, intel capital will participate with its own $200 million commitment. intel has worked with 24 leading venture capital firms to join us with their own

commitments in support of this alliance including advanced technology ventures, bramar energy ventures, d.c.m., draper fisher, fly wheel ventures, good energies, institutional venture partners, invest corp. technology partners, new enterprise associates, north bridge venture partners, west mark partners, seven rosen funds, storm ventures, telesoft partners, updata partners, u.s. venture partners and walden international. those are the leading venture capital firms in the world coming together to commit $3.5 billion to u.s. investments. i believe that together our commitments to seeding the ground with start-up capital will prove to be a very rewarding investment for both

the companies that contribute and for the competitiveness of the united states. and since venture-backed companies in the u.s. accounted for more than 12 million jobs or 11% of the total private sector employment in 2008, these investments will also help drive job growth in the u.s. now and in the future. i would like to conclude on an optimistic note. a year ago we were focused on avoiding economic calamity. today we need to start focusing on the future. that future is going to be more demanding, more competitive, and, frankly, more disruptive to american business. but those conditions as anyone who has ever worked in silicone valley knows, can be exactly the right environment for new thinking and breakthrough innovations. that is why fostering such an environment ought to be the essential characteristic of our

economic policy and the plans of every competitive business. i hope my thoughts today can help create a common ground between business and government, a shared vision that allows us to start focusing on the future, not just the crisis of the day. all of my life i believed that america's best years are still ahead of it. if we focus, invest, and work hard, that belief will hold true. thank you. [applause]

>> first of all, i thank you very much for those comments and that leadership. i mean, especially, the two new initiatives that were announced today creating 10,500 jobs is terrific given the state of our country's high unemployment and then also investing in america, the lines that you're creating. it certainly is a bold new venture. and at the very end of your talk, you mentioned the importance of focusing on the future and that we need to create an environment for new thinking. and i was reminded that last february, you gave a speech at the washington, d.c. economics club and you said that you thought the economic crisis represented an opportunity for institutions to look at themselves and to think about how to reshape things and how to behave in a different way. ok. now it's a year later. how would you assess the job that our institutions are doing, both in terms of business institutions as well as political ones? have they risen to the challenge? are they making the types of changes that you thought were

necessary a year ago? >> with a few exceptions, no. i think you have seen some companies make some big bets on the future and try and change direction. i'm point out shoutout g.e. is a notable example of it, a gigantic company a 100-year-old company that is trying to change itself and trying to retool itself while it can. most companies, most people don't change until they have to. intel had the ability to change in 2006, 2007, and 2008 before the recession hit because we thought the business of the future would be different than the business of the past. going into the recession, we were already restructured. we had the luxury of going through the recession mostly intact. i think other companies had to make pretty drastic changes, cutbacks and so forth. i don't think they have come out of it rethinking yet where they want to be or where their businesses will be with a few

exceptions like g.e. i can extend that to the banks. it's not clear there is anything different today than there was five years ago, and yet these institutions are more necessary today to our society and our economy than they have ever been. >> and in terms of our political institutions, i mean, you had several pointed compents comparing the united states to other countries and other countries kind of stepping up, doing their stimulus package and investing the funds more rapidly. how would you rate the job congress and the president have done? >> oh, boy. >> now is when you get in trouble. >> pretty poor. i think it's been a series of endless compromises and debates at a time when action is needed . i was in europe last week and i met with the finance minister of france. and for many, many years, france was a place that you

didn't think about as a place you would do investments. the 35-hour a week and the social welfare state and those kinds of things, they have changed and they have changed in the last few years, primarily under sarkozy. christina tells me france now offers a 50% credit on r and d against maybe a 20% credit in the united states that sometimes may go away. so you are thinking about hiring an engineer, where would you hire that engineer? in california or in toulouse? almost half the price. i think you have to think about these things. while other countries are making hard decisions on attracting investments, we're debating earmarks. >> but yet you seem very optimistic about the long-term future of the u.s.a., you're forming this fund to invest in america. what's the basis of your

optimism there? >> you're entrepreneurial zeal is second to none. our education at the graduate school levels, particularly in math and science andening nearing is second to none. i don't see that changing. the best and the brightest go to our schools. if we could capture that and channel it into our companies and start-ups, that cycle will repeat itself, %%h%g@ @ @ @ @ @

it's all paid for eventually by the employers. even if countries where they provide it, you pay a salary, it goes into the tax system and gets paid. from that perspective at the employee level, i don't see a difference. and our employees will remain covered whether they're here or someplace else. the health care question that is on debate, i think right now, it's not one that is -- my only concern as a businessman is are we doing something which will significantly increase the costs or decrease the benefits to my employees? and some of the proposals, at least one of the proposals that is going through theoserizer now would tax some of the plans we offer our employees at a pretty hefty right. that means they would pay more money for less benefits. that's not good.

>> right behind that gentleman is another question. >> frank manheim, george mason university. >> i recently have done a comparative study of u.s. and europe and here i find the watch world is innovation, but there seems to also be a stigma. when i was a grad student in the sciences, most of the grads automatically went to industry. now the greatest outlet for science seems to be university writing peer-reviewed papers. and part of that seems to be because of the theme that industry or manufacturing is a thing of the past in the united states. could you comment on whether the climate in many respects in the u.s. is hostile to manufacturing and industry? >> well, i think those are two different questions. let me deal with the graduate student first and then talk

about the climate. i haven't seen your observation in practice. intel has 4,000 p.h.d.'s on the payroll, principally in the united states. i'm on the board of google. i watch who they hire each year. i have friends at microsoft and the other high-tech companies. we are still incredibly large employers of exactly the people that you say are competing to write peer reviews. if you want to go into ack damia, that's a -- academia, that's a choice. if these students want jobs in research and development, there are plenty available and there are 10,000 more as of today. >> what about the rest of the country? >> well, that's a third question. maybe we'll defer that one. on the climate for manufacturing, it is tough and that was my comment today. when i look at building a new fact rirks a new semiconductor factory which costs about $4.5 billion, the cost of putting that factory in the united

states versus not is an extra billion dollars for me it's not low-cost labor. it is the difference in r and d credit, capital equipment credits, tax credits and those type of things and you get access to local markets. so we're continuing to invest in the united states, but the cost, the opportunity cost of these decisions is getting larger and larger as we do nothing. >> right here. >> michael, the joint economic committee. one of the things that we're seeing in the employment data is that there is a concern about the long-term unemployed, those that have been unemployed for six months or more. i think that's more than 40% of the total unemployed and then when you get to a year or longer, that's like half of the 40%, so about 20% or so. i guess two questions -- number one, what exactly is the source of this concern?

what exactly is the source of this, is it stigma? number two, as a tech company, what then are some of the policy actions that we ought to be thinking about in order to actually break the -- >> i have no idea what the source is, not being the study and one of those people. >> studies or data. >> i don't know why they are chronically unemployed. i don't see a stigma. someone is qualified for a job that's applying at intel, we'll hire them. i lost the second part of the question. >> how do you break the back of it? >> when i was putting my thoughts together for this speech, we looked at a third initiative which was what if we got the tech industry to get together on retraining and maybe grab some of these people that are cronly unemployed and put them through retraining processes that would make them qualified to work in high-tech today. and as i looked at that, i

found there was so many preexisting programs in that area, both public and private, that we frankly couldn't add anything new to that stew. it seems to already being addressed by a variety of bodies. our thinking was to do something new and innovative that wasn't being addressed at this point in time. >> there is a question right there. >> michael, consortium for policies and incomes. innovation ultimately comes down to one person having an idea. what makes these people different from the rest of us and how can our educational infrastructure and business climate support these people? >> i think that's too narrow a definition of innovation. i think there is often -- there is that light bulb idea that one person has which is the thing you described.

and i do the united states is good at that and the track record of the united states says we have the majority of the light-popping ideas for the last 100 years. in a company like intel, though, innovation is not a one-person deal. the products we make are so complex. a new generation of silicone technology takes us four years to development. there is probably 2,000 engineers working on it, $1 billion of r and d goes into it. you're inventing new materials to be used, new structures, new equipment. it's a process of collaborative innovation that to me has the sustainable breakthroughs that are able to advance science. that used to be done in the bell labs of the world. now it's done in the intel labs of the world or the microsoft labs of the world. that is not often as one person as legend would have it. >> in the back there was a question.

right there. dan o'conner, ccia. i wonder if i could get mr. otellini's thoughts on the patent system and how the patent reform going through congress and patents playing a critical role in the i.t. industry, there is a lot of talk of how it's hurting or harming, depending which side you're on, high-tech innovation. i wonder if you're in the field and get your thoughts on how that is affecting your company. >> i agree, if it isn't broken, it's pretty darn close to broken. there is at least two layers of things that i think need to be addressed. one is the process itself. the technology as gotten, in terms of what is being patented in our industry or biotechnical and so forth to have examiners understand the invention and the narrowness and the breadth of it in a timely fashion is

something which is simply problematic and underfunded. to me, the patent office needs a substantial change in its funding mechanisms to be able to get proper review in a timely fashion. so that's one end of the spectrum. the other end of the spectrum is once something gets through that process and becomes a patent, it is increasingly the use of patents isn't to protect the inventor, but it's to attack somebody else because of the process of creating these patents. so patent reform in terms of the litigation areas is really what our prime interest is here. and you have got four subsequent sis that don't always -- -- companies that don't always have the same function. weave across all of those is the notion of patent trolls who buy a patent and sue a rich company, usually in the eastern

district of texas. that has gotten totally out of hand. i think we had good progress on getting consensus bill agreed last year and it seems to have gone into suspended animation right now. we're hoping that it gets revitalized this year. it's a good chance to get it done, good time to get it done and stop some of the nonsense here. in the meanwhile, the administration is funding the first part of the problem more aggressively. >> here in the front row with a question. >> to talk about the stem education, math and science education that you were discussing, what do you think is needed? is it more money? is it a reform of the system? how can business change the success that we get out of the dollars that we spend? >> well, i think it's

accountability. it's involvement. it's reward systems. it's incentives. it is better teachers. i forget the exact statistic but the number of math teachers in this country that were trained to teach math is well under 50%. it may be 30%. it's a low number. to me, the only way you can stimulate kids, particularly girls in math and science is to have a math teacher that inspires then. we lose girls at an alarming rate out of math and science in the fourth grade. and we lose boys in high school. so we need to figure out a way to get better teachers in their first and incentives. one thing that china does -- i don't want to use them as a paragon here -- when they run the nationwide science talent contest that they have in terms of the science fairs, the top 10% get instant admission into any college they want.

i don't know what the right model is, but something that says you're in the top 1% of science fair participants in the united states, you can get into any college you want. forget this admissions process. wouldn't that be a nice incentive to put people into the mode of investing in math and science. there are a lot of little things. there has to be pull on the other side. we have to make sure there are jobs, well-paid jobs when the kids get out of college that they can find a home. >> hi, i'm julie. i want to piggyback on that question. when you talk about the teachers that you're training to go out and teach stem, are they -- what level are they, high school, middle school? >> k through 12. >> what i'm finding are most of the programs are focused on high school. the gates foundation is primarily high school and it's a little too late by then. >> i agree. that's why we do a lot of stuff

in the elementary school. there is a disparity between those numbers. 7 million worldwide, 350,000 in the united states when we started here. i think that disparity itself is alarming. it's not like we're deliberately training overseas. there are significant impediments here that are imposed by the school districts, the teachers unions and those kinds of things that are different than what you see in other countries. china says, great, we want all of our teachers trained, 6 million teachers, go get them trained. we have north of 2 million trained already. they make it as imperative. >> right over here is a question. >> my name is stephanie sheridan, i'm a graduate student at johns hopkins. i had a question about the risk climate, i guess within r and d now and how you would say that the last couple of years, given

the financial crisis has impacted the risk climate within r and d and how that might affect future progress. >> well, very few tech companies -- i'm trying to think of any -- cut their r and d that i can recall of any measurable number. so if you consider that the economic crisis that cuts the money which cuts your seed corn, i really haven't seen that in our industry. i have read about it in some of the biotechnical. that's mostly a function of the consolidation of that industry. so their eliminating redown dancies and inefficiencies. i do think that prior to this year's budget, there was an issue relative to the funding of the big national resource organizations. i think they doubled it in this year's budget again, that's a good start. i think we're up to 2%. >> right there.

>> i'm with oracle. you made a comment about some of these other countries. what i have noticed that culturally, the parents encourage their children much earlier in their lives so the government and the education are enablers, but there is a lot of encouragement. what do you think the parents' role should be here in terms of providing that@@@@'ácr

before 1900. they just did it in a different industry. we did it with our industries. so i think part of it is there has to be some degree of pull, these are where the good jobs are going to be. it's with a bit of irony that i watched the great math guys coming out of the schools who were all going to wall street coming back looking for jobs at companies like yours and mine and i think that's great. the fact that you can now recruit some of the best and the brightest and they aren't going to go out and create some

derivative. maybe they'll create some real value for the world. >> now you're making news. we have time just for a couple more questions in the background aisle. >> my question, i think that there is only so much that companies can do like or kl, microsoft, intel, so like because of the credit crunch, i was thinking is there a way that it could be a public-private partnership where the government can simulate entrepreneurs by maybe creating a competitive form like the venture capitalists do? i don't see that particular problem on start-ups and here is $3.5 billion, if you have a great idea, people in this audience are happy to write you a check. so i don't think the credit

crunch on the v.c. side, there is a lot more c.v. money waiting to be invested today on the sidelines than we have had in a decade probably. the idea that the government would get in the middle of our decisions on which companies to fund to me is probably not the best use of government. i don't think -- that would not be something i would support right now. >> actually, there is one more question right in front of you. i just want to get to one more person. >> ryan roddio with the competitive institute. high-tech firms including intel have been the target of -- is it in need of reform? >> i think it is in need of reform in the sense that there are reformers in europe and perhaps in some of the agencies here in washington that are behind the curve on what makes

technology tick. i mean, the heart of technology for 50 years has been around the law of increasing returns around standards. and when a company has an invention around a standard, they ought to be able to reap the awards of that considering that they compete fairly. there is a growing sentiment, certainly in europe, where that is unfair and wrong and you need to protect competitors as opposed to protecting compures. the old u.s. view which is d.o.j. view of protecting consumers ought to be the ultimate test. the consumers getting better product at lower prices year after year, the system works. and if he is not, then something out to be done differently. i think that the old laws are not yet caught up to where technology is and where it's going. >> ok, i guess we have time for

just one more question right here. the gentleman with his hand up there. >> i'm jim walker, i'm retired right now. when i was in senior management, i used things like preparing presentations and doing research projects and things that i read are now being sent to india and researched to china and taiwan. how does that effect our short and long term development of junior management into senior management? >> gosh, i haven't seen that trend. we use around the world, mostly u.s.-based training. most of it is developed ourselves. our latest training is actually out of the university of virginia that we're putting the top 1,000 people through. so i haven't seen the

outsourcing of thought around management leadership and management training. i'll see tom at lunch. i'll ask him. i haven't seen this. >> ok, we're out of time. i know we have a number of journalists here. if you have additional questions for mr. otellini, we have set up a space in the room which is the next auditorium over in this direction. so paul will join you over there in a few minutes and we would be happy to answer additional questions that you may have. i want to thank paul for sharing his thoughts, for the leadership that you're developing in terms of job creation and investing in america. we really appreciate you coming to brookings to join us. [applause]

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>> on the chart i believe will be displayed in a moment, i plotted some interesting numbers that i down loaded from the federal reserve website. it shows from july 2007-march 2009, roughly the last year and a half of the previous administration, the net household worth fell. since the package of the stimulus, this trend has been reversed. our economy has stabilized and household wealth has increased.

how large is $17.5 trillion. that's more than 1.5 times the national u.s. debt. more than one year of the u.s. gdp. more than $57,000 for every man, women and child in the united states. or about 200 times larger than the anticipated also in fanny and freddie.

>> the gentleman from texas foró 3:00. >> thank you and welcome chairman bernanke. ñi i'm interested in the suggestion made recently about curtailing some of the investment banking risks they are taking. he brings up an important subject and touches on it. it's bigger than what he has addressed. when we repealed against ñrthis

i also believe there's been a moral has order caused by a fra decision of a line of credit given to freddie mac. the concept still persists that it is too big to fail. nobody is going to walk away.

there's this dpar untea that the government will be there to bail out anybody that looks like is going to shake it up. it doesn't matter the bad debt and burden on the american taxpayer. it is still there. creating a tremendous moral hazard. the real problem over the decades has been the perception put into the markets pretending there is a saveings ore actually capital out there. this is the moral hazard because they believe something that is not true. we see the disintegration of the system we have already created. we have already been in a final

crisis. we are going to see this get worse and have to a dris the subject and whether we want to have a system that doesn't guarantee that we will always bail out all the banks and dump these bad debts on the people. the whole system is filled with a moral hazard. i hope we come to our senses. the free market works pretty well. it gets rid of these problems sooner stz an endless battle and hopefully we'll see the light and do a better job in the future. >> 2:10 for the gentleman from north carolina. >> thank you. over the last two breaks in august of last year and the

president's break this year, mr. meeks is the chair of the international monday he tarry policy have travelled and met with central bank governors, finance ministers and leaders in many countries. we are trying to figure out what impact this economic down turn is having on african countries.

with that, i'll yield back and schmidt the rest of my statement for the record. >> we'll do a couple of 1:00. and then the gentleman from florida and kansas. >> thank you. chairman bernanke, the fed's decision to raise the discounteó

rate today. the deficit exceeds 10% of g. d. p. they are not making such a commitment. sips joining this committee, my priority has been to protect the taxpayers by ending bail out and preventing the future bail out. with concerns about tarp and some of the fed's actions. i'm interested to hear how the fed plans to pull back on the liquidity. i'm interested to learn that people need the true economic recovery can occur with continued excessy deficits. i yield back the remainder of my time. >> i get to the gentleman from new york for 1:00. charm thank you for coming before the committee today.

i know there will boo a number of issues. i wanted to highlight a few specific ones i'm also increasingly concerned that the triple a rating is in jeopardy and when and if, do you think that will be down graded. we can't ignore the motion that

america will not pay its debts is without any foundation. i find it very irresponsible. inviting the rating agencies without any factual basis whatsoever. the rating agencies have done enough daniel. i do not doubt for one second that the damage will not fund. i want to responsibilitied on bail outs. i understand the nose tall gau that some of my friends have. every single activity of the federal government that's now going forward with a bail out was gun by the bush administration and the hayek nom yik officials in some cases on their own without any congressional input by bear sterns. i am not aware of any bill out initiated since president obama

took over in this administration. next, i want to talk about jobs. one of my colleagues say where are the jobs. maybe they are in crawford. here is the figure that we have on pages 18 and 19 of the monetary report. losing 725 jobs per month on average. by november and january of 2009-2010, after the economic recovery bill was passed by

these figures, we.1 something million jobs. and we lost 60,000. the answer is 2.1 million jobs disappeared and haven't yet come back because of the economy that the obama administration inher atted. the chairman twice notes the

question is going forward. i recognize the gentleman from minnesota fore1:00. the fear that if the fed raises interest ratesçó as i travel

throughout, i was speaking with and meeting with small businesses they are strooemly concerned about job prospects. likely leading to curb consumer spending from some time to come. you will address this issue the

u.s. economy expanded over lat last year. si significant portion of that grow has been working down unwanted regular la torrys.

starting in single family homes have recently been roughly flat and commercial construction is declining sharply and continued difficulty in obtaining financing. the job market has been hard hit as employers reacted in sales declines by deeply cutting their work forces in late 2008 and 2009. some indicators suggest the deterioration is abating.

indeed more than 40% of the unemployed have been out of work six months or more.

reflecting both tightened lending standards a mit uncertain economic prospects. in con junction with the january meeting. board members prepared projections for economic growth and inflation for the years 2010-2012. the contours of these forecast are similar to the congress last july up to 3.5 and 4% in 2011.

consistent with moderate economic growth arranging roughly 6.5% by the and of 2012. still above the estimate of the sustainable rate of 5%. inflation remains subdued by a rising percent of 2010-2012. expecting to be between 1 panned 34 to 20%. the duel mandate of price ability. the federal reserve has deployed a wide range of tools. the target for the federal funds rate has been maintained as a low rate of 0.1%. continuing to anticipate that the economic conditions

including low rates, subdued inflation trends are likely to warrant exceptionnally low levels of the funds rate for an extended period. to provide support in the mortgage lending and housing markets. we anticipate that these actions ñiç of the financial marketsñi the federal reserveñi a winding dow the liquidities createdçó in th

crisis. lending programs intended toñi stabilize moneyñr marketñr mutu funds and temporary swap lines all allowed toñr expire. the only created on the emergency authorities and term scheduled by march 31. on june 30th for loans backed by newly issued nbs. in addition to closing the special facilities. the financial auction of discount window funds to the ejp &hc% the earlyçó stages of the crisi will occur on march 8. last week, we announced that the maximum amount increasedñi to a much as 90 days in the crisis will be returned to overnight

which it was before the crisis erupted in 2007 to discourage banks rather than private spending markets. we increased the discount rate by 25 basis points and to the top of the 50 basis points. these changes early this month are in response to the improved functioning of the financial markets which reduced the need to the federal reserve. leading to tighter substantials and no change in the outlook which remains in the outlook. the federal fundsñi rate isñi ly to remain exceptionnally low. the federal reserve will fled to begin to tighten conditions to

begin to development of the pressures. notwithstanding the increase to the size of its balance sheet associated with the pump of the trading sheet, we are confident we have the tools we need to firm the stance of the policy at the appropriate time. ñi most importantly, in october 2008, he gave the authority toñi pay interest on bank's holds on federal reserve banks by increasing the interest rate. putting pressure on all short term interest rates. actual you'll interest rates will be in turn to financial conditions more generally. developing a condition of tools held by the banking system which will improve the control of financial conditions leading to a tighter relationship and other short term interest rates.

notably, our capacity to conducting the reverse agreements. a tool historically used is expanded soar so transitions can be restored. the federal reserve is refining plans for a deep facilityçó tha could convert a portion holding reserve balances the federal

reserve. all the information needed to insure the regulationsñi providg detailed records. over the past year taking steps to enhance transparent si including the provision of the reports to the congress and the public and have worked closely on a range of matters ranging from your stabibilities.

we support regulation to audit clab rat policies, çóaccounting financial reporting and internal controls of the ñifacilities. looking ahead, we will continue to look at the congress in identifying approaches that are consistent with our objectives

to foster maximum employment it is vital that the monetary policy continue so the fomc can make quality decisions in the interest of the american people. moreover. the fiscal level must be maintained under circumstances critical for preserving financial stablt and supporting the key role in meeting credit needs of firms and households. strengthening our regular la torry system is important. the crucial importance of

macroregulation achieving financial reform. in the meantime, to strengthen the reserve's oversight for example, the federal reserve has been playing a key roll last

string, the federal reserve led. in that spirit, the federal reserve for large bank holding companies the resent crisis has

subported the extent depending on the information and powers it has by virt u of being both the bank supervisor and bank.

we are collaborate with the dent housing and urban development to further increase the transparent si the we are implementing the rules and protection in private student loans and meaningful opportunities to avoid overdraft fees ensuring our economy is never again devastated thank

you, mr. chairman >> the statement telling the regulators of the skill not 0 to do it. you recognize there is a problem. we call it the mixed message problem. we pressure doing this. we are getting everybody in the same room. the banks and regulators are being too tough on us.

i was pleased to see you note on a couple of occasions. you debate history as part of the debate over policy as to whether or not the stimulus should take place.

you say from highly stim la tiff policy in proven financial continues. and the stim luis for monetary policies. then again on page 8 a development that helped to build household wealth you have to do it again. am i accurate in interpreting your comments without saying it was the best possible way to do it or the fact that it did

contribute to what we err seeing in the activity. >> most agree that the stim luis has created.

at this point going forward. should we say nothing further should be done that would have a stim la tiff çóçóaffect. do you think there is any realistic prospect of america falling on its debt in the

foreseeable future? >> not unless congress decides not to pay. i don't anticipate any such problem or down grade. >> i agree with that. giving investment advice, if you are given good enough policies, buy them. i heard this morning we have

many case $between children and adults walking out on the thin ice and they walk out day after day and get some comfort that nothing happens. but thin ice is dangerous. i schmidt that this type of budget path is dangerous and the deficits we are running are dangerous. i would ask you, i don't believe that our present budget path is sustainableñr coming up with th plan. we are talking about the median term deficit that remains close

to the more normal levels of activity. those numbers are above a sustainable level. in order to sustain a strabl ratio, you need to have a deficit that's 2.5 to 3% at the most. i do think it is very important we begin to look at the path of the deficit as it goes forward. there could be a bonus there to the extent that we could achieve credible plans to reduce median to learn-term deficit >> so the current budget path is

not sustainable, is it? >> it might be upon us sooner than we think? >> it is possible that bond markets will become worried about the sustain blt. we find ourselves facing higher interest rates. >> is it critical that we have a long-term plan and we have it now. i real ides it is extremely difficult. i don't understand estimate in any way. it is also difficult to address issues still a few years away. it would be helpful even to the current recovery to market confidence if there were a sustainable plan for a fiscal exit, if you will the

legislation you have passed has been an important tool >> thank you mr. chairman. i neglected in the press of my opening statement to congratulate you you made it

clear you don't want to medal too much in what the congress does i'm more interested in what i perceive to be reading between the line. you think the fed itself has used all the tools that are available to the federal reserve to help facilitate job creation

probably more than what would be done to create maximum sustainable employment so you don't have a lot of concerns about the other part of the duel mandate which is price stablt. am i reading that correctly or are there other specific things that the fed tool kit might allow the fed to do to create the environment for more job creation. one set of tools we have, we continue to work on is to try to ged credit flowing. we know small business is closely replated toçó job

relations. >> i presume that will be the subject of testimony focussed at the fridayñi hearing. i won't ask you to elaborate on on that. what other kinds of things in your tool kit moit be considered are the short term consequences anything you might use?

do you think that the fed really has done everything it should be doing other thans÷ñiñrçóçó tryi facilitate credit as you just mentioned inñi terms of policyte emergency steps you've taken. areñi there other things you ca prudently do i guess is the question to facilitate job creation. >> as you point out, we have extre extremely large securities that expand our balance sheet. that'sñi supportingñr job creat the fomc will have to continue toñi evaluate the stim luis. we'll continue to look at çótha >> you are kind of in the same posture we are in on the other

side. your policies are creating some stresses on your own balance sheet overtime that might have consequences that you might get out of them. we need to be looking at the long term consequences of more debt and more deficits so that we have an exited strategy to get back to a more normal kind of fiscal policy at the same time you are getting back to a more normal monetary policy. am i miss tating that? finding a way is very important for confidence. >> gentleman from texas, mr. paul. >> thank you mr. chairman. the federal reserve transparent

si act that has passed the house already is something the federal reserve has been opposed to the consensus is that is true. hardly could the congress influence the federal reserve by causing them to inflate even more. there has been a political relationship between congress and the federal reserve you

print the money, dilute the value. prices go up and price evaluation is a tax. debasement of the currency and the real debt actually goes

down. a lot of cash was passed through the federal reserve when there was a provisional government. that money was not appropriated by the congress as said. there has been reports that the cash used in the water gate scandal came through the federal reserve. my question is you object to this idea that you say give us six months the involvement and find out possibly you are working right now to bail out greece. could you grant that after 10-15 years the american people would

know. no matter at all, it would be to your advantage to say no, we don't do stuff like that. why can't we open the books up and find out the truth of these matters. >> these specific allegations you've made are bizarre. i have no knowledge of anything remotely like what you just described. it is this co-se relationship.

as long as we continue this cover up. i do not believe that the real effort would become available to us have you talked about any groups about us participating in a bail out in greece? >> i have not. isn't it correct that the fed can buy relationships the

federal reserve engaged in those activities we agree to what would happen. the gentleman in pennsylvania. >> thank you. i'm not going to take all my time because i know we have interest of the other commit y members. i am interested in some of the communications we have could you give us an a sessionment to where it is today the

fundamental shopping enters have been worsening they are causing problems for a lot of banks. we are watching that carefully. the fed has done a couple of things here and in ways of helping and instructing banks to try to restructure the loansçó

trying to start the market with limited success in qualities. and in any problem that's could occur. >> i don't have any specific suggestions >> thank you. you said the federal reserve has

been playing a key roll one of the issues we'll have to address if the regulators agree that there should be additional capitol than the question would be how to identify the concerns. we'll look at size, complexity, connectedness it provides. we haven't asked that