for 18 years. like my contemporaries, i was not enthusiastic about joint operations with other services. i figured if we just brought them up to navy standards, we would be fine. i have to tell you, i was wrong. the armed forces are much more effective now because they are working together than they were never fighting separately, mostly over who was in charge, rather than against the common enemy. i see the same progress in the intelligence community. like the armed forces, we have made it a requirement that an intelligence officer sir fourth time outside of his or her parent agency in order to reach -- served for a time outside his parent agency to reach higher ranks. while there are still instances in which intelligence is not shared with other agencies, they are fewer than before and

more the exception than the rule. never be ashamed to unlearn an old habit. the primary lesson for the intelligence community from 9/11 was that we need to share information. . .

ççwe are looking ahead more we intelligence community mobilized the best information. we found expertsç to makeç se. we provided solid assessments of theç potential extent of the epidemic under various conditions. although we did not keep abdulmutallab the fight on christmas, we arrested david headley, who was involved with planning attacks on our friends and allies, and we arrested several other americans planning to blow up public buildings right here in the united states. last september, months of painstaking work by the intelligence community led to

the announcement by our president, flanked by the prime minister of the united kingdom and the president of france, the iranians had been constructing a secret centrifuge facility to enrich uranium and that they had been concealing it from the international atomic energy agency, and these are few of the examples of the excellent work being done by the intelligence community on new areas, but i can assure you none of us believes we can rest on our forests. there is much work to be done. now let me turn to the future and tell you about the priorities for the intelligence community, what it is we're working on a sweet to go forward. oun traditional -- what we're oun working on as we go forward. some of our missions remain traditional. even though the cold war is over, we still need to know a lot about russia, with its nuclear weapons, new european security proposal, its vast energy reserves. we need to understand if it will

work with us on common challenges like countering violent extremism. we also are working to learn a lot more about china with its impressive economic success, it's growing armed forces, it rising international profile, but beijing is also our partner for dealing with such challenges as north korea and iran. i understand there are quite a few chinese students here. we need to have more chinese students and americans understanding each other based on firsthand knowledge. it is going to be interesting when the chinese students take their tradition back to china. can you imagine 1.3 billion people dancing at ava? russia and china are not the enemies they were in the past. there are many areas in which we cooperate, but we still need to know what they think and say about us in secret. we're learning more every day about iran, north korea, these two countries in particular that

threatened areas where we have allies in vital interests. we're learning everything we can about groups that powerful, international, and threaten americans and our way of life. i am talking about al qaeda and the groups inspired by it, but i am also talking about drug trafficking organizations, organized cyber criminals, nuclear proliferators, those two charges of the knowledge to make weapons of mass destruction. we are exploring the megatrends that affect american interests, the free flow of people and technology around the world, international exports like corn and wheat right here in the center of the united states. the rules of the road being established by international organizations as they deal with trade. we have people studying the implications of climate change. we need to be a vote to support

humanitarian relief organizations such as those going on in -- need people to support humanitarian relief organizations such as those going on in haiti. we track international oil and gas developments. they can and do affect u.s. supplies and businesses and have a profound geopolitical of 53 give we're working to stay -- geopolitical defects. we're working on biotechnology. we need to make sure we use the edge of the sword the house a specific country and that we minimize the danger the other side of the sword will hurt us. in both those areas, cyber technology and biotechnology, the defenders have a much tougher job you have to spend hard and work harder to enjoy the benefits of the internet without being vulnerable to those who produce them against

us. this is an area where threats could affect a typical student or a professor or resident of manhattan. nobody wants to be the victim of some stiver or banking or id theft. nobody wants to worry about -- cyber threats or thanking or id theft. people worried in the recent snowstorms when they ran out of fear and ships for the super bowl. you can imagine what a real threat would be like. i know we have the tiger defense facility, and despite threats of have to be managed -- we have the defense facility, and despite the threats, you understand the importance.

we already assisting the intelligence community on bio forensics, and i want to say you're doing the country a great service by taking that on. we will send the money but keep the bureaucrats in washington. the realç challengeç of all te subjectsç is toç understand te different types of interactions, internationalçç organizaü9mqw these play ouu0the end ofç the events theç interest. ççthey interact in interesting çinççç mexico, drug trafficg çorganizationsç are a threat. they could be even more of a threat if they are linkedçç to violent extremists,úbét they are çalso an opportunity between te -- for cooperation between the united states and mexico. çitç represents a not -- an

opportunity for cooperation in çthe private sector and withç many governments that share our goalsç of having anxd internetd for illegal purposes. çof the technological level, we itiesç --xe an opportunity. çççççal qaedat( has been he spread of technology in areas like explosives. related to that, the megatrend of global media plays an important role. now more than ever, one person causing fatalities could have a huge impact on the world. one man with explosives in his shoes in 2001 changed airport's security so we have to take our

shoes off, and the technology helps both. we can connect the dots like never before. we can quickly soured data repositories for more clues, but as we learned on christmas day, we still need to do that better. we need to make it easier to search data services maintained by different agencies for different purposes, and we are working on that. let me turn to some concerns i have for the future as we pursue these difficult and complex issues one major concern is that the measure of success for the international intelligence community has become nothing less than perfection. we are expected to find and stop ever thought before if ruth -- before it proceeds. let us look into reality.

perfection is an impossible target given that the united states is a prime engine of globalization. in 2008, we have 50 million illegal foreign visitors who came for many reasons, including to attend the world's best universities. many came here to kansas state. how much should we be expected to know about every person who enters our borders? what is right? what is too much thurman second, when it comes to americans, a free society where we enjoys civil liberties and our citizens expect privacy, that does run some risk. we cannot eliminate risk with the government that has the right to gather on limited information from its citizens, turned out to intelligence services, but we do not want to live like factory give where do we want to draw the line between security end -- we do not want

to live that. where do we want to draw the line between security and privacy? last year we had just over 14,000 homicides in this country. the you know how manyç people o were killed onçqi]'çt(ççl soil who were connected to international extremist groups xiv, and that number falls to zero if you look death those from extremists. success or failure should not just be measured in lives lost. it should be measuredç in lives even one that caused five of violent extremists strikes of the core of of free people. -- even one death caused by violent extremists striking at the core of free people. it is your sense of security, so the standard for success

encountering violent extremism has to be high, because the stakes are incredibly high, and on us than ourselves about the times we fall short, but i cannot promise you the intelligenceçugñç communityq we about toç discover and stopped every attack by aç violent li, butç as aççóçt( country, we t aççallowç a?; successfuliwo diminishçlpñçmçi] our wayç< xdifu! that happens, the violent çextremists win. remember, there areççmy thoseo have crashed and those who will crash. what we do is learn from itbájp1 it does not happen again, and then we get back on the bike. ça related concern i have is to increase the openness of our work in the intelligence community without giving away secrets. it is the -- is part of the

reason i am here. i want to take some of the mystery and some of the menace out of the intelligence community. the american people should all feel as fraud as i do, and they should feel assured we do it while respecting the liberties and privacy is americans have under the constitution and that çwe act in accordance with american values in everything we do. i truly believe the more open we are, the easier it is to do our jobs. xdthen it becomes apparent we ae doing our jobççç without< g theçxdq?m(i]çw3 privacy ofçq of. we areçç primarily focused on foreienççóççqççoççtgl.

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qwhy we do it, we will be a safr nation. yes, we interrogate those we cetane, because we expect those are planning attacks to. no, we do not torture them, but we are investigating new ways to interrogate them. maybe we should have coach martin go into a room and stare at them for a while. i understand that is pretty effective. if we are going for teamwork, have the txu marching band to play, -- ksuç marching band pl, and have you intimidate them. there is one more magnificent experiment in american democracy. can we operate a large, powerful intelligence enterprise while adhering to the constitution and american

principles of openness? we think weekend. we think we are doing it every day. that brings me to my final flight, because i want to take the advantage of this to do shameless recruiting. all of your outstanding wild cats out there, i reallyçç hoe when you decide what to do coast college that many of you consider the intelligence field as an occupation. last year the institute for public policy institution -- for public policy if came in, and the intelligence community was ranked no. 4. more than half the people came to us after 9-11. they want to defend the country. they are patriots. they enjoyed being part of the profession, and they are younger than you might think.

we are among the most selective professions in the united states, a pretty tough to get into a. we can sometimes receive up to 5000 applications a month. some find only 10% get in. this comes with medical exams, psychological tests, and a polygraph. plus, you need some math skills for. if you are interested, i want to encourage you. persistence is everything. the stereotype is we want men and women willing to go out on dusty streets in hostile regions toç gain information about evildoers, and we do need those people, but we also need linguists, lawyers, historians, political scientists. we need engineers to work on advanced satellites, facial recognition technology.

we need business savvy professionals who can make sure uncle sam isñr not paying too muché÷6 c1 we need smart analysts who can make sense of the flood of data we collected every day. if you want to build a high- performance surveillance devices, consider the cia. if you want to be with world- class mathematicians and computer sciences, we have got them atç the national agency. if you areç interested in çsoftware to buildç models of space, a thing aboutw3 it. if you have designs on becoming our rocket scientist, there may be a space for you, andç that s only four ofçw3 our organizati. we have a dozen more, and for those of you taking foreign to say. =çç gracias.

w3you have no idea how important language skill thiskóçó. it is alsoç important to truly understand a culture, so if you are a first generation or second-generation american who already speak another language and already understand another culture, we definitely want you. you have trainingw3]/> that cane replicated three did you might check out the online application for our seminars. ççtwo weeks in july in washin. the weather is delightful. $500 in walking around money. you might locket -- you might like it. i think the deadline is coming of. -- up.

i will stop right there. it has been wonderful to be here. thank you 4 for the survey did, and i would like to take a few questions. [applause] >> we really appreciate everybody's patients and moving around. the next lecture will be three locations instead of just two. we have time for a couple questions, and we would ask if you would comei] down, and once we run out of time, i will cut the questionsç of, and we appreciate everyone's coming out today. if you have questions, please come forward. >> thank you for coming tuesday.

online group, anonymous, recently shut down the home page for the government of australia, so the group of maybe 1000 peopleç took this thing tt encompasses thousands of computers. how can we come to terms with ñrsuch an overwhelming that wor? >> there is no easy answer to that question, and right now, theç way the internet is designed, it is easier for someonec' who wants to do something bad then itúyzç for othing vague. last year -- for something good. lastq year of co. came out witha statistic if there were more illegal applications designed for the internet than?; legal applications. thew3 bad guys are on the move, and being able to magnify their efforts, they are having a

tremendous affect -- defects -- çeffect. a lot of this can come from care for the network. basic things people do not through. the rest of it we have to do by public-private partnership to be a will to track down the sources of attacks like the ones you were talking about, stopping it, and then getting publication out so people do the basic things they have to do. there's a lot of hard work done in -- involved, but is not impossible if we give organizations to vehicle to stop it, but it is a good question, and we worry a lot about it.

thank you. >> to the afternoon. ç-- good afternoon. çtd jutáuçç in te sector? does the government use a lot of private sector organizations in acquiring a private intelligence? or is it mainly through the government entities? >> we have a lot of private sector partnerst(çççççñrxde contracts with the intelligence agency to perform functions. a lot of them are the functions almost any company uses private support for, basic sdcvicesç. xdcertainly, when we buy it of

women, but as through a private -- when we buy equipment, that is through a private company. we have procedures so they can get through like government agencies karen, so we have the same level of security --ç like governmentç agencies can,çç e the same level of security. çwee çfunctionsç that are inherentç governmental have to be done by people who work for the government. one is interrogation. those are now all government officials. ççwe areç careful to do this people ought to do, but when it ì(lc@&c h>uñçokççxdxd wexd?ósmçóoó e private partners, so it is a combination.

>> thank you for coming to speak. given that on september 5, the treaty expired between the united states and russia, given that is intended to be a sign of good faith, why it that it has been placed in poland and russia has been purchasing cattle sheds from friends? -- purchasing battleships from france? >> my friend would be happy to answer policy questions. my job is to provide intelligence to make it in food policy, but all technology of missile offense and defense has k days, so there

are more countries in the world with a different types of nuclear weapons, and american policy has shifted with the line, so i think the time it is taking to complete these the depreciations we're now involves been is really a function of the complexity of the problem, and i can tell you the subject you raise, monitoring verification, all of these are being negotiated hard to make a treaty the serv sonata security of the unitedç states, and the russias want a security treaty that will support russia. it is hard work, but it is going on now. ççç>> please join mew3okw3 g

director blair. [applause] >> today on "washington çjournal," a look at the white house and congressional plans for health care and jobs legislation which will england and patricia murphy. also, business roundtable president john castellani and dr. cecil williams. mççlive 7:00 a.m. eastern,ç n c-span. w3çtoday, part two of the heag ]-on reconstruction contractn iraq and afghanistan. çrepresentatives from the state and defense departments and the u.s. agency forç$'ternational çdevelopment talk about interagency coordination and a

proposed new government oversight agency to reduce waste and fraud. that is live at 9:30 eastern on c-spançç 2. >> the new c-span video archive -- library is an archive of c- span programming. over 1057 hours now available to you. it is fast and free. try it out at c-spanvideo.org >> now of the joint economic committee. this is two hours. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> hello, the meeting will come to order, and i am pleased to be joined by the senator. i want to start on time because the votes areç projectedqxdç r ?;çdç10:30, and i will have e for that. çi first would like to thank m. jarrett end the doctor for their willingness to return to testify. at our last meeting, it snowed out, and the weather continues to cause problems. roger altman, a former deputy treasury secretary was going to testify, and he has been snowed out and is not able toçth?k]mo i ask unanimous consent to put his testimony on record as. today continues our in-depth series on job creation. today we will be examining the

prospects of a market recovery from the great recession, which is true -- which is fueled by housing problems and financial problems. a recent op-ed based on the testimony he was supposed to give before this committee before he was snowed out pre -- presents a clear picture to increase private sector employment. either increased demand by consumers and businesses, or give employers the incentive to hire workers. on tuesday, they heard testimonies from the director of the congressional budget office. his testimony showed an employer tax credit similar to the one in my bill is one of the most effective and efficient ways of spring hiring. his testimony also showed extending unemployment benefits have the vaguest -- biggest bang

for the buck. qthose benefits quickly multiplied since families will spend all their benefits on foodç and expenses. those purchasesxd have ripple effect throughout the economy. we have, a long way since last january when the economy lost 700çç -- we have come a longy çsince last januass in that month alone. last month, we lost 20,000 jobs and in the most recent three months of the obama administration, the average monthly job loss was 35,000. so, we are headed in the right direction thanks to the recovery act. the economy is growing. the bureau of economic analysis reported in the final quarter of 2009, the economy expanded at

a rate of 5.9%. the recovery act included a tax cut for 95% of all american families, and created jobs while investing in a clean energy, infrastructure, and education. while we have brought back the economy from the brink, we are not get where we need to be in terms of job creation. over 8.4 million jobs have been lost during the great recession and in addition to the 14.8 million workers who are currently unemployed, there are 8.3 million workers who are currently working part-time, but would like to work full time. in the last year, congress has enacted policies that support struggling families and encourage job creation. these actions include creating and extending the first-time home buyers credit, boosting funding for small business loans through the small business administration, extending safety net programs and extending the next operation loss carry vision

that will help businesses hire new employees. but we need to redouble our efforts to create jobs. the son a jobs bill that was passed this week is a step forward and an encouraging sign of bipartisanship. it includes a scaled-down version of the employer tax credit. i am happy that the senate has included this. as dr. blinder said in his op- ed, "reducing costs to hire new workers will create jobs." during today's hearing, we will explore other options and hear other ideas for helping workers get back on their feet, spark consumer spending, and brighten our economic future. i am pleased that dr. brenner was able to testify today and provide us with his forecast of which sectors and regions of the economy are expected to grow in the coming year. mr. joerres will be giving us manpower's on the ground experience about increasing

demand for temporary workers, job creation -- for temporary workers. job creation the temporary sector is a leading indicator of the market. since september, 2009, a temporary help services has added over 247,000 jobs, 52,000 in january alone. finally, dr. hastert -- dr. hassett will be giving his views about the future of the growth in the labour market. i am also pleased to see that today's panel will touch on another topic, discussed tuesday with the cbo, and that is the role of uncertainty about government policies on dampening economic employment growth. i did for to revive a discussion with the panel today, one that i hope -- i look forward to a lively discussion with the panel today, one that i hope will create certainty so that households and businesses will feel confident that we will lead our country out of this recession.

i recognize my colleague. i thank you all. i do not really have an opening statement. i look forward to hearing from all of you about prospects for accelerating the economic recovery and creating jobs, and your best suggestions as to what policies we can adopt that have not been adopted. thank you for being here. >> ok, let me just start -- unless you have some preference in the order that you would like to testify. dr. brenner -- berberner, have u been adequately introduced? >> i am happy to proceed. >> let me just indicate, he is the managing director, co-head of global economics, and chief u.s. economist with morgan stanley. we appreciate you being here.

you direct the firm's forecasting and analysis of the global economy and financial markets and co-heads the firm's strategy forum. you have served, of course, here on the research staff of the federal reserve in washington where yuko directed the fed's model based forecasting -- where you co-director of the fed's model based forecasting. there are a lot more things i can say about you, but i think this gives us an indication of your qualifications. we're pleased you are with us today. what are you go ahead and let me hear from you and then i will introduce mr. joerres. >> thank you for inviting me to this hearing. following the deepest economic crisis since the great depression, u.s. and global economies are starting to recover. in our view, however, the recovery will be moderate and job gains modest. in 2010-11 we expect gdp to grow 3.5% and we expect annual

job growth to average about 110,000 monthly over that two- year time frame, excluding high yields for the senses. even those job gains, however, are not a foregone conclusion. we have yet to see job growth in our economy, as you know. and while indicators have improved, it is still a forecast. more important, as you also know, it will take a stronger job and economic growth over the next few years to regain the 8.4 million payroll jobs we have lost in this recession, or to gain the 10.6 million jobs required to restore the employment rate, or the employment population ratio to the one prevailing before we got into the downturn. and important as well, our important -- employment problem has become -- the median duration has reached 20 weeks, and a record 41% of the

unemployment have been jobless for six months or longer. in my testimony i will tackle four specific obstacles to hiring, each with a cyclical and a structural element to them. for each i will talk about policies that will help foster economic growth and job creation. but first, i want to identify where job gains are likely to be over the next two years, and why. we think advances in export infrastructure, capital goods, energy and health -- health care related industries likely will account for most of the job gains in the next 18 to 24 months. that echoes our views of sources of growth in our economy. the combination of strong global growth, fiscal stimulus, and improving conditions thanks to the efforts of the federal reserve will continue to promote growth and promote improvement in many of those industries. and of course, rising demand for health care services continues. when you think about where the

regional strengths will become a that is a bit harder. for example, industries that likely will benefit from exports and other strong sectors happen to be located in regions that are hard hit by regional housing problems. the pacific northwest, part of the rockies and upper midwest, parts of the southeast and parts of the southwest seem likely to us to be the strongest regions. turning to us -- export markets and export gains and volumes are around 10% to be sustained for 2010. many of our trading partners will average 6% to 7% this year and canada will probably grow more strongly than the u.s. although slower growth in 2011 is likely to occur as u.s. and overseas policymakers exit from their fiscal and monetary stimulus. in manufacturing, some 20% of

unemployment in 2006 was directly or indirectly related to exports. i expect that share to grow over the next two years. capital equipment and industrial supplies exports likely will continue to do well, while consumers will represent a rising share of overseas demand. now let me turn to some of the obstacles to hiring. i think worries about the sustainability of the recovery are legitimate, as they often are early in a recovery. that is maybe holding hiring back. the fallout from the bursting of the housing and credit bubbles has intensified such concerns. i think it remains a essential to pursue policies oriented towards reducing housing imbalances, reducing debt and improving the functioning of financial markets and financial institutions. in addition, i think there are four specific obstacles to hiring today -- rising benefit costs, mismatches between skills needed and those available,

labor and mobility resulting from-equity housing, and uncertain policies here in washington -- resulting from negative equity housing, and uncertain policies here in washington. i will illustrate what we can do to recover as good as possible. let's talk about the cost of labor. thanks to high fixed costs on labor and benefits and taxes on labor to pay for the social net -- a social safety net, our labour costs are out of line with other countries when adjusted for living standards. i say fixed costs because benefits do not vary with work, but are paid on a per worker basis. the recession made the wedge bigger as cost-cutting of private-sector employees cut take-home pay while leaving benefits intact. median pay suffers. the long-term solution to this

issue would include comprehensive health care reform and innovation to boost productivity and labor skills. a short remedy might include the payroll tax credit that we just mentioned in the hearing. the house confirms that they increase their peril. it would be one of the most effective short-term -- increased their payroll. it would be one of the most effective short-term remedies. the second would be skills in the workplace and what there are. there are big changes in the structure of our economy. dislocations in several industries from the recession have magnified the mismatches, workers that have been trained for one occupation lose their job and have difficulty taking another. even in health care, there's a growing nursing shortage that requires new training facilities. the long term solutions include policies that keep students in schools, provide access to

education, reorientation of the higher education system, specialized and vocational training in community colleges, and of course, training programs at firms like mr. joerres'. the short-term remedies are a little bit harder. when my pair short-term training and basic skills that are needed for work with the income support me through unemployment insurance to help people bridge the gap through jobless spells. two other groups seeking employment, newly minted college students, and recently unemployed t(çñrçthe third obstacle is lr mobility resulting from the housing bust. thisçç is substantially lower mobility rates. that is leading to a wave of strategic the faults in which borrowersç who can otherwise

afford to pay decide to walk away from their homes. çw3itç isççç undermining tf community, and so far, the policies have not dented the problem. çthe long term solution is financial and mortgage regulatory reform, which are essential. significantly improving financial literacy is equally important. in the short run, experts to stabilize communities plagued by foreclosure are essential, and they are worthwhile, but we've -- they are not enough. modifyingçç mortgagesçç is t working. m#mw3;çw3w3kçw3i]xfor shortl reduction should be a useful tool in avoiding costly for closure. the fourth obstacle is policy uncertainty.

i see if that is a negative for the economy and for us. it is clear to all of us we need to solve our long-term challenges. the list goes on, and theyç das -- the debates around major initiatives to address those problems is an important part of this, but the uncertaintyçt 0tç theo$(áu(áu's majorç pols(v businesses and consumer decisions. consumer decisions to hire, expand, buy homes and to spend. the rise in uncertainty increases the option value of waiting as volatility in markets and the economy rises. moreover, this reasoning suggests the uncertainty reduces the potency of policy stimulus. in effect from it raises the threshold that you have to clear to make a business choice worthwhile, and conversely, it

certainly declines as the threshold falls with it. in financial markets, the market participants are used to thinking that political gridlock is good, that it prevents politicians from interfering with the marketplace. and by the way, i think that interference is sometimes essential and important. the flaws are exposed with respect to financial regulation, whose absence allowed abuses. indeed, gridlock is bad for markets -- likely to be bad for markets. the long term solutions here and efforts to tackle those complex problems one by one share and advice and benefits. the short-term remedies are no easier. they involve, obviously, getting together, but there will be a tonic for growth in my view. the reduction of the uncertainty around the political environment

here in washington would give some clarity, some direction to head in and it would improve support to the economy and pave the way for renewed job growth. thank you very much. i will be happy to take your questions. >> thank you very much. we appreciate you being here and we appreciate your testimony. jeffrey joerres is the chairman and chief safety officer with manpower inc.. he joined manpower in 1993, served as vice president of marketing and later a senior vice president of european operations and global account management, promoted to president and ceo in 1999. in 2001, was named chairman of the board. again, i have more information that i could put out here explaining your imminent qualifications, but thank you for being here and we are anxious to hear your perspective on these questions. >> thank you, senator.

job creation is the topic that we absolutely, deeply believe in as we every day connect people to jobs as we do for a living. but globally, we have more than 400,000 associates on assignment at any given day. in 2009, we interviewed over 12 million people through our network of more than 800 offices in the u.s. we have a pulse on the -- we have a finger on the pulse of the labour market. what are we seeing? companies are starting to hire, no doubt. however, like the recovery in the last few recessions, it will be a jobless recovery. this is because companies are much more sophisticated in their ability to assess their workforce needs. companies can -- can determine exactly when they need workers for the demands of products and services. from now on, companies will logger engage in what was considered anticipatory hiring. table instead wait for increase

in demand before making -- they will instead wait for increase in demand before making hiring decisions. as a result, we would expect a short-term increases in the level of job hiring will be created by new businesses or actual demand. our latest survey, a survey of over 28,000 u.s. companies as a forward looking survey come off 12% of the company said it would increase staff in the first quarter. 73% said they extent -- expected no change in hiring. why is that important? in the 42 years of this survey, that number has never been that high. that number of companies stuck in the middle of civilization waiting for a signed to be able to take on -- the normal number in this category would be around 50%. -- 58%. this is the first time we have seen a number of this large. additional surveys show employees in the mining,

manufacturing, government are expecting hiring in the fourth quarter of 2009. a slight increase in nonverbal, transportation, utility, professional and business services. wholesale will have a soft first quarter and a softer second quarter as well. using the seasonally adjusted rate -- the adjusted data, all expect moderate growth from hiring levels, with the highest coming from the south and midwest. and you can see why, because of the growth in manufacturing jobs right now. a major trend emerging from this down cycle is the number of unemployed workers who will be forced to find new jobs outside their industry of expertise. in our company, we have labeled these people. they are industry migrants, very similar to a migrant coming into the country. they face challenges including how to adapt old skills to a new demand in the marketplace and how to represent those skills in

a brand new light. an example of this would be what we would call basically a foreman in an auto company on the shop floor, possibly having problems fitting into a manufacturing environment, but a very different kind of manufacturing environment. another one of these major challenges that these workers based in this recovery is the lack of mobility exacerbated by a housing crisis. this inability is slowing down employment. the inability to help homeowners get out from underneath their negative equity problems means that many jobless are unable to take jobs in different locations when, in fact, there are available jobs. we believe that any initiative that the government implements to address the level of unemployment and foster job creation should focus on three specific areas. the individual job seeker, companies, and potential new businesses. what can be done to assist in

individual employment? training programs, again, as dr. verner mentioned, these have very good track record. they also have the challenges associated with them. i might suggest they should simply focus on these industry migrants. not just focus on existing skills, but move them into different industries. what can we do for corporations? corporations are more specific than ever about their hiring needs. this is the conundrum. there are people saying they have the skills and the companies are saying the skills are not good enough for me. they have to have softer skills, flexibility, adaptability, intellectual curiosity, an interest in lifelong learning, things that we did not have to have before. the velocity in the change of these required skills, all industry migrants will need to develop them. tax credits and incentives for companies to increase the size of their work force will put

needed money in the hands of businesses. however, companies have gotten smarter. in that from this recovery going forward, hiring decisions will be made based on demand for products and services and goods. offering incentives will not create new jobs, in my opinion. rather, they will subsidize the cost of coast -- because of growth of companies where they would have hired anyway. this money is well intended, but at the same time will create a tax break for companies, which is good. but if you look at the long term core, it is not getting at true job creation. business is create new jobs. one of the biggest challenges of any federal government initiative is getting to the end citizen and how that is in can participate in these programs. programs to provide these people with access to start up capital, grants, access to cheaper this day, perhaps even using some fdic-owned real

estate will create jobs. in conclusion, i am suggesting three specific actions that should be used to address the three areas of which i just spoke. one, a targeted investment aimed at new business creation, a comprehensive program breaking down the silos within government to support entrepreneurs to set up and establish new businesses. a new pipeline of businesses must be there in order to replace the continued product and efficiency. a program targeted at unemployment and the homeowner. we need to create a more flexible and flow with labour market. we need to be able to have people continuing to pay their mortgages so they are not trapped in their city when there is a job in another city. a target to address soft skills, these migrant populations. this is an opportunity to develop a training and curriculum program to work force and assessment boards.

all of these can introduce the likelihood of this migrant moving to other industries. manpower has been in the business of jobs and training business for over 60 years. we have seen the economic ups and downs. it is clear that this recession is by far the most severe in its downturn. it is a privilege to get some of the thoughts and feelings that we get on the ground and share them with the committee. partnership between government and industry is critical to move forward quickly. it is also critical that we get it right, and right means systemically so that we are not solving this 18 months from now again by and the employees of manpower are ready to -- 18 months from now again. i and the employees of men are ready to assist in whatever way we can. >> thank you for that testimony. our third and final witness is kevin hassett, director of

economic policy studies, a senior fellow at the american enterprise institute. his research areas include the u.s. economy tax policy and the stock market. he is a senior economist at the board of governors at the federal reserve system and a professor at the school -- the graduate school of columbia. he also served as a policy consultant to the treasury department during the presidency of george h. w. bush and the clinton administration. dr. hassett, thank you for being here. >> thank you for having me. it is an honor to be here in the room. have -- i have turned amarah -- my microphone. is it not working? the microphone is not working. >> no, it is working. i think if you will just pull it a bit closer. >> how about that? >> that is great. >> it is an honor to be here, especially before this committee, which you can see in looking at my fellow panelists

has a long tradition of inviting people here to give the unbiased truth and help people think about where we are and what we need to do. as you know, senator, my testimony was fairly long and after listening to my two predecessors, a lot of the things that they said are things that i grew so -- agree with explicitly in my testimony. i will go through the parts of my testimony that offer a slightly different or alternative perspectives and not emphasize the areas of agreement. i will begin with a brief overview of our current economic situation, discuss what i see as the most pressing challenges for employment and growth, and then describe policy changes that i think would address our current challenges, especially those in the u.s. labor market. the headline of my testimony is that it is absolutely clear that the recession is over, although that is not commonly discussed. but it is certainly accepted by most economists. i think in the end, the trough

of the recession will probably be sometime in july of last year. but even though the recession is over, as was the case in the previous two recessions, we have begun with something that looks a little bit like a jobless recovery. the labor market is improving far too slowly. although, it may have suddenly turned the corner lately. the fact is that we are coming out of what economists now call the great recession, but i think we need to amend that as we think about our policy changes because it if you look at the differences across races and unemployment, it is startling and disturbing and an urgent call to action. i see also the great depression is not over. we are starting to see signs of improvement inç the labour market, and if you look at the difference betweenç whites and

minorities, you will find minorities are really trailing, so i think looking at the economy, we are clearly out of the recession. we have had a tremendous quarter, but a lot of that came from inventories, and traditionally, inventories bikes are followed by weak quarters, which means there is a downside risk if the beginning of the year and a double room for caution, and iwn3 think given tt and the state of the labor market that we would be wrong notw3 to think of additional measures to take. before i go on toç the proposas i would like you to consider,çi would like to talk a little bit about what we did last year, because i think it is crucial to not repeat what we did last year. w3the report released last week

provided estimates of the impact of the stimulus, and they offer broad ranges when estimating theç effects and thereby reflect the uncertainty. as youç know, the estimates hae been fairly favorable. my view is that the report is incorrect, and i make these observationsç not to make çpolitical points about what we did last year commonw3 but rathr to say it isq crucial we look elsewhere. ççwhy do i disagreeç with the report? ge scale on keynesian forecasting models that were mostly discarded by the economics profession and a long time ago.

the cbo analysis concludes that we got lots of jobs created and that the broad range of economists' views would support that. but i disagree. that is not my read of the literature. a sign of how far off their analysis is comes in their comparison to the broad range in comparison to the analysis na "wall street journal" article this week. it has tried to observe the economic data rather than assume, as is done in the keynesian model. the author is a virtual lock to win a nobel prize and his work has been followed by many others who have made similar findings. the key statement is that he estimates the government spending will declare for the stimulus in 2009 was about 0.4%, pretty small, and the multiplier

for your two would be about 0.6%, a bit bigger, but both of these estimates fall near the bottom of the range of cbo multipliers because the cbo chose to ignore the literature that relies on experience rather than keynesian speculation. i believe that the correct position for policymakers as we look ahead for what to do is to adopt skepticism concerning these effects and openness to different approaches. . .

i highlight the number of things in my testimony which i am going to have to give a helicopter view of, as i am running out of time. the first thing is that we should recognize that we have a serious opportunity if we get our house in order. uncertainty about feature policy and about the course of u.s. prices and the value of the dollar is certainly having a depressant effect on the u.s. economy. there have been many countries in the past that have been in circumstances similar to our own, and the literature suggests that those countries that get their house in order by having something like the bipartisan commission that was proposed in the senate recently to reduce the deficit in the long run -- they have seen even at near-term economic booms, in part because the uncertainty about future policy is removed. the first thing we think about is not to a sharply cut back

government spending in this year, but rather to recognize that we have an opportunity to move the uncertainty about future policies by getting our house in order in the long run. such fiscal consolidation would be beneficial policy going forward. it would give people a reason for confidence as they make plans about the future. the second policy that i emphasize in my testimony is something known as job sharing, which is a smart and clever idea that has been floating around for years, perfected by some european nations. i am running short. i will summarize it in this way. right now, we have unemployment insurance. if a firm lays a person off, they will have a reduction in their wages they have to pay and the person who is laid off will çóget someone unemployment insurance. job sharing its fractional

unemployment insurance. you could reduce a workers' hours and they would get a share of their unemployment insurance. in germany, they have had gdp decline similar to our own, and yet the unemployment rate has barely gone up. many analysts contributed to their job sharing program. i think it would be very cost- effective to adopt one now. it is important to note that it is not too late even in the first stages of a recovery. the fact is that each month 4 million jobs or so are created and destroyed. there is job creation out there, but there is still a lot of job destruction. if we can use job sharing to slow destruction even 10%, that migt add 400,000 to the net job numbers in the top line unemployment report. i go on to discuss the idea of creating jobs directly, which is not something i would naturally choose to do if asked.

but given the state of the labor market, we need to really be creative. the good news is that the new programs that we have seen that have tried to create jobs directly have done so in astonishingly cost-effective ways compared to things like the economic stimulus. for example, one jobs program, h r 48564 crated jobs at a cost of $10,000 to $20,000 a job, which is about one-tenth the cost of creating jobs to stimulus. -- of creating jobs through stimulus. it want to give people optimism, we can consolidate physically, but we also have to give businesses a break. the rest of the world has been reducing corporate taxes for years. the average in our trading partners is about 10% below our current corporate tax rate.

if you're a multinational firm deciding where to locate your activity, are you going to located where you have to pay 10 percent more of your profits in taxes, or are you going to choose another place? the literature is clear. if your corporate tax is far out of whack with the rest of the world, the revenue costs are extreme. you can reduce the rate without losing much revenue, if at all. i even have references listed in my testimony that suggest the cost of reducing the corporate tax rate might actually be nonexistent -- it might raise revenue because we are on the wrong side of the black for curve -- of the laffer curve. we do not have much revenue to give. the corporate tax area it is one that is harming our competitiveness and could be fixed without deep cost. thank you for your attention,

senator. that includes my prepared remarks. >> thank you for your excellent testimony. let me put an article on the record that relates to your testimony. it is entitled "stimulus arithmetic." it is by a professor at uc- berkeley. it discusses the analysis of the fiscal stimulus act and its effect on jobs. let me start with a few questions to you, dr. richard berner. i think your testimony is very useful, particularly in that you organize it in terms of the short-term and the long term. that is obviously the reality we are faced with here in trying to make policy for the country in

the weeks ahead and the months ahead. one big debate that i think i hear all of you taking a position on is we have got some in the senate who are taking the position that we should not be spending any more for unemployment insurance, any of these job creation initiatives, payroll tax holidays, these types of things, unless we offset that spending by cuts elsewhere or, presumably, by increased taxes. somehow or other we need to pay for any continuation of the job creation provisions that we have in law today, or the job maintenance provisions that we have in law today.

i guess i would be interested, if i am understanding your position, dr. berner -- your position would be that is not the right policy in the short term or in the long term. there is a distinction we need to keep in mind about what we do now versus what we do with regard to the long-term deficit and fiscal situation in the country. is that accurate or not? >> that is accurate. i think there are two things that are important. in the shortñi term, what we are all saying is we need to be smarter about the way we implement programs and the way we use taxpayer money to implement them. we are all interested in getting the maximum bang for the buck out of those programs. income support, for example, is important in a period of great stress for american families and workers. but as i suggested my testimony it might better be paired with

training or other things that would make it more productive. kevin and mr. -- kevin talked about how we could spend our money more effectively in short- term programs. here is where i joined dr. hasset. we need a credible plan to get our fiscal house in order. we have not seen it yet. i think markets would derive great benefit from that. not only would we reduce uncertainty, but i think that people would understand that while it is going to take some time, because we have difficult problems to solve and big challenges to address, a credible plan can resolve our fiscal problems over time. i think it would be enormously beneficial to markets and the economy. >> the deficit reduction commission that the president is

establishing is the right thing to be doing for the long term, and but continued support for job creation initiatives now is also the right thing to be doing. is that what i understand? >> it is, senator. it is the right thing to do as long as we do it in a way that is both creative and where we get the most bang for the buck. >> this suggestion that dr. hassett is making about work sharing, job sharing -- is that something you looked into, dr. berner? does that make sense as a policy issue we ought to explore or adopt? >> senator, i have not looked into that, but it doesn't count -- but it does sound like something we could explore. we should leave no stone unturned. the appeal of what he is talking about is that if you have people who have their our significantly cut back, but there is a level

of income support their for those people, that builds an automatic stabilizer into the system while at the same time we reduce our spending. we get into consumer saving in a precautionary way if there is a lot of uncertainty out there. that kind of support could be useful. i think we ought to also look at the other kinds of creative ways to both support demand and to get our economy going, to support job creation. >> mr. joerres, did you have any thoughts about the questions i have just posed here about what short-term policies make sense for us to consider here in congress? >> anytime you can get somebody back to work instead of sitting at home, it makes a big difference, whether it be some

form of job sharing or the industry that we are in. it makes an awful lot of difference. the longer you are unemployed, the more you get to a long-term unemployment situation. even if you group -- if you do comparisons between us and europe on the long-term unemployment rate, a lot of that ha b/@@@@ rrrha,m)ru) r@ )r

slack of mature business is continuing to enhance efficiency? i have 5000 employees. i moved it to 4500. there has to be another business coming up employing 500 people, just to be the same. our pipeline of new businesses is not there. safety net services and short- term job creation or preservation, and then longer- term programs to pipeline new jobs. >> dr. hassett, maybe you can just comment on the general question that i opposed to dr. berner. as i understand your testimony, you said we have a near-term opportunity to get our long-term

house in order, and that is the deficit reduction commission. you believe that is a good step to address that problem. >> i am not sure about the deficit reduction commission, although i have a great deal of respect for the people who have been in charge of setting it up. the fact is, we have tough choices to make. as you know, senator, there have been many more failed commissions in the past than successful ones. i wish we were a little more ambitious in this regard. i would also highlight a charge -- a chart that looks at the u.s. debt situation and points out that we are pushing the envelope in terms of our debt. again, i am not here to point fingers at who is to blame, but it is something that started about a decade ago. we began running up big deficits. right now, our external debt relative to gdp is worse than the external debt we saw for

latin american companies that have defaulted over the last few decades. if you are to say the u.s. is like another latin american country, i would respond, "you wish." it would be a big improvement from where we are. that is the circumstance. we have to be wary of expanding things without figuring out how we are going to pay for them. we do not have to time them so they all happen this year. if you could find -- i know this is something that politicians often refer to that never really exists or happens -- lots of money we could save from reducing waste three years from now, or some program we are going to cancel, that the present value for that cancels out our jobs programs, then i think the panelists would all agree that would be a policy that would have a significantly better effect than one that just added to the uncertainty about how we're going to fix this mess. but the good news -- in some

sense, it is depressing to think about our fiscal situation, but i think there is a twist on it that one could think of as good news, in the sense that if you are a person like me who likes to watch medical mystery style television shows, if somebody shows up with a knife in them, you take the knife up, pull it out, and they are fine. if there is something wrong with somebody and you cannot tell what it is , that is bad news. we know there are knives in us. it is not a mystery. the question is how to navigate the political world, not what the problem is. >> your endorsement of direct job creation is interesting. we get into real is the logical discussion around here whenever we tried to appropriate money -- into real deal logicideologi

discussion around here whenever we tried to appropriate money for direct job creation. we will make tax provisions to send somebody else to create jobs instead of directly creating jobs. i understand you saying that direct job creation seems to be a more successful way to get jobs created at a reasonable cost. am i understanding you right? >> thank you for pointing that out, senator. i would add that the thought that started me in this direction -- if we had started the stimulus package by hiring people and paying them the median wage of $38,000, we would have created 21 million jobs. with the higher cbo job, it is climbing to something like 23 million. i am not saying that is something we want to do, but it

puts into question what the multiplier is. creating jobs directly is more effective than a public works program that creates jobs. the idea that creating jobs directly means big government is incorrect. i think that one could easily envision a program that i would probably want my colleague to the right of me to design, where we arrange for firms to hire someone who is unemployed, to give a fraction of the salary for the first few months of that person in terms of wage sharing or some kind of contribution. if you did that, firms would have access to cheaper labor, so their profits would go up. we would get someone back into the labor force before they are lost forever. as my colleague mentioned, if people stay out of the work force for a year or two, they often have a hard time returning. we have to send a lifeline to

these folks. given these concerns, especially if it focused on private job creation, it seems that people of both parties should agree that it is a much more cost- effective way to create jobs and many of the other things on the table. >> dr. berner, i would be interested on your comment about this proposal about reducing corporate tax rates, indicating we are at a competitive disadvantage because of the top marginal corporate tax rate here being so much higher than it is in many oecd countries. my impression is that while the tax rate is higher the effective taxes paid by corporations are not out of line for corporations operating here verses corporations operating in europe. am i wrong about that? do you have thoughts about this?

>> i have not looked into that comparison, but i think your intuition is probably correct. many of our largest corporations are global. when i think about the tax liability and how they structure it -- in my testimony identified something else on a cross- country comparison basis that i think is important. that is the role of health care in the workplace. i think that is one area where we are out of line with other countries, even though those benefits are a tax deduction. nonetheless, the represent a fixed cost that, when hours are reduced, still persist. they put our cost structure -- our composition -- our compensation cost structure out of line with those of other countries.

how we deal with health care and health care benefit provision would make us more competitive. i think that is a really important issue. >> let me throw out a radical view of things. if -- sort of three of our problems -- one is strucshort-tm job creation. a second is eliminating uncertainty for the long term. third is getting our fiscal house in order for the long term. if those are three big challenges, it would seem to me that major reform of our health- care system accomplishes all three, or hold out promise for progress on all three because it holds out promise for job creation in the near-term. there are direct jobs being created in the proposals we have been talking about. one of the uncertainties i think you referred to in your

testimony, dr. berner, that businesses look at is the uncertainty about what is going to happen with health care reform. and then cbo and most economists are in agreement that, over the long term, if we cannot reduce the growth in the cost of health care, we cannot get this debt problem fixed. we cannot get our fiscal house in order. so it would seem that doing something significant on health care ought to be a priority, as it has been for the president. do you agree with that? >> i do strongly agree with that. the three things that are important in health care are cost, access, and quality. many people view them as in conflict with each other. i actually think that if we do it right then we can actually achieve a lot of those

objectives, and the objectives you just mentioned -- namely reduce the cost of health care for businesses and for consumers, improve the quality, increase the access. and because that is such a big part of our fiscal problems going forward, and it is only growing under current law, that fixing that is imperative to get our fiscal house in order. >> joerres, do you have a perspective on whether this is an important policy initiative for us to try to deal with or whether we can put this off and deal with it down the road? what is your thought? >> because of the complexity, it is difficult to put off down the road. having said that, we have over 200,000 clients, many of them small and medium businesses that say they are not hiring a person until they find out what that cost of that health care is.

>> of the health care costs associated with that hiring? >> right. so right now, those businesses are not going to make a move until they absolutely have to. they can do the math. when you take 10 people to 12, it is too much money for them. they are holding out and stopping. what we need to address it. this process of addressing such a complicated issue during a period of time when you want hiring is creating a stumbling block. after something is passed, it will still require some time of digestion. shifting it down to the additional burden cost over pay is going to take a while. it needs to be addressed for the long-term health. portability of jobs, and so forth -- health-care allows for a lot of that. the more we allow for that, the

more vibrant our economy will be. but we are in a time when we are vapor lock in small businesses, and they are saying, "i am not moving unless i have to." i think that has become the biggest issue right now. >> if i could add -- he has pointed out something important. lots of americans are staying in their jobs essentially to keep their health care benefits. that frustrates the mobility we have in our work force, the dynamism of our economy. i think that when you make policy, you have to consider that that is going to be an important benefit to health care reform -- that it is going to make our work force and labor markets much more efficient and dynamic, and free labor mobility. >> there are some very good examples of that. if you were to study what happens in singapore, with portability of health care and the portability of your pension

scheme, it allows a high velocity that is required in a smaller environment. even in this larger environment, palin needs to move quickly, but without the portability of pension schemes and health care, you are shortening the ability to create a robust economic and job creation environment. >> dr. hassett, did you have a perspective? >> thank you. i understand that the political clock and the economic clock are sometimes in harmony and sometimes are not. i understand why health care was addressed this year, but i agree that it was probably the wrong time and that health care is probably best folded into the consolidation -- we need to build a program of fiscal consolidation, and it will not work without addressing health care. many of the facts are long-term objectives. those facts are unassailable. i would like to make one last aside about corporate tax

issues. you are correct that if we look at corporate taxes in the u.s. that the actual number -- the average tax the firm will pay is not the highest on earth. it is the corporate tax rate that is. it is because of this laffer curve in the data. these companies move their profits into low tax environments. the move their profits around to reduce their global tax rate. that includes moving things out of the u.s.. if we lower our rate, we will not lose revenue. we lost it already. it is going to somebody else. there is a way to make us a better place to do business with a lower corporate tax. i think we would be wrong to ignore it. >> 85% of our business outside of the u.s. is going to 90%. $20 billion of our company, $2

billion is in the united states. our largest competitors are a swiss-based company and a dutch based company. in our current environment we have a $120 million deficit disadvantage because of taxation between those two. that means i have to do a hundred $20 million more of productivity in order to maintain competition with european companies. none of those jobs have been off short. i am growing markets in china, vietnam, and others. when i look at minimizing the effective tax rate, it can be done much more effectively in the manufacturing in parliament through the use of transfer pricing. that is not done in the services industry. it is a very serious issue. >> right. i am informed that chair maloney is on her way back, will be here

in about 15 minutes, and would like us to recess for a short period. then she would like to ask some questions. if you have the time on your schedule, we would put the committee in recess at this point. she will reconvene the committee. thank you all very much for bebeing here. i think this is all very useful testimony. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

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had hearings right in the middle of it. i will be looking at the tapes of this and hearing your testimony. mr. brady is on his way back and will be here in a moment. i would like to ask the witness is something i always ask at the monthly hearings of the bureau of labor statistics. do you see any bright spots for job growth in our economy? anybody who would like to give any positive news about job growth in our economy? >> i think i can do that. as you mentioned earlier in some of your remarks, there is a very traditional flow of what happens in the economy. when there is some uncertainty of demand, we are the ones who come back first. the amount of people we are adding on a weekly basis, and the additional people that are out on assignment, says this is clearly a recovery. the majority of jobs are in manufacturing, spread across the entire u.s.

we have not seen a growth rate like this since 1993. yes, it is happening. we, like you, have questions about whether it is sustainable. i would say right now our field of 800 offices in the u.s. are feeling like it might be over. we are on our way. >> could you tell us some of the things we could do for people who have been unemployed or underemployed for a long time? >> if it is something we have worked on. we have programs for the underemployed and the unemployed. we spend a lot of time on training and development to put them in jobs. what we have found is that worker readiness is becoming more and more of a difficult issue for the longer and long- term unemployed. >> that is important. 40% of the unemployed have been

unemployed for over a year, and their skills are deteriorating. this is a problem. do you have ideas for programs to put in place to reduce the long-term unemployed? "programs, unfortunately, the we have seen -- that we have seen -- they work, but they take a long time. get them back into training. training that is tied to a job, not training for training's sake. we work closely at a community level with a workplace investment board to say where are the people and try to do training -- and try to do surgical updates to get people into a job quickly. >> would anybody else like to talk about the green shoots they see in the economy now? >> i think we are starting to see some advance indicators. we do, actually, a survey of all our industry analysts where i

work. hiring plans, and i think this echoes what mr. jorres was saying -- hiring plans are back up to where they were before the recession. those are plants that have not yet matured into action. i think the discrepancy between the plans and the action has something to do with the uncertainty that we all referred to in our testimony. coming to the issue that you raise about the long-term unemployed -- in both of our prepared remarks, mr. joerres and i referred to training. the history of training programs is, to some extent, a checkered one. the importance of training cannot be denied -- the importance of education. there is a short-term and long- term component. in the short term, i propose that repair the unemployed who are getting income support which is very much needed with a pool

of unemployed, for example college students or teachers who have been laid off, and get them together in a training program that can give people basic job skills. in that way, you are giving people important things to do while they are looking for a job. i think we all agree that when you have long spells of joblessness that erodes the chances you are going to get a new job. it erodes your skills and it arose your ability to find a new job. all of those things are important. >> do you see any bright spots? >> i think that first of all an interesting chart -- we always follow up hearings with those. this chart shows the geographic distribution of the recovery. there are some states that are starting to look pretty solid again and others that are still

in deep trouble. when correlation that i have seen in some of the work i have done is that the states that had the real-estate market that you read the most about are the places that are still going in the wrong direction, and maybe are not even seeing a recovery yet. >> where are we seeing recovery? which regions? >> i wish i had the chart with me, because it has been about a month. texas seemed to be doing pretty well. the other thing i would say that is a bright spots and the op opportunity that makes me psyched about job sharing -- there is always construction going on. that number in the labor report is often one-tenth or one 20th of the actual growth flow of that month. in november, there were 4 million jobs created a 4 million

destroyed, so destruction is still winning. in our economy, there is always creation and destruction going on. we need to create the circumstances were the creation can overcome the destruction. >> my time is expired. mr. brady. >> thank you, madam chairman for calling this hearing. i just got back from the to spitting in uneconomic council conference. a lot of people are interested these days. i think the corporate tax rate in the u.s. does put us at a competitive disadvantage. internationally, proposals to raise a hundred $20 billion more on top of our companies that are trying -- to raise $120 billion more on top of our companies that are trying to create

american jobs -- it seems to me the economic models on the stimulus are outdated. they seem to be $1 in of government spending generates this much, but back home, you look at small businesses. their behavior is modified because they know increased spending leads to new debt and new taxes. the business community looks at cap and trade, health care mandates, spending taxes, international tax provisions -- they are frightened by it. one of them said it is tough enough to predict the markets. trying to predict the market and you guys -- they are holding their money. that is affecting those older economic models. my question to you is -- thinking about the study examining the forecast of senator romer and others -- were

using keynesian forecasting models instead of dealing with those rational expectations of businesses, consumers, and others. do you think, looking at cbo, who does a terrific job at things -- based on your extensive knowledge of macroeconomics, were the cbo multipliers to hide? where their estimates of the stimulus impact perhaps a little larger than you see. >> thank you, mr. brady. i am a big fan of the cbo, and especially a fan of its current director, who i think has gone back to exactly what we expect from directors. the infrastructure that has been built up to analyze these things has been there since day one. too often, in washington, truth proceeds by induction. something is true today if it was true yesterday. if we adopt the model of the

1970's, it is very unlikely that a government agency will stop using the same model. the fact is that the literature has moved on. one metric -- i was trying to think of the most different way i could describe this. the place where these big, large macro models were pushed the furthest was the university of pennsylvania. larry klein got a nobel prize. a mentor of mine designed the federal reserve on a large keynesian macro model. those were designed in the '70s. i started graduate school in the '80s. at the university of pennsylvania, the models had already been rejected by the literature. and yet these are the models that are creating the sound bites. that does not mean that we think it hurt growth last year, or that we know precisely that the stimulus was a failure and made things wose.

it does mean we should have a great deal of skepticism that we know what the right thing to do is. going forward, we have seen the success of some programs i highlight in my testimony. we should trust evidence more than models and the skeptical about what the model say, especially when the model predictions are so at odds with what we see in the literature. >> my gut feel is that the economy has changed, but those models are not as reflective. stimulus is almost always arrive after the recession has peaked and is slow. i think today that we downplay the economic boost from lowering the after-tax cost of capital on a permanent basis, where businesses can count on that rate of return and the ability to invest. your thoughts? >> i think you are right, mr. brady.

the way i like to think about it is not that the stimulus, again, made the economy worse last year. there is no question that growth was higher last year because of the stimulus. the question is how much. as we see, when we consider the jobs measures that i mentioned in the testimony could have

constantly adapting it to reflect new considerations -- structural change in the economy, globalization, and a number of other things. the models that we use -- and we do not rely exclusively on models, because i am old enough to use judgment and experience as my key model. but the models that we use explicitly incorporate the role of pacs dictations -- the role of expectations, whether in financial models or the type of uncertainty that reflect business decision so importantly. i think that that is really important in thinking about how to use those models. quite frankly, i think that is something people have looked at. >> can you tell me, in your opinion -- and i am asking all of you this question -- the number one thing that can be done to stimulate job creation

in the short run? can you give the number one thing you think we could do? of course it is a combination of things, but if you had one thing, what would it be? >> jeffrey joerres talked about the role of small business, and new business is what we really mean by small business. when we think about what their main problems are, small businesses are telling us in surveys that their problems are poor sales, access to credit, and the cost of employee health care. so we need to continue to use policies that improve the functioning of our financial system, that get people access to credit on reasonable terms. we need to address, in the short run and overtime, the cost of health care, and reduce the uncertainty around that. and we need to have policies that will continue our ability

to access global markets, because that is the key source of growth that i indicate in my testimony -- exports and the access to global markets. jeffrey joerre>> i would like t. right now, we are in a critical spot. i do not want to underestimate what we need to do as a safety net to stop some things happening now. that is not job creation. that is stopping the slide. i think we need to do that. i have spoken before -- >> how do we stop the slide? >> we stop the slide by giving additional visibility to what will be coming and not coming. we have limited opportunities to do that. it is difficult to say that we have long-term and short-term objectives. it comes down to confidence. hiring is a confidence in

demand. those two combined. we are starting to see the demand. does the demand start to level off? we do not know that. but i can feel very confident in saying the demand may not level off as much after there is a certain amount of inventory replenishment if we give them confidence that we are not going to give them any more -- any type of thing that is going to get in the way of them expanding their business. small business must create jobs to back up the efficiency that will be driven out of the job deterioration in large businesses. >> dr. hassett? >> i hate to waffle and sate two thanks. i think reducing the corporate rate is urgent if we want to create the context that is necessary for long-term growth to really ignite. i think if we were to adopt a job sharing proposal, we could see a response from it right away.

the reduction of the corporate rate would have benefits that would be spread out over many years. a job sharing proposal would stop job destruction almost immediately if there were generous, and you would see an increase labor markets in the months after that as well. >> is that uncertainty among your client's real -- clients real? do businesses look at -- our tax credits. our small businesses are not responding to that. is that uncertainty an issue with your clients in their hiring practice -- in their ability to rehire, hire new, or buy that new warehouse and make expansion? >> it is the number-one discussion we have with our small clients, the amount of uncertainty. their business is growing. when business is growing at a place where uncertainty is overcome by demand, they will do

that. as demand is somewhat tepid, the uncertainty is driving for them. they are looking at tax rate -- the additional burden on top of an additional person. i cannot emphasize enough that in our organization of 30,000 people, 5% 10 more people -- the math works out. if i have 10 people and am adding an additional person, i do not know if the additional staff are going to have an increased burden of cost to pay. that slows it down. >> looking at job opportunities, a lot of the world's customers live outside the united states because other areas are recovering faster than us. it is important not just to buy american, but to sell american throughout every corner of the world. sometimes we can do it with a company from here.

other times, they have to have a presence overseas. today, there is almost an attitude of benedick arnold. if you are large and are out there competing -- a company that expands into another state, we say "way to go." if a company expands into another country, it is viewed as a bad act. every study shows those jobs create stronger companies here -- research jobs, development. a company that has 40 people on site in algeria has 400 here, monitoring. should we be encouraging instead of discouraging companies who are finding new customers in every quarter? is it outsourcing of jobs or is

it looking at opportunities to sell more of our products and services? >> all of these have some complications. it would be easiest for me to talk about my specific situation. we are headquartered in milwaukee. we are 62 years old. each of our three ceos has been born in milwaukee. a 90% of our business is outside the u.s.. in six to seven years from now, it will be 96% to 97% of our business. the chinese business is growing fast. none of this is outsourcing. we're putting thousands of people into jobs in china, the middle east, abu dhabi. in the process of growing our business from a $10 billion business to a $22 business, which built a building in downtown milwaukee that employs 1200 people. the mayor of the city was in favor. we have reenergize a part of

downtown. we could not have done that without our expansion overseas. our two largest competitors are foreign companies. their tax rates are anywhere between 8% and 15% lower than ours, which puts us at a disadvantage annually of hundred $2,120 million annually -- a disadvantage a newly of $120 million against our competitors. >> that is a great story. we need more of you. >> that is an amazing story. congratulations on your success. dr. richard berner., greece and its financial problems -- we

are all concerned. i'm concerned about the potential impact to the united states if greece and up defaulting on its debt. i know that you have previously reported that the impact to the u.s. of slow growth in the european union is relatively small. i believe you said that one percentage point reduction in growth in europe would shape only 0.2 percentage points in u.s. growth, but that you were worried about financial contagion. can you speak about the crisis in the european union and greece and financial contagion? >> yes, i can, congresswoman. briefly, the big problem is that you have the potential for what is happening in greece to spill over to other countries on the periphery of europe, portugal and spain for example. it is important for greece to be

able to refinance its debt over a long period of time because they have a huge fiscal problem. they are having difficulty rolling over that debt on terms they can afford. they're just postponed an auction of tenure debt this week, as you have heard, so they can cool off and get better terms on that debt. one way or another, they are likely to get assistance from their other partners in the european union. that assistance will come with strings attached, of course, because the other members of the european union do not want to pay for the mistakes that greece made . one way or another, that assistance is going to have to come. they are paying together. that is a real problem that the europeans have. it is because of the fiscal consolidation, because of the

increased cost of financing the debt which will spend -- which will spill over into the core of europe. the increased cost in funding for european banks -- all of that is going to slow down the european economy. we have been very pessimistic about europe to begin with. these developments make us more pessimistic about the prospects for europe. we talked earlier about coming up with credible plans to fix fiscal problems. it is also important here. if greece and the european union can fix these problems that are prevalent at the periphery of europe, and do them in a way that we instill confidence in investors, bringing down the cost of debt for greece, for its people, for the banks in europe, that is going to reinvigorate the greek economy and the european economy. the key is to come up with a credible plan to do that. as we think about your question

-- as we think about the potential for this contagion to spill over into other economies, the point is that people are drawing parallels now between what is happening in greece. they are saying, "where is the next greece?" it is like the financial crisis, people saying, "where is the next bear stearns?" while there are many differences between what is happening in greece and in europe and what is happening in the united states, there are some parallels. i think the thread that draws them together is that lawmakers around the world need to think about how they are going to deal with fiscal problems and to articulate how they are going to come up with a game plan to do that in a way that we instill confidence among investors.

>> can you tell whether the impact of the reduction in the export sector would be spread across the u.s., or whether some regions will be particularly susceptible to any reduction in exports to europe or greece? in particular, i am concerned about the greek american community and represent -- community i represent. i am worried they may bear a disproportionate share of this burden. >> i have not done the work on that, so i would be pleased to get back to you if i can uncover -- if i can uncover the answer of that question. >> can you talk about the potential impact on new york if the contagion spread to the u.s.? >> i will do my best to get back to you. >> lastly, you mentioned that your growth -- since 92, 96% in

foreign markets. do you have offices in greece? >> yes we do. >> can you tell us what is going on -- on the ground information on employment with your company and its employees? >> hour operation in greece is feeling the effect on this. @@@@@ @ g) 4@

result of successfully selling american products and services throughout the world. as you point out, one out of five manufacturing jobs is tied to that. when service companies like mr. joerres' have a surplus they sell overseas, it has huge economic impact. we are looking at three pending trade agreements with colombia, panama, and south korea. we are seeing other countries ahead of us -- canada, the eu. that would put us at another competitive disadvantage. do you support those trade agreements, opening those markets for u.s. service and production companies? >> did you for your question. i support, in general, the idea that we should have free and

open trade, and also the idea that it has to work both ways. when we open our markets to companies in other countries, and to other countries. we want to make sure that we have access to their markets. we want intellectual property agreements that make sure we have a level playing field, to the extent that is possible, in which our companies can compete. and so it does work both ways. >> we are such an open economy in the united states. panama and colombia have 1-way trade. we have obstacles from we try to have two-way trade. in every other case, it has worked beautifully for us. we have doubled or tripled our exports. we turned a trade deficit into a trade surplus.

we even have a manufacturing surplus with our nafta countries. unrelated to exports, but related to your view of going forward -- i noticed in your testimony -- your gdp growth percentages are higher than the blue-chip this year, but lower next year, and much lower next year than what the white house forecasts. i know there is always a rage. is there a reason why you see significantly lower growth than blue-chip? >> yes, there is a reason. to make it explicit -- up until very recently, we have been assuming that the bush tax cuts would probably sunset as scheduled on january 1, 2011. if that is not the case, and

some of those tax cuts are extended, we would see somewhat faster growth in our forecast. . .

so coming up with the plan, if it is credible, with making material difference to the outcome here >> can go back to why the tax cuts are before america? i am kidding. with consumer demand, it is hard to know what families are thinking about. they are worried about their jobs and a lot of things. it may be intangible from an economic standpoint, the dead and the spending is the number- one concern for consumers. does that way on the decisions that a family makes in purchasing a new tv set or making an economic decision? >> there is a great deal of scholarship that goes back to

milton friedman's basic observation about temporary tax cuts that do not really have an effect because people know that there will have to pay for them in the future with higher taxes. so they're sort of skeptical about that. if you take a dollar from them next year and you give it to them this year, they do not feel better off. if they think they're better off, they will regret it next year when they get the tax. if you look at the numbers of future taxes associated with things like the stimulus, they are really mind-boggling. if we divide the stimulus among all taxpayers, then the cost of the stimulus last year is about $8,000 per taxpayer. but about half the taxpayers do not pay taxes. but if you are someone who does

pay taxes, if you have a positive number on your tax return when you mail it to the irs, your number is about to be double that. if we raise the money for the stimulus, aboard -- according to the distribution of the income tax that we now observe, for people within, of two hundred thousand dollars or $500,000 range where small businesses that have more money, their bill for the stimulus is enormous. for someone with an income between $300,000.500000 dollars, the stimulus cost will be -- between $300,000 and $500,000, the stimulus cost will be $41,000. one reason why we see a spike in

the savings rate is the expectation of future taxes. some of them is that people thought it was picked in the cake. >> so people may not know the amount they will owe, but they do know that some of them will pay. >> they know that their taxes will go up and they are consuming accordingly. >> thank you. >> i would like dr. hazmat and dr. bernard to react to -- dr. have sessett and dr. berner to t to a letter from one of my constituents. to take the unemployment and tie it to job training and tie it to

job hiring, give it to a business that will hire the unemployed and have it to run through that business. can you comment on this idea or any new ideas you have on how we can help just developed in our country. >> as i indicated in my testimony, that is one of the fourth things that i thought would be very helpful, specifically, if we look at training programs, we all agree that education and training and training job skills are extremely important. if you compare training with the income support which we all agree is so necessary to the health of american workers and families at this time, that is going to give them the skills they need to go out and look for jobs and perform those jobs when they are available. we have a skills mismatch in america that is profound.

i just read in the other night, for example, that microsoft to build a development facility in british columbia because it could not find the skilled workers that they needed in the united states at the right price. they ran out of room under their h1b the subprogram -- h1b visa program. it would also help to look at newly minted college students, retirees, people who have experience and skills who can train others in digibasic job ss and link them up to a partnership that could help to acquire the skills. >> we have a fair amount of experience.

many work with several wibs across the united states and in other countries. when there is a disconnect between the job training program and finding the job, it is much less efficient. when those are two different organizations, your training for government dollars, if i could be sold, in other words, giving $15 for a person presenresume. when you can connect the ability to find corporations that almost sponsor or take on the individual as they are going through the training program, the efficacy of that person making it through the program is dramatically improved. many times you do not need a resume. they can just get the job. when we put the training programs, we also have to say that you have to have an eye on who these companies are that will go there. i am sure you have heard many times that the companies are

saying that you're not giving me the skills i need. you not -- you are not doing this. we need people who can get in the game could get in the game and tell us and bring these people all the way through. we need a connection between job training and job placement, as opposed to a handoff. that hanna is a very dangerous and dr. >> -- that handoff is a very dangerous handoff. >> we were discussing a related point. the unemployment insurance program is designed for the old fashion economy where people took a break in august and got laid off. now we have an economy that requires moving between jobs a lot of times. search costs are really high. that is an important factor for

firms. it is urgent that we redefine the unemployment insurance program where we can have job sharing within the unemployment program. it seems like most are mutations. >> i have anecdotal evidence that is compelling we have about 2500 accountants in one of our organizations that we own. there are people who have been unemployed in the finance industry. we have been able to find them jobs, put them in jobs that would be contract jobs. in other words, they might work three jobs -- three months. they refuse those jobs because their unemployment compensation goes away and they are not sure what will go away. in fact, 70% of all the people we put on assignment get hired

with the company that we place them with. the individual is put in this poor position of either sitting at home all working on job board and getting paid or possibly improving their skills. it is almost like a job sharing the environment. it is a way of splitting the unemployment dollars where they may be paid less, but getting work experience and getting hired. >> there are two spikes in reemployment for workers. there's one in the beginning and one near the end. it is exactly because of that. once you are in, if you go for that job, you give up a big part of the unemployment insurance that is costly. people are very cautious about the jobs they except. >> thank you. my time is expired. >> there have been passed

proposals on job training. there is a lump-sum for workers were they can continue training. they were not penalized for what they were given. even part-time jobs, as long as they had continuing education d@ @@0 billion to $800

billion processed outside of the united states that is too expensive to bring back. why are we not lowering the gate again to bring back that kind of investment? it is the size of the stimulus outside of the u.s. trying to find a home, right now finding a home in another country. i know the government cannot and directed an investment. it has to go straight into the marketplace and decisions of that benefit companies and full fully the workers. but do any of you have any -- and hopefully the workers. but do any of you have any ideas on why we are not bringing back those investments? >> i can speak purely from a mathematical view. our largest operation in the world as france, where we use $7 billion to $8 billion a year.

we have never repatriated that cash because it was a pure cfo operation. the late time we use that cash is to buy assets in the same denomination, euro-denominated. two weeks ago, we bought a company in houston for $431 million. it was a very good i.t. contract staffing company. we decided to pay it had cash and half stock. we did that because we cannot get the cash back from france. this is just pure math. this is not just about the tax code. when we look at a transaction like this, when we look at it from the efficacy of the dollars and the return to the shareholders. >> many believe that the reason that this mess is happening is because our tax policy is out of whack. our corporate tax rate is so high that people have to locate

their profits overseas in order to compete. so the problem i have in this proposal, and it is not that i would, and combat, is that it has two problems. one is that it is sad on the wound. what we really need to do -- it is salve on the wound. the temporary holiday creates uncertainty about when the next time will be that they have one of these. islamic people repatriate in the interim. >> -- it will not make people repatriate in the interim paren. rather than focus on the gate, i would focus on reducing the corporate tax. >> thank you. one effort where we do have bipartisan efforts is our efforts to cut the debt. currently, about $12 trillion,

about 85% of annual gdp. where do we come para next to other countries? -- where do we compare next to other countries? >> congresswoman, i don't have the statistics in front of me. what is important is that our debt is growing rapidly. as you know, at the end of fiscal 2008, the debt held by the public, you referred to the growth that statistics, the debt held by the public is about $2 trillion. here we are in 2010. by the end of this fiscal year, it will be 61% of gdp. it is rising rapidly, obviously,

because of the recession. we're just on the cost, as you know, of seeing a major increase in our deficit, whether you look at the cbo forecast or adjustments for realistic consumption. our guess is that, in the next 10 years, we will see the debt held by the public at 87% of gdp. there is no magic threshold in my view. investors start to question the fiscal sustainability of your policy. personally, i think they are already starting to question that. we have not seen it in the interest rates. they are low.

and they are low because other countries are, in many cases, in worse shape. so they look to us. we want to maintain that status. we have to think seriously about making the tough choices for our fiscal health. >> in making those tough tricks is, how much can we reduce the deficit by -- in making those tough decisions, how much can we reduce the deficit by cutting discretionary spending? how much of government spending is really discretionary and how much is mandatory, such as health care? >> or the next 10 years, if we take medicare, medicaid, and social security, they will account for 50% of the budget.

it is assumed that state and local governments will get back on their feet and pay their fair share of medicaid. if they do not, the federal government will be asked to take up an incredible share of that. that is the fastest-growing health care plan that we have. so that percentage will likely rise even further. >> on that note, state and local governments are facing enormous budget shortfalls. we have had states come to the federal government and ask for a bailout. at the same time, the swelling ranks of the unemployed are putting further pressures on the budget. i would like to hear your ideas about to problems, the short run problem in the state and local governments and the potential impact on employment and how do we deal with the long run problem of these budget problems

in the states? as you said, as medicaid cannot be assumed by the states, a tremendous problem going forward water your comments on these two points? >> from a better perspective, we have a system that is not working medicaid is one of the key issues in that system. we all know that, when we go into a recession, particularly the deepest recession we have had in 40 years, medicaid grows dramatically pared that puts the burden on states that they cannot pay. in my state, your state, the state of new york, for example, 50% shared. in mississippi, it is only 2% at the state level.

efforts to offset medicaid have been short run with that making cuts. in the longer run, part of health care reform, it seems to me, has to involve fixing the way that we share medicaid and the way that the medicaid program is designed. at the state and local level, we have enormous fiscal problems that need to be addressed. the governance there at the state and local level varies state-by-state. there are 50 different kinds of problems in 50 different states and thousands of problems in local governments as well. ultimately, tough choices will have to be made there. like it or not, we have been making promises for health care

for pension benefits and other promises that have not been found in and they cannot be kept. we're going to have to make a lot of choices. >> i could listen to this panel all day long. all of you have been inspiring and insightful. you have given us a great deal to think about. but i am told that it is impossible to get back to new york. the airplanes are not running. if we do not watch out, the trains will not be running. we will have to call an end to this. i hope you'll come back to testify again. you have given the tremendous session today. the truth is we will have a slow, long time to get out of where we need to go in terms of creating jobs in this economy. but we are beginning to see glimmers of opportunity and certain strategies in certain sectors. this will help on an upward

trend toward future growth. my goal is to work with my colleagues in a bipartisan way to develop and enact policies that will create jobs immediately and in the long term that ensure we are getting the most value for our dollars and help our economy move permanently in the right direction. i want to thank all of you for the tremendous work to do in your lives. we really appreciate your time here today. thank you very, very much. >> thank you. >> thank you. >> thank you for being here.

chile. "the roads, the neighborhoods, they have been ruined." paul, thank you for being with us this morning. we found a report last week looking at the ethics investigations into charlie rangel, what is next for the new york democrat? ocaller: the investigation that was announced on friday regarding a trip that the chairman and several others in the congressional black caucus took to the caribbean for a

conference. in this case the ethics committee concluded that the conference was slated as having been paid for by nonprofits, but it was in fact paid for by a corporation. while none of the members of congress knew this, the staff of charlie rangel knew that it was paid for by a corporation. and since his staff knew, he should have known, and a folded into that. the next things on the slate for him are more substantive, more directly related to his conduct. he had a condominium in the dominican republic -- hard to say in the morning, where he was getting rent on it, but not declaring to the irs, he is paying back taxes on that now.

when he went back to fix this financial disclosure forms, they found all sorts of errors. finally, last summer it was indicated that he had $500,000 worth of property that had not previously been disclosed that all. so, it has been one year that they have been doing this review of this finances, his reporting, and recording correctly that he had paid taxes. any number of errors he has admitted to, but the question is if he is at fault. host: paul singer, he is facing a primary challenge, something he may not seek another term, what are we hearing from his district?

caller: charlie rangel has been around for a very long time with terrific support in his district, but at this point is the most ethically embattled member of the house. there are more allegations against him than anyone else at this point. have to assume that it will be hard, particularly of the other three find fault. even if his staff do something that he should have known. the next question will be if they find him responsible for something that he personally did wrong. there are already members, including democratic members, but are asking him to step down. this would make his re-election very difficult.

host: how many -- how much pressure is he getting from democrats in the midterm election in terms of the republicans calling the democrats' poster boys for corruption in washington? caller: this is a real problem. up until a couple of days ago, before this report came out, of democrats were standing behind charlie rangel. and the problem is that now there are democrats coming out and saying that maybe he should stand down. i suspect, given the next couple of days, republicans in the house will attempt to force the issue. i suspect that there will be some democrats voting for it. the speaker of the house has said that he should not be

forced to step down yet, let's wait to see what the rest of the ethics reports come out to say. to some degree he is still within the process, it is not over yet. but it looks like it is becoming a harder position to hold it, even in the democratic caucus. it is not inconceivable that the democratic caucus could break and divide substantially over the question. host: george miller is the democrat from california, chairman of house and labor, joining us on the newsmakers program today at 10:00, eastern time. here is what he had to say about congressman rangel. >> sometimes in politics you have to do difficult things. i can make a case for him

stepping down, but i can also make a case for him getting his day in court. it is the ethics committee. i would hope that they would wrap up their work as quickly as possible in order to make a decision. i would think that is what he is entitled to. >> as a chairman, can he continue to be effective in that position? >> it makes it difficult, there is no question about that. he and members of this committee will have to discuss that. this happened on friday and we have to review that. this is not about dodging the issue. we can try to do the right thing, but we also know that the right thing in and a political environment can be very difficult. host: george miller is joining us after this program, paul

singer is with us now. caller code george miller, interestingly, is not just some democrat from the middle of the country on his second term. he is considered one of the closest allies of nancy pelosi. also, by the way, he is also from california and takes their airplanes back and forth. they are pals. if george miller is saying that we need to think about this, that is in nancy pelosi's cabinet. that is not an irrelevant member of congress. host: what happens next, paul? caller: i do not really know. my suspicion is that next the republicans are going to call for resolutions to have him step down.

i do that no whether that will be before the democrats have an opportunity to caucus. by tuesday morning there's going to be a lot of swirl going around washington about what to do, exactly, with charlie rangel. we will see how long it takes the ethics committee. i think that the next move is a

bout iran and other security issues. this is one hour and ten minutes. good morning. i am the executive stricter of the washington institute for middle east policy. it is a great honor to welcome our guest today, to welcome this is barak and welcome all of you at this very special event,

horse third annual memorial lecture on middle east security. this was established by members of our board of trustees for three years ago after the three years ago after the passing longtime . . he was one of the intellectual founders of this organization and among the many people he creased throughout his life with friendship and advice i'm proud to count myself among that number. it is a great testament i believe to his memory that we've been able to convene this event. it is no small event in washington as you can see by looking and around the room by being able to convene this and offering him by bringing to cut

their the leading lights of israel's national security establishment. every year to talk about the key challenges, the key opportunities facing israel and the broader middle east. today we will hear shortly from our guest. he is the third former chief of staff the israel defense ministers of the road to participate in this event after the last two years and we are very grateful to you for being here today. before i turn to my formal introduction of the guest, let me take a moment to welcome sarah, his wife and their daughter. a few comments from hadar.

>> friends and guests come it is the third year we are gathering here in the institute for the annual lecture in memory of my late father. as always i moved by the fact so far from israel people remember my father and come to participate in this defense. we are honored today to have general barak, the minister of defense as the speaker. general barak and my father were friends for many years. my father highly appreciate his wisdom and of the libyan military and security fields. i remember one occasion when i was a younger girl, barak, who was then a young officer came to meet my father. after he left, my father said i assure you this young officer will become one day the chief of

staff of israel's army. [laughter] he was happy to see barak reaching higher positions. on behalf of the schiff family, i want to thank minister barak for taking time off his hectic schedule and coming to speak to us. many thanks to the dear friend of my father and our family who does his best to keep the tradition of the zeev schiff lecturer memorial to be held every year. thank you. [applause] >> thank you. indeed, if zeev schiff salles promise and the young ehud barak, then he knew what he was talking about because zeev had amazing ability to identify not just what was going on that what was likely to happen in the israeli politics and security.

>> [inaudible] [laughter] >> it is one of those truisms' of washington and discussing middle east policies we say that we are across roads in the middle east. i think it is also a truism for the next line to be why the speaker and this time i really mean that come at this time i really do mean it. i do believe that at this moment for america in the middle east and america's friends in the middle east for most of whom is the state of israel we are at a great moment of the threat and opportunity of risk and challenge not least posed by the rise of radicalism and extremism manifestative course by what the

challenge posed by the islamic republic of iran but not the nuclear post. the region is a crossroads you we are honored a person who plays such a critical role in helping his nation navigate through the turbulent waters of the middle east is with us to offer his views on israel, 2010 strategic threats and strategic opportunities. ehud barak, is as everyone in this room knows that the very pinnacle of the national security establishment. he is most decreed a soldier and has served in the defense forces his entire professional life rising to become chief of staff and then shortly after retirement was called directly into political life to serve in the cabinet eckert deployment,

interior minister, foreign minister elected to be prime minister and now serving as the defense minister, a rock foundation in israel's difficult security environment. mr. barak, we're delighted you're here today and on behalf of the washington institute and in memory of zeev schiff we welcome you to the podium. thank you. [applause] >> the schiff family the belief of the washington institute distinguished guests, it is an honor for me as minister of defense of israel to address you at this conference in memory of zeev schiff who in his life and in his deeds was wealthy of the

title journalist commentator and security person. the years that have passed since he was taken have only deepened the professional vacuum the discreet in public beyond in the absence of one who was a guiding light. time shows how much we need people like him in journalism and the same time security work. as a military commentator zeev didn't hesitate all the criticisms both the idea of and the political defense echelon of israel he was steadfast in his opinions and did not hesitate on things that were pleasant. sometimes hard things, tough writing called his perception of the world concerned folds and

failures which needed to be corrected. but everything was always done with the realization with a desire to influence and change things for the better. everything was for the security of the state. it is clear that at all times the good of the state was utmost for him. he was a patriot and a gentleman. responsibility was prominent in every line and word he wrote. his concept of responsibility in journalism was also for most and what he decided not to write. i can attest to this personally that there were times when i knew as a commentator and a journalist zeev gave up on major scoops in following the

journalistic prestige just in order to protect the security of the state of israel. the subject i was asked to speak on today is the challenges and opportunities in the year of 2010. i'm sure those few who knew and loved zeev like we do would like to hear what he would have said and i will hear what matters of the beginning such as 2010. it seems to me he would have quoted saying the wisdom will increase. you are missed by all the fuss and even more so today. 2010 reflect shows us collection

of opportunity as well as challenges. a variety of sweat and the opportunities. we are facing this allowance all around our borders -- tetralogy of sweat starting to loom over the horizon hamas and gaza, hezbollah and lebanon and the jihad, iran and so on the only superpower on earth the agenda is overbuilt with both domestic and foreign strategic challenges and israel finds itself at the

focal point of historic struggle on two levels. the challenges presented by nuclear, military proliferation and wrote and failing states and on another level we see islam now tufty date and tough struggle between the radicals. the consequences of this struggle on its two levels will shape the geopolitical landscape for the next decade. i prefer to start with opportunities other than script and it was already set up the region that in the middle east the pessimist was an optimist experience. [laughter]

i prefer the option of chilean observation that the pessimist sees the difficulty in every opportunity like the optimist sees the opportunity in every difficulty i prefer the churchill version attitude towards events. clearly opportunities here and i do believe that the israeli leadership is at the uppermost responsibility in trying to reach peace with our neighbors. both in order just to have it come to normalize the neighborhood and also in the absence of agreements the risk of to to read reading into a vacuum then violence are significantly increased. but we have to identify and look

honestly into the basic effects of our neighborhood. the middle east is not the midwest. neither western europe. we would love to have the canadians as our neighbors but you got them. [laughter] and we h we are living in a tough neighborhood. those of you that i see, a few individuals served lifetime careers in the region. it is a neighborhood where there is no mercy for the week. no second opportunity for those who cannot defend themselves. israel is strong and is the strongest nation around jerusalem. we are realistic and open-eyed.

there will be no peace in the least before the other side or our navels for rivals will realize that israel cannot be defeated by the mere use of force. it cannot be stopped by terrorists. and cannot be brought down by diplomatic threats. diplomat tricks. those alternatives will be open. they will choose it over making peace rate is only when a strong self-confidence israel will be ready out of the strength to

stretch the arm to which peace and will find the same kind of attitude on the other side we will have peace. i say we have to stand firm on our 2 feet from open without a drop of self delusion that the realities of the neighborhood, but having one hand preferably the left hand looking for any window to find opportunity for peace while the other pointing finger to the trigger ready to pull it when it is ultimately an accessory. the strong issues as well. we are trying to nurture the cohesive society, a strong sense of solidarity.

we are navigating quite successfully through the economic crisis that is a major issue for the whole world. we are moving forward in culture and science and technology. israel is a super power in several areas of science and technology from a renewable energies the processing of water and nanotechnology. life sciences especially stem cells, medical devices, remote learning as well as additional strong points of our economy, agriculture extreme model sophisticated agriculture and special expertise that grew out of the circumstances and the homeland security.

what had been taken by force will be taken back by force. the peace plan that will be adopted by the international community's and become the cornerstone of the final thing between us and the arab world. a successful peace process, especially with the palestinians, is not just in the interest of israel. it is a compelling imperative

for the state of israel. that is why i say it is the utmost responsibility of any israeli government. not to disable the palestinians, but out of our own interest. out of strength and without compromising our security. the reason for this is painful but simple. between the jordan river and the mediterranean to the west, their lives 11 million people. 7.5 million israelis. 3.5 million palestinians. there is only one sovereign entity in this area, named israel, it will become inevitable either no-jewish or non-democratic. if this block of palestinians cannot vote, it is -- no, if

they can vote, it is bi-natinal state. if they cannot vote, it is not a democratic state. so it is either non-hjewish if -- non-jewish, if they can vote. the only way is to be open to the realities, to delineate voter rights within the historic, biblical aspect of israel that takes into account security as well as demographic considerations. and within reach we will have a jewish majority for generations to come and the

palestinian viable state that will reflect the palestinian dream, which is in the national identity. i reached this conclusion not because we do not have the biblical rights or because we do not have a strong affiliation. we have both. dooley so -- what it should and could be done in order to promote a strong israel for generations to come. we are in the effort to move it on, to start with proximity talks. i hope that it will be opening in the coming few weeks and that we will follow, israel or another by substantive dialogue about the core issues that are

still between us and a breakthrough. we have visited all of these issues several times in last 20 years. in paris in 1992. under rabin. in my government in 2000. under olmert's government in 2006. and under netanyahu oppose the government. -- netanyahu's government. we realize there should be a palestinian viable state established. ñithis government in its guidelines accepted the road map, was it it it is the first phase or second or a combination of the two.

we committed ourselves to all agreements approved by previous governments, which were not right-wing governments. we reflect a national unity, not the typical national unity with the right leg is much heavier than the left leg, but with it and us, we include the bloody politics of israel mainstream. i keep telling you, there's a strong silent majority in israel which is ready to make decisions in order to reach peace, once they feel there is readiness on the other side and we are nutot having this alone. i feel the efforts from the bottom up building institutions

and organs of a future palestinian state, with whatever support that we can give to it -- and we want to see a strong palestinian state and a weaker hamas and we've tried to coordinate experts with them toward that direction. i can tell you, talking about opportunities, i cannot ignore the issue of syria. it is not a secret to that in israel, both myself and the defense ministers in the past and the israel defense establishment of all levels believe that we have strategic interests in putting an end to our conflict with syria. we have been in negotiations

in this city and the other places regarding this issue under rabin and under perez's government, the previous government, my government, and olmert's of a spirit all of us notice on the table and what kind of decisions need to be taken by both sides. all of us are realistic about what could be achieved and what cannot be achieved at the very first moment. i insist this is an opportunity , swift and navigated cleverly, keeping theçó dignity of the otr side at all stages. having said that, i can tell you that we are strong enough. if deterioration happens on our

northern front, but we're not interested in it. we will not initiate it. i do not believe that anyone in the region in the immediate neighborhood of israel really needs it. we follow carefully what happens in lebanon. i think the time has come to deal with it in a much more straight and real manar. the actions of 2001, the u.n. security resolutions following the north. in 2006 it was to put an end to the existence of hezbollah in lebanon. solving the problem just allowed it to become more complicated. there is a bizarre anomaly.

lebanon is a member state of united nations. it has a militia. the militia had 12 members in parliament. even ministers in the cabinet with recent power over the decision of the recent government. now it is supported and equipped by two member states of the united nations. syria and iran. technologically and with equipment and many civil servants in uniform and without uniform in both member states of the united nations are serving in lebanon within the chain of command of hezbollah and giving orders stemming out of the interests not of delivering people but of other players. it happened to be that this

motion does not just to develop the new longbows or more effective arrows. they happen to have 45,000 rockets and missiles that could wipe out israel and are part of what they have activated. they already did it in the past, we've seen this. this militia happened to have weapons that many sovereigns don't have. we cannot accept this artificial division jadifferentiation betwe terrorists of hezbollah and the others. we keep saying that we do not need any conflict there. we will not lead towards one. but we do not want to chase an individual hezbollah terrorists. they are digging within the

urban concentration inside the city's, inside the civilian population. these weapons that they have mainly cannot be used against any military targets. they're not accurate enough. the only conceivable use of most of those weapons is against civilian populations in heavily urban concentrations. that is what they have tried to do in the past. so we made it clear that we do not need this conflict. but if it is imposed upon us, we will not run after every individual. but we will take the lebanese government and other sources of sponsorship, but mainly the lebanese government and lebanese structures that are part of the

equation that is facing us. and to continue the challenges or threats, i have to mention hamas, they suffered a major blow year-ago in a mid-sized operation that we launched in the gaza strip. they were deterred, but still the accumulating more and more longer-range lockrockets that ty smuggled all the way from iran through africa through the gaza strip. this situation is not fully stable. we still have the abducted soldier. that complicates some aspects of the normalization of the

situation. but it is quiet, more quiet than anywhere in the past. but internally or inherently unstable. the last word is about iran. it is not just a challenge to israel but a challenge for the whole world. i can hardly think of a conceivable, stable world order with a nuclear iran. it is clear to us and becoming more and more clear to others that iran tried to define, defeat, and deter the entire world regarding nuclear ambitions and it wants more time to enable it moving towards nuclear military capability. the goal is clear and becoming clearer by the day. i think the last we talked about

the new head of the iaea is highly important, because it shows that international agencies can, if the will is there, call a spade a spade and to stop the verbal gymnastics about thwhat the iranians are really doing. if they make explosions, the experiments on heavy metals with simultaneously activated detonators and if they are working so intensely on a two hemisphere is within a certain size, it means they're not just trying to have a manhattan

project nuclear device. they are trying to jump directly into the second or second and a half generation of a nuclear warhead that could be installed on top of ground to ground missiles with ranges debt would cover not just israel but moscow or paris. and i think that we can like it or not. i believe most of us don't like it. we cannot close our eyes to what really happens in such a delicate corner of the world. if iran will not be stopped from moving there, it will reach a certain point of nuclear military capability. one can close its eyes and think what it means. a nuclear iran means the end of

any non-proliferation regime. it involves saudi arabia and another two or three members of the community will feel compelled to reach nuclear capability as well. it will open the door for any third-world dictator who has nuclear ambitions to understand that if he is mentally strong enough to decide any kind of threat from the world, he will reach a nuclear capability. i don't think the iranians have this example. probably some certain example of how easy it could be to defeat the whole world. basically, they probably see themselves as another pakistan. probably they started totally independent from the issue of israel. but they gradually adopted us as

a major cause for their hegemonic intentions. just recently ahmadinejad has said in damascus that they are looking for a new middle east, reminding me of perez. [laughter] a new middle east, according to ahmadinejad, something that would be free of zionists, and free of colonialists. they're developing and the a napoleon-style, with nuclear weapons. we should not take its too easily. i believe it starts the countdown that was first described by a professor of harvard, brett allison, in his

book about nuclear terrorism, his belief that in another half generation, there could be devices from terrorist groups. please start to think of what shape can a multi-aggressive deterrence against a nuclear attack with no address stamp on it, cause such a strategy might look. and you'll realize how intensive and conclusive and concrete we should be in regard to these threats before they materialize. it is not just about hegemonic nuclear capabilities. i do not think the iranians, even if they got the bomb, they're going to drop it on israel or some neighbors, fully understand what might follow they radical.

>> [laughter] >> mets technical. >> they have quite decision making process and they understand reality. but it is not just in the nuclear arena. it is also in the hegemonic intentions that they might intimidate neighbors all around the gulf. we might feel very quickly the tail winds that the radicals from all cut or islamic jihad or whatever will feel once iran has this impact, what it will have on their assertiveness, the radical players. not to mention the indirect capacity to influence the prices of oil.

all of these could be part of a nuclear iran. i think with open eyes we just have to follow with deeds what we are saying in all capitals of the leading members of the international community, that a nuclear, military iran is unacceptable. the point is how to translate this clear message into reality. the europeans in a critical -- we've been in a critical dialogue with them for years. the united states now is trying -- i'm not sure whether the dialogue will work, but now it's working on sanctions. i believe it is important. there is a need beyond the type of dexterity or helping or

crippling or paralyzing as i would like to have, it is significant sanctions, effective ones within a time limit that together with the russians and the chinese, if they could be brought to do with. i feel the administration is doing its utmost effort to deliver an effective set of sanctions. we appreciate it and we hope it will be successful. but we also should carry certain skepticism and always think thoroughly end in a concentrated manner about what should happen that is against our hopes and wishes and dreams. we are all aware of certain tensions simmering beneath the

surface in iran and especially following the elections and what happened recently. we see that regime against its own people and even the cohesion of the leading group, the ayatollah both being correct. probably the countdown towards the collapse of all this started. i don't know if there is any serious observer who can tell us whether it will take two years or 10 years. it is clear to me that the clock towards the collapse of this regime was much slower than the clock which ticks towards iran becoming a nuclear military power. this is the reason why diplomacy and effective sanctions with a command to all players not to remove any option from the table

and re-adoptwe adopt this attite ourselves as well. in my summer, i would say that we are living a unique, a quiet, confusing time of challenges and opportunities coming together in a great gestalt. i find the leaders all-around world more and more coming to grips with reality and with more opened eyes. i have found in the capitals of the free world and even in some authoritarian corners. 2010 will tell us whether this can suffice to tackle the

challenges and sees some of the opportunities. my feeling is that some of the challenges will be with us longer than 2010. it is clearly time for coordination on high levels between leaders of the world. i think that within this kind of dialogue and most important to be kept in mind is our responsibility is never to drift, let ourselves drift into kind of self delusion where the reality is too tough to look at and too painful while you are considering the consequences of

either choice and the decision is to close your eyes. that is something we cannot afford. we can make this kind of decision or another or combination. we cannot afford closing our eyes towards developing in front of them. the united states is clearly the number one leader of the world and faces all kind of internal debates you have in the eyes of the rest of the world focused at you. the big struggle about how the world will look like when its ceases to be one pole, but a multi-polar worldñi and how the balance between dialogue and efforts are exhausted.

not just soft power. . it's extremely dependent on the american dialogue. the public participates. think tanks are attempting to understandñrçó and illicit certn alternatives from complicated situations. i think this is something that is done here in a much more intensive way than any other corner of the world. at the washington institute, i see members of other respected institute's in this city that are extremely important. çóñrñrñrñiñi[unintelligible] as i have said, i do not delude myself about the situation, as simple as it is, would be

easily sliding towards 2011 with no need to take decisions. i expect it to be quite t(ñiñicomplicated for years. butçóçó still i am optimistic at israel. i see many opportunities and difficultiesñi around us. i wishñi all of you a goodñi ye. thank you very much. >> minister bob, thank you very much. koñi -- mr. barak. xdño'that harkened back to yours as military intelligence in your briefings. thank you very much. i would like to ask you more specifically about the u.s.- israelçó relationship, concernig ñithere isñrñr currentlyñi a slf visitsññd of high-level officias

in the national security realm. in the natioice president is gog shortly.

>> could you wait for the ãmicrophone to come to you. identify yourself for our viewers around the world. >> david petoskey washinton institute. mr. minister, you talked about maximizing the success of your decision building. how impor,ant has t$e security israelis ì+ palestinians been to the tranquillity that0is existing now on ground? also, you mentioned a border demarcation as a compelling imperative for israel. given that, some issues for jerusalem and the like of very sensitive and there's a lot of resonance, can you speak, focusing on borders first as the first item on a final status agenda? >> microphone, please?

>> minister, with [unintelligible] what is the time limit for israel to rely on diplomacy? why is it israel cannot live with a nuclear iran? >> [unintelligible] [laughter] >i am slow in writing in english. [laughter] with regard to the questions, i feel our relationship with the united states goes decades back. i see one of the founding fathers of the [unintelligible]

they went through the ups and downs, but basically the underlying attributes with democracy, we perceive ourselves as an outpost of the western way of life, the ideas of democracy, open society, western way of life, in a region that would gradually go toward normalcy. i hope it will improve in the future. we have the same, and basic values and a lot of support from the united states, both sides of the political aisle, on many issues regarding military and even economic support. at the moment of truth, the united states knew to stand and

unitureç that this0outpostd and [unintelligible]lates to-

>> the mid tool capacity to listen to each other, even without speaking about it explicitly or publicly is more important than the other aspects -- the capamutual capacity to listen.

as regarding the other question, some very intimate coordination with us regarding the opportunity, very fruitful. we have had good defense attache to washington. the general until recently was the commander of this region. a battalion after italian, they came back to the area and they were equipped and let them bring weapons. they are changing the way that it's run. if you go through some areas, you'll find something you not seen in years, more than a decade.

the economy is growing very fast. the public order is very clear. the canadians are helping them with their court system and the prison system. the security situation is much better. recently we imposed a freeze on new building in the west bank for 10 months. there was quite naturally and a vocal and intense meetings with leaders of israeli settlements. they all agreed that the security situation on the ground is better than anywhere in the past. our effectiveness in the security service in the idf

activities. parts of it is clearly a result of these meetings of security forces for them. regarding the border, first of all, did will be agreed to solve this. i personally think that leaders -- and i can talk from personal experience -- leaders take the challenge of having a break in diplomatic agreements, by looking at the whole gestalt. any kind of giving up or concessions on any isolated elements exposed to them politically when they do not know whether they have an agreement -- they do not know they have one. they have to pay the price for it. even if its it is in a closed

rule, far from the public eye, when you negotiate issues and yet of on the agenda, borders and securities, jerusalem and so on, you cannot easily deal with one element. on both sides, when a compromise is achieved on one element, it is too painful for both sides to do it without knowing what is going on on the other side. it makes more sense to have more transparency. at a certain point it becomes clear what are the give and take in terms of what could be done on all of them simultaneously in order to make it work for both sides. i already told the government in front of president obama and netanyahu that the toughest decisions he will have to make will be through his own people and not with netanyahu. the toughest decision netanyahu

will have to make is with his people. they should look for finding a way to shorten the corridors in which political leaders on both sides will have to go, expose them vulnerable it politically before they can make decisions. probably how to shape events, that by their very nature changed overnight to the perception of the conflict by billions on both sides, this will be the focal point of creative sorts in order to reach decisions. i think i basically answered your question. i cannot talk about time limits and so on. it is something [unintelligible]

i do not think there's any development in the area that will put the continuity of the existence of israel being questionable. i do not accept these kinds of hypophysis. there could be something that risks the continuity of existence of israel. but it is clear -- and i tried to explain it -- why letting iran turn nuclear is a risk to not only israel but the entire middle east and really opens the way for ahmadinejad having his new version of the middle east. when i mentioned perez never hinted there was anything relevant, as we say in hebrew, thousands and thousands of differences. he just used the same term.

i think that because we are merely stern -- middle eastern, andñi many ofñi the viewers arei think we should also assess whether it is possible to stop it. if so, a much better middle east. >> very good. next set of questions. on my right and then dan. then dug on my left -- doug. >> one on the left and another on the right. [laughter] go ahead. >> if i may speak on behalf of

all the friends of zeev schiff, thank you very much for honoring his memory by addressing us. i think he would have been very impressed by your strategic assessments. you did a very credible job, saying israel is a strong country with a strong arm and a strong economy. what i did not a year and what i would like to hear is how you connect the dots between the assessment of all the challenges, which could present opportunities and what israel, a strong country capable of taking calculated risks will do about it. how do -- what is your strategy for dealing with all of these very difficult challenges?

thank you. >> in the center, dan? >> thank you, good morning. you mentioned the israeli delegation. i'm from the washinton news agency. they've wrapped up their talks. the chinese government described the talks by lateral. the chinese posture has been to play down the iran aspect of the talks. given that an effective security resolution hinges on china, are you optimistic? is the american message to china effective? and also about the current talks with the israeli delegation? >> doug from the right,

actually. >> the far right. >> i want to echo what marc said. zeb ws as a mench. i wonder if you talk about the state of israeli relations right now. >> to that question, israel is strong. we are ready to take risks. we have a political bridge, one with a heavy leg and another

leg ready to act. with the government, we are ready to take risks. unlikelike war, peace takes two sides. i listened to the doubts raised regarding whether netanyahu will move, what kind of political pressures he faces, how important they are. we have a different system than yours. in this country, you choose a president and he's there four years and you need to negotiate with congress and the public, but he is not threatened by the continuity of his reign. in israel, the prime minister wakes up in the morning to see whether he is is still there.

[laughter] he can be replaced at any moment. so there is a more sensitive kind of navigation needed. i always answer this by returning the challenge. namely, instead of speculating whether netanyahu is ready or in ready or this government can live up to the commitments that i mentioned or not, let's bring them. the proof of the pudding is in the eating. let's push them to the negotiating room. we are ready to go. we made it clear. let's put them to the test, both sides. there are some israelis who suspected the palestinian leaders, they are ready to get

more promises, more tangibles. gieven if there is a proposal like the one we put on the table under the clinton administration, will veto, they will not be capable of signing an agreement where it says at the end of it that this agreement is the end of conflict and finality of mutual claims. i tell those critics the same. we can never prove its unless we can bring them into the room and be ready to put those proposals on the table and sit and judge by this. if it does not fly, it goes to violence. but i think that both sides can

avoid or minimize this risk. having said that, i should tell you that there is safety in israel. a position not only from the right side, which is natural. we find certain rejection of the attempt to go to the place and tried to have a breakthrough on the left side for people who are -- like supporters of inkatha peace process. we find them acting against it. i cannot explain it. if we have a joke regarding anti-artillery aircraft, talking about a young cadet in fighter pilot school. was asked where he wanted to go. he answered, anti-aircraft artillery. the reason he gave was, if i

don't fly, no one will. [laughter] i tell my colleagues, leading and former ministers of israel who it to slow down the process, i tell them that we do not need anti-aircraft artillery. we need all the support you can give to move on with a serious process that will put to the test both sides in their readiness to go. i keep telling my colleagues even in the government that i am confident that there is a strong silent majority in israel. when the moment comes to make the decision, we will find 50% of one and 90% of the other

group will be in my position, not in what seems to be the reigning position in this government. i think that netanyahu clearly understands the strategic or historic challenge. i believe that the government, at least based on what its south road in its guiding lines -- what it wrote in its guidelines, is rell to go there. -- israel to go there. >> in regard to dan's question, i am not an expert on china. our mission there is just about information. we know that's we are more than 1 billion people.

we feel very strong against the chinese. [laughter] wiig share development on currencies-- we shared development on currencies. they did not buy it a lot of bonds. we want to share with them our feelings about what is going on in the world and what's going on with the iranian project. the chinese are interested. we are quite a body of information about it and we want to share it with them. in regard to the question about 30, we have a long relationship with turkey, very strategically. if times are changing, internal

changes in turkey. i happened to meet many prime ministers there. and the minister of defence. there are changes they're taking place. some people in israel tried to categorize them as simple black or white. i don't think this is the case. this is an historic empire with a deep understanding of our region and very nuanced attitude to bear it in mind what happens to them internally and the european union and you can assess some of these developments. i think that we do not need to create a new right in turkey. we better have a partner and understand the limitations of this partnership and keep

neutral and it could be of high importance in more than one place. still there are many layers in our relationship with them. some of them we are still working very well. i don't like everything that he said in a on kerraankara, but 't think we should make anything of what was said as a major cornerstone of our judgment. i happen to know some of the minister's and i find them of high-quality, not light weights but respectable persons. i am afraid we have to go to some other meetings in the state department. >> friends, we're going to leave

in a moment. when we close, i would like to ask, the as the minister and his delegation departed out the door, wait for just a moment. on behalf of the washington institute and a half of the friends and family of zeev schiff, thanks for joining us today for this wonderful set of remarks. >> thank you all. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

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