more widely. it may reignite the global financial crisis and produce a crisis 2.0. >> watch these remarks in their entirety tonight at fort -- tonight at 9:45 eastern, here on c-span. >> tonight on c-span, president obama talks about health care. that is followed by a response from mitch mcconnell. we have an analysis of the congressional election at the n.a.b.e. .

>> i am kind of fired up. [cheers and applause] i am kind of fired up. [cheers and applause] this is an extraordinary credit.

-- extraordinary crowd. i love you back. there are some people i want to point out who are here and have been doing great work first of all, get leslie a round of applause for her lovely introduction. [applause] somebody who has been working tirelessly on your behalf and doing a great job, the secretary of health and human services, kathleen sebelius is in the house. [applause] one of the finest governor is in the country, ed rendell is in the house. [applause] everybody noticed how good it is

looking, by the way? he has been on the training program. [laughter] eating a whites and keeping his cholesterol down. [laughter] [applause] your senior senator who has been doing outstanding work in the senate, harlan specter is in the house. [cheers and applause] one of my great friend, somebody who supported me when no one could pronounce my name, bob casey. [cheers and applause] your congressman, the person who gave me confidence that i could when even though nobody could

pronounce my name is in the house. [cheers and applause] i figured if they could elect a shotguchaka, they could elect a barack. allison schwartz is in the house. [cheers and applause] someone new rendered outstanding service to our nation before he was in the congress is in the house. [is and applause] technically not his state, but he is right next door at the new jersey. we got some jersey folks here.

rob andrews is in the house. [applause] and the the great mayor of philadelphia -- [cheers and applause] i am a little warm here, so -- [cheers and applause] all right. it is a little hot up here. and the two arcadia university -- and too murky university -- and to arcadia university -- [cheers and applause]

i thought the white house was pretty nice, but that campus -- [cheers and applause] it is great to be back here in the keystone state. it is even better to be out of washington, d.c. [laughter] first of all, the people of b.c. are wonderful. they are nice people. they are good people. i love the city, the monuments, and everything. but when you are in washington, folks responded to every issue, every decision, every debate, no matter how important it is, with the same question -- what does this mean for the next election? [laughter] what does it mean for your poll numbers? is this good for the democrats

or for the republicans? who won the news cycle? that is how washington is. they cannot help it. they are assessed with the sport of politics. -- they are obsessed with the sport and politics. that is the environment in which elected officials are functioning in a point you have seen the pundits and the cable networks. that is what they do. but out here and all across america, folks are worried about bigger things. they are worried about how to make payroll, how to make ends meet, what the future will hold for their families and for our country. they are not worried about the next election. we just had an election. [cheers and applause]

they're worried about the next paycheck for the next tuition payment that is due. [cheers] they are thinking about retirement. [laughter] you want people in washington to spend a little less time worrying about our jobs and little more time worrying about your jobs. [cheers and applause] despite all the challenges we face, two wars, the aftermath of a terrible recession, i want to tell everybody here today that i am absolutely confident that america will prevail, that we will shape our destiny as past

generations have done. [applause] that is who we are. we do not give up. we do not quit. sometimes we take our lumps, but we can keep on going. that is who we are. but that only happens when we are meeting our challenges squarely and honestly. i have to tell you, that is why we are fighting so hard to deal with the health care crisis in this country. health care costs are growing every single day. i want to spend some time talking about this. the price of health care is one of the most punishing costs for families and for businesses and for our government. [cheers and applause] it is forcing people to cut back or go without health insurance. it forces small businesses to

choose between hiring or health care. it is plunging the federal government deeper and deeper and deeper into debt. the people who are here, some of you guys still have health care while you're in school. some of you may still be on your parents plans. some of the horizon insurance rates are among young people and it is getting harder to find a judge that will provide you with health care. right now, a lot of you feel like your invisible so you do not worry about it. but let me tell you, when you hit 48 -- [laughter] you start to realize that things started breaking down a little bit. [laughter] and the insurance companies continue to ration health care based on who is sick and who is healthy. on who can pay and who cannot pay. that is the status quo in

america and it is a status quo that is unsustainable for this country. we cannot have a system that works better for the insurance companies than it does for the american people. [cheers and applause] we need to get families and businesses more control over their health insurance. that is why we need to pass health care reform, not next year, not five years from now, not 10 years from now, but now. [cheers and applause] since we took on this issue a year ago, there have been plenty of folks in washington who said that the politics was too hard.

they warned us that we may not win. they argue that this is not the time for reform. it is going to hurt your poll numbers. how will it affect democrats in november? do not do it now. my question to them is when is the right time? if not now, when? [cheers and applause] if not us, who? think about it. we have been talking about health care for nearly a century. i am reading a biography of teddy roosevelt right now. he was talking about it. teddy roosevelt. we have failed to meet this challenge during times of prosperity and also during times of declined. some people say don't do it right now because the economy is weak. when the economy was strong, we did not do it.

we talk about it through democratic administrations and republican administrations. i have all of my republican colleagues out there saying that we want to focus on things like costs. you had it 10 years. what happened? [cheers and applause] what were you doing? [cheers and applause] every year, the problem gets worse. every year, insurance companies to deny more people coverage because they have pre-existing conditions. every year, they'd drop more people coverage when they get sick, right when they need it most. every year, they raise premiums higher and higher and higher. just last month, anthem

bluecross and california try to jack up rates by nearly 40%. 40%. has anybody paycheck gone up 40%? [laughter] why is it that we think this is normal? in my home state of illinois, rates are going up by as much as 60%. you just heard leslie who met with more than a 100% increase. one letter from her insurance company and her premium doubled. just like that. because so many of these markets are concentrated, it is not like you can go shopping. you have a choice, either no health insurance, where you take a chance that somebody in your family, if they get sick, you will go bankrupt and lose everything you have or you keep

ponying up money that he cannot afford. these insurance companies have made a calculation. listen to this. the other day, there is a conference call organized by goldman sachs. you know goldman sachs. they're organized a conference call in which an insurance broker was telling wall street investors how he expected things to be playing out over the next several years. this broker said that insurance companies know they will lose customers if they keep raising premiums. but because there's so little competition in the insurance industry, they are ok with people being priced out of the insurance market because a lot of people will be stuck. even if some people will drop

out, there will still raise premiums on the customers that they keep. and they will keep on doing this for as long as they can get away with it. there is no secret. they are telling their investors, we are in the money. we will keep making big profits even though a lot of folks will be put under hardship. some -- so how much higher do premiums have to rise before we do something about it? how many more americans have to lose their health insurance? how many more businesses have to drop coverage? all those young people out here, after you graduate, you will be looking for a job. think about the environment that will be out there when a whole bunch of potential employers tell you, you know what? we cannot afford to point where we will take thousands of dollars of your paycheck because the insurance companies to just jack up our rates. how many more years can the federal budget handle the crushing cost of medicare and

medicaid? that is the debt you have to pay, young people. when is the right time? is it a year from now or two years from now or five years from now or 10 years from now? i think it is right now. that is why you're here today. [cheers and applause] leslie is a single mom, just like my mom was a single mom. she is trying to put her daughter through college. she knows that the time for reform is now. a self-employed cancer survivor from ohio wrote us a letter and said that her

insurance chargers $6,000 with the premiums, paid $9,000 worth of care, and now they want to raise rates for next year. she wants to drop her insurance because it may coster the house that her parents built. she knows that it is time for health care reform. a friend that i meant when i was campaigning in wisconsin is a young mother with two kids. she thought she had beaten her breast cancer, but then found out that it spread to her bones. she and her husband had medical insurance. but her bill landed her with 10 thousands of -- tens of thousands of dollars worth of debt. all she wants to do is spend time with her children. i spoke with her this last weekend. she knows that the time for reform is right now.

so what should i tell the americans? that washington is not sure how it will play in november? that we should walk away from this fight? or do something like someone the other side of the aisle has suggested, take baby steps? they want me to pretend to do something that does not really help these folks. we have debated health care in washington for more than a year. every proposal has been put on the table. every argument has been made. i know well lot of people view this as a partisan issue. but both parties have found areas where we agree. what we have ended up with is a proposal that is somewhere in the middle. it is one that incorporates the best from the democrats and the

republicans, the best ideas. think about it along the spectrum of how to approach of care. there were those in the beginning of the process that wanted to scrap the system of private insurance and replace it with a government-run health care system like in other countries. [cheers] it works in places like canada, but i did not think it would be practical or realistic to do it here. on the other side of the spectrum, we have those who believe that the issue is just to loosen regulations on the health care companies appeared but if we had fewer regulations on insurance companies -- health care companies. but if we had fewer regulations on insurance companies, somehow, market forces will make things better. we have tried that.

i am concerned that that would only give insurance companies more leeway to raise premiums and denied care. [applause] the bottom line is that i do not believe we should give government or insurance companies more control over health care in america. i think it is time to give you, the american people, more control over your health insurance. [is and applause] that is why my proposal is on the current system, where most americans get their insurance from their employers. if you like your plan, you can keep your plan. if you like your doctor, you can keep your doctor. as a father of two young girls, but i do not want a plan that interferes with the relationship between a family and their doctor.

we want to preserve that. the proposal would change three things about the current health care system. first, it would end the worst practices of insurance companies. within the first year of signing health care reform, thousands of uninsured americans with pre- existing conditions would suddenly be able to purchase health insurance for the very first time in their lives. [applause] or for the first time in a long time. [cheers and applause] this year, insurance companies will be banned forever from denying coverage to children with pre-existing conditions. [cheers and applause] this year, they will be banned from dropping your coverage when you get sick.

[cheers and applause] and they will no longer be able to arbitrarily and massively hike your premiums, just like they did to leslie and antoma and too many other americans. those practices will end. [cheers and applause] if this reform becomes law, all insurance plans would be required to offer free preventive care to all of their customers starting this year, free checkups, so that they can catch disease quickly. [applause] starting this year, there will be no more lifetime or restrictive annual limits on the amount of care you can receive from your insurance companies.

there's a lot of fine print in there that can cost you people hundreds of thousands of dollars because they have a limit. if you are a young adult, which many of you are, you will be able to stay on your it -- on your parents' insurance policy until your 26 years old. [] cheers and [ -and -- [cheers and applause] and there will be a new independent appeals process for anyone who feels they were unfairly denied a claim by their insurance company. you will have recourse if you are being taken advantage of. that is the first thing that would change and it would change fast. insurance companies would finally be held accountable to the american people. that is number one.

no. 2, the second thing that would change about the system is this. for the first time in their lives, uninsured individuals and small-business owners will have the same kind of choice of private health insurance and that members of congress get for themselves. [end applause] -- [cheers and applause] if it is good enough for congress, it should be good enough for the people who is paying the congress salaries, which is you. [cheers and applause] the idea is very simple.

[[unintelligible] -- >> [unintelligible] >> let me explain how this works. my proposal says that, if you're not part of a big group, if you do not work for a big company, you can be part of a pool which gives you bargaining power over insurance companies. it is very straightforward. suddenly, just like millions of federal employees, you, as an individual or small an business owner, you can have more negotiating power for a lower rate and a better deal. [applause] if you still cannot afford the insurance that is offered, even

if it is a better deal than you can get on your own, we will give you a tax credit to do so. these tax credits add up to the largest middle class tax cut for health care in history. [cheers and applause] the wealthiest among us, they can already afford to buy the best insurance there is. the least well-off are already covered through medicaid. it is the middle-class that gets squeezed. that is who we need to help with these tax credits. that is what we intend to do. [cheers and applause] i am going to be honest. let's be clear. this will cost some money. it will cost about $100 billion per year. most of this comes from the

nearly $2.50 trillion per year that america already spends on health care. right now, and a lot of that money is being wasted or spent badly. with this plan, we will make sure that the dollars we spend will go to making insurance more affordable and more secure. i will give you an example. we will eliminate wasteful tax subsidies that go to insurance and pharmaceutical companies. they're getting billions of dollars a year from the government, from taxpayers, when they are making a big profit. i would rather see that money going to people who need it. [applause] we will set a new fee on insurance companies that stand [unintelligible] they will have 30 million new customers. there is nothing wrong with them paying a little bit of the

freight. [applause] the bottom line is this. our proposal is paid for. all the new money generated in this plan goes back to small business owners and individuals in the middle class who are having trouble getting insurance right now. it would lower prescription drug prices for seniors. it would help train new doctors and nurses to provide care for american families and physicians assistants and fare best. there are great programs right here in arcadia. [cheers and applause] i was hearing about the terrific programs you have here in the health care field. we are going to need more health care professionals of the sort that are being trained here.

we want to help you get that training. that is in this bill. [applause] i mentioned two things. insurance reform and making sure that people who do not have health insurance are able to get it. finally, my proposal would bring down the cost of health care for millions, families, businesses, and the federal government. [applause] as i said, you keep bond hearing from the critics and some of the republicans on the sunday shows saying that they want to do something about costs. we have now inc. almost every single serious idea from across the political spectrum about how to contain the rising cost of health care, ideas that go after waste and abuse in our system, including in programs like

medicare. but we do this while protecting medicare benefits and we extend the financial benefits of the program by nearly a decade our cost-cutting efforts -- nearly a decade. our cost-cutting efforts reduce most people's premiums because we're spending our health care dollars more wisely. [cheers and applause] those are the savings determined by the congressional budget office, which is the non- partisan, independent referee of congress for what things cost. so that is our proposal. insurance reform, making sure a that you can have choices in the marketplace for health insurance and making it affordable for people, and reducing cost.

[cheers and applause] how many people would like a proposal that holds insurance companies more accountable? [cheers and applause] how many people would like to give americans the same insurance choices and that members of congress get? [cheers and applause] and how many would like a proposal that brings down costs for everyone? [cheers and applause] a that is our proposal and it is paid for and it is a proposal whose time has come. [applause]

the united states congress owes the american people a final up or down vote on health care. [cheers and applause] it is time to make a decision. the time for talk is over. we need to see where people stand. and we need all of you to help us win that vote. i need you to knock on doors, talk to your neighbors, pick up the phone, when you hear an argument by the water cooler and somebody says this is bad guys, said, hold on the second. we need you to make your voices heard all the way in washington, d.c. [cheers and applause]

they need to hear your voices. right now, the washington echo chamber is in full throttle. it is as deafening as it has ever been. as we come to that final vote, the echo chambers telling members of congress to think about the politics instead of thinking about doing the right thing. that is what mitch mcconnell said this weekend. his main argument was that this will be really bad for democrats politically. first of all, i generally would not take advice about what is good for democrats. [laughter] [applause] but setting aside that, that is not the issue here. the issue here is not the politics of it.

but that is what members of congress are hearing right now on the cable shows and the gossip columns in washington. it is telling congress that comprehensive reform has failed before. remember what happened to clinton. it may be too politically hard. yes, it is hard. it is hard. that is because health care is complicated. healthcare is a hard issue. it is easily misrepresented. it is easily misunderstood. so it is hard for some members of congress to make this vote. there is no heart -- there's no doubt about that. but you know what else is hard to? what leslie and her family is going through, that is hard. [shoes and a plus] -- [cheers and applause] the fact that natomas may lose

her house, that is hard. [applause] my friend in green bay having to worry about her cancer and her debt at the same time, trying to explain that to our kids, that is hard. [applause] what his heart is with millions of families and small businesses are going through because we allow the insurance industry to run wild in this country. [applause] so let me remind everybody. those of us in public office were not sent to washington to do what is easy. [applause] we were not sent there because of the big fancy title. we were not sent there because of the big fancy office. we were not sent they're just so everybody can say how -- sent there just started can say how wonderful we are. we were sent there to do what is hard. [applause]

we were sent there to take on the tough issues. [applause] we were sent there to solve the tough challenges. [applause] that is why we are there. [cheers and applause] in this moment, we are being called upon to fulfill our duty to the citizens of this nation and to future generations. so i will be honest with you. i do not know how passing health care will play politically. but i do know that it is the right thing to do. [cheers and applause] it is right for our families, for our businesses, for the united states of america, and if you believe that, i want you to stand up with me and fight with me. the opportunity is here. let's seized what is within our

grasp. thank you. [cheers and applause] ♪

♪

>> soon after this speech, senators responded to his remarks on health care. we will hear first from senate minority leader mitch mcconnell, followed by mike johanns, and arlen specter. >> the democrats in washington

have been focused, some with faye fixated, on making dramatic changes to the american health care system as we know it. the best interests of the public at a time of record unemployment and a need to address jobs and the economy. but what's not open to debate i what is not open to debate is that the plan they came up with is fundamentally flawed. problem with our health care system, which is cost. this is why americans have been telling democrats in washington to scrap their plan and start over, and this is why so many americans are so frustrated with government right now. the administration says we need to pass its health spending bill to show americans that government still works. americans are saying just the

opposite. they're saying that the first thing washington can do to show it's working is to listen to what the public is saying: to scrap this bill and to start over. unfortunately, democrat leaders in congress aren't interested. they're still clinging to the same old bill and the same old process americans rejected last year. they're more determined than ever to jam their bill through congress by any means necessary. so over the next few weeks, we're going to see a replay of the same kind of arm twisting and deal making we saw in the run-up to christmas. i say we're going to see it, but in reality we won't see any of it. we'll have to read about the deals and the arm twisting only after the final bill hits the floor, because all of the arm twisting and deal making is going on behind closed doors, and it's already started.

somehow the administration seems to think all this arm twisting and deal making will prove to the american people that government works. i should think that americans will draw the opposite conclusion. americans don't like this bill any more today than they did three months ago. they don't like the frantic, backroom deal making any more now than they did then. in the midst of all this, it's understandable that a lot of democrats are on the fence about whether to vote for this bill, about whether to vote for this process, as well. but the reasons they're giving for being on the fence really don't square with they are not going to fly with the public. some say they like the current bill because they say it reduces cost. it does not. the administration's own experts say that it increases by $22

billion more than if we took no action at all. in other words, the bill would ban the the cost curve up, not down. others say they like the current bill because it reduces the deficit. but the one bill that the senate will be voting on tomorrow would wipe away every dime of those projected savings with one stroke of the president's plan. if you believe that the health bill will save $100 billion, you have to also acknowledged that the bill that the senate will pass this week increases it by $100 billion. so far from moving in a fiscally responsible direction, the spending bill that the white house wants congress to pass before easter would move us into a less fiscally responsible

direction. this undercuts the entire point of reform. the administration recognizes that the weakness of its argument. that is why it is trying to create a sense of inevitability about this bill. once again, it is imposing an artificial deadline on members. it is talking about how we are in the final chapter of this debate. the administration wants members to believe they're characters in a screenplay and that the ending of the play is already written. this is an illusion. house members aren't buying these arguments any more. in fact, many of them are already walking off the set and my guess is that a lot more are about to. they know that we may be nearing the final act for this bill and the legislative process but that it's just beginning for those who support it. americans do not want this bill. they're telling us to start

over. and the only people who don't seem to be getting the message are democratic leaders in washington. but they can be sure of this -- absolutely sure of this -- if they cut their deal, if they somehow convince enough members to come onboard, then they'll get the message. the public will let them know how they feel about this bill.n. the presiding officer: is there objection? without objection. mr. johanns: mr. president, i rise today to speak for about ten minutes to talk about the health care debate that continues to be in front of us. for much of our country, the health care debate has been a long and confusing trail. as details have emerged over the last weeks and months, constituents ask me what's going to happen to my health care? will i be able to continue to see the doctor that i have

always seen? they've heard both sides argue the merits and the detriments of various pieces of legislation. citizens are understandably skeptical and perplexed by the debate that has transpired. one of the things i would suggest, mr. president, that is very clear, one situation that is clear as a matter of policy and conscience is this, and that is that americans are against the federal funding of abortion, whether they support or oppose the bill. unfortunately, the senate-passed health care bill allows taxpayer funds to fund abortion. the current senate language does this: it says people who receive a new government subsidy could enroll in an insurance

plan that covers abortion. stphog would stop them from -- nothing would stop them from doing that. some say, well, yes, but states could opt out. what i point out is that those states that opt out, in those states the taxpayers would still see their tax dollars funding elective abortions in other states. additionally, the office of personnel management can provide access to two multistate plans in each state, and only one of them would exclude abortions. o.p.m.'s current health care program, the federal employee health benefits program, now prohibits any plans -- any plans -- that cover elective abortion. so for the first time a federally funded and managed health care plan will cover elective abortions. those who have looked at this

language have said very clearly that it's woefully inadequate. i say that. it does not apply a decades-old policy and agreement really that was reached many, many years ago that was embodied in the hyde amendment. the hyde language bars federal funding for abortion except in the cases of rape and insist or where the life of the mother is at stake. the public has clearly rejected advancing the abortion agenda under the guise of health care reform. yet, as we have seen, the language of the senate bill proceeded, seems very, very clear that my colleagues are refusing to listen to that. they seem bent on forcing this very unpopular bill upon us via a rather arcane process called

reconciliation. the important point to be made today is this: reconciliation will not allow us to fix the egregious abortion language. mr. president, this is not the first time that i have come to the floor to speak about this issue. last november, i came here to urge pro-life senators to vote "no" on cloture if they wanted any chance to address the federal funding of abortion in the senate bill. i said then that if the language wasn't fixed before the debate began, there would be no way to fix it. we would not have any leverage to fix it. mr. president, i wish i were here on the floor today to say this, to say that i was wrong about that.

unfortunately, though, i was not wrong. unfortunately, when an amendment was offered to match the stupak language in the house bill with the senate bill, only 45 senators supported it. the sad reality is this, this senate as a matter of the majority is not a pro-life majority. there are not 60 senators who are willing to vote for that. back in november, some of my colleagues disagreed with my assessment. there was a big debate. they said wait a second here. we can fix this provision via an amendment, they said, but they were wrong. when the dust settled, we were left with a senate bill that allows federal fund of abortion. the house is now being asked to

vote on the senate bill. you see, that is going to be the pathway. vote on the senate bill so any fix on other provisions can come through a reconciliation side war. now, korgs national right to life committee, the senate bill is -- and i'm quoting their language -- the most pro-abortion single piece of legislation that has ever come to the house floor for a vote since roe v. wade. unquote. they go on to warn -- and i'm quoting -- "any house member who votes for the senate bill is casting a career-defining pro-abortion vote." unquote. there is talk that democrat leaders might try to appease pro-life house members by

promising to change the senate bill through a separate bill or the reconciliation sidecar that i mentioned. i urge pro-life supporters and pro-life house members to think through this very, very carefully. don't be food. don't be lulled into thinking that there are 60 votes in the is that senate that will somehow rescue the situation. there are not. you don't have to take my word for it. it's in black and white in the "congressional record." it's the same situation we faced in november. the senate specific economy rejected the amendment that would have blocked federal funding for abortion. nothing -- nothing -- has changed to suggest the senate would have anywhere near 60 votes to support it now.

it was recently reported that some in the pro-life community support adding pro-life language in the reconciliation sidecar or maybe in a separate bill, with the hope and the promise that somehow the senate will swoop in and waive the rules and keep that language there. let me be abundantly clear, as much as i might want that to happen, it won't happen here, as demonstrated by november's vote. so if the senate rejects it again, the language in the senate bill would become law. current law would be reversed and taxpayer dollars would in fact fund abortions. it was recently a column in "the washington post." it issued warning to pro-life

democrats to be wary of this strategy. and i'm quoting again: "the only way they can ensure that the abortion language and other provisions they oppose are eliminated is to reject reconciliation entirely and demand that the house and the senate start over with clean legislation." so, mr. president, i come to the senate floor again to encourage my pro-life colleagues in the house to recognize the reality here in the senate. i tell them what they know already, and that many innocent lives are depending upon their courage. this issue should not be an issue of political gamesmanship, especially when the game is so rigged against pro-lifers.

this is an issue of conscience. on this one, you are pro-life or you are not. agreeing to a strategy that is guaranteed to fail, one that has failed already in this health care debate in november, in my judgment, is not leadership at all. it's surrendering your values. i leave the floor today, mr. president, and i pray that my house colleagues will have the wisdom to understand this in their decision making. thank record. the stage is now set where we have gridlock on the issue of comprehensive health care reform. and in this situation we have had the bills pass by both the

house and senate. and we're now looking to use reconciliation, a procedure which has been employed some 22 times in analogous circumstances, ill husband triive of the analogous circumstances is the medicare advantage, the passage of koab, a the passage of schip, the passage of the welfare reform bill in 1996. in a learned article in the -- in th the "new england journal f medicine," dr. henry aron, an expert on budgetary matters had

this to say -- "cloture can be used to implement instructions contained in the budget resolution relating to taxes or expenditures. congress created reconciliation procedures to deal with precisely this sort of situation, referring to what we have with the senate passed bill and the house passed bill. the 2009 budget resolution instructed both houses of congress to enact health care reform. the house and the senate have passed similar, but not identical bills. since both houses have acted, but some work remains to be done to align the two bills, using reconciliation to implement the instructions in the budget resolution follows established congressage procedure." i ask consent, mr. president, that the full text of this article be included in the

record following my statement. the presiding officer: without objection. mr. specter: so what we have here, essentially, is gridlock we have gridlock treated by the composition of the two houses of congress. we have a situation where not one member of the other side of the aisle voted in favor of the health care bill. only one out of 177 in the house -- a more precise definition of gridlock is what appears here. it would be my hope that we would be able to resolve the issue without resorting to

reconciliation. if there's any doubt about the procedure, our institutional integrity would be enhanced without going in that direction. . five years ago in 2005, the senate faced a somewhat similar situation when the rules were reversed. when it was the democrats filibustering the judicial nominees of president bush. and we find that so often that it depends on whose ox is being gored as to who takes the position. some of the objections on reconciliation on comprehensive health care reform have filled the congressional record with statements in favor of using reconciliation in analogous

circumstances that would help their cause. in the year 2000, it was the democrats stymieing republican judicial nominees. during the clinton administration, it was exactly reversed. it was the republicans stymieing the clinton nominees. it was the republicans stymieing the clinton nominees. in 2005 we were able to work o the controversy. we were able to confirm some of the judges. some of the judges were withdrawn and we did not move what was called the nuclear option which would have confirmed judges by 51 votes. and the procedural integrity of the senate is really important. without going into great detail, it was the senate which saved the independence of the federal judiciary when the senate acquitted the supreme court justice chase in 1805. it was the senate which preserved the power of the

presidency on the impeachment proceeding of andrew johnson in 1868. congress sought to have limited president's power to discharge a cabinet officer in absence of approval of the senate. well, the senate has to confirm, but the senate doesn't have standing to stop the president from terminating the services of the cabinet officer. and there the senate saved it through the courageous vote of a single senator, a kansasan, i'd like to mention, being one originally myself. so it would be fine if we could find some way to solve the problem. but absent that, this senate reconciliation procedure is entirely appropriate. we have gotten much more deeply involved in the research and analysis as this issue has come to the floor on comprehensive health insurance.

comprehensive health coverage. the gridlock that faces the senate and country today has profound implications beyond the -- the legislation itself. it's hard to find something more important than ensure -- insuring the millions of americans now not covered. hard to find something more important than stopping the escalating cost of health insurance, driving many people to be uninsured and raising the prices for small business where it cannot be afforded. but the fact is that this gridlock is threatening the capacity in this country to govern. really threatening the capacity to govern. secretary of state hillary clinton was before the appropriations subcommittee on foreign operations, and i asked her about this issue.

i asked her about the president -- quote -- -- not being able to project the kind of stature and power of a year ago because he is really hamstrung by congress, and it has an impact on foreign policy which we really ought to do everything we can not to have partisan influence. secretary of state clinton replied as follows." senator, i think there is certainly a perception that i encounter in representing our country around the world that supports your characterization. people don't understand the way our system operates, and they just don't get it. their view does color whether the united states is in a position, not just as president, but our country is in a position going forward to demonstrate the kind of unity and strength and effectiveness that i think we have to in this very complex and dangerous world. "she continued a little

later --" we have to be attuned to how the rest of the world sees the functioning of our government because it is an asset. it may be an intangible asset, but it is an asset of great importance, and as we sell democracy, and we're the lead democracy in the world, i want people to know that we have checks and balances, but we also have the capacity to move, too." so that what we really find here is a diminution of the authority and stature of the president, a diminution of the authority and stature of the presidency, and ultimately a diminution and reduction in the stature of our country and able to deal with these problems. so it would be my hope that we could yet resolve this issue with a little bipartisanship.

it wouldn't take a whole lot, but at the moment there is none. with 40 senators voting no, all of those on the other side of the aisle, 176 out of 177 republicans in the house voting no. that simply is no way to govern. i thank >> coming up, an analysis of this year's congressional elections. then, the prime minister of greece talks about his country's debt crisis and relationships with the u.s. and europe. later, economists discuss the u.s. health-care system. >> this weekend, but television is heading west with live

coverage from the tucson festival of books. starting saturday, hear from authors on their experiences living on the mexican border. sunday, panels on writing about history, the war in afghanistan, wwii and other topics. this weekend on "book tv." >> a look at how the economy might affect this year's midterm elections. panelists include the editor and publisher of the "cook political observer." this was hosted by the national association of business economics.

>> i have often been criticized for wearing my heart on my sleeve. when i was asked to moderate this system on the political environment in washington today, i decided to wear what i see and feel. that is red. i get very angry about the political process during election years because it seems to be that they have a way of taking our debate down to the lowest common denominator and it was not exactly high to begin with. when i hear things like ron paul asking the fed about the role played in watergate and the iran contra scandal, i wonder about the intelligence of people elected to congress. i know there are some intelligent people out there but they're getting few and far

between. and i also wonder when senator bunning compares ben bernanke to hitler. these are clearly a bias on protecting fed independence on my part but today, i think we have an extraordinary panel and an extraordinary opportunity to try to understand what is next. a lot has happened in a very short period of time. we went from gridlock to talk about major reforms in health care and financial reform being brought to vote. i think that is something that is extraordinary. i am going to turn over the podium. we have a full hour so we will do 50 minutes -- 15 minutes with charlie cook. i think this environment must keep you pretty busy. and greg who was known for a

long time, welcome back to washington. we missed you. both charlie and greg have incredible breath of information and knowledge on what is going on. i do not know how it does not make him drink quite heavily to watch what is open on. if you are enduring, i remember when she appeared give that speech, all of us were consuming heavily. the one thing i have been tracking consumption of is out halt. in good times, we popped champagne corks, in bad times we drink generic beer. our consumption has gone up in volume which is the quality trade-off. in other countries drop consumption on the run out of money. we just buy cheaper stuff here. without further ado, i would like to welcome charlie up to the podium.

thank you. [applause] >> thank you. thank you for having me. this is a great panel and i am looking forward to this. first of all, i think the whole country owes all of you a debt of gratitude, particularly in these times, policy makers, business leaders, everybody is looking to you for guidance in terms of what is going to happen. i hope you are really smart. you have your pencils sharpened because we are looking to you. change was the watchword in 2006, 2008. it looks like it is the watchword now, as well. a dominant term in american politics.

in 2006, we had the war in iraq at its lowest point. you had a serious of congressional scandals under the republican control of congress. president bush paused numbers were in the toilet. everything that could possibly go wrong for republicans did in fact go wrong in that. leading into the 2006 election. sure enough, they lose their majority in the house and senate. they had one that just 12 years earlier and that 1994 newt gingrich election sweep. and 2008, when iraq got better but as you well know, the economy got a lot worse. president bush' numbers were still in the toilet. while republicans were swept out of the house and senate, voters were angry at republicans and wanted to sweep them out of the white house, as well.

you had the second factor of all of these new voters who were so excited about barack obama. young voters, minority voters coming in and took democratic majorities to a higher level. and both of these elections, which sought democrats being motivated while republicans were lethargic. the second thing was independent voters swing heavily in 2006, in 18% margin for democrats in the house of representatives. they gave barack obama and eight. win. democrats have to defend the majority that was created in those optimal conditions in 2006 and 2008. change is the watchword again now in the sense that to me, the circumstances would have to change to change the trajectory

of this election. right now, you hear health care experts talked about bending the cost curve to keep it at a sustainable level. looking back at the last month of what has happened with the heat has been turned higher and higher, something will need to bend that curve or if it continues at the current trajectory, it will go over 40 seats. but something would have to change. in terms of the senate, but things do not change, you will see democrats losing in excess of five senate seats but in all probability, the odds are public 95% that the democrats will retain their majority but you are likely to see one that is significantly diminished. i am not saying it is there now but what i am saying is that we are on a course that appears

likely to go over that point between now and november. just to talk briefly about the house and senate pictures, and the house, there is a 46 majority for democrats. to put that into context, democrats have 53 seats right now that were held by republicans just four years ago. in varying degrees of enemy territory, to look at it differently, 48 house democrats are sitting in seats that john mccain just one back in november of two dozen aid. 47 democrats are sitting in seats that went for john mccain and also went for george w. bush and the 2004 elections. when we go through and start with the first district of alabama and go through all 435 districts and end up in

wyoming, looking at it district by district and using the zero tip o'neill added, it was actually his follow -- his father that said all politics are local, when we do that right now, about one week ago at a -- we had a democratic loss of 28 seats. it is probably closer to 30. let's call at 34 just the sake of argument. when you have these with the elections, and we have had an abundance of indicators that this is not in normal election, that race by race approache, it always underestimates what happens when you have a way election. that urn that painfully in 1994

when republicans won control of congress. we could count up very large republican gains but we could not quite get that number up to the 40 seats that republicans coincidently needed to get control of the house. not only did they get 40, they got 52. in 2006, the next wave election we saw come along, we figured out that you have to do a hybrid approach of the micro and overlay a macro on top of that. we hit that one right on the head. when you take that microanalysis that fits you to 28 or 29 seats, you start to apply that macro. democrats right now have 59% of the seats in the house of representatives. the relationship between the percentage of seats that a party

has and a percentage of the major party, the two-party vote were you throughout the wacko vote, -- where youths throw out the wacko vote, when you factor that out, there is generally a good linkage between the popular two-party vote and the percentage of seats. in that last election, democrats got 56% of the popular vote for the house. they carried the popular vote by a 12 point edge. if you took a poll nationally, when they ask people if the election were held today who you would vote for, it was dead even. absolutely dead even. other averages are basically even on that, too. when you then look at the polls

that are looking for likely voters, and one pulled for example, they ask people on a scale from 1 to 10 how interested you are in the upcoming election. they take the nines in the 10's. when you look at the most likely people to vote, the parity between the parties turns into a republican advantage. up into double digits almost with that intensity that democrats had in 2006, those voters have become lethargic. republican voters that were lethargic in the last two elections are suddenly very motivated. looking at that gallup poll, where democrats when they won their majority in the house, they had an 18 point lead among independent voters. they have swung in their voting

for republicans by 17 point margin now. we are seeing the old "lost in space" television show, danger. we have been seeing this since last summer and it has been building and building. i talked about the curve. what could bend that curve? first thing, when you talk to democrats, they admit there is no question whatsoever that this is looking eagerly ugly for democrats. the only question is how bad is it? some of my friends in the political science world, they do not quite see the apocalypse the democrats that i do. my biggest competitor and good friend is sort of somewhere between me and where tom is. and we are at varying degrees of how bad things are. these are gradations of how bad it will be for democrats.

i am the out wire a little bit. when you ask democrats, what could change things? what could save the majority? you usually hear two things. unemployment getting better. i am not going to stand in front of a room poles sional economiu is the direction getting better? to me, you have to give it about a point down or so before you can hang out a mission accomplished banner in the front yard. i frankly did not see that happening. you know more about this than i do but i think the answer is democrats getting a lifeline on the unemployment line, and job creation, it is unemployment for political purposes. that is the key one. the second thing is health care.

if the democrats get a bill through, that could be the shot in the arm they needed. maybe but the way i look at it, democrats have three options. i am trying to look at this from a non-partisan and non it logical -- non-theological view, they have three options but they could quit. that means we wasted the first year we were in office. that is not a good option. they could fail. see the first explanation. that is not much better. or they could jim something through that people at least today say that they did not like and do not want, jam it through and hope that their minds changed at a later date.

that is clearly what they are pushing to do and may do. the vote in the house could be very close. the thing about it is since democrats have lost the messaging battle on health care for the last year, but it is objective probability. i do not know what democrats will suddenly start when that -- winning that battle than a lot of opinions have formed on this. people may look back on this proposal and think it is great and even if they did, giving democrats every benefit of the doubt, i am not sure it will be between now and november 2. that is not likely the lifeline they're going to get. a friend of mine on wall street used to ask me, if you were wrong, what are you wrong? this was about something else. if i had to pick apart my own argument, it got some the

republicans are not to win to get a majority in the house and not going to win six or more senate seats, i think what i would say is i do not think unemployment is the explanation. i did not think health care becoming popular is the answer. i think it is more likely that what you saw happen was either in a lot of republican primaries around the country, i think this t party is vastly overblown but i think it is representative of something larger, a very angry group of people who are not necessarily a part of the process in the past storming the primary election polls and nominating people that are way out there where there would be in the establishment republican candidate and then there would be another republican candidate that is a wax job -- whack job,

suddenly, if you see that happening, republican gains may not be what we're talking about or the second variation is if you see establishment candidates winning some of these republican primaries but the tea party movements or their ilk start fielding candidates independent in the general election that would be siphoning out of republican column votes. to me, if i am leaving myself and out, that is the one thing that i think could undercut

might broader case. this is going to be a tough one for democrats, the question is how tough. do not assume anything about this midterm election in terms of projecting forward to 2012. midterm elections are notoriously bad about predicting the following presidential election. all you have to think back is to 1982 when republicans have that tough loss during the 1982 recession. they lost 28 seats in the house of representatives. they did not lose the majority. under president reagan, tough losses and what happened to years later in 1984? he won a 49 state suite. every state except minnesota.

look at bill clinton in 1994. democrats were almost wiped out. they lost the majority for the first time in 40 years in the house. they lost the majority in the senate. terrific election. what happens to years later? he wins comfortably over bob dole. this is the funny fact, look over the last 100 years. elected presidents who have taken over from the other party, only one of them has lost reelection in the last century. that was jimmy carter in 1980. that was losing to ronald reagan. there are a lot of really fine republicans looking at running for president in 2012. or some of them, anyway. i did not see ronald reagan out

there. i am not predicting that obama gets reelected, it cannot get a wrong. there are huge things. unemployment still being perhaps on -- 8%. do not make any assumptions based on this midterm election. if the final thing is this, i mentioned the democrats controlled the house for 40 years. goodyear's or bad years, 20 straight elections, democrats held the house. they lost it in 1994. 12 years republicans have the house on their side. they got thrown out in 2006. here we are, four years later, one of two things is to win to happen to either democrats hold on to the majority by their fingernails or they lose it. the circle is getting tighter and tighter and moving faster and faster. i think that that tells us is

the volatility out there among voters and their patientce is getting less and less and given the disfunction we see in washington, it shows that are not so dumb after all. they are seeing it and reading it. they have a hair trigger on reacting. that is something we need to pay attention to very closely. thank you very much and i look forward to the question period. [applause] >> we are going to take up a collection and a few minutes for a rottweiler and a bulletproof vest. great to be here. i want to pick up where he left off. what does this mean for the agenda? the investment issues that we all follow. at the outset, i say that since neither of us are encumbered by an affiliation with a political

party, we are free to speak very candidly. i would start out by saying that for most of us who had been doing this for a while, the concept of bipartisanship is a crock. i roll my eyes when i hear that. i hear people on television saying how we have to be bipartisan, it just does not work. this administration came in with a lot of knife that tate and some hubris, as well. they thought they could have a bipartisan deal and wasted one year trying to get a bipartisan deal that does not exist. i think it is fair to say that the lack of bipartisanship is bipartisan. it is equal. we got a deal on a jobs bill about one month ago and at the last minute, harry reid torpedoed it. i thought that was a rare side -- rare sign of parties working together. most of these issues are

theological more than anything else. it is going to be very difficult to see much. before i talk about the agenda, i would just say there is a very depressing sight in this administration. that is -- that is the finger- pointing. whose fault is it? everybody is spending. that is a sign things are not doing well. this incestuous world inside the beltway, the speculation is who goes after the gulf region after the election? who pays the price for the failures? my own personal take and i am sure all of us have opinions, mine is that the white house abdicated largely to the house for the first year or so on so many key issues. the idea that you would abdicate to the old dinosaurs in the house, rangel, waxman, all of

these old-timers who came up with the stimulus bill that was loaded with pork that gave all the talk show hosts plenty of ammunition, and then they abdicated on health care reform in the first bill had a very tough surtax on wealthy individuals. and scared about the people. the public option was not well explained. by advocating to the house, the administration set itself up for where they are. let's talk about the agenda, where it stands right now. if the vote were held today, i think health reform would fill in the house. we do not think that nancy pelosi has a 217 votes that are necessary. my colleague at the potomac research group thinks she is probably at 211 or 212. there will not be a vote until she has the to -- the 217. it would be an apparent victory

because the political push back could be quite strong against the party. we have this bizarre experience if we get a bill through the house of then going back and doing reconciliation and making changes. we have the spectacle of a month or longer were the most important player in washington will not be ben bernanke or barack obama, it will be the senate parliamentarian who will judge every day whether certain issues are germane and if they involve budget or tax cuts. it could be somewhat analogous seeing this parliament terry really parliament terr -- parliamenty rulings. even if we do get a bill, there is a chance that the political ridicule would be great over the next month or so.

as far as other issues, you have to sit card check is dead. the big issue for organized labor is not going anywhere now. i think tap and trade is pretty much dead. pat think anything that involves a carbon tax or any kind of tax is absolutely radioactive right now. no politician wants to be identified with a big tax. there might be an effort to impose upon utilities different energy efficiency standards but any sort of robust capt. trade bill is pretty much dead. -- cap and a trade bill is pretty much dead. i think chris dodd is at a point where he will sign off on anything for a legacy, a bill that will have his name on it. he keeps maneuvering on a consumer protection agency and they are convinced he is willing to do anything to get a bill done.

i still think that whatever bill emerges will be won the industry will gladly live with. i do not think it will be a financial services bill that the industry would have a problem with. we see on so many of these issues, i did the agenda being watered down or in gridlock, that brings me to the main thing i want to talk about. this mantra that a good -- that gridlock is good. for years and years, gridlock is good. i am no longer convinced that it is necessarily good if we start looking like greece. i want to spend a few minutes talking to you about how utterly hopeless it appears to me that we get anything dramatic done that even if the democrats take a good beating, it might make it more difficult to get anything done on budget deficits. the one thing i always point out

to people when i talked is i know i will get questions with people saying why to they'd just not cut spending? you could take the entire discretionary part of the budget, you could take all of the discretionary budget and kill it. i did not mean freeze it, kill it. the fda, the fbi, flat out to let and you still have the deficit of about $1 trillion per year. that part of the budget is only about 17%. we would be lucky to even have a partial freeze on that part of the budget. when i hear people saying cutting spending, that is not enough. i would think that there are only three options that we can look at to get us out of this mess. one would be to grow your way out of it. you are not going to grow your way out of the deficit this big. the obama gdp forecast is slightly pessimistic that you

will not grow your way out of it. a second approach would be to look at the other 83% of the budget that is apparently untouchable. that consists about half entitlements, social security, medicare, medicaid. i cannot see any meaningful reform of the entitlements before this election. frankly, i did not see any meaningful reform until after the next presidential election. while alan greenspan and others said some smart people could get together in a room and within a few hours come up with this solution on social security, that is not coming anytime soon. you look at what is left with the budget. close to 20%. defense, wars, va hospitals, even this administration which is castigated for being too far to the left has advocated increase in spending in this

area by 2.5% in the upcoming fiscal year. i did not see any big cuts coming. the rest of the budget is just interest on the national debt which is about 14%, a high number. i do not see deep spending cuts being a fruitful area where we are going to whittle down this deficit of $1 trillion or more for the next couple of years. then we come to the most controversial option of all. that is what about a new source of revenue? i would be interested in our next speaker. i would have told you if of your one year ago that i thought maybe there will be new revenue. maybe there is a way to deal with a deficit that way. i think charlie would agree that after what happened to john courson and massachusetts, tax hikes are totally toxic to any politician. you can forget all the balloons about a vat tax fund every

couple of years, you can set your watch on a bunch of leads that they are going for a vat tax. nobody will go after something that would be demagogue. that would be a huge source of revenues that won't happen. another area would be u.s. multinationals. there was a big push and it is still and the obama budget to change the way we tax the deferral of foreign income. that is not going to happen. corporate lobbyists have made a persuasive case that it would make our companies less competitive. i did not sense anybody wanting to go after that. some say that if you do, our companies will lose to singapore or hong kong. i did not see any big source of revenue there. and even on a fairly innocuous tax change, the prospects are bad. hedge funds can pay 15% capital gains rate rather than the top

rate of 35%. that seems to have stalled, as well. when i look at other tax increase issues, a surtax on the bridge, no way. any kind of tax on people making below $200,000, i am sure larry summers and the economic advisors in private look at this group. the people who make 100 to thousand dollars or $160,000, that is the mother lode. does he want to break a campaign promise that he would not go below 200,000 on individuals? if he breaks that promise, he could separate the same fate as president bush who broke attacks promised and served only one term. not only to why not see new

taxes to deal with the deficit, as we come to the end of this year, do we extend the bush tax cuts for everybody? i would have said one year ago it was not deny% that it would expire -- i would say it was 99% that it would expire. it is probably still 70%/30%. capital gains going from 50 to 20. dividends from 15 to around 20. that is the likeliest, i think. there is a growing movement on the hill to perhaps wait a year. maybe to not raise any taxes with the economy is still fragile up. that will cost another $300 billion but at this point, who is counting? just add it in? i certainly agree with the forecast.

i think gridlock will become more apparent. for everybody that rejoices over this gridlock, i would have to say that i agreed for now. a 10 year bond yield is not a problem. that is not a bad treasury 10- year bond yield. at some point, the bond market is going to have to realize that there is a lack of seriousness on the deficit and this lack of bipartisan compromise is going to have a significant impact on yields as we go into 2011, 2012, 2013. on that cheerful note, i will stop. [applause] >> thank you. this is not a partisan comment, by the way. i wanted to start up the questioning and you have to line up to ask the questions. i will start the questioning to

launch it. you commented about the volatility. you see that as a bit of a good thing. has that contributed to our ability to pass legislation? does it contribute to gridlock issues? on the third one, when we talk about deficit reduction, is there any sense of washington getting back to the five-year paygo rules so we get compromise over a longer period of time rather than everything crunched into one year of painful paying? we got some movement on both sides of the aisle on that. >> i will lead the substance to greg. i think the level of

partisanship we are seeing today in washington, it is a long time in coming and it has a lot of causes. some of it is these members do not know which other or trust each other. and there are no relationships. you could take it back to intangible things like more and more members are just here tuesday to thursday. they leave their families back in their home states and districts. the idea of the socialization and going to see a member from the other side's kid soccer game or playing golf together. that whole socialization process where people of different ideologies and partisan stripes could meet off campus and get to know each other and trust each other and build relationships.

i think the decline in international travel, the junkets, the old adage about not know when somebody until you travel with them, that is true. relationships going downhill. i think it is a product of the advertising we see in campaigns but it is much meaner and tougher than 30 or 40 years ago. even if you did not run an ad against me, somebody on your team did that was unfair and was distorted. i am going to hold it against you and everybody on your side. also, the temperament that members of congress on both sides, they are picking leaders almost because their leaders to not work well with the other side, not because they have any capacity track record or inclination to work with members of the other side. of the nine top leaders in both

parties in congress, i can actually only think of two of them, one on each side, that would have the slightest inclination to work with people on the other side. all of that together, and probably a few more factors, came together to create a totally dysfunctional situation and one that our country has been through a lot, the revolution, civil war, reconstruction, somehow we will figure out how to get through this. i cannot say that i see the path right now. >> i would just add a couple of points to what charlie said. you did not find anybody like people who used to be viewed as moderates. the level of hypocrisy going back to the budget deficit is worth spending a minute on. i had that extra cup of coffee

so the rent for 30 seconds about this. you hear kent conrad, one of the most passionate advocate of reducing the deficit, for years he has squawked about the deficit. he is one of congress's biggest spenders. talk about welfare. if you look at the amount of agricultural subsidies, they need to be addressed. to hear him rant against deficits, to me, is hypocritical. on the other side, d.c. richard shelby who held up something like seven obama appointments because he was not getting enough pork in alabama. he has ranted against budget deficits. these guys and gals say one thing and do another thing. the hypocrisy is blatant. the other point is transparency point it is a good thing but it has led to more gridlock. things like c-span. the fact that the nebraska deal

that was cut for ben nelson was instantly recognizable and out there on the internet. the average american is far more aware of this closed door meetings and it has made it more difficult to get things done. >> thank you. >> we started to talk about something out in the hall. maybe you could comment. we are going to appoint governors. the of vetting them inside. the board delayed because of ben bernanke in the financial reform bill. could this become an issue? the scrutiny of what to say about bond vigilantes' and deficit being what they are? >> i think that is a real loss because you are now down to only one macro economist on the fed board, ben bernanke. they have to get another one or two macro economists. i did not know if they could bring them back or not.

there is a need for macro economists but beyond that, the bigger issue is could obama get a fed that this somehow compliant or easy or soft on inflation? i doubt that. and bernanke's power is quite dominant at the fed. f there was a feeling that the fed was becoming too easy, they were ambivalent about inflation. they would get a gnashing -- a nasty slap in the face from the bond market or from some of the hawks at the fed. there are a lot of people at the fed who might squawk if the fed starts to look too easy. i do think they need more macro economists on the board. >> fannie and freddie, there is a little theater: on right now there.

they took all the ceilings off on the potential extra funds going to them and end an unnamed treasury official said he does not think it is going to be used. republicans have been attacking this generally and the bailout and had put through a bill which will probably not be passed to put fannie and freddie on the balance sheet. there bormann up for the election on this issue. it looks like barney frank counter -- countered last week and attacked and said both fannie and freddie creditors are not guaranteed. we are reworking totally new housing solutions and maybe they are not part of it.

my question is who is going to win this? is it relevant to anything actually done potentially or not guaranteeing freddie and fannie and creditors and insurance? >> when i talk to people about freddie in fannie, they threw up their hands. if i think it will stay in limbo for quite a while. i did not think there be any legislation dealing with them for quite a while. barney frank sounded the alarm on cnbc and i think it is a serious issue down the road. for now, they are going to kick that can on the road. and not see anything on that this year. >> might drop is to forecast the economy and stock prices -- my job is to forecast the economy and stock prices. it is pretty strong.

most economists are more bullish. what impact would it have if the economy and the stock market continued to do better? do you think your opinions that you get from your percipient when you take these polls come out to you think they could change dramatically? >> i do not think there is much relationship at all between how the stock market is going and the votes. looking at how the market has come back over the last year and how anchor has gone up. i am not saying there's an inverse relationship but i am saying there is not a relationship. i think the markets could theoretically go up substantially and not change. i do not think it is likely to change the outcome. for the average voter out there,

they do not know gdp from sdp. they really do not. the only number if they are actually even aware of, they may or may not be aware of the dow jones industrial average. in terms of politics, they're really only aware of unemployment. even then, some political scientists have pointed out that there is not a direct relationship between unemployment and midterm election results. the catch with that is we have only had once in the post-world war two era that we have unemployment over 10%. that was one month leading into 1982. the idea of having 10% unemployment for a solid year going into a midterm election, that is uncharted territory. even if the market continued to grow, i did not think that would

change. an unemployment would have to drop pretty substantially before i would say that that would affect things. >> i work with a wonderful gentleman that many of you know. he tells clients that it looks like we're in the sweet spot right now. we have moderate economic growth, low interest rates for one year before a rate hike, virtually no inflation, that is a nice trifecta. you go out and talk to retail clients, people look at me like i am on drugs. the average american and many investors who have never believed in the stock market rally are very cynical and skeptical that this rally is for real or the recovery is for real. it is such a pervasive attitude that i think it will take months and months of good data before

it turns things around. i agree with charlie, i think it is the unemployment number. in fact, all the years i have been doing this, i have never seen a dichotomy like this between the average american and people like us to do see a recovery under way. >> i just have to add on to that, we are all looking at the obvious issue which is home values, the largest asset most americans hold. those are still to win in the wrong direction. before we get to our next question, i want to throw this one out. both brought up the lack of bipartisanship or cooperation and lack of socialization. i thought was interesting because many years ago i heard somebody from illinois talk about how they would all drive back, no matter who they were

but i know that barack was originally from white. is there any way of curing this lack of socialization and did this just? is that something in our national policy that we have to address? >> if i could wave a magic wand, i would to a couple things. i would push to meaningful redistricting -- redistricting reform but rather than voters picking elect officials, we have the elected officials their voters. this one is designed for democrats and this one for republicans. that just creates ideologues on

both sides. when i moved to washington in 1972, there were a lot of conservative democrats and liberal republicans. for whatever reason, that has changed. the overlapping was tremendous bentham the number of conservative democrats were like a ballast that kept their party from marching off into a ditch. the liberal republicans kept their party from lurching off to the right. meaningful redistricting reform could do things but the schedule of congress, in terms of their work, to incentivize members to sort of live here a little more , maybe here three weeks and gone one week. i would like to get them around the world a little bit more severe more aware. there are breeding business leaders from around the broad. government leaders from around the world. military commanders around the

world. fe are a little more aware of that around them. that would help enormously. i forgot my other reason. >> i was always scornful of term limits. maybe we should test that off again. i have to note that when you have charlie rangel replaced, he was 79, he was replaced for two days. he was replaced by people who were 78. i have nothing against people of that age group but these guys do not get out much. [laughter] what better example could i point to? you have a senate majority leader saying barack obama speaks well for a light skinned negro. i have not heard anybody use that word since 1974. did these people get out very much? the lack of term limits may be a problem.

>> i feel compelled to add that when you look at states with term limits, i would say what is the most dysfunctional state in the u.s.? california. term limits are alive and well. i share your frustration but i do not think that is the solution. . . frustratius frofrustration -- >> i always wanted them to stick around long enough so they can take responsibility for what they messed up. but that's my own bias. >> and you guys are talking about the threat, the tea party candidates could split the vote and i happen to go to a tea party and threw a little tea bag in. i find people are concerned about a government taking away their freedoms to make a lot of decisions. and i see a lot of people all over this country afraid that the government is going to print so much money it destroys the

value of their savings. they don't know what to do with they don't know what to do with their and so, i'm curious what kind of political advice you could gi give -- forget the labels, tea party or anything else. for the people in this country that are scared that their government is taking their rights and freedoms away, whatever those might be and they're scared the government is not going to do what they said like you said to take the bull by the horns and limit spending. and they're afraid of their savings being destroyed. what kind of advice can you give them so they don't get marginalized in front of c-span and everybody else as whack-os. because i think freedom and the value of your savings is not a whacko issue. >> the two pieces of advice i would give them is number one, restrain the rhetoric when you're in front of a microphone screaming at the top of your lungs with your veins and your eyeballs popping and your veins sticking out of your -- i mean,

that kind of scares people a little bit. and that undermines effectiveness. sort of tone down the rhetoric a little bit. and the second thing would be to select when you're picking candidates, select the person you think that can bring the most amount of change but still have some realistic chance of getting enough broad-base support to win an election. i mean, the purity -- purity is great, but purity doesn't win elections in a lot of places. and that, you know, don't let the perfect be the enemy of the good. and having a candidate that embodies everything you believe in who was destined to lose in a general election doesn't really move the ball forward very much. and so they, you know, so i guess the -- to sum it up, i'd say dial it back and you could be -- you can have an impact. go full throttle and you will be

marginalized. >> i just disagree slightly with something charlie said a few minutes ago. he thought maybe the tea party was a little overrated. that it won't have that much influence. i think they're being heard very clearly in this city. the republicans certainly are. they want to co-op them on as many issues as possible. after the massachusetts race, which was a stunning result to everybody in this administration. the best line i heard was on saturday night live, they said martha coakley was such a bad candidate she would lose to dick cheney in berkeley. but at the same time, i think the reaction by the white house spoke volumes. they went almost populous against the banks. if you recall that week, january 19, brown won and within days you had harsh anti-bank rhetoric. even the democrats let alone the republicans are hearing the message. i agree with charlie, if you

look a little -- if the party looks a little less threatening, moves a little bit more to the center, it's going to have a big, big influence. >> let me clarify. i've got a column coming out tomorrow. to me when i think the tea party movement i think is overrated, i think they're kind of a tip of an iceberg. i think they are representative of a much broader group of people who aren't going to meetings and who aren't screaming in the television radio talk shows, but who are disaffected and who are expressing their concern. these are folks that you will never be able to explain t.a.r.p. to them, never be able to explain the necessity in my mind for the takeovers and some of the bailouts. the thing is, these are some of the things that i personally think were essential but can never be adequately explained to a lot of people. they're just never going to accept it. but the thing is -- i think the

tea party becomes a convenient label for a much broader group of people that are not quite, you know, they're not quite as vocal or not nearly as vocal or visible, but the polling data suggests it's a big group that's out there that's quite unhappy. and i think those people -- i'm not diminishing their impact at all. >> one last question from jim -- >> really quick. >> go far out in your crystal ball, election is over, november 3rd, republicans won the house and at least dramatically reduced the democrats' majority in the senate. who's the speaker of the house next year? and, you know, and the next two below. and two, is there any chance of that happens that we get a lame duck session that would actually approve the pending trade agreements with colombia, panama, and south korea, which would add a lot to economic growth. thank you. >> oh, lord -- >> and you've got about 30 seconds to answer it.

i shouldn't have let jim give the last question. >> let me just say, if republicans took over the house and i know there are a lot of sort of young rising stars on the republican side. but i would be very surprised if they took the speakership, the gavel away from john boehner. he was the field commander. and, you know, i'm not sure he'd be there forever, but i couldn't imagine they would take it away from him, you know, if they were victorious. if democrats were to lose their majority, my guess is that nancy pelosi probably would head on back to california or wherever before too long. i don't think she'd want to hang out as minority leader to be perfectly honest. and there's just a whole cadre of rising stars. i think you'd be looking for generational change. >> the brightest of all bright

lights is paul ryan in my opinion. he's a very likable guy, intriguing fellow. he's someone clearly to watch. i'd just answer the question this way, which way does barack obama go after the butt-kicking that the democrats are going to take in november? does he decide he wants to do a bill clinton and triangulate? does he want to be like a tony blair and play small ball and get modest things? bill clinton got nafta, got welfare reform, clinton did get a few things done. does obama want to go that way? or is he as his detractors claim a very cerebral law professor who doesn't have the guts for politics that bill clinton had? the jury's out on that. >> i think one thing, when you look at what we're seeing, one thing is because of these campaigns, democrats are absolutely terrified of raising revenue. republicans are terrified about cutting spending.

and that's sort of the policy paralysis we have. that they've been so stigmatized by negative advertising that neither party seems willing to do what good put these two parties on the planet to do. and democrats define revenue and republicans to cut spending. and that sort of the bottom line where we are right now. and i don't know what changes that. >> a crisis and there isn't one. >> thank you. i want to give a big round of applause for charlie and greg. >> tonight on c-span, the prime minister of greece talks about his country's debt crisis and relations with united states and europe. economist discuss the health care system. president obama visit

pennsylvania to talk about health care. later, an analysis of this year's congressional elections. >> on tamara's "washington journal," a look at the obama administration's efforts to reduce home foreclosures with john taylor. peter eavis discusses greece's debt crisis. maria carrillo after that. >> over 1000 middle and high school students entered our documentary competition with a short video on one of our country's greatest drinks or challenge were facing. we will announce the 75 winners and show you their winning videos at student kim -- march 10th.

>> hour, and is available on television, radio, and on line. you can connect with us on twitter, facebook, and you do. signup for our schedule alert e- mails at c-span.org. >> the prime minister of greece is in washington for an official visit with president obama. george papandreou was in the brookings institution with a discussion about the economy. he was introduced by the president and former secretary of state. this is about one hour and 15 minutes. >> good morning to all of you. i'm strobe talbot. welcome to brookings. welcome to spring in washington. i'm ready for that. and welcome especially to the washington diplomatic corps, which is particularly well represented here today.

and i might add that the athens diplomatic corps is pretty well represented, too. by dan specker, united states ambassador to greece, a very dear friend and former colleague of mine and several other people in the room. this is going to be an especially timely event. and it features an especially distinguished guest of honor. americans like to think of their country as the world's oldest modern democracy. going back all the way to george washington. well, the george who is with us today traces his political heritage back. prime minister papandreou is a leader not just of his own country but a leader of europe. he is a champion for everything that's everything that's good, everything that's best about the

idea and the institutions of the international community. he's also a great friend of the united states of america. he has many personal friends in this country, in this town, and the white house and the department of state. and in this room. and i am proud to be one of them. back in the 1990s, i worked with him on some of the most challenging issues of that period, some of which are all still too much with us today. he was then and he is now a statesman, of rare discipline, ingenuity, integrity, and i want to stress this word particularly, political courage. he was then and is now a problem solver.

and it was in his capacity as a problem-solver that he decided on assuming the prime ministership of greece to retain at least for a while the portfolio of foreign minister. so that he could follow through on his commitment to resolve long-standing regional issues so that greece can play a larger role on the world's stage. as a problem-solver, he's also got his work cut out for him on another front, which is to say the home front. when the ambassador, bill, and martin and i saw him in athens last october, a week after his election, prime minister papandreou knew then that the biggest of the problems his country was facing were its troubled economy.

and those troubles, of course, are linked to the troubles of the world. there are consequences of a financial earthquake of 2008. like president obama, whom he will meet tomorrow, prime minister papandreou inherited a crisis, my guess is that when they meet tomorrow, they will not spend much time commiserating or looking backwards. rather, they are born to concentrate on coordinating and cooperating -- going to one concentrate -- going to concentrate on coordinating and cooperating going forward. following his remarks, our brookings colleague and another of the prime minister's many friends will moderate a

discussion. it is hard to imagine a more appropriate moderator, since he successfully managed a financial crisis of his own as finance minister of turkey. ladies and gentlemen, please join me in welcoming to the podium the prime minister and foreign minister of greece, george papandreou. [applause] >> thank you, strobe. it is an honor to be in this great institution. ladies and gentlemen, it is great to be with you, particularly a good an old friend of mine for many years ago. we've been working together for many years. his contributions to the united

states into greek-american relations have been paramount. i am very happy to have the moderator here as well. ladies and gentlemen, 53 years ago this week, on march 12, 1947, president truman was before a special joint session of congress. he was there to warn america a of a looming new crisis -- a crisis that revolved around greece, but was in essence a european crisis that directly affected america's interests. in that speech, president truman introduced a vision and laid down the street foundation for policies and institutions such as the marshall plan and the bretton woods arrangement that enabled our two continents to rise above the crisis and build

an unprecedented era of shared peace and prosperity. so today i have come to washington this week to speak about another crisis in europe. this crisis, too, revolves in part around greece. this crisis too very much involves america's interest. and as in 1947, if we act with sufficient foresight, i believe this crisis also contains opportunities, great opportunities to strengthen our respective countries and our shared interests for decades to come. what is this crisis. i would call it a crisis in global governance. as we bask in the triumph that the end of the cold war symbolized for the west, we forgot three important elements. first of all, the world's problems were not over. no.

history had not ended. new conflicts, new issues and new complexities of a globalizing world arose. secondly, we underestimated our own dogmatism while those on the other side of the iron curtain worship state-run economies as master, we had created our own masters. the free market, the master and the masters are not to be tampered with. they rule. forgetting that in democratic politics, our master is the people. and both states and the market are there to serve them. thirdly, we neglected our transatlantic relationship. either by paying lip service to it as something as a matter of fact or something irrelevant to the new challenges of the time. so off we went with our

respective, often narrow politics as the world was changing and as the balance of power was shifting. that has undermined the extent to which our common values remain a dominant force in the shaping of this new globalizing economy and society. values such as democracy, the protection of human rights, the rule of law. the core of the crisis is that today the international community seems impotent. impotent to deal with the complexities of an interdependent market or for global warming or energy resources or the spread of violence, terrorism, and the proliferation of nuclear weapons. or an inability to deal with protracted conflicts like the ones in the middle east. my conclusion is that cooperation between europe and the u.s. must be revitalized to empower our countries, societies and our citizens so as we deal

with these issues effectively and democratically. how does this relate to my country, greece? you are all aware of the financial crisis greece has faced in the recent months, the crisis that confronted me when i became prime minister last october. after we took office, we discovered that the budget deficit was actually double. double what our predecessors had told us, told european authorities and the greek people. so our announcement of this discovery rocked investor confidence, not only regarding the finances of greece but also the soundness of currency that we share with our european neighbors. all of you understand this crisis like wall street's original crisis in 2008 risks spreadly more widely. many worry it could reignite a

global financial crisis and produce a crisis 2.0. that's why in the past five days i met with chancellor merkel and president sarkozy and previously visited with gordon brown and jose louis paterro how to deal with this ongoing crisis and how to prevent it from spreading. and that is why i will meet tomorrow with president obama not only as a greek leader but also as a european leader to discuss the important role i believe the united states can play to ensure greece, europe, and america that we remain strong and healthy partners. let me exemplify the greek case. i stood for election last fall before a country that was demanding deep changes during the preceding five years our public had grown increasingly alienated as greece's national deficit ballooned. wasteful expenditure mushroomed and our gdp shrank. during our election campaign, we

promised to tackle head on the chronic problems of the heart of greece's economic woes, structural problems that we often politicians had avoided addressing for so long for such a long time. our goal was and remains to transform greece into a thriving economy driven by green technology and investment in our natural and human resources such as education and health. so when my party won a resounding electoral majority, we knew our mandate like the mandate of your own president, your new president, president obama, was to bring deep changes even at a time of great economic challenge. now, i am used to change. i was born in minnesota and raised in california before eventually moving to athens. and then when my family was

forced to flee the dictatorship we lived in exile in canada and in sweden. and throughout my political career i have often taken office during times of crisis. as strobe mentioned earlier. i became education minister during a teacher's strike. i became foreign minister just as greece was entering one of its most fraught standoffs with turkey. i took over as leader of my party in 2004. just a few weeks before an election that we were quite certain to lose. and now i have become prime minister during the greatest economic crisis greece has faced since the second world war. so confronting upheaval and the need for big changes has been an intrical part of my life. even so, that doesn't make change any easier. the enormity of the deficit made deep changes absolute and now the changes are underway.

to restore confidence in our country and stability to our economy, we pledge to bring the 12.7 deficit down to 8.7 this year. and to the e.u.-mandated levels of 3% by 2012. to meet those targets the parliament has adopted the toughest austerity measures in greece's modern history. the third round of those measures passed just last week on friday. and we know greece faced not only a fiscal deficit but i would call it a credibility deficit. as a matter of fact, i call that the biggest deficit we had. as a result of the fabricated budget figures our predecessors had published. so our partners in the european union were understandably skeptical about our promises to rein in the deficit and crack down on issues such as corruption. but today we are demonstrating

the decisiveness of greece. public secretary salaries have been cut. retirement ages raised, taxes increased. and these are painful choices. they have come with high political and social costs. we have made them not only to rescue our own economy but also to prove our courage and our credibility. we do so also because we are part of a genuine community, the european union and all these measures reflect our commitment to protect the stability of our common european currency. this medicine may be bitter but it's the only -- but it is only an immediate remedy as we must deal with other core problems that have prevented greece from reaching its great economic potential and there is great economic potential in greece for far too long. so i've told the greek people that 2010, this year, must be

and will be a year of drastic reforms across all levels of government, changes in our tax system, our social security system, our public administration, our education system, our health system and our development model. at the top of the list is tax evasion. to give you just one measure of the scope of that problem, fewer than 5,000 greeks declare incomes of 100,000 euros. that pattern must end and it will end. we will be prosecuting offenders no matter how rich or powerful to show that mean business. the rule of law means it applies to all. such changes we are sure will bring in billions of unpaid taxes and help underpin our return to fiscal health. we are also tackling challenge of corruption head on. within the first weeks of my

administration, i dismissed a deputy minister and friend who was trading minor favors for voters. corruption, of course, is highly unique to greece but it is a problem we are determined to address as part of our broader reforms. to usher in a new norm of transparency, we are televising our cabinet meetings. we have launched an open online application process for public secretary jobs even at the highest of levels. and passed a law so that every government expense will be published online, a first in europe. every signature from mine to the civil servants in local government will be online. we post all our proposals on the web to allow for deliberation and participation in a web 2.0 application which empowers our citizens, puts a check on lawmakers and strengthens the qualities of our policies. these are among the changes my

government has made and will pursue in response to this crisis. so i'm confident that greece will very soon be a paradigm of open government, a leader in green development as greece has great untapped potential for renewable energy but also a real magnet for new business investment. ... we must plan for the long term. the architects of the postwar recovery had an eye on what made sense, not only for next week, not only for next year, but for the next generation. so it must be today. the crisis the world has faced over the past few years should alert us to the fact that we need more cooperation,

regulation, and foresight. my own people, the greek people understand this. the majority of gris realize is that we're making very difficult changes -- greece realizes that the difference -- realize that the very difficult changes we're making our in our own best interest. i see this every day. even those who have volunteered to help, such as a well-known singer who has given her pension back to the state, who saspoke about greethe greek sense of pr, honor, and giving to the common good. europe needs to recognize that the measures we have put in place and those still to come need certain time to take effect. countries are not like financial

markets. social change cannot be executed as quickly as credit the fall swaps. you cannot sell short on social commitments and political responsibilities. although there are great risks in the current crisis, there are equally real risks in on realistic expectations and inflammatory in patients, such as we of seen around the world. it is dangerous to push people too hard and too fast. we already have one of the lowest wages in europe. the average wage increase is just under 24,000 compared to just over 40,000 and the u.s. we intend to reform our economy with the help of our citizens, not in spite of them. this is where europe needs to join us in taking a longer view. we need our budget cuts, but we also need to have sustainable economic growth.

if we're not careful, both higher taxes coupled with lower revenue will actually slow down our recovery. taxes coupled with lower revenue could actually slow down our recovery. that would be both unjust but also could create a lot of social unrest. deflation is also a genuine risk. if we don't take your love measures to kickstart productivity, and create new jobs. this is not about asking europe to rush to the aid of a reckless country. on the contrary, standing by greece as it makes deep and responsible reforms is in the interest of europe as a whole. and this, i think, is now understood by the leaders, the other leaders in the european union. so the price of not acting together will be higher taxes, higher unemployment, a slower economic recovery, not only for greece but for all in europe. so greece may be doing all the right things to revive our

economy. but not everyone may want us to succeed. and this brings me to my second point. they need to address the threat of speculation and ill regulated financial markets. a threat that imperils not only greece, but the entire global economy. i see that threat every day as we manage this crisis for the immediate problem we face is not dealing with the recession, but in servicing our debt. and despite the deep reforms were making, traders and speculators have forced interest rates on greek bonds to record highs. many believe that there have been malicious rumors, endlessly repeated and tactically amplified that have been used to manipulate normal market terms for our bonds. partly as a result, greece currently has to bar at rates almost twice as high as other european union countries. so when we borrow 5 billion euros for five years we must pay

about 725 million euros more in interest than germany does. it would be like, let's say, california having to borrow at a rate which, 5 billion euros, which would mean they would have to pay 725 billion u.s. dollars more than another state in the u.s. when you have a common currency, that is simply not viable. so we will have a very hard time and implement our reform program if the gains from our measures are simply swallowed up by prohibitive rates. this whole affair has a horrible sense of déjà vu. the same financial institutions that were bailed out with taxpayers money are now making a fortune from greece's misfortune. while those same taxpayers are paying the price in deep cuts to their salaries and social services.

so on principle specters are making billions everyday by betting on the greek default. all this may sound a bit familiar to american ears. and unlike the bankers, greece isn't asking for a bailout. let alone a bonus. indeed, we have slashed the salaries of every single government official. i myself cabinet members, have all taken significant pay cuts in our salaries. yet our correct decisions may still be undermined by speculation, and to me this is a challenge to our democratic institutions. an elected government making huge changes with the consent of its people is being undermined by concentrated powers in an unregulated market, powers which go beyond those of any individual government. a further point is that even though greece accounts for just about 2 percent of gdp of the european union, our economic conditions can have a far larger

impact than that figure in flies. and ongoing euro crisis could cause a domino effect driving up borrowing costs for other countries with large deficits and causing volatility in bond and currency rates across the world. a small problem could be the tipping point in an already volatile system. we should remember that the great depression in the u.s. was followed by a second recession in 1937 and 38 that derailed the world's recovery, and prolong the crisis. so if the european crisis metastasizes, or any other crisis around the world, it could create a new global financial crisis with implications as great as the u.s. originated price is two years ago. so for america, a weak euro also means something else. it could mean a rise in dollar, that in turn means a rising u.s. trade deficit, which will not help america's economy rebound. if the e.u. still america's

biggest trading partner should falter, the consequences here would be palpable. that's why europe and america need to work together to say, enough is enough. to the speculators, who only place i on the immediate returns with utter disregard for the consequences of the larger economic system, not to mention the human consequences of lost jobs, foreclosed homes, and decimated pensions. these market manipulations, which were at the heart of the banking systems collapse, are still legal practice. so it's hard to fathom that we have allowed this to continue after what we went through. it is common sense enforced by in church regulars that a person is not allowed to buy fire insurance on his neighbor's house and then burn it down to collect on that insurance. yet that is exactly what is done in the market for credit default swaps. this malaise has led banks to

foreclose on the homes of millions of americans, but this malaise now haunt not only greece, but all of us. but if europe and america jointly stepped in and shore up global financial regulation, and find regulations, we can curtail such activities. and it is encouraging. it is an encouraging sign that the american authorities have ordered some speculators not to destroy records of their trading in euros. and i would encourage u.s. authorities to continue these investigations. since the 1980s, we have witnessed a succession of global financial crises. the third world debt collapse, the u.s. savings and loan debacle, the asian financial crisis, the high-tech and housing bubbles, and now the worst over recession since the 1930s. globalization which promised so much and opened so many doors to those of us with the good fortune of advanced educations

and careers has also brought new inequalities and new risks. so this crisis is an opportunity to correct many of the ecstasies of the globalization. it calls for deep structural changes, changes to our global institutions, to our system of global governance. at the g-20 in copenhagen, and at the meeting in copenhagen for climate change, we did fall short of our citizens expectations. we fell short of our own rhetoric. so we can't afford to squander another opportunity to make the critical changes that our current reality demands. this crisis should be an opportunity for decisive and collective action, for regulation which is urgently required if global economic growth is to be sustainable. we need global coordination of monetary policies, and if we let market forces alone dictate the

terms our economic recovery will almost certainly slip into reverse. i just arrived from paris before that i was berlin, in berlin and in luxembourg. together, with my european partners, we have taken a common initiative to strengthen financial regulation. particularly, these are the, speculation. we need clear rules on short, thank you shorts and credit default swaps. so i hope the to be a positive response from this side of the letter to bring this initiative to the g-20 and its next meeting. i know that some fear the word regulation. they claim that regulation curtails our freedoms. but i would simply say that it's like saying that we should go without traffic lights as it slows down our cars. so let's make the markets work for us. all of this is possible if we, greece, europe, the united states, have confidence and

trust in each other as partners. there was a debate for some time about whether the european union would work and then whether it was better for it to be week or strong, particularly vis-à-vis the euro. >> even now there are debates about whether the new europe is a force to be reckoned with, it's global roles strengthened by our new president and high representative, or whether it is a non-entity of a continent disappeared off the map, as "time" magazine would have us. my view is that the world needs more europe today, not less. in saying so, i would like to say that europe, the european union, as a model, as a prototype is very interesting experiment in a globalizing world. a world which is a need of a more humane globalization. we are a political union of 27 nations today. and in monetary union of 16

members. each of us brings our own experience, our own idiosyncrasies, even our own language. imagine uniting america if a different tongue were spoken in every state. but we have been a catalyst for great progress, prosperity in the region. and democrats decision of many countries. with a whole raft of global crises are gently calling for closer operations we in the european union have pulled some of our national sovereignty to become more effective in protecting our common interests, vis-à-vis these world challenges. creating our common currency, a currency shared by 328 million europeans, and backed by an economy larger than america's, is perhaps europe's greatest achievement. the euro has been called a postmodern or a post-sovereign

currency. whatever we call it, we european leaders must now show real leadership to prevent unbridled market forces from hijacking this success story for their own ends. i'm confident we will succeed, and we cannot fail. this is reason to have confidence. there is reason to have confidence. in my country also during this crisis. we have shown determination and i think this is a sign which shows that we will be ready to use this crisis as a real opportunity for change. i say that because a decade ago when i launched the process of greek turkish as foreign minister, everyone said that it was doomed to failure. but our countries are closer than they have been in centuries, and there's no better symbol than the fact that my good friend, kemal, is moderating this discussion. i also look forward to turkish prime minister to athens in the

coming months. i believe we can make new breakthroughs in our relationship and become a symbol of stability in eastern come in the eastern mediterranean and the middle east. prior to the athens olympics, so many voices at greece would fail. but we pulled off one of the most secure and successful games in history. today, we will be using this legacy to revamp athens and our public administration. and so we will overcome this new challenge and we will do it with the cooperation of our partners in europe and america who have stood with us on so many vital tests. for this new crisis is a moment of great opportunity for greece. a chance to modernize and revitalize its governance and development model. for europe a chance to become more fully integrated we're talking now about more coordinating economic governance, for example. and for the world, this is a moment to move towards greater

democratic corporation at a time when, once again, the global power of poorly regulated markets is proving dange our modern global economy faces a very ancient challenge which i would like to conclude with. before the advent of democracy, greece was ruled by the rich and ruthless oligarchs who belong to powerful, it into related clans, not altogether unlike the merger is between the financial institutions that dominate our markets. plato made a remark about the vested interests. "just or right means nothing but what it is -- what is interest -- was in the interest of the stronger party." it is not the rule of law, a lot

of the powerful. we have a shared responsibility to create rules and institutions that can provide a more just and sustainable answer for our planet. let me take you, in concluding, to the parthenon. if one stands by the parthenon and looks down on evidence, you will see -- on athens, you will see ancient markets and ruins. the report has two meanings -- a marketplace and public speaking, a place of politics. engine agrees should guide us here -- ancient greece should guide us here and be part of the political realm of our decisions. we cannot separate the two.

eparated the two as if they are dumb as if they can be separated. if you look over the hill to the other side, you will see, each and every citizen will stand on a rock, speak and be heard. politics in ancient athens was participative. everyone have the power to be heard. so we must use the new means we have, such as the internet, but not only, and our globalized society to empower our citizens and give them a real voice in politics. and that's much more than just a technique. it's a question of political will. as you look towards the sea, you will see the islands of the aegean. an agent is comma every eye was the country into itself, a city state. yet they all were aligned to a common purpose, the protection of democracy and, not yours.

so let us use our countries as a vast, let us see our countries as a vast sea of diverse islands linked by a common set of values. and that is what europe is trying to be. the ancient philosopher socrates said being greek is partaking in greek education. meaning very simply, sharing a common value. greece has long been america's partner in values and in history. we are determined to be an ever stronger partner for the u.s. in world affairs, and commerce and in culture, and security. so now i ask you to stand with us and work with us again as what each confront our own challenges of change, as we work together to realize our shared interests and a strong europe and a sound global economic system. thank you very much. [applause]

>> mr. prime minister, thank you very much on behalf of all of us in brookings and discrete audience here for this powerful speech. let me start the discussion by asking, how did things happen so quickly, six months ago there were difficulties, but there was not a major crisis? i have known you many years. i have had the honor of working with you in various seminars and workshops that you always

stressed the importance of transparency. citizens are to the patient. what role do you think the lack of transparency has in the emergence of this crisis? >> thank you, kemal. i think when we're talking about this financial crisis, we should see that it is a challenge to our democratic institutions. politics around the world, we representatives of our people, sometimes or often tasked and seen by our people as all powerful. but, in fact, there are parts much stronger than us. and in other parts of the world, and corrupt politics, and other parts of the world can simply lobbied enough to change politics. but what will very often undermined the will of the people, if you like.

and what we have had and we have seen in this financial crisis is that they were all kinds of innovations, as they were called, or all kinds of practices, which were too opaque, to nontransparent for first of all, us to understand but then to actually see and if we were able to of transparency, i would take immediately we would've had much more possibility to prevent the crisis as it unfolded. increase, particularly we had lack of transparency, even to the point where we didn't have the right numbers of what our deficit was. and a lack of transparency there also has at times allowed for decisions, which are client

list, more based on party politics voting, not meritocratic. voting very often the public sector as becoming part of a party machine rather than part of an engine to help both growth but also protect our citizens rights. but also it helped to develop a lot of corruption, corruption from the local, the grassroot level, day-to-day level and civil services all the way to the political level, to a higher level. and that's why transparency, for me, is very important because what it does do is, first of all, it exposes these possible wrongdoings. but secondly, in a democratic society a sickly gives our citizens and our different bodies, part of the democratic, part of the democratic process

whether legislative or executive or judicial bodies, to be able to apprehend and to control these types of activities. so bringing back transparency, or bringing transparency to our system is, i think, one of the prerequisites, not only to deal with a crises such as the financial one we felt when we went through, but also it's a way of giving and empowering our citizens again to be part of our political life, and not feel alienated from the decisions we often take. >> usage are going to televise some are made all of your cabinet meetings that i think we're going to do a sessions at brookings watching one of these cabinet meetings. [laughter] >> i think that will be great. now at the time of crisis, sacrifices unfortunately needed, and i know you are taking very tough measures, 4 percent of gdp in one year. trouble is, budget cuts.

and unfortunately, the sacrifices for even on people who were not that strong, not that wealthy, although i'm sure you are trying to make everybody pay their fair share. but as the recovery will come, these things will recover, they have been many expenses of crisis am and it looks terrible but then two years later all of a sudden growth is back. but often what happens is the fruits of that recovery are not very well spread. do you have already any thoughts, i know it's hard that you in the middle of this crisis, but thinking of how to make that recovery benefit really the average citizen increase? >> thank you, kemal. you've gone through a similar crisis in turkey, and you know what this means. i think the basic prerequisite for people to be, they feel that they can actually support, even though they may not be happy and we're not happy with these

measures, but they can support these measures, is the first of all, there is a prospect and two, three years as you said for recovery, putting our finances into order and creating a much more viable economy. but secondly, that these changes will be just. and obviously we have taken some immediate measures him as an emergency measures, and they are not necessarily as just as we would like it because, for example, we are cutting down the deficit by cutting down wages. and those who actually have their wages out in the open, and declare their wages are the ones that will have their wages cut. while those who taxi table not really feel this. so this is why we are moving into other types of changes which will bring transparency which would change the tax system which will redistribute

in a more just a matter, the tax revenues, and the burden if you like, of the tax system. so that people in the and will feel that we not only have taken this very bitter medicine now, but we are actually creating a much more just and viable system. i would add the third element to this, that obviously with these measures we need to see the other side of the stabilization program in the european union. it's called officially the stabilization and growth plan. and the other side of course is the growth area, we need investment that will be public investment, there will be you funds which we have, which we are allowed to have for public investment in infrastructure. but we also will be looking for private investment. i think this will be a time of opportunity for investors to come and see greece at a time of

change where we are cutting down on bureaucracy, cutting down on corruption, making it much more easier to invest. but also moving into, as i said or in my speech, a green economy, making green economy the driving force of our economy from tourism to agriculture to the mediterranean diet, to our services. which means quality products and competitor products. and this is where we see greece heading, and that's our goal. >> you emphasize again in this speech this morning the need for, you said, more europe. and i know you've been a great supporter of the european project for many, many years, decades. in a way this is a challenge for europe. and also for the southeastern part of europe, where greece of course plays a particularly important role, that you played an important role. could you perhaps before we open

it up to the wider discussion say a few more words about europe, the european project, which is in a way at the crossroads but maybe in a way this crisis can help you can also about southeastern europe, the whole enlargement issue, given the economic difficulties where do you see it going? >> well, if we go back to the origins of the european union as it is today, we're talking about a post-world war ii europe, where the major, the major factor in developing a european market at that point was common market, and in the european union, was pretty much a piece project even though it began with the economy. as a matter of fact, the idea was to interlink the economies in such a way so that there would be no desire for war, as that would be catastrophic from both sides if you're all sides. so it has been a piece project,

and people sometimes underestimate the importance of the fact that the european union, over the years, have brought in countries, for example, breaking the divide between the east and west of the cold war. and that is huge piece project. with it also is a democratic project to project a democracy. bring in countries that were formerly did dictatorships, greece, spain, portugal. but also many of the eastern and central european countries that were under communist regimes. and thirdly, it is of course an economic project with social cohesion. the whole idea of social cohesion is very important. and many other countries, particularly the south, and we talk about the south sometimes we bring in countries like ireland, even though they are not south of europe. but now when we're talking about the central eastern europe, or european funding is help to

equalize the differences, the economic differences in europe, i would say that today europe more and more will be evolving. this is a challenge and that is why this financial crisis can be an opportunity, not so much as an answer to the past of the world wars, although when we get to the balkans europe and play a very important role in putting a solution to these protracted complex. -- c