and reading the work of our studentcam winners. see you tomorrow. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] . >> president obama starts his day with an energy policy announcement just outside washington. we will have that live for you at 11:05. the president will announce a major expansion of offshore

drilling leases along the atlantic coast and the north coast of alaska. live at 11:05 here at c-span. immediate looking at the first amendment. they will also look at the impact of new technology. that is live at 1:00 p.m. eastern here on c-span. it is the afghanistan ambassador to the united states. that will be live at 5:30. >> c-span, our content is available on television, radio, and online. you can also connect with us on facebook, twitter. >> paul volcker said financial firms must face the threat of closure for a new regulations to be meaningful.

he took questions after his remarks. >> the treasury has proposed -- this is part of the volcker rule. they made a proposal which is rather sensible. it is not a proposal that is so aggressive you'll make financial institutions small. a few institutions are going to run into a restraint of a proportion of the total market in the united states. that handful of institutions would approach 10% revenue limit that would be set, is small.

an institution that has access to 10% is big enough to take care of itself. we do not have to worry about somehow prejudices against size and prejudice against american banks and other banks. i used to have to go up to congress and testify 30 years ago. i would get the question, you run all this regulation. look how big the japanese banks are. isn't it a terrible thing? i did not know how to answer that question. i said i would rather be good them big. this is a change when you consider the enormous size of banks. i do not think it is implicit we can get a solution by saying we will break up the big ones.

it seems to be unrealistic. >> question here. >> i think the upsides of the suggestions you have made are clear. a step back into a more -- a safer time. i am curious how you think about what could be the potential losses of a downside, and how you reconcile your thoughts and with the bottom line of their work lots of financial institutions not involved in each one of those, whether it would be hedge funds are private equity, they failed miserably on excessive leverage.

how you balance that with your rules. >> on the first point -- >> the downside. >> i do not think there is a downside in terms of the many activities by commercial banks. i would prefer you to the analysis. the look at liquidity. this argument for more liquidity is not valid. some liquidity is necessary. it reaches a point where it doesn't make any difference in nine nanoseconds or 10 nanoseconds. the over-the-counter market, but there could be such a thing as too much liquidity. you can always get out tomorrow

or an hour from now or two days from now. maybe there is too much confidence. so i have some sympathy for what he says. some liquidity is good. but let's stop it at some point. thousands of institutions with hedge funds, private equity, there's a shortage of people willing to do that stuff. >> how you reconcile those things? >> yes. there's no question that proprietary trading contributed to the crisis.

banks were outside and they did contribute. a lot of other things contributed. proprietary trading in commercial banks was there but not essential. do not forget one rogue trader knocked down the whole institution. one wrote tradrogue trader cost6 million. that is part of the risk. i am looking ahead. i want to make a distinction between what banks and others can do. i assure you, if all those other institutions can get banking licenses, it will be fair game for commercial banks to do this in greater volume and a greater risk. that is what i want to avoid.

>> a question on derivatives. i used to have the chicago mercantile exchange. i may be showing my biases. the river this on the changes as futures contracts -- derivatives trade as futures or options contracts. now you have people in this legislation who would like to have exceptions from that so they can do customized product that will not be cleared anywhere presumably and a lot of them, the preference is the not be transparent at all, which is another danger. it seems we need to be careful in the handling of that particular issue. >> i would agree with you.

i entirely agree with you. that is where the pressure comes from. some of that stuff can be highly profitable. you get as much out of the trading operations and the clearing house as possible. let me also say as we push more into a market, a clearing house, i think we do need to review the strength of the clearing house and the market to make sure the next crisis, the market does not break down and the clearing house does not break down. that is part of the hearing reform -- part of the needed reform. >> question from the second row. >> formally sec world bank. assuming for a moment that

proprietary trading is severely limited if not excluded from commercial banks, as well as proprietary derivative trading, and that is confined to non- banks, since virtually all proprietary trading and certainly all derivatives are highly leveraged, what is to prevent that non-bank as it must from borrowing and leveraging and therefore putting the risk right back to the commercial banks who will be at risk on the landing rather than the proprietary trading? if you can control the lending by commercial banks to prevent that risk, why cannot you control it also in those who do proprietary trading? >> you anticipate my answer

until you got your last thought occurred i would expect through normal approaches they would be alert to the fact the banks to lend to these other institutions. they have special programs of so-called prime brokerage and that through the prime brokerage, a supervisor can review the practices of the prime broker to make sure you are not affecting the ability of the bank in the kind of lending facilities for those big traders outside. traders are big enough -- there is an assumption that there would be regulatory authorities more directly lethbridge controls -- more directly leveraged and it's harder to do if you're in the same organization. there are ways of getting around it.

there are incentives to play games. i just -- i am not going to show every evil in the world. i do not see the point of inviting the risks that are involved. look at american banks. you are talking about a tiny universe. they are big institutions but the number are less than the fingers on my hands. there may be only two or 3 the volume. i want to avoid 10 years from now where we're not sitting here with every bit trading operation -- every big trading operation and doing the volumes of proprietary trading. there is no limit. the temptation is great because the rewards seemed so great. the rewards will be great even

if you take account of the crisis. >> i am with american university. i am sympathetic to your richard fontaine volcker rule. in order for the volcker rule to be defective -- effective, whether you need other countries to adopt your rule in order for it to buy, and if so, what is the prospect that you see for europe and other jurisdictions to adopt it? >> you are certainly true that the effectiveness and sustainability of this approach will be greatly enhanced by the coordination with other precatory authorities. you have the financial markets

in concert on this issue. you have a big head start. i do not think the institutions will run down to the cayman islands to do business. you have the british and you are a long ways ahead. if you can get europe, the rest of europe, the european union to do something very similar, then we are practically home. japanese banks are not doing this. chinese banks are not doing this. korean banks, thai banks. right now there are no threats. the effort has to be to get the u.k. and europe, and i hope the president will start out in his contribution to getting international consistency.

we have a meeting coming up in early june. there will be some commonality. i don't think it is hopeless. we have the governor of the bank of england supporting in. we have a number of politicians in the u.k. supporting it. >> question in the third row here. >> i am from the world bank. something you have not addressed in the volcker proposal, but i wanted to raise an issue. the system is designed to be built on transparency. accountants, lawyers, credit rating agencies. the reason womelehmann, they'ren to two and half credit rating agencies. four forms from the big eight.

the gatekeepers are now so few and shrinking every day. they are in a dilemma with transparency because the regulators cannot afford any longer to penalize them. whatever proposal they are now in congress, i read them on the credit rating agencies. they are not dealing with the real issues. a small number of credit rating agencies will find virtue in acting together wrongly as opposed to acting bravely together. >> i agree that it is a problem with the credit rating agencies. i have some sympathy for the idea we should be much more liberal in permitting more credit rating agencies to

appear, including a direct competitor. you could get more specialized credit rating agencies who have a product other then charging the issue were. this would be an inch string development and i hope we go in that direction i think this sort of consistent with the law, the new legal proposals. in general, i do think i have a magic plan to eliminating the crisis. i want to eliminate them for the rest of my life. [laughter]

>> there is the size limit these of the the u.s. market, you said your enthusiastic about the first part. you're not quite enthusiastic about the second part. i think the size part is much more important. i am in favor of the first part as well. i think the size part is what is crucial. you can imagine institutions that did not do proprietary trading. i would submit there will be pressure for the government to step in and save them. we do not have any evidence the economy is hard to scale and they exist beyond $100 billion in assets. we have the crisis. if this is the opportunity,

reducing to do something better than the size of the market of gdp, which is some indication of our ability to pay for it these things. why do we need the financial institutions to have $2 trillion balance sheets? i would like to think it is realistic. i think it is the key to doing something on too big to fail. wind down the authority it counts. the one that would deliver it if we could get agreement is some kind of size limits. >> i may be disappointed in myself. there is a drastic break up. my imagination is limited somehow.

i think we were doing reasonably well. that is a practical judgment. it will not hurt my feelings. i did not know if something can be done. you have all kinds of claims. you can hold it in place with a degree and it will develop in size. this may be goes to your point where three secondary banks get together and make another one within the size limits that are suggested by the treasury. you can stir up some support. i'm not going to be in the vanguard but i would be interested to see what you can do. >> you mentioned excess

liquidity and the imbalances. i have a question that relates. you were one of the few people who have addressed the big macro issues and a more precise regulatory issues. how much bit role the u.s. signed in the creation of crisis to the international imbalance, the big global flows of capital, the fact that it generated lots of liquidity here, downward pressure on interest rates. some of the incentives to over when, over borrow. there is a big debate about that -- some of the incentives to over plan-lend, over-borrow. >> we encourage lending practices, and some of the other stuff.

it led to the collapsed and i think they are inseparable. >> as one of the last academic defenders of the glass-steagall act, i have some sympathy for the volcker rule and what it seeks to accomplish. i do worry that much of the discussion of to big to fail has over emphasized one particular problem at the expense of recognizing a wider array of problems. you had left the fed but october 19, 1987. alan was in charge. year-old fishing buddy was of the new york fed -- your old fishing buddy was at the new york fed.

jerry got on the phone and told the major u.s. clearing banks, keep your credit lines to the broker dealers open. we do not want a massive selloff in the stock markets because the banks are withdrawing credit from these particular actors. that was not a matter of rescuing large firms. it was a matter of rescuing the financial systems. we had at that time many failures of investment banking firms in the 1970's and into the 1980's. there are sometimes systemic crises where you need the authorities to step and with public commitment to stop the crisis before it's been completely out of control. it seems to me on the discussion of colorado big to fill, there is a loss of this notion -- on the discussion of too big to

fail, we to have public money at risk and we shouldn't lose sight of that. this time, big institutions were involved in the development of the crisis. that is not always -- that has not always been the case. we had hundreds of institutions that were doing odd things that got us into difficulty. in this instance, we had indymac. it was big enough to cause the fdic $8 billion of public money. my impression is the so-called notion of prompt corrective action that we have been sold, that is not entirely credible at this stage and we need to

maintain the focus that the next crisis may not look exactly like the last one. it is not only big institutions that can get into difficulty. >> i basically agree with what you are saying. i think the responses are, they're not -- there is thought attention given to it. in the house bill, you have the kind of situation that you seem to be describing. the agency'ies could declare an emergency where the use the old fashion formed to provide assistance to the market generally that would be necessary, it might be necessary in the conditions you are describing. i think that is important. the ftsdic extended guarantees o

all bank borrowing of less than five years maturity, if i remember right. and i suppose it is not inconceivable that something like that would be necessary again, which is not focused on bailing out large institutions, although they benefited as well. investment banks benefited, as well, which is not something i do not want to encourage. i think the resolution authority -- is meant for the big institutions. there is no doubt about that. it reduces the chance of spreading panic through the markets so that the smaller institutions would be affected. there is no fail-safe method and a defect in the back of your mind or the back of the

legislation some place, something like -- is still necessary. >> antoine, next question. >> i am from the emerging markets management. you passed by quickly in your answer on international coordination on the issue of taking that beyond europe. he didn't say much about china. at the same time, you mentioned earlier that 30 years ago, japanese banks were big and help as a paradigm of virtue. you also said the volcker rule is looking forward rather than backward. even though chinese banks right now have not gone into some of the practices that got us into

trouble, if you look forward and you look at the enormous increase in size in chinese banks, this is an area that should get a lot of focus and how in your view to the chinese regulators look at the volcker rule? >> i think the chinese banks may get into trouble but i do not think it is because of proprietary tlending. their economy is expanding rapidly. you have the united states and the u.k. and if you get europe, it becomes -- i hope we're not so weak and it will get weaker that we cannot declare this is international law. chinese banks did not cooperate and the did proprietary trading in a big way. we said, i am sorry, you cannot operate in our markets.

you will not get by with that very easily. it will take getting the corporation of the u.k., at the very least. without ok, thank you. >> mr. volcker, the question about the downside risk. it is a bid broader. i would like to ask it now after excellent presentation. assuming the proposal is implemented and the proposal that you alluded to but did not explain in remarks, including from the committee and the capital requirement of liquidity and capital offerbuffers and so what you think of the economy?

the next factor on the -- the net factor. the proposals, but what will be the net impact on economic growth? >> my proposal of no impact on economic growth. i don't see it as producing anything. the banks are not doing it now in any substantial way. even the once pes that do it -- there's no shortage of people ready to take proprietary risk with hedge funds and all the risk. there was something in the paper this morning. jpmorgan is buying equity fund fund"american idol."

i do not think the united states is going to suffer more and cannot buy -- if morgan cannot buy "american idol." you'll have capital requirements so high and liquidity requirements so tough that it would affect growth. no question. you are talking about the whole banking system. you would affect growth. i assume you try to avoid that. this is a difficult thing. how high can you make them and still have a viable commercial banking system? if you make them too hi, there could be boards -- if you make them too high, there could be

speculation. they are sophisticated and i wish them well. it will take some time to get a consensus. when we first made those up, the political pressure was to go very easy on mortgages. even the germans. the germans' lead the parade to a requirement -- a casual requirement on mortgages kurt you see the political pressure in terms of getting that. what you did not show your age until you trashed "american idol." just cut and then robbed -- jessica and then rob. >> a wanted to go back to inflation.

i wanted to ask you a question about moderate inflation, which has picked up a little talk in the last few months i do not want at all to caricature the careful the radical paper. it does seem to me, and wanted to ask you about it. the one institution -- so many institutions have lost credibility of government around the world. the one success we have had in the past 25 years is in getting a handle on controlling inflation curried people really don't remember things that happened before they were born. they can go back over thousands of years of history. it has been abandoned about being able to talk about moderate inflation as a response to problems.

even if the most careful economist does it, it is music to the ears of some politicians who do not want to face fiscal problems. i would like to ask you to speak to the notion of moderate inflation. >> you know the answer to the question. >> i would like you to speak on the record. and also maybe importer your remarks with some of the things henry wallacck used to talk about. it is how corrosive it is in terms of what happens to people's expectations. >> somebody -- i cannot remember -- the director of research in the imf issued a

paper a few weeks ago saying there is 4% inflation, which startled me. i was in europe after that happened and i have a short interview. they said, what do you think of that proposal? the only word i can think of was that it was nonsense. in the press conference, they had a nice big headline and the headline said, volcker said it is nonsense. four % is quite something. i do not know what i can cite other than the whole -- once we lose sight of the ultimate theme, capacity remains in price stability. i think we have lost a lot in these crises.

it doesn't make me at all nervous. we have zero price inflation at the moment. we should applaud that. zero price inflation, be used to happen all the time. it comes out close to zero and is ok with me. that is what should be in people's minds. if we were not merzero, the context of the euro is a tough question. >> the administration he served in 1971 applied price controls when inflation hit 3.4%. remember that. >> i thought it was 4%.

>> thank you. i'm robert sky scott. you talked about the growth of the financial sector. i think it is tied to the growth of compensation. we have seen compensation has come back strongly. do you have any proposals that you think would address this to get the scale of the financial sector back with respect to the economy on a more sustainable path? >> i do not have any recommendations. there are strict laws saying you cannot make them much money or that big of a bonus. it is a pretty deep cultural thing. this kind of behavior when i was a younger man would just be unbelievable. people think they're entitled to

$10 million a year, $20 million a year. if i made $20 million a year last year, i must be worth it. i think it does lose perspective in terms of the kind of functions that are useful for economic growth and stability. it is all convict crapshoots -- is all kind of a crapshoot. >> question right here. >> thank you. goldmansachs got 100 cents on the dock when received $12.9 billion from the credit default swaps it held with aig. should they have taken a haircut? >> i read that situation and i will plead incapacity

incoherent. i do not know what i would have done or anyone else would have done. it does not strike me as totally unreasonable. whether something could have been done, i do not know. >> president obama will announce an expansion of short drilling. he is outside washington. the comments will get under way and 11:05 this morning. it will affect the north coast of america. coverage in about 20 minutes here on c-span. there will be a meeting on media regulations and the first amendment. also elected new technologies. that is at 1:00 p.m. eastern. also, rebuilding the afghan government. live coverage 5:30 eastern.

we now have a discussion from this morning's "washington journal" on the proposed policy change. first hearing about this this morning. caller: i think it is a great thing because it is about time that we started using our own resources and we stopped sending $800 billion a year to the arab countries, and they send it back to us in missiles and weapons. so, i think it is a great thing. we can help our own selves, our economy, a lot more. and i think we should go to a fair tax and drill, joe, joe, and it would be a great thing for our country. host: jamie is on the line from anderson, indiana. another independent scholar. the president's proposing more drilling for oil offshore. what do you think? caller: i think it is a brilliance idea.

and a strategy to expose the hypocrisy of the opposition party -- once he says he once drilling and sarah palin was campaigning drill, they become a drill, what -- it is too late. the man but the teleprompter should have done it before. it is time to reload. all he does is give republicans what they are arguing for and when he proposes it they run away from it like proposals on health care. maybe at some point they will say we can't beat him and they will just join him. because they threw everything they could on health care -- he waited about seven or eight rounds and they were so tired from opposition and obstruction. host: "the new york times" perhaps as the most extensive writing. i am sure we will have more as the day goes on. it goes on to say that this is

intended to reduce dependence on oil imports -- @@@@bb the sheer breadth of the decision will take some of the supporters of back. it will win support from undecided senators, like lisa murkowski or mary landrieu. the senate is expected to take up time a bill in the next few weeks. jackson, tennessee, is now on the line. caller: i would love to see the day that we as a nation can come together on any proposal whether it be offshore drilling, health care, and stop all this name

calling and bickering, work out some common ground and move forward as a nation. i think the decision is a correct one. i think it will benefit the nation. there will be some -- there will be some on the left that oppose this and there will be some on the right that oppose this. it should be the greatest good for the greatest number. host: mr. obama and his allies have made significant concessions on coal and nuclear power on the climate bill.

host: jim, democrat, east ridge, tennessee. your reaction. caller: i just want to take you back for a second. we had all the big long lines in 1973, they said we will of the alaska oil opened and we will have the pipeline, all the way down to mid-america during the war. then what happened was they had it coming down and went down to develop valdez. it is not given to us. the same thing with the oil in the gulf of mexico. a lot of that oil is refined and

shipped right down to mexico. host: this current proposal, what does it mean to you? caller: if they use the oil for domestic purposes -- they are not doing that. host: charlie is on the line, republican from fort wayne, indiana. caller: i recall bush proposing drilling for oil. everybody in the senate and congress said, you know, you are not going to do it. and then this is the first time we heard of it. people are being blind. the smoke and mirrors are not working anymore. host: the current administration is adopting some drawing proposals floated by president bush, including

opening up much of the atlantic and arctic coasts. host: "in the wall street journal," they will allow offshore oil and development and a large portion of the eastern gulf of mexico. republicans have made expanded offshore drilling a political rallying cry. host: oklahoma city, leon, democrat. your reaction. caller: good morning.

i am from oklahoma. the oil drilling may be a wonderful idea. i think they should do something in return flight build more refineries because every time we turn around, the price of gasoline goes up. we do not have enough refineries to drill. and then they have not demonstrated in the past they can keep the prices down. they keep going up. that is it. we need the prices to go down in this recession. host: the thunder forced drilling platform is one of the key gulf of mexico production sites. the. 250,000 -- it processes 250,000

barrels of oil a day. here is a twitter message. you can see and us a twitter message to c-span and we will read more during the show. john from maryland. caller: i think it is high time we droll and free ourselves from the dependence on oil from other nations. i will believe it when i see it. when you take directions from george soros, i have to be suspicious. i think it is live service from the administration. the jury is still out. be suspicious. i doubt it will ever happen. there is some hidden agenda of their talks away -- tucked away. i do not know what it is, but it will be revealed.

host: michael from florida. caller: good morning, sir. i believe with two of your previous callers. there were over 52 billion gallons of oil shipped down from alaska. most of it went to the far east. that did not lower the price of gasoline in our country. if they drill on shore, that oil will go on the open market and be sold around the world. if it was kept in our country here so we could use it and not send money to the air raarabs, we could lower the price of fuel. host: they are talking about newly approved oil and gas exploration areas.

the darker gray color, the let the coast from maryland, delaware all the way into florida. they are also talking about parts of the gulf of mexico and other parts of the gulf. most of the pacific coast will be off limits. and then alaska. the upper part, the northern areas of alaska would be newly approved. they black out bristol bay as a new protected area, something that is protected. they're right in "the new york times" the policy has been closely held.

host: franklin, pennsylvania, on the republican line. caller: can you hear me ok? stephanie, i spoke with her. it was a long time. that is how long i have call. up here, they have not -- they are starting something serious as far as drilling. it is based on the marcellus shale. the need to can you -- they need to continue drilling. there is a lot bet an awkward politics. they have the technologies. they have other businesses that could come in here to do other

energy sources. that is what i am appealing to. i am honored you have given me the time to speak. people think it is not going to happen. there is too much optimism. there can be optimism against some much pessimism up here. it is bad. i thank you for hearing me out. i say if they are going to choke, be serious about it. we do need other energy sources, especially for parts of pennsylvania. that county deserves better. callerhost: we go to chapel hil. drilling for oil and gas. caller: i would love to say the president alleviate some of our dependency on other countries.

what i have some hope -- i have hope for this country and hope for what president obama is doing. it is time we get behind our president and have faith in him and what he is trying to do for this country, moving us forward to be an independent nation. i thank you for allowing me to speak. host: this is a front-page story in "the houston chronicle." it would pave the way for energy countries to explore previously untouched atlantic waters on the eastern gulf of mexico.

host: houston, you are on the air. steve, republican caller. caller: i am confused about the opening drilling. it goes on all the time. is anyone aware that we have two nuclear reactors on the coast, and they're going to build twomo more. they dumped in agent orange. we are kind of like the toilet of america. it supplies a lot of jobs. one caller said we shipped it

out to other countries. it goes to baytown and everyone else. i guess that is all i have. host: more of the headlines from "the new york times." front page of the "pittsburgh post does said -- post gazette." we will have the speech today at 11:00 eastern time live on c- span. the president will be at the naval air station and speaking about this. kathleen, georgia. -- carol. welcome to the program. what is your reaction? caller: north carolina, south carolina. i live about three hours from the shore.

i looked at oil drilling wells. we need to get back to green jobs. we're of the battery companies coming to make these batteries for cars. if we can get incentives to small businesses, that is one way to start these jobs that somehow we have to give incentives. there are small businesses building into the green and indeed. let's get it going, america. we have to look to the teacher. we have to make jobs come back. we have to get it going with the help of the government off of interest free loans. that is my view. thank you, c-span. host: we have danny from silver spring, maryland.

caller: i am danny. host: turn the sound down. caller: it is fine if there realize it is safe for the environment. would that mean they stop working on nuclear energy and the windmills'? host: should that stuff keep going? caller: france uses more than 20% of their energy so it must be working. it seems like a safe way of doing it if we get it going. the windmill seems to be doing quite well. i was wondering why we couldn't do that. if they can get the oil fairly soon without doing any departmental dangers, i think it's a good day. host: portland, oregon.

the president proposed a more offshore oil and gas drilling. your thoughts. caller: i am a student at portland state university. i think drilling offshore is one of the best things we can do because this country has been far mental regulations. we get most of our wealth from the persian gulf and mexico. they don't have the environment standards the united states does. i think offshore drilling would be more environmentally friendly. we're not there yet. i think drilling offshore with our standards will be the best way specifically to helped us wean ourselves off of that. host: we have a message from twitter. "i support this as part of a long-term energy plan."

business section of "the new york times." "prices have done something remarkable. they have barely budged. host: from 30 four from a year ago to 70 dollars and $83. plant city, florida. caller: good morning.

i'm against drilling anywhere near the coast of florida. i have been campaigning against this since 1980. the middle grounds is the incubator for the atlantic ocean. all the fish that live in the atlantic ocean begin there. if there is an environmental problem there, the whole atlantic ocean will suffer. host: use say you have been campaigning against this. other than calls to this program, what other campaigning have you done, and what will you do? caller: it is a group that just has been opposing this since the 1970's, i think. i got involved after high school, and just went out and campaign. i support them, i give them money whenever they come around. i'm constantly working.

i am at work right now. i would just continue to fight against it. my fear is that there will be a huge environmental backlash if this stuff gets into the middle ground that most people just don't understand. they're not from florida, they don't understand a whole environmental issue. they are scared to go into that. it is a powder keg. host: charlotte, maryland, just outside d.c., democrat line. caller: i was calling to point out that there is a lot of pollution that goes on with the drilling, and with gas drilling in the marcellus region of western pennsylvania, they put chemicals in the ground. they don't even have to disclose what chemicals they are using. it pollutes the offer -- aquifer, and these chemicals and up in people's food and bodies. with all the energy consumption and pollution, people of think about where is all this stuff

going to end up, and it ends up in people's bodies, causing illness and cancer. people ought to think about that before they yahoo the gas and oil drilling, because they will be eating and eating it. -- and breathing it. host: "the wall street journal" -- "bp begins big push to revive iraq's oil. if successful, this effort could be one of the largest expansions of crude oil production ever achieved anywhere. increased iraq production could be the difference between the walls applied global market with oil steadily trading below today's $82 a barrel and a tide of oil market with a triple dip

prices, struggling to meet rising demand. 'it could change the map of oil,' says the chief executive" of one of the companies in italy. michigan, republican, you are on the line. john, are you there? caller: i just don't understand why the democrats are going after all reserves went for a ticket or so -- for a decade or so -- especially in the dakotas or their art shell prospects and so forth -- where there are shale prospects and so forth. is this going to make a job? it is a commodity. host: anything else? caller: yes, my natural gas

prices have not gone down. and the commodity has gone down. so it is not a matter of reserves. we know is there. it will always be there. why aren't we making jobs in alternative fuels? host: pat is on the line from long island, new york, a democrat. caller: good morning. i want to say that i don't know if we are stupid or not, but i have to ask the question -- hundreds of scientists at the u.n. have already made the statement that oil is our resource that we are going to have to change, we are going to have to substitute in the future, we are going to have to wean off of it. children, chgreat grandchildren, if anybody cares about them, this is the chance to drill for the immediate, two

years of energy, but what are we really doing? i worked in europe at the defense department for 10 years and i have seen them cut off heating at certain times of the year, air-conditioned could not be started in executive buildings, he could not be turned on at office buildings -- heat not deter not in office buildings at a certain time. how do we cut our consumption as people, the way our grandparents used to live and generations before that until this present day? how do we do that? that is what we should talk about. all we can say is that the oil companies promised it would make $50 billion last year could use some of that money as resources to build new energy sources. it is working in holland and spain. that is what we need to focus on, sir, not how do we give the company more money.

host: contribution from pat on long island tree more of your calls in the next 15 or 70 minutes or so. in "the washington times," they have a front-page photo of the president of france, nicolas sarkozy, and president obama. they had a joint news conference following the meeting. "obama it demands deadline for iran. sarkozy also backs sanctions. president obama on tuesday it said the international community needs to impose fresh sanctions if iran fails to come clean on its nuclear program by this spring." >> we discussed our shared determination to prevent iran from acquiring nuclear weapons. on this, at the united states and france are united, inseparable. with our p5+1 partners, we

offer a round good faith proposals to resolve this through diplomacy, -- offered iran a good fit proposals to resolve this through diplomacy, but iran has rejected those offers. that is why we are pursuing strong sanctions through the u.n. security council. finally we discussed efforts to advance the security and peace around the world, including the middle east, where we agree that all sides need to act now to create the atmosphere that this party talks the best chance to succeed. host: more quotations from the president -- "i want to see the regime in place in weeks. this is not simply an issue of trying to isolate iran. it has enormous implications for the safety and security of the entire region." that is open " the washington times." back to the offshore drilling question.

atlanta, good morning. caller: have not heard that much lately about the strategic reserve plan for the ground, but in a way, the reserves that we are talking by drilling -- talking about drilling could be looked at similar to the strategic reserve thing, because even though we have electric power for automobiles, we will need oil and gasoline for air travel in the future. finally, if we are going to drill in these sensitive areas, it should be at least linked to development of alternatives -- batteries for autos, wind power, excep -- etc. host: president propelling -- proposing more drilling offshore. what do you think? caller: my name is michael. i don't understand why they want

to do so much offshore drilling, and this is why -- 40 years ago, my grandfather stop was to come in west virginia -- my grandfather's drop was too, in west agenda, tap gas drill -- in west virginia, tap gas drills. there are hundreds of them. i have a battery it -- there was an. he drilled for gas in northern west virginia. as far as the oil is concerned, there is all kinds of oil in the united states. i have a friend in the texas panhandle. they only have two pump jacks. the government would only pay $380 for a date at the pump, and they would not pump not anymore.

host: lincoln city, democratic caller, good morning to you. what do you make of this proposal by the president? caller: good morning. i certainly feel punched in the stomach when warti -- plunged in the stomach one that more time. i am wondering who this president is that i campaigned for and voted for. host: why do you say that? caller: the first people who got federal money with eggs, the second people will be the health insurance industry, -- the first people who got federal money were the banks, the second people will be the health- insurance industry, and now we have the oil -- and you read this story about bp and iraq. they have a gasoline prices. we have the same problem. -- they have a gasoline crisis. we have the same problem. everything gets shipped abroad. they just take the money and

run, like every other industry. where is the jobs, or is the development -- where is the development in this country? what happened to the high-speed rail? i feel really, really let down. caller laura, on the line -- ho: laura, on the line from oregon. "the wall street journal" -- "haiti hopes the kindness of strangers will allow it to emerge not only from the january quake, but years of tragic history and poverty. at a donors conference in new york today, the haitian president will present an action plan hammered out over the past two months with his government and more than 200 experts. it is the biggest gathering of potential donors since the january 12 earthquake --"

>> we will leave this and take you live to president obama, who is expected to announce an expansion of offshore oil drilling. that is secretary ken salazar there. the plan calls for the first offshore oil in the atlantic ocean in two decades. >> it is an honor to be here today with president obama and other leaders who worked so hard to set america free from our dependence on foreign oil. we are here today because americans have waited long enough for the energy security that they have been promised for decades. it was in the 1970's when president nixon first coined the term "energy independence," and presidents ever since then from both parties have promised to deliver on that goal. yet today, america and america's families are still filling their cars would fuel from deserts'

half a world away. our economy still whites the highs and lows of world oil prices, -- still rides the highs and lows of world oil prices. is not the time for change? president obama -- is now the time for change? president obama has made it clear that we're not here to do what is easy. we are here to do what is right, to make the hard choices, to succeed where others have failed by finally ending america's dependence on foreign oil, building and energy economy that is more secure and prosperous, and protecting our children from the dangers of pollution. since president obama took office, we have made great progress towards this goal. we are standing up wind turbines on the plains and solar plants all across our desserts. we are making our grades

smarter -- grids smarter and the next generation of nuclear power safer. we are fighting to but the united states back on top with technology that will shape the country. it is a race that we cannot afford to lose to china or india or anywhere else. all of the things we are doing will help us cut our dependence on foreign oil. no single energy source is enough. well, gas, coal, nuclear, sun, wind, geothermal, biofuels, hydropower, all of them need to be on the table. today, as part of our comprehensive energy plan for the country, we are announcing how we will expand oil and gas exploration and development on the outer continental shelf. our strategy calls for expanded development and production in new areas such as the eastern gulf of mexico, where we can develop resources that are more than 125 miles off the florida

coast. we are also moving forward with significant new oil and gas exploration in frontier areas such as the arctic ocean and areas in the atlantic, where we must first determine whether there exists oil and gas reserves, and then secondly, determine if we can develop them appropriately. we are protecting areas of our coasts like alaska's's bristol bay that are simply too important for us to develop. bristol bay has some of the world's most important fisheries, including one at the largest salmon runs in the world. people come from across the globe to see the trails and fields and the bald eagles. is a national treasure that we must protect. together, our efforts to explore, develop, and protect represent a new direction from the past, a change from the past of the outer continental shelf.

after years of lawsuits and political battles, we are bringing much-needed order and certainty to our nation's offshore leasing program. this order -- this will come from our commitment to ensuring that development occurs in the right places and in the right ways and in an ad that protect our purchase environment. -- in a matter that protect our precious environment. we're making decisions based on sound information and science, much of which still has to be developed. but we're listening to the communities most affected by development. we have an orderly process for exploration and development. finally, american taxpayers are getting at their return -- getting a fair return on the use of the resources. these are the principles that will guide the offshore energy future. as secretary of interior, my responsibility is to balance the

many that he i -- the many values and needs of the outer continental shelf. it will affect our prosperity and the availability of energy supply for years to come. i also make these decisions knowing our responsibility as the american people to preserve the land, water, and wildlife that have allowed our country to flourish generation to generation. in 1907, president teddy roosevelt reminded the kindness that -- reminded the congress that the we're blessed with a rich natural bounty in america, we must develop our resources with a nod to future generations. he said that optimism is a good characteristic, but if carried to excess, it becomes foolishness. we are proud to speak of the resources of this country as inexhaustible -- prone to speak of the resources in this country as inexhaustible. that is not so. that is what teddy roosevelt

said over 100 years ago. the strategy we are announcing today heeds his caution and stays true to our values as americans and allows us to responsibly expand oil and gas exploration and development offshore while protecting the places that we have love most. we are fortunate that in these times, in his 21st century -- in this 21st century, that we have president obama in place as our leader for all these efforts. president obama understands that to do what is right for the country, we must strive of the political battles of the moment. energy security -- strive above the political battles of the moment. energy security is not a democratic or republican issue. it is an american issue whose time has come to ladies and gentlemen, help me welcome the president of the united states of america, barack obama.

[applause] >> thank you, everybody. thank you so much. please come at a seat. i have a few introductions, to make very quickly before i start my remarks. by the end of this tenure, we will know that ken salazar is one of finest secretaries of interior that we have ever had. please give him a big round of

applause. [applause] other members of what we call our green at team are here. steven chu, our secretary of energy, martin johnson, administrator of the gsa. we have carol browner, white house energy and climate change director. please give them a big round of applause. they put in a lot of work. [applause] gov. martin o'malley is here, governor of maryland. [applause] the secretary of the navy is here. chief of naval operations is here, and we appreciate his outstanding service. thank you. [applause] i want to thank the base commander here at andrews, and

the leadership that is present from the air force, the marine corps, and the coast guard. you know, ken and i were colleagues in the senate, and i appointed him because i knew he would be a faithful and pragmatic as the word of our natural resources. -- pragmatic steward of our natural resources. he is changing the way the department does business so that we are responsibly developing renewable sources of energy, from the winds on the high plains to the sun in the desert to the waves off our coast. i am very grateful to the work that he has done, culminating in one of the announcements we are making today. it is also good to see so many members of our armed forces here today. andrews is the home of air force one, and i appreciate everything that you do for me and my family.

i should point out that you have got a wonder% on-time -- a 100% on-time departure record, you don't charge for luggage. it is a pretty good deal. i want to thank you not only for the support you provide me, but also for the service that you perform to keep our country safe each and every day. i am very grateful to all of you. we are here to talk about america's energy security, at issue that has been a priority for my administration since the day took office -- the day i took office. already, we have made the largest investment in clean energy in our nation's history, an investment that is expected to create or save more than 700,000 jobs across america, jobs and manufacturing advanced batteries, updating the power grid so that it is smarter and stronger, doubling our nation's capacity to generate renewable electricity from sources like the wind and sun. just a few months after taking

office, i also gathered the leaders of the world's largest auto makers, the heads of labor unions, environmental activists, and public officials from california and across the country, to reach a historic agreement to raise fuel economy standards in cars and trucks, and tomorrow, after decades in which we have done little to increase auto efficiency, those new standards will be finalized, which will reduce our dependence on oil while helping folks spent in a little less at the pump. my administration is applying its -- upholding its end of the deal and we expect all parties to do the same. this rule we will be nothing about increased mileage standards will save 1.8 but -- we will be announcing about increased mileage standards will save 1.8 billion barrels of oil overall. that is like taking 50 million cars of the road for an entire year. -- 58 million cars off the road

for an entire year. in order to save energy and taxpayer dollars, my administration, led by secretary chu at energy as well as administrator johnson at gsa, is doubling the number of hybrid vehicles in the federal fleet, even as we seek to reduce the number of cars and trucks used by our government overall. we are going to lead by example and practice what we preach, cutting waste, saving energy, reducing our reliance on foreign oil. we have to make continued investments in clean coal technology and advanced biofuels. a few weeks ago we announced loan guarantees to break ground on america's first new nuclear facility in three decades, a project that will create thousands of jobs. in the short term, as we transition to clean energy sources, we have still got to make tough decisions about opening new offshore areas to oil and gas developments in ways

that reflect communities and protect coastlines. this is not a decision i've made lightly, one that ken i as well as carol browner have looked at closely for more than a year. but the bottom line is this -- given our energy needs, in order to sustain economic growth and produce jobs and create -- and keep our business is competitive, we are going to need to harness traditional sources of fuel even as we ramp up production of new sources of renewable homegrown energy. today we are announcing the expansion of offshore oil and gas exploration, but in ways that balance the need to harness domestic energy resources and the need to protect america's natural resources. under the leadership of secretary salazar, we will employ new technologies that reduce the hazards of exploration, provide areas that are vital to tourism, the

environment, and national security, and will be guided not by political ideology, but by scientific evidence. that is why my administration will consider potential areas for development in the mid- and south atlantic as well as the gulf mexico, while studying and protecting sensitive areas in the arctic. we will support areas in alaska is bristol pray -- alaska's's bristol bay. there will be those who strongly disagree with this decision, including those who say we should not open up any areas to drilling. but i want to say that this is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on home ground fuel and clean energy. the only way that this transition will succeed is if it strengthens our economy in the short term and the long run.

to fail to recognize this reality would be a mistake. on the other side, there are going to be some who argue that we don't go nearly far enough, who suggest that we should open all of our waters to energy exploration without any restriction or regard for the broader environmental and economic impact. to those folks, i have got to say this -- we have less than 2% of the world's oil reserves. we consume more than 20% of the world's oil. what that means is that drilling alone cannot come close to meeting our long-term energy needs. for the sake of our planet and our energy independence, we need to begin at to transition to a cleaner fuel now. the answer is not drilling everywhere all the time, but the answer is not also for us to ignore the fact that we are going to need a vital energy sources to maintain our economic growth and our security. ultimately, we need to move beyond the tired debates of the

left and right, between business leaders and environmentalists, between those who claim that drilling is a cure-all and those who claim it has no place. this is too important to allow our progress to languished while we fight this in all battles over and over again. for decades we've talked about how dependence on foreign oil threatens our economy. our will to act rises and falls with the price of a babble of oil. when gas gets expensive, everybody is an energy expert. when it goes back down, everybody goes back to their old habits. for decades we've talked about the threat to future generations posed by the current system of energy, even as we consider the mounting evidence of climate change from the arctic circle to the gulf coast. and this is well known to all of you serving in uniform -- we have talked about the risks to our security created by depended on foreign oil.

that dependence has actually grown year after year after year. while our politics remains along these worn divides, the ground has shifted beneath our feet. countries are seeking an edge in the global marketplace by investing in new ways of producing and saving energy. from china to germany, these nations recognize that the nation that leads the clean energy economy will be the one that leads the global economy. here at all, as politicians in washington debate endlessly about whether to act, our military has determined that we can no longer afford not to. some of the press may be wondering why we are announcing offshore drilling in a hangar at andrews air force base. well, if there is any doubt about the leadership that our military is showing, you just need to look at this f-18 fighter and the light armored vehicle behind it. the army and marine corps have

been testing this vehicle on a mixture of biofuels. this navy fighter jet, appropriately called the green hornet, will be flown for the first time in a few days on earth day. if it goes as planned, it will be the first plane ever to fly faster than the speed of sound on a fuel mix that is half by a mix. -- half of biofuel. there was the first successful by a fuel-test flight last week. i do not want to drum up any kind of rivalry. [laughter] the pentagon is not seeking these alternative fuels to protect our environment -- not just seeking these alternative fuels to protect our environment, but our national security. the increasing use of alternative fuels, decreasing

energy use, reducing our reliance on imported oil, making ourselves more energy efficient -- that is why the navy has set a goal of using 50% alternative fuels in all planes, vehicles, and ships in the next 10 years. that is why the defense department has invested $2.7 billion this year alone to improve energy efficiency. moving towards clean energy is about our security. it is also about our economy. it is about the future of our planet. what i hope is that the policies that we have laid out for corporate fleets to offshore drilling, nuclear energy -- hybrid fleets of offshore drilling, nuclear energy to wind energy, underscores the seriousness with which my administration approaches this challenge. it requires each of us, regardless of whether we are in the private sector or public sector, military or civilian

side of government, to think about how we could be doing things better, how could we be doing things smarter. so that we are no longer tethered to the winds of what happens somewhere in the middle -- the whims of what happens somewhere in the middle east or other major oil-producing nations. i am open to proposals for my democratic friends and my republican friends. i think we can break out of the broken politics of the past when it comes to our energy policy. i know that we can come together to pass comprehensive energy and climate legislation that is going to foster new industries, create millions of new jobs, protect our planet, and help us become more energy independent. that is what we can do, that is what we must do, and i am confident that that is what we will do. thank you very much. and thanks again to all of you for serving in our armed services.

you are making an enormous contribution, and this is just one example of the leadership that you are showing. thank you very much. thank you. [applause]

>> the president at the andrus naval air facility in washington, announcing an expansion of offshore oil and gas drilling. elected media regulation and the first amendment, and the future of journalists -- a look at media regulation and the first amendment, and the future of a journalism and new technology, later today at 1:00 p.m. on c- span. later, the afghan ambassador to the united states, talking about rebuilding government institutions. he is speaking at the johns

hopkins school of advanced international studies. that is at 5:30. since the president signed the stimulus program a year ago, $255 billion has been committed, to order $5.1 billion has been paid out bid on our website, c- span.org, you can look at recent hearings on the stimulus, a state-by-state spending, and watch how government groups are tracking the spending. that is that c-span.org /stimulus. throughout april, see the results of the studentcam documentary competition. videos on at the countries greatest strengths or a challenge that the country is facing a watched the winning videos every morning on c-span just before "washington journal ." at 8:30, during the program, meet the students who made them. for all the winners, visit studentcam.org. >> now a discussion on the

ability of american businesses to compete in the global economy. from the american enterprise institute, this is an hour and half. >> good morning. i think we will get started. everybody can wrap themselves coffee and orange juice -- grab coffee and orange juice. we appreciate you coming out this morning. i'm the managing director of the chamber passed a campaign for free enterprise. -- chambers campaign for free enterprise. we watch a view to this panel discussion. we think that one of the greatest challenges facing our nation today is reviving our

economy and figuring out how to create jobs. in our view, while the government can blunt the sharp edges of our recession and help push the economy toward recovery, only the private sector, operating in a free enterprise system, can create the number of jobs we need to be competitive and prosperous. that is why the chamber launched this campaign for free enterprise last october. this campaign is a long-term, positive, educational effort to try to convince americans that the free enterprise system has operated more less appropriately over the last 200 years and is the answer for job creation in the future. the center pillar of our campaign is what we call the 20 million at job challenge, the need to create over 20 million jobs over the next 10 years, to

reabsorb workers who have lost their jobs, and to accommodate the new workers that will be entering the work force over that period of time. our mission is to drive, after the development and adoption of policy that increases opportunity and prosperity. we need policies that permit economic growth and job creation. the chamber has for years really had an agenda for economic growth. to name just a few, we think it is important to revitalize both the education and training system at the federal level to allow workers to be ready for the new jobs that will be created over the next period of time one estimate is that 10 years from now, 30% of the jobs that will then be in existence are yet to be conceived of as we sit here today.

we need to rebuild and modernize the america's infrastructure to allow our companies to flourish. we think there has to be a big role for the private sector in this infrastructure activity. we need to promote healthy credit markets to provide credit for small and medium-sized businesses, and particularly, for entrepreneurs who are attempting to start businesses that create jobs. we need to expand trade. we announced in january a six- point program to create jobs, and one of them was to double exports over the next five years. the president in his state of the union adopted the standard. but in our view, rhetoric is not enough. you have to approve pending trade agreements, you need to

revitalize export control rules, and take exports seriously, which we do not think it is being done. and we need to be sensitive about taxes at the corporate and individual right. -- rate. this is the second in a series of discussion-focused events, and we mean that foster a better understanding of our free enterprise system. in my view, we have not heard enough discussion about how can american businesses remain competitive, and perhaps more importantly, what steps should the government take to create the right climate to allow american corporations to be competitive.

our panelists will take over -- will take on these and other issues. please join me in welcoming nick. [applause] >> it is good to be here at the chamber. i am a fellow at aei and editor of their flagship magazine. we are here today to talk about competitiveness, u.s. competitiveness. to just set the table a little bit for our conversation, just a little over a decade ago, the u.s. auto maker ford acquired the swedish auto maker volvo. some might have looked at this and see it as a positive development for american competitiveness, an iconic american firm went out and purchase an iconic european rival.

but just this week, we found out that ford is selling a full vote to a chinese firm -- selling volvo a chinese firm that i am sure most americans have never heard of. someone look at this as a bad sign for american competitiveness, the u.s. has to sell a major asset to a chinese company, and to one that most americans have not heard of. the president seems interested in expanding the conversation about american competitiveness, and just late last month, he gave a major speech on competitiveness in which he said the following -- "we need to invest and nurture the industries of the future and train our workers to compete for those jobs. nations around the world have already realized this, putting more emphasis on math and science, making serious

investments in clean energy because they want those jobs. as i said in the state of the union, i do not accept second place for the united states of america." competitiveness is on the minds of many people, and yet for economists, competitiveness is a bit of a slippery notion. i will give you one quotation to highlight that discussion. paul workman -- paul krugman -- most people know him as a columnist for "the new york times," but he is the trade economist of some note, nobel- prize winning. in an essay in 1994, he said, " coke and pepsi are almost purely rivals at only a negligible fraction of coca-cola's sales go to pepsi workers.

if pepsi is successful, it tends to be at coke's expense. major export countries are also each other's main export markets. if the european economy does well, it may not be at the u.s. 's expense. it is likely to help the u.s. economy by providing it with a larger market for goods at lower prices." most people worry about competitiveness, and on the other hand, what is this really mean to say that america competes with other countries? to try to put some backbone into this notion of competitiveness, at aei we have launched a year- long project to study competitiveness, to better define what it means in various contexts. we will turn it over to the panel we have assembled here to talk about our research efforts

of the more -- our research efforts a little more. what i am going to do is introduce our speakers, they will talk about 10 minutes, we will have a conversation about some of the issues that are raised, but we want this to be a general discussion with the audience. i encourage you if you are listening to what we're saying, if you have questions, write them down. we have microphones that will be going around and we will open it up to the floor and you will raise your hand and you'll come around and have a conversation with the audience. our first speaker is former chairman of the council of economic advisers and is currently the dean of, columbia university graduate school of business. he is a visiting scholar at the american enterprise institute. he has written more than 90 articles and books, including two textbooks on corporate finance, investment decisions, banking, energy economics, and

public policy. in the political world, he advised former gov. mitt romney for his 2008 presidential campaign and was instrumental to the design of the 2003 bush tax cuts. he previously served as a deputy assistant secretary at the u.s. treasury department, called a consultant to, among others, the federal reserve board -- and a consultant to, among others, the federal reserve board and the fed for reserve bank of new york. -- federal reserve bank of new york. >> good morning, everyone. it is almost impossible to be opposed to the term " competitiveness." it is like mothers and apple pie. how could you not want to be competitive? the question is what does it mean? we just went through a wrenching national debate on health care reform, and part of the reason that was so complicated, at least from an economic perspective, is that it seemed to mean different things.

for some people in means coverage leading to cost reductions, and for others it means no, cost reductions needed to coverage increases. getting a definition right matters. for competitive is, it is ultimately about our living standards, and it is easy to see why we care. in the very difficult economic environment we find ourselves still in, it makes clear the need to never lose focus on long-term competitive fundamentals and the short-term problems that we face. competitive economies are those that have in place at all level of individual sectors -- at the level of individual sectors the factors that allow prosperity to build, and sectors and markets that can actually win competitions.

we contribute to competitiveness weather in cyclical downturns -- competitiveness in cyclical downturns, leading to better economic performance. it can lead to some mischief. the word competitiveness is often used to justify it what most economists would call industry policies. in continental europe, this would be the idea of national champions, that we should take industries that we want to win. in the u.s., these terms tend to be blander. the notion that we could have the government be a venture-capital llist or g reren our way to prosperity. old-fashioned mercantilism is dressed up in the word

"competitiveness." what exactly is competitiveness? if you survive and you have surpluses, you are competitive. if you lose money or go out of business, you are not competitive. this is not difficult. despite what you hear in some elements of the media, and even in some of the nation's leading business schools, it is much squishier for our country than the paul krugman quotation suggested. in an essay about the same time as the one nick talked about, he said that it is dangerous to predict that trade balance with the countries bottom line. for a firm, running a surplus is a good thing.

that element of competitiveness is not necessarily true for our country. sometimes trade deficits can be a sign of competitive health. for anybody who was worried, that is my last reference to paul krugman this morning. [laughter] there are two issues that are being buried here, and they are both important. one is productivity, and the other is competitiveness in the sense of winning competitions. in action that improves productivity, it helps raise output and living standards. that is a good thing, and it tends to show up and leads us to rank countries by various things. productivity growth, living standards. but you are competing only in the sense of serving as a point of reference. that is not necessarily what economists think of as competition. there was a very high profile

study by the world economic forum really focused only on productivity when they think about competitiveness. indeed, the world economic forum and economists consulted define competitiveness as the institutions, policies, and factors that determine the level of productivity in our country. it takes one piece of what i said, productivity, without reference to the ability to win a competition. one could say that there is not necessarily anything wrong with talking about productivity. and the factors that economists use with studying productivity inform competitiveness. i think of them as being grouped in three categories. one is providing a foundation for growth. this is the familiar discussion of the institutions and basic education and skills. a second category i would think up as building efficiency. this i would think of as higher education and efficiency in markets -- markets for labor,

markets for goods, markets for finance. a third factor i would call driving the growth, and here i have in mind the quality of management and innovation. we are starting to get to things where actual competition can take place. for the united states, our high productivity growth is certainly -- our heart productivity growth certainly expands our relative prosperity, and it explains our resilience. there was recently estimated output losses from the financial crisis. the u.s. did the best of oecd countries but it didn't go through a great deal of pain? yes, but because of flexible markets and resilience, it will actually be ok. it really does not get to the heart of competitiveness as

policy makers want to think of it. it is probably too broad. competitiveness, i would urge you, and studied with respect to areas that have an actual competition -- can be studied with respect to areas that have an actual competition. it is not about economies, it is about particular sectors. it is an article of faith among economists, at least outside of washington, that the optimum tax on capital is zero. it is tied to a discussion on productivity. there is also an interesting discussion, and evan will talk about this, about international tax cut addition, that there are things on which we compete in addition to the article of faith. you look at additional examples with education policy, and the basic underpinning would be improving primary education. but there is a competition to be had in attracting the best

graduate students, the business that i happen to be in. another is a financial regulation. transparency is a general thing that is associated with financial market stability -- financial markets' ability to deliver productivity growth. i would argue that there is a public policy research agenda here -- taxation comes most easily to mind but i would argue that there are other areas as well, i reeducation, immigration, how we compete with -- hire education, immigration, how we compete with countries around will to be successful. how can we do the kind of cost- benefit analysis that enables us to have the smartest regulations. financial markets and competitiveness -- how can we make sure we are not over- burdening financial tax actions

-- financial transactions. and how we make sure that we have the markets and institutions and industries that not only advanced development, but carry out what i think of as the non-linear true process of innovation on the shop floor. of course we should do things that advance productivity growth, but we should also be fine in every ridgeway competitions that enhance -- we should also define in a rigorous weight competitions that enhance that and competitions that we can win. .

>> when bob said once that he knows there are many industries where there are $4 worth of social output to $1 worth of private output. he doesn't -- he didn't know which ones they are. there is not often humility and washington for it is hard for policy-makers and easy for lobbyists to decide which industries actually have spillovers.

as in sports, we knew to do two things -- -- we need to do two things -- we need to practice good competitiveness to win. >> i want to touch on one point that you raised about come -- about the nation competing for graduate school students. it is a global competition. i think the united states does pretty well on that. our universities to a good job to get the best talent from around the world. i wonder if you are concerned about something i just read last week which was an article entitled "whymba's are going east." the peace says that whether it is columbia or the best business schools in the united states, they are seeing opportunity. does the united states need to

worry about the students graduate and seeking opportunities abroad? >> in that article, there is a nice picture of a columbia business school graduate. it is certainly good news for business school because it means that the global reach is still there. i don't think that has to be the story that plays out. that is definitely a story on campus >. >> our next analyst has a specialty on policy and economics. before joining ai, he was the

associate professor of economics and finance at columbia university school of business. he is a policy consultant to the treasury department in the clinton, bush, an obama administration. he writes for many publications but as a weekly column for bloomberg news. >> this is a kickoff of them a project that glen and i have become ai to see if it is possible to revive the notion of competitiveness. what motivated us to start this is the observation that it is almost impossible to seek an economic speech by a politician and not mention the word competitiveness. it is almost impossible to mention the word competitiveness

at a lunch with a bunch of economists and get dirty looks. competitiveness is often best used. -- is often misused. we wanted to see if there are definitions of competitiveness in different areas of economic policy that are useful. we want to see if they can help policymakers see how the competition is doing and what it is for. what we have done in this project is we solicited leaders in the economics profession and other fields to spend one year in different areas and find out what competition is going on. i hope that these papers will end up being fruitful but since we are wandering off into uncharted territory, i am sure

there will be some gaps in this. one thing that i can said is that there are some examples of the kind of thing that should influence policy. one example i would like to walk through is the example of taxes. before i do, i would like to say that it is urgent. we have told our authors that they need to have papers by -- ready by next december. it is urgent that we get to work on this. with the unemployment rate so high and so many americans jobless and so many americans jobless for extended period of time, there is a serious risk that we will create a whole generation of people graduating frobut there are people get in - not getting jobs. they will be separated from society and will spend one or two years out of the labor force. it is hard to get back in.

the job agenda of the u.s. chamber is urgent. if we don't do this, the future of this nation will be fundamentally different. we will have a class of people who are separated from society that we have not seen since the great depression when there were hobos wandering from city to city. it is urgent that we try to find out what we are doing wrong, what competitions are we involved in that are real, and how are we doing. hopefully, that will give us a guide as to what we need to fix. i was going to talk a little about tax policy. i don't have slides and i don't know if the viewers can see the slides well. i want to talk about the top marginal corporate tax rate in the u.s.. i have a whole bunch of research on this including a recent academic paper. we look at tax competition

across countries. we tried to see the impact of the tax competition. there is optimal? literatur texts literature. -- tax literature. how far are we from a consumption tax? that might be useful to think about when you think about productivity. every morning, our people are asked to compete with people of other nations. the people who are playing by the rules of other nations often have advantages and disadvantages that are presented from the association. one that has changed most radically in recent years is the corporate tax climate. back in the early 1990's, if you

look at this green line, the u.s. increased its corporate rate from 34% to 35%. that is the last increase on earth over that time. there were a couple in south america that may be followed after that. every other nation on earth has been reducing its corporate tax and the red line is the oecd average rate for it when we increase the rate, the average oecd trading partner was a bus and we went to their average. today i would guess that it will extend a line for the average which is below 25% and in order to get to the average for the oecd, we would have to reduce our corporate tax by 11% that is

interesting because that number is the reduction that is proposed a bipartisan rate bill that would restore the kind of quality with our trading partners that we had back when president clinton increased the corporate rate. why is the corporate rate at the statutory perpetrate tperfect r? and if you are a foreign automaker and you want to decide which state you want to locate a plant in, you care about if there are good roads and a nice airport. you also care about what is the state tax of your activity. the states to all sorts of the to lure plans to their state. the corporate tax, you can think of it as the average tax that someone will play when they locate activity and the place over time. the corporate tax is the key

factor that someone locating a thing like a plant cares about when deciding to locate anywhere. for now, the tax is so high it has serious consequences for the location decision. that means that there is a competition going on, if you like. the competition is for the location of investment of plants that are coming from all over the world and deciding where to go. the thing that other countries are using to attract activity to their shores is the corporate rate. you can see that we are not doing so well. i like looking at the whole distribution of tax rates, too. you can see that in 1981, the u.s. corporate tax rate was a

little bit above the median for world distribution in 1994, we were just about at the median but we are way up. the share the government takes is important. you might think twice about locating in activity in the u.s. i will skip that chart because we are running late. that is like the competition. in this and chart, -- in this chart, we show foreign direct investment inflows direct to j.d. paper it i have two really high tax conferees -- countries, japan and the u.s., and i compare them to the oecd average and you can see that japan and the u.s. have really high corporate taxes. they have a very low in flow

relative to gdp. compared to the average, there's a clear relationship where we have a light blue bar and a low red bark and the average is in between. this idea that there is a tax competition is mutual for thinking about what we are doing in tax policy. we need to chop it down or we could expect to see this chart continue to go down. the good news is that this is not a partisan issue. i was pleased to see in the last tax reform bill in washington, democrats and republicans agree that we have to do something about this competition. my hope would be that as we develop the competitive that

this of this project, this low hanging fruit will be the first of many policy proposals but flow from thinking about the competition we are involved and and what is the score. thank you very much. >> thank you. the third panelist today is the executive vice president of public affairs at verizon communications. before joining verizon, he represented the iowa second congressional district. he served on the energy and commerce and education and labor committee as well as the select committee on aging. he previously shared the u.s. telecom association and served on the board of directors and committee.

please join me in welcoming tom. thank you for being here. >> thank you. it is always great to follow its two great intellectuals and economists and i will do my best this. . i do not think about countries being competitive ordinations being competitive or governments being competitive. it is important that we reflect that the countries or governments that best create a climate with enterprises can be of a competitive in the business. rihanna, it is the individual that has to compete. it is not the governments that compete. the government create the climate in which the business compete for it when thinking about the right climate, i think there are two driving forces. the first is having the investment necessary to compete and the second as having innovation, the innovation necessary to compete.

what is capital and one is people. let me start first with the policies relating to the people. when it comes to attracting the best people, it seems to me that we have to focus on education. many business organizations spend a great deal of money focusing on training of our people, trying to make efforts in the community to improve our schools, trying to encourage adult education. we, at verizon, are spending a lot of time to include education in certain areas because of the nature of our business. overall, i think it is fair to say that as a nation we have a huge amount of work to do in the educational arena in order to have people who are competitive with their counterparts elsewhere in the world. when you have 40% of students

not graduate from high school, you know you have a significant problem in terms of the ability of the nation to attract the people and have the people with the skills necessary to man the enterprises that will be competing in the world. this is a significant issue. the second issue under this category, and there are more, is immigration. having the right immigration policy also was critical to attracting the right people. . we bring a lot of people into the u.s. to train them at our institutions of higher education. having those people stay here and attracting others who are well educated and have capabilities is important to the climate that we have in this nation that allows enterprises to be competitive. in addition to attracting good people, the other issue which is not politically fun to discuss

is the ability to replace people in an enterprise. in order for an enterprise to be competitive, you constantly have to be replacing people who may not be as strong with those who are stronger. you have to have the ability to change your work force. one of the difficulties we have in the education system is an inability to change work forces. while the problems we have had in a number of major industries in our country is an inability to make change in the workforce to get rid of those not performing with those who can be performing well. all those rules that prevent you from creating -- bringing the best people into work force and moving out those who may not be as good our rules and laws that prevent us from having the most competitive enterprises in the world. i would say to you that innovation is tied with people and in order to get people, you

have to be able to attract educated people. you have to be able to bring them in from around the world and you have to be able to change as necessary. the second big thing is attracting investment capital. -- investments or the world is much different from when i was in congress, it was not easy to move capital from one part of the world to another today, capital flows in minutes and seconds, at the speed of light people are constantly making decisions as to where they will invest their capital. the climate for investment is critical in terms of determining the environment and competitive climate within which enterprises do business. the tax policy would be the first leg on my list. if you have a tax policy which

discourages you from putting your capital in that and firemen, you will put your capital somewhere else. high taxation of capital investments discourages a competitive climate. lower taxation encourages more investment in that area. i agree that the best policy is to have a low tax on capital and take low tax on corporations. given where we are now, we spend a lot of time with the high end tax rate trying to encourage different types of behavior. we see that right now in congress. they are talking about bonus depreciation to encourage investments and create jobs.

this is almost april and congress has been talking about the administration that they want the bonus depreciation to attract jobs. this has been going on since last year and would be extended to this year and as part of the effort to create jobs. yet at this juncture, it has not happened yet. they want to make more investment now to create jobs. some stability in policy is useful. the second area that is important when it comes to attracting capital as regulatory policy. in our industry, i don't know if we are blessed or cursed with heavy regulations. we have had parts of our industry, mainly those sectors

surrounding the internet and wireless business that have enjoyed a light regulatory touch from government over the last decade or so. the bottom line is that if you have heavy regulation that is the equivalent of a heavy tax. this will prevent you from making an investment you want to make. it prevents you from being able to be experimental. this will allow for the development of new products and services. the regulatory climate can stifle investment or innovation or it can help stimulate it. the other thing is trade policy. there are two aspects of trade policy that i will touch on. does the trade policy of a nation, our nation, make it easy for a company to do business outside the nation or does it

make it more difficult? it is in the interest of the united states to have companies that are not only able to compete effectively within the u.s. but can compete on a global scale government plays a role in determining whether or not we have access to that. this also touches on whether we can play in the international arena. the second aspect of trade policy receive less attention and that is does trade policy drive the rule block across the world? intellectual property is where this is very real for our industry. if you can protect your intellectual property as a result of trade policies, you are in a better position to compete and if you are unable

to protect your intellectual property. through trade policies, government determines whether or not the innovation that occurs is able to be protected and if the rewards can be reached from the innovation. t/uáom line in my mind is that you have to have the right climate in order to attract the best people and to encourage investment. the policies that encourage investment and help attract the right people make us more or less competitive depending on the nature of those policies. >> we will open it up to the audience for questions. i want to drill down on the tax issue a little bit. the speech that i mentioned at the outset that the press again

on competitiveness spoke directly to the tax issue. there is confusion about it and maybe we can try to make some sense of what is going on. he said that the other promise he made during the campaign was to make sure our tax code does not provide any competitive advantage to companies that move jobs outside of the united states relative to companies that are investing here. he would not to say that his interest is that it should reward non disadvantaged companies who are creating more jobs and doing more borders -- more work within the borders of this country. i look at the chart that you have which is pretty dramatic and shows a wide range of corporate tax rates between the united states and oecd countries. can you make sense of what the president is saying in the context of this discussion? >> the idea is that right now,

u.s. firms can't deferred u.s. taxation if they locate activities offshore -- can defer u.s. taxation if they locate activities offshore. if you want to sell a product in germany, you have to compete with a company that is producing a comparable product at a tax rate that is maybe 11 points lower per it one way you can do that is to locate a subsidiary may be in ireland which has a lower tax rate and that subsidiary will sell into germany. the profits will land in ireland. you will not have to pay u.s. taxes on those profits. on till you mail the money home. it has been said that the company that does that is evil.

we would take away the opportunity for the u.s. company to compete in germany. the way you attract business to the u.s. and make sure that our multinational businesses thrived is you have to make it through -- so you don't have to go through ireland to compete in germany. you have to do that here. if you wonder why there are as so many unemployed people, it is because the economic literacy as low. >> what the president's said is

just old-fashioned mercantile some dressed up in the words. it does not make sense historical or now. there is a confusion about what multinational companies do. there's a notion that there is some kind of zero-sum game. i take a plant or group of employees and by put them in a certain equation, most multinationals own valuable brands or intangibles. the value of that brand or intangible goes up, the greater the international expansion. many economists have studied this and. . i question the intellectual underpinning of the speed. >> if this is a political statement, it is not economic or business statement.

it was designed to appeal to a certain constituency which has a point of view. i cannot believe that when serious people analyze this issue would reach this conclusion. it is unfortunate that our political system sometimes appeals to certain groups or other attempts to educate them. that is the way it is part o. if the corporate tax rate or lower, we would not have this issue. how to get around a the -- how do we get around a high corporate tax rate and compete? companies worldwide will get employees around the world. that strengthens the employment in the u.s.. the statistics on this in studies are overwhelming part g.

multinational companies that are doing best as world wide as a result of the business world wide and they have employees worldwide but they also have more employees and more welcome -- creation in the u.s. which is good for the country. -- wealth creation in the west which is good for the country. >> the president says this is not a high tax country because our tax revenues relative to gdp are relatively low. the reason we observe that is the corporate tax rate is so high that nobody wants to locate profits to the u.s.. we don't collect much resin -- revenue as a result.

this is something that has to be addressed if we are going to create more jobs. >> the oecd suggests the revenue maximizing of the corporate tax rate is probably in the mid 20's per i. >> we talked about international tax competitiveness. i would like to drill down on regulation. in the last week or two, you gave a speech by u.s. regulatory policies and how it relates to the telecommunications and broadband industries. can you give your sense of -- i looked at the speech and it jumped out that we had this 20%

industry of broadband and you have many rules that bind us were written into the 1930's. how much of a problem is this? what is your sense relative to other countries and what they are doing and how they look at regulatory structure within which they're bleeding edge industry must compete? >> it is true that the policies relating to the communications industry were generally adopted in the 1930's. they were built under laws that were made for the railroad industry. they were focused on how you regulate a monopoly that provides a vital service for our country. as we have moved into the current century, we do not have

the same kind of monopoly structure. instead, we have many players competing and we have a very informed dynamic. we have all these groups competing with each other at the same time. we will be partnering with motorola and google and verizon will be partnering in order to have the droid but the same time we are fighting with google in other areas . . you have these models of companies that are competing. the clinton administration under the fcc said they are taking their hands off the internet. they said they would not regulate that space.

we have had robust growth in the internet ospace. the problem is we have players who are attempting to fit their industries into the old communications policy infrastructure and make that apply to the engine that work today because they want government to come in and manage the sector better. we would contend that the sector does not need -- does -- does not need regulation.

it is time for congress to look at this issue, at least let the update pulte law and have a policy that makes sense for the internet space if we are going to have additional government oversight. if we are not opposed to government oversight in the state, if you're a good actor in space, you want some kind of ruled law. we are fine with the rule of law. that was more than you wanted to know, i am sure. >> you mentioned labor market issues in terms of where firms

make decisions about where to build plants or it is based on the ability to have control over hiring and firing. what does the academic literature say about this? >> i mentioned to the oecd study on this. what worries me is that through the rearview mirror, it is able -- as possible to celebrate the country's flexibility. we have had the ability to more of flexibly hire and dismiss employees. policy moving in the other direction is moving slowly but deliberately toward changing hiring and firing costs.

that is something that will raise the of one right of the country and make us less resilient. it is a choice that the political system needs to make. i don't know of is a wide choice. >> right now, the intangible capital stock is bigger than the tangible capital stock. if you want to compete globally as a u.s. firm, you have to locate your profits of lower tax jurisdictions that the united states. in order and you do that, the best way to do that is to locate the r and d in a place below tax rates. that means you'll get paid

royalties. when many firms in the u.s. relocate, that has a big affect on the gross in those countries. you might go there for to work for a while but after working there for a couple of years, you start your own company and then there is a high-tech boom going on. we to call the best sense mars people and move them there. -- we got all the best people and move them over there. people need an incentive to move their best idea people somewhere else. that cannot be right for this

country. >> i think you are right on what to call shop-4 in ovation. -for innovation. most innovation is incremental because you do things better. if we stop doing that here, we will miss the point of innovation. another 21st century industry positioned is financial services. much of our regulation of financial services draws its we are in the middle of financial reform. i am surprised that much of what happened in the current financial crisis seems to be back -- not that related to a policy discussion. we need better consumer protection but that doesn't get entirely at what happened. thevocker rule has nothing to

do what happened in the financial crisis. we need a better regulatory discussion. >> one question about intellectual property protection. what do we know about the role the different policies related to idea protection? >> i wrote a paper on this awhile ago.

we find that there's a clear correlation with no way country protect people's intellectual property and where people decide to locate their activities. we wrote this paper during the bush administration. this is not a criticism of the current administration but i'd sure it still holds. we set our system not along time ago and now the u.s. is good at protecting textiles and other aldie condi pegs. we are terrible at protecting intellectual process -- property. the level of piracy around the world is stunning. there has not been a whole lot of action to try and fix that.

on the other hand, steel and textiles and those kind of things which are less important in the economy now than they were in the past, they are part of our activities. >> the u.s. has done something very important correctly. the support they provide for basic research has led to a lot of commercialization our major universities which is where research takes place have been -- have had big waves of innovation. how do you commercialized ip? >> as a company that innovates and relies on intellectual property -- >> i would offer two or three observations. we do have to recognize that the

u.s. is thorough and creates a climate where the less depression occurs. innovation in the world is still occurring in the united states. we provide better protection for intellectual property than many other places. as a nation, we continue to attract bright people who will want the m opportunity to innovate. we have to recognize that. the second observation is that in the u.s., the other problem with patent laws is that it is turning from a protection for intellectual property or innovation to insure that the elevator reached the rewards of that in -- innovation to the legal game where have various groups of entities trying to buy up patents.

they may also take up lawsuits against companies that have touched on that patent. we do have a growing problem and i don't know what the answer is part o. the third observation relates to our international exposure and generally with our industry is doing, the communications -- international communications and what is doing to piracy is a big problem. the difficulty is we do not have the cooperation of other countries. we have to enforce the copyright laws. the technology has changed. we have new challenges. it is easy to capture information and then our re- transmitted and to not pay.

>> we want this to be a conversation with the audience. let's open it up. we are working over the course of one year on research on this. >> i think for taxes, you should go beyond oiecd and look to china and india where this is happening. india has special economic zones which are tax hogan's for export industries, the zero taxes. based on the previous tax law, they did the same bank. i did in the broader context. we have not heard the word exchange rates all morning.

i would ask about the competitive -- competitiveness of the court of around the world. we have just had nothing like it. because the manufacturing sector, the dominant trade in exports. there's nothing like that in asia. should risk be considered? china has been -- it is nine years they have protractile large-scale purchases on the foreign exchange. as a result, in the year 2000, u.s. manufactured exports globally or three times larger than chinese exports. this year, chinese exports are

50% larger than the u.s. 70% of their exports are in technology-intensive industries. with what has been happening in recent years, shouldn't this be a major factor in terms of international competitiveness? >> your question is important and it raises a couple of topics first about china's policy. they have been pursuing a classic mercantile policy. it will harm itself by such a policy. part of a problem for the u.s. is that we tend to talk to chinese officials as a base need

to make a change for our benefit. how often do people do that in competitions up? there is a large amount of negative value-added investment in china. our problems are not with china, per se. they weave -- even if china revalued the r &b this afternoon, there was still be a problem. we need to stop doing the bad things that we do to our manufacturing. there is much that we can do ourselves before turning to china. you are absolutely right. china's policy is a mercantile

policy. creditor nations do not have much of an international -- what about when china wakes up and realizes it has made a mistake? >> could i get my slides back up? is that possible? the dark blue line is the rest of the world. >> asking china to do something because it is in our interest is

not going very well. it is off-often difficult to convince somebody to do something for us. it does not appear that way to people in terms of what we are doing is not working. eventually, it will be a big problem by adopting that we now. there is close to 10% unemployment here and china is reviewing another boom. the perception is not there. a manufacturing company in the united states may decide not to do anything. >> the quick answer would be the word," japan." we would be talking about japan doing everything right, if we talked about this one decade ago.

you cannot have a financial system that is broken. the same is true for china today. the chinese officials are not oblivious and it is not a matter of american officials preaching. there is a trade-off between trying to bring approximately 10 million people per year into the productive urban sectors. the first is the cost. 2uwe just had a trade deficit in china. there are working hard at understanding domestic demands i think the ship will turn. there is the -- very little we can do. >> i have a question with regard to the corporate tax. what are your thoughts as regards to small business and

them being the largest employers in the u.s.? with regard to education, you talked about getting the best minds for higher education. why do we want to retrain english seem to be the factor that is holding people back them uck. >> taxes are paid at the individual tax rate. we have a progressive individual tax, the top rate will be going up. that is clearly an anti-jobs creating move. it is a corporate tax but it is an individual tax move. there is also the issue that it would be fruitless to pursue financial reform because that is

where we slowdown in lending to small businesses while corporate balance sheets are flush, the spreads have fallen back to more normal levels. it is still very hard for small businesses to get credit in the united states. the slow pace of financial reform has made that worse. from an economic perspective, the big difference between the competitive situation of our big universities verses what we do in primary and secondary education, it is brutally competitive at the university level. i compete all day. the same can't be said of companies educated in the public. >> a few observations -- we have all of elementary and secondary schools that are doing very well. they're doing a great job of

educating students. we know what works and how it is a matter of doing what works. the second observation i would make is that we have not had adapted education to the changing nature of our students. the students today properly are not going be attracted to certain businesses because they live in a world that is so different. we have the ability to teach them in the way they levels or information through all the video and other things that are online.

we use state standards in schools. we have lesson plans with supporting material and schools that are using that and the results are good. you have schools that cabin made available. in the special education arena, we have done a remarkable job of creating and the dead of buying a house students, special- education students can learn. and then creating a climate which allows them to you the most school they have. we are still in a world that treats them all the same. using the technology today, we can figure out if a student learns better visually or by sharing.

we know -- or by hearing. we know if they learn better in the morning or the afternoon. we do that for a small segment of our student population but not for most of our students. those are three observations i would make about changes that should be made in the educational arena. but underlying -- my underlying point is that we know how to do this. if schools would do it, we have technology that is doing it today and begin -- should take the best of what we know. >> are there countries that you have looked to of the education from and we need to adopt some things they are doing? are there, -- other countries

out there like that? >> i don't know that i can name a country in particular. i look at our country and see people doing their jobs very well. spend more time in cause college in the u.s.. >> i was going back to past policies. i worry about the possibility of getting a broad reform passed. eager congress is unable or unwilling to do such a reform. i don't think that the public

will react positively to some sort of lower tax bracket or drop it entirely. do think it could actually happen? >> it is a very important question. especially when i speak to my friends that our politicians, one question they will often have is how this will apply this will play . the charlie rangel bill had a reduction. i think it is becoming widely acknowledged. i do not think there is a person

in the room that would want to stand up and say that it is better we are higher than everyone else on earth. in the last presidential election, john mccain proposed a reduction in the corporate rate tax. when it talked about that in town halls, people were sensitive to it. my observation of politicians is that they stop talking about things that they proposed and go around and get a cold reception in a town hall. this continued conversation about the corporate rate throughout the campaign was a metric of how well it played. people are saying we should do something about this.