tax things, you get less of the more they become more expensive. we can see labor costs will increase in these provisions. capital becomes more scarce for smaller businesses which means engines of job creation and growth will be slowed down by this. that is a tax that starts in 2013. .

because he hires on a part-time and employees, trips the 50- employee threshold, and is subject to the mandate. if he does not offer coverage, he will suffer a penalty. so he will think long and hard to hire those five part-time employees. those decisions will be made across the economy. obviously, if you are thinking about perhaps not hiring as much, lowering your current employees, it could have an effect on job growth for creation. one other example that i would like to highlight, on page 10, is a decision that a lot of employers will start to think about, particularly in the later years.

the calculation of whether to offer coverage or to drop coverage. we thought it was important to include. this is an example of a company located just outside of philadelphia, 55 workers, and currently the company pays $600,000 in health care benefits to every year for their employees and families. under the new law, if they dropped their coverage, they would be assessed a penalty if someone went into an exchange and got a tax credit. that penalty would be equal to $50,000 a year. so the economic decision before the employer is, do i continue to do the right thing and provide benefits for my employees, or do i drop, knowing that they can get into an exchange, and pay only $50,000 a year?

as you go through the primer, one particular section which picks up many pages is the section on taxes and revenues. lots of interesting items in here. one thing you have already heard about, small employer tax credit. this is something that is critical to a lot of people, because small employers are the ones hardest hit by these increases in medical care. it is important to note -- amanda thought about this little bit -- the folks available for this credit for are severely constrained. you have to be below that employee threshold, below the

$50,000 average wage cap, and you have to wait the entire year to claim the credit. these are significant hurdles for small businesses. it will be interesting to see how many of them actually take this up. the small business tax credit is also not sold to private. that is about 70% of small businesses in america. it will be interesting to see how robust that small business tax credit is. obviously, this is a category of folks that are prevalent on a daily, real basis. -- struggling on a daily, real basis. we tried to highlight areas of concern. we did not get to everything, we could not, in the 30-page

document. for the immediate regulatory issues that need to be held this year, you have heard it before. this grandfather plan is huge. right now and employers are frozen in their benefit designs, cost sharing responsibilities, deductibles, so they're absolutely needs to be clarity. in addition, medical loss ratio will need to be defined. ali, they are very broadly defined. my personal hope, view here, fraud and abuse programs, programs to prevent that, care programs, should be defined as medical care benefits. if they are considered outside of your benefit dollars, it

would hurt you. if you do not reach 80% in the small market, you have to start paying rebates to consumers in 2011. one thing that we have not talked about, within 90 days, initial internet portal, compare planned. we hope that is robust, that it provides a lot of information, so that consumers can really comparison shop, not just on prices, but on disease management, wellness care. one last thing on small business credit. it will be critical -- the owner will be included or excluded from the calculation of the average wage. it included, it means a lot of

small businesses will not qualify for the credit. again, this primer does not catch everything. as you have heard, there are lots of questions, and hopefully, we will start to be able to get some better answers. thank you. [applause] >> we want to be mindful of all your time today. thank you for joining us. special thanks for everyone who provided insight today, as well as all of you participating online and this important process. we will continue to be active in this process, moving forward, over the next decade in full implementation of this bill, and will be working to improve it

and making changes to make it better for everyone involved, especially from the employer /employee perspective. there are a number of ways that we will do that, all of which include advocacy and your involvement in the process. so thank you for joining us today. we look forward to continuing to work with you in the coming months and years. [applause] guest[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009]

>> the chamber of commerce talking about the implementation of the new health care bill. other issues ahead on capitol hill, the house and senate gambling in to begin the work this week. the house coming in for morning speeches. legislative work includes maiming and post office honoring sam houston. any book for request will be held at 6:30 this evening. the senate will return to financial regulations. then they will get back to debate. 5:00 this afternoon a procedural vote on financial regulations, whether or not to proceed. senator shelby saying this

morning, "and i do not believe we will have a deal today." you can follow senate coverage on c-span2. taking a look at the stimulus program passed by congress last year. nearly $219 billion paid out so far. our website has a lot about the economic stimulus program. you will hear news conferences, links to tracking websites, government watchdog groups. c-span.org/stimulus. economic issues are expected to be among the topics of discussion today. now to take us up to the bottom of the hour and the start of the morning ever in the house, a look at the week ahead in the u.s. congress. journal@c-span.org or

twitter. senators will face a future -- crucial test vote on far reaching legislation to overhaul the nation's regulatory system. republicans said sunday they plan to block efforts to move forward unless democrats altered several elements. meanwhile, democrats and obama officials spent much of the day finalizing strict new rules to rein in the huge derivatives trade -- other coverage of that in "the washington times." republican leaders said yesterday their ranks are unified and determined to shoot

down a key test vote today, potentially embarrassing scenario for democrats seeking to advance a major item of president obama's agenda. our question to you is, do you think bipartisan support will materialize today on the financial regulatory bill. and it's not today, because of differences between the parties -- do you think it will be different, perhaps, than the health care debate? we will take a live look at today and what is going on in congress with a reporter from capitol hill -- a staff writer from "roll-call." guest: thank you for having me. host: seems like a big development of the week and was the decision not to move forward today unveiling climate legislation. guest: senator lindsey graham sent a letter to majority leader harry reid saying he felt that the debate on immigration was being rushed for political reasons and so he essentially he

was saying he is stopping progress on anything -- not on anything, but on the issues for which he has been out of the most recently, which was climate change. that was expected to be introduced today with senator kerry and lieberman and as far as things go right now, it is not going to happen. host: do we have a sense how it will go this way? is it political posturing or sort of a derailment? guest: we will have to get some numbers back and see -- there is going to be a vote at 5:30 p.m.. certainly this has been a major, major goal of senator kerry since last year to get something passed and certainly they are shot grambling to salvage it. senator reid put out a statement yesterday -- or i believe

saturday, actually -- he saturday, actually -- he prioritizes both issues highly whether or not they can salvage anything remains to be seen. of course, parties are also debating the financial regulatory reform bill. host: immigration reform, how he is that? you mentioned majority leader reid considering them as top priorities. >> one of these issues where everyone agrees need to be addressed, the will to actually do this, that is the question among members. of course, it is like health care reform. the system needs to be addressed but the political sacrifices of doing that are pretty gray.

senator schumer has been working with senator graham since last year. senator leahy has said the moment there is a bill ready, he will make the time for his committee to take it committee to take up, even if his committee is also taking of the supreme court debate. so, the principals are definitely committed to making the process work. and we will see if the caucuses want to take up as well. republicans have been reticent to do that. some democrats, too, certainly. there are quite a few hispanic voters back in nevada and there could be some political benefits. for others, it may not be the case. host: talk to us about this afternoon's test vote on financial regulations. guest: at 5:00 tonight the senate will vote on a motion to proceed to the financial reform

bill. this bill is one that was voted out of senator dodd's banking committee last month along party lines. he and senator shelby, the ranking member, have been working trying to reach an agreement and so far have not announced a bipartisan agreement. because of that -- the democrats would like the 60 votes they need to proceed and that they will continue their talks and try to bring something together to mark or early this week. -- tomorrow or the berlin next repaired host: is there a different tone? guest: with health care you heard republicans going to the floor saying scrap this bill, let's start over. smaller and target. you are not seeing it with a regulatory reform. senator mcconnell had -- have been quite critical of components of the bill but has not said anything like, let's get rid of this bill, let's

totally ignore this and move on to something else. there is a will to want to work something out. however, senator dodd has been trying to put together a bipartisan agreement for quite a while. so, democrats on the are concerned this will go the way of health care with the gang of six, there were bipartisan talks and did not yield for the at the end. senator dodd does not seem to have that same set of thinking. he has been working with senator shelby even over the weekend. they were going sunday talk shows yesterday. the belief on the hill is even if yesterday's vote goes down, that progress will be made this week. host: jessica brady, staff writer ed "roll-call." financial regulatory reform, do you think it will find bipartisan reform today? let us go to colorado springs, colorado, republican, nancy.

caller: i have so much to say about cap-and-trade, but i won't talk about that. what concerns me is, if you ask somebody why we want to stop somebody counterfeiting money, and they say because it will wreck the dollar, but yet our own government is wrecking the dollar by producing money more and more. i'm hoping that the government will finally look at what is going on with our country, and i believe that is what the tea party is about, thank you. host: omaha, nebraska.

jeff, independent line. caller: i would just like to say that as usual, they are putting way too much in the bill, cramming it through they should be taking baby steps, just like pretty much done everything -- should have taken on health care and everything. this is pretty common sense and simple. separate of the banks from the banking and the "gambling brings" like it was before, separate those out. if the people want to take a big risk, it is totally separate. and the other is derivatives. obviously when you bought go up a bunch of bad mortgages and trillions of dollars and you spread them around and sell them, are you kidding me, the biggest ponzi scheme i have seen. and the bankers keep on saying, people keep on being suckers. if we don't have derivatives they will not lend any money. they are not lending money. and it would go overseas -- in a

what? let the derivatives go overseas because of the stuff blows up every two or three years. let them deal with it. we will give the money here and get jobs. host: jeff mentioned the derivatives. this on "the wall street journal." democrats take a step toward their goal of financial regulation -- let's go to tucson, arizona. sarah on our democratic caller's line. caller: i just wanted to ask a quick question and make a quick comment. the goldman sachs -- the entire think it's really frustrating to name and it is just icing on the

cake with the politics going on in america. instead of it being about human beings alliance and being kind to fellow americans and equality and justice and corporations not to taking over, every single vote is just so ridiculous. i am not a democrat if i can vote like you, i am not a republican if i can -- i am so tired of politics and it is so obvious why so many people are becoming independents. i was on to say, do you think this will continue? well partisan politics -- or do you think we will find a place where we realize we have to move past that if we are going to get anything done and we have to support our present and even if we don't always agree with them. host: de think the situation with a goldman sachs board -- spurred on more of an effort for people in washington to change

the system? caller: it helps, because whenever john mccain or somebody else comes out and speaking about their views on it, they are just political. it you don't -- don't hear about -- corp., we give them a lot of power, we need to take the power away and how we work together to get it done? instead, it is who they are against. host: let us talk a little bit more about derivatives. a definition, from "the wall street journal."

that is some of the relevancy of derivatives. linda, republican, rapid city, south dakota. caller: i hope i can get this out properly. i read the bill. in fact, i was doing it just before the show so i could be prepared. i understand we have a problem. and it is not democrat or republican, it is just plain old greed. but what people aren't a looking at and realizing, in this bill i noticed a lot of language that, first of all, establishing a new council. one of the members of this council will be the chairman of the sec. that disturbs me right there. the second thing, they will be able to pick a corporation that is going to be able to tote -- take over any of these so-called "bad company's." that worries me. who will the corporation date? this bill is another rush to --

quick, we have to get something done -- and it is going to be wrong and it is going to put the power in the wrong places. they are just not doing it right. this is not a democrat, this is not a republican. this is the american people with a government just can't -- with a government just can't get it right and doing it, a lot of them with good intentions but a lot of the language in this bill. and one other thing jiging -- one other thing, it also specifically exempts any federal housing, which means fannie mae, freddie mac, fha, va -- any of these loans through the government that might be messing up, they are exempt, only private companies. so, i understand we have a problem and we need something done but if you look at this bill it gives too much power to too few people. thank you. host: let us take a look at minority leader senator mitch mcconnell talking on fox news yesterday about bipartisanship and what is going on.

>> we want to make sure that they don't have the same kind of approach on financial-services that they did on health care, and ironically, chris, my view is very similar of that bastion of conservatism "the washington post" editorial page, that said this bill -- but $50 billion fund it needs to come out. we need a system where creditors expect to be treated fairly, somewhat similar to bankruptcy laws. and we need to have enhanced capital requirements. none of that is currently in the bill the majority leader would try to have us take up on monday, which came out of the committee on a strictly party- line vote. that is not the best place to start. host: minority leader mitch mcconnell talking on fox news yesterday. looking at the issue of bipartisanship, the financial regulatory bill, this from "the washington post."

republican and democratic aides expect the monday vote to fail unless -- what do you think? do you expect to see a bipartisan effort out of this financial regulation work? ohio, john, independent line. caller: thank you for taking my call. the bill may not be perfect, but we have to do something. anybody that is involved in writing this bill knows that we cannot put this aside and longer because the financial

system is constantly flowing and evil drink and changing. and as -- flowing and the evolving and changing. and as christopher dodd said, like somebody breaking into your house and you have not changed biloxi it in your house and if that is any of us who had it personally and our own personal lives that had to do with change and making changes to keep it from being breached again, we would have done it. but we are dealing with our country and our country is all we have. we literally lost billions and trillions of dollars because we don't know -- we don't even know how many people were involved in making these decisions as we sit here today. so, we need to show some some light on what is going on and why people are getting away and some are getting rich. we don't even know what is going

on on the racetrack. so, these people calling in, especially the republicans, saying things like, we need to get it right. it is the same thing they said during the health care debate and this is a little different. i value my money, i value my investments and i want something done. host: let us look at "the washington post" for more clarity on what is on the table today. republicans are recent focus their criticism on a proposed $50 billion resolution fund which would help cover the cost of dealing with a major financial firms failure.

>> we are going to leave, washington journal. the u.s. house is gambling in in moment. they will be looking at three items on the agenda today. .

the speaker pro tempore: the house will be in order. the chair lays before the house a communication from the speaker. the clerk: the speaker's rooms, washington, d.c. april 26, 2010. i hereby appoint the honorable james p. moran to act as speaker pro tempore on this day. signed, nancy pelosi, speaker of the house of representatives.

the speaker pro tempore: pursuant to clause 12-a of rule 1, the chair declares the house in recess until approximately 2:00 watch the senate live on our companion network c-span2, the house on c-span. >> meet the grand prize winners of the studentcam competition, the more morning at 9:15 eastern. see all the winning videos at

studentcam.org. tonight, at a discussion on fcc policy with members of the commission, talking about the national broadband plan and what the contest decision means for net neutrality. coming up, we will take you to the white house for the daily briefing with spokesperson robert gibbs. until then, part of this morning's "washington journal." >> "washington journal" continues. host: coming up in a moment, a discussion about diversity in the united states and in your community. our first prize high school studentcam winner but that this issue. >> america's strength is in its diversity of its people. >> when you're in school and you

do not really fit in with everyone, it gives me a place where i always belong. >> i guess people's always say, whoa, that is a different mix. no one has ever heard of a jewish chinese guy. >> when a person comes to the united states and they're not a native-born american, they bring a lot more than just the color of their skin. they bring a completely different outlook, in a different way of celebrating. >> it does not matter what coulter you come from, if you are in america, you are what makes up america. it does not matter where you are from. you do not have to be in america to make up america. without the people in america from different cultures, america would be lifeless. host: we would like to introduce you to this year's first place prize winner, krista kayiza --

mcchrystal kayiza. we really enjoyed your submission. tell us about why diversity was something to focus of in your video. guest: my parents immigrated to the united states in 1991 from uganda and i've always had to balance the american society and american culture with my parents traditional culture. i've always been fascinated with how students balance their family values and the values they learn in school and the education in other areas of the community. i was thinking about the topic and i figured that because a lot of things are going on in the nation right now that are not necessarily positive, that would be a good reflection of america by choosing something that goes to its founding values. host: crystal kayiza joins us from oklahoma this morning. and what is your high school like that do you think is very diverse?

guest: i think it is pretty diverse. our school is very big. our graduating class has a couple hundred people in it and i think they do a good job of making sure that all students are involved and not just one segment of the committee has the advantage of the school. host: did you learn anything new about your classmates, you're a a teachers, your peers, your community at large as you did this project? guest: i did not -- i do not think i realize how different cultures affect american society. teachers always say that we are the american melting pot and you learn in history the pilgrims came over to start a new kind of revolutionary idea of having freedom of religion and freedom of thought and everything, but you do not realize how our diplomacy and education and everything that we do, there is a culture.

everything that is the original about america is -- it is not just one definition of america. host: how did you get people involved? was it hard to tell their personal stories? you really got them to tell their own life experiences with you. guest: lot of the people in the video our friends that i have. we have a club where a bunch of different kids come together and share their cultures. at one of the meetings i just had a bunch of them sit around and discuss how their culture affects american life and what are the advantages and disadvantages. it was not necessarily hard to find the people, but it was difficult to understand what the goal would be because there are all these different sides to coulter -- what the angle would be because they're all these

different sides to american culture. it was hard to get the response that was the truth, but at the same time i think that the in deeper and try to get people to give positive answers was the thing that helped us this most -- the most. host: do you want to keep learning about this issue? guest: yes, i am interested in how our bertran it is built and are different cultures -- how our government is built and how different cultures -- the school that i go to end the committee i live in, regardless of how i use it, it is going to be a part of my life. host: we have another guest in the city of this morning, christopher metzler from georgetown university. we want you to join our discussion about diversity. seeing that clip about her world, what was in guest: your mind it is always -- what was in your mind?

guest: it is always interesting to see the different perspectives. i think the older definition -- the older generation had a different definition of diversity. i was absolutely impressed with the amount of time and effort that she has put into place to produce the video. host: kristcrystal kayiza, can u reflect on the experiences review or one of the people in your video did not have a good experience? guest: it was not necessarily difficult to get people to speak about their culture, but it was hard for people to speak about the negative effects that it has on them, like discrimination and everything. one of the people in my piece, david villepin, was talking about how there is a lot of ignorance american communities

because people -- in american communities because people are afraid of what they do not know and assume that stereotypes are true. i think it was difficult to get people not to just be honest with me and the people around them because it was a comfortable environment because everyone was the reverse, but they knew that the people watching would not necessarily -- everyone was diverse, but they knew that the people watching on necessarily agree with them. host: can you talk about hot the pike position of -- about the accusation of playing the race card? guest: the interesting thing about that conversation with harry reid is that it turned into a big political discussion. i keep in mind also when trent lott said things that people

thought were discriminatory. we did not have as much hoopla as we did in this particular instance. that was part of the peace and was inspired by what majority leader reed said. host: crystal is a junior in high school. when you hear about her experiences or other students' experiences, what do you think that is going to be like in 20 years? guest: i think we are having discussions and not focusing so much on issues of color, issues of race, etc. i think as we look at it, we will find is that this new generation will move past all of this discussion of race, discrimination, exclusion and all those kinds of things. we have the conditions in america where folks are actually able to do well despite race, color, etc. and it seems to me that there has been some discussion about that.

hopefully in 20 years we will not be having these kinds of content -- discussions. host: let's go to the phone lines now. welcome, we are talking about diversity. caller: i just wanted to tell crystal -- i happened to catch her speaking, and she is just a beautiful gun lady -- a young lady and she will never be slumming in this society. and she will always be a shining star. i'm so glad i got to say that to her. host: ok, thank you for your call. christo, do you feel that people in your committee have gone to watch your video? you have talked to a lot of your students, your peers who are doing interesting things to change their culture reader through cooking or they are wearing their native regatta --

regalia. news invisible affect your community? -- do you think this will affect your community? guest: a lot of people that have watched my peas have realized how diverse our school actually is -- have watched it have realize how covers our school actually is. i think it opened people's eyes to how much people want to say they are american, or if they're born in america that is automatically what they are, but it has helped people. i have friends that have wanted to investigate what their culture is because it opened their eyes to how different we all are. nobody is exactly the same. host: dr. metzler, what are some of the biggest challenges that you see with the and

regeneration with diversity and blending into the culture of march? guest: you are going -- the culture at large? guest: you are going to have to blend into the culture at large. we are a democracy whereaboutwhf each culture does not necessarily out its own religion and identity. i think it will be important for each culture represented to look at its identity and also be american. for this generation, the challenge will be to and politicize the issue. i think it's -- to unpoliticize that issue.

host: let's take another phone call. caller: the real issue of hand as we talk about the state of inclusion. in the state of texas they are excluding the history of african americans and native americans and mexican americans in the history books and in the teachings to all the students. in order to have a real conversation about diversity we have to get to the grassroots of the issue at hand. most people think that immigrants came through ellis island. i know a group of people who came through galveston, texas and they came to labor and build the wealth of this country. we're not saying that one group of people are to blame for this.

and you had different people involved in maintaining that institution. to me, there is no such thing as an american culture. guest: there has been this discussion that there is no such thing as american culture. but quite frankly, we do live in america and certainly, there are different aspects of american culture, but i think if we're going to have an inclusive society that necessarily means we cannot nessus' -- we cannot separate ourselves along those lines continuously. the fabric of democracy is people who live together, work together, all for one common good. i understand the historical aspects and i understand this discussion in texas about the history books, but at the end of the day there is this issue about the fact that we are in america and we need to live as americans. host: crystal, what sort of costs is to take in your high

school? do you feel you get a wide range of american history? guest: absolutely, i think that history glasses today are more experian -- more geared to experiences -- history classes are more geared to diversity. it is not just the american point of view, but the asian perspective, the african perspective, the hispanic perspective and the european perspective. compared to decades ago, american students have more opportunities to know the truth and not just be fed the generalized american culture that people are on the world might assume we have. host: we have a special phone line set up for students who want to call in and talked to mcchrystal or dr. metzler.

202-618-0804 for students. mr. jones, how will -- we wanted to find up from you -- we have a guest joining us from the census bureau, nicolas jones. how did you find the results of the senses? guest: we have data that provides information on many of the similarities and differences between a number of major groups in the united states, american indians, alaska natives, asians, blacks, hispanics, native americans and others. host: why is this a significant aspect of the census?

guest: the data and not only give us the ethnic makeup of our committees, but it also helps with the redistricting principles and is critical in assessing racial and ethnic disparities in the country. host: what has changed in the way that the questions might be phrased than in the past? guest: the question on hispanic origin has changed throughout the history of the country, but if you look at the 2010 census and the previous census, they are simil. but we rec what will the data that you

discover in this sense as to go toward? how quickly can we find out the results and what do we expect to learn from that? guest: this will provide us with the next portrait of the racial and ethnic diversity in our country. we need to understand who we are right now in order to write another chapter in american history. we recognize that there are growing proportions of children and young adults who may be reporting different identities then perhaps generations in the past did. we may see increasing diversity within the country. it is reasonable to say that there is the potential for the 2010 results to provide us with information on a wide variety of

groups as well as people reporting of a a identities are changing. host: nicholas jones, thank you for joining us. let's get back to questions for dr. metzler of the georgetown university and crystal kayiza, winner of the studentcam competition this year. caller: i would like to comment to christo. i would like to say congratulations, i'm very proud of her. i want to know what her future plans are for college and former career. i would also like to say that i am a student of history. it is not until we get to college that there is a comprehensive perspective of history. the high school version is basically explored further. i wanted to know if in her school they were exploring the

different cultures, contributions more so than the, say, the regular american cricketer -- curricular. guest: thank you for the congratulations and after our azko i'm planning to go to film school, probably nyu, and not just focus on film, but also political history. i think my high school does a really good job of making sure that we get every perspective and not limiting us to american society. it is really important, in education in general to enforce a non biased, or to be leaning on one side and give kids because of leftist view or rightist view and me in the middle. i think at my high school they give us an opportunity not just

to learn inside the classroom, but to expose us to other avenues and resources that might not necessarily be in front of us. host: david is calling for massachusetts on our democrats line. caller: my name is steve, but i'm happy to hear that kristol is thinking of going to nyu. it is a great college, a great university. the area that it is located in is a -- an incredible mix of people from all over the world and you will definitely learned a lot there. i am 53 years old and i made born new yorker, a political science major. i am at 53 years old still not sure what american culture is and what an american is. i was sitting red school not

that long ago and somebody who was an ally -- sitting in grad school not that long ago when somebody was an elected person t-- i believe the times that we are in now, people like crystal, it is so awesome. in my lifetime, even though we came from the generation of the 1960's, there was still so much to do to open up people's minds. i sit in coffeehouses today in the boston area and i hear things that are incredibly ugly on an everyday basis. host: dr. metzler, reflecting on steve's comments, talk about how you think american culture or diversity has been changing abroad? has that been affected by the accounting of the first african- american president? guest: i think it has. i spent a great deal abroad and

what i get from others -- a number of societies are broad and have basically said that it shows america is coming into the kind of enlightenment timeframe. of course, the question is, in the majority of countries across the world, we still do not see the election of someone who is multi-cultural or multiracial. but in the context of that, you know, we keep going into this thing of what is american culture? i think it is a combination of people who come to america and bring their different perspectives. i do not think we need to get stuck as much on the definition of american culture, but focus on how people who are americans are living here. how do we work together as a society? for me, that is the issue.

host: easton, texas, john on the independent line. caller: the issue is, i wish c- span would put on "washington journal" later at night because we need another point of view other than talk shows and things of that nature. host: thanks for your comment. you have any comments for your best? caller: basically, this is what we need. people need to see the diversity of our nation. if we really need that. i hope "washington journal" or c-span will consider coming on around the same time that they come on. i know you also want to show things like what is going on in

congress. that is very important, but we're in a time now where we need the positive things about diversification to drown out some of these negative things. people are inundated with them. host: let's go to our next caller in indiana, walter on the caller in indiana, walter on the republicans line. caller: i found that being born in raised in new york city, it was basically a lot -- born and raised in new york city, it was basically irish and italian, a lot of white neighborhoods. they did lowell -- affordable income and brought in minorities. it was like an experiment, forcing the blacks and whites to be together. with that, i noticed there was a lot of racial violence, a lot of racial tension. there were actually race riots.

it seems like the government wanting to jam their reporting next to each other, whether it is schooling or education or in communities. why can't you let people there that-be where they want to be -- why can't you let people be where they want to be? and i'm proud of being a part of the white race and heritage and i want to stay with white people to keep that going. guest: i think the caller has his own perspective of what he would like to do and that is often the discussion. this issue of forced segregation causes a lot of people to feel a level of discomfort. i think part of the issue in america is being open to a different -- to a number of perspectives. the caller has indicated what his perspective is.

host: kristol, what is your idea of diversity? you talk about your own perspectives in your film as well. guest: i do not think that one sector of the committee is necessarily better than the other. a lot of things were inspired by what my parents have told me. it is always coming back to the idea that -- where they grew up it was kind of a homogenous society, but coming to america the realize there were other issues contributing to the government, the education system. and now the sisterly that it is a bad thing that people want to be with -- not necessarily that it is a bad thing that people

want to be with those people that they look like and have the same traditions, but at the same time, one coulter in america is always influenced -- one culture in america is always influenced by another one. host: to see her winning entry to the studentcam competition, you can go to studentcam.org. and students, there is a line that you can call if you would like to talk to them, 202-628- 0184. let's go to the democrats line. jim, good morning. caller: i am also from oklahoma. i am 67 and i grew up in a town that i have always been proud of. i thought it was a racially

sensitive town, but i remember a 12 years old going to boy scouts and rubin, who eventually became one of my best friends, and showed up with patients that i've never seen before -- i think our town turned 100 years old. i bought a book about the history of our town and found out that it was built on what used to be an indian reservation. we apparently have stolen their land or broken some kind of treaty with native americans. i was glad to have a crystacrys say that she included their

diversity in the discussion. i think working to improve our sense of oneness as a nation is going to be a long struggle for america. host: i want to get dr. metzler's response. guest: it goes back to this notion of american culture. we have to have won this. -- oneness. it is a complicated answer, but that has to be the and gold -- the end goal. host: kristol, tell us about your experience at your school. is there a teacher there that teaches film? guest: when i was in intro last year from a lot of the kids there were about me enter the competition and did very well.

my teacher, mr. raley field, runs the tv production costs. -- mr. rayfield, runs the tv production class. and he emphasizes that our film should be a well-rounded story and has really helped us understand what filmmaking is and how it is not just the technical side, but the artistic side and getting us to be storytellers. i think that within the house will ring up, that the arts are really important and my high school does emphasize not just athletics or just being generally in the classroom, but that the arts are very important to helping develop the host: students -- developed the students. host: dr. metzler, do you have a sense of how young people are

allowed to tell their own story now? does that help educate the rest of us about diversity? guest: i think it does because the use of social media, whether it be facebook, twitter, etc., i think that helps. rather than have adults can determine what the story is, students talk about their own perspectives and experiences. i think absolutely enriches the dialogue on all sides of the discussion. host: but go to richard, democratic caller in massachusetts. caller: i am 70 years old and i grew up in the jim crow era. when i hear people at rallies, especially during the campaign about barack obama about "i want my country back," well, they are a dying breed. people i've got to remember in

2040, or 2050 -- somewhere in that area -- the caucasian race is going to be the minority in this country. i love the diversity of cultures. young people today are much more often much more susceptible and i just think it is great. -- much morand young kristol, iu have a wonderful career. -- crystal, i hope you have a wonderful career. guest: i talked at the beginning about how this issue of race has become politicized and there is all this discussion about whether that is code for racism, etc. i do not think that we can

assume that just because someone says "i want my country back" that is necessarily racism. what they are indicating is that there is a frustration in the country. part of diversity is, after all, listening to everybody's perspective. no one, left, right, center -- whatever your persuasion -- does not have an opposite -- a monopoly on the discussion and we ought to respect that. host: crystal, in 10 or 20 years, do you have an idea about diversity, or something you would like to see happen? guest: i think that with the election of barack obama, there will be a lot more discussion about not just immigration, but involving different cultures in the government. and i think in the next couple of years we will see more openness to electing people that do not look the same, this

kind of stereotypical white male that you see in politics or the senate or the house of representatives. i think it will be not just with race, but with people that are raised in the community, but are from somewhere else. one of the things that barack obama has done is that he has not hidden the fact that he is from different cultures, but he recognizes the fact that he is an american and that is where his core values come from host: let's go to -- that is where his core values come from. host: let's go to new orleans, good morning, william. caller: people talk about they

want their country back, but you know, the first person to die for this country was a black man. that was in the revolution. and the second man to die was at lexington and he was a black man. how can people say we want our country back? guest: this issue of defining who our country is and what in our country back, again, i would simply say on the question of wanting your country back, i do not think that is necessarily code for racism. in some respects, we have seen a number of people who have basically said they do not like the direction of the -- the direction the country is going. that is one perspective. and then you have other people who say that they would not have said that but for the fact that there is a black president. i think both perspectives have to be examined, but i do not think we can make a conclusion based on those words.

host: crystal kayiza, what do you plan to do with the prize money that you have been awarded as a studentcam winner? guest: most of it will go to my college education, about $2,500. the other $500, i'm going to spend on myself. i will definitely get my sister something for helping me with the peace. host: tell us about your sister's role in it. guest: i was looking for someone in a different age group and i wanted diversity in the people of were speaking in peace. and as you can see, it is really articulate and -- you can see in this piece that my sister is really are to give it and opinionated. i did not realize how strong our opinion is, but she is only 12 and i guess that is how we were

raised in our house. host: you will be a senior next year. you plan to enter the studentcam contest again? guest: yes, depending on the prompt. i always try to do something that is not necessarily going to be assumed. when we have the choice this year to choose a weakness or strength from i thought that people would choose a witness because there are a lot of obvious weaknesses that people like to talk about. but i wanted to do something that reflects my values, but also show different perspectives. host: crystal kayiza is a junior at jinx high school in oklahoma and she is the winner of the high school studentcam 2010 prize. congratulations. guest: thank you. host: and you can see her work at studentcam.org.

and we still have dr. mcchrystal from georgetown university. view --guest: there is at leaste of diversity in urban life. but i also think there is diversity of economics in terms of background and education. the issue for students is, once they get into college, it is where the two worlds meet. hopefully what we are able to do at the university level is to make an enriching experience despite their background. host: let's go to john on the independent line. good morning. caller: i just love c-span and i call occasionally. it is a pleasure to see a gal like crsystal come on and be so

intelligent and well spoken. i am 53 years old and we still have racial problems. it is a shame that we cannot appreciate each other more than we do. that is what makes america great. we do have to be, i mean, united we stand. if everyone gets on the same page, it is a fantastic thing. i think obama is a good man and i think his heart is in the right place. hopefully, better days are yet to come. guest: i agree with you. i do think that we ought to stand as -- we have to stand as one america. there will continue to be racial

problems. my fear is that oftentimes we have discussions about race and diversity, had become so polarized that we never really get the opportunity to talk about what the real issues are instead of choosing sides. i think all sides of on this issue need to be heard and diversity is not only about race, gender, etc., but also about perspectives and political background. it is all kinds of things. we do need to stand as one america, but that necessarily means we need to have a discussion about diversity that is genuine and not contrived. . . he know, if you go on the internet and see a couple blogs, it is a lot of negative comments

and hateful speech out there. guest: i do think that with the rest of the internet, we have the opportunity now for a number of groups to express themselves and to express their perspectives. i do not believe we're moving backwards necessarily. i think what we're starting to do is to open up the conversation relative to race, etc., but i do not think it can be assumed that the reason all this is happening is simply because we have a black president. is that part of it? are there some people who do not like the fact that we have a black president? i am sure that there are. however, i do not think it is the majority of people. we have to be careful not to overgeneralize on this. host: how do cultures best share their different perspectives or diversity's on a number of things? how do they share the life stories? do you have a sense of the most

effective way to do that? does that discussion take place on community centers are college campuses? guest: i think it does take place and community centers and college campuses. in terms of culture is being able to do that, we have to be predisposed to listen to another person's perspective. i think that is the problem. on the one hand, you have a bunch of people saying that all the tea party people are rapists. the other people say the tea party people are not rapists. above the noise, we hear nothing but noise. there's never a discussion on perspectives. it is possible that, in fact, everyone is not racist. that is possible. but to be about to do that, we need to be up to listen to each others' perspectives. that is my concern. we're not predisposed to do that. we just want to take sides and stick to our tradition. that is what i see as the problem. host: we have a call from the

republican line from cleveland. caller: hello. i have a question, maybe a comment. you know, i do not know what everybody's talking about all the time about diversity. i think maybe that sounds ignorant, but you know, i am from the 1960's. it seemed as though there was open as then. i think our kids are a lot more open. i think our kids have lost that now. guest: aig think the people are much more open to discussions, but i will go back to what i just said, which is people are more open to the discussions but they're more open to shouting and not being predisposed to listen to every prospective whether you agree with that perspective or not. at the end of the day, that is what diversity is about. host: thank you so much for joining us. guest: my pleasure. >> this is the brady press briefing room at the white house. the briefing is scheduled for

1:00 p.m. we will have a live once it gets under way. president obama this evening will speak to the entrepreneur should summit. we will cover that letter. this week, the president travels to iowa, missouri, and to illinois. again, live white house coverage coming up with a briefing in just a few minutes. in the meantime, a look ahead at what is going on this week in congress. >> we are going to take a look at today and also what is going on in congress this week with one of our reporters on capitol hill joining us this morning. a staff writer from "roll-call," jessica brady. talk about what is happening today. it seems like the big development over the weekend was the decision not to move forward today on climate change legislation. climate legislation. guest: senator lindsey graham sent a letter to majority leader

harry reid saying he felt that the debate on immigration was being rushed for political reasons and so he essentially he was saying he is stopping progress on anything -- not on anything, but on the issues for which he has been out of the most recently, which was climate change. that was expected to be introduced today with senator kerry and lieberman and as far as things go right now, it is not going to happen. host: do we have a sense how it will go this way? is it political posturing or sort of a derailment? guest: we will have to get some numbers back and see -- there is going to be a vote at 5:30 p.m.. certainly this has been a major, major goal of senator kerry since last year to get something passed and certainly they are

shot grambling to salvage it. senator reid put out a statement yesterday -- or i believe saturday, actually -- he prioritizes both issues highly and not putting one in front of the other and accused senator graham of political posturing. and could be partisan debating over the financial regulatory reform bill so it is piling on at this point. host: immigration reform bill, how key is that in what will happen this week? senator raid -- senator reid saying both are priorities. how is everyone else weighing in? guest: when issue that everybody agrees needs to be addressed. the will to act to do it varies among members. of course, it is quite a bit of light -- like health care reform, the system needs to be

addressed but the political sacrifices of doing that are pretty great. so, senator schumer, who chairs the subcommittee on immigration, has been working with senator graham cents last year, very much was to get it done. senator leahy, the chairman, said as long as there is a bill ready, he will make time in the committee to take up, even if his committee is also taking of the supreme court debate. so, the principals are definitely committed to making the process work. and we will see if the caucuses want to take up as well. republicans have been reticent to do that. some democrats, too, certainly. there are quite a few hispanic voters back in nevada and there could be some political benefits. for others, it may not be the case. host: talk to us about this

afternoon's test vote on financial regulations. guest: at 5:00 tonight the senate will vote on a motion to proceed to the financial reform bill. this bill is one that was voted out of senator dodd's banking committee last month along party lines. he and senator shelby, the ranking member, have been working trying to reach an agreement and so far have not announced a bipartisan agreement. because of that -- the democrats would like the 60 votes they need to proceed and that they will continue their talks and try to bring something together to mark or early this week. -- tomorrow or the berlin next repaired host: is there a different tone? guest: with health care you heard republicans going to the floor saying scrap this bill, let's start over. smaller and target. you are not seeing it with a regulatory reform. senator mcconnell had -- have

been quite critical of components of the bill but has not said anything like, let's get rid of this bill, let's totally ignore this and move on to something else. there is a will to want to work something out. however, senator dodd has been trying to put together a bipartisan agreement for quite a while. so, democrats on the are concerned this will go the way of health care with the gang of six, there were bipartisan talks and did not yield for the at the end. senator dodd does not seem to have that same set of thinking. he has been working with senator shelby even over the weekend. they were going sunday talk shows yesterday. the belief on t the hill is even -- thank you for joining us. >> the house gaveling in at 2:00

p.m. eastern. a procedural vote in the senate at 5:00 p.m. eastern on the cloture vote. that is live on a c-span2. the house beginning at 2:00 p.m.. we're the brady press briefing room at the white house, waiting for the briefing together with robert gibbs put up a likely to get questions of the financial regulations bill. looking ahead on capitol hill, on c-span3, c-span radio, and c- span.org tomorrow, a hearing look into the role of investment banks and the securitization of residential mortgage related products. that gets underway tomorrow morning at 10:00 eastern, live on the c-span3 c-span.org, and c-span radio. still waiting for the briefing to get underway. we will go back to "washington journal" from this morning and come back to the briefing live when it starts. host: we have folks talking about immigration policy.

daniel stein, federation for american immigration reform. thank you for being with us. frank sharry, founder and executive director of american boys. news this past week -- american voice. news this past week and immigration. let us look at an article from "usa today." opponents from nationals of rights activists to phoenix mayor vowed to take their fight to the court as soon as this week. looking back at the law that would take effect 90 days after the state legislature adjourns, requiring local law enforcement officials to determine immigration status of a person during any legitimate contacts made by an official or agency of the state if a reasonable suspicion exists. if the person is an alien who is on lawfully present in the united states. let us go to mr. daniel stein. guest: i think it is an

excellent law. i want to commend senator russell pearce for acting on a lawn not just needed a highlights a growing divide the country. a highlight in "usa today" says the law creates a race. adds of the rift is being carried by the fact that we have a failure in leadership of washington to recognize that the american people want the immigration laws enforced, they want to see a smooth, unified and forced the system between the federal government and the state and local governments. the arizona legislature is operating fully within its constitutional authority to enact laws that are entirely consistent with federal immigration enforcement scheme is, and yet what you have is this anniversary action of the president and administration sang -- american people want to see their laws and force are somehow not entitled to see it done. the growing clarity on this issue has been defined by a series of strategic interests that believe that the essentials

have a right to demand a mass amnesty with no real accountability for future enforcement or reform of the overall system. that is the proposal the president is pushing. aversive, the general public at a time of high employment, major job losses, structural changes in the american economy, many hard-working americans looking for work saying -- why isn't the federal government getting serious about enforcing the law? this is a rational response. what we are like -- would like to see. we are calling for the federal government to come in and ends -- assist arizona and other states, help them enforce the laws. it's co-founder of america's voice, give us your take. guest: a very important debate on how to eliminate illegal immigration. we don't think a patchwork of radical laws of at the state level should do it. we think congress should work with the president to pass comprehensive immigration reform, secures the border, cracks down on illegal hiring and make sure people are here

legally. the arizona law, i am afraid, is abruptly written it literally declared open season on 30% of the state which is hispanic. they say it you are suspect, the police have to ask your papers. who is suspect and who is illegal and not? we know when there is a disturbance at a soccer field, who will be asked for papers, most likely hispanic americans. many are here legally. so i think what arizona has done is institutionalize racial discrimination and racial profiling in a way contrary to basic american values of fairness, rather than pressing fairness, rather than pressing congress and the administratio host: about 3500 protesters turned out sunday at the arizona capital, and there were selling the measure signed on friday. among them with the mayor of phoenix and a democratic congressman from arizona. they called it racist and unjust. they are concerned about how it

will take affect. lay out an area that concerns you. guest: let's say there's a parked in a separate field, maybe 500 people doing various activities and a fight breaks out and the police show up. and they congregate the people involved. what do the police do? i have tremendous sympathy for police in this situation. one of the reasons that the arizona police chiefs opposed this bill is they say it undermines the confidence of hispanic residents with the police that is so critical to fighting crime. so they start to ask questions. some people run away because it did not have papers with them. other people who state -- who gets asked? do all of them get asked for papers? is arizona going to be the kind of state or every interaction with police becomes, show me your papers? this creates an awful situation where you can, by the way you look, you can be asked for papers. a supporter who is a republican

in congress says they will be able to tell by the shoes they wear. that is a ridiculous that has become. how can you tell to an illegal immigrant is? the governor was asked that, and she said i do not know but the police will write a prescription that we will follow. this is open season. host: wire you not concerned about civil rights violations? guest: there are concerns about civil rights violations in any organization. i think engaging a hypothetical about how long might be in first is its negative. i think the law was carefully crafted to try to ensure the civil rights of all individuals in arizona are respected. the constitutional norms need to prevail again that allow local police reasonable suspicion to verify a person's right to be on the country. in the had the services and the federal government to make that determination. one of the reasons why americans ask why legal immigration is out of control.

if you look appears on the situation -- get on line and read the law. the language. you'll see that this sets up a very careful from work to try to bring out the rationality of how we enforce these laws. you want to-carefully for civil rights violations -- >> you can watch this segment online at c-span.org in our video library. we will now take you live to the white house for the briefing with robert gibbs. >> the president dropped by a meeting between general jones and the israeli defense minister this morning. the president reaffirmed our commitments with israel's security and our determination to achieve comprehensive peace in the middle east, including the two-state solution with this characteristic -- jewish state of israel living with security with a viable independent palestinian state. the discuss challenges to regional security, how to deal with threats of both the u.s.

and israel face, and how to move forward towards comments of peace. also this morning, the president called the egyptian president to extend his best wishes for a healthy recovery from early march surgery and to congratulate him on the birth of his first granddaughter. they discuss the prince of grading and and was forever% the middle east and agreed to follow in the near future on a broad range of issues. with that, questions. >> a two-part question on immigration to the new arizona law will require some federal partnership when it takes effect. some of the people the tin can be turned over to the fed immediately, i believe, and be served with deportation. level of cooperation as the and mr. shaw plan to give? >> i would refer you to the cummins prison a man on friday -- to the comments the president made on friday.

he will examine and evaluate the impacts, potential impacts of this law. those impacts on citizens' civil rights. we are in the process of evaluating what the law means. >> so there's a possibility, tht there might not people cooperation? >> i do not want to get ahead of the justices read of what is in the law. i do not expect that to come in the next day or so. they are obviously looking through this to examine, as the president mentioned, the impacts on civil rights and other implications. we will wait for that to read out from the department of justice. >> you said you wanted to do an interview bill in the immigration bill. is that feasible and which is a

priority? >> well, i think that we have seen progress made on both issues. i think it is possible to continue to make progress on both those issues. i know we had some statements this weekend by senator gramm and others that have been working on this legislation. the chief of staff talked with senator gramm on friday. when i look at both of those issues and look at the u.s. senate, there is an accredited calendar, but i would say that our dependence on foreign oil, the national security problem is creates, the environmental problems it creates demonstrates that it has to be a priority. i would say if you look at what

has happened in arizona and the implications that that type of law would naturally drive each state to creating its own immigration rules. that is because the u.s. has failed to act at the federal level. i think there is room for progress on both issues. the president will continue to work with members of both parties to see that happen. >> to follow up quickly. which is the higher authority for the president to push at this moment, climate change or immigration? >> i think whichever bill has the support it needs to pass, then that is what will move first. i would say to you that i think we can make progress on more than just one issue. senator gramm, senator kerry,

and senator lieberman all spent time at the white house last tuesday with the chief of staff on trying to work through many of those issues. you all see this as an either /or, but this administration does not. >> passing health care reform was his top legislative priority, clearly, and that has been done. what is next? >> financial reform. >> and once that is done? >> then we can move on to the next one. >> no republicans are showing signs of voting to move ahead with debate on financial regulatory reform. that looks like it will fail to night. what is the administration's next step? >> at the the next that quite honestly will be a bit -- a vote a couple days after that. as you rightly point out, there will be a vote tonight. it appears as if all the republicans have decided that the rules in place now are the

rules we should have going for. that is what happens if we do not do it. let's be clear about the consequences of not moving this proposal forward. the same rules of the row that got us into this mess, the same ones that led to banks and financial institutions making their own decisions, they are still the rules of the road. washington is a very poll-driven city. i know today there is a poll of the shows two-thirds of the american public is for stronger regulation over wall street. i do not think it is untenable political position for republicans to be in, to continue to say the rules of the road for wall street should be as they were when the economy collapsed and nearly ruined everybody. so the secretary treasury, dr. summers, and others have met over and over again with republicans.

i think in the end, we are going to get a bipartisan vote because i think the position is simply untenable. >> [inaudible] >> that is a better question for them. >> the white house has president urging supporters to prepare for the midterm elections. is this because of the concern of losing and lot of seats? >> well, look, we will have plenty of time to debate what the outcome of or what those elections went whatever way they went. they are many months away. obviously, more campaigns are gearing up and the president wanted to speak directly to his supporters. >> was there any concern at all though? >> well, elections will be held in november, and i can assure you the president will participate. >> any progress on the supreme court nomination? any time this week perhaps?

>> i did not expect anything this week. >> on the general jones joked, i have seen the apology but it does the white house have a problem with what he said and did the white house urge him to apologize? >> i think the apology rarely speaks for itself. >> why was his remarks omitted from the official transcript? usually include everything. >> this is not a presidential gaffe. it was obviously an honest- camera speech. there is not a stenographer and most non-presidential events. i think the remarks of were put out were put out as the text of the speech was to be delivered. >> on the financial regulation, $50 billion resolution is one of the key points. it is not something that the president has made clear he really supports.

is he involved in this -- you said the republicans want to go with the rules of the road in place, which is not true. >> if you do not have a new bill, the only way to cover my sister get on the bill. the only way we can make progress is to get on the bill. if you're going to vote not to get on the bill, which will change the rules of the road, then your for the rules of the road we have now. >> there will be a compromise eventually. why not do it now? it is a political game on both sides? >> i do not believe it is a political game. administration officials have met over and over again with republicans. chairman dodd, as we read out last week, the president spoke to a number of republicans including scott browne on some issues. senator dodd has met over and

over and over again with republicans. i now see there is discussion on the republicans' side of putting out their own bill. i cannot imagine anybody believes that is going to be a stronger reform product and what will be contained on a host of issues as seen as regulating wall street more strongly. >> with the president considered talking to them and trying to get the to drop the $50 billion fund? >> every administration has spent a huge amount of time talking to the republican. the president, through the secretary of treasury, as his chief person on financial reform. >> is he personally talking about it? >> i will say this, i think if anybody is playing a game here, it is the republican party that again seems to think that the best way forward is to keep what

we have in place now, which led us to the brink of economic collapse. >> what is the policy problem? >> it is not in their original proposal. i think there are a number of different ways to deal with the possibility of needing resolution authorities contained in the bill. the best way to get to this moving forward, the best way to make progress, is to get on the legislation. >> but if the democrats would give on a couple things -- >> i am not sure that is true. >> has the president said mr. blank fifein's email by saying e met -- made more than we lost by betting on the housing market? >> some of that has been

reported over the weekend. i will check in on that. an aide to put your second question in with your first question, but i will do it anyway. the rules of the road that allow people to do what you just asked me is alleged to have happened is as a result of the fact that the rules of the road but wall street in charge of main street. if you want to change that, they have to support real reform. that is the choice in front of everybody at 5:00 tonight >> mischaracterization say that the republicans want to change the rules of the road. >> based on one? >> they just do not want exactly what the democrats are pushing. they want a compromise. >> they wanted to get on the bill and then we can get on the floor and find out about it.

simply saying no over and over and over again, keeping the rules of the road in place, leads you to where we were when we got into this. >> so are we officially saying that is not coming out this week? [inaudible] >> on the financial bill they're still negotiating. why not wait a day or two? they're still trying to figure out and negotiate what is in the main bill. >> again, i think they have made a tremendous amount of progress on that. my senses -- >> before 5:00 today? >> that is a better question for senator dodd. >> he mentioned another vote. if this goes down, do you expect it to be right back? >> this issue is not going away

because you cannot let it go away. >> you understand what i mean. >> with this soon we would come back somewhat quickly. i do not know -- i have not been told that as a matter from the majority leader's office. it is a window of time to change the rules of the road. to have real genuine wall street reform passed into law so we do not find ourselves at the two- year anniversary of the dramatic economic collapse created by risky decisions repeated. and we have not taken the common-sense steps to change how we govern wall street. >> he said twice that there's no reason why progress cannot be made. there is difference between progress and it finished piece of legislation. is it fair to say you believe only one can get done this year? >> i do not know the answer to

how many can. i know that on energy, senator gramm, senator kerry, and senator lieberman has been an awful lot of time working through an awful lot of issues. they have spent time with the president on this bill. just last week, we were in rahm emanuel's office for a considerable amount of time working on this. we have senator gramm and senator schumer working on a number of issues relating to immigration reform. >> de fill a lot more can be accomplished on the energy side? >> american samoa as of last week, senator gramm and senator schumer came in and asked the president to do some specific things to move immigration reform forward, signaling his support for moving it towards being an op-ed, which we did, asking that the president reached out to five republicans

to try to garner additional republican support for moving immigration ford, and we made those calls last week. you know. i will say this, i think we have a very good relationship on those two issues and in working through issues like guantanamo bay with center lindsey gramm. rahm emanuel has a good relationship with him and so does the president. many people here do. i do not know the degree to which that has complicated his life. that in working with this administration to solve problems. i think there is no doubt that he has heard from republicans in the leadership and in his home state in not wanting that

progress to be lit up. >> he said the chief of staff spoke with senator gramm on friday. did the senator tell him that you are yanking my support and energy because of senator reid? >> i think this had percolated for a while. >> when the president travels to the midwest, will he be putting financial regulation on the agenda? >> i do anticipate the the president will mention it at one of the town hall meetings and over the course of time. >> but just a mention rather than a full speech on it? >> look, i think he laid out a pretty comprehensive speech just last week on the need for moving

this thing forward. i think the time for the day let -- the delay on this is passed. the time for moving this forward and having action is where we are at right now. >> so they will be more focused on jobs? >> i do not think anybody of any of the 8.4 million people that lost their jobs since this recession started, i do not think in their world they can divorce the risky behavior of wall street that caused the massive economic downturn that led to 8.5 million jobs. maybe if you have the luxury of not having lost your job, it is easier to bifurcate those two issues. i am pretty sure that this administration and many that lost their jobs do not necessarily see those as two different issues. >> unless you're talking about job creation, of course. >> well, the reason we're talking about job creation so much is because we're talking about 8.5 million jobs that were lost. i have a hard time separating a

financial collapse that led to so many of those jobs being lost with those jobs being lost. >> what lead to general jones' decision to issue the apology? to the president, chief of staff, or anyone else as kim? >> no, not that i know of. i think there were inquiries, and he wishes he had not told the joke. >> is there and middle east peace process now? >> an active one. i would say that to we are encouraged by the productive nature of the meetings that senator mitchell has had in the region beginning late last week and into now. so absolutely. >> what to do those meetings produce? >> the meetings have been productive in moving this process forward as we talked

about in the past many weeks and getting these two parties to the table. >> if you are mentioning the need for an atmosphere for peace in your opening statement. what does the president feel right now are the prerequisites for that? >> most of all, the president has discussed that each side has to take steps to build confidence, that we can get to the table, and most importantly, when we get there, we can make some progress. we understand this will not be easy. we understand where this issue was when repayments to office and read the headlines of the news were. the president has decided that this country and our government being actively involved in this process has tended his starkly to push this process forward in a way that is positive, and that

is why our government will continue to do so. >> i have one more question going back to tomorrow. will the president go back to the health care reform pitch? will lead the theme in many of these stocks? >> i have not seen the final remarks. let me look at those and get back to you. i imagine that it is topics that will come up. whether or not it is a specific focus. >> staying with the midwest. the unemployment rate nationally is at 9.7% for the last three months. will we hear any new language tomorrow to reassure people on his jobs? >> with all due respect, understand that i think in the last -- and did not have my chart. i think if you look at the last

three to five months, we have had the best three to five months since the beginning of the technical beginning of the recession in 2007. that is not to said the president is satisfied. but i think to simply say the rate is that a certain level does not quite do justice to the fact that when we walked into the white house in january of 2009, nearly 800,000 jobs were lost than a month. last month, 162,000 jobs were created. as i mentioned, we have a tremendous hole to fill. that is not going to be filled. it was not last month and will not be filled this month. but this president made a conscious decision from the very beginning of his administration to focus on getting our economy back on track. we're making progress. the economy is working in a more positive direction. we will get gdp figures at the

end of the week. there will give us a sense of whether or not -- are we where we were in 2008 and 2009 with an economy that is contracting or one that is continuing to grow? i think that by all accounts, that is growth that has been greatly aided by a the president's recovery plan. >> joe biden last friday in pennsylvania predicted how the next one to be a 100,000 to two hundred thousand. >> he is an optimistic man, and that is why we like [laughter] him] >> and he said 500,000. >> see previous statement. [laughter] >> fair enough. >> can say the same for fed

governors as well as asa tsa nominee about that? >> i will have to check on that. >> use of the president and the israeli president -- >> defense minister. >> they discussed how to move the peace process forward. the israeli press says they reached an agreement on doing so. >> i certainly do not want to say it. let me see what they're saying and get back to you. >> the presumptions as if they have reached agreement, they found a way to deal with the israeli settlement construction in east jerusalem. that is where my question goes to. the israelis agreed to spend -- >> i do not have anything new on that. i would simply point you to

where we have been reset on that day. >> on national regulatory reform, should banks be allowed to, in effect, bets against the financial instruments they sell, they encourage their investors to buy? >> well, look, i will say this, i think that there are a host of provisions in these new rules. obviously they will have to be married up with what the house passes. it will change the way business and wall street works. the president put a tremendous amount of effort behind consumer finance protection agency. we talked about ensuring that the size of banks is limited. and a host of other tools and protections that we need for the

american people. i do not want to get into the specifics of pending inquiries from an independent agency like goldman and the sec. >> will the rules grandfather some of these practices? existing contracts? >> i would have to look that up on how that is handled in the current legislation. >> what about whether it should be? apparently it is part of the negotiations. >> than me see where that is on the the bill. thank you. >> on the supreme court, will the president be interviewing people this week? do you want to tell us which door? >> there is a good story to tell at the end of this, but i will wait on that. >> go ahead. >> it is torture. >> it provides me and must delight.

there will be an announcement this week because the process will continue. >> will that include interviews? >> the president will continue to talk to prospective candidates. there many ways. >> my some of this be on the road this week? >> no. as much as i would like for you to set a ring about the hotel for a share following -- maybe you should. [laughter] no, i know of no -- we could just do it right here, so why would we go all the way out there? >> one quick question on general jones. is the subject that the taliban joke -- >> no, not that i am aware of. >> to president is still meeting

with the commission tomorrow? >> he is. i will have a statement after the meeting for you all to cover tomorrow. >> the charges still that everything is on the table from social security -- quick to get to do now my weekly thing which is all of you have read your computers and blackberries out to quickly twitter that robert gibbs, per the washington game, did not rule out the barack obama has said x, y, and z is on the table. i appreciate this. it apparently keeps us are quite busy. we can treat all of a twitter. but i will simply say -- >> engine i see the significance in that. >> the customer to play along. >> the president may prove his most fundamental promise. >> and he may not.

i have caught a large fish on my soul of the washington game. >> when you are definitive, your definitive. when you're not, it is quite the game. >> yes, you're playing the game. every single day. >> but you never play the game? >> not nearly as good as you. >> as far as the conference going on at the reagan building, and with the polls, they say that it is gone upward during the president's first year. he has moved up around the globe, including very high in india but very low in pakistan. >> part of today's white house briefing, which will be able to see later in our schedule and shortly in the c-span video

library. we're leaving this. the u.s. house is gaveling in with a shortage in the debate, naming a couple post offices and a bill honoring sam houston. there will be special order speeches. the senate gaveling in at this hour, too. a vote later on the senate on whether to move forward with french regulations bill. that is live at 5:00 p.m. eastern. you can follow senate coverage on the c-span2. . the speaker pro tempore: the house will be in order. the prayer will be offered by the prayer will be offered by our chaplain, father .

chaplain coughlin: ever present god, who knows us through and through, hasten to help us and strengthen the faith and unity of your people. give us courage to attack what is evil and surround itself with negativity. history shows us you will fortify the just, lift up the lowly, and cleanse the pure of heart. empower us to accomplish what is good and give you the glory. both now and forever. amen. the speaker pro tempore: the chair has examined the journal of the last day's proceedings and announces to the house his approval thereof. pursuant to clause 1 of rule 1, the journal stands approved. the pledge of allegiance will be led by the gentleman from

texas, congressman burgess. mr. burgess: all members and visitors in the gallery join us in the pledge to our country. i pledge allegiance to the flag of the united states of america and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the speaker pro tempore: the chair will lead with a communication. the clerk: the honorable the speaker, house of representatives. madam, pursuant to the permission granted in clause 2-h of rule 2 of the rules of the u.s. house of representatives, the clerk received the following message from the secretary of the senate on april 26, 2010, at 9:31 a.m. that the senate concur in the

house amendment to the bill senate 1963. that the senate passed senate 3253. that the senate agreed to with an amendment house concurrent resolution 255. appointments, commission on key national indicators, with best wishes i am, signed, sincerely, lorraine c. miller, clerk of the house. the speaker pro tempore: at this time the chair will entertain requests for one-minute speeches. the chair recognizes the gentleman from texas, congressman burgess, for what purpose do you address the speaker? mr. burgess: i rise to address the house for one minute. revise and extend my remarks. the speaker pro tempore: without objection. mr. burgess: mr. speaker, 14 months ago this house passed in the stimulus bill a measure that contoday $20 billion for information technology relating to health care. the center for medicare and medicaid services published a

rule on january 13 of this year to determine qualifications of what determined a so-called meaningful user and who will be able to receive this funding. mr. speaker, this morning i spoke to the american hospital association, our nation's hospitals are almost unanimous in their dissatisfaction with the rules coming out of the center for medicare and medicaid services. these rules are misguided, ridged, and unattainable. in fact the bipartisan group of 248 members of this house of representatives agreed. further, instead of incentivizing compliance, these rules punish noncompliance. this undoubtedly gives us an idea what we can expect with the rule making and regulation that will occur at the center for medicaid and medicare services, health and human services, office of person nell management, and for crying out loud the internal revenue service as they go through this process addressing the new health care reform law. this will go on for years and in fact decades, perhaps even generations. doctors, hospitals, information technology manufacturers,

medical device manufacturers, and all americans need to stay alert, pay attention to what's coming out of the agency here in washington, d.c. mr. speaker, i urge all of us to stay involved. the speaker pro tempore: the gentleman's time has expired. mr. burgess: the stimulus and reform bill will affect how health care is delivered for generations to come. i yield back the balance of my time. the speaker pro tempore: for what purpose does the gentleman from texas rise? mr. smith: i ask unanimous consent to address the house for one minute. revise and extend my remarks. the speaker pro tempore: without objection. mr. smith: mr. speaker, while pro-amnesty advocates are busy criticizing arizona's new improhibition enforcement law, arizona voters are registering their overwhelming support. according to a rasmussen report survey, 70% of likely voters in arizona approve of the legislation. including 84% of republicans, 69% of independents, and more than half of democrats.

these results are not surprising. arizonans are no different from other americans. they want to see the nation's immigration laws enforced. they are rightly concerned about the jobs that illegal immigrants take from citizens and legal immigrants about their community safety and about the substantial cost to taxpayers of illegal immigration. if the obama administration continues to ignore immigration laws, it should not be surprised if other states follow arizona's example. the speaker pro tempore: for what purpose does the gentleman from california, congressman honda, rise? mr. honda: unanimous consent to address the house for one minute. the speaker pro tempore: without objection. mr. honda: thank you, mr. speaker. mr. speaker, i rise today to honor the life and work of my friend, anthony "tony" cortese, for the past four decades he

was a proud and dedicated employee of the united states post office. -- postal service. i am proud to stand on the floor today in support of h.r. 4543, legislation to designate the westgate post office in my district in san jose, california, in memory of mr. cortese. i would also like to thank my good friend and sponsor of this legislation, zoe lofgren, for working closely with me on this effort. he was born in the san francisco bay area and moved with his family after his father took a job at the ford plant. a few years after graduating in san jose, he started working as letter carrier in the downtown post office. he was a tireless advocate for letter carriers and made a significant impact on our community. in addition to his 42 years at the postal service, he served 27 years as the president of the national association of letter carriers, local 193, under his leadership, this

local procured a building for its members, secured expanded health benefits, and provide an open forum for discussion with union members. throughout his tenure, mr. cortese developed strong relationships with postal workers and management. his legacy and accomplishments will be not forgotten. once again, mr. speaker, i rise to honor the life of anthony cortese and ask my colleagues to support naming a post office in his honor. i want to congratulate the family and give a personal thanks because without his work my family would not be beneficial to the kinds of things that he has done in our community. thank you, mr. chairman. the speaker pro tempore: pursuant to clause 4-a-5 of rule 10, and the order of the house of january 6, 2009, the chair announces the speaker's

appointment of the following member of the house to the select intelligence oversight panel of the committee on appropriations. the clerk: ms. wasserman schultz of florida. the speaker pro tempore: pursuant to clause 8 of rule 20, the chair will postpone further proceedings today on motions to suspend the rules on which a recorded vote of the yeas and nays are ordered, or on which the vote incurs objection under clause 6 of rule 20. record votes on postponed questions will be taken after 6:30 p.m. today. for what purpose does the gentleman from massachusetts seek recognition? mr. lynch: good afternoon, mr.

speaker, mr. speaker, i move the house suspend the rules and pass the bill h.r. 4543. the speaker pro tempore: the clerk will report the title of the bill. the clerk: h.r. 4543, a bill to designate the facility of the united states postal service located at 4285 payne avenue in san jose, california, as the anthony j. cortese post office building. the speaker pro tempore: pursuant to the rule, the gentleman from massachusetts, mr. lynch, and the gentleman from texas, mr. olson, each will control 20 minutes. the chair recognizes the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. i also asks unanimous consent that all members may have five legislative days to revise and extend their remarks and add any extraneous materials. the speaker pro tempore: without objection. mr. lynch: thank you. i yield myself such time as i may consume. mr. speaker, as chairman of the health subcommittee with jurisdiction over the united states postal service, i'm

proud to present h.r. 4543 for consideration. this legislation will designate the facility of the united states postal service located at 4285 payne avenue in san jose, california, as the anthony j. cortese post office building. introduced by my friend and colleague, representative zoe lofgren of california, on january 27, 2010, h.r. 4543 was favorably reported out of the oversight and government reform committee on april 14, 2010, by unanimous consent. in addition, this legislation enjoys the overwhelming support of the california house delegation. a 55-year resident of san jose, california, mr. anthony cortese was born in the east bay city of richmond, california, and graduated from james lech high school in san jose. while in his early 20's, he began working for the united states postal service as a

letter carrier. in the downtown san jose post office and continued to serve as a produce postal service employee for over 40 years. as a letter carrier he became a member of the union, local 193. mr. cortese climbed the ranks from shop steward to vice president and in 1981 was elected union president, a position he proudly held for 27 years. as president of local 193 for nearly 30 years, he devoted his efforts to advancing the well-being of his fellow letter carriers, notably mr. cortese successfully procured a union-owned headquarters building for the members of local 193. he helped expand member health benefits and established an open, meaningful, and continued dialogue between his union members and federal, state, and local elected officials. however mr. cortese's service

was not just limited to efforts on behalf of his fellow letter carriers, rather his commitment to public service could be evidence by his effort to benefit the entire san jose community. specifically in 1990 mr. cortese established a local food drive initiative, sponsored by the national association of letter carriers, that since 1991 has become a national food drive held every year on the first saturday before mother's day. regrettably mr. cortese passed away on february 11, 2007. however while mr. cortese is no longer with us, his memory and legacy of public service will live on through his family, his friends, his community. of course his fellow letter carriers. mr. speaker, let us further honor the life and legacy of this letter carrier and former union president cortese through the passage of h.r. 4543 which will designate the postal facility located at 4285 payne

avenue in san jose, california, in his honor. i urge my colleagues to join me and the bill sponsor, zoe lofgren from california. i reserve the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from texas is recognized. mr. olson: mr. speaker, i yield myself such time as i may consume. thank you, mr. speaker. i rise today in support of h.r. 4543, designating the facility of the united states post office located at 4285 payne avenue in san jose, california, as the anthony j. cortese post office building. a graduate of james wick high school in san jose, he started working at a letter carrier in his early 20's. he was known for his outgoing nature and ability to work collaboratively to get things done whether he was resolving

workplace issues or organizing charitable work in the local community. as president of the national letter carriers association branch 193 for over 26 years, mr. core tease had one of the longest ten yours of any local labor official. not only did mr. cortese help build membership of more than 1,000 local postal workers into a political force, he also helped to initiate a food drive in which letter carriers collected donations for the second harvest food bank for families in the san jose area. this program served as a pilot for what became known as the national food drive. the program continues today and is just one of the generous contributions mr. cortese made to his community and his country. sadly, this outstanding citizen

of san jose died of a heart condition on february 11, 2007. he leaves behind his wife, barbara, his daughter, caroline, and his sister, mary, and his grandchildren, austin and ashley. for his tireless efforts for his fellow postal workers and people in need throughout the country, it's fitting that we name the post office in tony cortese's honor. thank you, mr. speaker, and i reserve the balance of my time. the speaker pro tempore: the gentleman from texas reserves the balance of his time. the gentleman from massachusetts is recognized. mr. lynch: mr. speaker, i don't believe we have any more speakers on our side. i continue to reserve, however. the speaker pro tempore: the gentleman from texas. mr. olson: and, mr. speaker, seeing no members on my side, i yield back the balance of my time. the speaker pro tempore: the gentleman from texas yields back the balance of his time. the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. and i want to thank the gentleman from texas for his

kind remarks, and i would encourage my colleagues to join the lead sponsor of this measure, zoe lofgren from california, in supporting h.r. 4543, and i yield back the balance of my time. the speaker pro tempore: the gentleman from massachusetts yields back the balance of his time. the question is will the house suspend the rules and pass h.r. 4543. those in favor say aye. those opposed, no. in the opinion of the chair, 2/3 having responded in the affirmative -- mr. lynch: mr. speaker. the speaker pro tempore: the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. i'd like to request the call of the yeas and nays. the speaker pro tempore: the yeas and nays are requested. all those in favor of taking this vote by the yeas and nays will rise and remain standing until counted. a sufficient number having arisen, the yeas and nays are ordered.

pursuant to clause 8 of rule 20 and the chair's prior announcement, further proceedings on this motion will be postponed. for what purpose does the gentleman from massachusetts seek recognition? mr. lynch: mr. speaker, i move that the house suspend the rules and pass the bill house resolution 1103, as amended. the speaker pro tempore: the clerk will report the title of the resolution. the clerk: house resolution 1103, resolution celebrating the life of sam houston on the 217th anniversary of his birth. the speaker pro tempore: pursuant to the rule, the gentleman from massachusetts, mr. lynch, and the gentleman from texas, mr. olson, each will control 20 minutes. the chair recognizes the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. i ask unanimous consent that

all members may have five legislative days to revise and extend their remarks and add any extraneous materials. the speaker pro tempore: without objection. mr. lynch: thank you, mr. speaker. i now yield myself such time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. lynch: thank you, mr. speaker. on behalf of the committee on oversight and government reform, i present house resolution 1103 for consideration. this resolution honors the life and accomplishments of sam houston for his historical contributions to the expansion of the united states. introduced by my friend and colleague, representative michael mccaul from texas on april 24, 2010, house resolution 1103 was favorably reported out of the oversight committee on april 14, 2010, by unanimous consent. in addition, the legislation enjoys the support of over 50 members of congress. as we all know, sam houston, the 19th century soldier, statesman, played a pivotal role in forming the state of

texas as well as a collective history. private and then first lieutenant houston fought courageously in the battle of 1812 during which he received near mortal wounds at the war of horseshoe. mr. houston served as a district attorney in 1819. as the statesed a underant general in 1820 and then as a major general in 1821. as the united states representative elected to the 18th and 19th congresses, mr. houston proudly represented the state of tennessee before service as the state's governor from 1827 to 1928. as a subsequent -- 1828. as a subsequent resident in the state of oklahoma, he was recognized as a member of the cherokee nation by the national

cherokee council. however, he's best known to secure statehood for texas. in 1835, mr. houston moved to the texas territory and promptly served as a member of the convention at san philippea de austin designed to promote a separate statehood for texas. one year later he was elected to serve as commander in chief in the texas army and led his volunteer texas forces against those of mexican general antonio lopez de santa anna. the treaty of velasco recognized the treaty of texas. mr. houston was subsequently elected to serve as first president of the texas republic, a position he held from 1835 to 1838 and again from 1841 to 1844. fittingly, the city of houston was named after the president of the texas republic in 1837.

mr. houston also served the texas republic as a member of the texas congress from 1838 to 1840 and upon texas' admission as a state into the union served as a united states senator from the 31st through the 34th congress. mr. houston would also serve as governor of the state of texas from 1859 to 1861, making him the only person in the united states to have ever served as governor of two different states. notably, mr. houston's tenure as a texas governor ended with his refusal to take an oath of loyalty to the confederacy. following texas' success to the union, an act that mr. houston deemed illegal. mr. houston died on july 26, 1863 at the age of 70. fittingly his last words was spoken to his wife, margaret, were reportedly, texas, texas, margaret. mr. speaker, let us honor the lasting contributions of sam houston to the state of texas and our national history

through the passage of this resolution, house resolution 1103. i urge my colleagues to join mr. mccaul of texas in supporting h.r. 1103, and i reserve the balance of my time. the speaker pro tempore: the gentleman from massachusetts reserves the baffle his time. for what purpose does the gentleman from texas rise? mr. olson: mr. speaker, i rise in support of the resolution. the speaker pro tempore: the gentleman is recognized. mr. olson: mr. speaker, i yield myself such time as i may consume. the speaker pro tempore: without objection. mr. olson: mr. speaker, i'm honored to rise today in support of h.res. 1103, introduced by a fellow texan and colleague, congressman mike mccaul, honoring the life and accomplishments of sam houston for his historic contributions to the expansion of the united states. sam houston lived an amazing and vibrant life. shortly after moving from tennessee from his home in the

state of virginia, sam was drawn to the cherokee indians, a tribe that would have a profound impact on his life. at the age of 19, sam houston enlisted in the military to fight the british in the war of 1812 where he distinguished himself for his bravery and was wounded several times in battle. after the war, his attention shifted to the study of law. in 1823, he was elected to the first of two terms here in this body, the united states congress, before being elected governor in the state of tennessee -- for the state of tennessee in 1827. in 1828, houston resigned from tennessee politics returning to live with his longtime friends, the cherokee indians. in 1835, sam houston left the cherokee and his wife in tennessee and moved to texas where he quickly gained note right for his leadership in seeking independence from mexico.

in the wake of the feat at the alamo on april 21, 1836, houston rallied the army of texas to victory decisively defeating santa anna and the mexican army at the battle of san jacinto, securing independence for texas and his heroic place in our nation's history. shortly after securing independence, sam houston was elected the first president of the republic of texas, beginning a long and successful career in texas politics. he went on to serve a second term as the president of the republic before being elected as the united states senator after statehood in 1845. in 1859 houston continued his public service when he was elected as governor of the state of texas and became the only person in u.s. history to serve as a governor in two states. though sometimes embroiled in controversy, sam houston was a

passionate, dedicated statesman who played an important role in shaping this great nation. i urge my colleagues to support this resolution and honor the accomplishments of this important, if not heroic, figure in american history and the history of my home state, the great state of texas. thank you, mr. speaker. i reserve the balance of my time. the speaker pro tempore: the gentleman from texas reserves the balance of his time. i recognize the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. i don't believe we have any more speakers on our side, so i'll continue to reserve. the speaker pro tempore: the gentleman from texas. mr. olson: and, mr. speaker, seeing no further speakers on my side of the aisle, i yield back the balance of my time. the speaker pro tempore: the gentleman from texas yields back the balance of his time. the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. again, i encourage my colleagues to join mr. mccaul and mr. olson of texas in supporting house resolution 1103, and i yield back the

balance of our time. the speaker pro tempore: the gentleman from massachusetts returns the balance of his time. the question is will the house suspend the rules and agree to house resolution 1103, as amended. those in favor say aye. those opposed, no. in the opinion of the chair, 2/3 having responded in the affirmative -- mr. lynch: mr. speaker. the speaker pro tempore: the gentleman from massachusetts. mr. lynch: mr. speaker, i'd like to request the call of the yeas and nays. the speaker pro tempore: the yeas and nays are requested. paverfaver -- all those in favor of taking this vote by the yeas and nays will rise and remain standing until counted. a sufficient number having arisen, the yeas and nays are ordered. pursuant to clause 8 of rule 20 and the chair's prior announcement, further proceedings on this motion will be postponed.

for what purpose does the gentleman from massachusetts seek recognition? mr. lynch: mr. speaker, i'd like to move that the house suspend the rules and pass h.r. 4861. the speaker pro tempore: the clerk will report the title of the bill. the clerk: h.r. 4861, a bill to designate the facility of the united states postal service located at 1343 west irving park road in chicago, illinois, as the steve goodman post office building. the speaker pro tempore: pursuant to the rule, the gentleman from massachusetts, mr. lynch, and the gentleman from texas, mr. olson, each will control 20 minutes. the chair recognizes the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. i ask unanimous consent that all members may have five legislative days to revise and extend their remarks and add any extraneous materials. the speaker pro tempore: without objection. mr. lynch: thank you, mr. speaker. i now yield myself such time as

i may consume. the speaker pro tempore: the gentleman is recognized. mr. lynch: mr. speaker, as chairman of the house committee -- excuse me -- as chairman of the house subcommittee with jurisdiction over the united states postal service, i'm proud to present h.r. 4861 for consideration. this legislation will designate the facility at the united states postal service located at 1343 west irving park road in chicago, illinois, as the steve goodman post office building. introduced by my good friend and colleague, representative mike quigley of chicago of chicago on march 16, 2010, h.r. 4861 was favorably reported out of the oversight and government reform committee on april 14, 2010, by unanimous consent. in addition, this legislation enjoys the support of the entire illinois house delegation. a beloved native of the city of chicago, american folk singer and songwriter, steve goodman, was born on july 25, 1948, on chicago's north side. mr. goodman graduated from

maine east high school in park ridge, illinois, in 1965 and enrolled at the university of illinois. after one year, mr. goodman left the university of illinois in order to pursue a musical career in 1968. he began performing at the famed earl of old town folk club in chicago's old town neighborhood, where he first attracted a large popular following and soon became a regular performer throughout the city. mr. goodman's subsequent and distinguished musical career evidenced his dual mastery, as well as his devotion to his hometown, and left a mark on folk music and the city of chicago. as noted by "the chicago tribune" earlier this month, his songs told wondrous stories and if you are a fan and lived in chicago and he was alive you certainly help but feel he was a pleasure, end quote. notably, mr. goodman released

10 folk music albums during his life. including modge his most enduring song was "the city of new orleans" about the city of new orleans train which became a top 20 hit in 1972. the song would also become an american standard covered by such artists such as johnny cash which earned him as -- a music award. mr. goodman latered received a grammy award in the best contemporary folk album in 1988 for his critically acclaimed album "unfinished business." additionally, mr. goodman is well-known for performing a variety of humerus songs including "daley's gone" and a dying cubs fan last request.

also go, cubs, go," in honor of his beloved cubs. the latter song can be heard playing at wrigley field after every cubs' home win. in addition to his musical contribution, mr. goodman is equally remembered for the courage and optimism always evidence throughout his 15-year battle of leukemia. while he was diagnosed at the disease at the early age of 20 in the words of "the chicago tribune," was, quote, always a little guy with a huge smile and he was chicago, closed quote. . regrettably he passed away at the age of 36. four days after his death, the cubs clinched the national league's eastern division title on being october 2, 1984, played their first postseason game since the 1945 world series. while mr. goodman had been asked to sing the national anthem for the occasion, jimmy buffet performed the "star

spangled banner" in his absence and dedicatesed his song to mr. goodman whose ashes were subsequently scattered at wrigleyfield. let's honor this life and legacy of mr. goodman through the passage of this legislation, h.r. 4861 to designate the west irving park road post office in his honor. i urge ply colleagues -- my colleagues to join mr. quigley of chicago in supporting h.r. 4861. i reserve the balance of my time. the speaker pro tempore: the gentleman from massachusetts roips the balance of his time. the chair recognizes the gentleman from texas. mr. olson: mr. speaker, i yield myself such time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. olson: mr. speaker, i rise today in support of h.r. 4861, designating the facility of the united states post office located at 1343 west irving park road in chicago, illinois, as the steve goodman office

building. born on july 25, 1948, in chicago illinois, steve goodman began his life -- a life of long musical career at a teenager. after graduating from maine high school in 1965, mr. goodman entered the university of illinois and started a band called the juicy fruits, with friends from the sigma alpha fraternity. after only one year he left college to pursue his music career full-time. he was a regular performer in chicago and off supported himself in singing commercials. he often performed but he was known as an excellent and influential songwriter. known more prominently in folk music circles than commercial venues. his music represented a chronicle of the times including his many humorous songs about chicago. his creation of "the city of

new orleans" got the attention of top recording artists such as arlo guthrie, johnny cash, judy collins, chet atkins, and willie nelson who all recorded this much loved song. he was also known as a die-hard cubs fan. where his songs were often played at wrigley field. in 1984 his beloved cubs won the eastern division title in the national league for the first time. sadly mr. goodman died of leukemia before he could sing the "star spangled banner" for that first divisional postseason game. he was 36 years old. jimmy buffet filled in, dedicating the song to mr. goodman. subsequently some of mr. goodman's ashes were scattered at wrigley field. i appreciate the opportunity to recognize this man of chicago, steve goodman, whose world renown for his many musical

accomplishments. thank you, mr. speaker. i reserve the balance of my time. the speaker pro tempore: the gentleman from texas reserves the balance of his time. the chair recognizes the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. i don't believe we have any further speakers on our side. i'll continue to reserve. the speaker pro tempore: the chair recognizes the gentleman from texas. mr. olson: mr. speaker, seeing no speakers on my side of the aisle, i yield back the balance of my time. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. i thank the gentleman from texas for his kind remarks. i urge my colleagues to join with congressman mike quigley of chicago in supporting h.r. 4543. i yield back the balance of my time. the speaker pro tempore: the gentleman.

the question is, will the house suspend the rules and pass h.r. 4861. so many as are in favor say aye. those opposed, no. in the opinion of the chair, 2/3 of those voting having responded in the affirmative, the rules -- the gentleman from massachusetts. mr. lynch: thank you, mr. speaker. i request the call of the yeas and nays. the speaker pro tempore: the yeas and nays are requested. all those in favor of taking this vote by the yeas and nays will rise and remain standing until counted. a sufficient number having arisen, the yeas and nays are ordered. pursuant to clause 8 of rule 20 and the chair's prior announcement, further proceedings on this motion will be postponed. pursuant to clause 12-a of rule 1, the chair declares the house in recess until approximately

in recess until approximately 6:30 p.m. today. >> tonight a discussion on fcc policy. we will talk about the national broadbent plan and what the comcast decision needs for -- means for net neutrality. >> cspan, our public affairs content is available on television, radio, and online. you can connect with the sun

twitter, facebook, and youtube and sign up for our scheduled alert e-mails @ c-span.org. >> no a discussion on digital money talking about the future of electronic payments as the popularity of to cash and checks continue to decline. this is from the american enterprise institute in washington. this is just under two hours. >> good morning. we will start in just a second if of the body can grab their seats. -- if everybody can read their seats. >> good morning and beg you for coming to the american

institute. our conference this morning is about digital money. before i introduce our keynote speaker, i would like to take a minute to set the stage for the topic. this topic is about a portion of our economy that affects all of us every day. outside the economists who have studied this issue, the regulators and lawyers who practice in this area and the executives who leave this industry, this topic receive relatively little public attention. in fact, it permeates our economy. how we pay for things we buy matter. naturally, we focus more often on the purchases themselves. similarly, when we are in a car or on a plane, we focus more in our destination then on our means of transportation. just as our roads system and rail system and air traffic control system are important and vital to our economy, so is our payment system. this is part of our infrastructure. making payments is simply

transporting money. in the transportation sector, technology has helped address the problem of getting ourselves and our things to other places as efficiently as possible. take the global gps system. these satellites have been deployed for decades but only recently has the technology become accessible and affordable. in the payment system, technology has also reduced costs, sped up transaction times, and improved convenience. cash and checks can be thought of as the cars and buses traveling on streets and credit cards and debit cards may be a high speed rail. cash and checks serve a purpose, there are inherent inefficiencies associated with the great credit-card and debit cards are certainly an improvement in many ways and i think we learned more about that this morning. limitations exist there, as well. we cannot be unaware of the inadequacies in our current

transportation sector, contrast in, court wrote services, limitations in mass transit to name a few. -- in mass transit. we can ask the highway trust fund and a gas tax are helping or hurting our infrastructure network to modernize. response to these limitations, the means of transportation are shifting. they are becoming more diversified and they are becoming more digital, more electronic. video conferencing are ways to be somewhere else without leaving the office. the amazon candle and a new apple i pad tartus for transporting books into our hands without leaving our homes. these means of virtually conducting business spare us the extra time and inconvenience of physical traveling. in the same mode, digital money, products like paypal and other

new technologies are the way to pay safely and convenient way. in considering technological trends in the payment system, this conference this morning will focus on digital money in particular and the associated policies and regulations that we need to consider or avoid. we're fortunate to have a great group this morning. this includes josh bloom of visa. he is executive director of the sat inc. and is responsible for global government relations for the company. he is a member of the executive management team and sits on the operating committee. his primary responsibility is for advising management of the board of directors of global competition, legal and regulatory matters. it is the company's principal voice in competitive issues and a frequent traveler to

washington to engage in these matters. after his presentation, he will take a few questions and we will have another opportunity for questions and enter after the panel for all the panelists. it is a pleasure to welcome you to aei. [applause] >> thank you. it is a real pleasure to be here today with the distinguished panel talking about the global evolution from paper based currency digital currency and the role that government can play to encourage and accelerate this shift. i am proud to say that we work with government agencies in many countries around the world to help them tried efficiencies in their operations, everything from cutting the cost of purchasing air line parts to child support. while we agree on the importance of digital currency, we don't always agree on its debts -- its execution.

before i go into details for a public-private partnership, i would like to take a step back and regard the transform the nature of digital currency. i admit i am biased but i believe there is a strong case to be made that there are few innovations that have so fundamentally changed basic aspects of social and economic behavior that they can truly be called transformative. the emergence of global communications is one example the cell phone has affected the lives of a vast majority of people on the planet. people at virtually every income level in every part of the world enables them to connect with one another more affordably, securely, and reliably than ever before. the internet is another example. the web has put previously unimaginable quantities of information at the fingertips of literally billions.

appropriately, we as a society dedicated great deal of time and attention to thinking about, discussing, analyzing, and debating the future of these technologies. volumes have been written about how mobile technologies and the internet have transformed almost every aspect of human life. i would argue that the shift from paper to digital currency represents a transformer of the pollution. yet, it is one that has taken place with remarkably little notice. let me take a few minutes to try to amplify what i mean when i talk about the transport of nature of digital currency. think about how e commerce has transformed our lives. in india, the six card holders can buy a train ticket online in a few moments instead of standing in line for up to six hours to buy a ticket in person. or you can hop on a plane to europe and pay for your hotel,

meals, even taxis using your card without having to exchange currency or stand in line for hours at a foreign bank. i am one person that does not lament the passing of traveler's checks. what do these and similar anecdotes bubble up to? how'd we quantify the broad economic value of digital currency? a recent study by moody's economist.com commissioned by visa concluded that the digital currency usage contributed an incremental $1.10 trillion to the global economy from 2003- 2008. that is an incremental $1.10 trillion. where does this tell you come from? essentially, three areas. first, digital currency means consumers have more convenient access to resources.

it is hard to overstate how transfer of that access to resources is in terms of consumer spending behavior. for those of us who have used payment cards, it is easy to take for granted the freedom that comes from not having to causally consider whether you have enough cash in your pocket to pay for a purchase or to reconsider a transaction out of concern for the hassle of writing a check. those limitations have historically been a major source of transaction friction which translated into billions of dollars in lost spending. digital currency acts as a lubricant for transactions large and small across the economy. for example, in new york city, especially manhattan, the iconic yellow cab is a constant. there are 13,000 licensed cabs transporting millions of passengers around town every year and taxis are the cornerstones of the city's

transportation infrastructure making it possible to keep a place as densely populated as manhattan moving in efficiently. barry archosaurs of employment for thousands of people -- they are the source of and plummet for thousands of a pimp -- of people where cash has been historic a way of earning a living. for drivers, that meant having to carry enough cash at the beginning of a shift to make change for passengers. beginning in 2004, taxis in new york began installing card readers and the passenger areas of cabs and today, all 13,000 taxis in the city have the reader's allowing passengers to utilize digital currency to pay for their ride in a matter of seconds. that means no more public for bills or side trips to the bank for a change and more efficiency for taxi drivers and their consumers. this is just one small example. multiplied that by hundreds of thousands of cab rides, tens of

millions of copies and quick service meals, and book purchases and movie texas -- movie tickets and you get the idea. add that to the trillions of dollars of transactions that take place on line, transactions that are only possible with digital currency. you begin to really understand all access to resources online and off is a profound driver of economic growth. the second key contribution that digital currency makes to economic efficiency is a reduction of gray market transactions. the fact is, cash transactions do not leave any record. a merchant chooses to conduct business off the books is in cash means tax collectors will struggle to piece together evidence. there is a reason that shady operations are referred to as " cash only"business is.

digital currency makes it harder for these to take place off the books and as a result, expense of the legitimate economy and the tax revenues that can be collected on illegal transactions. while this study was relevant around the world, is particularly important in emerging economies with deeply entrenched gray economy spurted to also increasingly relevant issue to governments around the world as post-recession tax revenue trends. bringing those billions of dollars in transactions into the formal economy not only leads to increased tax revenues for public use but also allows for better statistical gathering, improved consumer regulation, and a wide host of fundamental benefits that the developed world might take for granted but that are vitally important for sustainable development any marching markets. -- in the emerging markets. finally, digital currency

increases economic efficiency by bolstering confidence for merchants and consumers. it is a little difficult today to recall a time when check bouncing was a mass of sorts of loss to merchants, banks, and customers alike. that was the case. bounced checks continue to be a source of millions of dollars in losses to merchants each and every year. digital currency largely eliminates those problems. inherent is a guarantee to merchants that they will receive payment even in the event of a consumer defaults on credit and consumers are guaranteed liability protection from fraudulent purchases on their cards. never was this more important than in the hopefully soon to be ended economic crisis but the ongoing economic crisis. while consumers struggle to get by during the downturn,

financial institutions -- financial instruments like credit cards often bridge the crowds when times were tough. goods and services were sold, merchants got paid. instead of a bounce checks, merchants receive a guaranteed pimmit as part of their contract for accepting credit cards. the billions of dollars in losses absorbed by the potential industry during the downturn funded margin businesses large and small. had it those losses been absorbed by the already suffering merchant industry, the results might indeed have. been have while those losses to financial institutions were painful and a significant challenge to the overall economy, imagine the alternative, a break down and confidence between buyer and seller. in retrospect, there is no doubt that the digital currency system improved -- proved far more

resilient. certainly, digital currency cannot eliminate all threats to confidence, in particular fraud and theft are constant concerns that cannot be entirely eliminated. by protecting both buyer and seller from serious personal risk, the digital currency system creates a safety net of confidence that allows the economy to run more efficiently. it is clear that the shift to digital currency creates value. it improves the efficiency and makes economies more dynamic and more resilient. what is truly so exciting to me about the digital currency revolution is that we have really only begun to scratch the service of that body. today, digital currency represents a little less than 1/4 of all world transaction volume with cash and checks still the dominating form of payment worldwide. the trend lines are pretty clear.

between 2003 and 2008, card- based transactions grew by 13%. for that same time, transactions fell from 50% poll global transactions to 44% in cash. what this trend represents is the collective choices of hundreds of millions of consumers and merchants in virtually every part of the world making a choice to shift an increasing share of their spending on to digital currency platforms. in much the same way as mobile phones are being used to innovative and sometimes surprising ways by businesses and individuals around the world, so, too, is digital currency, unlocking of value in all sorts of unexpected ways around the world. here in washington, the u.s. federal government is finding that utilizing digital currency purchasing cards for procurement is leading to savings of $1.70

billion per year according to a study by the gao. in states like nebraska, direct programs for citizens are reducing the disbursement cost of distributing funds by about 59 cents by using re-loadable cards rather than mailing checks. in developing countries, micro finance organizations are partnering with visa to use digital currency to help the smallest merchants and the most remote areas tap into global markets and the fishing transaction systems. in pakistan, in the wake of the over 1 million displaced persons, this made disbursement faster and more accountable. nadra, the pakistan national identity agency, enlisted the help of the united bank ltd.,

one of the largest full-service banks and pakistan to devise a way to get funds to refugees who fled the northwest frontier province to escape the areas of armed conflict. the united bank ltd. work with the agency to issue visa prepaid cards at sites continue to refugees that allowed them to buy supplies like extra food and other accessories. in addition to enabling nadra to issue disbursements quickly, the choice of visa ensure them that they could account for every penny in financial aid and to make sure it went to the right individuals to provide the right benefits. the situation in pakistan represents a true innovation. it is just one example in one country and based on one digital currency platform, mainly visa's. in other countries like haiti, cuba, visa is in discussions

with government entities on establishing similar infrastructure to the one in pakistan. we are eager and committed to replicate our success in pakistan so financially underserved people can access their resources quickly, continually, and securely. while i am hardly modest about our own ambitions, the fact is that the digital currency space rapidly becoming more competitive with new entrants are around the world developing smart new tools to transfer value. that competition is a bible and healthy part of the digital currency you pollution. -- evolution. it brings me to the issue what role government can and should play in the future of electronic payments. protecting their market-based competition is clearly an important role that government should play. enforcing laws on the books and injuring an environment in which small upstarts and established

players can compete on a level playing field ultimately benefits all stakeholders. a corollary to that principle is that government must resist the urge to put its finger on the scale and the marketplace for the benefit of any particular participant in the system. the clearest cautionary tale is australia. i spent a lot of time in that country in the last several years speaking with regulators and the central bank. there, the reserve bank decided to intervene in the marketplace at the behest of merchants and essentially imposed government price controls on transaction fees associated with card use. the regulator also freed merchants to impose surcharges on consumers who used their cards. the attention of these regulations was to -- the intention was to reduce fees and

that would be passed on to the customer. the experience has been quite different with unintended consequences. it was the opposite of what the regulator sought to achieve actually occurred. by the regulators on assessment, prices have not gone down four australian consumers but annual fees on cards have gone up, benefits have been reduced, and many merchants including australia's like chip airline qantas have imposed fees on consumers bought for using their cars. consumers are not happy. . . the bottom like is that this experiment in government management of digital currency has a generally harm to consumers while creating no clear social benefit. the lesson of these expenses is not that government has no role to play, but that it must recognize the inherent risk of upsetting delicate market forces.

and certainly, government has a role, a vital role, to play in keeping digital currency secure. to be sure, the burden of network security must be born first and foremost by digital currency networks, including visa. we are investing hundreds of millions of dollars to make our networks among the most secure and robust in the world. we are working with merchants we are working with merchants and others who handle consumer and ensure compliance with industry security standards. and we are constantly seeking to educate consumers about steps they can take to keep themselves secure. but ultimately, criminals, fraudsters, terrorists, hostile powers in other threads will always be there. and so government and industry must work in close collaboration to ensure that our vital networks, including our digital currency networks, are secure and that cripples are aggressively pursued and brought

to justice. in this fight, the stakes simply could not be higher. according to that same movies economies.com study i mentioned are there, everyone% increase in digital currency transaction volume translates to about two and half basis points, 2.4 basis points to be exact, i think increase in local gdp growth. let me say that again. so every 1% increase in digital currency transaction volume translates to about two and half basis point increase in global gdp growth. given the secular trend in the past decade showing annual average growth of 13%, we are seeing a contribution of 38 basis points in gdp growth, just through the increased economic efficiency that comes from expanded card use. these trends are the very definition of progress.

these trends are the statistical expression of men and women around the world who can enter a higher quality of life, who can build a business, who can make choices as consumers, who can benefit for more responsive transparent government services, and you can feel more confident and secure, thanks to the technology -- technological evolution that is slowly but surely changing the world. so long as they called in the system continue to recognize and appreciate that value, and ensure government policies that nurture its expansion, then this value will continue to grow. that is a topic that deserves and demands our attention. and it is in that spirit that i am so pleased that aei is hosting today's discussion, and what i hope will be but one of many such forums in the months and years to come. thank you very much. [applause]

>> thank you, josh. we have time for a few minutes, folks to raise their hands. we have a couple of people helping us with microphones. when the microphone comes to you, don't start till the microphone comes to. least state your name and your affiliation, and please do ask a question. in the back here, please. >> my name is jo freeman. i'm a senior scholar at the woodrow wilson center. having been, watch this transition, i am concerned about how it affects the consumer, and that's what i would like you to address. i have seen the increase of automatic debit i places that you might normally write a check for every month, when you're writing a check you could decide whether to write the check, and if you cancel the service you would not write the check. but i've seen in a lot of cases where you give a copy permission to do at. [inaudible] debit. they do it every month whether you want them to or not, whether you have the time to fail or

not, whether you have canceled the service or not. and i haven't seen any protections against that happening. can you please address that? >> i would be happy to. even though at visa, our clients and customers are financial institutions. we are acutely aware that the end-users of the products that we facilitate, merchants on the one hand and consumers on the other hand. so we wake up everyday thinking about how our products, how our services can benefit consumers and enhance their well being. i think that digital currency has brought incredible value to consumers. imagine when the days were that you had to walk into a store with only cash or checks as resources available to you. cash can be stolen. cash cannot be enough to support what you intend to purchase,

once you arrive at a retailer. checks and balance. you can buy something that is not what you intended and you have no recourse. and so with networks like visa, they provide a consumer with instant access to credit, or instant access to his or her own dba account that if you buy something that is fraudulent, if you buy something that is not what you intended, you will not have to pay for it. that in and of itself is an unbelievable enhancement to how things were in the past. if someone steals your card and uses it, you will not be liable whatsoever. we think that it also enhances the speed of the process. you're promising so far at about speeding to the checkout line, perhaps a bit of hyperbole but you do get the point that it increases efficiency. it also increases your ability to keep track of your records. with respect to your particular question, about automatic debit

systems, those are things that you can set up with your financial institution and with the appropriate merchant. my understanding is that in most of those situations, if not all of those situations, the consumer does have the ability to cancel the automatic deposit or debit service. now, that's not something that we do. that's something that's between the financial institution and a merchant that but we do not at visa condone any kind of deceptive or unethical practice on the part of any of our members or end-users. and so if there's an instant where that's a problem for a particular consumer, i suggest that he or her contact a financial institution and make very clear the instructions regarding any kind of automatic debit program. . .

>> it's questionable whether it belongs in the plus column rather than the negative column. >> i thank you for that question. i believe that what we do is we provide a consumer with choices. among those choices is whether to extend his or her own credit facility beyond what might have been available otherwise.

i think in terms of how the consumer uses that optionality is a legitimate question. and i think whether a particular consumer overextends him or herself is a very, very serious issue. but i'd also say that we're very proud at visa that we really pioneered the debit category. you hear a lot about interest rate practices, overextension of credit. some of the things that you are mentioning. and at visa we were the first to get into debit in a big way. and as i think everyone is aware, debit is simply access to your own dda account funds that you have so that really mitig e mitigates overextension of debit. overextension of your own credit. i should say by access to your dda account and debit doesn't carry with it interest rates and the types of fees that you see with credit.

so we think the debit category is a very, very important part of our business globally. and just this past year in fact our volume of visa transactions in debit exceeded credit for the first time ever. so we used to think ourselves as a credit card company. we longer do. we are a digital currency company and debit is a huge part of our business. >> thanks. >> burt? >> we'll go to the gentleman next to him afterwards. >> burt, a banking consultant. i'm a great fan of electronic payments. i try to set up as many automated payments as possible. but i've run into three instances in recent years which suggest actually in my case a move back to cash as the green stuff. and my question relates to what the credit card companies are doing to deal with these three little barriers i see.

number one, the search arches on foreign currency transactions, when i go to europe now i pop euros out of the atm every couple days rather than subjecting myself to, i think, it's a 2.8% surcharge. so number one, what's going to be done to get rid of that? number two, new york taxi cabs -- it takes longer to get out of a cab when you're charging -- i gave up on the credit cards and i just pay cash like i used to. number three, i'm running into more retail outlets on small -- of course, many don't take amex but they will take visa and mastercard but more and more i find a strong preference for currency because of the expense -- the discount expense of a credit card transaction. so my question is this, what are the credit card companies -- well, excuse me, the digital currency companies doing to

overcome those specific barriers to using those cards instead of the green stuff? >> well, thanks for that question. i think that in respect to traveling abroad and getting cash, whether it's euros or bot or what have you, that, for example, using your card in an atm machine is the least expensive way for you to do that. remember the days of traveller checks. remember the days of exchanging cash? people still do that. but digital currency is the least expensive of those options. and so we're very optimistic about continued growth in that sector. all i can suggest is shop around. it's a very competitive environment. in the united states alone, we have something like 10,000

issuers. there are many, many acquirers. if you happen to be a retailer, shop around. for the best deal. it's a competitive market. now, my experience in new york cabs must be very different from yours. i just give them my card. they swipe it. i'm out there. i'm not aware some of them were slow. i thought they were incredibly fast. and then with respect to merchants imposing surcharges, we are extremely adamantly and passionately opposed to that. merchants should bear appropriately some cost for accepting digital currency. it drives tremendous benefits to them. there are some merchants who would like a free ride. and would rather not pay anything for digital currency. again, this is a competitive market. and you have to balance the benefits they receive with the cost to them.

and make a judgment about whether it's fair. i think it's extremely fair. some merchants try to steer towards cash by imposing surcharges at the point of sale. that actually violates our rules. and we have those rules for a very good reason. which is that surcharges harm consumers. we care very much about consumers. we don't want to impede the ability of consumers to use those cards. and again we think those cards deliver tremendous values to merchants, which far exceed their relatively modest costs. >> thanks. i want to take two more questions. my own and the gentleman in the back. and let me just ask mine and then we'll ask yours and josh, we can respond together. you mentioned the regulatory charges in australia and what happened there. i'm just wondering as a

multinational corporation looking at your business activities. how are things here in terms of the penetration rates of digital money and activities? versus elsewhere in the world? where are the most amounts of digital money and the fastest growth and how are we stacking up? but let me also take the other question. >> i'm with the african development center. my question i'm originally from nigeria. if in the continent of africa it's very difficult to use any of these credit cards. that creates an economical blockade. if we are looking at a global rate of over a quarter in the industry, how do we in africa able to access this system so we can get in the global economy? >> thank you for both of your questions. let me try to answer yours and then i'll answer his.

by far the biggest penetration and the most widespread use of our products is here in the united states. this is where we were born. we came out of the bank ameri card and we have the largest product suite. however, our growth places where we are growing the fastest tend to be in places like asia pacific, latin america. so when you look at something like australia where the regulators took in my view an extremely ill-conceived course that they have thus far refused to back down from and you look at the empirical data -- what the reserve bank of australia thought was by artificially suppressing interchange it would somehow benefit consumers. and they were also hearing from the very few because in

australia the merchant population is fairly concentrated merchants who said, what we would like you to artificially lower our costs. well, they did artificially lower the costs to the retailers. the retailers in australia are paying far less for digital money than others around the world. those retailers didn't lower their retail prices. they didn't provide extra coupons. they didn't provide gift wrap paper or anything of the kind for consumers. so consumers in australia took it in the shorts one way, if you will. and then secondly, the rewards portions of the card was rolled back. the fees were increased. so consumers got hit a way in australia. so i am very hopeful that over time we'll be able to reach some accommodation with the reserve bank to step back from regulation.

they've indicated at one time they were interested in that although i haven't seen a lot of progress over the last couple of years. now, let me turn to the gentleman's question in the back about nigeria and africa. it's true in many parts of the world particularly in developing countries, the card is mostly a cash access device. it's mostly a way an atm device to get cash. debit is really in infancy. the gentleman here alluded to the positive and negative aspects of credit particularly for people who are not of great means. and don't want to get in a situation where they may overextend credit. debit is a perfect means of driving growth, an engine for growth in places like africa and in places like central europe. in places like latin america. so we at visa are very committed

to growing our debit infrastructure in africa. we are now a global public company. so we look at everywhere around the world. and we try to allocate resources. and i can tell you, sir, africa is a big priority for us. >> josh, thanks very much for joining us. >> thank you. [applause] >> i'd like to turn right away to our distinguished panel who's with us this morning. i've asked each of the panelists to speak for 12 to 15 minutes. and we've got a nice diversity. and i'll just introduce them very quickly and we can begin. geoff gerdes is the payment section of the federal reserve board. as lead economists in several major studies in payment conducted by the board he has the primary responsibility for analyzing trends in noncash payments in the united states. >> bob ballen, in the middle --

he's the founder of the the law firm schwartz and ballen. he recommends many insurance companies and securities firms and advises clients on financial services, law, and regulation. previously in the early '80s bob was in the general counsel's office of the federal reserve board and was responsible for counseling the board on legal issues arising in connection with payment activities including fed wire, check collection and the automated clearinghouse services. and bob is past chairman of the aba's payment subcommittee. to my immediate right, wayne abernathy has been the executive vice president for financial institution policy and regulatory affairs at the american bankers association since february of 2005. at the aba wayne oversees the aba groups that deal with policy development, regulatory issues, bank, economic, security investment and risk management. before coming to the aba, wayne

served for two years as treasury assistant secretary for financial institutions. and before that, served in a number of positions at the senate banking committee. we're going to start with geoff to give a little bit of the economics overview. and we're going to proceed this way down the line. geoff, thanks. >> good morning. i'd like to thank alex and aei for inviting me and other distinguished panelists. i'm going to step back a little bit from the discussion from joshua. and give us some background on the u.s. economy and the way the payment system fits into the u.s. economy. and first i'll give you an overview of what we're doing. and alex has done a good job telling you about me. so i will follow up with his comments and point out that my opinions are my own today.

and don't reflect opinions of the federal reserve board. moving on to key messages, as i figure out how to use this device. first, it's pretty clear that technological innovation has dramatically changed the u.s. payment system over the years. we have new ways to initiate payments and new ways to initiate them coming online all the time. each of these instruments has different properties. the properties of these instruments affect choices. and as new instruments get introduced, it's important to keep in mind that the convenience and the risk tradeoffs associated with them change.

there are factors that affect all of this, obviously. and, you know, i've listed technology clearly as the important thing and the digital money conference. but the preferences of the users -- both today we're talking about what we at the fed call retail payments. we're not really talking about interbank payments or very large payments. preferences of merchants and users are very important. there's also person-to-person payments, options available today. beyond the traditional check and cash that people have always been able to use. and obviously regulations, policies, industry practices, just what people are used to will have an effect on where we can go and do next. it may not be an immediate transformation to a whole new world.

and also one of the major points that i want to bring up is that the infrastructure, the electronic infrastructure of the world has really, you know -- we've come into the computer age. the payment system is following our ability to use computers in all sorts of different ways and it's intrical to that transformation to the digital age. okay. and on the next slide, i'm just going to step back as a central bank economist i'll point out a couple of things about money. but there's a lot that could be set and i think i'll not spend a lot of time on it. but, you know, reminding people money is a medium of exchange. it's a unit of account. it's a store of value. there are a lot of different functions of money. and, of course, we're talking about currency.

everybody is used to the use of currency and coin. they have different properties. for a long time economists have recognized that bank deposits can be considered money as well. and today i'll be talking about noncash payments which almost universally access some kind of deposit account. there's also this concept of electronic money or some kind of digital token that could exist on a card. and perhaps if the card is lost maybe that digital money could disappear. and that's a technological issue that we may overcome and it's been discussed for some time. and we'll see how things go in that area. but for now i think we're still pretty much accessing bank accounts or some liability of a nonbank when we're using these payment systems.

so i'm going to move on to the idea of a payment instrument and talk about the payment instruments that we use to access these deposit accounts. and give you an overview now -- and it's going to be difficult to read. i'm sorry to say. but these are the results of the most recent federal reserve payment study. we do this study every three years. we've done one for 2000, 2003. and these are the results for 2006. and in these studies we devote a lot of effort to get a complete national picture of what is going on in the u.s. payment system. so to start off with, the total number of checks written in the united states was about $33 billion, and that's out of about

93 billion payments noncash payments. so even in 2006 we were talking about a third of all payments were made by check. secondly, it's pretty clear that the debit card has been the huge success story as josh had pointed out. by 2006, it had overtaken credit cards as the most used electronic payment instrument. and cards collectively -- when you count the credit cards and the debit cards actually amounted to the largest payment instrument used in the u.s. economy. but by value, checks were by far

the largest payment instrument when you exclude inner bank wires. it's about $42 trillion went through the payment check system. and by comparison, the electronic payment system was about 34 trillion when you add in not only credit card and debit cards but also the automated clearinghouse system which is replacement for the check that was introduced back in the '60s, which provides a check-like clearing system in between banks. and it's what people are used to using, for example, if they receive a payroll check that's directly deposited to their bank account. and there are other uses of it as well that have driven the growth of ach.

so this chart here just shows the -- more detail about the changes. i think next time i do this i will probably narrow in to some larger font. [laughter] [inaudible] >> that's right. and this is available online. the debit card from 2003 to 2006 was responsible for more than half of the growth in the noncash payment system. so that really is another way to look at how influential the debit card has been. in recent past. now, just to step back a little bit more. take a longer view of the transformation of the payment system since checks and cash were really the predominant kind of way of making payments.

this chart shows from 1970 on each bar represents when we've done payments in the economy during those years. so what you see there is that the orange bar portion of the bar is checks by volume per capita in the united states. and you see that it shows that it peaks somewhere around 1995. and has declined ever since. in the meantime, you see electronic payments have grown. and by 2006, again, electronic payments by number are about two-thirds of all noncash payments. well, so much of the credit card growth, debit card growth and

automated clearinghouse growth has been driven by replacement of checks during this time. but there are other effects that you can see going on in this chart. first noncash payments have more than doubled. there are lots of reasons -- the most intuitive reason i think for this audience would be perhaps cash has been replaced. i think that's a reasonable expectation. there are others that have driven the noncash payment system clearly rising wealth and income has made people richer, changing process methods may have caused some transactions to generate other transactions. for example, when people use their credit cards, then they expect the bill at the end of the month and they are going to

have to pay that bill or, you know, over time. either way they're going to be paying that bill with probably a check or using the ach system. another point is that, you know, payments may have simply risen because we have more opportunities to outsource as our household production functioned back in the old days, reading "little house on the prairie" with my son back in the old days people used to churn their own body. -- butter. these days we probably purchase it. people used to sew their own clothes and/or they bought them in the open market and now you have to have a payment system to do that. okay. moving on to the next slide. a little bit more of a focus of what we do know about cash. and one point, it's pretty clear as we use cash, it's anonymous.

it's distributed nature of the cash payment system, there's no way to be able to measure all the cash payments. so rather than displaying a flow like i've been showing on the other chart, this chart is showing the stock of currency. this is not all currency. and this is on a per capita basis dollars per capita real value over time since 1960. and these -- what i call the transactional denominations excluding 50s and 100s in the united states. typically, people do not use these transactions. focusing in on this, what we do see there was a decline of stock of currency probably influenced by the use of checks and followed by additional use of cards. but then more or less the stock of currency per capita has been flat. you see that little blip there.

during the millennium bug period. there was some concern that the electronic systems would experience a problem. and for that reason, banks held extra stock of currency in order to facilitate commerce in case something happened and nothing happened and they returned the currency to the fed, no problem. in any case, it's pretty clear that the replacement of cash is occurring. the federal reserve is the issuer of currency. and has to print money and reprint it as it wears out. we have ways of tracking the wear and tear of currency. there's evidence that small denomination currency is lasting longer than it used to. there are a variety of factors that could affect it but some of them could be just the simple wear and tear of conducting transactions.

it's possible, although not conclusive at this time that individuals may be holding a steady inventory of currency but simply just replenishing it less often. but then, i think the jury is still out. we need to learn more to be clear on how much currency actually being replaced. next, i wanted to sort of talk about a case study of debit cards. stepping back again for a longer view. these were -- debit cards were issued first in the former as atm cards. and they were essentially meant -- they were a network but they were thought of as a bank's own network of atms. and this was for their customers to access currency. this was really the first and

only payment system and i'll get into a little more detail in the next slide. that has really been purely electronic from the beginning. and ultimately merchants started installing terminals to be able to accept these cards. but for many years, even though some options to use these were available, they were not very broadly available to the general public. and it wasn't really until, i think, mastercard and visa came in with their branding and getting into the debit card scene at around 1993 when we saw the number of terminals start to increase and when the numbers of terminals started to increase, card payments followed. so i think a number of us felt confide surprised when they saw

the surge of debit cards initially and the use of debit cards. and i think this chart seems to display -- it really had to do with whether they were available to people to use. and i think some work that i have done has shown that it spread from network to network kind of from the west coast to the east coast. and they are different. and as people saw they could use the so-called check card, they started using it. so messages from history, first existing payment types evolve. all a of these electronic payments that we have today used to have some component of physical processing except perhaps for debit cards. the ach began a computer tapes.

the federal reserve was heavily involved in the initial startup of the electronic ach electronic for checks in the 1960s. this was able because the fed was able banks to organize and facilitate the movement -- or, you know, collaboration. and also it was because they had big computers and could process things. but still these local ach associations settled within the local fed. and then the computer tapes were sent between fed offices on airplanes along with checks as they were being flown around the country. so -- but i think that was what was available at the time. and it was an incremental change. that was worth doing. credit cards, of course, have been around actually -- since around the turn of the century. and i don't know if the largest -- or the first major

retailer, i think, that issued a credit card was montgomery ward way back at the turn of the 19th century. but, of course, these credit cards were really an alternative to, you know, keeping the books in some other way. it's a way of issuing store credit. the general purpose credit card, of course, is what has really become the big transformative type of credit card. i won't go into a lot of detail of how those were introduced. it's a very interesting story. but essentially the general purpose card replaced merchant credit with bank-issued credits. this is what banks do. they finance things and merchants don't necessarily have the cash to do it. it was certainly a great deal for merchants when it first started out as an option. if you didn't have the ability to issue credit to your customers.

in any case in the '70s, that was around when visa began to electronicfy its systems. initially some folks in the audience may remember credit cards were run through paper imprint machines. and then merchants would actually stuff envelopes and mail these envelopes to banks and then things got sent through the postal mail actually. that was not a very efficient system. they asked the fed, which had a very efficient check-clearing system, paper check clearing system, to bring credit cards into that system. and the fed refused. that really spurred private sector development, i think, of the electronic payment system. and even so, it took a long time for that system to get dispersed throughout the economy. and there are many merchants

that were still -- that last mile of connecting the merchant to electronically to the system was still too difficult at the time. and yet the cards were out there. it was really in the 1980s when electronic -- or credit cards became a fully electronic system. [inaudible] >> okay. thank you. yeah, i was afraid i would spend too much time on these slides. and bob is going to get into the check clearing system and the fact that's become very electronic. i'm going to step back a little bit. people are thinking about the financial crisis. and we thought it would be useful to take a look at some -- and it's very difficult to read again perhaps again for some in the back and on tv but it will be available on the website. but this shows public information on quarterly volumes by dollar value for credit

cards, debit cards, checks processed by the federal reserve and network ach. so that doesn't include ach that's processed within banks. it shows in the gray area you see -- this is when the nber has identified when the recession began in recent -- so that would have been about 30 quarter 2007. and you see that pretty much all payments have experienced a drop in growth. this is the growth rate. so when you see the drop below zero, all of those payment instruments have really experienced the negative growth rate, meaning that people have retracted their spending. what's clear here -- if you can read the chart is that the little -- it looks like pearl necklaces are the debit card payments. and the debit cards did not dip below zero. they stayed in a positive growth.

but also see by the end of 2009 all of them seem to be showing some kind of recovery in terms of spending. finally, i think i'll -- except for a couple of points, i'll end pointing out about with our international -- the balance of electronic payments and paper clearing in developed countries. and i have japan, the european monetary union. i've got united kingdom, canada and the united states. and largely, all but japan show a very high acceptance of electronic payments. this is again is in per capita figuring. the u.s. has a very high additional number of noncash payments being made through the check system. and really this can be explained, i think, by the

relative -- obviously, maybe there are a wealth of differences but it's also perhaps higher use of cash and other -- in other countries as well. particularly, japan, there has had a very high use of currency historically. so i just figured i'd end with a little bit of a question. the u.s. card infrastructure is currently magnetic striped. there are various technologies that are being touted as a possible replacement. replacement is difficult. and there are lots of issues to consider. but all of us should be thinking in the future likely magnetic stripe, like paper, will probably be replaced. how will it be replaced and when? and then i'd point out also internet commerce is actually pretty small although clearly for airplane tickets you're going to make a purchase online.

but it is actually a pretty small segment of the economy still despite me and my friends and everybody i know using the internet, most of us are still using brick and mortar to make our purchases. and it's pretty clear as that continues to expand, new electronic methods will grow along with it. thank you. >> thanks very much, geoff. that was very interesting. bob, we're going to pull up your slide and the floor is yours. >> thank you, alex. and thank you to you and the aei for inviting me and putting this conference together. i'm going to discuss the regulation and laws governing all of this. in 10 minutes or less because i know we want to keep time for the open discussion. so -- i'm going to cover this at a very high level. and if anything piques your interest we can draw down later in the session. certainly josh -- yeah, i got it.

josh and geoff have really laid the groundwork here for indicating to us all the tremendous impact that technology has had on the payment system. and i'm going to talk a little bit about the regulatory challenges that have resulted from that technological impact. this is a very timely discussion because just a few blocks from here, congress is considering many of these very issues in the context of the financial reform legislation that's currently being very actively considered. so very good timing on the conference here, alex. i'm going to talk about two things. product regulation, how one regulates particular products and entity regulation. and that's how one would regulate particular entities that are holding or providing those products. and i'm going to look at recent past experience again at a very high level. geoff alluded to it.

the process by which banks collect the paper checks that you all right has basically in the last five years been converted from a paper process where at one point 60 billion checks a year are being flown around the country to now almost a completely electronic process. i'm going to talk very quickly about how we got there. and what the lessons, i think, of that process are. going forward. and then i'm going to talk a little bit hopefully we'll have some time to talk about new technology of internet, mobile and what that is doing for the payments process and the challenges of regulating that area. so here we go. quickly. okay. the picture tell us a thousand words. or maybe more. here is a chart and i would like to thank david walker who's the president of the check clearinghouse organization which is the nationwide bank clearinghouse organization that basically in part made all this

happen for these slides. so thank you, david. so i think this shows for you the average number of check images -- and these are the electronic transmissions of the paper check that are sent between the banks instead of the bank check, each day. and i don't know if the folks on tv can see this, yes? good. okay. but basically you see here on this chart that the average daily volume of images transmitted in the first quarter of 2005 were the grand total of about 80,000 a day. in the last quarter of '08 you can see -- or i guess the first quarter of '09, about 59.57 million images of checks are transmitted between banks each and every day. here's a sort of comparable chart that shows the dollar volume, dollar value of those checks.

again, at the top bar there, the annualized fourth quarter of the dollar amounts of the checks being transmitted between the banks instead of the paper. 17.2 trillion per year. that's about five times the sum of all debit card and credit card payments. sorry about that, paul. but look at that as a business opportunity. [laughter] >> and it's not just a few banks that are participating. here's a chart that shows the number of routing transit numbers and the routing transit numbers are the numbers that each bank has that identify them in the check collection system that receive these electronic images. and you can see about 21,500 routing transit numbers currently receiving these images. here's a summary chart of what i just went through. i would only highlight here that the federal reserve and, geoff, maybe you made these estimates.

estimates that the proportion of checks that they receive from the banks that send them checks, electronically through these images that i'm talking about will exceed 98% of their total check deposits by year end 2009. and they estimate 99% by year end 2010. and again, for the federal reserve sending those checks on to the banks usually that the checks are drawn on will have to pay those checks, they expect about 90% of those checks to be done electronically by year end 2009 and 97% by year end 2010. and again, five years ago these numbers were like zero. okay. so what were the legal -- the law that made all this happen was -- and geoff mentioned it. is check 21. it was enacted in 2003. basically a little history 'cause i think it's interesting. the banking industry had been

looking for some time now before that as the cost of data storage and data transmission was dropping. the cost-savings that they could result for themselves in sending electronic information instead of the paper around the country. and then 9/11 came along and no air transportation. no paper checks. payment system basically went into gridlock. and that, i think, along with the cost-savings resulting from the advances in technology got everybody together to work on this check 21 law. it was a very collaborative effort with the federal reserve, bank industry, all sorts of stakeholders. and i'd like to call out particularly vice chairman roger ferguson then vice chairman roger ferguson and then and still the director of the division of reserve bank operations and payment systems. and i guess your boss, louise roseman for really working cooperatively with the industry.

and i think this collaborative process is a great success that has worked in roughly five, six years since that act was passed. and i don't want to go through all the details of the act because we don't have time but i think the lezzons learned are very important. -- lessons learned are very important. what check 21 did is almost as important as what it didn't do. and it did not mandate for anybody, banks, customers, consumers to use this process. it facilitated it. it put a legal framework in place to facilitate it. but it left it up to all the people that josh was talking about the consumers and the banks and the customers and the businesses to make their own decisions as to whether for them this process made sense. secondly, it provided baseline protections to consumers, which in my view is a very valid and

appropriate responsibility for statute and law. but what it didn't do is it did not dictate the specifics of the interbank exchange, the interbank dealings, the bank to bank dealings. that was left to the industry to work out for themselves. and i think that was an extremely brilliant decision. because if that had been drafted into the statute at that time, in 2003, i don't think we would have had the success that we had. and let me give you an example. everybody thought at the time that all the banks were going to do was exchange the information electronically and then the paper check would be retained and be retained later if some people needed it. indeed, all of the initial interbank rules were written based on that assumption. but then as more technology developed and costs came down

and more thought was given to this, the process that ultimately developed was, no, the image of the actual physical check is what's transmitted between the banks not just information about the check. and all the rules then had to be rewritten. and they could be done very quickly. and if we had to then go back and rewrite the statute, if the statute had written the process into the statute and that had to be -- everything had to stop and then go back and get congress to rewrite the statute, none of the success that you saw on those hockey stick slides would have occurred. everything would have been delayed while everybody went back to congress and went through the whole legislative process all over again. so the genius i think of check 21 in part and i think this is an important lesson as congress looks forward in terms of how to regulate new payments products is consumer protections, customer protections absolutely.

but as to the interbank process for how all of this is going to be done and, josh, i'm sure you would agree with this knowing how often you change the visa rules that really should be lef accommodate new opportunities, new technology and not have to go back to congress or the regulators each time to change the rules of the game. that's my thought there. and by the way, check 21 was a win-win for everybody. not only did we have hundreds of millions of dollars of cost-savings for the banking industry, not having to fly the paper checks around. customers are getting faster availability now for the checks they deposit literally all checks now because they can be collected electronically are collected faster. they're all considered local under the law and subject to faster availability requirements than the old nonlocal checks that were drawn far away and have time built into the availability process for the

paper to get across the country. new products and services for customers. i don't know if many of you do this but i do it all the time. you can go to your bank online and see a picture of your check right away, copy it if you need it for some purpose. not available in the old paper process. obviously less susceptible to terrorist attack. not dependent on planes flying all over the country every night moving this paper around. great success. let me move on. how am i doing on my time? [inaudible] >> okay. >> i can cover this in 3 minutes no problem. that was product regulation and now i want to talk about participant regulation. as josh and geoff have explained, there are all new technologies and communication channels that are enabling payment. we're talking internet. we're talking mobile. we're talking value. and many new nonbank payment

participants have entered this market. paypal, a well-known nonbank, amazon payments, another example of a paypal-type product. you have content and payment aggregates. -- aggregators. i give examples of others that provide facilities for -- if you're into online gaming as my kids are to purchase a whole panoply of online gaming. products from various merchants through their sites. you've got internet marketplaces, google, amazon, ebay, some names you may have heard of. cell phone carriers are now providing facility for you to charge things, not your phone bill. your telephone services but to charge things to your phone bill. verizon, at&t, for example. many, many others.

all sorts of new types of payments and related services are being facilitated by this new technology. person-to-person payments. small dollar micropayment merchant purchases. itunes, prepaid transactions, bill payments. there was a question earlier about bill payments which we could come back to. social network, online gaming, digital currencies. okay. no banks. banks we know that are regulated. congress is working on redoing that. but clearly they will be regulated. what about these new entrants, 10 or 15 i just listed in the last minute. i could multiply by 10 if i had more time. how should they be regulated? at all? and if so, how? should we worry about consumer protections relative to their customers? should we worry about whether they go away, go bust? certainly many of these startups have flamed out. should we worry about money

laundering and what do they do with their data, customer data in connection with these payment activities. is that a concern? should we worry about whether they are facilitating payments to what the u.s. considers to be bad persons such as people on the prohibitive list, terrorist activities, organizations. worry about unlawful gambling. now the current regulation for these nonbanks, if there is any, is mostly under state money transmitter laws. virtually all states license nonbank entities who vary genetically and broadly defined accept customer transfers to third parties. per the instruction of their customer. the requirements of the state statutes vary from state to state. but you see there on the chart typically require a licensed entity to post a bond in favor

of the state in a specified amount which often is not very high. file periodic reports with the state to maintain certain books and records. to maintain specified capital and to limit their investments to permissible asset types, to undergo some state organization and pay special assessments to the state. is that the right regime to regulate these nonbanks in the payment system? i just ask the questions. i don't have the answers. something congress is considering right now we can certainly talk about more in the open session. but i just wanted to raise that 'cause i think that's a key regulatory challenge that this new technology that we've been talking about will be raising today and going forward for both federal and state legislators and regulators. that's it. >> thanks very much, bob. [applause]

>> thank you. [applause] >> and our third speaker, wayne abernathy. thanks. >> thank you very much. i certainly want to thank you for inviting me for being on the panel but especially i want to thank aei for demonstrating today being at the forefront of the public policy discussion and debate. and bringing scholarly tools to bear. all these important financial issues that affect everybody. but that need to have some real good scholarly thinking behind them before we make these public policies. i'd like to introduce a couple of sets of evidence, if you will, or objects, exhibits, into our discussion. first of all, as this little thing i brought here with me. now, this is a dollar coin. it's in plastic. because it's uncirculated. it has been uncirculated since it was given to me a year or so ago and will remain uncirculated as i pass it down to my children. but this is a first exhibit.

the second exhibit, i reach in my pocket is this piece here. this by the way is supposed to replace this one. and if you talk to the mint they'll give you enormously persuasive arguments as to why this is a much better instrument than this. but nobody buys it. they still like the paper dollar. second set of instruments that i'll present to you. i carry this. this is my checkbook. my wallet. oh, and now this item here. all of these contain payments mechanisms. with any one of these or all of them together, i can make payments for a variety of different things together with, of course, of this and if i'm willing to break this out of the plastic i could make payments with that. now, these are important exhibits and i want us to keep all of these things in mind as we're thinking about electronic payments. because what we need to think about -- what we're talking

about is the payment system. electronics just happen to be the latest innovation into the payment system. digital is one of the most recent. and it won't be the last. what will be the next one? i don't know. i would have invented it if i knew what it was. people wouldn't think people would use this to make a payment let alone to send messages back home and remind folks that the exterminators are coming by today. now, as we're looking at the payment system, i think we need to remind ourselves what is it that people are expecting from the payment system? and i think there are four key things that people expect. and have always expected from the payment system. from the very first payment system when two people got together and decided that they wanted to exchange something of value. and i think those four are -- i would summarize them as number one, security. people are looking for security in a payment system.

we don't want the payments to be robbed. we don't want the money to be siphoned off. number two, we're looking for integrity. and i think integrity is different from security. it's related but it's different. we want to make sure that the value that is received is the value that we sent. we want to make sure that it gets to the person we're intending to make the payment to. and we want to make sure that it's as free from fraud and deception. as it can possibly be. and i would say id theft is particularly an assault on this part of the payment system. it's an assault on the integrity of the payment system. number three, people are looking for efficiency. people are looking for safety. integrity and then efficiency. they want payments fast. and they want the payment system to cost as little as possible. and i would also consider convenience. to be part of the element of the

payment system. many people would say that's why this one didn't catch on. it doesn't meet many of the convenience tests that you get with this one. but convenience is part of, i think, efficiency. and i think that also includes some of the ancillary costs and the efficiency you may say well, it costs almost nothing to send something electronically but i got to buy the electronic device. and that's an ancillary cost and that gets built into the efficiency. and then number four is reliability. if these systems can't continue to perform. can't continue to meet the security and the integrity and efficiency test time after time they won't become part of the system. and so reliability is the ability to meet those tests again and again on a consistent basis. now, none of these qualities are absolute. every payment system today has security integrity, efficiency and reliability problems. and risks and costs associated with them.

but i will say this, that over time our payment systems have been performing better and better in all four categories. digital payments or any other payment mechanism will be judged against those four criteria. how the payment system to propose new mechanism to meet those will judge will it's accepting and succeeds or not. as a basis of discussion now, let me turn to the development of the electronic payments mechanisms. and i would offer just a few observations in connection. observation number one, any new payments mechanism poses questions as well as offering answers. and that is true for the various epayment systems. that's observation number one and we need to keep that in mind. each time i have met with people or presented their new great idea for new payments mechanism, electronic or otherwise, they really focus on what they're offering.

what they may not adequately meet is are they answering the questions that that new system poses. observation number two, what we've been definitely seeing in recent decades -- which i think is new, and i think it's new from what we've seen historically is growth and variety. the fact that i can have all these different things and i use them all today. i use all of these different payments mechanisms. the variety has grown. and i'm not sure that's a bad thing. that is increasing the competition. each new mechanism has to compete against all of that. and everything that people are already using. so this growth and variety is important because it's widening the payments choices that are available to people. and despite the predictions by some advocates of these new mechanisms, no new mechanism, at least in recent years has entirely replaced any other significant payments mechanism that already existed. ...

>> number three, there is very little record of success in predicting at the outset which new payment mechanism will succeed. i sat down with people over 20, 30 some years and heard their wonderful ideas and how successful this new mechanism was going to be. and it never caught on. and many of them are that way. it's hard to predict what is going to succeed. what is going to decide these notes of payment choices that we tabulate and reflected in market result, if we let them. and those choices will likely give us the answer as to what will succeed and what will not. and what is the best answer for what should be in a payment system, including not -- including not only which one particular item, but maybe which selection of items will succeed. what sweep of choices customers like. we need to let the market work its magic. i thought bob made an excellent

point, that check 21 would have been the kind of disaster a lot of people were predicting. we thought they're going to be serious dislocations trying to get people to adjust to this. and maybe because very hard work on a lot of people, but i think also because the legislation was not prescriptive, we were able to make those adjustments. most people didn't notice what was going on. and yet they read all those benefits that if we let someone other than the market decide the winners and losers, we will likely create the condition, bureaucratically, that's something that mechanism will fall short in either the security, the integrity, the efficiency, or the reliability for the payment system. and experience as a guide, many more ideas payment platforms will fail than succeed. now a word about risk. we can't forget that we're also talking about some very risky business.

dynamite was created to replace nitroglycerin, as an explosive. but it can still make a pretty big bang. now, at this mode is appropriate to ask, what's he talking about? just this, banks are robbery targets here because if you can get into the bank, you can get into that mold, it's a lot easier to rob your neighbors that way than to rob each one of their house. what's true about banks and houses is a true about payment systems and banks. if you can break into a payment system, it's a lot easier to rob through the payment system that it is to go and rob several banks individual. because you're into the flow of the cash. and it's because of that, it's a recognition of that, that banks have for years been devoting enormous resources to protect the payment system and to

protect himself for those kinds of risks. recent transit show that organized crime is not unaware of the fact that they have increased their effort to try to break into the payment system. unfortunately, this effort that the banks have put forth to try to protect the payment system has not been reflected in all of the participants in the payment system. many participants or would be participants have been focusing on some of its efficiency, but haven't focused on protecting the integrity of the flow of information and the flow of the fund. and because of that, some very, very major data breaches have been the result and we can go down the list if you want to. nearly every one of those cases, those are people got into the payment system without the adequate protections that were needed to preserve and integrity. any significant participant in the payment system, regardless of how attractive are revolutionary the new platform may be, must have a rigorous program of protecting the integrity of the payment system.

now, how do you do that? again, i think bob was a effective in pointing out that many of the new participants in the payment system are not subject to any significant system of standards. there's nobody looking over their shoulder, or few looking over their shoulder, to make sure they are doing what they need to do, particularly in this integrity space. in our view, in the aba, we believe that perhaps that is the role for the federal reserve. and we think of that for two reasons. number one, the federal reserve is a major participant in the payment system, and so they have a stake, a state that is inherent to what they do, to make sure the payment system works well. and then secondly, they have a national, in fact, not a national, a global perspective on all the different elements of the payment system. so we believe it's not at all inappropriate for the federal reserve to have the responsibility to set the standards and to make sure those

standards are enforced. now, again, an important point and the third to emphasize that, the standards should be careful that they don't inhibit innovation. they should focus on integrity without being prescriptive on what new systems should look like and picking winners or losers. better must mean better and attractive to customers from all. safety, security and integrity, efficiency, which often governmental rules forget, and, of course, reliability. if they do that then we all benefit. we will all benefit because we condemn rely upon all these new innovations actually making things better. increasing competition, forcing cost down, making things easier for customers, we all benefit from that. banks benefit from that, customers benefit come and that is how we can harvest benefits of technology as well as very, very keenly competitive area. and i think that's good for us

all. thank you. [applause] >> just to make one comment, just to pick up on your remarks about the security integrity issue, and bob's comments about the well constructed checkpoint one and a flexibility that that has created. it seems there's a real trade off here. on one hand, allowed the integrity issues are currently not regulated from the two entities. and you're absolutely right, we are all aware from just reading the news, some of the data breaches that have occurred, and those are costs. and those are cost to consumers and costs as a whole. and the flipside being, i guess, if we go forward with a regular framework, legislative framework to create a system to impose security standards on these players, i can't agree to more about the importance of doing it in a way that preserves

innovations that it seems to me that the solutions, the ways to impose security in a manner that doesn't distract or create unnecessary rigidity in the system are going to be new companies, new technologies, new mechanisms and new forms of software. and that's an important part of the payment system as any other. so we want to bring those systems forward in some way, and in my view at least consumer should be demanding the security procedures and protections, as should the merchants themselves who are at risk. and so, it's i think a passing issue and maybe an issue for another aei event, to think about what's the role of government in guiding or creating that opportunity for more integrity or will the market evolve myself without creating those. you guys can comment on that, or

just q&a spent a brief comment. one is, banking is very proud. that's how we've been. but we also recognize we can come up with all the innovation. we have created checks. i think banks were behind the development of general-purpose credit carpet but there are a lot of other new innovations that we didn't do but we benefit from, and we want to encourage that. we want to make sure that you don't open up an avenue, because you can have a real tight security system, but you create an avenue for crooks to get in. they can then get in the back door and actually foil a lot of the best security systems. >> alex, integrity of the data is a critical issue for both existing and new innovative payment systems. and i think it might make sense to take a moment, step back and say okay, where are we and the government regulation of that. the major statute at the federal

level is the gramm-leach bliley act which imposes general requirements for banks. they're implemented in very detailed fashion by the banking regulators through the federal financial institution, examination council which is basically the grouping all of all the regulars and they put out very detailed manuals, and those i think i will start the banking industry. wing indicated, i don't want to say this category, but i'm not aware of any data breach of the magnitude that wayne was described that occurred at a bank. and the banks are subject to this regime, these also is subject to and complies with this regime as well. a lot of the other non-bank players that were talking earlier am a not subject to this regime. some question as to whether they

are subject to the gramm-leach-bliley act et al., to the extent they are, they would be subject to it as implemented by the federal trade commission which is not implemented a detailed regime like the taking registers have for the banking industry. so i think we need to look at this, drill down a bit and look at this question, both for the banking industry which has been the trend once of the world would have been heavily regular. and then these other ventures that may or may not be subject to any regulation where the problems that we've seen have occurred. >> briefly. the federal reserve has always worked closely with banks and consumer agencies and other stakeholders in the payment industry. and has looked towards collaborative efforts to remove barriers to innovation where they have existed. and serve as a catalyst for

discussions of these matters. i think i will stop there. >> we can go to the floor. i would just finish that thought. i spent some time on the hill, and at one point, some of the security issues. you mentioned, bob, nine 9/11 and shut down air traffic control system. but gao did some nice work on the electronic structures, not the consumer side, but the bankside and the federal reserve site. when we didn't see interruptio interruptions. and for all the tear and consequences in new york city, that those wires and those systems were preserved and continued to function. there is a lot of integrity, a lot of places in the system that need to be protected. i want to turn now to the floor, and have a little bit dialogue and open things up for questions. either individual or to the true. don't feel obligated to respond

to every question. but let's start over here. if you could wait for the microphone and identifiers of. >> tom brown. thank you for putting on a wonderful conference. i have a question picking up on a thread that you introduced, bob. i do a fair amount of work with payment companies, some in a non-banking. and as you and i have discussed in other contexts, the pulsing blueprint identifies this sort of loophole in the regulatory structure for the payment businesses of the night stays between the bank provided and non-bank providers. it seemed to me that thread has been lost although the end the discussion about financial services mega- tort reform as we've been distracted by sort of discussions about other issues that i in trees if you've seen anything in any of the conversations that are going on at the moment that will address this oddity of telling non-bank to go get 48 state licenses to operate what is often an international are certainly national business. >> i guess that's for me.

yes and no, tom. the cfpa that you mentioned does have within its scope potentially, we don't know of is how the ultimate legislation will be drafted. but potentially does have within its scope jurisdiction over the types of entities we have been discussing. i don't think in the context the other half of your question, the context of preemption there has been any discussion of replacing the current state system with a federal system. i think if anything it would be additive and it would be some type of a federal overlay on top of the current state system of regular in the state money transmitters. >> right here in the middle. >> thank you. dave mills from the federal reserve board. i want to talk a little bit about the security and integrity.

i might repackage it as a trust. and so there are a number of ways one could get trust in an issue of a payment instrument. certainly instead passionate a set of standards may help protect that, consumer protection laws may help facilitate that. but also reputatioreputations can't facilitate back it's hard to envision for several some start without some kind of established reputation being able to enter the payments instrument space, and just step in and be able to sort of loosely just provide services without enough security, or integrity. i think, because the you need to establish trust to get consumers to carry, at least at a wide and broad scale. the other thing is oregon, all right, once you established something in the payment space, the trust still maintains, still very important in the sense that, okay, security and changes and threats to security are an

evolving and dynamic process. sort of the old cops and robbers story. so you may secure one end of a payment security type of risk and new ones begin. and the importance of establishing that trust is an ongoing battle. and i think one of the things that in important to think about him as issues, are the incentives aligned properly to sort of maintain that level of trust. it's sort of a comment i have. >> well, i agree with that. i think confidence and trust is what underlies all this. that supposedly in what causes you or me to take several thousand dollars and give it to somebody we don't know, and assume they will then transfer to somebody we want to. and i wish the point was correct that people wouldn't do that. unless an already established confidence to people. and i think maybe to some degree they do, but people will transfer trust. trust in one area, they may think transfer to something else. so i think that's a we've seen

in the retail space. i have a lot trust and confidence in this retailer because i like what i buy there. and offered to take my money and transfer it into the payment system. i really have no idea what kind of systems they've got for a payment system and what it turns out is that many of those retailers that have earned your trust as a retailer, did not deserve your trust as a participant in the payment system. and that's why i think you need something like the federal reserve to set its a set of national standards that if you're going to get access to the payment system on your own, you got to meet a minimum. i think the reason why you need to do that rather than let you build up the trust is this again, as if someone can break into that system, they can potentially have access to a lot of other participants that has been the treasury to develop the security systems, but knocking backdoor by so many who didn't do that. >> i would just add that in our expense in the u.s., i think

successful payment systems so far have typically found themselves partnering with the banking system, or with a recognizable brand, payment network. and that's what's worked so far in this era of facebook and twitter. people are willing to share lots of information but i think they're probably still quite conservative with their payment information, and i don't know if there will be, again, it's a question of if a new brand can enter the market and how that would happen is an interesting one, and worthy of continued discussion. >> i assume this was a new survey recently conducted that's not get published, is that right? is it a try and you'll -- >> that is forthcoming. we have a server in the field right now spirit that you find the pitch at the.

>> and we expect preliminary results from our study by the end of the year. and we look for to sharing that with the public. maybe we will see how trends are changing. spent we have time i think for one last question. the gym and on the end here. >> thank you. my name is louis. for the question i want to address to both of you, is somehow, i feel it needed to address. don't you think that there are some special people we are not aware of, doing things against the you as as part of this ongoing work against the u.s.? you can -- i can sit this digital money can disappear. i can see this financial crisis.

don't you think this question need to be looked at more closely? thank you. >> well, i'll make one comment on that. it is a very difficult to control something that's as competitive as the payment system is. the payment system is so incredibly competitive, fiercely competitive, that no one particular party could control all aspects of it. are the people that are trying to break into it? are the people are trying to defraud others and pretend to be folks that they are to? they absolutely are. we've seen the growth of identity theft over the sense of about late 1990s, read something in the neighborhood of millions of people a year who are somehow in one way or another able to pretend to be somebody who they are not. but i would say if anybody being a mastermind controlling all of that, i think is probably pretty difficult to do because it's incredibly competitive system.

>> and we have time for one last question. all the way in the back. >> on the slide, have a uniform law commissioners alternatives to the transmitters? was the potential for their being hated states, either for money south dakota, delaware type things, such as your states, or sort of something like that kind of haven state for money transmitters to locate? >> that's a great question. some number of years ago, the federal congress adopted a statute to encourage the states to become more uniform in the regulation of money transmitte transmitters. up to that point in time it was really all over the map. there was an effort as a result

of that federal statute to develop a uniformed money transkei, money transmitter law. and many states have adopted that law with some an animal state variation, but not all states. so there is some uniformity state to state, but it is not uniform and there are a couple of states still that don't have a statute. now, to the other piece of the question though is that virtually every state takes the view that if you are providing what i as a state view to be a licensed money transmitter service to residents of my state, regardless of whether or not you're actually located in my state you've got to come in and be licensed and be subject to my state. so it would be very -- and there's no sort of exportation like with interest rates and the states that are favorable to interest rates that you referred

to. so it would be very difficult for an entity engaged in a licensed money transmitter business to certain nostalgia in a state with light or no money transmissions, but then it could only offer its services in that state. want to win out and offered services to residents to, say, residents just in new york, new york would take a position have to come in and be licensed and be subject to our state. the answer is an excellent question, yes and no. [inaudible] >> extraterritorial, glad you followed up. very good question. it's a jurisdictional issue, while the state make it give you that a foreign company located a broad providing money transmission services to residents of that state is subject to that states regime.

the state may will not be able to assert any jurisdiction over that company, particularly if the company is located in the country that doesn't have reciprocity arrangements with the united states. so that would definitely be a potential loophole to the existing regulatory structure in terms of a foreign company through the internet, for example, offering services to u.s. residents in the united states. >> your question raises one of what we see one of the cardinal virtues, the american financial system, and that's illegal the dual banking system. with national banks that have national rules that we have state banks that have state rules that one of the most successful payment mechanisms and deny state came about because of that dual banking system to try to the civil war, every bank issued its own currency and to secretary of the trace of that's crazy. we want to have a national currency. so we invented the national currency. but all the state banks out of

business. but state banks independent checks. and when state banks start issuing checks we had a brand-new very successful and attractive payment mechanism. the bottom line of that is we need to have some basic national standards but don't eliminate the opportunity for experimentation and innovation through various different states in other jurisdictions that because i think we'll find some of the better future innovations will be established in one of those jurisdictions, and then become widely popular. >> fantastic that innovation is good important. a couple of things are really important here at aei and one of those is ending on time. so we have got about a minute left and i am going to wrap a. i want to thank and but on the for coming here. and thank josh for his remarks as a keynoter, and thank ago here in the audience as well. [applause]

>> [inaudible conversations] [inaudible conversations] [inaudible conversations] >> the u.s. house is in recess at this hour. earlier, they took up three bills. any requested votes will happen at 6:00 this evening. the procedural vote on whether

to move the financial reform bill is scheduled for 5:00 eastern. watch that live on our companionate channel, c-span2. what role did investment banks and goldman sachs in particular have in the recent financial crisis? a senate sub-committee looked into that tomorrow with officials from goldman sachs, including the chairman and ceo tabloid blank find -- lloyd blankfein. taking a look at the stimulus program, $378.5 billion has been committed. $218 has been -- $218 billion

has been paid out so far. >> tonight, we will talk about what the contest decision means for net neutrality. that is tonight on "the communicators." >> author and politician pat buchanan will take your calls and e-mails sunday, live at noon eastern on c-span2. >> arizona recently passed the strictest immigration law in the nation. next, a debate on the merits of the law. this is from today's "washington journal." daniel stein, federation for

american immigration reform. thank you for being with us. frank sharry, founder and executive director of american boys. news this past week -- american voice. news this past week and immigration. let us look at an article from "usa today." opponents from nationals of rights activists to phoenix mayor vowed to take their fight to the court as soon as this week. looking back at the law that would take effect 90 days after the state legislature adjourns, requiring local law enforcement officials to determine immigration status of a person during any legitimate contacts made by an official or agency of the state if a reasonable suspicion exists. if the person is an alien who is on lawfully present in the united states. let us go to mr. daniel stein. guest: i think it is an excellent law. i want to commend senator

russell pearce for acting on a lawn not just needed a highlights a growing divide the country. a highlight in "usa today" says the law creates a race. adds of the rift is being carried by the fact that we have a failure in leadership of washington to recognize that the american people want the immigration laws enforced, they want to see a smooth, unified and forced the system between the federal government and the state and local governments. the arizona legislature is operating fully within its constitutional authority to enact laws that are entirely consistent with federal immigration enforcement scheme is, and yet what you have is this anniversary action of the president and administration sang -- american people want to see their laws and force are somehow not entitled to see it done. the growing clarity on this issue has been defined by a series of strategic interests that believe that the essentials have a right to demand a mass amnesty with no real

accountability for future enforcement or reform of the overall system. that is the proposal the president is pushing. aversive, the general public at a time of high employment, major job losses, structural changes in the american economy, many hard-working americans looking for work saying -- why isn't the federal government getting serious about enforcing the law? this is a rational response. what we are like -- would like to see. we are calling for the federal government to come in and ends -- assist arizona and other states, help them enforce the laws. it's co-founder of america's voice, give us your take. guest: a very important debate on how to eliminate illegal immigration. we don't think a patchwork of radical laws of at the state level should do it. we think congress should work with the president to pass comprehensive immigration reform, secures the border, cracks down on illegal hiring and make sure people are here legally. the arizona law, i am afraid, is

abruptly written it literally declared open season on 30% of the state which is hispanic. they say it you are suspect, the police have to ask your papers. who is suspect and who is illegal and not? we know when there is a disturbance at a soccer field, who will be asked for papers, most likely hispanic americans. many are here legally. so i think what arizona has done is institutionalize racial discrimination and racial profiling in a way contrary to basic american values of fairness, rather than pressing congress and the administration to step up and pass immigration reform that end illegal immigration. host: protesters turned out sunday at the arizona capitol assailing the measure. the mayor of phoenix and also a congressman, democrat from arizona. they called it racist and unjust. they are concerned, as mentioned, how they would take

effect. play out a scenario of concerns. guest: let us say there is a park with a soccer field. maybe 500 people doing very sector it is and a fight breaks out and the police show up and they, they the people that are involved. what do the police do? i have tremendous sympathy for police in this situation. one of the reasons there ever is on a police jeep opposes this bill is that they say it will -- police chief opposes the bill is that it will compromise with is critical to fighting crime. they will begin to ask questions. some people will run away because they don't have papers. other people to stay -- do all it ask for papers? as arizona become the kind of state where every interaction with police become commercially your papers, or just some big book asked. that is what the law does. it creates this awful situation whereby the way you look you can be asked for papers. brian bilbray, a supporter of

dan's group, they would be able to tell by the shoes they wear. that is how ridiculous it has become. the governor asks to how you could tell -- and she says, i don't know but the police will write a description and we will follow it. it is open season. host: daniel stein, why are you not concerned about civil rights? guest: they are as concerned as any other -- host: why don't you think this will be a civil rights -- guest: engaging in hypothetical on how a law might be enforced is extremely speculative. i think the law was carefully crafted to ensure the civil rights of all in arizona is respected. at some point, however, the constitutional norms need to prevail again that allows local police on reasonable suspicion to verify the person's right to be in the country and to have the services of the federal government to make the determination. americans ask, why is illegal immigration out of control? if you look at the arizona situation and you get on line

and read the law and take a look of the language, what you see is this sets up a very careful framework to try to bring about rationality on how we actually enforce these laws. naturally you want to monitor -- monitor the law carefully for civil-rights violations. at the same time we feel comfortable that the compass of the law as well as state authority -- and it will be administered properly and effectively. there is a climate of fear and arizona but the fear is that as a result of drug cartel, gang violence, mob violence, if you will, orchestrated. this is a very serious national security issues and to continue to talk at the federal level about an amnesty program, encouraging people the belief that we will not enforce these laws, we cannot expect it to work. we cannot expect it to work if we will growl off an entire agency in dhs, isolated from state and local police departments. no other area of federal law is so isolated in its enforcement

components as immigration law? the arizona law deals with another -- a number of other areas as well. but it empowers the police to be part of a team with the federal government. many police departments are recognizing the need to maintain trusting community relations, but they understand it is quixotic to try to contain crime if you cannot contain illegal immigration. all, but there is a wing and the democratic party that seems to believe that the civic fabric can be maintained when one population in the united states is essentially saying we do not have to obey the law -- we don't have to respect u.s. law, we don't have to play by the rules and we will be sent to get ahead of the game and get amnesty. people are saying, this is not what the american assimilation ethic is about, not what immigration is all about and it is causing a rift and our policy. the polarization and partisanship in this debate are deeply troubling right now. i did not believe i have seen in the history of this country america's immigration policy

debate become so polarizing and politicized as it is now in this congress. can that thing we are going down the wrong road. we are not dealing from a consensus basis. we have no commission to come up with a large view of the national interest. it is nothing more than a special interest political power grab and the reason why people are being -- being frustrated. host: and the scenario about the soccer match, and there is a disturbance and his organization is concerned that perhaps hispanics would be targeted by law enforcement officials and ask for their papers. why are you not concerned about that scenario? guest: welcome i think it is important not to engage in hypothetical. police departments are going to be looking to enforce over all laws in arizona, criminal laws, and what have you. to engage in this kind of speculation on how they will enforce the law -- clearly, if they in the course of a regular unlawful police conduct aside a one to ask for identification -- which they usually do -- and then have a basis saying we

would like to see if you have off of a nation to be in this country. fair has been arguing for years that we need a single document to verify citizenship or alien status. we have been pushing it for 30 years. why we don't have it now? special interest lobby prevented it from happening. .

that is not a practical assessment. guest: i am looking at some areas where comfortable have to do with on the beat every day. but under the law, they are required to ask who is suspect. if they do not, they will be subject to a lawsuit. let us take a look at what "u.s. today says. the new la of course, there are r

opinions. walter, daytona beach, florida. democrat line. caller: when i travelled extensively through central and south america, i am often asked for my papers because i look different. i do not mind showing my papers to the door is, because i am aghast, so i do not know but the big deal is here. as well, there is a war going on in mexico. since 2006 there have been an average of 5000 killings a year because of the drug war, but nobody is talking about that.

nobody is mentioning this. janet napolitano says, no big deal, everything is fine. what is wrong with you people? host: let us get a response to the phone call. questions about how this measure could help with drug issues, border violence. guest: first of all, there are lots of laws against drug smuggling, kidnapping, going after drug cartels. when police say these things undermine their ability, it speaks volumes. border violence is incredibly important, but that is a cross-

border issue. the idea of open borders -- we have had defacto open borders for way too long in the u.s.. nothing that we have done has worked. why? the real key to stopping immigration is to turn off the jobs. you do not do not at the border with a wall that you can scale over. you do that at the point of higher where you have an employment verification process. but you have to couple that with a process by which workers pay their taxes, learn english, and get back to the citizenship line. that will eliminate illegal immigration and do a much better job than we are doing currently.

host: what about the idea of the enforcement being done at the job site? guest: we go back and forth on this issue. we have been working on this for very long. coupling employer sanctions here is not acceptable. we tried that in 1986. we are not trying that again we will not be giving illusory enforcement. this administration has made promises about border security, they have not met them. napolitano has not finished the border fence and that congress demanded be built. john mccain said in a obama does not like the arizona law, they can send troops down to the border. pretty much, they are saying, put up or shut up.

essentially, what we have been listening to from frank's side of it is fine if we do immigration law, as long as no one is deported. you undermine completely moral authority to make the argument that there is a good faith basis for believing any consensus compromise your side of the aisle is pushing would ever fulfill the commitment. the reason why we month not see in bill is because democratic leadership does not have a convincing, credible enforcement strategy in place. host: joe, independent caller,

lubbock, texas. caller: we are experiencing a building boom because of the cheap labor. they are seeking a better life. red than criminalizing the immigrants, how about the employers who are attracting them? employers who hire illegals are unpatriotic and should be jailed. i will take my answer off the line. guest: amen, and that is what drives illegal immigration. that at all employers are looking to hire these people without paying taxes or benefits. that is at the heart of illegal immigration. so what do we do about it?

in addition to the measures being taken at the border, we need aggressive enforcement at the worksite. we have to have an aggressive enforcement of labor laws, so that the same people and violating these calls, we need to go after them as well. we can lower the playing field, but you cannot do that only with the employer enforcement. you also have to make sure the 11 million people here become legal. dan favors making everyone so miserable that they eventually leave the country. we do not think that is realistic and politicians who favor that are not being realistic with the american people.

we know we've had a should be able to seek citizenship after they learn english, get to the back of the citizenship line. in the future, people will not come if they know that the job to magnify and not let the markoff books. guest: your point is well taken, but there are states that are working to beef up sanctions against day labor employers. working aggressively to crack down on employers because the obama administration is doing more paperwork audits of employers but they're not actually increasing the fines or upper hand in the workers themselves. frank and objects to what the obama administration is doing, which is firing individuals from worksites, but they are not taking them into custody. so the policy does not make

sense because, at root, we are not going to solve the problem it be the party uses this situation for political gain. republicans believe that cheap later contribute to corporate contributions. this thing is coming to a head in the country. unless we start dealing with this, and will simply explode. host: this is from "the washington post" -- joe, republican caller. south carolina. caller: i know that the

republican support big business, want cheap labor, and democrats want more hispanic votes to overcome the moderate, center-right of voting blocvoti. this fellow on the right, frank sharry, he does not do anything. if you mention any ballot proposal, he would just knock it down, and anything defending our border, he is not for it. canada defends their border so aggressively, mexico called them racist or something.

guest: we strongly support professional accountable border patrol. we think it is essential as an exercise of national sovereignty and to protect the american people. we support aggressive work site in foresman, going after employers who deliberately seek out illegal to get an unfair advantage in the labor market. we also support the idea of making sure that the 11 million people who are here illegally -- this is the dividing point in the debate. his organization wants to drive the 11 million people out of the country. we do not think that is realistic. we think they need to get into the system. as a result of turning up the drums amendment, we will change the immigration system into an orderly system.

when you say that we are not for real control, i would argue that those of us who support comprehensive immigration reform are more interested in eliminating illegal immigration more than the people who think that driving a 11 million people out of the country will solve the problem. these people have been here for 10 years. you may not like it, but it is something that we have to deal with. that is why most americans are interested in a common-sense approach, rather than town names, come on, let us get serious. host: let us take a look at arizona gov. jan brewer and the signing last week >.