specter for being here and his lovely wife, joan. the issue that pennsylvaniaanings, as i go throughout this great keystone state, most want to focus on is regaining trust in their politicians down in washington, d.c. they know it's broken. they know that career politicians will do anything in order to keep their jobs. they'll switch the party from being a republican because they cannot beat the republican opponent and the next day after a poll's taken, they become a democrat. .

when he challenges me on my record, i have been a democrat.

if franklin roosevelt was a democrat. john kennedy was a democrat. they told me i could not. when the congressman talks about senator jefferson, $200 billion was passed up for education. ahoy when we talk about the parties, i supported the stimulus package. -- when we talk about the parties, i supported the stimulus package. i was willing to take a key role to have the stimulus package. i provided the 60th vote.

that is why president obama came to philadelphia. that is why the president has supported me. i was for the people. price that is your time. you have 90 seconds >> i have served this nation. when i came back from the afghanistan war, i was assigned. the chief of naval operations said i was courageous. he put me on the cross hairs during an -- the cross hairs. they do not say anything about

me. down there in washington, you see too many career politicians. let's talk about things. the veterans committee and the senate, he actually permitted 1 million veterans to be kicked out. he voted against posttraumatic stress disorder, increasing funding for vets who came home from iraq, a war he voted for. i went to congress and got some effect in, -- got them back in, and we increase post-traumatic stress disorder for $10 billion. people do not do smear tactics to win an election. >> that is your time.

the question goes first to congressman sector. this has to do with the circumstances in which you left the navy. he says, in exchange for you supporting the court nominees. congressman, were you reassigned or dismissed all for creating a command? >> absolutely not. they said i had been a patron in trying to stand up and change things. what this means is the cement -- the senator has been there 30 years. he has nothing to do with

working families of pennsylvania. more than that, i have run on our record where we have put money into office of. three j into autism. -- into autism. we have actually had a bill that will help our seniors. arlen specter has reverted to his old republic in fact, say anything and divert attention. negative attacks have not created one job eureka i am going to go to -- created one job. i am going to go to washington and stand up against those who actually believe negative politics is what you have to do to win an election.

>> was there a deal or no? >> there never was a deal. i would not submit my votes. i have never used a litmus test. i have voted for nominees against merrill vs. wade -- rove vs. wade, nothing at all of that charge. when the congressman says the record is public, he knows better than that. he has been asked to authorize the records. the admiral says this business about people disagreeing with his policies is not true.

also, the words of the admiral. fear and intimidation. did it is not my word. -- it is not my word. he was relieved of duty which because of the climate. when he was asked to authorize the release of his merchants, why don't you do it? >> you have 90 seconds. >> on the record, rick said in order to get his endorsement, you agreed hot to whomever when george bush nominated -- agreed to whomever george bush nominated to the supreme court. they had anonymous sources -- something they did for john kerry.

we have to change this. washington is not about whatever you can say falsely about someone else. i loved the navy, and i'll love standing up to change the navy. that is effective what i am going to do in washington, tried to change career politicians hodean that will actually try to change the job, not by switching of party, but after voting. the supreme court, the most conservative justice clarence thomas, has unfairly taken on the anita hill, and then giving two votes to rick santoorn. we have to have a change in washington.

we actually have to have someone who believes and will stand up. >> he was in front of the republican crowd trying to explain why he had supported me. he is given three different stories on the matter. when congressman studentcam talks about -- sestak talks about the supreme court justices, one would have changed roe vs. wade. when the supreme court nominations come up, i think that is something i have offered people, but the turns of

activities i undertake, the congressman would be in position to do that. when he brings up my of war in iraq, it was him that ran for office in 2006 and said he thought we ought to withdraw from iraq in 2007, but when the vote came up, he joined for voting for $100 million without any withdrawal, but fair in mind, but how about it? will you really suck? >> -- will you keep that in mind? >> described an error in judgment, a mistake you made, and what you learn from it that has better prepared you.

>> i believed it was a mistake to listen to what they say, even though it was under oath. he promised he would not join the system. he went to voting 100 years of precedent to allow corporate entities to engage in political activity. he said he would be deferential to congressional fact-finding, the factual basis is when the

voting rights came up he did a 180 degree turn. in his early days when he was in the department of justice account what house counsel with an ideological warfare. the supreme court has become an ideological battle, and i think i should have paid more attention. i did not know the battle ground would be if in both periods -- in vogue. >> you learn from it, and it will make you better. >> hi joined after the vietnam war. how remember going and thinking i knew the answers. for the first six months, i do not think i listened to the

chief. those old guys who put their arms around an officer and said, let me teach you the ropes. after six months, they gave me a father-son talk. i think you kind of understand of even better. i will carry that into the senate. i will never forget. those people are relieved engine, so when arlen specter voted to deregulate wall street, to let goldman sacks gamble with the savings of working people, i am informed, because we should never have a senator who voted for a corporation that invested in a

foreign factory to get a tax credit. we should have given tax credits of two small businesses. my proposal is for a 15% tax cut. >> that is your time. hopper -- that was your question, but when he talks about law, and you signed a law that said that was not responsible. he was one of eight democratic senators out of 300. he was one of faith democratic members of the house -- one of

the eighth democratic members of the house on this issue of the wall street, they are having a hearing next zero tuesday to move to penalties of fraud that goldman fax is alleged to have committed. when you have a fine, it is just factored into the cost of doing business, and my experience in philadelphia, the way to deal with wall street is by jail sentences, because that would mean adequate punishment, and that would serve as a deterrent to others. >> congressmen, 90 seconds. >> for 80 years and even previous to that, there has been of believe that arlen specter of

the events, when you could have trickle-down economics, where if you they regulated wall street answer -- de regulated wall street, the guelph would co trickle-down theory but when you voted for the bush -- that wealth would trickle down. when you voted for the bush tax cuts, the majority went to the top 1% of americans. thought there was the belief that ahead of wealth would trickle down. he was the only one that had a bill that means the multi- millionaires will get a $200,000 tax cut, and for the rest of us, we will have to have a tax

increase to pay for that. my proposal is change focused on working families, to small businesses -- the small business administration. >> that is your time. we are going to move to a question on domestic policy. one under 86 pennsylvania mayor's urging congress to close the region 186 pennsylvania mayer's urging congress to close the law that allows funds without background checks. you agreed to? >> you can go out and get a gun without anyone seeing you as a law-abiding citizen. i also support the assault

weapon fans. i believe -- ban. i believe our cities have to be saved. why should our citizens go against the same armament our soldiers face in baghdad. h'the deaths of our officers changed from 16% murders i believe every citizen has a right to have a gun, but they do not throw away records every 24 hours. those who want to do recreation can actually. i know arlen specter has 100% support from the nra hamas, but

i believe we have to have somebody in washington d.c.-in of four families, and the violence has to seize. -- to cease. >> where are you on closing the loophole, and why doesn't >> when the congressman talks about zero hundred% voting record, he is not correct about the facts i believe the way to deal with the problems with guns is with tough sentences for tough criminals, and that is why i proceeded in passing a bill. when i was district attorney in philadelphia, there were sentences extended by the philadelphia judges.

when i got to washington, i wanted to bring the federal government into the picture. but they would be taken into the federal court and have a mandatory sentence of 15 years to life, and that is why i have supported strong law enforcement officials to the united states attorneys around pennsylvania. holloway to deal effectively with crime -- the way to deal effectively with kravis to deal with career criminals -- effectively with crime is to deal with career criminals. >> violence is an issue it is not just these loopholes that had existed for far too long

because people in washington did not have the courage to stand up and do what is right. of 1.5 women out of five on campus will have great offensive against them. my opponent actually voted against whole resolution to end the violence that happened at columbine. hong huff's also have an immense -- i also have an amendment to know a child behind where it examines the type of violence in our schools. it is dismissed the head of school violence initiative. it is also firework hard farm region why i work hard on the elderly abuse act. -- that is why i work hard on the elderly abuse at.

one senior with alzheimer's -- it is also what we can do for children as they are growing up so they do not fallen to a violent pattern. at the rebuttal comment. >> he talks about a resolution. i introduced a bill hall said had -- a bill to a few years ago. they introduced legislation to require -- to inquire about colleges and what they were doing on campus. it has been of to the department of education. it has not been effectively

enforced. i have pushed on the appropriations committee to enforce that law. somebody who is now considering a college campus in america, the college campus have an obligation to tell them exactly what will happen. for the answer to the question you posed and the question i posed, he talks about its being on the record this business of him being relieved of command, but we still have to have thought quiescence to take the first step. >> we are going to move on. we have a foreign policy question.

senator, you opposed true expansion into afghanistan last september. do you stand by the opposition, and wives? >> i am opposed to increasing the troops in afghanistan, because the out-can organize in yemen. why try in afghanistan, where no one has been successful? we have to do what it takes to defeat al qaeda, but to have a loss of limbs and lives so expensive. i issued. i made the trip to afghanistan and talked to karzai. karzai is not a reliable ally. he does not have the confidence

of the people of afghanistan, and he ought not to be bolstered. we ought to be working survey -- so they would not have troops on the ground. i urge the prime minister of india is to relieve pakistan of the troops, and now we find pakistan is trying a more aggressive approach. >> congressman, your support of more troops in afghanistan, was have the right decision and why? >> it was a very difficult decision. i supported it because of the safe haven several hundred al

qaeda leaders had. as we partner with them to exterminate that out kited safe haven, this cannot -- the al qaeda safe haven, this cannot continue. we need benchmarks by which we measure our success and failure, and if the success is successful, we exit. if our failures are too much, we exit to an alternative strategy. as the chairman of the joint chiefs of staff said, after we went into iraq, haas said such a tragedy i opposed and arlen specter supported with no davis ever to get out, who have afghanistan region with no dates to get out, to have afghanistan

stumble, and then in those jobs i did track terrorists in somalia and elsewhere and actually targeted them. it is a global warfare if it is not successful against a tide, we must expend. >> senator? >> he stated when he ran for congress in 2006 but there ought to be a withdrawal in iraq, and then he voted for $100 million, so he has not responded to that. when he talks about a safe haven in pakistan that all of canada has, he is making my point of. -- the outcry has, he is making my point. my point is we ought to be

making our stand in pakistan, and we ought to get their army to do that. in 1995, i visited the prime minister in india, and i said i would like to be the subcontinent nuclear-free, and then i talked with benazir bhutto, then to present of pakistan and recommended to clinton that they try to work out a rapprochement. as i said earlier, i urged the prime minister of india to try to hockey's that attention, and i think that has been done to some extent. when he talks about a safe haven in pakistan, and let's remove the safe haven and guess them to do it. >> 11 my point. i was on the ground in

afghanistan and watched as the taliban and afghanistan -- and outside of flowed into pakistan. we cannot put our forces there, and that is why there is a partnership to seal the border so they cannot fully repaid -- cannot flee. i did put a bill in that said and within one year our commitment in iraq. because of military experience, i knew it would take that long to redeploy, so when of the came out that said we would be out in four months, there's no way i would ever engaged our troops with my military knowledge, and that is what i want to bring to the senate. i learned serving with president clinton as director of defense the many limits of military power.

because we diverted our forces, we would have been out of that conflict are now if someone else had not been supporting dick cheney and george bush in such a tragic situation. and probably the most defining vote in our national security. >> that is your time. we are going to move on. i am going to ask you both about something you have recently been quoted on. "the most undemocratic placed there is hot ans," so the questn is, is a party of no consequence? >> sometimes party asked her to much.

-- sometimes the party asked to much. and the establishment of us need to sit down, but i honestly believe but ultimately it is about how democratic principle. i understand he could not win in a primary. he is the junior senator from pennsylvania. the democratic caucus denied him his seniority. this there are no entitlements in washington. accountability and transparency with the people. honthey want to believe again.

career politicians have been there for a generation and are used to making ideal to keep their job. listening to special interest has done them no good. we have created zero jobs during the bush administration. there have to be somebody that wants to change washington, that focuses on the working family of. aho>> you are quoted recently as saying, i probably should not say this but i thought i might have helped the country more if i had stayed in a republican. >> party is consequence. the statement was based on the respective ability to get more republicans to support health care legislation. i was able to persuade a couple of my colleagues on the other side of the aisle to support the stimulus package, aho but when i

found irreconcilable differences, i returned to the party of my roots. when the congressmen condemns the democrats, this is not a decision made by some faceless caucus. this is the president of the united states. when he talks about the county's, i went to the county's and told them about my roots, and i got to 70% of the democrats there. we talked about the state committee endorsement. now the seat of the house of representatives is at risk. it also puts at risk the same

thing pennsylvania has, so this man has done a great disservice to the democratic party that got him of elected in 2006 periods >> 90 seconds for rebuttal. >> two years in the senate, reelected against the wishes of the party. i want to be president obama's strongest ally, not a yes man, but i want to be somebody in this senate who actually stand up when the going is tough. imagine if our senator had opposed george bush's policies, we would not have needed an economic stimulus. then just before they voted for the economic stimulus bill, he pulled out $100 billion.

unhook 900,000 americans to not have a job today because reading 900,000 americans do not have a job today because of that. the2000 votes for george bush, e finding vote soon if -- defining ifvot vtes. voting against schip. when working families need is somebody willing to lose their job, knowing what is right. there is no record as of the republican record. teham>> how he can claim about y vote on stimulus, we would not

have had $16 billion to pennsylvania. it is paying for unemployment, medicare. in the balance of this time, we will be telling you about a conversation i had. barack had his office down the corridor. he said, you and i both have kansas connections. my mother lived in a small town east of wichita. we were born and raised in wichita. if a jewish kid from kansas, how can a black kid from kansas go to pennsylvania? onow he is president of the united states.

i do not mean to suggest there's a connection between the advice i gave him and that he is president, but that is a true story. it is that relationship that led him to call me, and i did not talk to him -- call me and said, i am glad you did >> i am going to try to help out by asking you both this. on issues that traditionally are important to democratic primary voters o, is there any real difference between the two of you? >> yes, there is. there is a great deal of difference. if you take health care to, when i served as chairman, i took the

lead to increased funding to $30 billion. that medical research has made enormous strides for cancer, heart disease, autism, of parkinson's. when it comes to the issue of a woman's right to choose, thin i have been in the forefront of that movement for efforts to deal with issues informing people, saying it is up to the family. when it comes to labor issues, he quotes the percentages he has

hired an eye on labor, ha -- than i on labour, but it was the actions i took the lead to worker safety. because of my experience and seniority, i have been able to accomplish that. >> on basic issues important to the democratic primary voters, any difference? >> the major difference is, i asked out of core beliefs. lynn -- i act out of core beliefs. they said security was needed, but it was not. howe keep our office opened sevn days a week.

we have handled four times constituencies of the average office. we have had to korean -- we have had to. the difference is, i served in the united states navy for 30 years. we serve in washington, advancing not a republican -- you've served in washington, advancing the republican agenda. he stopped the clinton health- care plan dead in its tracks, and i do appreciate what you have done for nih, but on the key defining issues of families, and they need someone in it because they stayed, this is what i am doing for working families, and it will not be there before the election but

after. >> it is interesting that he says he is a democrat, but if you the check the record, he was registered independent until the spring of 2006 when he decided to run for congress. the record also says he did not vote have the time, so he is hardly in a position, but when the issue comes up, this is one of many he has made without any factual basis at all. i became chairman in 1996. it was increased to $41 billion. if you take notes out of

program in which the congressman came to me. i've provided $100 million a year to take eighth graders and move them to the college. my colleague did a tremendous amount to increase education funding. when you talk about a labor issue, -- >> that is your turn. and 90-second rebuttal korean -- rebuttal. >> i believe the military should be non-political. the senators submitted a bill last year to try to correct the abuse ho.

the record is important. we have had half the job growth of the national average. rainier in philadelphia, of -- right here in philadelphia, we have lost 100,000 jobs. that is why i want to focus on small businesses that create 80% of all jobs. not in my district, we have already increased federal contracts -- in my district we have already increased federal contracts to small businesses. 110 businesses are submitting $1 million each for business contracts. i want to bring the same approach.

hamza 44 toulon, washington has favored wall street. if you want -- for far too long, washington has favored wall street. >> we are quickly winding down to closing statements. i want to ask one more question, but we do not have time for rebuttal. i am going to give you two minutes to answer. i am trying to give voters a sense of who you are, so i would like you, without invoking the name of a family member or a relative, tell me who in your life past or present to you admire to try to emulate and why? >> thank you very much. i very much has been mired know, john f. kennedy, but if i had to i very much admired john f. kennedy, but-miers sam, region i

-- i admire sam, who was willing to work hard for the issues he believed in. although he focused primarily on national-security issues, i was breathtaking by how he always did the right isaying. -- thing. we have lacked the kind of leadership if. from immigration to climate change, to where we see challenges and actually address them. i saw that with some wonderful

leaders. i saw it with my father. he was just laid to rest in arlington, but i honestly believe that type of approach has to be regained in washington. for far too long -- i have only been in it three years -- yes, i am running in a democratic establishment i do admire, but we are not bidenites. are democrats that believe in the principle that you stand up for the working families. >> two minutes. >> franklin delano roosevelt. roosevelt was hot hero of the household. both of my -- roosevelt was the hero of the house will.

both of my parents were immigrants. that was what was in my mind when i voted for the stimulus package to avoid another 1929 depression. he took his son very much as i could on the tea party game. -- he took is on very much as i took on the tea party. i was met with 1000 people engineered by the tea party. i think it's going to require sun how to beat the former congressman. -- someone to beat the former congressman. the very overarching issue in how you select a nominee is he

has of a lot of money. where was hot coffee in august region where was he in august -- where was he in august? i was out there battling. the republicans are out to scuttle president obama. he needs to receive from democratic hands. that is arlen specter. >> we have time for closing statements, beginning with senator specter. >> i ask for your vote on primary election day, based on what i half-dozen -- what i have

done. i have talked about my role in getting stimulus fast and health care passed. i can bring jobs to pennsylvania and more money for medical research. i know this state like the back of my hand. why have been endorsed not only by the democratic party, but by president obama, vice president biden who knows it very well, governor rendell of, "the pittsburgh post-gazette." there is one of their endorsement i am asking for. the endorsement that is most important to me, and that is your vote. support me, and to not forgive

the challenge to release your navy records. >> i want to thank the congressman, but it is time for a change. i listened. you can see in every poll that if we democrats, his real electability is less than 30%. what the people want is no longer a politician who will say anything. if they have issues that want to be addressed. they want more than anything hot head -- i was told to be accountable. they went down there to help change washington ho.

for far too long, people are actually hurt the integrity of the system, where people longer actually trusted. i was honored to be your public servant, and i value your opinion. >> that is our debate for this evening. i would like to thank of both candidates. thank you to the viewers for watching, and let me remind you there is an election on may 18, the democratic primary. if you're a democrat, get out there and vote. no matter what you are, pay attention. thank you all for watching. good night. >> thank you for watching the 2010 pennsylvania democratic debate. we wish to thank fox philadelphia for hosting the the

danger. if you have any questions, please contact honda the campaign -- contact the campaign offices. for joe sestak, please call suspecsestak for senate or logoo this website. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> next, a discussion on the future of american jobs. after that, author ahmed rashid, and your calls and comments on "washington journal cronin --

washington journal." live coverage of the kickoff of the to the some 10 review of the nuclear non-proliferation vitrine been -- heather non- proliferation treaty. speakers include hillary clinton. the center for american progress hosted a conference on the job creation. among those participating, the former treasury secretary and new york city mayor michael blumberg. this is about three hours. >> are we all ok? we have packed in a great deal

of information, and there is no time for coffee between panels. i was really delighted when bob asked me to monitor this panel, because i think issues we are discussing our central -- are central. i think this is really the central question of our time. i started working as a reporter in what was the soviet union, anas -- end as communism collapsed, it became a popular joke still told in russia, which is everything marks told us about socialism was false but everything he told us about capitalism was true, and this may be particularly acutely felt

in russia today, but reading david's paper and hearing his remarks about the actual fall in wages of people in the middle, that is astonishing, especially when we see the top 20 hedge funds back at the billion dollar level amazing. it is enough to make a you have some sympathy. the other thing which made me very happy to be here this morning was the job to comment superficially about many things without research, and one of the things i have found myself thinking a lot is really what

could be the motto of politics now. is the jobs do it neman -- the job stupid hama? right now it is not, is the economy stupid, but is the job stupid. there are so many issues, so really, this is a morning well spent by all of us. i have to warn the panelists that if people want to know about their honors, please read their biographies. they are rich.

alan comes to us from berkeley, where he runs the center for tax policy and public finance. next to him thiis alan kreuger. diaz's and director for economic politics regius the director for economic policy of the treasury. please say things that are indiscrete but know they will appear on blogs. next is michael greenstone. he is also a professor of economics at mit. we journalist know we have to be very nice, because they go on to

positions of extreme power. next to him is john, and we will offer comments about the ways in which you can find your economy is more like europe. the way we are going to do this panel, i do not know if you might give us extra minutes because we started late. the way we are going to run if his game going to ask a starting question. -- run this is i am going to start by asking a question. in the final 15 minutes we will have questions from the floor. .

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. [captions copyright national cable satellite corp. 2008] [captions performed by the national capáajájjr'stitute] >> ellen degeneres once walked

out of the oscars. she says, regarding paul mccartney, "this man needs no introduction," and she walked out. i am tempted to do that with this man here, but i won't. mike bloomberg, mayor of new york, is a person of singular achievement and singular talent. i use that word "singular" carefully. i have lived in new york most of my life, and he simply the best mayor that new york has had in my lifetime and even in the much longer lifetime, for example, of bob. now, much of today's conference today so far has highlighted the relationship between education

and pliment and wages. now i would particularly point to mayor bloomberg's achievement relative to the new york city public school system. this is one of the most difficult challenges, and one i know quite a bit about. he has really made remarkable progress. i hope you will talk a bit about that today. he is also, as we know, one of america's greatest entrepreneurs and greatest chief executives. there are few enterprises stronger than bloomberg l.p., his company. so mr. mayor, thank you for being here today. finally, the most skillful moderateor -- moderator in the world, charlie rose. i'm sure everyone here watches his show every night. if you don't, leave now.

it is one of the deepest shows of its kind in the country. if you want to see a subject explored in great depth, watch charlie's show. you can see that charlie is very young, but he has interviewed everyone from alexander the great to george washington and moderated every important discussion since the constitutional convention. it is a real honor to have charlie here, and now i'm going to turn this over to him. >> thank you, roger. it is good to see all of you here. this is obviously a substantive one that is on the minds of many americans. i know that all of you and the panelists have thought long and hard about this. let me go ahead and interview from your own perspective how you see the job picture today in terms of unemployment and job

creation. >> ok. i can't help but be a prisoner of my past as an economist and try to be a little analytical about it. that should not blind us to the fact that this is a terrible defining problem for our society.s7 i think of this differently than i usually think of. it calls to the national -- calls to the national domestic hotline are running at a 50% greater rate this year than they were a year ago. that indicator and many like it tracks what's happening with the unemployment rate.

so that is another way of making a pick -- picture of how difficult life events are for many people. in some cases, losing a job one has had for a long time is second and not very far behind losing a spouse. and it is actually more tra mumatic for -- traumatic for many people than a divorce.

this is important for people to think hard about what the solutions are. i think when we think of joblessness, we need to think of three different dimensions to the problem. the first is the cyclical dimension. we are in the midst of the worst recession in the sense of a continuing impact since the world war ii. it is a financial crisis of things that went wrong in the financial system and spread to the rest of the economy. that depressed demand and therefore destroyed jobs. if you ask why is the joblessness picture today different than the joblessness picture three years ago, the

dominant reason is that we have this profound recession, and the solution to recession lies in increasing demand. that's done by making financial markets work. that's done by temporary role for government in providing demand. that's done by creating an environment of greater confidence that spurs business investment and spending, which goes to the picture that's being painted of the long run of the country. that's what the president's recovery act and the financial recovery program are about, and there is no solution to any of this that doesn't run through having a strong recovery. the second dimension of the problem, and i would guess when history has been written, the least fundamental of the three, is the -- what has so far been a

temporary breakdown of the relationship between the economy as measured by the g.d.p., and the unemployment rate. if we had taken the standard relationships that economists use to project the relationship between g.d.p. and unemployment, and you projected the disaster in g.d.p., you would not have projected unemployment as high as it is right now. you would have projected it a point or a point and a half lower. or to put the point in a different way, you would not have projected -- projected that productivity growth would have been higher in the second half of 2009. that means we have a certain

amount of demand, and it is taking fewer people to produce the stuff that's demanded. nobody can know for sure what the future holds. maybe things will restore to normal, in which case we'll see more job growth than would be justified by g.d.p. over the next year or two. that would be my guess, but not one i would hold confidently. alternatively, things may have happened that led to higher productivity growth which in some long-run sense is a good thing, but will complicate the challenge of generating adequate demand to meet what is even greater potential with more productivity growth. so the second jobless phenomenon is this breakdown between the relationship of g.d.p. and unemployment. the third phenomena, and there only will be three, i promise, is in many ways the most

profound one and the one that ultimately is most important, which is a breakdown in the economy's ability to provide viable jobs for those who would in an earlier era have worked with their strength. the best way to put it is this. 40 years ago, 1-20 men 25 to 54 was not working at a given point in time. today the number is not 1-20, it is 1-5. and a good guess, based on extrapolating the trends in this area is that when the economy recovers, i've years from now,

assuming we have returned to normal cyclical conditions, 1-6 men who are 25 to 54 will not be working at any point in time p. and as you would expect the rates are twice as high or more among those who are less educated but are even close to 1-10 among those who have been to college. that is a reflection of the fact that large catagories of jobs that once existed, large catagories of demand have simply fallen away domnantly due to technology. wherever it is produced, it just doesn't take very many people to assemble a car, compared to the

number it took 30 years ago. where ever that car is produced. that is the dominant explanation. the secondary explanation is that with global zation -- globalization the jobs at the lower end have tended to migrate abroad. so in the long range, finding ways as a country developing the skills and potentials of all americans, not just the majority who are working becomes a and thinking about why and how public policy, while being responsible, can promote the demand for that lower wage labor

becomes essential. there are many policies around how you can do this, but i don't see how anyone can look at the wholesale destruction of construction jobs, the number of people working in construction, the state of our infrastructure in many spheres, and not think that something ought to be done to increase the extent of our national effort around public investment, which in addition to its broad benefits on the supply side to the economy, also is a disproportionate employer of some of the groups that are hardest hit. >> mr. mayor, that's from a policy how about -- that's from

a policy perch. how about from an executive perch? >> you have a quick downturn to put us back to reality. everybody says never again, and then we start the cycle over again. i've been alive only 68 years now and i must have seen 10 of these things. we will get through this. we have to make sure we don't destroy our capital markets, but in the end it is the capital that's available to solve the problem. we don't have the jobs in the construction industry at the moment. it is the capital that's necessary to let businesses expand. some of the more fundamental things larry talked about are the real issues in this country. one is immigration. we need more immigrants, not less. you are only going to have jobs

if people start businesses. who around the world wants to start a business? well, the experience of immigrants that come to our country is, they work very hard, they are very trep neural, they -- entrepreneurial, they have added to our culture and our cuisine and our languages. they have been the catalyst for new businesses. the percentage of businesses are formed by people that just got a green card is quite dramatic. i would try to get congress to give a green card to anyone who would have 10 or more employees.

that's a prack cal -- practical thing. people say, how to start businesses? well, this would do it, and it would do it at virtually little expense to the federal government. the percentage of men that went from 1-20 to 1-5 is good. i think part of that is the opportunities for women to enter the work force and how they have taken advantage of it. if you look at universities and high school, every place, it is starting to be women, women, women graduating more and attending more and more and more. it is a time bomb for our society that we have a big group of men who are dropping out, but it is partially because women who didn't participate in the work force other than in nursing and in teaching and those professions are hurting because two women want to go into them,

but all these other companies, it is the women who are coming in. you see a handful of companies run by women but i think in the years to come you will see a heck of a lot more. they are getting the experience. they are demonstrating they know what to do. so they are the fundamental things of we don't have people starting businesses. we don't educate our kids well enough. if you want to go to work for the sanitation department in new york city. you have to have a high school diploma or g.e.d. that is to drive a truck and keep our city clean. think of all the jobs that drop out of high school. they couldn't get jobs on our sanitation department. why? because the technology is greater all the time and we want people that show they have the drive and the self-discipline to get through school and the maturity that going through

school gives you, otherwise we can't provide as -- the kind of service we would like. i happen to think obama's legacy will be how good a job he does in reforming public education. he has taken it on. he has the right people there. how he is going to convince this country that you can't let your religion get in the way of education and science. we are making that mistake throughout this country. you can't let your views on who should be teaching and we want to protect certain groups of teachers. we have to have the best and the brightest. you have to fix education. you have to fix immigration. the economy will, with time, get better. we've got to make sure that we don't hurt it. we're sort of on the other side of that. and lastly, technology. you have to understand, technology will make people more

productive. we have talked about that. you can go back to when the steam engine came in. you can go back to when electricity came in. there are always these disruptive technologies that were going to destroy the work force. in fact, we manage to work our way through it and come out stronger at the other end. but we need to have more skills and more opportunity to do so. the same thing is happening around the world. we are not the only ones with these problems. the demands of not being able to keep up with the work force is a universal problem. i would describe it as a barbell effect. it is the middle jobs, the service jobs that are being automated and not just in demand. but if you take a look, you have the jobs at entry level and jobs in a restaurant, those kinds of jobs, picking apples. there's nothing wrong with them.

when our an seftors came to this country, they started with a push cart or whatever. those jobs -- in new york city, for example, we work very hard on tourism, and on the other end, we have the high-paying job s where you can measure performance or somebody else measures performance. i'll get off my high-horse in a moment. if you think about it, some people rally around big bonuses and says it's not fair. nobody pays expense higher because they want to be nice guys. you don't even pay your expense based on how much people contribute. you pay your expense based on what it needs in a competitive market to get the people you want and keep them. then if that cost is too high compared to the value added, you go out of business. people always think that companies look at the costs of their product and set the price higher.

no, you set the price based on what the market will bear and then you find ways to have your expenses be lower than that. >> larry, would you like to speak to what the mayor said? >> i was thinking as the mayor was speaking, you know, you are supposed to respond to the other panelist, and first he talked about immigration, and i thought it's probably best for me to stay away from that topic. >> i had exactly the same response. i was cheering him on. >> and then where are we going to go next? opportunities for women. and i thought it might be safe to stay away from that topic. [laughing] >> so capital markets. you can go to capital markets. go ahead. >> let me say two things.

i think the mayor's emphasis on education on what is ultimately and most profoundly important. we cannot put enough emphasis on that. there are a lot of troubling statistics people throw around. we still have the largest share of our population -- of our work force that has graduated from college of every country. but we are now out of the top 10 in the fraction of those between 25 and 35 who have graduated from college, which means things are headed very much in the wrong direction. that is a ton about the provision of opportunity. this is something i studied a great deal when i was at harvard , and the way of over-simply

identifying it -- over-simplifying it is the dumbest smart kids are far more likely to go to college than the smartest poor kids. it is probably the best thing the president has done that has gotten the least attention in regard to changes in the pell program. we have set a goal to reversing that college graduation gap by 2020. it is something that is hugely important. i basically related to everything you said. i think i have a less fill soffic -- philosophic view of the current financial crisis as just an up-down cycle. this was a much closer brush

with armageddon than what we typically see every few years. and this financial crisis was by some counts the seventh in a generation where millions of people had lost their jobs because of a financial system that was supposed to manage and distribute risk but ended up to a significant extent creating risk. so i totally agree with your admonitions about the need to preserve a flow of capital. i agree about the importance of sort of preserving meritocracy and competition in payment. but i think that i would think that these events force some fairly fundamental reflection on the relationship between a financial system that has grown

massively and grown massively as an absorber of talent and the broader economy. larry katz who is here has done surveys. i don't remember the precise data on the fraction of harvard graduates who find their way into finance, and it changed in a revolutionary way from 1980 to this decade. you know, that was highly related to the expense. i'm not sure that the total benefit to the broader society means that that was entirely a step toward greater economic eefficiency. >> let me point out, my alma matter -- mater, a lot of them went into medicine. >> let's speak to the financial

markets and financial reform. >> larry is right. i got a call from several banks that said we're not sure we can open monday. what can you do to make sure washington understands how serious the situation is? and i think larry and tim and hank paulson and a bunch of people here. today you can second-guess some of the things that paulson and gitener -- geitner did. i think history will show they really got this country through a very difficult time. my view of this financial crisis is -- and i don't mean to make light of those who lost their jobs or houses, because it is

tragic. why did we get into this situation? i would blame everyone. we all wanted more credit, easier credit. we were out there encouraging home ownership as a social policy, which i happen to agree with. incidently, 90% of the people that got their homes that would not have gotten it without those expansive programs would not have gotten it without those programs and still have those homes many -- homes. so i still think it was a good idea to make this a possibility for a lot of people who would not have gotten up the ladder otherwise. congress was behind it, freddie and fanny. we all liked the ideas that our pensions were going up. you never knew what would

trigger the downturn. i think of it like an insurance company, a life insurance company. life insurance companies are built on the fundamental belief that everybody is not going to die at the same time. in fact, if everybody dies at the same time life ips companies could be argued to have been an jours speculation. but it is a risk we understand is a reasonable risk to run and it very seldom happens. and to some extent, you had companies like a.i.g.'s whose balance sheet was much too risky. if we had more disclosure, maybe the marp -- marketplace would have kept it from happening. i'm in favor of more disclosure. but you did have an awful lot of more people default on their mortgages than anyone thought was possible. that is why you have the rating companies rate a security triple

-a and then all of a sudden, it is worthless. there is a fundamental asum shup -- assumption in there that most people will keep their mortgages and some will default. that's that business mple now we change the whole idea and say, well, the insurance company that we now have is the government. i find it impossible to find an industry which has a large work force that is too big to fail. it's not just wall street that got in trouble. we are going to look at other businesses. detroit was too big to fail as well. why did they get in trouble? you could blame the government for that. if we had forced standards -- i think we had them from 18975 to

1985 where we improved mileage dramatically and then stopped, numbers like that, all of a sudden they woke up and found another group of companies that could beat them. if the government had tornado away and not protected them or forced them to do better, either one, that might have worked. leaving it in the middle, which the government did, was not a good idea. >> the keynote of this particular day has been jobs and job creation, understanding job demographics and where the problems lie. how long will it take now to get to full employment, larry, and what will affect the velocity of getting there? >> the pace to which we get back to full employment will depend upon two things fundamentally.

it will depend upon the pace of the economic recovery in terms of g.d.p. and it will depend on the uncertainty about the relationship between g.d.p. and unploim. the standard formula that economists use is take the growth rate, subtract 2.5, divide by 2. that's the change in the unemployment rate. if the growth rate is 4.5, you have reduced the unemployment rate by one percentage point. so make your judgment about the g.d.p. forecast over the next several years, take your guess

about whether the formula is going to snap back or continue to be off, and you can form a view about the movement in the unemployment rate. what i think is safe to say is that even on optimistic assumptions, there is going to be substantial unused capacity in this economy measured by the unemployment rate, measured by the fraction of factories that are in use, measured by the pa ucity of vakiansies -- vacancies . by any measure you use, the economy is going to be

constrained by demand more than by supply over the next several years. i emphasize that point because there is a tendency to gravitate quickly to measures that focus on the supply side. in the long run, that's ultimately the only thing really that is important and matters. in the short run, it is a great deal about demand. one has to be very careful about thinking about things that will increase the supply but not move demand. that's why my of us feel we need to focus on long-term problems, we need to, as the administration has, to maintain an awareness that a very large number of teachers, who are the investment in the education strategy in the future, are going to be laid off within the next six months if nothing is done. so the agenda of driving this

work of preventing armageddon, we have done a lot of work on that agenda. the agenda of creating a strong economy is not yet complete. >> do we need another stimulus? >> i don't think framing the question in terms of a stimulus is helpful. do we need unemployment insurance? yes. do we need to continue to provide support for state and local governments to maintain and prevent large-scale lay-offs of teachers? yes. are there investments that can be made in energy eefficiency that would be terrific investments measured by internal rate of return even if there was no resession and create jobs as well? yes. is this the moment for some major new speerment --

experiment? absolutely no. >> speak about austerity and loss of tax revenues and teachers specificly and therefore the restrictions of what you can do. >> a few months ago we thought the markets could not continue the way they were doing. when people you read about no-interest, no-could have in any event -- no-covenant loans, there have been cutbacks in expenses or looking for ways to enhance revenues. you can get revenues from fees or fines -- not taxes, but the other things we focused on. and we cut about $4 billion out

of our budget. we prepaid a few billion dollars in interest. we put $3 billion away in a fund to start funding the liabilities for retirees' health care and tried to make the city government more efficient. we have been combining some small agencies. we're trying to make the city government more business friendly so people can get their businesses that they want to open more quickly. the result is that the city's budget will be balanced -- my official budget comes out in another week and then it gets adopted by the end of june. we're in balance. our problem is we live in a state where we send a lot of money up to albany, they give a little of it back. they expect us to say thank you, although it is our money. they want to cutback the money they send back to us, because they want to use the money elsewhere in the state to

influence, i think it is fair to say, the political reality of the rest of the state. that's a nice way to phrase it. if you talk to mayors all throughout this country, they will all tell you the federal government again and again and again will make this mistake. they send the money to the states, and the states never get it to the city -- cities. i was talking to someone a few months ago, and seattle did not receive any money from the stimulus. the cities are the population centers for this country. when the states cutback, which they will do, it puts us in a difficult situation of having to make some choices. we have said with our governor's budget it will require us to lay off 19,000 employees. will we do that? we won't have to do that, but we will have to make some very painful choices. we have a situation where

government employees are getting paid more on balance -- i think it is the federal government more so than the city -- it is an untenable situation but it is a difficult situation to address. we have better city services, i would argue, than any place else. we just can't afford to pay them. in new york city in our uniformed services the benefits are equal to 100% of their salaries. it is a situation where it has become very generous, and that is true of virtually every city throughout this country. every mayor is trying to address the problem. the good news for new york, however, is we did not have the big downturn in real estate because we don't have a lot of second homes, and we don't have a lot of speck homes being built. so we never experienced the

destruction of the construction industry that occurred in the south and out to the west. we have a construction industry that has problems, but compared to the rest of the country, negligentible -- negligible. people make fun of the cultural things we do, the gates and the waterfalls and all this. we have become the glitzy, the edgy, the "where it's happening" city around the world. our tourism is down only 2% or 3%. it is down double digits in other cities. we have more people working in tourism than any other time in history. we have worked very hard to bring film and television from the west coast and from canada and eastern europe. that's billions of dollars worth of revenue and 100,000

employees. we worked very hard to bring i.t. to -- no one thinks of manhattan as an i.t. center but google has a few thousand people, bloomberg has 4,000 or 5,000 people, and a lot of these companies are growing in manhattan. all five bureaus put together, we -- all five burroughs put together. i want to say, larry, the people you need to be successful are living here and they are not going to move, so you don't have any choice. so we are investing it in the culture and safe streets and clean streets and that sort of thing. we have had some help from washington. schumer has worked very hard for

us. some of the others on some things have and on some things not. our problem isn't so much the federal government. we just have to make new york city be the reason people want to come there and stay there. >> one thing you said about job creation and holding jobs is when you start talking about the financial community and you start attacking certain aspects of the financial community, you are talking about new york city. we are talking about police, fire. how do you think we pay those? >> we pay them from the taxes that the finance industry generates. >> what is the difference between you and larry with respect to the federal regulatory reform bill that is making its way through the senate? that's the first question. the second question, if the bill that's making its way through the senate, larry, was in place, would it have avoided the economic recession that we face sfl -- face?

>> look, i think that the measures that are contained, and reduce the -- and you look at the fact we have reduced automobile fatalities, and can we substantially and importantly reduce financial risk? the answer is yes. and i believe this bill does that. the perception of too big to fail and quasi government guarantee is surely fueled by

the absence of any procedure for resolving a large financial institution that's not a bank. no one can look at what happened in the credit default slots market during the last decade. the volumes of risk that were being taken in completely long

stocks for a long period of time, like we do for commodity trades. it can't have been responsible to have normal financial institutions with no one taking responsibility for their financial regulations. that was true under the rules that we had previously, and that is fixed.[

that coupled with international cooperation to ensure these guarantees are used to prevent much less leverage i believe offer the prospect of very substantial reduction in the risk of financial ks. by the way, this is not something that is in-electible in human society. if you look at the experience of canada, if you look at the experience of the united states between 1950, there are places where the risk of financial accident was substantially lower, and that's what we need to drive toward in creating a

system, and that's what this bill tries to do. this probably has to be a restriction. every time you try to restrict what people can do, you run into lots of problems. you try to explain to them why it may or may not be in their interest, but the disclosure part, i couldn't agree more. if everyone knew what a.i.g. had in their portfolio, it would have been stopped. what government can do best is force disclosure and let the marketplace and people want to do work. larry mentioned globalization. you cannot have regulation that's inconsistent with what exists overseas.

companies will either move the business overseas or their competitors will take their business away. i think we're a little naive in terms how you would separate derivatives. none of these markets could exist without derivatives. the loan market can't exist. this is scombruft another way of -- just another way of letting everyone swap rissbling back and forth which will encourage them to provide the capital we need for other things. was it taken to extreme? yes. the other thing larry mentioned, and i think he couldn't be more right, we have regulation in this country for different industries. when those industries are in the same business, we don't have a business regulator. we don't have an industry regulator. they may all be doing the same things, but some have none, different states, different

parts of congress oversee or state regulators. you can't have companies shop for regulators. it is the way we have structured this as opposed to what they do. as we've changed the regulators have never been able to give up their regulatory authority to a different regulatory authority. why? political point of view. that's where they get ability to influence the dialogue, is a nice way to say it. >> i'm going to say something kind of unfair. mike and i basically agree. we agree on more than we disagree on, but it is more interesting to emphasize what we disagree on. so i just say this. if you are studying -- if you study the history of regulation from everything from food safety to plane crashes, it is always

at some level sort of the same thing. when bad stuff happens, plan a is form a committee to study it and report back. that's the plan. if that's insufficient, plan b is encourage industry to pursue better practices. if that's insufficient, plan c, which is an old standby, transparency. and plan d is to do something about the problem. [laughing] take the consumer area, with respect to baby seats, we don't have a policy based on transparency. we have a policy which is you are allowed to sell baby seats for cars that are safe for babies, and you are not allowed

to seal baby seats that aren't safe for babies. you aren't allowed to sell one that has 20 pages of print and by the way mention they are unsafe. i don't know what the argument is to allowing people to sell credit cards with interest rates that jump up to 36% on conditions that are totally at the discretion of the issuer with no notification to the purchaser just because there is 20 pages of small print in which you could have seen that that was going to happen to you. i think some regulation that actually goes to the content of the product is a good idea to protect people just like we do in every other sphere. >> larry and i agree on more things than we don't, and let me tell you, i defend his right to be wrong. i really do.

[laughing] >> we prohibit public smoking in a public place. you smoke in a public place, you are hurting someone else because they breathe what you smoke. if.ñ you want to go out in a fid and smoke, i happen to think it is dumb, but if you want to do it, i don't think government's responsibility is to prevent you from smoking. we have tried little things. there is a great article in the "atlanta monthly" this month about prohibition and how one guy convinced this whole country to do something. a small group changed this country and in one year passed a constitutional amendment. we have made mistakes before. i'm not opposed larry to prohibiting people from doing some things that are against

what we think are not good for society, but where do you draw the line? and at least on education, if you want to act stew -- stupidly, some people are going to act stupidly. >> now we are agreeing it goes beyond transparency and we also agree it should be rationale regulation. in a whole variety of these areas you can have unintended consequences of being fair.

[laughing] >> by the way, does the deficit commission fit your idea of what we do in a society when we are trying to deal with a problem that we do not know how to get our hands around? >> we are almost out of time. i want to pose the big cosmic question. we looked at job creation here. we have looked at disparities in terms of demographics of where we are and in terms of the long term and full employment and all of that. in terms of american competitiveness around the world, where are we thinking

outside the box? i'm not thinking of things that we are discussing here. the author had been discussing some of the things we are learning. where do we get our hands on things that would change what would otherwise be a disasterous and polarizing job placement? >> there is no god-given right that says in a world where vast numbers of things are mobile that some places should be 10 times as rich as others. if you want to be richer than other places, there has to be a reason. and that reason has to be that there is something about you that isn't present everywhere else.

what does that go to? it goes to -- since by and large most americans are not going to emigrate -- it goes to the quality of the education they receive, which is why putting such emphasis on that is important. it goes to the power of the collective. there is probably nobody so talented functioning individually that someone somewhere else functioning that talented individually will never be found. but clusters, whether it is a huge cluster represented by new york city, or the smaller cluster represented silicone valley or the still smaller cluster represented by harvard or the still smaller cluster that for a time was represented

by bell labs, those are much more difficult to replicate because there is a whole chicken and egg problem. you can get it started, but the reason everybody comes is because everybody is there. determining where these clusters are is going to be central. it goes to the educational issues. it goes to the issues around innovation. it goes to supporting our cities and that's the strategy -- those are broad elements that we're going to have to consider as we consider howñr to compete. >> a couple things you have to think about. the less developped areas could be another country, could be parts of america, for all i know. they have an option, an opportunity, an ability today to

leap pfrog what -- frog what has taken everybody else a long time. the ultimate example is cell phones. the smallest cell phone today probably has better computing ability than the biggest i.b.m. computers of the 1950's. in africa today every other person has a cell phone. think about that. they have in the palm of their hand theable to educate, get entertained. we are starting to get there. it is mind-boggling. take an i-pad. this is incon seeveable -- imple nconceivable 10 years ago. all of a sudden, countries are going to be able to leapfrog everything else. the defense that the old-world places have is what larry talked about, the concentration. everybody goes there because

everybody is always there. that's the value-added property that new york city is doing. it's not the yogi berra thing nobody goes there anymore because it's too crowded, people go there because it is crowded. there are these changes that are dramatic. the percentage of our work force, college educated higher than any place else but in the younger group not. one of the things that gives me comfort and should give this country some great pause to think, the percentage of the people living in new york city that are college educated keeps going up, and it's because of immigrants. people think that immigrants come here without education, an awful lot of them have a great education. they kill for a green card and the next