you learned about things in a funny way. you can get really narrow stuff that is teaching to the test. it is hard to be creative if you cannot add and subtract or read a complex sentence and understand what it means. that is not the only thing that counts. if you go into those charter schools and see how they are encouraging kids to do projects and how they are learning to work together, you will not see any misalignment. here is a class that is creative but cannot add. if the class is engaged, there is a culture of connecting with that teacher, they will learn how to add and they will learn how to do projects together. >> why do we still have textbooks and when do we get rid of them? >> textbooks in the u.s. are particularly small line because they have been designed by committees and the incentive is

to change them because the textbook as to not like competing with the used textbook dies. we do not -- an american math textbook is three times larger than an asian textbook. we read teach concepts many times poorly as opposed to teaching a modest number of concepts a few times. it is stunning but there would be this systemic difference. we have 50 states but they all fall into this trap. they all fell into the trap of committee-designed textbooks. and, the asians and did not fall into that trap. there is this common curriculum written about. there will be textbooks that will be on line and free. you still have a problem. you cannot assume everyone has an electronic key by -- and

device. our foundation was involved in putting personal computers into every library. but, even that, that is not perfect universal access. in the next three or four years, some evolution of the netbook, or ipad, or phone will be adequate for engaging in that text book in an interactive way. the price will come down enough that you can do that for a while last that you -- well less than you spend for the textbooks, but what you get is a lot better than that. beyond the textbooks, in need self assessment. the thing in that is that people progress in different speeds. people need to be reinforced -- you got this piece, you can move on. or, if you get further up, and you are doing story problems, you need diagnosis that says "look, the reason you are messing this up is not because of anything in the story problem, you just keep taking two minuses and keep getting a negative number, or long division, or turning an improper fractions into an integer fraction. you have got that nonstop." -- you have got that messed up."

self assessment software is a big part of this, where any student can sit down and try this out. that is happening. whether it is stuff that we are funding, raced to the top money is funding, -- race to the top money is funding, the contrast of what happens today, were you graduate from high school, and when you go to community college, it hit this test that the majority of minority students fail, and you get stuck in remedial math. the majority of the people get stuck in their, and never get a degree. so, they have wasted money, they have been humiliated, they spent a lot of time, and they get nothing out of it. that is because it is completely opaque. you are not told which part is wrong. that task is this black box that neither you nor your teacher knew about afterwards, and you did not know about before hand. our view is you should be able to go online, spend 15 minutes, and know exactly what results you are going to get -- which areas in need to go and work on, and everyone should teff free access to that. -- everyone should have free access to that. >> what are you funding at the gates foundation during

secondary education that you are particularly excited about now? >> well, most of it falls into this kind of teacher measurement and improvement activity. that is a very big process. >> have fun explaining that to the aft, one more time. >> well, the aft is not monolithic, you know? there are a lot of teachers, and every teacher there wants to teach well. if they teach well, they want the student in the next grade, that they put so much energy into to continue to have a good educational experience. when you contrast that to -- yes, maybe in terms of what they want intentions, or job protection -- in pensions, or job protection, or things like that -- that has been over emphasized. it is not like we have some magic measurement system that they know about, and they know is good, and they are rejecting that. the status quo is very attractive. the system works. you know what your salary is going to be.

he stick around long enough, -- you stick around long enough, you are going to do very well because the pension is so much jen -- so much more generous than it is in other sectors of the economy. it is understandable that getting people to take a rest, and do these new things -- they will be conservative about that, particularly in a time when state budgets are so messed up, and with that money is allocated to various things within education is not a very rational. as you cut budgets, the time you actually cut them, you cannot renegotiate the pension thing. you cannot go back and say "ok, the special needs thing -- in no, maybe we can read and that -- retune it." those things barr untouchable. the things you can touch are like the legnth of the school year. hawaii cut -- had one of the shortest school years in the nation, and this nation has the

shortest school year of any country, even the asian countries and the rich countries. and, we are going in the wrong direction. the good charters, almost uniformly, have long school days. the extreme is the boarding school, where you have that sort of a 24-our environment. >> should school days be until 6:00 p.m. or 7:00 p.m., and school years be 11 months? >> you do not have to go that far. the school day is about and eight and half hour day, and they go every other saturday, and they go three weeks in the summer. of course, the teachers are working longer hours because they make themselves uniformly available to the students after hours. the commitment of those teachers, and there are equivalent in non-charter schools -- a lot of those people in that top quartile are not only natural, but the energy and devotion they're putting in is pretty phenomenal as well. you imagine that if you raise the average up, they would feel

more unrewarded, and maybe feel even better, and do even more of -- feel more rewarded, and maybe even feel better, and maybe even do more of that. >> do you think that -- you talked about this pension that is very generous for teachers, and it kind of kicks in, not right away, but after 15 years or something. and then you talked about state budgets. do we have a huge, and accounted for pension -- unaccounted for pension overhang problem that is going to hurt our budgets? >> absolutely. it is pretty mind-blowing. there was a book written about it about eight years ago called "while america slept." and, america's continuing to sleep. it is partly because the way that state budgets are presented this so fraudulent -- there is a thing called the government accounting standards board that allows you not to take full pension costs, not to take retired health benefits. so, whenever something is free, it gets over used. improving the pensions of the

people already retiring at never shows up on the state budget. letting people retire early, having more overtime factor begin -- factored into the retirement thing -- all of these things come from the fact that when the person that says yes to those things, the government person, it does not feel any pain at all. there is no number that ever shows up. so, we need a lot more transparency about this, which will be bad news, at time when state budgets are already very bad, and then, maybe we will be more rational about it. it's like when stock options were free, and people were saying we would use them even if they cost a lot because they are so magical. no. in fact won the true cost was accounted for, -- in fact, when the true cost was accounted for, they were still used, but they were used about one-fifth as much as they were before they were in this accounting window that they were free. now, the pension payments to government employees -- lots of that looks free, and we messed

up long enough that we have a huge overhang here. you also get some inbalance between the people who do not vest in and do vest in because of how big that discontinuity is. >> in terms of a big, overall economic issue, did we not get a wake-up call from greece, and for that matter california and illinois now, and is there not something radical we are going to have to do to get these numbers aligned? >> no, we did not get a wake-up call. the wake-up call, unfortunately -- there are only two types of wake-up calls. one is a society that has a lot of centrist politicians who are very intelligent, who were looking at these long-term trade-offs involving people in these discussions. that is one way you do this stuff. the other is called the bond vigilantes'. when your debt rates spiked up, and they are acting like there is some doubt you are going to repay your debt. why was clinton able to balance the budget in the 1990's? medical costs one not as out of control as they were. some of these pension things had

not come along. you did not have the reagan tax cuts, but you did have the bond rates saying action should be taken here, and maybe we need to do something. for a variety of macro-economic factors, the u.s. treasury rates are super, super low today, so it looks really free to consult -- to continue federal deficit spending, and state deficit spending, which is normally a balanced budget, but only accounting fraud allows you to pretend it is balanced. 49 states at and the constitution -- everybody but vermont has to balance their budget. so, no, the great thing did not -- the greek thing did not pause good information -- cause good information to be put together. tell me what the projection for the california budget five years from now is? they are not required to do it. there is nothing that forces these types of analysis. so, you do not get these discussions. you look at how many letters as the governor have to pull.

-- levers does the governor have to pull? when, all the sudden he gets notice his budget is out of balance, schwarzenegger try to lay off, and the courts would not let him do that. he tried all sorts of things that are really inefficient. it is the same thing for school districts when they want to cut their budget. they cut certain programs. they will cut buying software, not the kind of software that microsoft does, but educational software. they will cut some good overtime requirements. they will cut things that are very effective because you have got into a point where you cannot trade anything else off. local governments will shut parks. oft's his tiny amounts money. -- that saves tiny amounts of money. so, we need to see what these fiscal situations are like, and create some sort of centrist dialogue about the trade-off -- what do we spend on, what does the tax level look like, and if we get too close to this, you

could despair that that conversation will ever happen, until the bond market does something strange, at which point your tools that are left are really very inefficient, their report. -- very poor. you are in trouble. our current course and speed will get us to that point sometime in the next decade. >> the overall structure of that conversation would have to be how do you allocate resources, in a sense. >> that is what government is all about. yes. somelk about -- let's do allocation of resources. the proportion of gdp that goes to health care -- is that over- allocated? >> well, the u.s. spends 17% of the gdp on health care, and you drop down to number two, which is switzerland at 12%. so, you say "hey, what do we get for that?" well, we get nothing. the health outcomes, which are complicated to compare, but the

health outcomes are basically slightly worse, both in terms of averages and the inequity. our bottom quartile is very ugly compare it to all other rich countries' bottom quartile. our upper quartile is somewhat better, but that is how you get the inequity. so, we are spending at a huge rate, which if it was not increasing fast in -- faster than inflation, then, you could probably afford it. as it continues to grow, it squeezes. unless, people say "yes, i would like to be taxed a lot more." most states have the super- majorities that are required to do that. it is not clearly a good thing either. as long as you are dealing with a finite amount, as the medical cost goes up, and that shows up in state medicaid spending, and in the federal budget as medicare, and they're part of

medicaid, it squeezes out everything else. so, what would you see is that it is squeezing higher education. they are raising tuitions at the university of california as rapidly as they can. the access that used to be available to the middle class, or whatever, is just rapidly going away. that is a trade-off society's making because of these very, very high medical costs, and a lack of willingness to say is spending a million dollars on that last three months of life for that patient -- would it be better not to lay off those 10 teachers, and make that trade off in medical costs? but, that is called the death panel, and you're not supposed to have that discussion. >> that is an interesting thing that you just said, which the last three months in life, for one person or something, because we have not had discussion of how to allocate

that money, it means we lay off three teachers to do so. i mean, in other words, we have not had this type of allocation. >> we are making that trade-off because of huge medical costs that are not examined to see which ones actually have no benefit whatsoever, and because of pension generosity, we will be laying off over 100,000 teachers, which i am very much against, and the whole aft would agree with me on that. >> what is it that causes us to spend 17% of gdp, and switzerland to spend 12%? what is the differential? >> i have read a bunch of books on that. it is complicated. i have a bunch of agitators that come educate me. it is a variety of -- i have a bunch of educators that come educate me. it is a variety of things. the last year of life we are not particularly good at. diabetes a huge problem in this society because of obesity, which each -- which it is not as much in some of those other

societies. one of the things that jumps out, and i do not claim to be an expert on this, i am trying to learn enough to understand what would cause innovation to reduce what has been this in exorable ride -- how you get innovation on your side to reduce those costs, which i think can be done. one of the things that jumps out is that we have three times as many specialists as we have general practitioners. no one else's system has anything like that. that is unique to the united states, and it is because it is a rigged market -- that is the reimbursement rates have been set. the patterns set by the government through medicare, and it was a rational decision to become a specialist. what that means is if you are impatient, you have lots of doctors -- if you are a patient, you have lots of doctors coming in and doing little pieces of things, where in germany, which is the best, their one-to-one ratio, specialist-to-general practitioner, is having to do a lot, and really manage your

care. so, both in terms of quality, and cost, it is a much superior system. >> would we get there better if we'd moved from a service system to a health maintenance system? >> absolutely. if you look at what effectively the other countries are doing that gets the incentives aligned properly, it is effective you have someone who has got the -- has to look at the long-term costs of somebody's sickness, so there are incentives to invest up front, in preventive care, and the relationship with that patient, and there is not some artificial thing where the more sick your patient is, the more money you make. in medicare, if you can get your asthmatics to have acute episodes, you get rich. if you teach them how to take their medicine, and how to do the right things, you go to the poorhouse. it is an odd system that we have designed.

now, if you are in and hmo like kaiser permanente, it is the opposite. you say let's look at the data on asthmatics that are in the that hmo versus, those that are not, it is a very dramatic difference. forcing people into an hmo, i am told, is politically very difficult. that would be a huge mode change in terms of the incentive system, maybe not a doable one. if there is any clear lesson from the european systems, it is having that alignment of interests. >> speaking of allocation of society's resources, i think he said on your campus tour -- i think you said on your campus tour, at least at harvard, that the allocation of iq points of our society, to wall street financial instruments was higher than it needed to be, and that some of those i.q. points should go into other fields.

>> if you say what portion of the society's iq goes into studying great teachers,, and document and what those great teachers do, and how you would spread those practices? what is effectively the research and development component in education? it is about as close to nil, as you can imagine, and yet, what is the most important thing in terms of having a society that has both an equality of opportunity, and is competitive with other countries? it is education. so, it is this mind-blowing misallocation. my favorite vingette is that guy -- that hedge fund got making lots of money, and he quit to do these little web videos. we moved about 160 i.q. points from the hedge fund category into the teaching many many people in a leveraged way category. that was a good day, the day that his wife let him quit his job.

we need something like that in a very broad, and dramatic way to learn about the money we spend on education. when you go to a state and say you'll understand your books are flawed, first you meet with a politician, and then they will say meet with a career bureaucrat. if they did not know the numbers. there'll be a 22-year-old who is being paid $40,000, and he is sitting there trying to figure route the state budget. he has been told we have to cut $500 million in the next month. he says what about this charity. the iq that is devoted to these complex trade-offs is ridiculous. [applause] >> if you gave me three years to cut the california budget as

much as it needs to be cut, i am not sure how well i would do, but you might trot in people that know what is going on, and notify people that if they have three years' notice, some category will go down, and you can prepare for that. the closer you get to it, the more you wonder how it has worked so well, for so long, because it has. >> you and some others have been involved in energy technology, and trying to produce carbon, and maybe putting a price on carbon. tell us about that. >> energy is this super important, interesting thing in the economy. if you can bring the cost of energy down, it improves everything -- the cost of food,

transport, water -- everything has an energy component. if you look at the progress of civilization, it is all about low-cost energy. first, you start with coal, then oil, the natural gas. it is another industry. it is not as extreme as education. it is another industry where the investment in research and development is low. we are trying to both reduced the costs, and put a constraint on it which is zero, not 50% less. effectively, we have to get to 0. the fact that we do not encourage market innovation by have been either the carbon -- having either the carbon tax, or the regulation, and we do not have the government research, it feels like on the state, and in

this case, it is a global problem, not the u.s. against china or anything like that. no warming problem is global. -- ago warming problem is global. the irony is the huge negative effect will be in the tropical zone. increased co2 will probably improve. we do not really know. it is within the level of uncertainty of whether it will only be slightly good, to someone that. in the tropical zones, it is going to be bad, it is just a question of how bad. the people who lived there did not cause a problem, yet they will suffer. this is a time when foreign aid is being cut. the fact that we are not working on behalf of the poor to fund cheaper energy development and

research is disappointing. john and i and some others said the research should be up by an $11 billion a year, which would take up to $16 billion, which would be about one and half of the amount spent on energy in the u.s.. we went to washington, d.c., and met with senators and the president. we had a nice binder for our report. i should not be cynical. i do not know if it will have any effect. i think the research and development provisions of the energy bill will probably be much better. the so-called house bill -- the extra money had been scattered off into very specific technologies and other things. hopefully, we will get something better than that. >> a lot of what happens happens

in the private sector. tell me about what you are doing with some of these pretty awesome smart people. >> one thing that has happened is that there has been more capital and i you put into energy innovation in the lap -- and i.q. put into energy innovation in the last seven years than was true before that. john and his group is now focused on that. a lot of so-called silicon valley, and i use that term broadly, that type of risk- taking is looking at neat energy things. there are investors all over the world. this is wonderful. there are regulatory things, and some basic science things that also have to be done.

you cannot just count on the innovation. a good example of that is this nuclear company that has a whole different type of nuclear energy that avoids some of the problems in existing nuclear energy. you need someone who is willing to build a novel reactor. the u.s. is not exactly a place where that decision would be made quickly or in the affirmative. we have this bind, which is brilliant people, and so far, all based in the u.s., going around asking other countries to build one of these things. on paper, this thing is a miracle. it emits zero co2, and the electricity is cheaper than coal-based co2. >> how does it work? >> one we burned iranian today,

uranium has two different -- uranium today, uranium has two different isotopes. you have to burn that, and it is expensive, and you get ugly ways. we take all of the uranium, including the 99.3%, and have the type of reactor that can burn that. we never opened it up. we never move it around. it sits there while the radioactive decay goes away. essentially, the fuel is free. and, you avoid the waste problem. we can even burn the waste of some of the other guys. the problem is that it is new. anything involving nuclear that is new people are appropriately cautious. there are a few signs questions. are there so many new trends --

neutrons flying around that it actually messes it up? i do not think so. it is one of about a thousand ideas. at least five of them would work. what we need is an environment where you know -- say you have a breakthrough in carbon capture. is the government willing to suffer a million times more with the nuclear waste underground? why should you invest something that helps with that if you do not know if the government is interested in supporting that? what happened with nuclear waste, were they agreed to do something, and change their mind does not set a good precedent pith that kind of waste is miniscule -- president. that kind of waste is minuscule. 1890'she 1870's and the

we were very innovative. that happened at the end of the 19th century. you continue to say we are less driving toward an ovation. what can we do? >> -- toward innovation. what can we do? >> there is a natural cycle. what the u.s. did in the 1940's and 1950's is unbelievable. what japan did for steelmaking, shipbuilding, in the 1970's, and early part of the 1980's was unbelievable. that fervor of taking a risk and moving ahead exist in china today. the world benefits immensely. those chinese advances -- the cheap steel, the ingenuity, that was a wonderful gift to the world. there are industries like biology things and software related things, where the u.s. is by far the leader, by far.

even if we do not do things right, it takes a long time for that to be road. if you want to a road it away, -- eroded away, you wouldn't mess up the migration, where high -- you would mess up immigration, where high-iq people of -- what is the most important import? hi-fi to people all want to come here. you get these bright people, and you're creating jobs around them. it is a great thing. if you want to assist -- stay strong, it is your basic education, you're you're the city system, your basic research, -- your university system, your basic research. the u.s., in the next 20 years will invent a wonderful new medicines.

these trendlines, you have to say what is your goal? if the goal is is the u.s. relative to everything else, you do not care how many people are dying from alzheimer's, than in 1986 -- 1946 is your year. we really dominated everything. heck, we are only 5% of the population. it is amazing. we spend over half of the defense spending in the entire world. is that impressive? maybe. we have huge advantages. i am not trying to paint a negative picture at all. china and india have relative positions -- 5% of the world will not dominate in addition to quite the degree that it does

today. that is fine. if someone invests in an alzheimer's spill in china, and one of us gets to say that, -- take that, and it says made in china, are all set i will take that. if someone else makes a way not to overheat the problem, it is ok. we should use that technology even though it was done on an international basis. living standards will get better. the place that will be the best for the foreseeable future will be this country. the intelligence about some of these trade-offs, some people would say it is not, we are more content with the status quo. it means we could end up arguing about things that are not really about the key, long-term future

things, and not address some of the things that are. if you get close to that, if you wish some of those things were better, but it is a very positive picture. >> you talk about china been the next engine of innovation. you were in a discussion last night on the question of whether china's restriction on the free flow of ideas, information, speech, and freedom would constrain china from been as innovative as the united states. >> any of those constraints are bad, but they're not -- anybody who thinks that as holding china backing a significant way in terms of scientific innovation is wrong. in terms of the universities, and how they collaborate, that is not holding them back. they will end of it. they represent 20% of the global

population. they are on their way to using 20% of the world's energy, and having 20% of the world's ideas, and having 20% of the world pro- military budget. it is outrageous, but they are carrying their weight, more and more. in terms of everything good, and everything bad, their energy use and -- usage is still a quarter of what is in the united states. they're not ahead of us if you count the stuff they make for us. we are still the biggest co2 in matter. if you build them for our gadgets, then they pass us in terms of co2 emissions. it is a complex picture. their innovation is full-speed ahead. so much the better, as long as we are also reviewing the things that have kept us so far ahead.

you cannot say china will be been the engine of innovation over the next 20 years. u.s. universities were built up over 50 years. they are amazing and quite unique. i think we do well on may 0 that in the second 10 years of the 20. -- will he wrote that in the second 10 years of the 20. the u.s. will be the engine of innovation, but not completely. >> one question about your world of microsoft. are we moving away, after 30 years, from a desktop and personal computer-based information environment, to one that is mobile, or based on social networks, in which the pc will be left behind.

>> determine d.c., if you view it as a static thing, it was left behind when we got portable computers. it is partly a matter of terminology. what i am browsing the web on my television, and i am using the same software and standards and graphics that were used out of the pc revolution, is that a pc, or not a pc? i do not care so much about the term. the software magic that lets you find information, analyze information -- all of that that came out of the revolution has moved on to the phone, which is the great thing. what is the boundary between the phone and a pc? there will be devices in the middle that defies easy categorization. you can roll out the technology that creates a wonderful new

devices. almost every surface will be a screen-type device. almost anywhere you go, you will be interacting with that device. there will still be pends. -- pens. >> instead of the ipad, you have a pen-based input device. >> we have had it, but it is not mainstream. i will predicted. >> you have predicted before. >> i will either be right, or i'll be dead. [laughter] >> one distinction between the phone and the pc is that the pc tends to be based on the openness of the web, where as mobile devices might be based more on applications that are a little bit more self-contained. applications on the pc are self-

contained. you have all sorts of things. you have software that runs on multiple manufacturers hardware as opposed to software that only rives -- runs on one software platform. you have many different things that are competing. it is a very healthy environment. some people believe in the pen. some believe in voice, some people do not. clearly, a dedicated device, for music, mapping, remote- controlled devices, they will see, over time, to a multiple device. if you can have an lcd that gives you browsing tom-tom movies, color, that will be better. -- browsing, movies, caller, that will be better. in the verizon, in the next six

years, we will get devices that will call into question is whether you want specialized the biases at all. if i can take a phone, and roll out the screen out to be 12 inches, -- the only way that it really stays around is talking about distance. holding it here, having it out here. that, there are some user paradigm things about the difference, and size of things, that even though it can be based on one hardware architecture, you are going to need to have some adaptation for screen size. >> let me end by asking you and explain -- to explain what you call your challenge. >> the philanthropies in the united states is greater than in any other country. the spirit of taken the

strength, and pushed it to new heights, warren buffett and i, got together, and had several banners with people of significant work who were doing fell at the peak, and talked about why did they do it, what did they learn, and what did they like? those dinners were amazing. in the dinners, it came up that maybe other people should hear how we made it fun, and be as fulfilling as whatever activity created the wealth. we decided to create this thing called the giving pledge. we called a few people up. we have had a very good response rate. many have signed up. it is sort of a family decision. it is like your kids realizing at least half of your money is not going to them. that might be good for them.

i said that to somebody that was on the phone. he said his son was six-months >> so we hope this is a group that will grow? size. right now the largest states in the u.s. give 15% to charity. we think there is room for that to be more. if people knew how much fun it was and what the impact was, they would think about it at a younger age and use some of their talents toward it. they would involve some of their high talent associates in doing the work, and they would probably be drawn in to giving more. that is a wonderful thing. we are going to do the same thing with some people in india, where the expectation for people's high wealth is not as establish, and kind of hangs in the balance. and also in china, we have some people signed up next year. it is something we are trying. every time we do these events,

i learn something about giving. i hear unbelievable stories about what people have done and how it has touched them. so for everyone involved in this, it's kind of a fun thing. this is not a guilt trip thing. to call somebody up, they say i am not good at that, but getting better. not many have said no. >> bill, thank you very much, and thank you for what you do. [applause] [captions copyright national cable satellite corp. 2010] >> next on c-span, treasury secretary tim geithnerer discusses the obama administration's fiscal apology. senator john thune outlines the federal debt. and a state depth terrorism report. and later a report on military detainees in afghanistan. >> tomorrow on "washington journal," we will talk to

national law reporter tony morrow about newly confirmed supreme court justice elena kagan. >> also, edmund andrews, john kroger and others. "washington journal" is live beginning at 7:00 a.m. eastern time on c-span. and wednesday, treasury secretary tim geithner her and others talked about american fiscal policy. he discusses the administration's proposal to allow some of the bush era tax cuts to expire in just under a year. this is just under an hour. >> good afternoon and welcome,

everyone. i am the president of the center for american progress. in just a few minutes we will hear from treasury secretary tim geithner, who i would like to thank very much for taking the time to come speak here today. i am also pleased that we have done something a little unorthodox and brought doug over to offer a divergent view on today's topic, the impending expiration of president bush's tax cuts. this is our second joint event with doug's new organization, the american action forum, and i would say given the toxic partisan climate in the area, both sides can take credit for not trying to kill ooch other. but i think everyone believes it is critical for the country to try to re-establish a dialogue between the center left and the center right. thank you once again to all of you for joining us. in my view, congress has a

golden opportunity this fall to kill two birds with one stone. it can and should extend tax relief for strapped middle-class families while the country winds its way out of recession. it could make a dent in the long-term structural deficits by letting the tax cuts for those at the top expire. but they are shaping up for a fight over whether or not the high end tax cuts should sunset as scheduled at the end of tht year. we wholeheartedly say yes. as a progressive who has expressed concern over the long-term deficits, allowing the top rates to revert will take a meaningful $700 mill bite out of the budget without impeding the growth of the economy. i think doug will argue that extending high income tax cuts will be critical for creating jobs and sustaining recovery.

but neither analysis or experience bears that out. c.b.o. ranked high income cuts dead last on a range of pract cal cuts that could help spur job creation. they found that one third of the money saved from discontinuing cuts at the top would create twice as many jobs if it were used to prevent laufs of police, firefighters and teacher. i am glad the senate mustered the 61 votes necessary to prevent the worst of the layoffs. i think one other factor weighs heavily on our side of the argument. it is history. we have provided you with a familiar flet that we have produced here that goes through some of the numbers about what progressive economic policy produced. i'm not going to go through that in the interests of time, but i would say that we do have eight years of history under

progressive economic policy that produced strong job and wage growth, and did so with tax rates that we are talking about moving back to. with that, i would like to turn it over to doug for a few minutes before the secretary takes the podium. as you all know, doug recently founded and serves as the president of the american action forum. he served as the director of the budget off and counsel for economic advisors. he was the top economic advisor to the mccain presidential campaign. doug, thanks for coming over today, and stage is yours. [applause] to z. thank you to the american progress for posting and everyone for coming today. before turning to secretaries geithner i want to do two things. the first is to introduce the american action for all of which i am the president. it is a center-right think tank dedicated to policy education,

policy ideas which are consistent with the principles th we feel have served this untry so well respect for individual freedom, reliance and private-sector, small efficient government is targeted toward its unique abilities. but more than anything else, we are dedicated to a debate over the substce of the policy ideas, the idea that there can be principled discussions about the differences that separate the center-right and center-left and it's in that spirit we are here today with the center for american progress in hopes of a stop washing a genuinely productive dialogue about this and many other issues that face our country. time will not permit me to disagree with mr. podesta. [laughter] but let me briefly outline where we might begin the disagreement. first and foremost, it is essential to recognize that the deficits in the next decade and beyond are deficits driven by spending problems, not insufficient tax revenues. all the projections done by either the administration's own budget or by the c.b.o. show

taxes rising to above historic levels of g.d.p. and still we are faced with deficits of more than $1 billion. this is not a solution to our deficit problem. i think it is imperative to look at this from two perspectives. number one is growth. in this economy we have households who are suffering the aftershocks of a severe financial crisis and recession. they have badly damaged balance sheets. they are in fact doing the right thing in trying to repair the balance sheets we've seen the savings rate rise. they are not positioned to power the economy forward. that means by a process of elimination we need to be focusing on the business community and on our net exports. the business community is, in this instance, really important

to pay attention to small businesses. if you look at data from the a.d.p. employment report, they break out employment growth by size of business. in their numbers since employment began to rise, there have been 189,000 new jobs created in the private sector. 90% of them are in firms under 500 in size, 30% under 15 employees in size. we need to take care of small businesseses. to raise taxes in the way the administration is proposing is to tax heavily the $500 billion of business income reported on individual tax returns. this places at risk 20 to 30 million jobs. from a growth perspective from the near-teerm and long-term, raising taxes at this point in the way the administration is proposing is not going to be a step in the right direction. and finally we need to look at this from the perspective of tax reform. we have a tax system that is badly broken. the essence of tax reform is to have a broad base and low

rates. everything we do in tax policy should be viewed through the lens of are we making racks reform. to preserve an unnaturally narrow base is wrong. so for those and many other reasons i am going to disagree in advance with the secretary and after the fact. let me turn to the real business. we are delighted to have secretary of the treasury timothy geithner join us. he is a graduate of dort mouth and johnson-hopkins school of studies. he is a long time fixture in the policy-making structure. he has served under five secretaries of treasury. he has served at the international monetary fund for two years, and he held a very important post with one of the linchpins of our financial institutions as president and

c.e.o. of the federal reserve back in new york. he was one of the key figures in the valiant efforts made to combat the financial crisis we have been through over the past several years. the main reason for his presence today is that on january 26, 2009, he became the 75th secretary of the united states treasury, and i am delighted to invite him to the podium today. thank you. [applause] >> thanks to both of you. i agree with much of what each of you said today, including the use of the word valiant. i want to compliment both of you on what you do. you want to raise the quality of debate on america's economic policy. it won't deliver on its own better judgments by your country's leaders, but we raise the possibility that you get better choices over time with institutions like yours engaged

in this noble effort of policy analysis and ideas. so my compliments to you for doing that. we face, as you know, some very important choices as a country in the next several months, and we need to make those choices carefully. guided by what will be best for the middle-class and best for economic growth. now over the past two decades, washington has given the country a useful lesson in the consequences of two very different approaches to economic policy and fiscal policy. in the 1990's, sound, prude, responsible fiscal policies led to large budget surpluses, along with significant investments in the middle-class, which helped to contribute to a period of very strong economic growth and job creation, led by the private sector with broad-based gains in income for all americans. washington then changed course, abandoned those basic disprince

of budgeting and borrowed to finance very expensive tax cuts skewed towards the most affluent and a substantial expansion of government programs, unpaid for. the result of course as you know was a huge increase in our national debt, relatively slow job growth and stagnation in incomes for the middle-class. now we are living today with the damage caused by those choices. as we start a new decade, we have compelling of what works and does not work for middle-class americans and for main street businesses. the debate we confront is whether to extend tax cuts for the middle-class, which are due to expire at the end of this year, and whether to allow tax cuts for the top 2% of americans, those with annual household incomes of at least $250,000 to expire as scheduled. this decision is about more than just the impacts on our

future deficits and debt, although that is critically important. it's a decision that will impact economic growth and the fate of americans in the fairness of our tax policies. now, the president's commitment is to restore policies that will help the middle-class and lay a foundation for better long-term economic growth. the president believes, and i believe, that extending middle-class tax cuts is an essential part of that commitment and is essential to continued economic recovery. these tax cuts mean roughly on average $2,000 per year for a typical middle-class family. but given the size of our fiscal deficits and debt, those inharrieted burdens, we have to provide that tax relief in a fiscally responsible way. we believe the best way to do that is by allowing the tax rate for the top 2% to go back to levels last seen at the end

of the 1990's, a time of economic growth and strength. there are some who suggest that we should hold the tax cuts for the middle-class hostage until congress extends the tax cuts for the top 2%. that would be a mistake in my judgment. if the middle-class cuts are not extended, americans will face a sharp increase in taxes and a sharp fall in disposible income. this would be irresponsible and unfair, especially given the fact that so many americans are still suffering through the effects of what we learned last week and what we learned through g.d.p. numbers, the worst recession in post-war history. allowing those tax cuts to expire would slow recovery. some have suggested that we extend all tax cuts. the world is like to view any extension of cuts to the top 2% as a relewd to a permanent

extension, and that would hurt economic recovery as well by undermining confidence that we are prepared to make a commitment today to bring down our future debt sits. fiscal discipline and responsibility requires hard choices, and we have to be prepared to make them. the president has proposed to terminator reduce government programs that we do not need and cannot afford. he has proposed to freeze nonsecurity discretionary spending, and by doing so by 2014 bring nonsecurity discretionary spending to its lowest level as a share of the economy since the 1960's. this will be re-- will require difficult choices. past budgets in an effort secretary gates in particular has been leading at the department of defense. now inthe context of those efforts to establish discipline on expenditures, asking the top

earners in our society to forgo an extension of recent tax cuts has to be part of the compact to restore fiscal responsibility in washington. some on the other side of the aisle insist on extending tax cuts for the top 2% of americans as a condition for extending the middle-class tax cuts but permanently extending the tax cuts for the top 2% would require us to borrow 700 lien dollars more over the next decade adding significantly to an already unsustainable level of debt. that would be a mistake. but who would benefit from that mistake? only again the top 2% of americans who today earn o average roughly $800,000 per year. now there are some who have argued against stimulus, who now say extending the tax cuts for the top 2% is just a form of stimulus that the economy needs

today but analysts from the cbo, congressional budget office to goldman sachs recently concluded that extending tax cuts for the top 2% would be among the least effective forms of stimulus. that is because the top 2% of the least likely to spend those tax cuts. certainly not in comparison to the 98% of americans who make less than $250,000 per year. while they would surely welcome expanding tax cuts itis not likely to change their spending habits. extending the tax cuts for the top 2% for one year would require the united states to borrow an additional $30 billion the top 2% would save most of that increase in after-tax income. w for we had an additional $30 billion to spend to reinforce recovery most economis would agree with the cbo it would be better to direct that money to tax cuts for the middle-class and to promote business investment and even more effective in terms of the

bang for the buck to use those resources to provide additional support to states so they can keep teachers in the classroom and policen the beat. over the pa few week some myths, old ones and new ones, have surfaced. there are some politicians who argue tax cuts pay for themselves. bad is a long discredited idea. ere is absolutely no evidence to support it. conservative economists and policymakers today are embarrassed by the argument and they run away from it. there is a second myth out there that by allowing the tax cuts for the top 2% to expire we are going to hurt small businesses. doug de this point. this is a political argument masquerading as substance. letting the top income tax cuts risk spire will affect less than 3% of small business owners. 97% of small businesses in this country would not pay a penny more due to upper income cuts

expiring. some of argued even if only a few percent of small-business owners make over $250,000 per year those few make up a substantial amount of what is called under this definition of small business income, but this argument apparently counts anyone who receives any type of partnership or business income as if they were a small-business. by the standard every partner in a major law firm and every principle in a major financial institution would or could count as a separate small business. and executive who has fees would also count as a small-business owner under this overly broad definition. if you actually want to help small businesses get needed tax relief as opposed to using them as a cor for supporting tax cuts for the most well-off, those people should be supporting senate passage of of the small-business jobs act this

week before they leave town. this bill, the small-business jobs act, along with important credit and lending initiatives calls for a zero capital gains taxes for long-term investments in certain small businesses and calls for a significant expansn of the ability of small and medium-size businesses to write off new investments. the policies put in place by the previous administration prior to this great recession have left us with a terrible legacy of challenges. the legacy of the crisis is millions of unemployed americans the country national debt swollen by eight years of deficit spending and growing income inequality. weive in one of the richest economies in the world but one in eight americans is on food stamps today. america is a less equal coury today than it was 10 years ago in part because of the tax cuts for the top 2% put in place in 01 and 03.

the most affluent 400 americans in 2007, who earned an average of more than $340 million each year or that year had-- paid only 70% of their income in taxes, a lower rate than many who consider themselves middle class americans. now we are in the midst of, and we have been for the last two and a half years at least, a very important debate about the best way forward for our economy, the appropriate role of government in the economy and we may disagree about the role of government in promoting better health care or retirement security or public education for our citizens and even where we share those objectives and of cour many of us do we may disagree on how best to achieve them but i believe there's no credible argument to be made that the purpose of government is to borrow from future generations of americans to finance an extension of tax cuts for the top 2%. the president believes and i

believe that we should keep taxes as low as possible consistent with funding the essential functions of government. that we have to pay for the programs we decide as citizens the government should provide and we have to do it in a way that both promotes economic growth and despair. we can't pretend that deficits don't matter, and it is encouraging today that we see more republicans expressing concerns about future deficits. borrowing to finance tax cuts for the top 2% would be a 700 billion-dollar fiscal mistake. it is not the prescription economy needs right now in the country can afford it. with that, i'm happy to having-- to have a little conversation. thank you. [applause]

>> in the interest of being a good host, doug i will let you have the first question. >> as i am sure you are aware of the cbo looks each year the president's budget and their analysis of the president's budget says for the next 10 years despite the fact that that budget includes tax increases on thound or 250,000, we never have a deficit under $700 billion. we end the decade with a deficit of $1.2 trillion. the debt-to-gdp ratio is 90% and in 2020 we are borrowing $900 billion to pay interest on previous borrowing. how do you reconcile your deep statement about interest in depth as a control when yur own budgetary plan takes those tax increases and spends them so much we have a larger deficit in 20 than we do in 2015? >> the cbo numbers and the omb numbers both show that with the

president's policies, we cut our deficit in half as a share of gdp over the next three to five years. cbo has estimates that leave us with a deficit slightly higher as a share of gdp live by veers out than the president on estimates. there are i think roughly one percentage points apart but they show appropriately that with, by allowing the recovery act to expire, by making sure that we contain discretionary spending, by supporting this package as a fair progress fiscally responsible packet for tax policies we can make dramatic reductions in reducing or long-term deficit as a share of gdp. for exactly the reason you are suggesting doug which is future growth depends on competence events and the americans to bring those deficits down that is why we think it is responsible and prudent to make

the tax cuts for the top 2% expire as scheduled. again if you don't do that you are going to be adding another $700 billion to the future deficits and i think that will risk undermining confiden in our ability as a country to begin to dig our way out of this deep fiscal hole, so that direction now, we acknowledge that this program of tax policies is not going to solve all the problems in th country. even if congress embraces and adopt the president's policies and submits to the discipline on spending that we propose, we are still going to have unsustainably high long-term deficits. we don't get them down far enough and for that reason the president taking a page out of-- bipartisan commission of men and women from congress on both sides of the eye of national experts in fiscal policy and economics and asked them to step

away from politics and try to figure out how to build a coalition around changes in policies that will get us but we need to do. so i agree with you is really important that is why again it is a good reason for why it is a prudent step today to let those top 2% cuts expire on schedule. >> let me follow up on that for maybe an unusual perspective which is i find it a little bit ironic to centrist democrats who have been allowed over the last year in saying that deficits are a problem and need attention have been the quickest to move towards letting these high-end tax cuts slide for a year or two and i want to ask you to speculate on their motivation but i will ask you, what do you say to them about the effect? you suggested to some extent in the speh but to the audience would you say about the effect of growth from the policies he

laid out in your speech? >> again i would start by saying that you have to recognize that the best, the central obligation we face now is to make sure we have this economy moving again. to dig our way out of this hole, reinforce recovery. t just short-term economic growth but long-term growth prospects in and you also have to recognize we do not have unlimited resources. we have to make choices. governing is about recognizing that we have limited resources and i do not elieve that it is abe prudent use of limited resources to again borrow huge amounts of money to make possib the extension of those tax cuts for the short-term. now, if people think there is a good case now for more stimulus r the economy we should have the debate about what is the best form of stimulus and again i think it is fair to say that economists across a broad

spectrum of the political ectrum, the economic profession would not rank those tax cuts to the top 2% anywhere close to the most powerful forms of stimulus and because we have limited resources we are going to make sure every judgment we make that takes a dollar of resources, it a dollar of-- we are using to support things that have a very high return and again because, you know the economic arguments, i don't think there is a good argument to make that the best use of the resources is to extend the taxes for the high-end. small business gives lots of good examples and again what we are trying to do is to find things that have a very high return that was part private investment that will have the highest contribution in raising employment at the lowest possible cost to the taxpayer.

>> let's go to that debate, which is her closing phrase, this policy of raising marginal tax rates, raising taxes on google-- dividends will spark tax growth. >> what we are proposing to do is to say for 98% of americans and for 97% of small-business owners, that we leave their existing tax rates in place, but we are also proposing to make sure that tax rates that are important for investment, dividends and capital gains, don't rise beyond 20%. we are also proposing to extend a variety of important tax cuts for businesses to spark investment. we are also proposing to make sure we are using tax resources to help make it easier for people to complete college in a very difficult economic environment. that mix of tax programs in our

judgment again, is more pro-growth and more fiscally responsible so thank you for that again. >> again, we are not talking about cutting anyone's taxes. the question is whose taxes will rephrase and for how long? that is the issue that is on the tabl it has been framed by you and others as a stimulus issue when i believe deeply it should be framed as a growth issue. we are past the point where the economy is falling. we have an economy that is growing, growing unacceptably slowly and the pain has been for by many millions out of work so it is past time for sugar highs, stimulus. you yourself say household specters badly damaged are unlikely to spend. changing stimulus is about stuffing money into households, a big chunk of the stimulus given to state and local governments, again unlikely to

spend. why not air on the side of caution and not raise any taxes on the business community which is uniquely positioned to power us at this point in time and we come back to the argument about small business which i believe is more than political budweiser being framed as stimulus when we should be past that and when even the framework doesn't match the problem we have. >> it is always about how you balance what is best for growth, what is fiscally responsible, what is fair. those are the things you have to balance in the choice we face is how best to balance those objectives and again i do not believe that given the fact we do live with little resources we don't have unlimited choices now, that to take $30 billion the prospect of $700 billion over 10 years and use that to again extend tax cuts that only go to 2% of the top earners in the country is likely to have

probably the weakest impacts on activity as almost any of the alternative uses including the tax code for those limited resources so that is the case. again i think it is very hard. it is very hard to make the argument that we can afford to add that additional debt burden over the 10 year period, given the basic damage to confidence presented by the long-term deficits and i don't think we get much positive back on grover. >> i just want to acknowledge, you know i am not a fan of the deficit outlook. it is deeply unfair. this is one of the most unfair things we will see but i never thought i would see congress outspend a republican congress and now we have and that is a problem. >> that is a very important point. it is worth pointing this out.

you know the decit we started with which was $1.6 trillion is a function of a lot of things that have happened over time. it is a the concept of two reception-- recessions. 1 mile one and one deeply sever one but also a consequence of a choice of how to govern and a bunch of choices to suspend and abandon basic disciplines like paygo and finance very expensive expansion of entitlements in tax cuts. now, the recovery act and can jb did a very modest additional anchormen to that budget deficit, to not have broken the back of that financial panic. i am very confident and we have evidence to support that recently, that we would have had much worse growth, much higher unemployment, much more business failure and much worse damage from a fiscal position. so i think we have done the best mix available of progrowth policies to break the backs of

financial panic recognizing of course those had to be temporary and we need to make sure we start the process now of digging out long-term. >> we will get to questions from the audience here in a second but i think the focus really is on growth. this was the centerpiece of the bush economic program, were these high-end tax cuts that produced 2.3 million jobs before the recession. nearly double that many were lost before you left office. we had growth that was half as strong as it was in the 1990s. medium household income declined for the first time since the 1960s by actually a whopping $2100. wage growth nudged up only $300 for women and actually fell $2000 for men. the expected growth of these high-end tax cuts, i think we have got actually a proven record on this and it leads me

to ask, i am almost tempted to ask doug, why would anyone want to embrace extending that record? i think we also, there is also an issue that is sort of embedded in all of that whicis that we have talked a lot about the wage gap that began to really growing again during what they call it? the wealth gap that continue to expand as it has over the last 30 years. is there now a recovery gap? are people at the high-end now? we have seen the stock market bounce back to 51% from its bottom. we have seen bonuses come back, at least the ones that get reported in the newspapers. corporate coffers are up 31%. the people at the top really seem to have begun to experience recovery as opposed to the middle class and particularly

the long-term unemployed. the tax policy embedded in your approach gets at this recovery gap we are currently experiencing? >> absolutely. financial crises are brutal in and the pain falls much more heavily on average americans, not just on the they are going to be living with the consequences much longer than the rest of the economy and all though the overall economy has been growing for over year and although the overall averages and show a job creation the beginnings of inrease in income growth, those averages mask an econy that has parts that re really quite strong, ally encouragingly strong like you see in high-ch. you see the evidence in exports rate despite concerns in this community. uc business growing at a rate of

butyou also see large parts of the economy that were hit hardest by the crisis still facing probably the toughest economic environment americans have seen in generations. anybody in construction, anybody in real estate at the epicenter of the housing crisis and of course lots of small businesses across the country still facing a really difficult environment. support to the parts of the economy still in crisis. we are using our limited resources as carefully as we can to make sure we are getting the impact on repairing that damage. targeted support for small businesses to states and local government is a very good, very essential policy. we are fighting very hard for thatut again we have to do all that and still recognize we have got some basic obligations to everything and i think one thing

we learned in the last decade is deficits do matter. it is not free and it is important for people to recognize that you have to balance those things in a way that is more fair, better for growth, better for the middle class so absolutely, john. >> there are a lot of companies sitting on a lot of cash. what is going to take them to hire people and to give them-- is it going to be on the demand side with middle class and is >> that is the necessary are increasing demand and try to sidelines. large shares of cash today? it is really for two reasons i think. one is they didn't come into this crisis with strong balance sheets. that is a good thing for the country. it is part of why growth came

back more quickly. that is distinctive economy and the best way to explain it is just that the scars of this crisis were so deep and so traumatic that it has left people very much more tentative about how strong growth is going to be and until they see that are still being very careful about how they put those investments in. the good thing is to say private investment is growing at a really rapid rate now and we hope we can sustain it. it is probably not going to be quite that great but i think it is encouraging. >> can i come back to one thing doug said? is that okay, doug? >> okay, then i'm going to disagree. >> is is important to recognize that for policies the president has proposed, for non-security discretionaryspending by the federal government, if adopted by the congress,e believe

non-security discretionary spending at a remarkably low level as a share of the economy, lower than what prevailed during president reagan's term and i said in my remarks lower than it has been since the 1960s. so we are not proposing and do not belie in proposing a set of policies that don't recognize are responsible burden for showing that we are willing to cut things that don't work and hold things to a, or restore things to a much more modest share of gdp as a whole. >> a couple of comments which i won't even disguise of the question that the first is, i will say this lovingly that there was a president other than president obama who had a large deficit and said i will cut in half by the end of my time and i will do it by freezing non-security, non-homeland

spending and we have seen that movie before and i think that is why people are skeptical that they believe that any tax increases will be used for deficit reduction because the track record on that front quite frankly collectively is not very good. if there is a memo in a chore,. >> what is important for people to recognize is our deficits today like when we came into office were roughly 10% of gdp but have a bad as a share of the economy is the combination of the temporary recovery act stuff which will expire and the effects on the deficit of the recession, so even with-- and from higher trafer of unemployment benefits th come in a recession so even if nothing, i shouldn't say it quite this way but say nothing happened in washington for the next four years. >> nothing is happening in washington.

>> but if we suspended, then you would see a very sharp reduction as a share of the economy. now, i agree most people look at america over the last decade or able to show and liver the kind of choices on how to use limited resources that average american families on all of us. the press and can enforce that. we are proposing its but we are going to live by a proposed budget to get us back to balance, get us back to a stable position. >> can i make one comment and the question? and running the horserace between the '90s and the first part of th decade i think would be fair to recognize that the '90s have adot.com bubble which read lead to a recession. they were beneficiaries of the peace dividend from a union and

the economy in this decade has suffered from corporate governance scandal, oil price out the effects of tax policies on economic growth is notç the. here is my last seriousí question. >> i try to be careful not to say that. i will leave it leave it to the outcome. in 2008 we send out checks to government which is conceptually identical to extending temporarily middle-class tax cuts. those checks did nothing to stimulate consumption, household spending or the economy. why are you confident that this approach will work? >> are you saying we should let the tax cuts for middle-class americans expire? >> the proposal is to extend them temporarily which is equivalent to having them. >> what we propose and it is probably worth stepping back for

a second. the recovery act which of course came alongside various programs by the federal reserves, essential programs to restore liquidity as well as the efforts made to recapitalize the financial system had very substantial tax cut, pretty necessary substantial support for states and investments in things that matter for long-term growth. that package of measures, quick-acting in a the two years were very powerful, incredibly porful and stopping the freefall in growth. if you just look at the graph of growth or equity prices or concern about the future of the world, the financial system, trade and finance, that turned when people saw congress legislate that package and the things we did to help fix the system alongside the fed. they were very effective. again, what we are proposing to do is to let americans

understand that we are going to extend those tax cuts for 98% of americans. in the presence first two budget we propose to do that over the full 1year windoand to do it in a way that is responsible consistent with the obligation we also have to bring down the deficit substantially this year as the economy recover so that is why i think for those two reasons i think it is good policy but again you have to judge these things all against the alternatives. we are judging things against alternative choices and again to take the alternative path which is to say we are going to borrow from the future to extend the tax cuts for the top 2% i do not think would be a prudent, responsible or effective program of the use of resources. >> we will take a question from the press here. identify yourself please. >> mike elkin. you just mentioned the economy has been suffering for a brady of reasons in the excluded mentioning trade. october 1 you have an

opportunity to label try and egg currency manipulator. considering that since her last round of negotiations have only raised 1%. >> a very important question and i guess i would say a couple of things in context. china is very important to the united states. exports to china in the first four or five mths of this year were growing rapidly doubled apace of exports to the rest of the world so the growth uc and china, the reforms he see in china as they shift towards an economy more driven by domestic demand are providing very substantial benefits to american workers and american businesses and you can see that jut in the cold numbers. now, china as you know about six weeks ago i think took the essential step of restoring

flexibility to exchange rate and making it clear they are going to allow that exchange rate to appreciate in response to market forces over time. they are only at the beginning of that process and what matters is how far and how fast they let it move and of course we like everybody else are watching that closely and everybody can watch how fast that will move. it is worth remembering that when they last let the exchange rate move in the period between 06 and 08 it moves 20% over a two-year period not. it is very hard to judge from the initial movement again how far and how fast they are going to let it go. wh is important to us and all of china's trading partners as they lead to depreciate significantly in response to market forces. >> the administration supports dividends going from 15 to 20% but are you working with lawmakers on our way to pay for it because budget rules prevent that from happening and then

business issue again? does mr. holtz-eakin agree with the estima by aj pt that only 3% of small business would be impacted by letting the top rates expire? thanks. >> you are right that the extended dividends reires refines and resources to make that possible and yes we are working with congress to find a way to do that. the question is why it is h again we are trying to figure out what is the best, most progrowth package of tax measures, the most responsible for the measures and agin but we think makes the most sense for the country is to make sure that 90% of americans in 97% of small businesses see continuity in their tax rates and that we keep rates that are very important to capital investment like capital gains dividends fromc8 rising dionne the level that would help investment that you are right to point out we

have to find a way to pay for that and we are going to have to do that. i don't want to speak to how we do that. that is obviously something we have to work with relative members of congress with but it is important to do that. >> for those in the audience that didn't get the basis of that questioned the budget discipline that congress has reimposed, that they abandoned in 2002 or before the 2003 tax cuts that reimposed last year requires paying for this particular increase to be able to not have that go back to ordinary income. >> the short answer is i agree with the estimates of two and 3% that have been dumb but it doesn't matter how many tax?? returns go to the treasure. what matters is the amount of economic activity affected by tax policy and because of conscious attempt to integrate the business and personal income taxes we have income reported on individual returns.x

>> do you want to point out again though that a lot of the small businesses on those returns are not what probably most people think of as small businesses but partnership income, people who have taken a? corporate form that allows us to pay personal taxes and it is not ordinary business income that is being accounted for a think. can i just say something? >> i will defer to the secretary of treasury but i want people t÷ understand this. my point on this is that there are traditional objectives of policy at play here. one of them is to integrate the business and personal income taxes so that all taxes will be appropriate whether directly through wages or indirectly through business act to be. the second is to have a tax that does not discriminate unfairly among alternative forms of business, skil of business and to set out as an objective to draw a line that says you are small and you are large and treat them differently is at

odds both with the integration issue and with the traditional goal of tax policy. as i said my opening remarks i believe bush should be ruthlessly focused on progress tax reform because we are going to need every ounce of growth we can get. >> we might actually agree on some of that. >> again, the question is, does that objective of what wld be ideal for abolition of tax policy over time justifying leaving in place tax cuts to a very small fraction of american businesses, given that fact that we have these competing very important imperatives not just of growth of fiscal responsibility so that is a question. i don't think we can elevate elegans in the near term at the expense of that basic objective. i think it would be a mess-- expensive mistake as i said.

i.c.e.. >> i think we have time for one question from the gentleman in the aisle and then we are done. >> i have a question on the outlook of the u.s. economy and the international market. there has been a growing concern about the economy and the japanese yen is getting stronger and hit a 15 year high yesterday chairman chairman bernanke said the outlook is unusually uncertain and weaker public coeption growth is fueling concern. >> the american economy is growing. is growing at a moderate pace. it has beengrowing for 12 months. some parts of the ear are accelerating as you see in private investment. infective you just put together spending by households and by

rate of growth in spending accelerate, not moderated as we get into this recovery. but, it is very important to recognize that we are still living with the scars of a very deep, germanic financial crisis. they are going to last for some time. it is going to take us a long time to repair the damage caused by that crisis. it is our responsibility, our obligation to do as much as we can to reinforce that recovery to reinforce growth and make sure you see growth extend to the parts of the economy that are still suffering the most, still suffering the worst economic conditions have seen in generations. that is why we are working so hard to help convince the congress to move forward with additional incentives, help it credit markets and sate and local governments. there is a very good economic case for doing that. we have is they want to do it in a way that is responsible fiscally but it is important we

do that. it is i think worth noting that we have really adjusted with amazing speed and force to get through this crsis. we have had a huge adjustment already in the housing market and the real estate market. you have seen a very substantial deleveraging necessary of the financial secretary to get itself back to a stronger financial position. you are seeing households have made substantial chaes already in reducing their debt durden and saving a larger fraction of income. those are very encouraging, very helpful adjustments. the business cuts so savage in in their peak of the panic because they were frankly scared to death has been just devastating for the basic sense of financial security, economic security and a that is going to taktime to repair but the american economy is in a much

stronger position today to manage echoes of the actions we took to break the back of the financial crisis and to begin to repair the damage and begin our job is to make sure that we are reinforcing growth and making sure we see growth extend to the very substantial parts of the american economy that are suffering so much from the american crisis. >> please join doug and me in thanking secretary geithner for with us for this conversation. [applause] >> please remain seated until the secretary has left the room. thank you. [inaudible conversations]

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[captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >> do you think -- have you any evidence that hamas is involved internationally in terrorism or would you only say israeli civilians are being targeted by hamas? my other question is about al qaeda. you talk about al qaeda as we know it or as a -- because most what you have mentioned is carried out by affiliates whether in iran or iraq or elsewhere. >> you are right that we are sometimes inprecise in our

speech. we should say either al qaeda senior leadership or the core or the broader network of affiliates that have taken the al qaeda name and others that are acting with them. certainly, you know, our concern is the broader one although the core remains probably the most capable unit within that entire network. on the issue of hamas, hamas has been responsible for killings of americans although there are some years back. of course hamas right now is -- a cease-fire. most of the victims have been israelis but hamas does have american blood on its hands as well. >> you mentioned -- do you see

expansion of -- pakistan and what is the relation -- >> let me put it this way. we are concerned about any indications of the spread of radicalism in pakistan. many of these areas identified as safe havens actually have pockets of militants in them, radicals, terrorists for sometime. welfare seen some areas more worriesome than before. there are plenty of areas of concern and i'm sorry, the second part of your question? you know, the story, i want to

reiterate that we deplore this release of material, we have been forging a much better, more trusting relationship with pakistan, you know the documents ran up only through december, 2009. the president had, you know, new policy for afghanistan, pakistan at that time. we feel that with the strategic dialogue with the new policy in afghanistan, we are building a much better relationship, a more wide-ranging relationship and one that is bringing our countries together to confront the common threats we face and we continue as part of that broader relationship to encourage pakistan's continuing strategic shift to take on terror and i think that that

trees probably where we'll leave this. >> -- that's probably where we'll leave this. >> what happened? what changed and secondly, al-awlaki, apparently under a death threat from the government. >> well, this is the state department. i'm reluctant to offer too many opinions on what happened. domesticically, i think the fundamental points are probably in any population of a certain size. it is in evidenceable that you're going to find more people over time turning up as radical. i don't think that the fundamental assessment is

differences between the american community and the communities in other countrys is wrong. i just -- countries is wrong. i just think it is at some point we would see greater radicalizeation. an important component of that has to do with the reaction after the ethiopian invasion of somalia, which caused a great deal of anger. it has been noted that we have seen a number of americans going to east africa and that is probably a considerable part of it. >> is there anything you want to add? >> what is the evidence involved in the operation, there is a considerable body of it. >> i can't talk about most of it here.

sorry. >> the information about the relationship between -- but your not sure about the kind of relationship. can you elaborate on that? >> i can only say that we have heard the targets from bogota and are looking at the reports carefully and we urge all countries to observe their responsibilities under international law not to host terrorist groups. >> that means the u.s. government is clear -- >> i said that we were looking at those reports and trying to ascertain the truth of them. >> there is a difference, could you please explain what is the difference between not cooperating and -- in the -- against terrorism and sponsoring terrorism because there were some outspoken voices here trying to include venezuela in

the -- so could you please explain to me? >> there are two different statutory proses that have different criteria. we do these evaluations about whether other countries are being cooperative in counterterrorism efforts. that is one thing. another thing is whether or not they are actually actively sponsoring terrorism abroad. and so we have a number of countries that are not cooperating, but that have not been listed as state sponsors. venezuela being one. >> in twix, in 2006, what will change this time? >> cooperation. i think the political relationship speaks for itself. we would very much like to see

venezuela cooperate and have the doors open to that cooperation. >> in the forward of the report, there are questions that you're asking, that the government is asking about what causes terrorism and one of the questions is are our actions going to result in the creation of more terrorists. i wonder if you can expand on what actions you are talking about and how we would alter them. >> i think that is something that is very much the summer of our policy and deliberations. it very much affects our thoughts regarding our presence in particular parts of the world where we may not be wanted as much as we might think or might like. it will certainly condition how we view any new supports. any connecticut action because i think we have a more, more

precise understanding about the relationship, and i won't claim that we have -- but we have a better understanding of the relationship between the use of force and the radicalizeation of those watching it. >> that would be with any country, you know, that is harboring terrorists, would they ever want our presence if we're here talking about how there are terrorists in these different places and certainly we wouldn't want to -- >> there are countries that would like not to have them. at the same time, that doesn't mean we should use force there. there is a wide range of circumstances in which we find terrorists. the question is what is the appropriate way to deal with them? what threat do they pose for us? our security and ability to work with countries in that region? you know, just to give you an

example, you know, we -- you have heard an awful lot about terrorists attacks -- it is obvious that using force there is a solution for us, given what our interests are and given all the other means at our disposal to deal with the problem where we have some capable partners and we can build capacity. they can deal with their regional problems themselves. you know, we really just have to ask the question, what is the best way forward. >> i was wondering if you could give me the names of the iraqi shia groups that iran is continuing to provide legal support including weapons,

training and funding in guidance for these groups and iran's forces have been providing forces to after the taliban in afghanistan. >> we don't have information that we can provide on that. >> so we should just take this -- we should just take these militant groups in the reports, not needing the name or anything. i'm trying to find the names to these shia groups. >> we haven't mentioned any of them by name? >> we'll get back to you on that one. >> and evidence that iran's forces have been prosiding training to the -- providing training to the taliban? you provided a lot of information here.

i can i find? one more question, do the terrorist organizations have to commit acts of killing people to be a terroristing or nation or do they just have to not cooperate with the u.s. or would that designate them a terrorist group? >> no, for organizations, they have to be foreign and carry out terrorist attacks or intend to carry out terrorist attacks. if we saw a group in formation that was going to carry out an attack, we could designate them and practice however there are so many groups out there, i don't think we have designated any before. >> one last question. >> i'm sorry. you can't ask all the questions. >> to hamas and hezbollah and also -- the weapons to the

taliban in afghanistan. north korea supporting militant groups? >> let me be clear about north korea. we have seen those reports. we are looking into them. the secretary and others in the administration have been clear, that if we find that korea is indeed sponsoring terrorism, indeed, we will revisit the issue of the lifting as a state sponsor. they were d-listed in accordance with the u.s. law in 2008 and it was at that time that north korea had not supported any terrorism in the previous six months. but you raise an interesting and important point and we are looking at that. >> wait a minute. wasn't that a document -- you're looking into a report about your document? you said you're looking into the report.

>> those were press reports. >> there have been other almosts. i understand -- it would not meet your statutory definition of terrorism. there was an assassination attempt against an exiled leader in south korea and now these arms sales, how long does this proest is sess take, the designation process or the review of the process? >> it is a fairly laborous process. what is going on or not. it is a very complicated process, but it has to be waterproof. it has to be scanned. all kinds of different tests and it is not something that we do

overnight. i'm fully aware of that issue and we're looking at it quite carefully. >> could you explain why you say that it was bound to happen that there would be a radicalizeation of subpopulation, domestic subpopulations in the question of home grown terrorism. secondly, you mentioned the 14 indictments today. are those all new cases or are they related to cases that we know of previously of the somali-american community? >> on the new indictments, i refer you to videotape. i don't happen to have -- we heard they were coming and then they were there at noon or something. i don't know the exact circumstances. bound to happen probably sounds a bit more determine isk than i

would like to sound, but the -- i'm just suggesting that in any large population, there is a probability that some small fraction of people will ultimately be attracted to any particular ideology over time. we have seen this in lots of different contexts, whether it was the christian identity movement and timothy mcveigh. the point is it is a large, globalized world. there are lots of rather nasty ideologies going around and at some point, someone, for whatever complex reason, having to deal with both their personality and social circumstances and the like, is going to be attracted to it. so, you know, i don't think that

there is anything either genetic or culturally determined about this. it is just probabilities over time. that, i think is something that we have to live with. i think it is probably a cautionary note. we have been fortunate that we have not seen greater radicalizeation that we haven't seen that in terms of the structure of our society and its openness and integration within the community but we nonetheless have to recognize this has happened in the last year or two. >> i'm just curious whether the group in iran, to the extent they attack iranian civilians, i know they often attack the militants but to the extent they attack civilians, are they in here? they are in the -- even though

it is not designated? >> i think the statistics do not only cover designated groups because there are many more groups out there than we have been able to designate. >> we have 250 groups in the catalog. >> ok. thank you very much. >> today on "washington journal," we'll talk to tony mauro about elena kagan. a look at the monthly unemployment figures with edmund andrews of "the fiscal times" and john kroger and john southers will discuss the implementation of the law.

"washington journal" begins at 7:00 eastern on c-span. >> over the years has come as close to being a religious issue as any defense issue ever is. >> this weekend on book tv, richard whittle looks at the decade-long battle for the marines or politicians to build or kill the v-22 tilt rotor aircraft. join us on twitter. more than 40,000 viewers already have. now a briefing on detainees in afghanistan. navy vice admiral robert harward is joined by ambassador hans klemm who recently announced he would be serving as advisor to the afghan attorney general. this is a half-hour.

>> all right, gentlemen. good morning here and good evening in kabul. i would like to welcome to the pentagon briefing room, vice admiral robert harward. he assumed his duties in afghanistan in november of last year and his task force assumed command oversight and responsibility for u.s. detainee operations in january. joint task force 435 is also responsible for biometrics efforts in afghanistan. this is admiral harward's first time joining us in this format and he joins us today from kabul where his headquarters is locate. the admiral is joined today by ambassador hans klemm, recently appointed director of rule of law and law enforcement. believl

harward will take questions and then turn over to ambassador klemm. >> good morning. but we clarify a couple things you said. we assume the mission in january. we just stood up a new detention facility. we are just transferred all the detainees in the old fee eckert and we have closed the locker room facility. our first focus was to ensure the perception of the u.s. detention operations were in line with the reality of what we did. during that we meet all of our operations open, transparent and and close if. that was through the whole cycle when any individual was contained in afghanistan we noted by the government of

afghanistan families, district leaders detained. in the detainee review boards, we opened that up to the afghan public and we now have afghan families and citizens to stop fighting on the military tribunals. we opened up to the afghan independent human rights groups and other ngos and then our release process is completely run by the government of afghanistan has seen in our last two releases no u.s. participation conducted completely by brigadier-general and the government of afghanistan. our priority transition of facilities and operations to the government of afghanistan. we have made a lot of progress. i have about 400 afghan military police corrections officers at our facilities, and in fact 126 of them are inside the facility

conducting off guard duties at this time. we will start the transition of those facilities on january, 2011, and complete them as quickly as possible but no later than january, 2012 all of which will be condition based. but i would be remiss if i don't bring you up to speed on our current evolution. am i joint task force is evolving into a combined joint interagency task force effective one september. in that role i will support the civilian lead interagency rule of law law enforcement corruption efforts led by my new partner, ambassador klemm. i will turn over to the ambassador for in the opening remarks before we take questions. >> thank you, admiral. if i could just supplement your opening remarks a little that,

it was decided roughly in the spring of this year the decision reached by general petraeus, ambassador eikenberry and also senior representative ambassador richard holbrooke the unity of effort by the united states and the rule of law a rio was lacking. it was decided up that point to create the combined joint interagency task force out of admiral harward mengin but also to put into place a new position as the ambassador frank at the embassy to oversee all rule of law justice counternarcotic said, anti-corruption activity across the military and civilian spectrum and they got a call in late march from ambassador eikenberry asking me to serve as his senior adviser on this very important task, and i was very

honored and grateful to receive the invitation. i arrived just over a month ago and my work has largely been focused on a joint project the admiral had to stand up to this task force that well on a new platform resource both by the military and civilian agencies that will allow us to better focus and concentrate and put into better alignment with afghan goals projects in the justice rule of law counternarcotics and anti-corruption area. it's a pleasure to be with you this morning. i look forward to your questions. >> admiral, the anti-corruption task force i guess there are a couple of them that president karzai talked about yesterday,

includes as part of its mandate to try to collect information on the financing of insurgent operations. can you tell us what information you routinely seek from detained suspected insurgents about the source of their money and what they intend to do with it? >> returning to this, exactly the information we are after but we talk to every individual detained through all portions of the lifecycle not only to identify the services but also the highest in the government, the insurgency and all other connections they have to understand how it functions in afghanistan. >> are you receiving enough of that information as part of the

detainee interview process or are you trying to get more? >> we use all intelligence to try to gather that information. our strength is having a large population. we have access to that we can spend a lot of time talking to and gaining more fidelity on the systems and those individuals interact and how they function. >> at admiral the last time we spoke i was at the new york times but have moved to the "wall street journal." question on the sort of reconciliation issue. how is -- is that going up the sort of speed you want to see it? are you able to sort of do some reintegration with people in the system? do you want to sort of speed that up and what do you think

will happen once the transition happens at the end of the year with that process? will it continue to go smoothly or what's the prospect of than the future? >> good to hear from you. albeit for a far distance. but i will tell you this, as a focus of everyone here today, i had several meetings ministers hamid karzai and the other players looming on the larger strategic reintegration program. as you know, our efforts have been at the tactical level where we've taken these individuals with their families, a village leaders, governors come in to testify of the detainee review. then when they are determined to be released we schedule the individual sites will not return to the fight so does the family,

the district, the government leaders. so we have created a process that i think becomes a good model for that strategic integration that is that very powerful in the meeting because but everyone we released at least 50 of the last hundred, those hundreds had been instrumental in ensuring that the purchase of batres are in the informal system looked after those individuals. so we think it portends well for the future. we want to make sure these programs will create sustainable and make models for the afghan system into the future. so we are looking how we are going to do that and how we are going to sustain that not only systematically but financially and we've become very creative. we think some of the money allocated by the nation's for

the afghan peace and reconciliation is a good venue for that. .. and we're supporting in that endeavor so i think that is the best snapshot i can give you of it right now, julian. >> can you tell us about any plans underway to maybe keep a part of those afghan facilities

under u.s. control and possibly detain some prisoners that were arrested outside of afghanistan there? >> that's another great question. we are concerned with that. we desire to transition all the facilities to the government of afghanistan and we're looking to third country nationals, those individuals who are not from afghanistan and how we are going to deal with them. the first presence is to repatriate them back to their countries and if not, prosecute them in the afghan legal system. we conducted our first series of afghan trials. already who were building-- we are building additional capacity to do that so our goal is to address those individuals who

during the transition period. >> do you are allowed to keep some of the-- under u.s. control like those that we are talking about? >> our preference would be not to, but i would not rule that out as an option if the government of afghanistan desired us to do that sometime down the road but i would tell you, president karzai is very focused on exercising sovereignty of all individuals detained in this country and we want to honor that commitment and we are partnered and we will act on behalf or follow the guidelines of the afghan government as we go through this transition period. >> my question is-- and the arab

world or muslim world especially where you are and afghanistan, what do you think about your presence there and if you have proved the military view as far as america and afghanistan is concerned? >> let me tell you two things. we just hosted all the ambassador of muslim countries from herat embassies here in afghanistan. they were all at the detention facility in parwan this week. i think they were impressed by the facilities in the programs were hosting. i would also tell you of those 200 individuals who have been released this year, all of them said they were treated well. they had great medical care and most of all we treated them with respect. in fact one individual, although

i would not want to be competing with mcgruff said he is learn more in our facility then he did add a madrassas so i think that is part of our goal, to make sure people understand what really happens in u.s. detention operations but i would also note that all of them said, well while they did not mind and in some cases, they all enjoy their freedom so much. i would also tell you that we have seen a very low recidivism rate, so i think the detention process has been helpful in ensuring individuals did not return to the fights. so i can't speak on the broader contents and i will refer to the ambassador but from what i have have seen individuals who have been through our facility, they are very positive. >> i'm afraid i didn't quite catch the question. could you repeat it, sir?

[inaudible] >> their perceptions in the muslim world? the perception of us here in afghanistan i think is what he said. >> that is a very broad question. sitting here in kabul, i do know that there is quite a large representation of other countries with majority islamic population. also there is a major international conference two weeks ago in which a number of islamic countries had very senior representation here and all of them together with the united united states, together with other western countries, also japan, china and others all pledge to support the further development of afghanistan and

also to bring the insurgency in, to an end and provide security for afghan citizens. >> and quickly, in a different way, general do afghans believe you more now than taliban because in the past they were saying taliban are bigger than the international community because they want the international community to do more for afghanistan. >> i am sorry. >> i apologize. i am not getting all of the question. i think again, i think the perception of most afghanistan's or the international community, is that what you were saying sir? >> yes sir and how do they feel

between you and afghanistan? >> i just don't understand the question. something about us and the taliban, serve. >> admiral i will take a shot from here at the lectern. yeah the view of the afghan public in general about u.s. and coalition forces as opposed to how the locals view the taliban and the fed has shifted over the time you have been there? >> again, i have to go back to kind of what we are doing and detention operations. perception and reality. i think the afghan, when i first came here in 1971 and hitchhiked across the country, every afghan i met, because i was american they wanted to talk to me. they wanted to understand about our country.

the people i come in contact with today are no different than that. i think some individuals, it is a very rural country who have not come in contact with americans or the international community have had negative experiences of and are more liable to respond to resonate with the taliban message so i think it is important at the end of the day that we make that perception and that is what we are trying to do in detention operations. i think in the broader rule of law efforts as well. >> the polling that is done here in afghanistan, consistently shows there is very little public support for the taliban and there is still quite a bit of support for both the government and the partnership with the united states in the effort to bring an end to the insurgency and to put afghanistan on a sustained path

towards development and democracy. >> admiral, this is the "washington post." i want to follow up on daphne's question about third-party nationals. can you tell me how many you have currently in custody as well as give us a basic idea of how significant that population is in the general idea of where they come from? >> sure. there were 75% that came from pakistan. one or two at most from any other country. >> thanks. >> this is very local fights. >> this is kimberly dozier and like my colleague who heard from

the start of the conference i'm also with the "associated press." as questions for the human rights lawyers i've been talking to, they raise some good points. in terms of what you mentioned, the rule of conduct and transparency, when did this start in terms of the cycle of the prisoner? does it apply to prisoners obtained in the field? how long can someone be detained on the battlefield before being transferred to your facility, and do these rules of conduct apply not just to the general forces under general petraeus' control but also under the national land the intermission special operating forces that operate in those areas? >> a great question. yes, they all apply to everyone. when an individual is detained on the battlefield, forces operating under isaf have 96 hours before they have to

release the individual, return them over to nbs. there are national caveats to those guidelines by isaf. the united states has a national caveat. they can detain an individual for up to 14 days at the feel detention site. during that time that they determine the individual involved in the fight is a threat to afghan or coalition forces, they submit eight detainee transfer request to us, lying out why they believe that. we then, if we accept that, receive that individual and to our defensive facility and at parwan, the 60 day point, he goes in front of his first detainee review board at which, and throughout that process as i said before within that first 24 hours of the individual being obtained, his family, the government of afghanistan is informed.

when he is brought into the detention facility in parwan, they were told about that event, and my deputy who sits with me everyday, he sees those reports every day. they are translated daily. he received that information and then as the detainee review board, all of those are open to human rights group so all of that is open and those standards are applied across u.s. forces. >> to follow, do you have any idea of the size of the population being detained for 96 hours to 14 days and how many facilities across afghanistan where that might be in effect? >> i know exactly how much. i track each and everyone of them and who is isn't them isn't them each and every day. we do not disclose their location but they are enough to accommodate the operational

forces. i track, i am responsible for the standards that each of those sites are run by the-- so i track who is in them every day. i track to make sure they adhere to the 14 day guidelines, so we have added a great degree of fidelity on each and every individual detained in afghanistan. >> one last point of clarification. does that mean they can take up to 14 days for the government afghanistan and the families to be informed of their loved one's detention? >> no. the government of afghanistan is informed within the first 24 hours. now, their ability by deputy general general to contact the families. the family may be in the far outskirts and not have power or a cell phone. the first place usually goes as to the prevention of governors or the central prison directors

or other parts of the afghan bureaucracy that are located-- but from the provincial level down to the district level down to the village level. it has been pretty effective so no, i think the word trickles down in the first 24 to 48 hours but i can't verify each and every case. it has been surprising, when you have 20 or 30 family members show up for a detainee review board it is pretty indicative of how word gets around here in afghanistan and their ability to move throughout the country even though some of the infrastructure is difficult. >> does that apply to the first 24 hours after they arrived at parwan? not the detention field centers? >> no, no. first, the first 24 hours when they are detained in the

country, general mcchrystal and confirmed again by general petraeus, signed out of tactical directive that any isaf or u.s. force detaining any afghan citizen or detaining anyone else in the country is required to inform the government afghanistan within 24 hours. >> individuals will not end up-. >> admiral, on your reintegration so far have you seen a difference between the economy network or the taliban that were? is it easier to get one group or the other group reintegrated? i mean there have been the comment date the haqqani network is a much more of a reconcilable

force. have you seen any difference at the tactical level of reintegration? >> not yet. what we are concerned about, and we have had happen on occasion, the health and well-being of those individuals once we returned there. there have been some who have been in fear of their lives and hands did not want to be released in the public shura process, so we have a private ceremony involving the family of the individuals because they feel they will be at greater risk one's release. that has been the biggest concern but so far no, no differentiation other than that at this point. >> for the haqqani folks from the east and with the haqqani network? are they in fear or the taliban in fear? >> let me again, i want to be

pretty specific on this. they will not acknowledge that they are taliban or other haqqani networks and we try to determine that from our intelligence discussions with them, so in some cases it is difficult to confirm his allegiance, but again through the process, when they determined that this individual will not return-- will not pose a threat to the government of afghanistan or coalition forces, we release them. >> just a question. you mentioned detainees. can you clarify how this is enforced and what it may entail? >> i am sorry. could he you say that once more please? did you catch that? >> i think it had something to

do with it pledge that outgoing detainees are required to make? >> can you mention how that pledge is enforced? >> sure. and i don't know if forced is the right way but this is created at the government of afghanistan or the deputy general so the individual that the release sides signed the pledge you will not return to the fight. his family, his district of provincial leadership will sign the same pledge. what it has allowed us to do is maintain contact with that whole informal network so enforcement may not be the right term. it has been effective as we determine when we first tried to call back our first group of releases. all of them showed up. they were well received by their

villages and their villages looked at it as an effective tool. now that we are up to 200 we will do our next post really shura after ramadan to again, the effectiveness of that program and that pledge that we think it ties the formal and informal justice systems together and it is something they understand. for instance, today there was a young man released to his mother and father and the mother said she would take his legs off if he ever did this again. so we are trying to leverage that informal network that is familiar bonds to ensure these individuals don't return to the fight for the wrong reasons. >> admiral, i know you said there is a local fight that is going on there that with coalition forces-- where would you keep them?

>> i guess it would determine where we capture them. if he was captured in afghanistan, i am sure he would come to her detention facility in parwan and in some part of the process but again, that is hypothetical. i will see when we cross that ridge. >> is it just a hypothetical or do you have plans in place? >> i am sorry. do we have policy in place for that right now? i did not understand the question. >> as you suggested, if he was captured in afghanistan now do you have policies in place for how to handle him?

>> for ubl? i would not want to be hypothetical on that. that is a very significant strategic-- we have our processes. we have a world-class facility here. we can incarcerate anyone in a very humane, just standard, so that is all i can tell you. we will have to see should we cross that bridge. >> mr. ambassador thank you again for your time. i will send it back to you for any closing remarks he would like to make. >> if i could just wrap up very

quickly, in addition to the work on detainee policy that admiral harwood has been leading for the past eight or nine months, his work on biometrics, that entire scope is growing rapidly to now encompass the entire rule of law area. the importance that the united d states is placing on this not only to get detainee policies right and biometrics right but to do it better and more effective job in supporting the afghan government in its delivery of fair, transparent and efficient justice to its people is represented by the fact that i would in a combined effort improve the delivery of our service and assistance to the afghan government.

>> and i would just add we are committed with all her resources and capabilities to support the ambassador and his rule of law and law enforcement efforts. the all right gentlemen, thank you again from the pentagon. >> this morning, the government releases the monthly unemployment figures for july. keith hall will talk about the new jobs numbers at a hearing at the joint economic committee. you can watch live coverage of the hearing at 9:30 eastern time on c-span 2. >> book tv has been finding out about the new books coming out this fall. jimmy carter every day of his presidency wrote in his journal. this is a very intimate look at jimmy's white house years. this is bob woodward and almost

anything that bob does is meaningful. this is not a sweeping memoir by george bush. this is rather talking the specific points in his administration where he had to make major decisions. >> learn more about these and other come -- books coming out. get whole schedule at booktv.org. >> the senate banking subcommittee on economic policy heard from administration officials in the chicago federal reserve bank on efforts to stimulate the u.s. manufacturing sector. the "washington post" reported that the administration and congressional democrats are propairing more than two dozen proposals aimed at u.s. manufacturing. this is about an hour.

>> thanks to both panels. i will introduce the first panel in a moment and the second. there is a phone call so we unfortunately have an hour and not an hour and a half. in america, we have always been good at making things. american companies and workers laid down rail ray ways and high ways and manufactured medical equipment and appliances. in turn workers have been rewarded with a path way to the middle class and provide a home and opportunity for our children. we helped send humans to space and develop the technology needed to defend our nation and cement our status as an economic super power but we're at risk of this slipping away unless we develop a more coherent

manufacturing strategy. it has been a long time since we have even asked ourselves in this country if we needed such a strategy. the nation's middle class. since 1987, manufacturing share of gdp has declined more than 30%. put another way, in 30 years ago u.s. manufacturing made up of about 25% of gdp. financial-services made up about 11%, 30 years ago. today those numbers have almost flipped. we see where that got us in terms of the financial crisis. we see where we are in terms of lost manufacturing jobs and see what that have meant to the prosperity of this country. we note this matters for several reasons. jobs in manufacturing pay more on average than servicing drops.

second, manufacturing has let the economy out of recession because it tends to respond quickly to changing economic conditions while creating tangible wealth. since the beginning of the bush recession, we have seen profits of large financial institutions and other service firms increased dramatically. at the same time, the nation's unemployment rate is still hovering at 9.5%. wells created by expanded production requires an expanded worth -- wells created by expanded -- wealth created by expanded production requires an expanded wealth. there are long-term challenges such as how we maintain the capacity to supply our military forces and how we achieve energy independence. this morning we will hear from two of the administration's point people on developing and

implementing a manufacturing agenda. one lesson we have learned that there is no clear path to manufacturing success, rather we have heard in this remote of the past year, and as i have heard in the factories and businesses, we need a strategy that the fits a predictable strategy, a supply chain that is open to new markets, and the ability to compete domestically and abroad. our government has taken steps to chordate agencies through the assistant secretary of commerce for manufacturing and services, whom we will hear from this morning. president obama has named a senior counselor, ron bloom, following his successful

restructuring of the auto industry. four ohio and our nation, manufacturing matters. we know that. on behalf of a machine shop owners, clean energy manufacturers, i am hopeful that we have an administration that also believes it matters. we also hear from the senator. thank you. >> i just want to publicly say what a leader you have been in this sector in , and a tireless advocate for making sure that we have a manufacturing sector in america. nobody is better about that the chair brown. he recently pointed out that the traditional arguments, the reason we cannot compete in the manufacturing bases is because manufacturing bases is because wages are too