risks that they willingly accepted. and while it requires a systemic and orderly dismantling of a failed firm, it also provides for the continuation of critical operations so that the failure does not cause other problems in our economy or our financial system. .

>> the volcker rule prohibits commercial entities from trading securities or derivative instruments for their own account and from investing in private equity and hedge funds. high-risk activities. a related provision also prohibits commercial banks and thrifts from making markets and certain types -- in certain types of derivatives for their own accounts. for several decades now, and this is why i want to go back -- it is so important. following the great depression, it was understood that commercial banks would be limited in their risk-taking because of their critical role played in the economy and the

special privileges they hold because of that special role. economic activity cannot occur without a system for making payments. virtually all payments ultimately go through commercial banks and are settled there. banks play a special role as the most trusted intermediary for holding our deposits and are savings. his critical role is the reason the united states provides these banks a public safety net, including deposit insurance, allowing the banks to borrow from the federal reserve if they have temporary funding or liquidity problems, not solvency problems. in 1999, the separation of commercial banks and the more highly risk oriented investment banks was ended. the market will take care of things. it took less than a decade for

the first major crisis to occur, and guess what? the market did not take care of it very well. if implemented well, the volcker rule can take as a head, i think, in a safer and more sound manner. the third area i want to talk about is capital, because there is a very important provision in the dodd-frank act. capital, and i will find it nearly -- narrowling, i define it as shareholder equity, provides confidence to depositors and other creditors that a firm can withstand an economic downturn which inevitably comes. financial firms, however, can most easily enhance their returns to their investors by leveraging up their assets. against this capital.

that is, borrow more for themselves to invest in assets such as loans and securities against the smaller basic capital. but in a financial crisis, the more highly leveraged the bank, the more vulnerable is because there is too little capital to absorb the loss. creditors then lose confidence and the creditor run occurs, and the crisis begins. the fallout of such circumstances is always a recession. like the one the country has just experienced and is only now slowly recovering from. the need to absorb losses and rebuild capital forces the temporary cessation of lending because you are building up capital which inhibits economic growth and worsens the recession. so you need the capital before the crisis because and then you spend the next four years trying to rebuild after the crisis. to demonstrate my point, i

would noted that prior to bear stearns a failure in 2008, its leverage ratio was 34-1. that meant that bear stearns had made $34 worth of loans or investments for every $1 of capital at held. those are shocking numbers because it meant that a loss of 3% of the assets is held, just 3%, made it insolvent. and it failed. to address this, the dodd-frank act instructs regulatory authorities to set up appropriate -- maximum leverage ratios for hyatt -- with higher capital for larger banks. the standards are more stringent to reduce their risk of failure, given the widespread systemic effect it would have on the economy. in addition, i should note that at an international level similar requirements known as

basel are in process and should be completed in the near future. we will see how those turnout. in my view, this provision of the act is now one of the most important resolution. it is essential that regulatory authorities get it right. a major contributor to this pass crisis was excessive leverage in the financial industry and in the economy more broadly and heard of it -- the standards must be established at a much higher level than that of the past if the industry is to provide not just credit in the long run but also credit with in an environment where the public can once again have confidence in its institutions and its economy. if we revert to allowing high leverage in the interests of short run growth, we are certain to repeat the mistakes of the past and experience another crisis, i can assure you of that.

now, let me turn to another element of this that i think is every bit as important as the first three. each of these provisions, as well as many other in the act and there are many, that lead to important and necessary changes that will protect our financial system. however, it is important to recognize that the president's signature on this legislation is only the beginning of a long process that will eventually determine the success or failure of this legislation. and even more importantly, the ability of regulators to respond and prevent crises. the title of my remarks today -- "who will lead, implementing regulatory reform"does not refer to a question of which agency. in fact, that is irrelevant, unless we have leaders within these agencies who will firmly enforce regulatory standards.

i am an advocate of a sound commercial banking system to underpin and facilitate this u.s. economy of ours which is so great. it is time that the largest financial institutions in my words experience a little more tough love. no one escapes. that is it say we should not be tough because they deserve a threshing, because we need sound, robust banks in this country. today, i have offered only a few examples of the complexity of the issues that lawmakers, regulators, and the financial industry face. as with any piece of legislation, some within the public believe it falls far short of its goal. others believe it goes far too far. for the moment, we must

implement it as prescribed. it is the law. opponents who are working hard to weaken its implementation and struggling to find loopholes already. others are insisting that it be implemented quickly and without exception as to the broad rules outlined in the legislation. this is to be expected and is part of our political and our capitalistic system. for example, the resolution process that i mentioned includes provisions that could leave it susceptible to political considerations and possible taxpayer bailouts, failing financial firms, especially when those failures happen quickly, as was the case during the most recent crisis, because there are ways to have the human element come in in a crisis. we cannot take a chance. bail it out. that is where the hard part is. i can tell you from experience. as we look to this legislation and more broadly at our

financial regulatory system, it is absolutely critical that it be implemented with strong, fair, and firm leadership. let me take just a minute to give you, and stint as particularly, an example of just such a person. -- and student particularly, an example of just such a person. individual by the name of bill taylor stepped up to the task of what was then that the worst banking crisis since the great depression. he headed supervision for the federal reserve system and then let the fdic. he was forthright in his views, firm and his conclusions, and fair almost to an extreme. he was a man of integrity and when necessary, he was willing to take unpopular positions. he recognize that the failure of the bank, regardless of its size, had an important impact on the community it served, whether a world community or a major wall street market -- or a rural

community. and it always, always impacts customers and consumers when there is a failure. you understood that the job of a bank supervisor was not to close banks. it is not our goal, but to enforce rules and exercise regulatory judgment that minimizes the bank failures in order to strengthen the safety and soundness of our financial system. he encouraged strong capital standards. that is where we start. he insisted on tough examinations and always outlined careful actions with a focus towards reducing the number of failures, thereby preventing or mitigating much of the damage before problems became so unmanageable in a crisis. finally, bill was not intimidated by those he had to supervise. you think that is simple, but it is not. because everyone has a reason for why things have gone bad. and if you only gave him a

little more time, and with sticks it their way. he consistently administered capital rules, examination findings, and enforcement actions from the largest to smallest institutions. talk about fairness. bill would look at a ceo from some of the largest firms eye to eye and tell them, it is time to change. it is time to get that capital. it is time to write those losses off. it is time to step up to your problems. delivering bad news and enforcing rules for safe landing is never an easy matter. the bill do it was necessary, and he had the courage of his convictions and the courage to act. leadership be the most -- let me emphasize this to the students -- leadership will be the most important element in the success of the new law in the months and years to come. without it, you can throw 2300 pages in the trash. this year, our bank published a

biography of bill that focused on his experiences during the financial crisis. -- of the 1980's. those who read this book, available on our web site, at the federal reserve bank of kansas city not only can see the important role he played but also might be surprised at the similarities between this most recent crisis and the events of two decades ago which we learned so little from. so i encourage you, as we go forward, that the fact is to strengthen the financial regulatory system is necessary and it is an absolute must in response to this crisis. the federal reserve, the treasury, other banking securities, regulators will now shape the law further as they write new rules and begin the process of implementation. as i said, this lot is complex

and the real challenges lie ahead. believe itart's done, or not. those will implement the legislation must make it understandable, without weakening its and without undermining its goal. we must take the complex and we must make it simple so that it is understandable and, therefore, reasonably enforceable. it must serve the objective of protecting the financial system and especially the business and consumers who use the service, who depend on those services. this must also occur without destroying the competitive environment and the personal responsibility of everyone for their financial decisions that is so necessary for capitalism itself to work. you cannot blame it on everyone else. you have to step up to it. we must explain it in simple terms. we must enforce it with the the

financial industry. the consumers must take responsibility. it is a community effort. and most importantly, we must show leadership in making sure it works. if we fail, and i assure you, we are doomed to repeat the mistakes of the past. thank you all very much. i am open for questions, students. so far awire away. [applause] >> ok. good morning. first, we would like to welcome our guest from our state to the land of enchantment. those of you out of state, well comparcome. would like to welcome our fellow new mexicans as well. we extend a deep appreciation to the senator for allowing this opportunity to create this

dialogue and have the same discussion where everybody is heard. the recent recession has affected a lot of americans. their livelihood and most of all their hope for the future that their children will have a better day than they had. so right now we would like to take a moment just to recognize those americans who are struggling right now to this recession. our first question gets right to the heart of the topic. do you think economic collapse has damaged american communities for generations? in the wake of the disaster that has rippled through our communities, our first question gets to the heart of the topic. the banking act calls for more regulation. is the united states government in a position to regulate the market, given it was unaware of the impact of the financial products being crafted on wall street such as collateral debt

obligations, credit defaults swaps, and proprietary trading? the reality is that government policy react to events. it does not perceive them. how can we effectively regulated industry that is sometimes largely unknown to those outside of the market? >> that is an excellent question. is the one i asked myself all the time. and my view is that you --it does not matter what it is, if you are playing sports or if you are in the financial industry, or in business, you have to have specific rules of the game. and the same thing for the financial industry. so, yes, you have to set them up. now, we have literally decades, maybe centuries of experience in terms of what should be the basic rules. for example, what should we have for capital? what should we have for a loan at dividing, underwriting

standards? should we separate high risk activity from commercial banking? my answer is yes. you set those rules out and make them simple enough that they cannot be worked or misunderstood. and then you hold people accountable for following those rules. we had those and people will disagree, but we had those after the last huge mistake in the great depression. we separated investment banking and commercial banking. one was more risky, and one was supposed to be less so because of the safety net, because of the payment system. and we also required significant capital for those. but what happens in success, you say, well, if we just get rid of a couple of these, we could make the economy better. we could lend more. we could have greater degree of activity. we could have ever went owning the house whether or not they have the down payment.

so what we did is we put the rules aside. we did not just have rules, but we moved the rules aside. let me give you an example. the 20 largest financial institutions in this country at the start of this period, around 1999 when we removed the separation, had a leverage ratio, a number of access to capital of about 16-one, 17-1/3 and the industry as all who1. in the industry in 2007-2008, that number went to 30-one. we increased the risk of the entire financial industry. let the principles go by. we used to have in the law underwriting standards that said the maximum that you could have for a loan to value was 80%. it was not recommended, but it was the maximum he could have. that got in the way. we could not make as many loans as we wanted.

things were all well intentioned. everyone should have house. i would like that. but it violated the principles of having an equity position in the house to begin with. and could you afford it? so we built up this major a bubble, and the outcome was a crisis. so the answer is yes, we can have rules that will help mitigate the effects of financial crisis so that they do not cause this kind of hardship, but we have to put them in place. they have to be the rule of law, and they have to be enforced and they have to be understood if we are going to be successful. and we will be successful if we do that. >> our next question will be asked by my teammates. it is a follow-up. >> if the tough love kind of approach that you suggest is followed to the letter, sir, what kinds of growing pains can states and citizens expect and what steps can we take to minimize and to deal with those

challenges? >> that is a very good question in the sense that -- let's take that more broadly, because the united states has, over the last two decades, increased its leverage. the federal government, state governments, to some extent, individuals. so the first thing i can do is be honest with you. there is no silver bullet. it is going to take time, and it is going to take commitment by our leadership, executive branch, the legislative branch, monetary policy has to be independent and that because there can be enormous pressure. but, if we commit, and i have seen this and other countries, if we commit at the federal level, and this will be important for senator domenici's group and others, to bring down the debt of this country to

our gross domestic product over a decade -- you cannot bring it down overnight. you will crash the economy. but if we commit to do that and we implement fair rules that do not give some party is an advantage over others, as an exception, so that people lose trust in the process, then, i think, you'll be surprised at how well the economy responds. now, canada did this in the 1990's. they are talking about it today in germany. there are examples we can look to to say, yes, we can give confidence to people, once we give them assurances that we will behave responsibly as leadership. so that is the way to do it in my opinion. failure to do it means we model along and we will have much slower growth. >> ok. our next question will address the sustainability of the american economy. the housing bubble is not the first and only bubble our economy has seen. government into many instances has been using a device by

corporations to pass favorable laws that benefits each industry respectively. can the united states economy and tax base sustain the negligent behavior of some lawmakers who did not fully understand the economic consequences of the laws they pass and may be unaware of the law's effects on local communities resulting in economic disaster? >> the answer is, yes it can. it has in the past, and it will atgain. i have long said, and i am not in politics in that sense at all, but here is my point. i have found that the elected body usually does with the american people want.

i have heard over and over again how low the legislative bodies are held in a group by the american people, but how highly they regard their local congressman or senator. if we all say, i want the deficit dealt with. i want this a dead addressed. and i want to be fair -- i want the debt addressed, except for me,. i can name some city after subsidy, which at the time, maker of sense, but it costs. there is no free lunch. we need to decide how we will proceed. we do pay-go without exception. will we get a 10-year plan that to reduce it. ? i gave a speech on knocking at the central bank's door, because

if interest rates begin to rise because of the debt we carry, you will come to the central banks and say keep interest rates low. he will not sit monetize the debt. so we have to decide, we, the people have to decide that this is what we want it taken care of. we tend to react to crisis -- maybe this is a crisis we can, or if we wait, a bigger crisis down the road. we will react systematically, practically, or as a result of crisis again. but we will do it, i am confident. it is a matter of how. it is up to us. >> this is our natural resources. >> in the previous two questions, the economic concepts and products not readily understood by the general public. yet, the same business models have been used to invest in our natural resources such as food

and water. the building boom occurred in communities where water is scarce. with the modification of water rights in the 1990's investors saw the opportunity to create communities where there may be a water rights but no access to water. this issue impacts the mortgage industry who finances houses based on water availability in states like nevada, arizona, california, and in new mexico. water is a light source for every american community. traditionally, communities such as los angeles that lack water have redirected water to another source -- from another source. this is not a sustainable plan for communities such as reno, nevada, or las vegas will have already been hit hard by this recession. and surrounding areas will face this issue at the present growth rates.

should the banking industry be allowed to invest in community development, the lack of basic water requirements and instead focus on a positive growth in areas with sufficient resources? is this the area that will be bailed out again that you refer to? >> that is a fairly complicated question. give me about two weeks to study it and i will answer it. that is a little bit out of my bailiwick. the simple answer is, for me, i do not know. i would tell you that it reflects the laws that were written. it reflects the markets that were established around those laws. so i know right now that is a huge debate. there is pro and con going on. that is one of those things where you have to make a decision about it in terms of the water. now, one thing we do know is how scarce water is and what the impact of that will be long-term i.

studies have predicted the effects of that. but that is not something for me to really be able to answer for you. it is pretty much a legislative issue. any others? >> ok. we have another question. in 1933, the glass-steagall act was passed to ensure that banks and not take major risks with deposited funds. it separated commercial banking from investment banks. this act helped curb reckless investing behavior. the act was drafted because it thought -- it was thought that major risk helped lead to the great depression. in 1999, the act was repealed by congress and signed by former president clinton. given that some deposits are no longer true lies' safe from investment, should the american public be allowed to opt out?

so, so essentially, we are asking, if the american public can choose to opt out of that large risk market and shelter and protect themselves and local investment banks? >> the answer is yes, of course. it is a choice of the investor where they place their funds. the local bank -- i am a strong advocate for community banks. community banks in america is $10 billion or less. you can have a fairly sophisticated kind of environment regardless. so you can place your money there, hold them accountable. one of the issues, though, just so do know -- if this new resolution process is not enforced and people do not have confidence it will be enforced relentlessly, and you have to think about that in a crisis not when the crisis has passed.

if not, and the markets understand that, then the largest institutions have a competitive advantage, because if they are thought to be too big to fail and the local banks here in new mexico or in kansas city or in dallas is not thought to be too big, then if you are a large depositor, where will you place your money? you replace it with debakey think is too big to fail. if you own a company and at the payroll, where will you run the payroll? that advantage has allowed them to increase in the last decade and a half to increase the% to asset management under control of the 20 largest financial institutions in this country from 35% to just under 80%.

that is a disadvantage to local banks. yes, you can choose, but if the incentive is for you to put it with a large bank, that is where you will put it. the incentives have to change. we have to be convinced that too big to fail has been put aside. it will not know that for sure until the next crisis. >> i am not accustomed to using microphone. i would like to do this in sound bites because i want some of the questions from the public to be heard. so, if you think of yourself in kansas city, just give us some sound bites. few banks are lending money. what is the situation? lending?they not >> they are building capital. >> that is a sound bite. >> by follow instructions well. >> here's one that will take

more. what should happen to fannie mae and freddie mac, and what will happen to them? >> housing is a very important industry in this country. it is thought to be the most important, so it will be - it is a nationalized and it will remain so. >> and you do not see any change in that status? >> no. >> see how these iowa state guys behave? experience.arm >> you are consistently a dissenting vote in keeping interest rates low. will you explain your basis for the dissension? >> if i am a bank and i can borrow zero from the federal reserve and led to the federal government -- lend to the federal government or land to a business that has risk, what would i do?

you answer the question. >> no, you have to handle this one. >> well, you will make money with no risk as a preference. if you want more answers, sure, they will make loans if there is enough margin for the relative risk relative to the risk-free choice. it has to be pretty good. and they have to be confident in the industry. we just finished a recession, so you'll be cautious. it will be slow. the question about higher interest rates are, if you keep them artificially low, then you are encouraging this other activity. plus, think about it, if 30-year bonds are at 3.5% and you have a debt of $14 trillion, ask yourself, does that make sense? if it does not, then it probably should not be that way. if you think it makes sense, then it is fine.

i have problems with it. >> the next question -- are their roles in the new act that will put a cap on how large a bank can grow? >> no. i think those were pulled out. >> we must also have a solid, sound business community in this country. where is the balance? how we balance what we see now without landing, building capital in the health of the new mexico economy? >> first of all, we have to rebalance. we were highly leveraged. we have to bring back double leverage. now, once you do that, if you think about the period of the 1950's, 19 it 60's or 1970's when we have less leverage, businesses could still borrow. the fact that we have capital ratios and the leverage ratios that were 15-1 instead of 30.

we could borrow and it was more stable. we separated investment banking from commercial banking. we still grow. there was greater stability. however, if you want to grow fast, you increase leverage. the trouble is, if you want to grow fast and increase leverage, then you have to be prepared for the crisis. it is not free. >> what is the role of interagency communications in the leadership needed to enact the new bill? i think the thrust of the question is interagency communications. how will you accommodate that? >> there is a financial stability oversight committee that includes the major and diseaagencies. and that is the mechanism through which the coordination will come. the treasury and the federal reserve will be important parts of that through the fdic and the sec. it is an important part of this.

whether it is successful or not will depend on the leadership of that group. >> would you share some of the takeaways from the jackson hole symposium? what do take away from that? >> number one, in this crisis, the federal reserve system introduced very non-standard, monetary tools to stanch the crisis. so, going ahead for the next decade, we have to reestablish what our monetary framework will be so that it is reliable, understood, and we can use it consistently. that is one of the things we know has to be done as the economy returns. secondly, if we are going to have any kind of the successful decade in the next 10 years and beyond, our fiscal deficit issues have to be addressed, not only nationally but

internationally. very, very important. thirdly, the international scope of matters has to be acknowledged, recognize, and worked with if we are going to have a global market system that works consistently. so those three take away. >> and that leads into the next question. since the financial system is global, what is the role of international central bank cooperation? >> let me start by saying, every nation is a sovereign nation. so you're monetary authority will act in the best interests of its nation. so the international element of it is that we have to, we talk to one another, the central banks to talk to one another. that is why we have this meeting so that you could understand what another. it is like anything else. if i understand you, i can work with you better. >> we make one exception here for people in the audience who want to ask questions. he is here with me right now.

>> first, i want to thank you very much. i am not sure what prompted most of the people to sign up to come to our symposium, but we have the largest we have ever had. this is our third. it is probably the quality of the speakers. i would honestly say they did not know you for a while. i am sure that those that are here are very glad they came. if they are interested in our economic future, they got a real good explanation by you. your second to last comment, you said those who are worried about the fiscal policy have to get on with guiding our country with the new fiscal policy which permits us to pay our bills, i would assume, and have a practical deficit line. >> yes. >> but you added, and also internationally. and i have been working now for six months on the group, the

small group that is going to be a very big group after november 15 when they announced the public what we recommend. but i do not have anything working that says we are doing anything internationally. i want you to tell us what does that mean, that we have to work on debt internationally? >> one of the things it -- this is my personal opinion. we are not the only country facing a deficit problem. and so, and i do not mean we have a formal treaty, but other countries have to recognize this or we begin to play against one another. we have a lot of debt in the hands of individuals and other countries. we must be mindful of that. we cannot say we can forget about that. we have to know what our impact will be carried but my own point is that i think that, if the united states addresses its

deficit systematically over a decade, with clear guidance going forward and commitment to it, then that will influence the rest of the world to follow our lead because it will strengthen us. it will strengthen us. as we are stronger, then they feel more comfortable following us. >> i look at it this way. see if it solves your concern. the bipartisan policy center, which is sponsor of this alternative budget that will come out because the presence people will not get away on time. we are. we will say, here is one for you. it is done by citizens. it will be significantly powerful that our friends will know it and it will be sufficiently powerful that the people will have to pay it for quite awhile. and i think that is what you are talking about -- the people have to debate it for quite awhile. >> i agree completely.

and i wish to all the best in that because it is desperately needed. >> thank you very much. >> thank you. thank you very much, senator. we always enjoy it when the senator wants to get up and talk to our speakers. i have two more questions. one, will you be available for the next conference, because i think the issue will be dead and we may be calling upon you to come back? in the next question is if we will send gary carothers a copy of that document and? >> let me hand you a copy right now. >> iowa staters take care of themselves. >> i want to comment -- >> hold that up. this is a guy that will give us the example that we need to leave. >> i just want to comment on how

brilliant our students are. >> i have been in front of a lot of audiences. these of the top as i have had. >> they will be all around all day tomorrow. now we will ask the regent to give you a small gift. we thank you for wonderful session. dr. tom hoenig from the federal reserve. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> in a few moments, the democratic governors' association will talk about the races around the country. in about an hour, texas senator kay bailey hutchison on border security. after that, a town hall meeting

with oregon senator tom merkley. then the president of the federal reserve bank in kansas city on federal regulations. federal live events tomorrow morning. the u.s. naval institute here is from virginia senator james webb, a former navy secretary. that is on c-span-2 at 9:00 eastern. former 9/11 commissioner leaders tom keane and lee hamilton brief reporters on the evolving terrorist threat, including homegrown networks. that is at 10:00 eastern. and right after that at 11:00, live coverage of president obama is a news conference on his new economic proposals. >> the bottom line is that we need our borders secure and we cannot afford the illegal immigration. >> it is heard arizona's economy seriously. we see the stories every day -- it has hurt arizona's economy

seriously. >> fall campaign 2010 online at the c-span video library, with debates -- follow the campaign. all free. on your computer. >> a discussion of this year's races for governor, hosted by the democratic governors association. speakers include former clinton administration officials. this is about an hour. >> thank you, everyone for being here. this is the panel. we will talk about 1994 versus 2010 gubernatorial opportunities. and have a good discussion about the political landscape and how this election will unfold in the weeks ahead. we have a great panel today. starting from the right, the former deputy chief of staff to

president clinton. the senior adviser to president clinton. deedee myers, former press secretary to president clinton. then the executive director of the dga. four of the best minds in democratic politics. they have seen elections. they understand the dynamics and factors and have been able to analyze how things will play out about as well as anyone in the country. you know, the way we will do this today is i will start off with opening remarks. we will have a discussion. then we will open it up to some questions from the audience as well as the press. to paint a picture of where we are right now it is fair to say that this is a volatile electorate. we have seen this in the polls. we have seen this in the changing way that these polls seem to fluctuate. we see this in generic ballots that go from clause 10 and galloped to a tie and another.

there has been a lot of discussion as to whether or not this has been always collection of like 1994 -- a wave election like 1994. maybe this is more of a whiplashed election. at this is more of a whiplashed election. -- i would put it differently, that is more of a whiplash election. democrats have let republicans and the debate to some extent. soldme extent, we've not out policies has significantly as we could or should half -- we have not sold our policies as seen differently as we could have or should have -- as significantly as we could have or should have. what is fascinating is how contrary i would make the argument that this is not necessarily a wave election as some of the pundits and others make the point. the stakes in this election are clearly very significant, said

especially when we talk about governor street redistricting, the implications for 2012, -- especially when we talk about governors. redistricting, the implications for 2012. i want to highlight what are some key insights that people should focus on as we move ahead. as difficult and challenging as is -- election season is for democrats, what is also interesting is when you look at where the reality of the gop and the republican party is. the gop brand is broken. it is as unpopular today as it was in 2006, when democrats picked up a significant seats. in poll after poll, the gop is still less popular than democrats. in the recent "wall street journal" poll, democrats were at 36, republicans were at 30. the gop is in the midst of a brutal civil war. we have seen this play out again and again in critical states. it has profound implications not only for governors' races, but

for all of the national races. this has created significant targeted opportunities for democrats that the panelists -- needs and in particular -- natha n in particular -- will talk about. when you look at a recent cnn poll, the majority of the voters blamed bush and the republicans for the economic woes. even when there were asked, without bush or obama in the question, they still blame republicans more than democrats. the one key thing that distinguishes this election that is the key dynamic to look toward is the whole notion of the enthusiasm gap. closing this gap over the next 60-plus days is the most critical thing for democrats to do. if we can do that, do that successfully, what you will see is a change of the dynamics of this election potentially dramatically.

in stark contrast, i would say, to previous elections, you have the ability of democrats, particularly in the governors' races, to make a strong contrast between their vision as to how they will move the country forward as well as what the democrats -- sorry, the republicans, arguably a very extreme agenda and the implication that they have for their states. given that as the context, i will turn it over to the panelists. this will be a question for all -- i will start with harold. to us your thoughts about a story line of 1994 versus -- give us your thoughts on the story line of 1994 versus 20103 how can democrats governor's mitigate what many are talking about as a wave election? >> first of all, it is a different year, by definition

-- i will start with that fact. there are clearly parallels to 1994, and i think there are pretty serious the distinctions. it seems that the series distinctions are that we democrats were asleep at the switch in 1994. we were complacent, we or smog, and to put it bluntly -- we were smug, and to put it bluntly, we were again. that is not the case today. we have been on red alert for a long, long time. no. 2 is that the republicans were identified in 1994. you mentioned this. they were unified in 1994. people forget the contract with -- some of us call it the contract on america. dee dee and i were talking about that. the white house was pretty smug about that.

"no one is going to listen to that." newt gingrich, think of him what you may, and we have a lot of him -- he had atampa - lot of thoughts. the tea party has a downside for us and in terms of energizing the base that may not be as energized today. finally, the governors are democrats, but they are not of washington, and they are continually making that case. they provide services and are balancing tough budgets and are making tough decisions people in -- and are making tough decisions. people in states don't necessarily associate them with the washington agenda. before shiftingt

to cover, that we have a two central points. one is independents. we have to have enough to carry these statistics. -- to cover these districts. two, we have to carry our base. our base is unhappy, pissed off, rightfully so. politics is a long time, top business. it is fine when the tides are running with you. but you have got to be there when the tides are running against you read my exhortation to democrats is that the tides may be running against us, but you of got to get out there and work. there are 60 guys -- 65 days left and you have got to go out and make it happen. >> i may be the only person in the white house who cursed more than half a world. -- than harold.

it is interesting that you have covered -- gathered three of the architects of the greatest democratic debacle in history. [laughter] that is really lovely. my advice to democrats in 2010 is three words -- build an ark. it is not a wave election, it is a tsunami election. now, you can survive, if you have something to carry you through it. let me pick up the last point howell ma -- harold made. the anti-washington, not anti- democrat. the republican brand move up, for the reason harold stated. newt gingrich had a coherent vision for his party. as the democratic brand has

declined, the republican brand declined more. anderson cooper interviewed as the head of the tea party express, and she said, "we are angrier with republicans than with democrats." this looks like a wave election and are things -- there are things the democrats can do to .itigate that t in state elections, it is not a wave election. it is an anti-washington election. we lost 10 governors' seats in 1994. i don't think that is going to happen this time around. there are two big things going on at the same time, and this is what is excited about this year. number one is that sometimes you have a wave election, and all you ought to do is paddle a canoe. but the other rule is that candidates and campaigns matter.

they are sort of at war here. the wave is going to republicans, but the candidates and campaigns are favoring democrats. democrats are better prepared and they have better candidates this time around, they have more money in many cases, and they are going into a map that is pretty favorable for them. there is a pretty strong chance that democrats, for example, hold the governorship in new york, the third-largest state. there is a really good chance the democrats can pick up the governor's seat in florida, california, and even my beloved texas, not to mention georgia. there is a whole lot of people that live in those five states. it's a tossup in illinois, to hold the governorship. that is a big deal. if we can do that, that tells you is not a wave. in texas, where i grew up, if that is a tossup -- texas is

south carolina on steroids, politically. if that is a tossup, it is not a way or the republicans. bill white, democratic candidate, former mayor of houston, popular, successful mayor, taking not rick perry, who has been governor along with -- taken on rick perry, who has been governor longer than any governor in texas history, and they are tired of them. bill white as the perfect response, that he is the anti- perry. he will spend 99% less time fixing his hair. [laughter] perry is just out of step with the times. when sarah palin resigned as governor as first- c-span.org -- governor of her state,

rick perry became the dumbest and prettiest governor in america. we have a chance of picking up a big, big states. >> i always hate when i agree with begala. it makes me feel like a loser. [laughter] i like to think of him as the biggest loser. which he is. he primarily, harold and i can testify, was responsible for 1994. [laughter] my memory of election day 1994 was that i was the last dope standing in the white house driveway. everybody else was going home. the only thing i could think of it to say was, "in kansas, kathleen sebelius was just elected insurance commissioner, and that is a really red

state." that is how bad things were. i agree with what harold and part of what paul said. one of the differentiating factor is that in 1994, democrats were in charge for 40 years. republicans could climb to do things and away, and there was no evidence to suggest that their programs were not going to work, that they cannot do it, that their contract with america was not the contract on america. it was easy for the republican party to pay themselves as a different kind of animal. there was unity. there was much more unity in the republican party. the contract was very specific, not the broad platitudes we are going to hear from john boehner next week. it was specific pieces of legislation. the party was so unified at that all but two republican members

of congress signed onto it. we still completely ignored it and thought it was not going to go anywhere. there was another element, another kind of unifying thing -- we all ran against ross perot in the 1992 campaign, and thought he was ridiculous. but remember how much traction he got on the idea of balancing the budget. the thing on independent voters and moderates, it seems like a common-sense thing to do. there was one of the themes of the 1994 election, at the republican call to balance the budget. then the controlled congress for years and what did we get? a doubling of the federal deficit, and never proposed a balanced budget. we have seen what republican leadership looks like. it is a huge difference. that is one of the reasons we have seen the republican brand diminish. it is impossible for them to

argue -- they are trying to run as the fiscal sanity party, which the facts completely undermined their argument. the national context is much different than it was in 1994. also, the press has been talking about this nonstop for months. there was not as the conversation about, oh, my god, how many seats the democrats going to lose when the republicans take over? it was a very different in armond -- very different environment. people are attuned to the fact that democrats could lose the congress. the country does not want it to every office to the republicans. they just don't want that. and the states are different. it is an anti-incumbency wave, i totally agree with that. hawaii is that the same as florida and california's -- not is not the same as florida and california is not the same as

colubrid i'm from california -- not the same as colorado. i'm from california, and california is a tossup. midwood spent $20 million over the summer -- against -- meg whitman spent $20 million over the summer against jerry brown, who did not spend a dime, and it is still possible. although schwarzenegger had almost two complete terms and he cannot get along with the legislature. the republican legislature is nuts. they do not want to work with the governor was not a right winger. she cannot run as a bright winter. jerry brown was -- she cannot run as a right winger. jerry brown was first governor in the 1970's. people cannot believe that the

republicans provide a panacea. they are angry, but they want solutions, particularly at the state level. they want practical and common sense leadership. i think that is why there are opportunities out there for democrats and it is not going to be awake in governor's races. -- a wave in governor's races. >> let me address what is on everyone's minds right now. carville couldn't make it. [laughter] that is why i am here. this year they are making bold predictions. 38 is what they think it will have at the end of november. not going to happen, and i will tell you why. the difference between the republican party now and the

republican party of 1994 -- this party is ruled by division and cynicism and extremism. number one, this party is that the wounded -- party is badly wounded. the republican party grant is as low as the democrat party ran. there is no clamoring for a return to republican leadership. the polls show the spread their message is one of the cynicism. -- the polls show this. the message is one of cynicism. every time the president unveils sunday to help the country, the republicans yell no. that is not what voters want to hear. two, you have the gop civil war, and that is our real phenomenon. when people talk about the enthusiasm gap, that is what people talk about. there's a lot of noise on the right, but that is not in these as some other republican spread that is a battle between a -- the right -- is not enthusiasm for the republicans, it is a

battle between the right and the far right. there are only two candidates running this year -- there are the tea party candidates, rick scott and florida, bill brady in illinois, and then you have the candidates scarred by the tea party, like meg whitman in california, who had to go so far to the right to win the nomination that she is mounted in the general. .- wounded in the general t dga is playing offense. there are seats that we think we can pick up. this the electorate is not a pro-republican electorate and i think we have it at points to prove it. we will pick up not only a geographically diverse number of states, but some of the big

states. that will say a lot about where the country is. it will give democrats something to brag about on election night. >> you have a republican party that is divided. you have our republican party brand that is less popular or unpopular today as it was in 2006. you have our republican party that is blamed for the economic well -- you have a republican party that is blamed for the economic woes the country faces more so than obama and the democrats. i will ask paul first, how are we losing to these guys? >> it sucks to be the party in power with 9.6% unemployment. people say the democrats have communication problems. no, they have a reality problem. the economy sucks.

at the citadel, the states are broke. -- at the state level, the states are brooke road again to this dichotomy between a -- washington and -- the state are broke. i get to this economy -- again to this dichotomy between washington and the states. the people angry about the deficit in washington, for which blamed thengly president, are also angry about state deficits, and it is republicans who screwed that up. yet i understand why there is a way of going on out there. you cannot walk into an economy this bad and expect people will throw laurels at you. >> i will give another question, to dee dee.

what is the message here for governors, a gubernatorial candidates, to penetrate what we understand is it tough economic but in these, states, which you already mentioned, democratic candidates are competitive or a head. state after state. what is the message to focus on to win over the moderates and independents who are not going to the republican brand but are still concerned? >> to use the old adage of politics, all politics is local. the candidates that doing well are proposing real solutions. it is important to keep the focus on how many of these problems were created by republican policies. but as bill clinton would say ad nauseam, all elections are about

the future. we have to maintain some focus on how we got into this situation and how republican policies were largely responsible, but also to focus on the future. one of the specific challenges -- what are the specific challenges states? even in this environment, optimism is important. every election, with the possible as caption -- with the possible exception of richard nixon in 1968 and 1972, the optimistic candidate always wins. optimism is born from confronting reality and having a plan to move forward. it cannot make it all about how bad the other guy is. it is about the future. >> i will shift a little bit in terms of a focus. when you talk about governor's races, 37 governors' races. the state in particular in this

election are profound for one factor, intending redistricting, and the impact that will have on the country ahead. to harold, if you could talk about that, at the media in particular focus is on the federal and the national dynamics. this story, which is critical, if not more significant for the years ahead, really has not gotten the attention it deserves. could you talk about that what the stakes and implications are? >> i agree with you, and more importantly, ed gillespie, haley barbour, and karl rove i agree with you. they understand as a general national republicans have a much more profound understanding of the importance of governorships that democrats

do. you see the national republican leadership put their weight behind raising money and seek to increase numbers from their current 24 up to 30, and some republican leadership have talked about 38 governors'. we ought to hold them to the highest standard, for two reasons. one, they want to control state houses. two, they understand that this year is not unique, but close to unique in the context of reapportionment and redistricting. they have their eyes to refocus on redistricting. it is a simple message -- they have their eyes and very focused on redistricting. it is a simple message, and when i talk to people about the pocketbook, they get it, but they don't think about it. rove and company have only to look to 2000. i would give you three examples.

pennsylvania -- virtually every state has the legal right to engage in redistricting, and most of them will engage in redistricting, and that deals with the house of representatives. if people are interested in the future of the house of representatives, they have to worry about redistricting, as well as local offices. in 2002, pennsylvania loss registered because -- lost a district because they lost population they ended up netting four republican seats for the 2002 election. florida got two congressional districts through reapportionment. a republican governor, republican legislature. they ended up, after all redistricting, netting four republican seats. two seats alone nett -- two states alone netted four

republican seats. haley barbour and a sense that even if the democrats -- understand that even if the democrats hold seats this year, they are confident that if can take the house i. texas netted six republican seats. now, they had time to lay down their -- they had tom delay down there. that is the reality, and it had very profound implications. think back to california. california in 1980 went through

redistricting. they worked that system r, and they locked down california bid -- subtly as -- they or to that system hard, and they walked down california as a democratic state for decades. redistricting has a very profound short-term and long- term implications for democrats, and also has an impact on the 2000 count -- on the 2012 presidential race. we want to win them, but it has profound collateral side effects, if you will. >> and building on the points harold said, in terms of the stakes of these governors races, dga is engaged in these races in a number of ways, and had come up with competitors on the republican side to -- hand-to-

hand combat with competitors on , ledepublican side,, rga by haley barbour, who is very good at raising money. talk about the strategy for dga. what is the strategy for the next 60 days, what is the focus, and had you not just expand the field, but in states where is going to be a tough race? >> well, it is a great question. it's almost like we planned it that way. just yesterday, dga unveiled a strategy for the fall, project extreme gop takeover. -- makeover. we can only play in states where we can make a difference. we will invest in states where we think we can affect the outcome and conserve our resources and use them wisely

and strategically. number two, keep a local. governors are here to create jobs and invest in schools and deliver health care and services efficiently. they don't go in d.c. and a vote on federal issues. republicans will try to trap them into getting involved on federal issues, and it is a trap. governors deal with local issues. no. 3 is a rallying the base. paul mentioned it earlier, at this is something we can do and we have to do. just last week we raised $1 million from on-line supporters the parent company of fox news's contribution to the republican governors association. our supporters came out in a show of defiance raised $1 million for dga. it is that type of rally of the base that we have got to do -- rallying of the base that we of

got to do. and we have to shine the light on the republican spread the types of candidates they are putting up the -- this year are -- we have to shine the light on republicans. the types of candidates they are putting up this year are not fit to lead. when you think of the maine republican -- maine republican party adopted it tea party platform as its own. he wants to teach creationism in schools, and he wants to throw out the bill that prevents the employment discrimination ordinance. he sarah palin --picked candidate in minnesota thinks it the economy is faltering because waiters and waitresses are making too much money. he wants to strip away the minimum wage.

he has appeared with the donated money to a christian group that has advocated -- appeared with and donated money to a christian group that has advocated the execution of homosexuals. in illinois, a candidate advocates the mass gassing of animals, which i still don't understand. and rick scott, the single largest medicare fraud in history. he pleaded the fifth at 75 times, including "are you currently the ceo of columbia healthcare?" he pleaded the fifth on that. the real issue is what kind of governor he would be. the type of person with that distain for government should not be governor of importance to it like -- should not be governor of an important state like florida.

if we focus on its core elements, we will do well in november. >> for those who would like to ask questions, please come up to the mike, and after a few questions from the audience, we will take questions from the press, if there are any. second last question. in particular to harold, paul, and dee dee, who were in the white house, what is the role of the white house in governor's races, making sure we win the critical governor's races? when you were there, the advice you have to the white house, changes, if any, to their focus? i will start with harold. >> i assume he would start with paul. [laughter] they can raise money. money will be very tight.

i don't know what you doing on any of this, but when i was at the white house, it is something that we focused on. two, i think the white house has a very strong message to kerri, a positive and either negative, -- strong message to carry, positive or either negative. shining a light and republicans. they have no message. they have the message of no on everything. it started with the first stimulus bill. i know we don't like to use the word stimulus and more as democrats. but there was high hopes that it would be but partisanship, and there should have been. the country and the world was on the brink of a massive depression, brought about by the princes of wall street and the republican policies. it was not one republican vote in the house of representatives,

not one, and only three in the united states senate. it seems to me that from that point forward, it has been no, no, no, one or message. i think it is turned off independent -- once core core message. i think it is turning off independents. the president has the biggest megaphone in town, and he is starting to use it. there is a big message there, if they can control, what will happen -- gain control, what will happen. >> i think harold is right. he can raise money, but that is about it. it is not like the government will swoop in and have a solution to the school testing issue in alabama.

you're just not geared that way, nor should we be, to have the president come in and fix issues. in the broader climate, he can help set the table. the speech yesterday in cleveland was outstanding. he went to cleveland, took on boehner by name, used the words "middle-class" 11 times. i love that. if there's anything that defines the democratic party, it is the middle-class. we are the party of the middle class -- we are the party of the american dream. the republicans are not the party of no. i don't like it when democrats say that. it is just narcissism. it is not that they are against good ideas, it is that they are for ideas that would the country

in the second term. we should put this on file. we should say that they are for privatizing social security, eliminating unemployment benefits. these people are crazy. they want to force their particular views on to our children on science. they don't believe in evolution or gravity are for the synthesis -- gravity or photosynthesis. [laughter] they have really extreme views. i think the media patronizes particularly tea party republicans. they don't vote, the parties on the upper west side -- they don't go to parties on the upper west side. i don't think we should demonize them, and we should not patronize them.

how many jobs would be treated by the present meant it -- how many jobs would be created by privatizing social security? i know that people are upset right now, but they have no idea right now what republicans stand for, and that is on the part -- that is in part republicans' fault, but it is also democrats' fault. if you ask these candidates, they think that social security benefits are on constitutional -- unconstitutional. they think they violate the constitution. the senate candidate in nevada since they are violative of the first commandment.

"thou shalt have no other gods but me" -- social security violates that? every democratic candidate should read that, because it is great. >> how can i add anything to was just said? [laughter] there is not much that the president can do. and the issues there are specific to the states and we do not want to federalize all the elections. the president can, exactly as paul said, set the table on who these folks are and create an atmosphere where we are more aggressively questioning what the other side is proposing and what they will do if elected. >> i will say this -- i agree

with everything everyone has said. there is no question that this white house wants to do everything it can to win these governors races, and they understand the importance of everything the white house is trying to publish and the countries long-term prospects -- everything the white house is trying to accomplish and the country's long-term prospects. having said that, you cannot nationalize these races. when they try to nationalize the races, you should know it is because they cannot talk about local issues. everything the government is supposed to do, about economic development and all the things that republicans claim to be better at, they are worse at the federal level. when it comes to the employment rate, republicans, who brag

about that, five of the states with the worst of a planned rights have republican governors. -- with the worst unemployment rates have republican governors. of the 10 worst economies, eight have republican governors. everything comes at a cost of an opportunity. this, i think, basically for fits their opportunity to talk about what voters really care about, which is jobs in the economy. >> last question is really short. it is election night, the states to watch that you are going to be focused on a in terms of how the light turns out -- how the light turns out with respect to governors, good or bad. >> i think it comes down to the arkansas governor's race. [laughter]

if we win that one, lights out for republicans. there are three reasons that 2010 is so important. the impact on the 2012 elections, and of course, redistricting. the state that captures that better than any is florida. you have a clear contrast between candidates at the state level. it is important to the presidential race and 2012. and it is going to undergo redistricting. and it is a state where the governor is central to the process. florida is not only a bellwether for the country is, but it will have a greater impact than any other state in the next 10 years. >> california, new york, florida, texas. if we win most or all of those, there will be more americans living under a democratic governors and then there are today. -- than there are today.

>> texas is the most important state and always has been . georgia. i want to thank the republican voters of georgia for nominating a corrupt washington congressman add a time when corrupt washington congressman are as popular as venereal disease. [laughter] just watch this -- how can we be this lucky? the republicans have put out a corrupt washington congressman in georgia, a pretty republican state these days. you might have a real chance of seeing a democrat sworn in as governor of georgia in what looks to be a pretty republican year. >> i don't have anything that.

i don't have-- - anything that. -- to add. differents a very year. but sometimes happens is that we sisimplistically compare on election to a previous year's election. the notion of the d.c. as a gap -- of the enthusiasm gap is a critical element. it is a negative for democrats, but also a positive for democrats. voters are still winnable. this is not an election where people have moved lock, stock and barrel to republicans and it is done. i spent time last night, because i have nothing to do -- nothing better to do with my life, looking at exit polls for 2006.

if it is true for 2006, it is more true now. the key thing for democrats, particularly at governors' races, but beyond, is to make the stark contrast, make a clear case, as to how they will lead the state for, and make clear the contrast between them and republicans. if that happens effectively, you will see a very different story line, in particular with governors' races. on that note, i will open it up to questions from the audience. who would like to ask a question first? would you mind coming up? we have a mike right there, actually. >> "daily caller." i have a question for dee dee -- you talk about optimism. what reason do you see for optimism?

you guys have been somewhat optimistic about some things from a political perspective, but from a borders perspective, how do you go out and talk but -- from a voter's perspective, how do you go out and talk about optimism? who would like to see when a nomination on the republican side? >> it is critical. you cannot go up there and just say, "we are in such deep doo doo and it is all over." i don't think that works as a campaign message. you have to talk about the future and what we can do collectively to build a better future -- investing in education and a green economy, whatever the issues are of the particular candidate. and why that translates into a brighter future. if you cannot sell a message that tomorrow is going to be better than today, if you cannot

get people to believe that and get people to vote hopes instead of fears, democratic governors are not going to win. as for who i would like to run against t, i think it would be so fun to run against sarah palin. ?blast't that be a she is not really a politician, she is a performer. >> there is no one who faced darker times than franklin roosevelt. you think we have dark times now? it was tougher then. it was his optimism that partly carried the day. ronald reagan was known for his optimism in the face of a pretty rotten economy. >> 1992 was a pretty grim time and he was able to win by being optimistic.

>> it seems to me structurally that one of the biggest differences between running a campaign in 2010 compared to 1994 is the use of early voting. i'm wondering, particularly for nathan and harold, how does the enthusiasm gap played out in that? is it harder to get the ground game going in those circumstances? will that have more of an impact on democrats? >> you are right, the early voting is going to have a big impact. i am dubious of the whole notion of the nbc hasn't gap, because a -- i thinkof -- of the enthusiasm gap, because it is

more of a noise that. tea party members are more upset with republicans that they are with the democratic party. the notion that there is some sort of overwhelming enthusiasm for the republican party, i don't think it is there. they are electing people who just don't have infrastructures for his general election campaigns. in florida, i think we are going to out-organize republicans. i think this will come out to our advantage. >> i do think that the early voting poses some problems, but people not as enthusiastic about voting -- i am not sure how that is going to affect the early

vote. it seems that the increase is in doubt i am concerned about is the -- that the enthusiasm gap i am concerned about is the turnout factor. there are 65 days left and the atmosphere can shift on this. people who may not vote early -- they still have a shot at voting before the polls close. >> susan page, "usa today." you say that presidents don't have that much to do with governor's elections, but when you think about congressional elections, what role did attitudes towards president and couldn't play in the 1994 election, compared to -- attitudes towards president clinton played in the 1994 election, compared to attitudes towards president obama this year?

>> in 1994, the reasons were very different. the president failed with the democrats on health care, this president succeeded. did different things with the gun control, kay writes, -- gay rights, raise taxes, we put a chicken on the podium at the white house. but for the house races, this the biggest distinction. in 1994, do you know how many house republicans lost? zero. i think they were kind of targeting democrats that year, the voters. that is not going to happen. the anger is more diffuse, less partisan. it is ideological, but less partisan.

what the president can do is the stuff he did yesterday, not just fire up the bay's, but framed the election and the choice. the republicans are much more extreme today. it is really extraordinary. the party of ronald reagan was more extreme than the party of richard nixon, and a party of newt gingrich was more extreme than the party of ronald, and the party of, who, palin? way more extreme than the party of bush. republicans took power in 1995 and they tried to cut medicare peoplan people freak out. they elected bill clinton. this is a way more conservative

republican party. this president needs to use the agenda they have stated and make it the issue that the election is contested on, rather than his accomplishments. that is why yesterday's speech was so important. it was a pivot point away from give me a gold star for my accomplishments, and to >> [inaudible] >> bill clinton was elected with 43%. he started from a position where there was a lot of skepticism toward him. as paul pointed out, we did a lot of really popular things, beginning with proposing letting gays serve openly in the military, which went really well. the biggest factors -- we were coming out of a recession.

there was a sense of economic undies, although less so. the president's first budget, which raised taxes, it also cut spending and set the table for the next eight years of economic growth. people were angry and the republicans had a big, fat easy target. that and the failure of health care. president obama -- 9.6% unemployment, a huge spending to get out of what was almost the second great depression, it has cost him. they could have done a better job -- it's easy to sit here and say this -- of framing the health care debate. i think that has become a big target for republicans. between health-care, stimulus spending, much of which happened under the bush administration but obama is being blamed for, it's a tough

environment. it is not as personal as it was with president clinton. his personal approval numbers were lower and people were not satisfied with him. with obama, people still like him, they're just not sure about his policies. >> next question over here. >> haley barbour was in town, talking about how these are going to turn the republicans out. is that a concern for you? do you have any candidates that will drive democratic turnout in some of these states? could you talk what haoles governor races are going to tie into some of the senate and house races that are happening? >> did he actually say bill brady is going to turn people out in illinois? 60% of people don't know who he

is. we already talked about calif. -- meg whitman has spent 200 times what jerry brown has spent to date -- to hundred to one. and the polls have a neck and neck. i find that hard to believe meg whitman will be able to generate swell for a candidacy that she has not been able to generate with the first $120 million. in a number of our states, we're going to generate a great deal of enthusiasm. one is the strength of our candidates and to is the republicans they are putting out. when we shine a light on them and talk about the stakes of this election, we will not only do what president obama shows we can do the war -- for shows the world will weaken do, but we can persuade independence. >> you have heard speculation about a potential government

shutdown. dick morris proposes to conservative republicans at a recent conference. i wonder if you could speculate on that. i'm sure you think democrats will retain control, but should democrats talking about this more on the stump as a potential? >> i would not talk about it on the stump because it is an abstraction. i would talk about the specifics -- social security, medicare, all those things they want to abolish. but should it come, to "the previous president, "beyond." independents particularly our the theoretical conservatives -- there against government spending, but there for teachers, more cops, for fire fighters, for social security -- would against to a specific, they like it. people are not running around

holding up signs saying canceled veterans benefits. they're not saying unemployment benefits should stop. they're just saying as a general matter, i'm against spending. so republicans win when they say spending is bad. but when the democrat stands up and says what he means is abolish social security, abolish medicare, and veterans' benefits -- people say i don't mean that. the democrats just said another $26 million -- $26 billion to the states to keep cops and firefighters on the job. nobody in colorado is saying i wish we had fewer firefighters in boulder. nobody is saying i wish my seventh grader was sitting in a class with 50 kids with headlights be as weak -- 50 kids with head lice because we should have fewer teachers. we should make it operational, not theoretical.

>> thank you for coming. thank you to the panelists. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] ;.. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] border security. then, a town hall meeting with senator merkley.

>> to take your calls about her new book. the author of permanently blue will focus on the fall election as it is like on c-span every day at 7:00 a.m. eastern. correct this weekend, commemorating september 11. a pulitzer prize winner on the offense and led them to 9/11 but the talks in detail about the twin towers, the collapse, the cleanup. and afterwards, but they play

among corporations but then she is interviewed by a cnbc interviewer. >> now part of our coverage of the recent public policy conference at new mexico state university. speakers include kay bailey hutchison talking about border security. in the event is hosted by a former senator who is headed the task force. this is about 40 minutes. . this is about 40 minutes. >> thank you very much. [applause] >> thank you very much. [applause] thank you, dr. barbara. i am so pleased to be here, and i think you are doing a great job as the president of this wonderful university. i have to say, when i came on

this campus i saw the marin colors -- maroon colors, and i saw these great agricultural traditions that i am very used to, and i thought, did we take a wrong turn? [laughter] i will say the spirit you do not get to play the university of texas -- i will say this. you do not get to play the university of texas. i want to say a word about why i am here. iversity of texas -- i will say this. you do not get to play the university of texas. i want to i love the opportunity to travel to universities, but i am here because pete domenici is an

icon. [applause] no one fought harder or made sure that new mexico was in the game and taking care of them pete domenici. he was more than that. he was the person everyone looked to when there was an economic issue, a finance issue. he was a renowned chairman of the budget committee. he was the one at that led to a balanced budget and to have a fiscal responsibility. so, when he called, and with all of the things we work on together, i would never be able to say no to people amenity. you are very lucky to have hit -- to pete domeneci. you're very lucky to have him associated with this university. i also want to mention sam nunn. pete and sam worked on so many budget and national defense issues. domeneci. you're very lucky to have him

associated with this university. i also want to mention sam nunn. pete and sam worked on so many budget and national defense issues. sam as you will find out in another great introduction, i am sure, was the chairman of the armed services committee when i came on the committee. it was a joy to work with sam nunn, because when i came into the senate, we worked together for the good of america. we did not look at party lines, we looked at what was right for america, and he is a great leader in national defense, an i am very pleased that you are here, sam. [applause] well, let me start by saying that pete asked me to talk abot border issues and border security, and of course, as the mexico and texas, arizona and

california know, we share thousands of miles of border. we share one belsen 400 miles between texas and new mexico -- 1,400 miles between texas and new mexico, and there are vast, wonderful opportunities because of this border. we have had economic and trade advantages that have been great for our country and our state as well as mexico. our culture has been enriched by the mican culture, where our histories are so intertwined. as barbara mentioned, my great grandfather signed the declaration of independence because texas was part of new mexico at one time. our history is intertwined. as we know, today we are facing many, many issues, the likes of

which we would never have imagined. the drugs and arms trafficking, the human smuggling, the violence that we are now seeing on the other side of our borders is becoming an issue in the united states as well. there is no doubt that we mus realize with the growing violence in mexico that there is a u.s. security threat nownot only on our borders, but throughout america as well as mexico. just 50 miles from here, on i- 10, tel pass the residents are seeing firsthand the crossover affects -- el paso effects are seeing present the crossover affects of drug violence from mexico. stray bullets recently hit the city hall. the university was hit by stray bullets.

we should be alarmed at this escalation. until now, communities on the american side of the border did not have a lot to fear because the spillover was not that great. but as far back as a year and a half or two years ago, i started getting concerns raised by my border residents about the rising number of kidnappings that have happened on the border that madehem very concerned about going across, as we used to do very easily. i am sure many of you have had the same experience of crossin over, crossing back, going to dinner, going to shop, going back, having mexican residen come across our border. there was an east at our border, but the violence has changed -- there was an ease at our border, but the violence has changed all of that.

it has become one of the wld's most dangerous places. president felipe calderón launched an aggressive war against organized crime in continuet the cartel's to operate with impunity. since 2006, the drug-related violence in mexico has resulted in 28,000 deaths. 28,000 in a board years -- in four years. so far this year, there have been at 3000 killings, including that of an american embassy worker and his family just across the border. last week's massacre, just miles away from brownsville, discovered that 72 people who

were thought to have been brutally murdered by cartels running human smuggling operations were found. here is the "dallas morning news" today. "slaughter in mexico. a new low in gang wars." i will read you an excerpt. "the terrorists have descended into an entirely new realm of inhumanity. migrants, in this case 72, lined up and assassinated in cold blood. grts' pay up to $3,000 each to be smuggled into the united states, as some apparently too great to escape the notice of gangland criminals who want a cut of whatever action is

heading nth. in the lucrative people smuggling business, apparently a new price of passage must be paid." the editorial also quotes robert bonner, the former border commissioner and the leader of the drug enforcement association, in which she argues that we can gain the upper hand in the se way columbia did, provided mexico and the united states are willing to take some difficult steps. he goes on to say that the difficult steps are that we, along with mexico, are going to have to target list, put up money, be willing for mexico to extradite criminals to the united states when that is

warranted for trial, so that the drug kingpins know that they will face a court in the united states instead of just lauishing in jailn mexico. he says that is what is missing right now. that is part of it. so, we are going to have to take this very seriously. according to a report released last year by the u.s. justice department, a mexican drug traffickers now represent the greatest organized crime -- the greatest organized threat to the united states. texas, southern texas and new mexico represent three of the largest crime cente in our country. the others are arizona and california.

we must accomplish a balanced strategy that includes more and well trained border patrol forces, and many of those great border patrol forces are being drained right here in new mexico. you have a wonderful facility -- being trained right here in new mexico. wonderful facility, and training is key. adequate resources and technological advances to keep one step ahead. i have worked with my colleagues to strengthe our border patrol forces. we must make sure that we have the manpower to do this job. we also are doing other things. project gun runner is one that i strongly support and for which we have got to an

appropriations, almost $100 million, in the last three years. that is to keep the sophisticated weaponry out of the hands of drug cartels, because what is happening is, the illegal weapons and firearms are being smuggled across the border from the united states illegally into mexico, and of course, into the hands of the drug cartels. the sophistication of the weaponry of these drug cartels cannot be underestimated. so project gun runner is focusing on that, stopping the guns from flowing into mexico and into the drug cartels. senator bingham has been my partner on that for the last three years. because of the surge in violence, an emergency supplemental appropriations, doing much of what the former head of the dea suggested, was

passed by congress and signed by the president. it's a $600 million investment. it will create specialized strike forces that will be deployed to the different parts of the border, designed to have the flexibility to focus on the areas with the greatest need for additional support. what has happened in the illegal drug trafficking is that when you close down one area, another one pops up. they have the ability to go into a new area and create undue system -- create a new system to get drugs in. this task force should be able to go where the help is needed, because generally they choose area tt do not have very many people and are not guarded very well and have easy access over the rio grande river. we have to be ever vigilant end

a whole lot smarter about where we strike. the bill also allows federal border enforcement agencies and state and local officials to have better communications assistance. when i talked to local policemen or state troopers, they will say, we do not have information. certainly, as a force multiplier with our border patrol agent, today we have six ua these -- uav's operating on our borders. however, only three are on our southern border. the rest are on the northern border with canada. we are asking for supplemental appropriations to be able to so that wemore uav's, would have 24 hour surveillance

all along our southern border, from california all the way over to the edge of texas and mexico. if we can have that 24-hour surveillance, it will help our border enforcement agent. it will help our border patrol to know where the hot spot is. it will be great for intelligence gathering. we are on the cusp, and i want to say that the faa administrator and the border patrol personnel are cooperating now to understand this urgency end to get the pilots trained to perate the uav's. i am very hopeful that we have gotten their attention and that we will be able to use these drones. this is the technology that is a tenuous, and i think it will give us the best chance -- that is the newest, and i think it

will give us the best chance for border control. i was very concerned originally about using the national guard, but as a violent end the epidemic proportions of this violence caused me -- this of violence and to the epidemic proportions of this of violence have cost me to change my mind. i have always tried to keep the military separate from border issues, which are different, but now we need the reinforcements. as long as the national guard can back up the border patrol s, then i think it is warranted because of this emergency. today, texas has asked for 1000 troops. arizona has asked for 3000. in april, governor richards and of your state also said additional national guard support to new mexico's border.

this is sething that i think evyone is now in agreement that it can be a good backup, and in this time while we are adding the arbitral agent and training them -- adding border patrol agents and training them, we need to have all hands on tech -- on deck. i was talking to border patrol and national park service people just a couple of weeks ago about how they were handling of the big bend and the rio grande river issues with the border, and they are in an unprecedented area now of cooperation between our park service's agents and our border patrol agents. our park service has not focused on security as much as they are now, but they are now, and i

think it is a very healthy relationship. i am very encouraged by that cooperation, and the feeling that we are all in this together, and that it in all of our interest to keep our parks safe, our constituents states, and to make sure that we are sharing information. in closing, i just want to say that ielieve border security is national security. it needs of the focus that we have not had because really, there has not been the violence and the associated violence and the human trafficking, but 28 fouls and the brutal murders in mexico is a cause for alarm -- 28,000 brutal murders in mexico is a cause for alarm. i know that you get reports about the brutality of these attacks and we just have to proactive.d thbe

president reagan once said, "a nation without borders is not a nation." we have to now recognize that this is a looming issue for our country. id is burdening our courts, our legal system, as well as the safety of our constituents. i appreciate being asked to be here. i again want to pay tribute to the service of pete domenici, the great love he has courtney mexico, and the service he has -- the great love he has for new mexico, and the service he h done for this country. in the annals of the history of new mexico, he will be at the

top. thank you very much. [applause] i will be happy to take questions. i do not know what your timetable is. we are going to have student asked questions. >> ok, super. >> check. hello. i would like to start by saying thank you for being here today. we appreciate your attendance and your participation in this conference. you talked about being a strong proponent of allocating more federal funds to increase the technology and personnel on the border for border security. could you explain how to elected officials and law enforcement assess the effectiveness of

increased security? in other words, how do we assess that this is having an impact? >> that is a very good question. we tried different thing, some mart successful than others. -- some more successful than others. i believe that well-trained border patrol are our very best asset. there are some technologies that have been tried that have not worked vy well. you have to have forced multipliers. give us a you to step up in intelligence, but also the infrared system -- give us a huge step up in the intelligence, but also the infrared system will give us access to things at night that we normally would not see. if we have systems to go inland,

or say every 30 miles for different stops, then we can use the intelligence transfer at the next border stopped to use that information and apprehend. as a matter of fact, no one o the -- as a matter of fact, a nigerian terrorist was looking for a base in west texas. he was caught, not at the border, but because the border agents noticed that there was something strange about this person. the border agent notified the next stop, and the border patrol and by the time the

vehicle that had been reported came through, that person was arrested, tried, and is in prison today for actually being in al-qaeda at credit -- al- qaeda operative. these are the things we try to learn and to do. i believe that people, meaning border patrol, are our best asset. but your question is, how do we know? you just have trial and error. i think we are doing a lot better in border patrol since we have increased the number. we have increased the number of border patrol from in the 3700 range when i first came into the senate to about 17,000. you know, we have a northern border. that is partly the northern border, and also some of the inland offices of border patrol. we have airports that have border and customs agents as

well we have done a lot. we are doing better, but we are not nearly where we have to be, particularly with the violence coming across now from the south. >> so are you have focused on -- so far you have a focused on the border between u.s. and mexico, but a great deal of the border is coastlines. what steps have you taken to make sure that the security at the port is commensurate with the security at the border with mexico >> that is an excellent question. it is an area that is being addresse but it is later, much later in the enforcement system. i think that after 9/11, the coast guard became a much more

operative organization in patrolling and watching our water borders, and they have done a great job for, like the oil spill that we have just seen out of louisiana in the gulf, and i think that today are really stepping up to the plate and doing more in the security area as well. but, we have deployed more -- i say we. the administration and the previous administration has deployed more into our ports and airports, more customs and border prol agents, because those are very vulnerable areas. some of the illicit activity ended drugs especially -- activity, and drugs especially,

has come in through our ports. we have to consider all of our borders, including the coast. it generally, the ports provide a more finite place for our agents to operate from because you have to come into generally support, but airports have been increased as well as our water ports, golf, atlantic and pacific. -- gulf, atlantic and pacific. >> in the past you have stressed the importance of working collaborative lee witt and the mexican government. can you briefly discussed -- withing collaborativ lely the mexican government. can you briefly discuss the

status of that corporation? >> president called iran has been very proactive -- president felipe calderón has been very proactive and has had a note tolerance -- no tolerance system in his government, but the violence has been overwhelming. were the mexican myayors assassinated -- two mexican mayors were assassinated. the head of the police was assassinated. the cooperative effort has been very promising. i know that there is a lot of training that is being done with the cooperation of american trainers, american border patrol agents, american military and police are helping to train the

mexican police and border patrol agents, and there is cooperation among the mexican and american law-enforcement agencies. so, i would say that the mexican government is definitely cooperating. however, having said that, it is not a success yet. so much of this drug activity , if you can sit down in one place it comesp in another -- tamp it down in one place it comes up in another. i think there was a time when ople thought we would never lose the organized crime in colombia. truly, it was a mafia of huge

proportions. it was a relentless, strong, american help with the colombian government and the colombian government taking responsibility itself for the betterment of this country, and i believe that mexico is definitely receptive to the help that america is willing to give. they are doing a lot with it. they are beginning to extradite drug kingpins when there is an american in excess -- an american nexus. that has been gradual over the years as well. i think we have to keep making progress, and i think we are making progress, but there is so much more that we must do.

>> along the lines with cooperation with the mexican government, is there action the united states can take to bolster the mexican government so that they will have a better ability to deal with issues internally? >> anytime you are dealing with a sovereign nation, you have to be very, very aware that it is not going to be america running mexico's government or any other government, and the people of those countries are very sesitive about that, and understandably so. we are not going to try to in any way get involved in at the mexican government or politics, but what we willo is augment

their efforts with their requests, and help to train their military and law- enforcement personnel to deal with something with which they have had very little experience. i think that has been positive, because we have had a strong law enforcement background in america. we have had strong military. we have had strong police, and integrity has been a hallmark of our law enforcement. that goes across the board from our criminal justice system throughout the ranks of people who have the trust of being law enforcement officers. the mexican law enforcement has not been as vigilant, because it

has been a different culture in a different time. i think that we can do a lot to strengthen their defenses, because they just have not had experience le this before. you know, they do not have a military to speak upof. they do not fight in wars since the one my great-great grandfather was in. they just have had a different culture. i think where we can be affected is not in their politics. they have a democracy. really, since they have had a competitive democracy, i think they have been better off for it. so now, i think we just have to be working with them, arm in arm, as neighbors do, and try to

respect their sovereignty but give them the help where their experience is certainly less than ours. >> in response to an earlier question, you had given an example about the apprehension of the terrorist. in fact, a common argument in support of securing our southern borders is that it prevents terrorists from entering the united states. how accurate is this claim? do you have other examples or statistics to support that it is a very real threat, terrorists coming in to the united states over the mexican border? >> there are definite cases of people being apprehended that have all of a the suspicions of

being terrorists. people who come in with the, i mean, they're clearly not from mexico. they're not from south america. there from areas where there are terrorist operations. some came from pakistan. some come from nigeria. other places. in addition, some of the terrorists to have been caught in other parts of our country have come into mexico -- come in at throughout mexico. once they have been caught, they have been traced as having come in and throughout mexico. i cannot give you numbers. i mentioned this in one instant.

it is not published in a data entry, but it is supported by many border patrol agents that they have found karan's -- korans, they have found arabic instructions on how to cross the border and get into the united states. these are clearly people getting in illegally with bad intentions. the drug violence is the biggest crisis that we have, and the criminal element that go with that, but to this country is not free of terrorism, and we kno that there are cells operating in the united states right now, and that they are looking for places to operate with little detection, and this past border that we have has many places where there would be little

possibility of detection. so, we are a nation that is in a war on terror, and we must be vigilant. >> we are going to have to ask you bk by popular demand. we have cars on which people have written you questions. -- cards on which people have written you questions. perhaps you could trouble your staff to answer them. i have all of the estions right here. >> ago, good. -- oh, good. >> i just want to thank you for coming here to honor pete domenici. we as and neighbors in respect of the good work you have done on behalf of our nation and for the great state of texas.

if it were not for texas, we would not be as wealthy as we are, because we have come up with all kinds of ways to tax you and to attract you to the mountains. >> i have heard many comments exactly along that line with regard to the new mexican view of texas. >> we would only ask that you be careful about claiming our water. we are very sensitive about that. [laughter] again, thank you for coming to our conference in this a year. [applause] >> senator hutchison, this is a gift from a mexican artist who works in the native tradition -- a new mexican artist who works in the native tradition.

>> tha you very much. >> give her a big round of applause. [applause] >> it has hurt arizona's economy, seriously. we see the stories every day. >> with midterm elections 50 days away, follow the campaign online at this c-span video library. it is easy to follow the issues any time, all free, on your computer. >> our coverage of town hall meetings around the country continues now from north-central oregon, where senator jeff mer kley met with constituents for a little more than an hour.

>> i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation, under god, with liberty and justice for all. we are pleased to have our guest here tonight. he was raised in mill creek. he began his career in public service as an intern for former senator mark hatfield. after working in d.c. for a few years in both the pentagon and the congressional budget office, just came back home to

habitat for humanity in portland. he was elected to the portland -- portland -- oregon house of representatives in 1998. in 2006, he became speaker, and held the post until he was elected to the u.s. senate. in 2009, he was sworn into the same seat that was once held by senator mark hatfield. jeff has been relentlessly focused on getting our nation back on track and getting our people back to work. in addition to putting to save jobs, he has worked to bring down the cost of health care, stop the abuse of credit card companies and investment banks, and investing clean energy.

he says he prefers to look forward rather than backward because there is still very much to do to help oregon workers and business owners. tonight, please welcome your senator. jeff merkley. [applause] >> thank you for the introduction, and thank you for coming out. there are chairs scattered around in front if you want to have a seat. i am going to say just a few things, and then we will pick up the questions and comments. we ask that you keep your questions or comments reasonably brief so that we can get in as many people as possible, and also to recognize how passionately appeal, there -- how passionately you feel, there may

be someone who feels as passionately on the other side. we will ask that you be respectful when they are speaking, and that everyone else be respectful when you are sleeping -- speaking. [laughter] no sleeping. a couple of things have been on the table that we will be returning to after the recess. one is the small business jobs bill. this provides a series of tax benefits to small businesses across america. it also has two provisions designed to increase lending to small businesses. that has been a key factor in kind of keeping us trapped in this recession. one is the expansion of fda lending. the other is a provision that transfers funds from wall street to main street community banks so that they can get the funds out to our small businesses, because they really understand what can work and what investment makes sense. so, that is a key piece.

a second key pieces the discussion over energy. energy affects us throughout our state. on the one hand, we have a lot of clean energy opportunities, ranging from the possibility of a wave energy to solar energy, wind power and geothermal. on another level, we have an opportunity to create a lot of jobs by investing in energy- saving renovations to buildings. the nice things about that is that it literally puts the construction industry back to work at a time when housing has stalled out. it is considered by most to create more jobs for the amount of investment and then anything -- investment than anything else we can do. scores as a positive as a lending program, because it does not add to our deficit. the other thing it does, is it keeps people not only working, but after the energy-saving renovations are in place, they lower the bills of our families

and our businesses month after month, as long as that building is utilized. it is a benefit that keeps on giving. one of the big issues in energy that i have been immersed in is to decrease or eliminate our dependence on overseas oil. we spend a billion dollars a day. we use a little more than two billion oils -- two billion gallons of oil per day. in positioning our nation to thrive in a world where energy is expensive, it is better if we can replace that oversees oil with an american- manufactured energy. keep those dollars here in our communities, in our retail stores, creating jobs here in america. those are some of the energy issues that are part of the dialogue when i return. rather than going on about other issues, we will just open

this up to the matter would like to -- open this up to whomever would like to speak. are we using numbers tonight? i have been asked to invite a longtime resident to ask the first question, and that is margaret demint. are you here? hello. >> let me get my paperwork here. i have lived here all my life. my interest is in the english- language bills that have been before congress or so long. -- for so long. 85% of people recently surveyed would favor making english the nation's official language.

official business has been conducted in english. perhaps the most important thing to me,english has been voted america's official language in 30 states. not in oregon. why has the oregon delegation time after time refused to support the amendment? many good amendments have been offered in recent years that have never quite made the grade because some members have voted no every time. i asked you today, why? >> thank you very much. in just about every town hall ia question comes up that has not come up before. you have taken that status right off the bat. my impression is that many people consider this a state's rights issue.

you mentioned that 30 states have made that decision. 20 have decided not to. i do not recall that there was a real discussion in any year that i have been in the legislature about this issue, but it does seem to me that this should be a decision for the people of oregon. the think it is something to take to our state legislature. thank you. >> when you get called out, wait until the microphone gets to you. we do have a national press here, wherever they are, so it is important. i will randomly pull out a ticket. raise your hand. the next number to ask a question is 641. 641.

>> you might want to read those three at the time. -- at a time. >> that is what we will do, so that people know who is expected. that person is out. we will line up. the next question is 0616. there you go. >> before you get started, i missed something on our agenda, which was to invite our elected officials to let people know that they are here. commissioners and mayors and so forth. some of them have to leave shortly. let us have a chance to lead knowledge to them, and then we will get on to your questions. -- let us have a chance to acknowledge them, and then we will get on to your questions.

[inaudible] duke we have anybody running for office who would -- do we have anybody running for office who would like to let people know they are here? please join in a round of applause for our home grown officials. [applause] >> the next question will be 06 to 3. -- 0623. 0623. there you go. >> thank you. you have been working hard to keep america's trade on the economy and provide employment -- keep america straight on the economy and provide employment. the federal government provided

1,500,000 -- how you justify providing 125,000 temporary guest worker permits every month? a recent report showed a significant diverse impact -- adverse impact on the teen employment. >> this is a point of concern. to give you an example, i went to a store this summer where the young lady working at the store at spoke with a foreign accent. i asked where she was from. she was from the country before yugoslavia broke up. she explained she came here on a guest visa. she had come here. we have unemployment in this country. why should someone else not be sitting at that desk? the argument is that these jobs

require skills and that no one inside the state can be found to fill. that is not the truth of what is unfolding. what is going awry in the application process? are there jobs that are unfilled that could be filled by people ready to work here in the united states. thank you for raising that. >> the next question will be -- raise your hand wildly -- 0612. 0612? nobody? ok. the next person is going to be 960. there you go. >> a few years ago i graduated from the university of minnesota school of forestry. what the environmentalists have done to my profession should not be done to any profession.

why are our elected officials, and i am referring to the governor, agreeing with everything that they said? what is, in your estimation, an old growth? i can show you a tree that is 12 inches in diameter that is an old growth. i can also show you a treat that is 4 feet in diameter that it -- a tree and that is 4 feet in diameter that is not old growth. every time i go over the past i -- the pass i damn near cry. there are millions and millions of feet of wood that today are not allowed to cut because the environmentalists say it might hurt the ground.

god forbid that was true. we never would have done anything, never. we used to have a very high rate of employment with the relatively high annual average salary when the mills were operating. we no longer have mills. what in the hell are we doing to this state? >> while you have the microphone, do you want to share any thoughts on the east side forest plan that my colleagues have put together to try to get us out of this deadlock? >> it works sometimes, but every time something gets going,

it goes into the cords. -- the courts. >> yeah. >> we are stymied. we are just stymied. >> thank you very much. i can tell you that whenever i am hiking in the second growth area, you often see very overgrown second growth area that is not serving an environmental purpose, a timber purpose. it is often a source of disease. it is a potential fire hazard. it is a lose, lose, lose situation. there are a number of things that we need to push forward on, and one is thinning and that produces a steady supply of blogs, us a stable ecosystem -- steady supply of logs, a stable ecosystem, and a true

economy that supports forest jobs. we have always depended on lumber. right now housing is completely down the tubes and will be for some time to come, but we have the potential to create a second market in biomass products. that might also fit very well with a deafening type of operation, and the thinning can produce, -- with a thinning type of operation, and the thinning can produce, may be small blocks, but a steady stream of logs. some of the bright. i have seen, i have visited the mill. i visited the operation that is producing short, compact blogs. -- compacted logs.

there is a group that is building the first ethanol plant from a tree fiber over in another county, and what they are doing is using the bacteria from termites, and then they set up a chemistry that goes from paint thinner to event occurred to ethanol, but -- paint thinner to vinegar to ethanol, but they can stop the process at any point. they can fill the product. there is a series of prop. -- possibilities. it is often burned in the woods. another structure is biomass. over lakeside, there is a promising development where we proceed to produce both heat and energy. it works well in partnership with the sawmill. another bright point, a small step that has kept us out of the courts, so far, oregon has

more storage agreements than any other state, and not up -- -- not a one -- stewardship agreements and then any other state, and not one has ended up in court. there is an effort to bring people together in a much larger is stewardship agreement approach so that they can stay out of the courts and get jobs back into the woods. i want to keep pushing on each of these types of ideas to try to breathe life back in, and i will tell you, the thinking is, biomass could be a real part of a clean energy strategy along with the wind, geothermal and solar. it does not take more carbon out of the ground. it takes it out of the air.

i had a meeting a couple years ago. a woman spoke up and said, wouldn't it be great if we had a machine that would take carbon dioxide out of the air? i said, he would be glad to know we grow millions of those in oregon. thank you for your questions. we have to push forward on those fronts for our jobs and to save our forests. >> the next one will be 647. 647. nope? >> [inaudible] >> the next is 619. there you go. >> my husband and i have had a trucking business. it is not real big. we have had it 16 years. last year, we went to register

our trucks. our registration went from a little over $800 up to $1,600. that was a surprise. when i called, i said, i have been filling out these forms for years, but i obviously made a mistake. she said, yours is the first one to come in. she said, there is no mistake. it is part of the -- what is it called -- jobs and transportation act. ok, well, we will put that in the budget somehow went cut something out. we flushed our insurance coverage. this year, in october, starting next month, are mileage tax on one truck will go up a little over $200. it will average per truck about

$2,500 per year. i got this letter with the rate increase. it is part of the oregon jobs and transportation tax. i feel abused. if our registration goes up, we will probably be done. when i talk to people, they say, you can pass that on. no, you don't set our rates. the low as we used to get, almost $600 a load for, we are getting $500. we cannot pass that on. if we don't take them, somebody else will. my question is, who else is paying for this organ jobs and transportation act? i know everybody who fills up their car is taxed, that goes toward this, but industry-wise, i really feel some abuse here.

>> this is the time i would like to be able to introduce your state senator or state rep. we don't have them here. i will take a shot at it. >> [inaudible] >> yes, indeed. do you want to take a shot at that? >> what you were talking about was passed in 2001 and was passed in the 2009 legislation. [inaudible] they did not listen. it went ahead and passed. there are a lot of components to the bill. one of them that indeed you as of october of last year was the title registration. those fees -- nothing was exempt.

it is for agriculture, business, private individuals, anybody in this room that has gone in to get their registration updated since october of last year. the fee for the automobile went up to i think $87 for the feet. the increase in registration and title went up $16 and $23, respectively. as of january of next year, the fuel will go up 6 cents per gallon. the that part of the story is not over yet. i did oppose the bill. however, some of the positive points, the county commissioners in their room with be excited to know that the city and county split for tax revenue off fuel. it increased. that should help the county. honestly, it was probably the

only bill we passed out of the 2009 session that will really create jobs in the private sector through road contract in and what not. it does not help as to -- it does not help, but does that answer your question as to where it came from? >> do they go to connect oregon? does it go to improving the transportation infrastructure in the state? >> that is a good point. there was a meeting last thursday, i believe. the airport got $1.7 million out of the connect oregon 3, which did come out of that house bill. >> this man has come to more town halls i have held than any other state rep. he is working hard for you. he is thoughtful, serious, a major part of the conversation, and i think we should say, you

are doing a good job. [applause] >> the next question will be 9664. -- 964. we have one before you. >> ok. >> my name is michelle. i want to thank you for health care reform. i think we still need a public auction. we need a -- publicoption -- public option. i want us out of afghanistan right now. >> thank you very much. i will talk about afghanistan. i went on a trip earlier this year. i went to iraq and death and its four @ november. -- i went to iraq and afghanistan in november.

quite frankly, i believe that our mission has creaked in afghanistan. we went in to take out al qaeda treating camps. we morphed into nation-building. this is a nation that has no tradition of central government. it is a tribal society with a literacy rate of somewhere around 25%. they absolutely hate central government. they heat for the folks being in lay bare and -- in their country. you throw in a very different tradition and the way transactions occur. i arranged to meet with tribal leaders. they came in from far away. they were wearing the traditional dress, as they do every day. each one spoke and that some version of the statement that the government as an affliction.

i asked them, what do you mean? the central government as an affliction. they said, the competent and respected people in the community are never pointed to government posts. it is always folks who are out to make money for themselves. the posts are sold from the top on down. i talked to the american team. they said, yes. everything from governors often done to school teachers are sold. you make the money back at the next level. it becomes an affliction. i went to a training camp for the police force. we are engaged in trying to build a larger army. i heard problems about the police force. the payrolls were stacked. another form of corruption. they were hired and put to work in part of a country -- the country where they did not speak the language.

i asked about some of these problems. the german briefer kind of throws. he did not really want to respond to these concerns. the american trainer came up to me afterwards. he said, senator, it is like this. the police in afghanistan -- we equip them, we train them, and they are equipped and trained thugs. that is the problem. at that time i was there, we had an offensive. there was a lot of commentary on television, interviewing people and locals. we like the americans coming in, but please don't send in the police force. we sent in -- the collective nato operations center in -- the lead, best-trained police in afghanistan. it has been a disaster because even the best-trained are still

in a state where they are not ready and able to operate in a professional capacity. the goal of taking out al qaeda was exactly right. there are less than 100 al qaeda in afghanistan. any training camps that are there, i think we need to go back in and destroy them. but, this state-building mission we are ron -- i do not think it is proportional to the costs in the lives of our sons and daughters. i have been to walter reed, meeting with people coming back, missing various parts of their body, and it is not worth the treasury are pouring in at $1 million a year for soldiers. you mentioned a job program. $1 million would create 40

$25,000 per year jobs. building infrastructure, improving our education system, and that is the type of thing we need to keep in mind as we look at the overall budget. i have real concerns about it. thanks. [applause] >> the next question after this one will be 969. >> i want to thank you for a lot of great things you have been doing for oregon and the whole country. especially education -- we have been fortunate to get a lot of funding here through the stimulus and other programs here in our area and our county. i do see lots of wonderful things. i thank you very much. also, just a moment here, we

will be visiting the d.c. area in a couple of weeks and we would like to get some passes to see your office, perhaps, and the senate chamber. we will be visiting our daughter, who works with homeland security. we would love to visit. >> for you and for anyone who comes to d.c., our team would very much like to help get to those kinds of passes. it is a good time for me to make sure susanna is introduced. i want you to come up front. she is my field rep. she is an ez pass -- easy pass. >> my number is 541-3 1/8-1298. i would be happy to help you. ok?

>> we can get lots of senate passes, but if you want to road to the white house, six months in advance is necessary. they are really hard. i hope you will find some chance to come to that nation's capital. it is quite an incredible place. >> after this gentleman will be six or six -- 646. there you go. >> my name is robert sinclair. i got one of your invitations. >> how many folks got an invitation in the mail? good. great. >> i currently work at safeway as a frozen foods manager at

night. i used to work building homes during the day with oakland construction. we built several homes in the area and madras. a lot of the people i worked with are out of work. i believe one of the key reasons for this is that the monthly mortgage payments are just too high for most individuals who are working class people, people working at the markets, who are only taking home $400 a week. basically, i had some thoughts about it. the government could potentially loan money to low and moderate- income individuals over longer periods of time and 0% interest. every payment the people would make would build equity.

100% equity. the bank is not to be cut out. they could issue credit cards for profit. as the people got this equity, every payment they made, they could go out and purchase it, which would put other people to work. i put a lot of this information together about mortgage tables in this paper work i have here. for example, a person making $6.20 but cents per hour, 40 hours a week, a 50-year loan at 0% interest, $250 would cover a $139,000 home. if you could get people working at subway, talk president