the economy in my lifetime. the president cannot back down and say, i guess you are right, i spent a year on the wrong thing. i see irreconcilable conflict. >> michael, you see that? he received some natural legislation being passed? some things do have to get past, right? there has to be a budget and tax code, right? >> that is right. the initial subject before the plane that congress would be the bush tax cuts. -- before the lame-duck congress would be the bush tax cuts. speaker nancy pelosi did not have it in the house to review all of the tax cuts except for those -- to redo the tax cuts except for those over 215 -- $250,000. it is customary for the speaker

not to vote unless it is important issues. she would have to cast a vote herself. i would think they are in a weaker position now on that issue, and in listening to mitch mcconnell yesterday, and john boehner, they are insisting on having all the tax cuts, and by the way, we will not go along with reducing the tax cut on the high earners for just a year, and the others permanently or for a longer time frame, because you will send up -- such as of 4 a drain on capital later. -- set us up for a drain on. there are some areas -- the house does have this leverage that the vote, and the

government needs appropriations. and we need to have tax laws and we need to have the alternative minimum tax fixed every year, which affects mainly democratic constituencies. it is a cut that the democrats need every year and the republicans can make them pay for it in some way, shape, or form. i see some of those things going along. a couple of things, the republicans are more in line with the president's the stated position on free trade treatment with colombia, panama and south korea. support for free trade has diminished sharply among democrats from 1993 when the nafta treaty, the trade agreement with mexico and canada was passed with support of the clinton administration and a coalition of approximately 135 republicans and 100 democrats. you do not have 25 democrats for that kind of measure any more.

and you may have some republicans against it, but that is a possibility of cooperation. the other thing in the exit poll, on the president's course in afghanistan, he has the support of most republican voters and most republican members of congress. he has opposition from most democratic voters and most democratic members of congress. and i would guess, for the moment, nancy pelosi would be included in that moment. she is not an enthusiastic person. looking ahead, will the president be challenged? there is still the possibility of challenging him in the primary. >> let me hold off on that for a minute. >> ok. >> let's build some suspense. [laughter] on taxes, what will the tax rates be in 2011 and in 2012? the current tax rate?

the republicans win? >> i foresee a two-year extension of all the cuts. >> republicans wanted for four years, which would actually serve obama better. the question is weather obama's ideology stand for him politically, and it may. obviously, he hates tax cuts. it feels like handouts, but those are not tax cuts. they are great cuts. we will see how difficult republicans are to get on a two- year extension because they are really in me an-- really aiming for four four. >> i agree with fred. i think he was hinting, that a temporary extension might work, and obama dropped a few hints

about that when he spoke the other day, meaning, just look at all the options. but if he wants a real stand off, it will be whether or not these are permanent. i do not think there will be in the middle ground on that between the two sides. >> but at the end of the day, two years, for years, -- four years, ironically, there was a bit of economic uncertainty for a couple of years and i think that might actually help the president's reelection prospects. >> that is one reason why speaker nancy pelosi la support. a lot of democratic house members said, -- lost support. a lot of democratic house member said, raising taxes in a sluggish economy is not a great idea. i think the interesting thing to me is that if speaker nancy pelosi could have gotten the democrats' health care in the

spring, but they had to do with health care in the spring. why? because they had to deal with cap and trade, which she pushed through the house in june. in retrospect, i think that was a mistake in tactics from the point of view of achieving maximite -- from maximizing democratic achievements. >> two obvious issues they have to fear, and john boehner you have me thinking hard about. the two -- the tea party inspired members and the caucus is going to be new. as a pure management challenge, you have people integrated into the current structure. a third, that could be a challenge for boehner. it seems the two most immediate versions of that i challenge would be taxes and then the debt ceiling vote.

then the republicans do have to unveil a budget. if you control the house, then you control the house budget committee. and paul ryan will throw down a budget around april 1, which wilson be the official budget on february 1. it seems to me there will be a huge amount of pressure on republicans both ways. you cannot just put it on the president after the campaigning about how obama is spending us into destitution. on the other hand, when you start doing the numbers, it is hard to bring the numbers down too fast on the debt. all the spending cuts when you get into big numbers are politically risky. the tea party guys did not think that they got elected to raise the debt ceiling. i'm curious to see how the debt ceiling raised -- plays out and/or the republican budget.

>> the tea party caucus, they could be great numbers because you are to get 52 existing members and many more are coming. they could say, we are not voting for raising the debt ceiling. we will have to stop spending. it could require the democrats to raise the debt ceiling and the republicans to say no and the democrats could very well say we are not going to vote for this if you are not. it could be a very -- it could very well be a standoff. , and it could be a test of the lawmakers. and the person who is going to have to handle it all is the new speaker, john vader. what is he going to do? -- john boehner. the what is he going to do? he talked to the people on election night and said, "i will never let you down." well, you've either got to raise taxes or cut spending.

>> you can raise it for less time that obama asked. there is will room on this thing. -- wiggle room on this thing. enough republicans will vote for it and they can let the tea party off the hook. they can vote against it and you can let the majority of the hook. republicans have a harder problem, i think, and that is, the things that they believe in, like extending the bush tax cuts and may be other tax cuts and spending cuts, if president obama opted to go along with those things, they will be helping him get reelected in 2012. this was a problem in 1996 when republicans -- trent lott, actually, when he was majority leader -- gave bill clinton, who had vetoed two welfare reform

bills, they gave him a third shot at it and clinton signed it. and bob dole, but republican , and wasial candidates t planning to use the welfare issue against him and it was taken a -- taken away. and i'm sure that bob dole and other republicans are still mad about that, that trent lott should not have sent bill clinton up for the third time, but they were in favor of it. they liked it. >> when you think about the dynamics of the next six to nine months, a player in this is the chairman of the house budget committee. it is the one document that could authoritatively set forth the republican vision, and not just a vision, but the details of the size and scope of government to contrast with president obama. the budget is what trip up the

republicans in 1995. they had to reduce the growth in the rate of medicare. that is what started to do you really republican revolution of 1995. ken ryan balance the tea party within his own party? is there a reasonable alternative -- kenny savidge this as a reasonable alternative to obama? -- can he salvaged this as a reasonable alternative to obama? >> i think, republicans, in effect, had a policy success. they more than us stop spending for a year, which played a large part in sending the budget toward being balanced a few years later. nicolasa some public support -- they lost some public support, but remember, they did not lose 60 seats in the next election. they actually held control of the house. it was not a total disaster. they did not win the presidency,

but they all the house for another 10 years. -- held the house for another 10 years. i think republicans are looking out to have paul ryan in there. on the one hand, he is telegenic and has a good personality, but much more important than that, he has a command of substance of public policy and is capable of arguing his position and debating it civilly, but strongly. we saw that at the so-called health care summit that president obama held. the -- he has also addressed the republicans' biggest problem, if they should achieve the kind of success in 2012 that they would like. that is, how you deal with these entitlements? he's got his road map, which is a long-term proposal to try to bring the entitlements state

into a situation of fiscal sanity. some democrats have taken to attacking it. they have not provided alternatives of their own. only a relatively small number of republicans have specifically endorsed it. the inclination of incumbent republicans has been to scare away from something that might provide fodder for attacks. it will be interesting to see if that idea is embraced by more of these new members of one-third of the republican conference. ryan will be front row and center of any of these fights here. it is hard to imagine how the republicans could have somebody better positioned to do this. >> it seems to me, a lot of the challenge is to sort of embraced -- paul ryan is on the roadmap

and explaining it and suggesting it is the way of their futurthe future for repub. i'm on c-span. i should be careful how i raise this. he said, he is very flattered by fred's piece and it shows that a lot of candidates must be reading it because suddenly on tuesday, his office got a lot of frantic calls from candidates and campaign managers saying, we hear the roadmap is great. but i did not realize there were actual medicare cuts in it. would you explain? i do not think it is really cuts, right? i think is just reforms. and paul had to send a couple of staffers over to the congressional campaign committee. he had to get outside people to brief these candidates about the road map.

there was this article that it was a great thing for the future and then they were suddenly getting attacked by their democratic counterparts as if it was in 1995. but didn't democrats lose that fight by being called scrooge medicare covers? >> i do not think so. as far as keeping the new members satisfied, the republican leadership is going to have to produce actual cuts. the new members lookin, they goo the historic tables of the budget and in 2007, in which the deficit had been falling for three years -- the deficit in 2007 was signed -- was $160 billion and that was after the bourse tax cuts. in 2010, they are $3.7 trillion.

they had never gone up like that before end of a sudden they are $1 trillion more per year than they were in 2007. these new guys will not understand how that is the new base line. they will push hard for cuts. >> in domestic discretionary spending? >> yes. they will exert a lot of pressure, especially agency by agency, to go through and say, how in the world are we spending $1 trillion more than we used to? we understand we airport -- we are spending more on unemployment insurance, but all of these other agencies are spending like crazy. we've got to do something about that. >> do you expect to see the president to be signing some of these cuts in many aspects of

discretionary spending? or do you expect another showdown like in 1995? >> if you are talking about a government shutdown, know. i do not think so. -- government shut down, no. i do not disappeared >> at the -- i do not think so. >> at the end of the day, president clinton accepted a certain amount of discretionary spending. he did not mean it, but he was saying it was a big concession. so far, president obama has not had the tone. >> that is almost a psychological issue of. how much can he accept this, and to what degree can he say he was on the wrong course for the first two years, which he cannot go there. he has come out in favor of freezes in some areas of domestic spending but i cannot see him signing a budget without a lot of fighting back and forth before hand. >> paul ryan says meeting the

obligation in year one in cutting spending of $100 billion is easy. he says he will not have any trouble finding that. he says if there are any republicans that object to that, he would like to introduce them to the freshman congressman cutting in, who probably think that cutting $100 billion out of a huge budget that is approaching $4 trillion is pretty easy. that is not a problem. what republicans are going to give -- i think the plan is to have every week, passed a spending cut. one of them mentioned to me that it might be a cut in the federal aid for national public radio, npr. >> you can call of the one williams -- call it the juan williams bill. they always give them these hokies nagin -- hokie names these days. [laughter] >> and pass one per week and

send it to the senate. and if harry reid does not like it, he cannot call it up and mitch mcconnell can use the obscure world and it will be called up and democrats will have to block it. you do that week after week and you can come up with enough popular spending cuts. but to do this for many, many weeks, sounds to me like a pretty good strategy. >> anyone else on 2011, what to watch for, before we get to my ex-president -- primary challenge against president obama? >> we have the debt commission with alan sisk -- alan the reporting in december. if they come out with some combination of spending cuts and entitlement changes cutting costs, democrats will be resisting the entitlement changes and the republicans will be resisting the tax cuts.

-- the tax increases, rather. and we are not going to see anything develop out of this. it seems to me, if you want to try to initiate change, one of the directions you might want to go is a tax reform of the 1986 type. where you eliminate preferences and so-called tax expenditures. and you lower rates. that is the obvious way to get something that will have important things that both parties want. i'm guessing the deficit commission is not going to give us that kind of proposal, so i'm afraid i do not see much happening on this front. >> susan, anything else we should be watching for? >> certainly, this you cut proposal where people help decide what we cut, i think that

was definitely paramount on the minds of voters. i think is a lot more powerful with people. maybe not cutting social security or raising the retirement age, but there are other areas where you see people willing to embrace cuts. and the fact that the president even has a debt commission and is talking about cutting it, i think the atmosphere there were you may see some success in reducing spending is here. >> michael, you were -- do you wish to jealous about the primary challenge to president obama in -- you wish to tell us about the primary challenge to president obama in 2012? but i do not think there will be a primary challenge to president obama because i find it unlikely that the first african-american president will be challenged in his own party and with a primary electorate in which the average primary electorate is about 20% african-american. it is unlikely. it does seem to me that it is possible that there may be a basis for a challenge from the

anti- war left. possible candidates, gov. howard dean, who are think was treated rather shabbily by this administration after a successful run as democratic national chairman kurra. the former senator russ feingold, as he will soon be, he was a principal opponent in to his credit, took those stands when they were not popular and made a big point of it. he is a person that might conceivably be that way. i think there is the possibility, but i still think it is quite unlikely. >> and on the republican side? >> i think the republicans have an absolutely winning ticket that they could put together. >> let me write this down. [laughter] >> and they could rent -- and they could win pretty easily. that is with jeb bush as their

presidential candidate and chris christie as the vice- presidential candidates. the problem is, neither one are going to be running. chris christie said there is a zero chance that he will be running and i personally have talked to jeb bush and he sounds not at all interested in running in 2012. he is a great governor and i think would be a great candidate, but you have got to run. and he is not. >> the one thing that you get when talking to republicans -- and they basically put a lot of their 2012 concerns to the back of the mine to and after this election. this -- to the back of their minds until after this election. but i do get this sense of how this extreme hunger for someone new to come in and save them. obviously, john mccain is long gone from the picture. but the people that they had, mitt romney being the best known name other than sarah palin from the 2008 race, i

think is never going to get people to love him. he has had, a problem connecting with a certain part of the electorate. sarah palin reminds a divisive figure among republicans. not too long ago i talked to the head of the paul maddow family council, which is the family research council of south carolina and got a sense, that it was evenly divided, kind of half and half about people who wanted her to run the chris christie or paul ryan would run -- who wanted her to run. maybe chris christie or paul ryan would run. somehow i do not think that someone with the name of "bush" will fill the role. >> susan? >> i get the sense that mitt romney is going to try one more time. regardless of who the star canandaigua might -- the star

candidates might be, you have to deal with the fact that sarah palin and mitt romney and who knows, mike huckabee. we will have to see how that plays into it. >> it seems like it will be more like a traditional democratic primary with some people running in some people favorites and some are outsiders. and sometimes the outsiders like jimmy carter win, and others have ups and downs and people go ahead and then mike deane and foster -- and then like carrying and foster. republicans are ludicrously boring. [laughter] mcginn if the nomination and

then -- reagan wins the nomination after running the first time. reagan beats bush and then bush gets the nomination. i sort of have the instinct that in the post-obama, in his defeat of clinton, and in this post-tea party and this new era that we are in, how does not feel like republicans keep wanting to nominate the next in line. also, there is no clear next in line. is sarah palin the next in line? is mitt romney? mike huckabee? >> mike huckabee won seven primaries. mitt romney only won one. >> he won several caucuses, though. >> sarah palin went on the

weekly standard alaskan cruise, if i recall. [laughter] since the report -- the weekly standard has led the nation on the issue of e sarah palin candidacy, what are my colleagues views of the potential for that in 2012? >> colleran's district is on the lake, right? >> yes, in michigan. -- paul ryan said district is on the lake, right? >> yes, in michigan. >> she would probably do well in iowa and south carolina. you have iowa first, and then new hampshire -- i guess you can skip new hampshire. then go to south carolina. i do not know about the nevada

caucuses, but they come in there. >> it is dominated by memories of the church of jesus christ of latter-day saints in the last primary. >> if mitt romney is running there, he might do well there again. anyway, you can see people who would like to be part of a sarah palin presidential campaign arguing to her that it is just taylor made in the beginning and all you have to do is win iowa and south carolina and it will be easy from then on. i think there is a substantial chance she will run. i have no inside information, and i suspect she does not know whether she will run at this point. >> i saw her on fox news sunday. we did a show from new york this past sunday and we were chatting before the show began. the most notable aspect of this conversation was that she was describing this thing in alaska where cbs news reporters seemingly ran tapes to cause trouble for joe miller.

and she was really outraged by these reporters on the tape. and she said to me, -- i said to her, the media has been very hostile to her and she said, yes, they are corrupt bastards. and she paused for a second and said, can i say that on television? and i said, don't let me stop you. and sure enough, there she was 10 minutes later on fox news sunday. i would say that what she said struck me -- she said, look, i want a strong, constitutional, conservative -- whatever terminology she said -- that kind of person to run. and she said, if there is not one like that, then i would consider running. it sounded like she wants to run, but i think she was

actually being sincere. if someone gets out there that she likes and agrees with, she might not be so determined to run. she has had success supporting other candidates. or a lease, she has shown herself willing now to throw herself into the race if there are other good candidates. it is prole pretty hard to tell yourself, why shouldn't i take -- is probably pretty hard to tell yourself, why shouldn't i take a shot at it? these guys -- i do not think it hurt them much to get out there. a lot of people on stage want it and there will be 20 debates. and things happen in campaigns. look at mike huckabee last time. he was a compelling debater. and he also found a niche in terms of his constituencies.

good for the weekly standard. good for the washington examiner. good for the chaos and unpredictability in the news. i think it will be exciting. how strong do you think ultimately president obama is or could be? all republicans are spooked by the memory of 1995 and 1996 when clinton came back so effectively. >> think where president obama start from. if he had been running this year, he would have lost. he's got a lot of ground to make up. and he is not as deft and nimble. he does not come from what president clinton does. he does not come from a state and a political culture that is fairly conservative, as clinton

did in arkansas. clinton knew after losing in 1980, he knew how to be reelected as governor in 1982. and also, though clinton -- bill clinton was never called ideological purity and of course, president obama is a fairly -- was never called ideological. and of course, president obama is fairly ideological. it is harder for him to move to the center. he obviously does not have any natural inclination to do that. but he is going to need to do? -- to do it. he will have to do it on issues he does not like. he is on the wrong side of it now, on taxes, spending cuts, maybe even on health care. although, whoever said it would be hard for him to do that may be right. there are a lot of different issues he will have to move to the right on if he wants to be reelected that he is not

inclined to do naturally. >> but he is terribly worried about his constituency on the left. if you say to them, this man who wanted to be president has been president and, by the way, we are still in iraq. he escalated the war in afghanistan. guantanamo is still open. a lot of the national security procedures you hated are still in place, and by the way, he extended the bush tax cuts. that is an extremely demoralizing record for a certain part of the democratic base. >> i agree with a lot of that, but i think there are some countervailing considerations. certainly, this electric issued a very strong rebuke of the president on public policy. they were against his policies. it may not be exactly the same electric in 2012. we had low participation by young voters. we did not have the record

participation by black voters we had in 2008. that may be different next time. we do not know for sure. certainly, that is a likely possibility. i feel that among many, perhaps most, americans it would be a bad thing to reject the first african-american president. i think that is a result of our history and is a feeling that is widespread. americansk generally co, have tended to indulge their favorites in terms of the president. if you look at bill clinton in 1996 or george bush in 2004, they were giving the incumbent the benefit of the doubt. maybe in this more turbulent environment, that will not be the case. but it could be the case. i do not see the kind of hatred of barack obama that we saw many

conservatives have for bill clinton. and many liberals had the same for george w. bush. those people had characteristics -- both people had characteristics that the people on the other side of the cultural divide absolutely loathed. i do not think that barack obama -- the toughest jokes told against him are the teleprompter jokes. that is about the stuff he gets. it is not the stuff you heard from conservatives about clinton, or from liberals about bush. i think all those things could be different. it could be a different issue environment in terms of where the economy is, etc. i do agree with fred -- let's put it this way. all politicians have a certain range of issues that they could possibly adopt. some have a very narrow range

and some have a very broad one. bill clinton had a broad range of issues positions he could adopt. obama seems to be narrower. i think he probably will not change and i think these positions will continue to be unpopular because the obama democrats came to office with the assumption that economic distress would make americans more supportive of or amenable to be government policy. that assumption turns out to be wrong. i think that is the fundamental lesson of this election. but there are other factors of which i can foresee the reelection of the president and some significant recovery by democrats from the position they were in in this election. >> i think you're absolutely right. what this is going to come down to in 2012 -- first, who is the republican that he is running against? obama is a charismatic figure.

he is an excellent presenter and we loved to follow him around in 2008 because he is a real rock star. he attracts thousands of people. they love him. he campaigns really well. we cannot discount what that is going to generate in terms of getting people out to vote. one reason why democrats fare so poorly this year is because so many democrats just did not turn out to vote. it was the enthusiasm gap that helped republicans. obama cannot really stir up his base if he is not moving in the direction of the liberal agenda, but on the other hand, if you look at the exit polls and results on tuesday. the independence switched this year -- the independents switched this year and really voted in favor of republicans.

he has to be incredibly mindful of independent voters and they are speaking loud and clear right now that they are not in favor of what he has been doing. i think the obama administration has a challenge to figure of how to get him reelected. i think it could be in jeopardy by of looking at the results of tuesday. and >> and one of the main thing is that the independents disliked was obama care, which the white house never can -- never succeeded in convincing the majority of the public was a good idea. and ironically, one huge problem the president obama has that president clinton did not have is that his health care passed. clinton was able -- it fell apart in 1994. by january of 1996, after politically, at least, winning the showdown, he was able to

play the era of big government is over. he did not have to say that explicitly. he just made it clear he was not picking that up again. and sure enough, he was president and no one heard anything about any kind of health care reforms in the next four years. the problem with obama is that it is the law of the land and whether it is repealed or substantially reformed is a big issue. and if you want to repeal obamacare or substantially changed it, then there is a problem. it is a matter of, he cannot move on health care because he is going to be defending it and republicans will be attacking it

in 2011 and in 2012. he set up a situation where if you want the majority of americans to be ok with obama care, the only way to get rid of it is to defeat the president in 2012. that is a problem that clinton did not have because, ironically, he failed. i think it is time for maybe 10 or 15 minutes of questions. we should let people go back to work. some of us should go back to pretend to be working on it. let's take a few questions. we have a microphone here. i cannot see because of the lights. you find someone there. good. >> my name is debora from the cato institute. there's a lot of optimism within the government, but how you reconcile that with the fact

that so many voters voted democrats out of the election because there were not doing enough on the economy and getting jobs? and also the fact that many republicans are paying lip service to spending cuts, but will not privatize social security or completely repeal the medicare and medicaid? what do you have to say to that? >> how serious are republicans about cutting government opposite, i guess, is what it comes down to? >> i have not seen them be serious about cutting anything in 10 years. there is the special monitoring service known as the tea party that is watching them. one of my tea party sources said, "republicans have the tea party support, but they are on probation as far as we are

concerned. they will have to prove themselves and if they do not listen to the american people, they will find themselves in a tough election spot in two years. right now we have to make cuts. the side -- we have to make cuts." besides cutting health care. what i have seen it from the gop leadership is that they are ready to take action and they are not going to back down on this. they have got to cut the deficit and debt. >> it would be interesting to watch what is happening in the u.k., where they are cutting the budgets of many government departments by 25% and going to lay off 490,000 public sector workers we may see some similar things like this in some of the states. we have three states that elected democratic governors and have very serious financial problems, calif., new york and

illinois. gov. schwarzenegger was at one point thinking about coming to washington begging for cash so that california could pay its bills and not issue script, as it did to pay its bills at some point. if and when the private credit markets cut these state government out, there is going to be an issue. and i think the republican party will be in no mood to subsidize these things. >> if there are, indeed, the cuts and reforms that the people in a tea party think are necessary, do you think there will be a third-party candidacy for the presidency? what will happen for the american people? if they do not like the republicans and do not like the democrats, what is the alternative?

>> the underappreciated success of some republicans, was after some initial resistance, they did not have much choice because they were defeated. what people forget, 18 months ago looked like a real possibility of many third-party tea party candidates. they could have had -- you know, he could have had nine states running as independent candidates. and they knocked off some republicans. but i think you raise a good point. it is one thing to handle a bunch of senate and congressional races when you do not have any power. you have to govern for a year-

and-a-half and hold that coalition together. >> the fact would be, who would be at the head of the ticket? who would be the presidential candidates in all of this? and the people who voted tea party in this election, they could sign on to this person. you are right, district by district basis, if someone were to elect a deep -- a tea party candidate, they could be in trouble. but the republican party, as a whole, -- the tea party as a whole, they have not elected a presidential candidates before. i do not see the tea party abandoning the republican candidate for a third-party candidate. >> i do not either because the republicans will get some spending cuts in the next couple of years and obama will have to go along with some of them.

at the moment, the culture of spending in congress has changed. now there is a culture of cutting spending rather than raising spending. we had won in 1995 for a little bit. but after the election in 1996 id sort of went away. -- it sort of went away. but for now, in the short run, i think the tea party people will be satisfied with what republicans do, but not for long. >> i do think republicans have a bigger majority in the house than they enjoyed between 1994 through 2006. they got down as low as 221, with 218 being the majority. and the glue that holds it together is called money. now they will have to wonder if 40 or more members -- 240 or more members. you can let some people walk the

plank. you have the possibility of exerting more pressure on the appropriators culture, so that may be a longer time frame of which pork is no longer kosher. one more question. >> i saw recently -- just now, tweeted that just twiste she will be running for minority leader. >> susie, you better get back to work. i said, she will not run again, will she? and >> why stick around? it is much less likely that they will be able to get back in

2012? it will be a longer time as minority leader. does she really want to do that? apparently, she does. the thought of going back to san francisco and sitting in the rocking chair ending for the grandchildren did not make sense. she is a tough lady. and it makes sense that she wants to stick around in the minority. the minority can do things. and she is also a good friend raiser. she is a source for potential for democrats to try to get some of the seat back. but most importantly, the reason she will run right now is that these elections have changed their carcase. these elections wiped out -- of their caucus. these elections wiped out her moderate faction. she got behind the cap and trade

bill, the ledbetter law, all of these liberal causes that were important to them. it is not surprising that she would want to stick around and do it. >> i think most of the democrats who came out during the campaign against her -- probably bobbi brighton in alabama, and i'm sure there were others. [unintelligible] >> in congress before the elections they made a point of that. these people were saying, she would never have the support to .tay around hal however, if they won by a slim majority, it would be virtually impossible for her to maintain her speakership because there would be just enough moderates,

or there would have been another person who formed a candidacy. you would have had people like steny hoyer. the steny war era -- steny hoyer will have to wait to become the top democrat. >> steny hoyer must be having a really bad day. >> what susan was referring to was new gingrich -- newt gingrich and his bigger ship in 1998. -- and the speakership in 1998. >> i think you could argue pretty easily that it was nancy pelosi. i do not think republicans would be unhappy to see that. >> the republican party will

continue to run against harry reid and nancy pelosi. i think a lot of people predicted that harry reid will lose his own race and that knows you -- nancy pelosi would step down as hastert did in 2006 when he lost the speaker of the house position. >> they are back, but there is a lot of collateral damage. >> on that note, let me thank the panelists for an interesting discussion. thank you all for coming. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> as the result from the midterm elections are still coming in, the transition to the 100th of congress continues to develop. this afternoon, nancy locy has announced that she will run for house democratic leader, that would be house minority leader. her office has released a statement to the effect this

afternoon. our work is far from finished, and as a result of tuesday's elections, the roles of democrats will change, but our commitment to serving the american people will not. we have no content to let the things we have accomplished for the american public to be rolled back. we're opening our phone lines to get your reaction, your thoughts on majority leader pelosi continuing her leadership of the democrats. here are the numbers. 202-585-3885. 3886. the first phone call, david on the republican line. >> this is concerning nancy pelosi? >> yes.

>> i actually just called her office to leave a message. i would love for her to just go away. i live in california. she has drained the swamps here in california. we have no welfare reform here, sir. we have 5.2 million people on welfare right now. the pensions are too high to pay for the people. a california state employees are getting 98% of their pension and it is only going to get worse. i do not want to see her face on tv no more, sir. that is all i want to say. >> next -- next to the democrats line, memphis, tenn., brenda. >> i would like to say that the caller before me, he may live in california, and that is unfortunate. he thinks that speaker pelosi is a drain there because she did win her election there.

i have to say, thank god. i have been sitting down depressed since the elections were over because we just got what so bad. i am so -- we just wewhooped so bad. and i'm happy that nancy pelosi is going to be there to take care of those guys. because the rest of those guys act like little wainscott and she is the strong -- and act like little wimps she is the strongest. i love strong women. i want to say, thank you, nancy pelosi. we love you here in memphis, tennessee. >> amarillo, michelle, on the republicans line. >> i agree with the guy -- >> michelle, i'm going to ask you to turn your tv down. very quickly. >> i will turn it off. >> and that is a message to all callers. >> i listened to -- i live in d.c. and in virginia, and i

would not trust her with anything. i agree with the first caller. he is correct. it has nothing to do with being a democrat or republican. i do love god and my country and i do not agree with her. i believe that he is correct and he knows exactly what he is talking about. it has nothing to do with the veterans. my dad died for this country. so did my grandparents. all of them were amy at -- navy and army and air force. they were all military. and there were also democrats, so i was well rounded. >> pleasant hill, calif., democrats line. >> i agree with the first caller. i am from 30 miles east of san francisco and nancy pelosi has to go. we're going to lose in 2012. there has to be a change all the way a round.

this is just not going to work. and i love senator reid. we met in washington d.c.. nancy pelosi has got to go. she is not going to be helpful. that is all i see represented the democratic party is nancy locy. and around the country, we know what that did to us. i think a change is needed. >> seattle, washington, thanks for your call. >> medical reform, this is just as ago, it is for both sides -- california, texas and everywhere. the skid row case, because of medical reform, there are 800 federal agents and they are arresting these guys in the hospital for medical fraud. that did the big $250 million in columbia. as far as nancy pelosi, she has

never backed out of a fight her life and should represent seattle, washington and the people. you are cutting off your nose to spite your face with wanting to reform -- take medical care of the table. host: bismarck, north dakota, independent line. thank you for calling. caller: i agree that nafta policy has to go. i like strong women but i don't like strong women that take advantage of their power and our tax money. i fee sure she does not practice what she preaches. she spends to get across the country. it is time for a change. we need someone who will care about everyone's needs, both democrats and republicans and not just her own interests. host: house speaker nancy lazar represents the eighth district of california. the last former speaker of the house was republican joked mcmartin was speaker from 1953- 1955 when the democrats took control in of the 1954 election,

he was elected minority leader in 1955. two of wellington, new jersey, on the republican line. caller: i believe that mantic policy has to go. i am sorry that she even -- i am sorry that she is even in politics. what kind of person would sign a bill that you will find out what is senate. ? i will happy to see all the politicians who shout the medical bill down our throats. if it is such a great thing, they should use it, too. host: raleigh, north carolina on the democrat line. caller: i feel as though the american people are really not paying attention to the issues. you are a strong woman, nancy pelosi, and i am for you. we lost the house and we still have the senate but we are going to come back in 2012.

we will come back stronger. go, obama, g pelosi, go read the host: many of our colleagues have called with recommendations on how to continue our fight for the middle class and have encouraged me to run for house democratic leader. based on those discussions and driven by the urgency of protecting health care reform, welfare reform, and so security and medicare, i have decided to run. we're taking your calls on the announcement this afternoon that house speaker policy has decided to run for minority leader. will go next to joplin, missouri, on the republican line. caller: tupelo's he says she is willing to work in a bipartisan way. -- nancy pelosi says she is willing to work in a bipartisan way. is it all right with her than if they have closed door session and the republicans show the democrats out? that is all, thank you.

host: lois, on the independent line. caller: i am a lease that. -- i am lisa. i thought a change was coming. i believe in president obama. if there is going to be a change, let's get rid of all the negative and see what compromise can do. i just heard the republican leaders say that he wants obama out. i want my president out. let's work together as a country. by an independent and i will watch what the democrats do and what the republicans do please, let's come together and get the anger out. we are all suffering. thank you. host: more changes and leadership among house democrats. maryland congressman in charge of the house democrats' campaign efforts is leading that post days after his party lost more than 60 seats to the republicans.

congressman chris van hollen said that two election cycles is enough. he has signaled plans to leave the chairmanship before tuesday's election. more of your calls and on to birmingham, alabama, on the democrats' line. caller: good afternoon. i have never in my entire life seeing a woman demonize as they have been and that is nancy pelosi. we are sick and tired. i don't mean to be biased. there are so many women against other women. i cannot believe what is going on in america right now. this woman has done so much. she put her life on the line. if they are trying to get rid of

nancy pelosi and don't elect our, we have something to say because we are sick and tired of men taking control of everything. host: northbrook, ill., on the independent line. caller: hello. i just wanted to said that it is unfortunate in my opinion that she is clearly probably the most partisan person that we have ever had in that position. i do believe that i could be wrong but i think she is also the only woman so i am not sure what the point of the last speaker was. it is unfortunate. it takes our country hundreds of years of equal rights for minorities and it seems like more often than not with nancy pelosi and president obama they

basically take advantage and treat the population the same way that they were treated as minorities in bullying the population enforcing their opinions on the population i think the democrats would be wise to be careful if they want to find themselves back in office. there has been no partisanship between nancy pelosi and barack obama over the last two years and i think the american people have spoken loudly about it, thank you. host: with speaker policy announced her intention to run as minority leader, house majority whip james clyburn of south carolina who is the current majority whip has announced he wishes to continue w as the tohip. he was elected to a 10th term in congress. more of your phone calls.

we go to niles, mich., on the republican line. caller: i was at the fire pe losi deal we had then i met michael steele and he gave a great speech. i am just so happy and excited that our country is moving in a new direction. so these liberals do not take away from people like me who have worked hard to get what i have and give it to people that don't want to work and don't deserve it. i am just excited of what is going on. i don't think she should run for minority leader. i think she should keep your mouth shut and drop out of the picture. that is what the voters fire pelosi and don't come back. host: let's move to the democrats' line, in alexandria, va.. >caller: i would like to make a

comment about nancy pelosi and the excellent work she has done. the fascist movement that has gone for many years in washington has not been addressed. thank god for the democratic party that government is trying to control corporate and wealth. thank you very much host: the last caller is from pasadena, calif., on the independent line. caller: thank you for cspan. i would like to say that nancy pelosi just 170% in san francisco. she is the first woman speaker of the house. women are among a minority of. she has been one of the law's effective speakers we have ever had. everything she has done has been done against political headwinds for the american people there are a lot of people out here that like are. there are a lot of people in california that are really tired of the whole country bashing california all the time. we are the biggest donor state to the rest of you.

if you want to keep getting our money, the welfare you talk about all the time, perhaps you should stop being so hard on us. host: thank you for calling. we appreciate all of your calls. we'll keep our eye on leadership changes within the house. now on to a cq role crawled group forum and what the results might mean for president obama going forward from the right -- ronald reagan building. this is over one hour. >> it is great to see you all

here on this rainy washington november morning. we appreciate you coming out and welcome to the 2010 cq roll call election impact conference. congressional quarterly, as many of you may know, has been holding this conference for just about two decades. every two years, it happens the thursday after election day. it is an opportunity for people in washington and around the television viewing area when cspan covers this which they are doing today to take stock of the results from the elections and get a first look, first comprehensive look at the new congress, the incoming class and the changes under way in the house and the senate and in the

committees and with leadership. it is terrific to see you all here. we could not be improper to be here today. this is the first election impact conference with the newly combined cq roll call group which was formed after the merger of the congressional quarterly and the roll call a little over one year ago. i would like to start up by asking folks to put their cell phones and their iphone on quiet mode, blackberries. let me get started by thanking a special partner in this endeavor the public affairs council has worked with cq since 2002 to put this event on douglas pinkham is also a

panelist and has been a wonderful partner. thank you very much. we would also like to thank our partners altria and united technologies who i just only recently learned how does more than an aerospace and defense is that there they are in the elevator business. somebody outside gave me their elevator pitch this morning. they on otis which i did not realize. there are many of these post- election events going on around town. today's event here is by far the largest partt. i think we have a great day ahead of us. i think guiding us all through the day will be our guide to the new congress which some may argue is sort of the real reason why we are here to grab a copy of this. this is the first complete look

at the freshman class of the new congress available anywhere. in print and online. it is really an awesome and denver that the newsroom at cq puts together. i realized i did not introduce myself. i am mike mills, editorial director of cq. the combined newsrooms put this out in unbelievable breakneck speed and how they do it is the races that are too close to call, we write profiles for both candidates. we press the right button when a winner is declared. this guy is a terrific entree and navigation tool throughout the day that you will all be able to use. extra copies are available

outside in bulk purchase or single but everybody in the conference gets a copy. as you will have probably heard, this has been made very historic -- has been a very historic and unusual election cycle. 1/5 of the new congress is new. it is a huge freshman class. one thing that is interesting about the guide is the demographic breakdown that we can do fairly quickly with our software. we find some interesting points about the new class and the new congress in general. the democrats in the house will buy large be more liberal while the expanded gop will be more conservative. the new congress will have slightly fewer women, fewer house members will have advanced degrees, there will be fewer

lawyers, and more business people. these and other insights can be found in the guide and we will be exploring than in the panels as well today. as you may notice, behind me and around us, today is a big day for a cq/roll call in general. we announce our new logo just this morning with this event and our new branding for the new group. we could not be more excited about it. we are also, as we introduce the new congress to you, we are also introducing cq/roll call as a new company. we're also unveiling today a re-designed a roll-call.com and a new daily e-mail newsletter that is free and you can subscribe to it in the lobby guarded if you subscribe to the newsletter which is called the cq./roll call of daily cq it is a briefing of everything that is going on in congress and

washington every week day when congress is in session. you can register to win and i had spre ipad. it can also look at cq/roll-call products. it is my pleasure to introduce the first panel which is aptly called "what is the mandate?" it is not call the is there a mandate. because there is one area i would like to first introduced david challeon who is the political editor for pbs news hour. he directs the political coverage across digital and broadcast platforms. he also manages the editorial content from the news hours congressional beats. he joined the the news hour -- how long ago? >> beginning of july emigrate.

he was political director for abc news before that. >> he won an emmy as part of the team that produced abc news and the inaugural coverage in 2009 very welcome and thank you for joining us. carol dorothy is to his left and she is associate director of the pugh research center for the people and the press. she is responsible for the development of the center's research products and its editorial output including surveys, opinion pieces, and political analyses. recent pugh center reports have covered the millennial center, the midterms, the public policy priorities of the upcoming census. i have known carol because he is a former senior writer at congressional quarterly where he spent a decade covering congressional leadership, politics, and foreign affairs. he also served as a commentator

on president clinton's prepared -- impeachment proceedings for npr during that time and was previously an off their investigative reporter for cbs news. thank you for being here and welcome. bob bennett is now in his 12th campaign cycle of specialized election coverage. he is the senior elections analyst for cq/roll call. he was the cq politics editor from 1998 up until the merger with c kick -- with roll call in 2009 and has been with cq since 1981. bob is one of the sharpest political minds out there and his encyclopedic knowledge of congress and politics is one of cq/roll call's greatest assets. prior to cq, -- actually started

at secure after a stint in radio? >> with abc radio. i went to the finest academic institution the united states. >> as did i. but enough against -- but enough about michigan state. [laughter] last but not least, doug pinkham. the public affairs council is a leading international association for public affairs professionals founded in 1954. it is non-partisan, non political organization that provides training and development to the profession of public affairs. prior to joining the council, doug was vice president of communications for the american gas association which is a major trade association in temporary he has authored many articles for trade and professional magazines around the world. i think we are looking at a very interesting day to day and

kicking it off with a terrific panel. please join me with a round of applause to welcome the new panel and kickoff the event. [no audio] [applause] use] >> david, you will moderate a panel. >> thank you. it is great to be here. i will let each of our panelists make opening statements. we will start with carroll because it is good to go into the numbers first and with the title of our panel, "what is the mandate?" there is always some message that the voters are sending with each election. the first question i want to probe your way and if you can work this dent -- into your opening remarks -- the basic question of who showed up to about and why did they vote the way they did who showed up to vote according to the exit polls obviously a more conservative, older, more affluent and electorate than in 2006.

41% or conservatives. that is the highest percentage we have seen in probably two decades, higher than in 1994, up from 32% in 2006. nearly 1/4 or 65 and older you won't see that in a presidential election, obviously. there was not a drop-off in the percentage of young people. the exit polls are a little rough and ready at this point are we will know more later. it was not much of a drop-off in minority participation so far as we have seen. it is just a very conservative electorate. >> do you mean compared to other midterms? >> yes, obviously since 2008. the striking thing is this conservative tilt.

in terms of messaging, anybody who spent five minutes watching television tuesday night knew that the voters were in a surly mood on tuesday. they were clear about what they did not want court didn't like starting with democratic incumbents by and large. and moving on to the economy and the federal government and congress. a couple of numbers and i will try not to throw too many at you. there is a lot of data about this election. a real message was no more expansion of government. that certainly came through loud and clear. 56% said government is already doing too much. 43% said that in 2008 after the obama lecture in the area. there was a broad rejection of

obama as stimulus -- signature policies. going forward, that is the easy story. what do they tell us about what they want going for? what are the voters saying about that? no expansion of social safety net but do they really want to contract -- what a contraction? ala the u.k. and what they are going through. that is a lot less clear. the exit polls does not have much of a message in terms of what people really want. we did a poll a couple of weeks before the election which was revealing. we tested many of the gop's proposals. some were from the pledge in summer from the campaign. it was divided almost everyone. in fact, below 50% for most of the proposals we tested. the only one that won a clear

majority is not one in the headlines and that is allowing more offshore oil and gas drilling. a freeze on government spending, more opposition than support. we did not get to the specifics of what that might mean. the idea of health care repeal gets a little more support than opposition. it is hardly overwhelming. in effect, issue after issue, social security reform on down, you get this divided opinion about these initiatives. that was a bit of a clue as to what we could expect in the months and years to come. the voters are not very clear about what they want going for it. i would like to close -- we are top -- we are going to be talking about the possibility for compromise as well up here. it is a mandate but i would like to talk a little bit about

compromise. we tested the general proposition of compromise a couple of months ago. this was well before the election and well before the tea party victories. at that time, 54% of democrats are telling us they admired political leaders to compromise with people they disagree with. republicans told us the opposite. 62% prefer political leaders who stick to their positions. the voters were telling us is that they can agree of -- on the general proposition of compromise. we are off to a bad start there. to theu don't even get specifics two months before the elections and you get a sense of how difficult it will be to work. who showed up on tuesday. the profile of the republican voter is just fascinating.

these are the voters who propelled the victors. 57% conservative. 60% age 50 and older. 67% say they are tea party supporters. 80% favor the repeal of the health care bill and 63% one the extension of all the bush era tax cuts. one more number i will throw at you very much was made over the finding of the exit poll that for achieving a smashing victory, the republicans among the electorate or not that positive it was more negative than positive. it was no better than the democrats. mayday that republicans achieved a great victory. even among those republican

voters to show up on tuesday and supported the republicans, 23% have an unfavorable review of the republican party. this group of republican voters, very conservative and seemingly not much in a mood for compromise encouraging their leaders to compromise. i will quit right there. there is a lot of data about the selection but i will turn over to bob. >> thank you. the title of this panel is "what is the man day?" if you look at the history of elections back to the 1990's, the question might more properly be who the heck of gave you a mandate? the elections have tended to be, especially these big swing elections -- and we have an extraordinary number of them over the last 20 years, three in

a row in 2006, 2008, and this year have tended to be rejectionist elections. people are angry and usually it is the economy but the iraq war was a big factor in undermining public support for the republicans and president george w. bush in the past two elections. voters have tended to go out and vote against, to send a message as they sent a message of this year -- too much spending, too much backer in dealing, too much corruption in washington. we want change. they are voting for change as a principal rather than for specific policy changes. then the problem for the party that has won, that has had this big surge, is that they fall into the mandate trap. they tend to interpret their victory as an affirmation of not only their agenda but even the

most controversial device of parts of their agenda. we saw just yesterday, eric cantor, the current minority whip and he said that their first priority is going to be to put legislation on the floor to repeal the health-care overhaul bill one of the exit polls tell us that 48% of the voters -- mind you, this is a very strongly republican electorate that showed up, a republican voting electorate that show up on tuesday -- 48% said either keep the way it is or repeal it. you don't get a more even split than that. even more fascinating to me was on tax cuts. 52% of the voters in this

republican wave year said that they don't want the bush era tax cuts its extended for people with incomes over $250,000. 37% of the electorate said they want the tax cuts extended up to $250,000 per a 15% said no extension for anybody. this suggests that they say we need to cut the budget and the budget deficit and you cannot do that with taking this action. when you ask the $250,000 threshold, 1/3 of the people voted republican this year. go figure on that one. the question for the republicans going forward as to what the mandate is, is who are they going to be listing to? whose mandate or agenda are they

going to be subscribing to? there are two big major forces behind the republicans' success this year. one is there conservative activist base. it comes under the umbrella of the tea party movement but it is much broader than that. these are people that strongly opposed the election of democrats the last two alexian's anyway. they oppose the election of president barack obama. they don't want the liberals/progress of agenda and they were very energized to go out to vote this year. that was the engine behind the way. ve. to win they needed a big swing among independent voters. independent voters, most of the elections recently have been rejection elections rather than affirmation of elections. there is about 1/3 of the

country on each end of the partisan spectrum. republicans/13, democrats 1/3 and there are some independence who vote one way or another all the time. in the metal -- in the middle it is substantial is a group of unaffiliated voters many of whom are disaffected and became convinced a long time ago that neither of the major political parties is really on their side. and was doing what they felt was right for the nation. they have become america's free- floating anxiety in the political spectrum. they tend to attach themselves to whoever is out of power, whoever is raging against whatever the machine is at the time, and they throw the people who they think are the current bombs out. we see in the exit polls the extraordinary swing among independent voters between 2008

and 2010. i specifically picked the house of results in the exit polls in 2008 to make apples to apples. 51-43 in favor of democrats among independent voters. this year, it was 56-38 in favor of republicans. that is a 13 point swing. that is extraordinary. that is huge. these independent voters do not necessarily subscribe to the ideological agenda of the conservative republican base. when the republicans take office and a look at their political base and say they have the mandate to pursue a strongly conservative agenda, that is what the liberal activists fought and demanded after 2008 when they elected a democratic- controlled congress and put a democrat and the white house for the democrats act accordingly and there were punished at the polls this year.

it will be interesting to see where they go. the sign is a mandate at your own risk. the republicans will face a fairly tough choice. one last bus of but i will give you -- po fromlling. going into this election, there were 48 district that we called mccain in democratic districts in the house because they voted for john mccain for president but elected a democrat to congress. this is what the democrats are so vulnerable is because they help a lot of republican-leaning seats. there are 48 of them. assuming the two races and arizona state democratic, it will be 12 of those 48. for liberal activists who said the problem is the conservative blue dog democrats or all of us back from a pursuing a conservative agenda, they don't have that problem but they also

don't have a majority anymore. on the other side of the spectrum, there were 30 obama- republicans. they might have vote voted for obama and elected a republican to congress in 2008. that is up to 54 and many of those members will be in the same kind of swing district quandary as many of the democrats were going into this election where if the republican leadership decides to follow a strict conservative agenda, contract with america, they will be putting a lot of their members out on a limb and they better hope they get major public support, more than the democrats were able to achieve over the last two years or they will face another huge pendulum swing in 2012. make no assumptions for 2012 based on tuesday's election. >> over dou,g. >> i will start by commenting on

what bob said and give a few thoughts on the nature of mandates and the dangers of mandates. and then segue into a discussion of the impact of the election on the business community. that is where a lot of the issues related to hiring and jobs and economic growth will take place and people are curious to see what the impact will be on corporations. just a quick court on mandates -- i absolutely agree with bob that you have to be careful when you declare mandates because very often you are wrong by the time barack obama was elected in 2008, i think he was elected because people were in love with barack obama not necessarily completely supportive of this issue agenda. i think he's somewhat misinterpreted that as they were completely supportive all aspects of his agenda. yesterday i went back and look at some of the poll numbers from the summer and early fall of 2008.

let me share some numbers with you to show you how quickly attitudes change and the warning is that your mandate is a moving target. even if you think you know where the electorate is on key issues, they change their minds based on economic and other circumstances. in the middle of 2008, 57% -- in the fall of 2008, 57% of the public including 54% of republicans favored the wall street bailout, 54% supported universal health-care coverage, and 71% of the public said there was solid evidence of global warming. in addition, little more than half of the public felt there was no place for religion in politics. isn't that interesting? looking at those datapoint, barack obama was well-positioned to win the presidency based on his charisma and intelligence but also based on these core issues that were part of his agenda.

as the economy went over the cliff, public attitudes change. it is not necessarily that people begin anti-environmental but when you are worried about your job and your mortgage, certain things go in order of importance and other things fall by the wayside. politicians need to recalibrate. evan bayh talked about what his party did not do to recalibrate over the next -- last couple of years. that is a warning about mandates and realize they are moving targets. now for the impact of the alleged on the business community. i'm often asked to comment on this subject as the token business-oriented panelist in these events. the first thing to say is say that the american business community is by no means monolithic. there is talk in the media about what corporate america thinks are there not many issues where corporate america thinks exactly the same thing. in fact, most major public policy battles are between

different segments. of the economy if you look at major issues we have talked about in the last couple of years including health care reform, financial regulation, climate change -- companies are all over the map. in financial services, you had banks and credit unions, you have agricultural communities because of commodity prices, credit card companies -- in these companies and sectors don't necessarily agree so makes it tougher to say what a new congress, what the impact will be on the business sector in general. for business executives generally, as they look at the way they run their businesses and look at their operation and marketing and how they raise capital, the political world is a conundrum. it is so unpredictable. uncertainty which politics can create at which we certainly have had a lot of the last couple of years equates to rest. when there is a higher sense of risk, that is when companies do

not invest in new plants and equipment and they hold off on hiring even if they have had a good quarter. they might just say to wait and see to make sure consumer confidence goes off and will be a market for their products. what creates a rest? a change in government rates arrest. even the current change though i would wager there are more republicans as corporate executives, it is not all one way or another but any change creates rest. many companies are waiting and seeing to see what will happen with the new congress. major legislation clearly a rti crea -- major legislation clearly creates risk. you don't know where it will go and you're trying to make business decisions especially in insurance companies for a financial reform when in several different directions and people the industry did not know how it would end up. that uncertainty makes people stop and think before moving

forward. this cannot get talked about often enough -- political rhetoric creates a sense of on certain to andrisk. one of my concerns of the democrats is an unnecessary demagogic approach talking about companies. it is one thing to talk about the true corporate bad guys, absolutely. when the president and the united states a major democratic leaders are in public forums talking about the evil oil companies and the eagle financial services companies and evil insurance companies c,eo's and their boards hear these things. if you are running a well-run organization, a pa makes youuse and think," does he mean that? does that mean we will be regulated at a higher level over the next? zero years we should discuss that and think of what. happens" political rhetoric creates uncertainty as does all legal

challenges to legislation. there are some companies would like to see health care reopened. some was embedded not be reopened because of the lack of predictability and the fact that it may come out worse than when they started. if you're trying to identify the winners and losers in the business community in an election, if you look at those little reuter updates and bloomberg updates on your smart phone and they say the market went up because of the potential of a republican victory, pharmaceutical stocks declined, health insurance stocks went up because we may repeal health care. that is a huge leap. that that could happen. the odds are against that happening. secondly, how can you possibly predict to the winners and losers will be in the corporate sector based on the far-flung potential of change in existing law. neither politics nor investment decisions are that simple.

in terms of the actual impact, gridlock probably a r decreasesisk because it will be harder to get big pieces of legislation passed. perhaps that will help the private sector take a breath and decide there won't be any more huge changes right away in which case they will start moving toward it and do some hiring. one of the areas i hope we can have a more adult conversation is trade. trade is very important to economic growth in this country. it is not just about shipping jobs overseas and making sure we have fair trade. you want to keep as many jobs as, as possible. it is about business growth, growing the economy, improving employment, improving economic growth. if we can have more adult conversations about trade agreements and the ability of our cable manufacturing sector to supply products and get them to markets around the world,

that would be a good thing. the challenges for the business community, one that doesn't get talked about often is republicans and tea party members are not necessarily as a group pro-business. many moderate republicans and many moderate democrats can be pro-business. there are not a lot of moderates right now and congress. in addition, among many of the tea party activists, there was a strong anti-corporate sense. all these outrageous wall street bonuses issues and so forth, some of the loudest, harsh as the voices were not from left. there were from the far right. that is certainly a concern for companies. in addition, there's the big question of what will happen to corporate tax rates given the deficit and the concerns on the economy, will they go lower to

spur investment or will they be increased because of their revenue shortfall? the hope is that the business community can work more closely with government going forward. there are a number of areas over last 10 years where the public and private sectors have worked very well together. many of you who work in the federal government know what i am talking about. many of the reinventing government program that's continued -- the start of underclass and have continued. -- many of the reinventing government programs that started under bill clinton have continued. the corporate community has played an important role and wants to continue to do that. i would hope the new administration there would be continued open door to that. the business community shared a common problem with politicians in that very few people like

them. many politicians have an approval rating of less than 20%. but many people do not of a federal law -- favorable view of politicians and businessmen. this huge deficit is what the major portions of the economy have in common and all of us will have to work to try to undo that if the country is going to move forward. >> the opening statements when longer so if you can keep your answers to my question briefly so we can quickly turn to your questions and if you have questions, i am told there are microphones, no? i will repeat them out loud. we will repeat them for you. let me pick up on what you said when you're speaking about trades pacific plate. the president is heading to asia on this trip to mars. at his press -- the heading of

-- the president is heading to asia on this trip tomorrow. yesterday at his press conference, the president gave the impression that he needed to show the american people more that he does consult with business executives all the time. it just happens behind closed doors and he does not do it in public and he needs to give some sort of sense to the american people that he does have a concern about the business community in his policy decisions and how they reverberate through there. is he going to find partnerships, real partnership from the business community at this point after the populist rhetoric to join him on this front to present a new joint mission moving forward together with the administration and the business community? >> there is always potential for that.

business executives are pragmatic they are not ideological if you're trying to move the economy forward and there are honest overtures from the white house and congress to work together on issues like trade, there will definitely be a willingness. there was a great interview with obama in businessweek maybe six months ago or they approached the issue of him being anti- business. he does not think so. one of the things the president does not get is that words matter. on the one hand, he says he is willing to deal on this and open to issues and the understands the concerns and realizes that most jobs can i come from the public sector, it is up to the private sector to drive the economy but then he goes out and politically demonizes many corporations. that makes people think. that is one bit of advice that many business executives would give him is to tone down the rhetoric and let's work together on issues where we have a common

cause damage each of you guys -- >> each of you have mentioned the tea party in the republican party and the new problems that will present. going forward, you have mitch mcconnell within the next couple of hours gobbling down on the notion that his major priority is to defeat president obama in 2012 and continued to call for the repeal of health care. you'll also see in john boehner and mitch mcconnell establishment figures that we will have to rankle. mitch mcconnell will have to say to senator portman, this is rand paul so discuss what you have together. i want to get a sense on how you think the republican leadership having embraced that energy for the purposes of electoral gains can now manage these factions for governing? >> the republican party

strategist at leadership decided early on that they saw this tiger roaming the landscape. they decided they were going to ride that tiger. they took some bruising themselves and many of those primaries where tea party candidates of said party establishment people. i think it will be more of a challenge for john boehner. people will run either as tea party candidates or will run on a conservative agenda and try to ride the momentum created by the tea party. they will be there and there is an activist group that will demanded that the party pay heed to their agenda. themwant what's coming to barry rand paul got elected on a lot of the tea party candidate.

many other republican candidates did not win. sharon angle lost against harry reid which seems almost impossible. before the election, i wondered -- mitch mcconnell is in an enviable position because it is enviable to be in the minority in politics because you can tell the people everything that the other party did wrong and you're not responsible. why mitch mcconnell want to be the majority leader with a 51- seat majority when they will call them out whenever they tried to compromise is an interesting factor. there is no question, the party base always wants to be heard. you can't sit in what happened the last couple of years amongst liberal activist democrats.

the legislative accomplishment -- i'm not sure a new -- i'm not saying they are good about bubba got all these things passed, the stimulus, the health care overhaul, financial regulation and get many people in their activist based said this was not enough. where is the public auction and health care? the financial regulatory bill is full of loopholes. republicans say that they have to be more reasonable. the only one was more than half the country matter how big those gains look. their forces will be rally. one of the interesting numbers from the exit polls was that day as people who do you buy most of the economic problems of the country. barack obama was named by 23%. george w. bush was named by 29% and a was an obvious partisan split.

35% said wall street and of those, 56% of the people or republicans. -- were republicans. >> no end to the populist rhetoric anytime 7. >> if the republicans think they are mandated to repeal or break down the financial regulatory bill, they may be heading into trouble. >> i don't know if you confine this in the numbers but i certainly know your knowledge of electoral history might help answer this question. we have been talking about a. volatility it is the third big change election in a row which is not the norm but is becoming the norm. is there anything you read out of the results tuesday night or your sense of electoral history where new leaders come into town and the obama administration can see some signals that they can see a

satellite in of the electorate for some time to come? will we be in a period of volatility for quite some time? >> the message is watch the independence. ts. the biggest segment of the american electorate right now is more independence than at any point in 70 years. a tip to the last three elections. they voted for republicans, 55% on tuesday. it was almost identical numbers for the democrats in 2006. early in 2009, we did a major survey at about 100-the remarkable bombers presidency and he was still 60% + in the polls and independence support had dropped off significantly from only two years earlier. this was before the health-care debate. it was a clear warning signal

about for the independence or having and watching these independents views are important. let it get back to one thing doug said about trade. we will have a survey next week that will include some trade for the first time, we will be able to analyze tea party supporters and i am really interested to see where tea party people come down on this. on the one hand, they are free market supporters and on the other, there is this sense of no foreign involvement and a sort of skepticism if not cynicism about foreign countries. we will have a survey out next week that gets to that theme. michelle bachmann is challenging jeb henserling for republican conference chair the new leadership, perhaps they can

have that debate. >> i would love to open this up and our final 50 minutes for questions out there that you have for our panel. i see a couple of microsoft. if you would raise your hand if you have a question and we will get a microphone to you. any questions? >> i am from the department of energy. you mentioned something briefly about offshore drilling can you expand on that comment? >> we were testing some possible gop policy proposals. that was the policy that 55% of all voters approved of. it is pretty popular. it is an interesting mini-trend on offshore drilling. democrat support fell off during the gulf oil spill and has not

come back but republicans never wavered on the drill, baby drill the loss of faith. we still see that strong. the majority of the public still favors it. a majority of the voters favored the despite the oil spill. >> other questions, down here? say your name, if you would. >> n cavacoavarro from, raven grow. he said there are 50 district that elected republican congress than but voted for obama. who were some of the congressman elected who are in obama district t? >> i am glad you asked.

>> would you like to do a dramatic reading >>? that would kill the last 50 minutes of this panel. >> one of the as example ischip cravac who scored one of the biggest upsets of the year over a long time german on the infrastructure committee. that is a longtime drama -- democratic stronghold which includes the city of toulouse. charlie vance met a comeback in western new hampshire to a seat he lost in 2006. he is ostensibly one of the more moderate republicans from the republican class of 1994 but that is a district that went 56% for obama. with many of these people, the degree to which the electorate snaps back to where was in 2008 -- there is a fair comparison to compare to the us andto 6 2010 because it is almost apples to

apples for the electorate in 2008 was very different they had a lot of young first-time voters and minority voters. the democrats did not succeed in getting them to the polls to agree -- to the degree they needed to. if the electorate is more, the democrats will automatically be on better footing and they will have a greater appeal to independents. to run down others -- there were three candidates >> adam kinzinger dear, who beat debbie halvorson, randy hultgren, who beat and bill foster, and bobby schilling, who beat representative hare in a district that had been drawn to been -- to be democratic. this was called revenue on a

skateboard. -- rabbit on a skateboard. they also have the ear muffs district. i am not suggesting that all of these are democratic district, but that are swing districts, and they are susceptible if the republicans make the democrats or the independence as angry as the democrats managed to, and the democrats get a little more on likely voter turnout like they did in 2008, you have a different our electorate. they have to factor that into their calculations. but one interesting thing is i am looking at this as the end of the september 11 decade in politics. there have been five national elections since the terrible terrorist attacks of 9/11.

this country and its people have taken some incredible body blows over those 10 years -- one major think that a shaken people's confidence and give them more about the future. you have the economic recession. he had 9/11. you have the economic boom, and then we found out it was built an enormous amounts of government and personal debt and was not sustainable, shockingly, and it crashed in 2008. we are just trying to recover from that. you have oil spills, and everything. the democrats, despite what happened on tuesday, the democrats are actually in better shape in terms of office holding than they were 10 years to dig 10 years ago. i have the white house still. president obama has to years to express themselves. if the democrats managed to maintain control of the senate. the house has just sprung back to almost exactly where it was

after the 2002 elections. this shows the enduring power of redistricting -- if you are involved, pay attention. in the states where they made their biggest gains, new york, pennsylvania, florida, michigan, you either had a situation where the republicans drew the map because they had control of the process, or it was a split decision supposedly safe districts were drawing for both republicans and democrats. the republicans suffered deep losses in 2002, 2006, and 2008, and when the pendulum swung back, they went back to working the way republicans plan them to. redistricting is no guarantee, but it is an important factor because it sets the tone for politics for a 10-year period. >> i see some of the way in the back there.

there you go. hi. no? >> i'm from booze at -- bruce allen hamilton. the old joke is bills are written in the -- are written it in the senate, and go to the house to die. can you see a scenario -- you talk of how this would be a harder leadership challenge for john boehner -- where bills are written in the house, and then continue to go to the senate to die or get vetoed, knowing full well they will not get through? >> did you want to take that, bob? >> you are absolutely right. even with the democrats with a so-called a filibuster-proof

majority in the senate, and there is nowhere near that this time around, certainly not for the republicans. they are still in the minority. the biggest example was the global -- the global climate change bill, or the so-called cap and trade bill, where the democrats feeling full of themselves into thousand nine pushed through a lot of the members from more conservative districts, in places like ohio, kentucky, and indiana, the bill went to the senate to die, and these people were out there on a thin limb, and they were punished. you can count several members who attribute their defeat to that vote. that is where the decision that john boehner and the republican leadership and the house is going to have to make. yes, the house, because of its rules, the republicans do basically whatever they want. they can push through whatever

they want, if they are able to maintain party unity on their agenda. they could test drive the entire conservative agenda for 2012, but if that turns out to be not where the majority of the public, especially those crucial independent voters are, if they are viewed as pushing too far, too fast, just like bill clinton was viewed before the 1994 election, like george w. bush, when he won in 2004, declared a mandate for pursuing social security and private savings accounts. he got smacked down like -- for that, and like the obama democrats. if they form -- is a force obama republican district members into voting for stuff that is not popular, they will find the same dynamic. they will need to decide what actually has a chance of at

least getting the hearing they .ant in the senate - they are in a fairly enviable situation. they are in a position where they could send up policy flares, but not have to worry about them getting enacted into law, because you could say obama and the senate democrats are thwart -- thwarting the will of the people. the other problem they have is that the one thing democrats failed most at was trying to keep the focus on george w. bush in this election. more people blame bush for the country's problems than obama, but they do not want to hear that. what have you done for me lately? why did not fix the problems? why do we still have 9.6% unemployment? if the republicans start

pointing fingers, too, and say we have a perfect policy agenda, but it is those guys that are blocking it, i do not know it will play any better for them than it did for the democrats. >> did you? but to add anything to that? >> no. >> i see someone all the way in the back. >> thank you. i'm from the hispanic association of colleges and universities. i was wondering if anyone can make comments about the turnout of hispanic voters, either republican or democrat. >> hispanics have voted very democratic. it does not appear as if turnout went up or down from 2006. that is what we were looking at. it does not appear that there is much change. 8% is the number that was in the exit polls, and i think 60% voted democratic. we saw a little slide in obama's

approval rating earlier this year among latinos. i think it was of it related to immigration reform, although it was hard to tell. again, i think hispanics voted about the same percentage as in 2006. i do not think there was a great shift there. >> i would just add that in certain key contacts -- contests and states, you saw the hispanic vote had a big impact for harry reid in nevada,, michael bennett in our vital -- that had some -- in colorado -- they have some impact in the race in new mexico. the democrats just barely pulled out of the fire. hispanic activists can certainly take credit for that. >> anyone want to be the brave'' last questioner? >> i am brad pitch with congressional management

foundation. there is a piece in will call today at the polls together a number of surveys that show that the vast majority of the american public wants compromise and wants the -- and want the two party to work together. if you had to bet on those areas where there is potential compromise, where would you say is the area a potential compromise? >> why don't we go quickly down the road. >> i would say on the budget, but on the margins. there will be some areas to find common ground, but i do not expect common ground on entitlements. education is an area where there could be some agreement. i think energy, perhaps there will be some agreement. >> i agree about energy policy. not necessarily on offshore oil drilling, but the fact that

energy independence will become a bigger issue. we do not know exactly what the issue parameters will be. we never know what is coming up next. if there is more and more evidence of global warming or climate change, and that becomes an issue again, or the economy improves, that is really the bottom line to everything. if the economy improves, a lot of the issues that democrats are being cuffed around for pursuing because they were not paying attention to jobs and the economy, then they come on the table at the other end, and the social issues that have been clamped down. those will reappear. the economy subsumes everything in american politics. >> just one cautionary note about polls that show support for compromise. they do, in principle, but we

did a major study that got down to the specifics, how about compromise on abortion, gay marriage, or specific issues, and the public appetite for compromise on those specifics, understandably, is a lot less of the general proposition of compromise. >> i have always felt that people say they want them to stop bickering and keep working together, but for a substantial amount of people what that means is we want the idiots on the other side to figure out how stupid they are and we are right about everything. >> on that note, thank you very much, you all, for being here. >> thank you, david. [applause] >> i have been told to inform you that you now have a break in your schedule, so go and enjoy that. your program that will tell you what is next. thank you. [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute]

>> while the voting for the 2010 midterm elections ended tuesday, closely contested races continued to be called. the pay announced the arizona democrat has retained his seventh district house seat. that means the house currently looks like this -- 187 democrats, two hundred 39 republicans, and nine seats are yet to be called. with republicans taking control of the house, the oregon congressman has been chosen to lead the transition effort for the republicans. he is putting together a 22- member transition team, composed

of newly elected members and long-time incumbents. the purpose of the team is to look at ways the house can operate more efficiently, which might include rules changes as well as internal republican conference rules changes. for more on this effort, go to gopleader.go. we continue to have continuing coverage all available for you any time c-span.org/politics. >> it is harmless if one is making a start out of brittany spears, but when one takes the notion of stardom into the national security realm, lives are at stake. americans get why is that the best and brightest might not be

what they are cracked up to date, but in that amount of time, chaos and mayhem can come. >> henry kissinger, robert mcnamara, donald from salt, is just a few of the leaders critiqued sunday night, on c- -- q and a." day more now from a cq roll call forum. this is about an hour and 15 minutes. >> good morning. i am the newly minted editor of

the magazine having moved from political and the washington post, both different kinds of publications. one of the things the magazine editor has to do at a time like this is kovach and reveal how the news media covered other elections once the results were in, and i went all the way back into the 1980's, even the 1970's, to do that, including some of the stories i participated in. it was a humbling experience to see what we said after each election, but it was actually a humiliating experience because almost without fail, except one article i wrote, we were not only wrong, we were dead wrong. we have a tendency to, as we were talking about in the greenroom, declare things dead that were alive, and allied that were dead, resolutions that

never materialized, realignments that never materialized -- missing those that did. this is because we come to some extent, we reporters are in the business of short-term observation comment except for a precious few. that is why we call people up our panel's -- our panelists today, who are -- who have been around, and know what it is like, and have the old-fashioned quality that used to be known as perspective. they have seen it before. they understand where it might lead, and where it might not lead. they understand what is possible, and what is not. i would commend you, in

particular, a volume that norm and tom worked on in 1994, called permanent campaign, which is a brilliant description of what had happened to elective government in the united states, which i think still holds true to this day. i do not want to -- you can actually get it free, if you google properly. [laughter] >> buy it. >> we do have a book that is for sale. i will let them out that. we will start today. i did not think these guys need an introduction. the question is what is the agenda, and i will start by holding up this column that mort wrote this morning, the headline of which is "voters want the two

parties to work together." it starts off with an ounce of the polls, that he says "will the politicians listened? protracted unemployment, the long-term debt bomb, energy dependency, a second rate defense system -- chances are they won't or can't." >> that is what i fear. in spite of these grave problems, and there are grave, the debt bomb i think is the most serious long-term, very shortly we will be spending $700 billion a year paying interest on the national debt. $700 billion is more than we spend on the defense budget. we are borrowing $700 billion from china in order to build weapons that we've may have to use some date against china.

it makes no sense. furthermore, -- not that we are going to fight a war against china, but it is balance of power in the pacific, and all of that stuff. in any of that, these are problems that the system has got to address, and everybody knows we have got to address them. yet, when it comes to actually doing it, the kind of steps that need to be taken never get taken, and i fear they will not be taken. we have a chance, when the debt commission reports, and i doubt they will come up with 14 out of the 16 recommending something that would put it into automatic attention, but there will be a lot of ideas there. if the congress is really willing to tackle this problem, the ideas will be there.

if the president can work it out, then, maybe something can be done. i fear, however, that because the president will be pulled by his left, and be worried about offending his base, and because i do not think he is bill ator, hisa triangular later mindset is that of a liberal democrat, and there are certain things that are out of bounds for him to consider, and because the right wing has been empowered and embolden within the republican party and there will be shrinking every time any republican leader attempts to make a compromise with the democrats -- just imagine rush limbaugh and sarah palin, all of whom are saying "do not compromise, do not compromise, do not compromise, we were all elected, we were put here."

this is the makings of gridlock. i will end on a hopeful note. there are other things that can be done, and also that everybody knows needs to be done that they can begin working on. one of them is education reform. no child left behind needs to be reauthorize. they are doing things -- this is a nixon go to china exercise, where they are really taking on the teachers union, so that is something that could be done almost immediately after they agree on extending the bush tax cuts, if they can. so, there are things that can be done, and i have a whole list of them, but i am pessimistic. >> all right. on that uplifting note, tom. >> fred, thank you very much.

what a pleasure to come back. norman and i started the cq roll call election conferences in 1980. this is 30 years later. we began with that extraordinary 1980 election. think of 1994, 2000, 2006 -- everything seems to change in the immediate aftermath, and we try to read the tea leaves and figure out what in the world is going on. alas, often times the immediate take and commentary and struggle by the two parties and their leaders to claim a mandate and define the meaning of the election, or for others to pull out there sort of ideological frame that they apply every day

to their jobs and their life, we figured it is useful, at least on occasion, to sit back and see if we cannot imagine what stream of political activity and developments -- what structures exist that in some way might help us get through this. before launching into that, i am always reminded of some story when something happens in an election. this one is perfect. most of us, i believe, watched the obama press conference. was he contrite enough? that is really the question. was he sufficiently abject? did he get the reporters what he -- what they wanted in terms of indicating he has heard the message of the people, and he is perfectly prepared to change his

agenda, to alter his positions, to reject his health reform bill and a belief that stimulus is important in a time of economic downturn. now. he did not. they were not happy, but obama would see them less happy than the others. i kept thinking and imagining what he was really thinking while the words were coming out of his mouth. of course, i was reminded of the famous story that some of you have heard before about mo and the presidential democratic nomination contest of 1976, when he was up against jimmy carter and various other candidates, but carter kept coming in just ahead of him in new hampshire and down south. it was very frustrating.

moe was a perennial second- finisher, but then they finally came to the progress of state of wisconsin. it was there he was going to make his stand. sure enough on the election night, the returns came in, and he was number one. he was a happy man. in those days, it takes hours for the returns to come and, now it takes weeks. he decided he had to get a little sleep. he took a nap. a staff worker will can up and said, mr. congressman, i'm really sorry, but the late returns were from their rural areas, and jimmy carter actually got the votes to move ahead. he has won, you lost. he said "call a press conference." his staff did, and he began by saying the people have spoken,

the bastards. [laughter] >> i am sure that that is how many democrats are feeling today, but from an historical perspective, we have a 6.5% swing in the national vote for the republican party, which we have had several times in the past -- in the last decades, but it proves efficient in producing more turnover and seats. when no republicans have 60 guaranteed, and they could well move up to 65. it was a significant victory. it did not produce a majority in the senate, but big pickups. when i was struck by in reading the papers this morning, from george will and kathleen parker , it is a rejection of

liberalism. it is clearly the country signaling that this it administration has gone too far to the left -- that this administration has gone too far to the left. i am just struck by how much my town is captured by ideological thinking, and not just the ideological polarization of the parties, but a belief that when a politician has a bad election is because they have swung too far away from the center. it is all about ideological positioning, when my own view, and i think consistent with what you heard on the first panel today -- is not rocket science to see what happened. we have come out of the worst economic crisis since the 1930's and the recovery is painfully, painfully slow, as we

expected it would be because it began with a financial crisis. if you just consider the democrats were in power, they have a lot of seats at risk, it was a midterm elections in which the economy was in dreadful shape objectively and subjectively, and the whole nature of the electorate's change from a presidential to a midterm election with the relative representation of young people and old people reversing. i mean, of course it is going to be a big swing toward the republicans, and the 6% to 7% swing is perfectly understandable, and, frankly, does not much require any ideological positioning or thinking. i think it is misleading to jump on changes in the% of people that identified as conservatives

or moderates, or liberals. those tend to be trailing indicators, rather than leading indicators of people reacting to the realities, and in this case, that is getting scared of what is going on, and seeing big, active government, and figuring because they have been skewed by the republican opposition, that not only did the big government not help, but it is the cause. if we just cut it back, we will return to some kind of nirvana. the question that is important to ask that we almost never asked because it is considered the lead- -- elitist, it is what if the public is wrong? in the face of a recession that could turn into a depression, if

the people think tarp is a bad idea, does that mean washington should not inactive? hats off to george w. bush for doing what had to be done in a crisis, despite of -- with -- despite of its on popularity. whatever the problems, it is a massive success. i would say the same for the stimulus. ironically, if you are going to criticize that, it is because it is too small, not too large. if the same for the auto company bailouts. you can apply that to the new agenda. how will we produced more jobs and real economic growth in the short-term? if we do not get growth going, if you cannot deal with it by cutting spending because the decline in revenues from low growth will overwhelm any savings from cutting spending alone. that is the kind of talk we are not getting, and one of the really sad things that is that

this party coming in now, with lots of new members and energy is particulary -- is articulating an agenda that if you look at in pure substances terms does not have a chance about -- of doing anything about the problems that are concerned americans right now. -- concerning the americans right now. a couple of columns talked about the desire of the public for people in congress working together, and in general, i think that reflects a basic feeling they have always had -- they like to see politicians agreeable, coming together, and doing the right thing. of course, the right thing differs among those people, and they do not fully accept the fact that there are profound differences in how to go about those problems, and that very behavior in aligning themselves with parties that are consistent

with their ideology has reinforced this ideological for after an intense partisanship. i do not think there is a golden means to dealing with any policy. i think we should get the substance and understand that the public has got to be brought in to this in some more substantial way if we are going to get anything done. >> thank you. let me start by saying, as tom suggested, with weeks to count returns, the elections are not over, and my eyes, as many others, are turned to alaska, waiting for the right-ins for the critical position of the mayor of what sell-off. i am waited to see if levi johnson can get into the double digits. he would springboard to bigger things, of course. [laughter]

i want to start with a story that i have told many times before and after an election with a dramatic victory for one side or the other. as a cautionary note, it is a story that takes place in the first year anatomy class in medical school. the professor turns to the class and asks the question of the day -- "miss richards, what human organ, one appropriately stimulated grows to eight times its normal size?" she refused to answer the question, and he looks around the room, and asks mr. porter. >> mr. porter says the people of the human eye. miss richards, i have three things to city -- you did not do your homework, you have a dirty mind, and you are going to live

a life of unfulfilled expectations. [laughter] >> that apply to liberals after the -- he will use it. he will use it, and he will not attributed -- attribute cared >> did you? it came from al franken. [laughter] >> at cit, it came from mort, and he forgot. [laughter] it is something to keep in mind. the argument about whether voters have swung toward a much smaller government, i found quite striking a cnn poll that asked what is the first thing you want government to do in the next year, and coming out on top by a wide margin of 37% is an economic stimulus. i am not sure how that squares

with the notion that voters have decided is what they want to do is take a meat ax to government. what it suggests to me is that while there is no doubt that we have many more people that self- identified as conservatives right now, that americans are as they have always been, pragmatic. they go with what works. his it is government, that is fine. if it is not working, then they want to turn to the private sector. once the private sector screws up, they will come back and look for something else. the most interesting statement on election eve came from the most likely speaker designate, john boehner -- "while our new majority will serve as your voice in the people's house, we must remember it as the president that sets the agenda for our government." you can have one of two interpretations.

the first is that the six training for our elected officials is abysmal, and perhaps they ought to read the constitution they refer to quite frequently. my guess is that several framers would be spinning in their graves at the notion that it is the president that sets the agenda for our country. the president is the agenda that disposes of the -- the president disposes of the agenda data set by congress. i do not think john painter is ignorant. -- john boehner is ignorant. i think it is part of an effort to lower expectations and a damper the fervor of new people coming in who may say this is not about us, but believe that it is, and really do want to turn up the heat, and pass an agenda that is, in fact, one that will take a meat ax to

government, and one that could not be inactive at this point, but that might bring a big enough public backlash. it reflects another reality, which is that for both parties, why we will have continuing -- while we will have continuing clashes, some stockstruggles wie internal. for republican leaders, the goal first and foremost is to win election. mitch mcconnell said the primary goal is to make sure barack obama is a one-term president. the second goal is to win a majority in the senate, and keep the majority in the house. a lot of new members coming in did not come in with their primary goal being that. their primary goal is to dramatically reversed the policy course that is being set in washington, and there will be a lot of elements of tension there. it is tension that we saw reflected in a rather stunning

as ament of jim demanint cautionary note to the new members of the senate -- "you will be on committees, but never mind those committees because they will all try to call what you into coming up with policies, and what you should do his forget about that, go on the floor, and do things said nothing to do with working together." i have never heard a politician to say to incoming members of congress, never mind the committee's you're going to serve on. he is an extraordinary statement. he has been like then neighbor freddy krueger living down the sea -- street. we have had a whole series of such families moving in on the block. [laughter] >> for obama, is the continuing disaffection of his left, which is kind of funny when you see all the stories that he has

moved so sharply to the left. if he has, why is the left so dissatisfied? they are. the fourth step and that was of great interest was on election eve, in his concession statement, russ feingold saying is on were to 2012. i am not sure that that means that russ feingold is already planning a primary challenge from the left to barack obama. it may mean he is looking toward what future he will have, and i'm sure it will be a robust one in the worlds of -- in the world of politics and policy, but it is a suggestion there are headaches for the president ahead. if we look at areas where cooperation is possible, and let's start with trade, where the president has indicated he wants to move toward enactment of free-trade agreements with colombia and south korea. doing so will mean finding more republicans willing to support that in congress than

democrats, and a base of organized labor, which is already on happy because they did not get the kind of labor reform card check or anything resembling it that they wanted. that is now dead. certainly, john klein will not be inclined to do anything on that front in the house of representatives. this will be another burr under their saddle, along with many other liberals. can he make a compromise, and still keep his own base intact? just a few other points. before we get to the agenda for the next congress, we have to navigate through a difficult lame duck session. one critical question that has been raised already that is obvious is can they reach some kind of an agreement, basically to punt the tax issue, at least for another year? we will be watching to see whether the campaign that began a couple of months ago,

anticipating a wave election from conservatives to discredit and decertify the lame duck session will get heated up. it did does, it will make it more difficult to do the kind of things that pragmatic republican leaders would prefer to push off. if they cannot get some agreement on taxes, tax increases will take place on january 1 with the new congress coming in on january 3. that will be a jolt to people in a whole host of ways. when of the more interesting statements before the election came from a republican congresswoman from wyoming suggesting if they did not do something about the estate tax that some of her constituents would kill themselves, literally. she has elderly people on dialysis that would pull the plug so that they would not screw their children out of the ranch's or other properties they

have. beyond the estate tax, can be -- and a fragile economy take a sharp tax increases for everyone? will the new collection of people coming in on january 3, is no agreement has been reached, insist that their version of compromise is capitulation, make them all permanent. how long will it take to make the agreement? we have not had a single appropriations bill enacted into law. what will happen with that? will they push that forward a few months so that the major battles over the budget that could and probably will lead to at least one shutdown of the government, and get put off for several months? what about the start treaty, and then keep in mind we will have two major ethics trial is taking place during a lame-duck session.

the year plus in which we had a strong close and working relationship -- for some a model of bipartisanship, and for others a sense that the hear no evil, see no evil process was under white, but between joe fell apart when the trials of maxine waters and charlie rangel were demanded to take place before the election. it was never practical path because several members of the committee were in tough reelection battle, but it was a political shot, and suggests that we might have partisan- pitched battles over ethics issues. finally, just two more points. one, there is little doubt that the policy agenda in congress will be a constraint one. we will have moved from the most productive congress in the last

50 years to one of the least productive in our lifetime. much of the focus will shift to executive power -- how much the president can do through executive orders, executive agreements, regulatory power, and bureaucratic action. "the wall street journal, will once again discover, some worry. in its files, article one of the constitution. you will find a tug of war over the use of power and the courts will play a role. the courts, still with judges would come out of the executive branch when the longstanding bias, will suddenly change as it is an executive controlled by people they do not like, and a congress with substantial role by people they do will bring us into a completely different than you. finally, let me say we will see some action, possibly on trade,

education, and energy is an area where there could be significant common ground. one of the most interesting tugs of war will be over infrastructure, where a business community that poured a lot of money into getting republicans into the majority wants a major move on infrastructure. it is their interest not just in jobs, but in terms of making sure that transportation corridors work. if the new members do not want a major new area of government spending in infrastructure. can the parties get their act together on that? this is another interesting area that we can talk about among the many. >> thank you. while i think some of you are playing down the notion that there is a message from the voters here -- norm, you in particular have mentioned the message the republicans have taken from best, -- from this,

with the notion that people want a dramatic reversal from government. whether that is an accurate definition, that does seem to be the agenda of the republican party, some might question, and let's start, for example, with health care as one of those things. i would like to ask each of you what, conceivably, mike the republicans be able to do on health care, and how might the democrats, many of whom suffered as a result of that bill, response? i would like to get each of you yet on this. >> the president said yesterday that he was willing to tweak the health-care bill, and the republicans are all calling for repeal and replaced. i suppose the tea party people just want it repealed, and forget about replace. i have not seen -- i think many

of them think that providing health care to the uninsured is something that is not explicitly referred to in the constitution, and therefore is an illegitimate form of government. so, you have a very wide range of opinions about what to do about health care. the 1099 form that covers required that every transaction that any business conducted over $600 has to have a 1099 form issued is deemed to be onerous. was a fund-raising mechanism. that will certainly be pulled out of the bill. that is sort of easy. the republicans really think that repealing the health-care bill is a job creator because

they believe that small business looks at this -- i am now quoting lumbar alexander, a very modern republican who said that he was with the chain restaurant owners, one of the biggest small-business groups in the country, and they claim to him that the health-care bill was going to put a burden of $40,000 per employee on them in administrative taxes, mandates, and all of that requirement. that would discourage them from having employees. the republicans believe that repealing or substantially amending health-care is a major

item on their agenda. now, this has the makings of total breakdown of the government. i can well see that the republicans in the house, particularly, are going to pass bills, one after the other after the other 21, repealed, and two, it had -- been hit the implementation of the health- care bill. by the way, there is a 22-page document that was issued by eric cantor, which you can download, and talks about the steps that the house republicans in addition putting into effect. one of the items in that is to bar the irs from the funds it takes to implement the health- care bill. this is not only a savings, but

a way of throttling the implementation of the health- care bill. i -- if they just did not appropriate that money, this inhibits the ability of the administration to follow through on health-care reform, and could be the makings, is there is a big b-funding effort under way, of a government shutdown. i do not see a coming to terms here on health care. you had two basic philosophical differences between the parties on this issue. the democrats and the administration believe that their highest priority was to get access to health insurance to the 51 million people who were uninsured. all the republicans care about was a boring the cost of health insurance, and the democrats

want the government to set the rules, create the mandates that -- and essentially take over the insurance companies -- turning them into public utilities. the republicans believe in a free market, health insurance you can buy across state lines and as you mandates as possible. i cannot see how they ever come to terms on this, and i could see it as the group of conflict over the next two years. >> -- root of conflict over the entire two years. >> i agree that it will be a source of conflict between the parties over the next two years, but i do think an advantage of crews to what is on the books now and i think republicans will encounter great difficulties. the first panel, i cannot remember whether it was carol

or bob, reported on the exit polls. if the public is that the bill the divided on this. there is not a majority favoring a repeal of health care. if anything, leave it alone, or strengthen it, improve it in some way. it really gets hard. obviously, you cannot repeal it with the senate as it is and obama and the white house. you can harass bureaucrats, and we will see a lot of that. you can try to de-fund, but i think obama would the l and go to the mat, shut down hhs, if it is all part of that, and remind me, are the funds for the administration of the social security included in that bill? let's have social security checks not go out because of a

disagreement between the president and republicans in the congress. of course, it probably will not come to that. his john boehner has anything to say to that, it will never come to that, because he has a legislature -- legislator. here is the other thing that i anticipate. there is a philosophical difference, but ron whiten worked for three years with bob bennett and attracted republicans to a plan that is not far different in respect to what eventually got past, but it is dramatically different from what the republicans are prepared to do now in health care. it did it -- it included an individual mandate, among many other things, and substantial subsidies.

mitch pulled the plug and said to are all off of this bill before obama was inaugurated because we are not negotiating over health care. even if we turned it into a bill more to our liking, obama and the democrats would get credit, and we would not have the kind of political success we want. there is less principle, and more partisanship, in my view. the final point is many provisions of the health-care have begin to on roll, some have already now, and almost all of them are very popular, it is just that the broad public does not know much about it, including tax credits for small businesses which have led to an increase in the number of insured among small businesses. all of the other insurance provisions that are really quite popular -- i predict that the senate, because it is controlled by the majority, will hold

hearings in which various people, come forward to talk about the favorable elements of the health-care bill now, and that will begin to get away from the rhetoric of government takeover of health care, socialized medicine, and death panels. >> i find some of the arguments that we see over the health-care bill, almost surreal. if you look at people read what people have said -- if you look at what people have said, this is the kind of plan with some problems that moderately conservative republicans have put forward as the alternative to clinton's billion the early 1990's, with many of the ideas coming out of the right. hit shows just how much of the debate has shifted, and whether

this is a government takeover of the insurance company -- alice rivlin, not exactly a raging leftist, has said the exchanges are the best way to bring real competition to the process. we will see. i am a little bit skeptical to the notion that if we let people buy insurance over state lines, everything will be fine. we have the notion that if we let people buy credit cards over state lines come everything will be fine, and what happened was there was a race to the bottom. everyone went to the states to the -- and credit-card companies that give them the most loose regulations and that is why we had credit card reform. all of that is a separate set of arguments. talking about repeal, or repealed and replaced puts you on shaky ground, and that is why it started with retail, and moved to repeal and replace. of course now it is we will keep

the popular things. no more pre-existing conditions. how you get to a point where there is no more pre-existing conditions unless you? late expand the risk pool? otherwise, people will game the system. why pay for insurance. wait until you get cancer. it is a logic that led to what the heritage foundation was discussing many years ago before they said we never wrote that to the notion of a mandate. are you going to repeal the annual limits and the end of a lifetime limits? we used to think, the $2 million limit -- who could never reach that? a couple of weeks, and you are bumping up against that. or, people keep insurance up until the age of 26 for their

kids. you cannot begin to unravel things without other consequences. that will be difficult. one thing john boehner said before the election was all we are going to first most to repeal the $550 billion in medicare cuts, that make up most of the financing of this program. i was a little unused that he used the term cuts. if you remember the debates we had in the reagan and bush administration when democrats talk about cuts, and republican sen how unfair that was. now, cots are back, but think about what happens if it put out a proposal to eliminate all of those things, most of which would be in any fiscal programs to ban the cost curve on medicare if you are going to get the fiscal house in order. as mitt romney said, you have to deal with medicare.

if you get an attack on caome ul plan that says we will tackle social security, we will continue to cut all the taxes and we won't touch the help system, you will not have any kind of agreement. this is tricky territory. it will lead to at least one of the many shutdowns in government that we have. the big thing to watch is when the debt limit is approaching sometime in the spring. >> how will this urge the power of -- that wants to dramatically

cut spending? call will we see that play out? >> this is clearly a part of the republican majority priority, to deal with spending. in some ways, it is immediate spending. ironically, it is almost all symbolic and counter productive, i would argue. cutting spending now, laying off

federal employees, is one of the dumbest things you can do. it would have little impact on the deficit itself. it is patrolling at the margins. it is anti stimulus at a time when martin feldstein are calling for more stimulus. the fights will be there and they will come back again and again, the bill by a bill. they will try to stay away from specifics. listen, i have a machiavellian view of this thing. what will keep barack obama from being reelected? the challenge in the primaries, and that is all about afghanistan and nothing else. the other is that we never get

out of this slow growth, 2% or under. republicans cutting spending and the short term probably increases the probability of more immediate pain, fewer jobs, lower growth. that puts obama in worse shape. but the public has come to believe that that is what we have to do. we have to cut spending and that will produce new jobs and economic growth. >> other thoughts? >> i be the next two years as a great and -- a game of chess. maybe it is only checkers. each side will try to maneuver the other into the blame for what does that happen in the next two years. think about this for a second. in order to get back to 5%

unemployment, we have to create 200,000 jobs a month for five years. we are currently creating jobs at the rate of 12,000 jobs a month. the fasting period of growth in history is 90,000 a month. that gives you some idea of how far short we are of doing what we need to do in order to restore the economy to health. i submit that that is not a good sign for anybody's reelection. i think that the republicans are now in charge of the house of representatives. they are going to be judged, too. obama is going to be judged for sure on whether he can get something going. but all i see is an inability to

get stuff done and maneuvering over who will get blamed for it. >> in light of that, let me take you back to john boehner air. it is the president that sets the agenda for our government. we will see questions of shifting the blame. we will see whether obama can be as agile and as clinton was when we moved toward the shutdown of the government with a speaker who is not going to have anywhere near the power over his own colleagues when that occurred tuesday, if we're going to get a second consecutive term, we have to work with this guy. can he do that? the fact that erick kanter is coming out with a 22 page majority leader's agenda, never mind with the speaker has to

say, and not mike int has been all over television saying, compromise? the only compromise we want is capitulation. it's just that the task of their becomes very difficult. it will be difficult with a public that has a deep antipathy toward lot -- toward washington. when you start to cut, and that includes a freeze on all discretionary domestic spending , never mind if we have another oil spill or hurricane or a crisis of any sort, you'll start to see programs that people rely on shaved. what will be interesting is whether the older voters who made up the bulk of this reaction -- and some of it was a reaction against the health care

bill -- some of these changes are going to impinge against them and how they will react to all of that may be one of the most interesting political development. >> you are saying that erick kanter is a greater threat to the republican leadership and freddy krueger. >> and the nightmares that john boehner might have over the next few months, there may be at least that many revolving around some of his own colleagues. in the end, it is the president who is held the cattle. one of the unfortunate things -- held accountable. everything is always symmetrical. we do not look at the substance of what is going on.

we need to somehow get higher growth. i do not know anyone under these circumstances to argues that cutting spending in the short term will increase jobs. we ought to be able to say that. the president has discovered one of the dilemmas of contemporary american politics. we do not have majoritarian rule because of the senate. if we did not have a filibuster, obama would have put a larger stimulus into play, health reform would have been passed in three years without credit deals with ben nelson and so on and then he could have made it adjustments is more stimulus was needed.

the irony is, he did something bad -- something that looks different and worse because of the republican opposition, but he is the one who has to be held accountable for it. " let me give the optimistic scenario here. there is a potential deal to be had that might bring the stimulus and economic growth that you could imagine being fought for. that is, democrats get more infrastructure spending in a fairly big chunk and return, we get to some additional short- term significant tax cuts, including the payroll tax holiday and a few other things that might actually work and begin to create some stimulus. we know that the incoming chairman of the ways and means committee is engaged in conversations with kent conrad about tax reform. you can see a deal that will

involve a pretty dramatic reform of our tax system. the odds of that happening are not great, but even it would this gulf between the parties and the growing electromagnet's pulling them apart, there may be something that could be done. >> there is an idea at that built -- ben nelson has been promoting -- and he is not alone -- a national infrastructure. it is an independent institution free from politics. it will leverage a small amounts of government money -- money and attract an -- attract

in the private money to develop major systems. i have seen that he is willing to move a little bit. the industry should -- the infrastructure bank is based on private capital. the most important thing we have to do is to make sure small business is hiring. business is a foundation of our economy. that is different from the kind of anti business town that you have heard from the administration. the small-business bill, which finally got past, contained a lot of tax breaks for small business. it may be that that the private

sector really is where the jobs created. improving the climate for private sector job creation is what they have to do. if that is true, and they could sit down with the republicans and say, how can we do this, they can make some progress. it is tax cuts, some tax reform, and so on. >> the infrastructure grant has a model that obama has been dizzy as sickly supported, which is the green bank. -- enthusiastically supported. >> these would work. more than the tax cuts, it would increase demand, which is really what is holding back business investment, confident that there will be enough vitality and demand to merits investment. >> do we have microphones?

>> i am from prudential financial. it seems to me that republicans cannot possibly allow the estate tax to snap back on january 1 to $8 million floor where a 55% rate. i wonder whether you think that some deal on the estate tax might serve as an anvil on which a larger deal could be formed on the income tax rates as well. >> i think you are right, bob.

it is a nightmare scenario would ease estate tax. if you want an exhibit a in the dysfunction of government over the last few years, we knew that the estate tax was going to go to the unwieldy situation where there is no estate tax, but you have to go back and calculate capital gains on assets that people may have had for 50 years. the new to this draconian level. they should have been able to work out a deal, which was on the table to and three years ago. keep it at the three plan $5 million. -- three plan $5 million. republicans were holding out for a much larger number. it will be a tug-of-war within the party.

while logic would suggest that you reach a deal, logic does not seem to have applied to many of these cases. >> anyone else? >> [inaudible] i apologize if you address this this morning. can you talk about the interplay between the fiscal pressures that will continue to deal with in response of the federal government? that will be an ongoing concern. >> i see no prospect that there will be any help from the federal government to the states. what you are going to have is a crisis in state after state after state where state workers will have to be laid off.

i think we have had the last bill out of the state. there is one problem with all of this. that is that some states have been frugal. some states have balance their budgets. and there is no way that anybody -- there ought to be a percentage of effort to kind of formula that could be worked out to reward the states such have actually lowered their own deficits. but i just think that this all goes into the category of bail out and it will not be -- nothing will be done about it. >> it is truly perverse because whatever remaining stimulus there is antifederalists level is absolutely -- i did the federal level is counteracting what is going on in the state.

it is insanity. you could have a program of revenue sharing. that was an old republican idea, remember? but tied to performance on dealing with pension liabilities and such other things. in order to keep the money, you have to act in a fiscally responsible way when the economy returns. oh boy draconian cuts during times of economic downturn -- but avoided draconian cuts during times of economic downturn. >> it is interesting that in the mitt romney's prescription for saturday is to put a cap on medicare dollars. i am not sure that that would be matched by many of his republican governors with great

enthusiasm. >> there was a mention this morning of battle between -- how about elections for house leadership's on the democrats' side? >> we are all waiting to see what nancy pelosi will do. i do not think it is all clear cut. many of the people close to her believe that she might step down. others believe that she will not shrink from the fight. i am not even sure she knows herself. if she does decide to step down from a leadership post, i think it is a slam-dunk for steny hoyer. i don't see anybody challenging

him. i would expect that chris van holland, despite his loss for his party this time, will remain a rising star and a top leadership figure in the party. >> since we are getting into personalities, i just have to do this. the impact of sarah palin over the next two years? >> i think the little cover story that you -- you see occasional references, but the people who got slapped the hardest in this election beside nancy pelosi and barack obama cards and demand and sarah palin. they are responsible for the fact that the senate did not go republican. they are the ones who are responsible for christine m. o'donnell.

they are responsible for joe miller in alaska. they are responsible for sharron angle in nevada. those characters were all rejected, in every single case, when the republicans won a senate seat, except in the rand paul case, the margin was considerably smaller 48 tea party kind of candidate that was for a regular. -- for a two-party kind of candidate. forget about mark kirk. he is a separate case. he is a moderate to barely one. the drug dealers across the board finished far better off -- and you can even put marco rubio in that category. he got less than 50% of the vote

as well. jim should not has been a happy camper yesterday. furthermore, his colleagues must hate him. i think that to -- he will have more troops than it had before, but his conservative caucus in the senate is not all that to beg. the same applies to sarah palin, i think. i think she is a phenomenon. i think she is a rock star. i think she attracts cameras were ever she goes, but she is a joke. even within her own party, the idea that she would be the presidential nominee, and vast majorities of ordinary republicans is unthinkable. she has a following, no question about it, but i do not think she

has triumphed. >> the majority of americans agree with you, but i suspect that republicans do not. i think you are right in your analysis of the impact on the senate races of the tea party, but not in the house. in the house, the energy and activity really did help the party. a large number coming in and with the affiliation of one sort or another and i think michelle bachman is starting her tea party caucus. think of them as the new faces of the republican party. it is a nightmare for the party, but the adults responsible are going to have a hard time treating them with anything other than absolute respect. >> i say this not in terms of

liberal legislative power, but the ability in collaboration with us and the press. did the is a really important legacy, the death penalty in a dramatic example of her framing an issue and it's such a way -- in such a way. it set up a whole chain of events in which more reasonable people -- you cannot use the word death panel. she treated an outer edge for the debate and made -- she created an outer edge for the debate. they became an almost a dominant theme in the debate. i think it is an extraordinary phenomenon. i will be interesting -- interested to see how that plays out. >> you mainstream media types

-- [laughter] >> they were able to channel this anger and disaffection with a focus on democrats. there is a real chance that she will be able to channel the anger against the is republican establishment if they are not able to do anything much on the wish list of those people you got out there and nominated some of these candidates. she could make the case is that if there had not invent this energy and anger channeled done by her and the others, they would have fallen short in the house. there is a case to be made. i did not rule out the possibility that unless the republicans dramatically change

their process, there will be a backlash against the establishment of that party that could be strong enough to nominate somebody who is outside that larger mainstream. once somebody is nominated, we have an economic problem with the inability to create jobs. it is what happens when you did a downturn caused by financial crisis. it is a jobless recovery and it could go on for some time. that might increase the chances of sarah palin being able to win. >> it is something to keep in the back of your mind. >> the person i hope will run

for the republican nomination -- it is not written in the stars that the united states of america, after to under 50 years, needs to remain a great power. -- 250 years. >> i think that our time is up. i wanted to close on that note. thank you very much to our panel. [applause]

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> changes need to occur in congress. >> you can learn about more of the speaker of the house consider this on birds in over 800 appearances in the c-span video library. >> this weekend, jonah goldberg discusses the election results, the conservative movement, and the next wave of leaders on the right. join our three-hour conversation. sunday, noon, on c-span2.

>> average to fight corruption in iraq and afghanistan. we will hear from these special inspector general for iraq reconstruction. this is hosted by george washington university. this is about an hour and 40 minutes. >> it is a pleasure to welcome this evening's distinguished speakers. they are here with us this evening to share their expertise on the issue of fighting corruption in the wars in iraq and afghanistan. as many of you know, the elliott

school has a special place. because of our location which is in the heart of washington d.c. if you draw those lines carefully, they would intersect here in this room. the elliott school is a special place because of who we are. an extraordinary community of scholars and students. because of our location and our programs, we're able to reach out to other distinguished experts. to share expertise and insights on important issues of the day. this evening's event is sponsored by the eliot school security policy for them, which was launched in 2007. over the course of the past three put five years, it has brought more than 40 experts

here to give gw campus to assess international and national security issues and the proper policy responses to these problems. i would like to think the professor who convened and started and lead the series from the beginning. his leadership and efforts have made this possible. it is my pleasure and privilege to introduce my colleague and friend. jim? [applause] >> thank you very much for that kind introduction. it is my pleasure to have this assembled a group of guests. i would like to briefly introduce them. stephen is the senior fellow for defense policy at the council on foreign relations. before joining the council, he

held positions with the u.s. army war college, the university of north carolina chapel hill, the institute for defense analysis, and hardy diversity. he is a member of the defense policy board and has presented testimony before congressional committees on various issues related to the wars in iraq and afghanistan. he served on its general stanley mcchrystal the initial strategic assessment team into a thousand nine. he was on the general petraeus team in 2007. he was a senior advisor to general petraeus in 2008 and 2009. his book won a number of the very prestigious prizes.

he is published on defense policy in a wide variety of the journals, both policy and academic. he holds a ph.d. in public policy from harvard university. he holds the record for the most appearances in security policy forum programs. that is testimony to my high opinion of him as both a practitioner and a scholar. although i did notice that you let that track record of your biographical statement that suggested low of modesty to me as well. stuart was appointed inspector general for the coalition provisional authority in january 2004. since october 2004, he served as the special inspector general for iraq reconstruction period

as the taxpayer watchdog in iraq, he oversees more than $56 billion and u.s. appropriated reconstruction funds, including the iraq relief and reconstruction fund, the iraq security forces fund, the economic support fund. since january 2004, he has made 27 trips to iraq. he managed the production of over 350 inspections, it issued five comprehensive lesson learned reports and provided over 27 quarterly reports on reconstruction to congress. his public service career include service and the white house, special assistant to the president and associate counsel. from 1994-2000, he held a

variety of positions. deputy general counsel, deputy general counsel for litigation, and assistant general counsel. he previously served as assistant attorney general of texas and is a briefing attorney to texas supreme court justice raul gonzales. he holds a b.a. from the university the south and dangerous doctor from st. mary's loss zero. finally, sean roberts -- doctorate from st. mary's law school. sean roberts is the director of the international development studies program and is a cultural anthropologist with extensive experience in international development work. in 1998-2002, he worked at the united states agency for

international development in central asia on democracy programs, political party assistance, community development, independent media strengthening, and elections assistance. he is the author of a popular blog in central asia. he frequently comment on current events in central asia for the media and the foreign policy committee. he received his ph.d. from the university of southern california. prof. roberts will be doing double duty today. he will be talking a bit later on the general central asian context in the war against corruption and he will also be serving as a moderator. after the panelists have completed their presentations, we will have time for to name --

q and m a -- q & a. prof. roberts? >> it is an honor to be on the panel with stephen. it is a pleasure to be here was shot as well. corruption in iraq -- not a news story. certainly something that has been present in that country long before the united states invaded in 2003. it was something that became

the part of our relief and reconstruction effort. once it became clear how large our engagement would be. initially, as many of you know, it was expected that we would liberates and leave. the president decided on march 10, a 2003, backed by september of that year, u.s. forces would be leaving. there are now going to leave at the end of next year. plans changed. the situation changed. indeed, what we found in iraq was something much more difficult and much more -- much grander than ever expected. looting was just a piece of it. it was the breakdown from the entire government. what of the consequences of that

breakdown was a exacerbation of the corruption problem in that country. i am leaving soon to go visit again. my staff -- seven years ago tomorrow, congress created the office that i lead because of fear on capitol hill that there was significant correction within the u.s. program. at that point, billions of dollars had been appropriated and there was limited oversights on our side. let me talk about the two aspects of corruption. the u.s. parts and the rocky parts. my job is to reach out corrupt practices and to hold accountable those who engage in them. we've had some success over the

last seven years. 50 indictments, 41 convictions, $71 million recovered. that is the largest output of any law enforcement entity and it should be. we have that jurisdiction. the corruption problem has been very difficult to make cases over there because it has been a cash environment. on the rocky -- iraqi side, it has been more insidious and expensive. leaders have agreed with that. unless they achieve victory, --

a horrible day in baghdad. not withstanding the successes and fighting back insurgency, the second insurgency continues to be a cancer within the government, but in the fledgling democracy. part of it is a historical level -- a legacy from saddam hussein. as the minister of planning told me, and there is a form of corruption that exists in iraq today and it is more insidious and it does of a different order than what existed under saddam hussein. it is pervasive. it is controlled by his -- it was controlled by his cronies before, but now it is omnipresent. part of the challenge is the

discontinuity that exists in the occurrence government structure. it is an electoral democracy without a prime minister. the fact that they have an electoral democracy -- 90% of the national income is generated from oil and gas sales. all 19 industries that run the oil and gas are government owned. which means they -- a handful all of oligarchs control the flow of that money. that simply cannot continue. the most important step toward victory over the problem of

corruption will be privatization, echoing what's the minister told me last year. the challenge is getting there. there is not any incentive toward the government to move toward privatization. to many people at the top are benefiting from the current structure. how does iraq tackle this enormous corruption problem? the united states created two new entities six years ago. it to help them move forward. it was the government audit agency it that to -- it was a puppet of saddam hussein during his era. as a result, the ambassador bremer established an inspector general's contentions, 35 inspector general's in every ministry, and a commission on

integrity. an analog to an fbi. the commission on integrity had the mission of pursuing and prosecuting corruption cases across the country. the inspectors general admission of investigating wrongdoing within the rock ministries. unfortunately, the last six years of work by both of those entities characterized largely by failure. the first half of the commission on integrity was run out of the country into a dozen 6. his successor has been probationary, even to this day. they still do not have an effective law. indeed, they increased their prosecutions this year, but their number one prosecution case type is diploma fraud,

lying on a resume. they are not getting at the real issue. part of the problem is the legal structural issue. in iraq, there is a section 136b my kids any minister the power to immunize any of his employees from prosecution. think about that. that is a fundamentally undemocratic. it is used quite frequently. it was used this year in prosecutions. it was used very recently in an attempt to prosecute those individuals involved in purchasing these bomb detectors. they are completely bogus and they do not work.

when you drive to a checkpoint, a policeman or soldier will come up and wave this divining rod. it really looks like. they will wave you through. in fact, as we have known and complaint, there is nothing in them. millions of dollars in contracts were spend on this affect divining rod. the minister of interior, when this issue arose, the minister invoke article 136b to protect the individuals that benefited from these corrupt contracts. the prime minister has said that the article should be changed. like so much in iraq, there's been no progress. the commission on integrity

looks good on paper, has a long way to go. the inspector general, again, they do not have a law that authorizes them permanently. they are still waiting on the new government to give them some form of legal protection. as a result, they're very much within the purview of the prime minister's office. they are all appointed by the prime minister. there are extensive rules that should protect them, there's been a replacement and firings that have gone too far in their investigations. some progress over the last quarter, they finally created an academy for the training of inspectors general that will open this month. it seems that this new concept

will survive. whether it survives in a meaningful and robust fashion depends on the new government and the commitment of the new prime minister to strengthen that to fight within the ministry is against corruption. the new anti-corruption strategy also empowers the inspectors general in a robust fashion. again, that is a document. that is a proposal. it is more sophisticated than anything we have seen before. its employment, it will make a difference in iraq. but the second insurgency is still a battle to be one. the upshot is that seven years into the iraq reconstruction program, with its winding down, we have seen progress on the

u.s. side in fighting corruption. my office has acted as a deterrent. the amount of wrongdoing has gone down over time. on the iraq side, corruption, like a cancer, a spread. it has become more egregious. at this point, unless a new government comes in that will authorize the commission on integrity with a meaningful statute and given the independence it needs to pursue and convict the officials to commit wrongdoing -- by the way, they have no convictions. the minister of trade was pretty much caught last year and the prosecution was given forward. and then it froze.

dilatory tactics delayed, suddenly it changes the venue. in new judges acquitted a blank -- one of the night. it is a horrible signal to send out to the people. they look at their government and really have to reactions. they are not getting the services they expect. they view their leadership as corrupt. the people are largely correct. for iraq to make the progress in needs, to become a successful democracy, it is going to have to meet the service demands and it is going to have to show its people a commitments -- show its people a commitment to hold accountable those to take advantage of the system that is fraught with corruption.

let me conclude by saying that on the u.s. front, we still have 110 cases going on. our largest cases are yet to be concluded. i am headed overseas to work on one in the near future. but the deterrent effect has had an appropriate curtailing of the wrongdoing that was more prevalent in the early days of the iraq reconstruction program. the fundamental cornerstone has to be laid for and the congress -- and progress on this continue problem. a parliament that comes in and takes action by authorizing the commission on integrity, the authorizing the inspector general and by repealing article

136b. it is the ultimate get out of jail free cards. absent those actions, i am afraid we will just see more of the same. much of the kind of wrong doing that we have seen in iraq, although the situation between the two countries are very different, are echoed in afghanistan. my friend steven is going to address that now. [applause] >> ok'd what an elegant subway. -- what an elegant segue.

i want to broaden the context slightly to the issue of government and which corruption is embedded. the way i would do that is by a talking about some ways that we should not think about the problem. these are nonetheless quite common. the first of these problematic ways to think about the government's issue in afghanistan is that government is a problem of building capacity for public administration in afghanistan. the central challenge for us is to take a country with port human capital and a limited base of public administrators and three some combination of mentoring, advice, and oversight increase -- get them to the

parts of the country where their skills are most needed. this is not actually the problem in afghanistan. heaven knows that there is a lack of skilled trained public administrators, but that is the long pole in this tent. it is not -- it is to deal with maligned self interest on the part of elements of the government that are actively at undermining the war effort through corrupt activities. if we do not deal with the problem of maligned self interest and we simply go about this as it -- as if this was as a benign process of training more administrators and putting them out into district government offices in places,

not only are we not making things much better, we are actively making things worse. in several important respects. we run the danger of creating -- they are better skilled and better able to extract resources from the society and from our efforts in the country and redirect them to the purposes that we would not like. secondly, our involvement with this activity runs the risk of making us appear to be complete sets in emmeline activities of the factors that we appear to be assisting. it increases resistance to what we are trying to do and undermines the war effort. this is not incidentally a problem that is you need to afghanistan. there is plenty of it in iraq. to it is almost universal.

as a general rule in counterinsurgency, that you are dealing with government is self interest does not all lined the same direction as ours does. there is a reason why we do not tend to do a lot of counterinsurgency in switzerland. there is a reason why we do not have 100,000 ground troops in great britain. were you have an insurgency to begin with, it is typically because of usually maligned miss governance on the part of a regime whose interests lie in a distribution of resources and society. it is thus not a problem unique to afghanistan and trade when we think about governance reform and the conduct in the conduct of -- context of counterinsurgency, it goes beyond taking an allied coup wants what we want, it involves

a central dimension of the use of political leverage to change the interest calculus of that after to get them to reduce the scale of activity. an interesting feature of american counterinsurgency dock direct -- doctrine is that it is built on a presumption that the host government wants what the outside counterinsurgency lost. they lack the wherewithal to realize their ambitions. much more common is the need to change the interest calculus of local actors to induce a change in preference and goal and intent with respect to government rather than just building up a benign capacity. that is one on helpful way to think about a government building in afghanistan. it is a product of our current doctrine.

a second unfortunate way to think about the problems in afghanistan is to view its primarily as a matter of local law and criminal prosecution of a handful of bad actors. they are breaking the law by redirecting money away from public purposes. our ability to meet the standard of evidence first of all requires the criminal prosecution and it is often problematic. the problem is only partly difficulty in meeting the normal legal standard of burden of proof, however. the problem is just as much back to this government in afghanistan is a network problem, not a random handful of

individuals. the difficulty vote with it in afghanistan is that collections of individuals linked by patronage contacts and in which money is used to buy influence behavior ends up in getting itself in large pyramids of many, many dozens of interconnected after spirited they take -- taking action against a single individual at the top of the pyramid would only remove part of the problem. it makes it extremely difficult for us to get anywhere in dealing with the real problem of maligned governance. the individual at the top has an entire network beneath them.

supporting, enabling, and abetting their activities in delivering, in exchange for the financial flows that move within the network, up political benefits to those above the person at the top. when we go to karzei and we say, we really need you to remove your younger brother -- that is a random example. stanley mcchrystal tried to persuade the president to move -- remove his younger brother. the president of afghanistan as for evidence.

the individual we were trying to generate pressure against was at the top of a list of individuals the president of afghanistan believed was delivering to him the combination of votes in kandahar province and a possible, tolerable degree of security in kandahar province, because among the assets at the disposal of this network or a variety of private security companies that act to enable convoys and other economic movements to take place within the province. in exchange for those benefits, or by comparison with those benefits, the course of leverage available to us to get hamid karzai to act against an actor that is so useful to him as this was not up to the job, and therefore this individual remained in office and remains there to this day. if we look at this as a problem of individuals at the top, we are going to have a great deal

of difficulty generating enough leverage to get the political actions we need to get individuals moved or removed when we cannot make the legal standard of evidence for a criminal prosecution. these two and healthful ways of looking at the government's problem -- these two unhelpful ways of looking at the governance problem -- i think one of the most interesting features of the assessment report general mcchrystal issued shortly after taking command -- the theater command believe that improvement in governance in afghanistan is equally necessary for success in the campaign with improvement in security, and perhaps the unique feature of the mcchrystal assessment report, relative to other joint campaign guidance documents that i have seen in military

headquarters and theaters of war, is that it took as a military responsibility because of the centrality to success in the undertaking the improvement of governance in the theater. it is not enough just to approve security if governance continues the way it does, because the primary mechanism by which the taliban gets access to populations in afghanistan is because of the consequences of this kind of predatory mispic sgovernance by the presence of malign actors in the country. this is not centrally and matter of public corruption at police checkpoints are having to pay baksheesh in order to get a driver's license, or any minor exchanges of money for government services that go on throughout the developing world and have throughout afghan history. the central problem with misgovernance in afghanistan is

it poses an unlimited threat of economic production on afghans outside of these networks -- economic predation on afghans outside of these networks. when emmeline actor network controls the courts -- when a malign actor network controls the courts and the officials in the province, and when the united states, as far as civilians in the area can see, appears complicit with this, because per our doctrine we are trying to build up, support, enable, and enhance the existing local government, and when that malign network is using its political, judicial, and economic influence to, for example, condemn private land for public use and then redirect that condemned the land to the benefit and the profit of members of the network -- in an

agrarian society, in which the fundamental source of wealth and livelihood of most members of the population is their land, this kind of public taking of private land in an apparently unlimited way, because all of the apparent authority sources within the society are evidently complicit in the taking, poses a threat to civilians outside the network of being rendered literally destitute, when instead of their neighbor's pomegranate farm it eventually gets around to being there pomegranate farm. this is not just being shaken down for payment at a checkpoint. this is your ability to feed your family. this is your abilities -- ability to sustain your basic lifestyle in the country. and when you see that happening around you, you cannot go to the

courts, because they are part of the network. you cannot go to the provincial government, because they are part of the network. you cannot go to the americans, because as far as you can tell, the americans seem to be part of the network. the only available source of protection against what too many looks like potentially unlimited government predation is the taliban, because the taliban offer the ability to protect people against this kind of government activity. as long as this is the perception of significant numbers of civilians in areas in which these networks are operating, our ability to keep the taliban out by screwing into the ground and infantry platoon at side of every presidential -- every presidential -- residential compound in kandahar province is negligible.

we have -- if all we do is provide security and leave governance in its current state, there is no amount of reinforcement that is going to stabilize this country. we have to make progress against malign actor miss governance in networked fashion in important parts of afghanistan. none of this is to suggest that we are going to fail in afghanistan unless we eradicate all dozen or so malign actor networks in the country, down to the last corrupt judicial official. i suspect strongly that is an unrealistic and. -- unrealistic aim. what we do need to do is constrained it and kept its take to create a perception that in fact the government is not inevitably going to eventually take everything, but in fact

there are bounds. there are limits. there are constraints on the capacity to prey on the population. there are a variety, i believe, of potential forms of constraint and enforcement that could give us a tolerable degree of corrupt activity in a country like afghanistan that is sufficient to enable us to keep the tell them out in a stable way. -- to keep the taliban out in a stable way. on the table is a paper i just wrote with two" authors that talks about a better form of end-state governments in afghanistan that might be sufficient to this purpose. to everyone's great relief, i will not deliver that in detail now. what i want to do with the remainder of my time is to suggest that success does not require perfection. there are intermediate states

that i think are stable and a tenable. the second thing i want to do with my remaining time, however, is to say a little bit about -- if this is the conceptualization of the government's and corruption problem in afghanistan we are going to act upon, what does that imply that we do? how do we go about this? what sort of implementing guidance could be given to the theater command in trying to with reducing the presence of malign actor networks in afghanistan? we could think of that through a mechanical engineering metaphor, since i find they are so transparent and work so readily with large groups of social science students. if we think of these networks as political machines, which of course they are -- this is not unlike tammany hall or other patronage machine political networks.

the hydraulic fluid that enables the machine to do its political work for its owners is money. the overwhelming majority of the money that is now creating the hydraulic pressure in malign actor networks in afghanistan is coming from us. it is redirected from contract in money that the united states is spending in the country, and to a lesser extent that other outside international actors are spending in the country. the first step, it seems to me, in any feasible campaign to reduce the influence of malign actor networks in afghanistan is reduce the hydraulic pressure in the machine, rendering it less able to do beneficial political work for its owners by turning off the intake valves at the bottom of the pyramids, where the money comes in that enables

the machine to do its work, up by reforming the way we do our own contracting, so that we stop funding companies that are complicit in and parts of these networks. we stopped paying private security companies, who are providing the security to keep the trucks that we are contracting with to move the beans and bullets and pallets of water and construction materials that all of our military forward operating bases need in order to function. we are currently paying private contractors to do that transportation, who subcontract to private armies to protect them. all of that money gets a cut taken by the network. the private security that is being used to keep all that working then becomes a private army that the network can use to enforce its edicts. all of this is happening with our own money.

the first step is to a careful census on who exactly we are contracting with, reform our own contracting so we stop actively providing the wherewithal for these machines to do their nefarious work. once we shut off the intake valves at the bottom and the hydraulic pressure starts to subside, the machine starts to become less useful to its members. especially initially, at the bottom of the network. when the machine becomes less useful, that means the leverage we have available to get change in the action of the machine becomes more plausibly capable of being sufficient to get people removed that we want removed. as we reduce the value of its activity to its owners, it becomes possible to direct leverage, especially at lower ranking actors who are less

powerful and less important. as they are removed, the hydraulic pressure of the machine diminishes further and we can move to the next layer. when we make progress there, we can move to the next layer. if we approach this as we would target every other network, we do not target the al qaeda network by going straight for osama bin laden at the top. we start at the bottom and work our way of ports. if we approach this not work the same way, it seems to me our odds of success in eventually diminishing its scale of activity is much, much greater. note, however, several of the disadvantages associated with this approach to governance reform in afghanistan, as opposed to seeing it as a matter of the nine capacity building or a matter of rule of law prosecutions of criminal action. and there are several important

ones. the first one is we are currently getting the beans and bullets and the water and the gasoline and the construction materials and the plywood and all the rest to all of our forward operating basis. it is precisely this kind of contract and. security remains important to counterinsurgency. mcchrystal report says they are "equally important. that means if either of them collapsed, we lose. if we are going to leave supplies flowing to the spaces and defund the private security and private trucking that is now doing it, we are going to have to return to the day in which logistical activity was a military function, which means there is a trade-off between the degree of population security we can pursue at any given moment and the success of our activities to reform governance, because it is almost certainly going to require that we pull out of population security in at

least some parts of afghanistan, at least some military resources that will be necessary to escort convoys, once we start defundin g the malign private activity that is moving not material right now. we are not so flush in soldiers and so flush in military capacity in afghanistan that this is a painless redirection of effort. it is an important, and i think it necessary, trade-off. in the famous words of many washingtonians, hard choices must be made. i love the use of passive voice in that phrase. [laughter] and this is one of them. but think we are going to have to accept a slower scale progress in population security if we're going to make any headway in the government's line of operation, because the two

are so closely interrelated. a second down side to approaching this the way i am suggesting we ought to is that it is slow. if the central challenge is getting enough trained people into the necessary number of local governments billets in places like kandahar, the tashkill being the list of government positions that need filling in a particular province, you can imagine taking a, to use and often over to -- and often overused cliche, a government in a box and deliver the box, and parachute public

administrators in places like marjah are helmont. in principle, you could start getting public administration. regardless, it has not worked that way, because that is not the central problem. if that were the issue, you can imagine making rapid progress. if the central issue is prosecuting a handful of key individuals at the top, you can imagine generating legal cases, getting prosecutions, giving people removed, and using that as a metric of progress which would show real change in the short term. if you are going to approach to governance in afghanistan as a problem of countering malign actor now works with a pure metal structure in which we have to start and the bottom -- malign actor networks with a pyramidal structure in which we have to start at the bottom by changing the ways we do

things like our contract and, this is not going to happen quickly. the process i've been talking about for the last several minutes has a sequence to it, and if you do not do any order you do not going to succeed. if you try to take a course of action against actors who are currently too powerful, because the control too much money and have to much influence, it is not going to work. you have to prepare the battlefield by weakening them first to make the leverage to have available sufficient. that is not going to happen overnight. simply sorting out who we are giving money to at the moment in afghanistan is not a quick process, as i suspect stewart could explain in greater detail and i could. there is a lot of homework we need to do before we are going to start substantially reducing hydraulic pressures in any of these networks, and we are not going to be able to act against all networks at the same time either. there is sequencing necessary

and there is prioritization necessary. all of this runs into one of the central domestic political problems of afghanistan, which is the crunch between the timeline of counterinsurgency, which classically is slow- moving, and the patience of americans, who by and large do not seem to have read as much counterinsurgency theory as i would like and seem to be substantially less patient than all of that, for doubtless find reasons of their own. nevertheless, i think we are left with one of those cursive hard choices -- cursed hard choices, where if we are going to do this right and pursue this in a way that has a reasonable prospect of success, as opposed to approaches i think are unlikely to succeed, we are stuck with avenues and approaches that take time to unfold. they do not move as fast as some of the other approaches that we have been trying to make headway

with in the past, but i think misunderstanding of the nature of the underlying problem has led to a lack of progress, notwithstanding the potential to move fast if only they had the correct answer to the underlying problem. with that resoundingly optimistic suggestion that more time is needed, let us all go forth and be patient. why don't i stop? [applause] >> i come to these problems from the margins and do not have nearly as interesting things to say about them as my other two panelists, so i am going to use my time mostly to kind of raise some of the issues in a broader context, and also lead into some questions that hopefully we can discuss with the other panelists. first of all, my background

intersect with these problems in two different ways. the first is through development. and we heard both where corruption is a development problem in iraq and afghanistan, where some of the proposed solutions our development efforts, whether they are in iraq, as stuart said, to work on establishing an anti-corruption agency within government, or, as steve said more generally, it can just be an issue of developing governance. but also development creates corruption. as steve mentioned, the oil of the corruption machine is money, and development brings in a lot of money. in the case of iraq and afghanistan, it has brought in a very large amount of money.

this is an issue, i think, about the delivery of foreign assistance. we have already had some discussion of that. i would like to explore that a little bit more in our discussion. also, i would like to, in terms of my other intersection with this issue -- my area of research has been in the region of central asia, which is in the shadow of the war on terror -- in particular the war in afghanistan. i have witnessed how the war on terror has contracted to the problem of central asia as well, which i think brings up a whole other group of questions. in central asia, around 2000 -- when i am talking about central asia, i am talking about the former soviet states of kurdistan, as pakistan,

tajikistan, and others. -- kurdistan, to extend, and others. aid budgets were decreasing around 2000, and then 9/11 happened. that brought a lot more money into central asia. the one way that u.s. aid in particular decided to deal with this in terms of corruption was to try to avoid having that money go to governments. so a lot of that money went to community development. it went to projects involving ngos. very little of it actually went into government. however, there was another dimension of this. at the same time we witnessed air base is being built in kurdistan and as pakistan -- kyrgistan and uzbekistan.

the u.s. did have to provide fuel for the planes on the air bases. in particular, in the case of kyrgistan, i feel the u.s. military involvement literally led to the fall of two governments in the past 10 years. in both cases, the u.s. military and the nato forces at that base were getting their fuel contract from the son of the president. in the first case, it was the president and his son. in april 2005, the overwhelming information that this money was going to the son of the president lead to a popular movement that essentially deposed the president. just this past april, april

2010, we saw a repeat of this. this issue came up afterwards. one would have thought that after five years, the u.s. military would have learned this problem. but in fact, immediately when the new president took over in 2005, once again his son began to receive money from the fuel contracts. as a result, this past april we saw another popular revolt remove this president. this is an important question because it also has to do not only with foreign assistance but the logistics of delivering goods and resources to afghanistan. in both of these cases, we are talking about logistics as a military function. but in fact, even though it was

as a military function, there are still aspects of the local economy that get pulled into it. if that money is going to certain segments of the population, that creates a new corruption problem, an imbalance in the power structure, and potential instability. i wanted to bring up those issues as kind of a leading to some questions to ask our panelists. first of all, in terms of corruption as a governance problem, i think that we have to recognize that in both the case of iraq and afghanistan the u.s. government had a major role in helping to establish new governments. so i am curious from both of you, reflecting on how that was done, have we learned anything? are the things that perhaps

could have been done differently, so we did not end up with corruption being such a critical part of government operations in both countries' exports >> we have done a number of audits of the efforts by the united states to develop and support anti-corruption programs in iraq. surprise surprise, they do not yield a very good outcomes. the truth be told, we invested billions in electricity, oil, capacity building, we construction across the country -- reconstruction across the country, and invested nothing in supporting these anti-corruption programs, less than $50 million of its $56 billion program.

that speaks for itself, i think. there at the outset was an interesting -- and interest to be robust, forward leaning, and supportive in tackling what frankly was a historic problem in iraq. it is no surprise that corruption would be encountered. what the surprise is, i think, by the iraqi minister's admission, is that it has gotten worse since 2003, notwithstanding the development and creation of new entities. the inspector general creative -- something= = that came to my attention and i passed to secretary brennan is that -- and a pass to embassador brennan is that these men are up there with no appropriations.

his last act before he left iraq was to approve funding. it did not help a lot because money is not the answer. you need a structure. you need a plan. but that is another story. >> on the afghan side of this, the issue is partly a function of the government's blueprint -- ance blueprint the afghans created, which was driven in part by the idea of preventing war lord is some and this kind of local control by creating a remarkably centralized plan. the blueprint for government in afghanistan is a centralized as any constitution in the world today. it is a remarkably centralized document. among the several motives of that was to prevent the kind of war lords we had seen in the

country in the past. you have seen how that worked out. i think the central problem with that is that we created a blueprint in which the allocation of authority of government power in the country was a very poor fit to the underlying distribution of perceived political legitimacy in the country, which was not terribly centralized. afghanistan is a decentralized culture. by grafting onto that underlying distribution of legitimacy, a centralized system did not fit it very well. we set up a government for weakness. we however added to that blueprint a serious problem of under resource and not development activity but security. -- a serious problem of under- resourcing not development activity, but security, and

creating a suggestion we would not be present past 2003. the growth of malign networks in afghanistan was not a result of fears of our living as a result of the july 2011 date that found its way into the president's speech from 2010. this was when we had the problem off to nato enabled -- in order to allow ourselves to focus in iraq, which persuaded hamid karzai we were no longer involved enough in afghan security to guarantee he was going to be able to rely on us to keep themselves in office. he started reaching out to a collection of power brokers with bases in different subgroups within the country, and in different localities around the country, many of whom have grown into the heads of these maligned actor networks that i talked about earlier. if we had at the outset designed

and afghan constitution that was the better fit to the underlying constitution of perceived legitimacy in the country so the government was not set up for a fall, and even provided a degree of commitment that we were going to provide the security element of that -- remember, security and governance are equally important. if we have followed through on the securities side with the perceived guarantee that we would continue to do so long enough for the solution to eventually become self sustaining, i suspect the kind of reliance on local malign actors that enabled an empowered them to abuse the local government and captured it in the way they have would not have gotten nearly the kickstart that it did. i would also prefer that we had policed our contracting and our expenditure in the country for development as well as security from the beginning in a way

that the anticipated the danger that we could end up fueling the growth of predatory government that would undermine our security efforts. but i think we would need to do not just a redesign of the government blueprint, although that was necessary. we would also need to make assurances there were credible and believable in handling the problem off to nato to work that way, and a degree of early oversight that would be more effective in controlling the way our money got used. >> this is a question for stewart. is there a problem with the mechanisms of u.s. foreign aid that is feeding into the kind of corruption that you have seen, particularly not the local corruption in the governments of

iraq and afghanistan but the actual delivery of u.s. foreign aid, which you have also mentioned has had its share of problems in afghanistan and iraq? >> i think it is a problem of the mechanisms specifically -- the problem of the mechanisms, specifically the lack of structure that allows planning for the kind of programs we have seen in iraq and afghanistan. this is not a development problem, nor is it a diplomacy problem. this is something different. it is something that is not completely sweet generous -- is not completely sui generis, in that we have had reconstruction efforts at a smaller level since vietnam, in the balkans for example. none of those lessons have been absorbed.

they have been encapsulated in their own experience and put on the show. i have, in our research, and covered some of the lessons from the balkans. it raises some issues very applicable to what we experienced in iraq. that gets back to what i said at the outset. no entity in the u.s. government is particularly responsible for planning and executing and being accountable for stabilization and reproduction operations and reconstruction efforts involved. this is the kind of environment that i think in this century the united states is going to be called upon to protect its national security interests abroad. that was the case in 2003, the lack of an effective structure. sadly, it is the case today. the commission was contracting at a hearing in march with officials from defense and u.s.

aid. the simple question put forward to them is who is in charge of the reconstruction program in afghanistan. that was an unanswerable question, which underscores my core point that without a central structure to plan and execute, the use of money, development, and defense have emerged somewhat in both iraq and afghanistan. the response program, for example, spent $3.50 billion to build this. the lack of coherence, the lack of clarity leads to confusion and lack of progress. >> do you have anything to add on that, steve? >> finally, one more question. i think i want to raise this, and then we can open up to discussions from the audience.

if some of the successes, in particular that you mentioned, stuart, you have seen in iraq as of late relate to deterrence, and we are talking increasingly about u.s. withdrawal from both iraq and afghanistan -- obviously not complete withdrawal of foreign aid and so on, but assuming that a lot of leverage is lost with the removal of troops, can we expect that the local corruption in both countries will get worse after u.s. withdrawal, or perhaps the opposite, that it would get better? >> one of the several

distinctions i would draw between these theaters is the centrality of corruption to the underlying belly. i think in afghanistan predatory governance, which is a bit broader than corruption narrowly defined, but closely related to it, is the primary way the taliban has influence in the war. if the united states withdraws our military but retains our expenditures, that is a double women that i think is very likely -- that is a double whammy that i think is very likely to produce failure. if we are going to remove our military, i think we should remove our economic presence as well. i would like both of them to

remain, but better directed than they are now. but if we removed our military and continue to allow poor lead- managed expenditure to fuel malignant behavior, i think that is a recipe for disaster. iraq, i would argue, is at its ethno-san sectarian conflict. the war itself is about neutral appears on the part ethnic groups, kurds and arabs, shiites, and soon these -- sunnis -- mayor oppression at minimum, and a willingness to prevent them -- the central problem in iraq today is that those conflicts are in a condition of negotiated cease- fire but have not been resolved,

as one could not reasonably expect them to be resolved on this short a time frame. the central requirement for success in iraq, it seems to me, is that some stabilization mechanism for preventing still smoldering fears from flashing over into large-scale violence retained in the midst of what ever brought down the united states is going to execute -- in the midst of whatever drawdown the united states is going to execute. my preference is slow rather than seven. a slow drawdown in what amounts to an international peacekeeping presence, which is essentially what the u.s. military is doing in iraq right now in terms of functions being usually performed -- slow removal of that presence is conducive to stability, rather than rapid. all that suggests is whether

corruption or maligned governance is at the very heart of the underlying problem in afghanistan. it is an important aggravate her, but not the central problem in iraq. in a rock, the key is to moderate these underlying disputes which have not gone away. i am concerned that our withdrawal will work not just to facilitate greater corruption but to enable flashpoints to become a large-scale violence if we are not a character flaw. -- if we are not very careful. >> resaw 10 simultaneous car bombs in she at neighborhoods executed by suny -- we saw 10 simultaneous car bombs in the shi'ite neighborhoods, executed by sunni actors.

there could be a loss of the progress gained during the surge. but corruption, an element of malign misgovernance, at least in iraq, it is the expropriation of public assets for private, criminal use. it has happened repeatedly. many officials in the four governments that have come and gone in iraq have become millionaires. in iraq, you join the government to get rich -- very rich in several cases. there is a multi times hundred millionaire living in poland now, building himself another house. that sort of grand corruption is the kind of thing that frankly, with a well planned stabilization and reconstruction operation in a coherent capacity-building effort, that the united states should have superseded early on.

it happened too often. because of the structural this- continuity within the iraq government today, it is tough to say. corruption is opaque by its very nature. but the limited reconstruction results, the good results we have seen across the country, mean that money went somewhere else and the structural discontinuity in the electoral democracy managing a command economy. you are holding off, but you know you might get voted out. but you controlled 90% of the revenue. a lot of the times, too frequently in iraq, officials have taken advantage of the situation of their access to the flow of money and enriched themselves. grand or petit, all of that criminal enrichment is a form of the second insurgency that has limited the progress of the u.s.

reconstruction program. it cannot be perfect, as stevens said. we cannot let the perfect the enemy of the good, another famous washington phrase. but what is good in iraq? good is to find the reconciliation that still seems to be missing between shia and sunni and to find sensible steps to create a move toward privatization that will promote international investment, take advantage of the third largest oil resources in the world -- this is a rich country, unlike afghanistan. it is a country and that has a legacy of education and capacity. but it is all in tatters now. and one of the largest tatters' fluttering in the breeze now is this does continuity --

discontinuity, the huge amount of money flowing through and being taken advantage of. we call the corruption. >> we will go to the audience. jim has a microphone. >> i will circulate through the audience in a semi-random fashion to get as many questions as i can. i request that you wait until the microphone arrives before starting a question, and that you let me hold on to the microphone. it is a longstanding security policy and foreign policy. >> what you both have been saying obviously has huge implications in our strategy when we deal with iraq and afghanistan, or any of these the element issues. as a government, how do you think we can set it up so we can better learn these lessons for the future, so that as has been said here they are not just put on the shelf? >> we have kind of taken at on

squarely by producing a lessons learned series and bringing into the congress the lessons of, as stephen was talking about, disorganized and improperly overseeing contract in within the department of defense and the department of state. we need to figure out how we do police training. huge programs, both in iraq and afghanistan, done in completely different fashions. but the hardest lesson from iraq that we spelled out in our book- length report in 2009 -- you can find it on our website -- is what i have been saying, is that there is no clarity, no continuity, no cohesive point of decision making, of authority, of responsibility to ensure that

planning and stabilization and we construction activities are carried out. somebody to be held accountable. if you want to hold the people responsible for the problems we've been talking about, you would be calling for the alumni from the managers of iraq early on. they are not in government for the most part. there is no identifiable point of accountability. that is my job, to impose accountability. it has been difficult to do over seven years because of the moving target. in our latest report which we put out in february, called "applying hard lessons," we proposed a u.s. office that would bring together those elements scattered and diffused among the agencies into one place and put somebody in charge so the planning would begin before the first group sets foot on foreign soil in a stabilization operation. >> i think that is exactly

right. let me add a word from the perspective of the military side of counterinsurgency. the u.s. military in particular the votes enormous effort to lessons learned activities. there are legions of lesson learners who go forward to collect material about the conduct of ongoing operations and issue reports and documents. the u.s. military also regularly revises all its major doctrinal publications. the major counterinsurgency manual actually became a best- selling book. the university of chicago press intervened. it will be updated and a biased. that will affect military perception of what went well and badly, and a piece of revision i hope they will make is to remove the underlying presumption in the document that there is interest alliance between the counterinsurgency and the host. the interesting feature of any military lessons learned,

including this issue of what do we learn from governance reform activities in iraq and afghanistan, is that it is generally done without a lot of social science methodological input. it is done in a remarkably casual way by officers who have been busy figuring out how to conduct military operations their whole career. they have not typically been trained as social scientists to unveil an underlying cause- effect relationships from complicated arrays of observational data that will lead you to do a better job of prescribing future action that is likely to bring about the effect from that cause that you want, and not something else. the military devotes huge effort to this. i think there is a massive and that opportunity -- massive opportunity for social

scientists to make a terribly important contribution to that effort, which is understood to be important to the military, by bringing to the table a collection of methodological skills and social science perspectives that the military does not normally have at its disposal. it is a mistake to learn this as a military lessons learned activity, hermetically sealed from the study of cause and effect in the conduct of war. >> next question. >> thank you both for excellent presentations. there was an article in "the washington post" the other day talking about recent military operations in kandahar. it mentioned one of the partners with whom the u.s. forces are working is a colonel in charge of the afghan border police. he is widely regarded as one of

the problematic figures in kandahar, but the article emphasized the opinion among u.s. forces -- actually, the astonishment among u.s. forces -- of the military efficacy among his band of merry thieves. this sort of points to one of the dilemmas that i have heard from many military personnel who have been in afghanistan. for the most part, the formal afghan national security forces are weak and unreliable, but these private security companies can be relied on, however corrupt they may be. this in some ways is an echo of the dilemma with the sawa in iraq. this is another dilemma that i wonder if particularly professor bittel could address. with the security forces who may

not be honest themselves ineffective, and the thieves the only effective military allies you have on the ground. >> let me just as a preamble note that i actually think the dynamics with people like razik and others in afghanistan are different than people like the sawa in iraq. the causal drivers are very different. that having been said, it is a potentially fatal problem in afghanistan to allow malign actors with private armies at their disposal to run rampant the way they now do in afghanistan. that does not require that the all be eliminated down to the last sold. as i pointed out in my talk, there are a variety of intermediate conditions between today's unlimited provision and

complete extermination that could involve potentially a role in governance for actors even like razik. the first thing we need to do is make a decision about how much suppression week require, which is not a decision that frankly i think has been reached yet, before we can make a decision about how to deal with individuals. that having been said, we are going to have to do with them. the idea that razik can deliver security and therefore we should let him run rampant will lose as the war. that is a short-sighted trade. it requires explicit guidance at the theater level to the local commanders who are dealing with to tell themrazik -- am i supposed to accept this guy's services because they provide security even though the

pace of important parts of the population, or not? we have to prioritize and sequins all this. which cannot simultaneously go after every colonel in the country, both because of limited resources and limited political capital. we are going to have to choose, prioritize, and sequence. that means some of these actors are going to be able to continue to operate in this way in the near term. the decision about where to start may and up leaving razik, for example, in action in order to focus somewhere else. if we are going to do is -- if we are going to do is leave them all in place and believe that are going to deliver a security force if only we play ball with them, and therefore we are not going to limit their take, we are not going to bind them into an enforcement mechanism that puts a cap on what they can do to the population -- then we will lose. none of that necessarily means razik needs to be shut down

tomorrow morning. it is not quick to happen simultaneously everywhere all at once. but eventually if actors like that are not brought into some confinement system that works and can be enforced, we will lose the war. >> we have another question over here. >> i am a journalist. my question is about whether the media have played a sufficiently strong watchdog role. i was with the bbc until recently, writing about a rock. my sense was the answer is no. there is one distinguished exception. it seemed to me, sitting in london, christian miller pioneered the story of corruption. he told me a hell of a lot of things i did not know. he was then writing for "the l.a. times." i am interested on your take as to whether that watchdog role

has been played sufficiently. >> i am not qualified to say whether the media has done a sufficient job, but i am qualified to say that miller has done an excellent job, or did when he was on the rock beat. -- on the iraq beat. to a certain extent, as is evident, we had similar roles -- to investigate and report. that is my office and the media. the difference is i have subpoena power. that makes my effort more encompassing and shortens my time line. but even with subpoena power, it is typical to get to the bottom of issues in an environment that was entirely cash driven. we have issued actually two reports, one recently, one in 2005, about the environment, the development fund for iraq.

$19 billion managed by the coalition provisional authority agency no longer in existence, created to spend that money without any capacity. both reports reached the same conclusion that there is no real accountability for how that money was spent. who knows how much of it ended up in illicit hands and fed the insurgency? it is impossible to say. but i think that the reporting overtime in iraq certainly became more incisive and improved. i think jim from "the new york times" did an excellent job. i think the bbc has covered it very regularly and very thoroughly. >> the question up front. >> thank you both for speaking to us tonight.

you assert that the malign misgovernance, the hydraulic fluid, as you put it, for the corrupt system, is mainly our own contracts. i was wondering how the opium war fits in. most put it at 95% of afghan gdp. could that also be considered part of the hydraulic fluid, as you so put it? >> it is, but it is a relatively small part. we spend lifetimes the gdp of the country every year, the united states. much less the larger international community. the narcotics problem is a contributor to the underlying difficulty. it is not at the heart of it, however. i think our own expenditure is a substantially larger source of funding for the activity of

these networks than is the narcotics trade. one of the problems we have when we approach this as a rule of law issue is we often do it through the lens of narcotics. it is reported that the early attempt to persuade hamid karzai to remove his younger brother from the provincial council in kandahar was oriented around his reputed role in the narcotics trade and the evidence simply was not there. i do not think narcotics money is at the heart of the network in kandahar. it is our contract and that is. that is not to say that we can simply ignore it. down the road, if we eventually get to some sort of negotiated settlement that produces a cease-fire for most of the combatants now fighting in afghanistan, i think if we get a favorable outcome, that is the pathway to which that might be realized. if we get that and we allow the

narcotics trade to continue at today's levels, the source of illicit money will eventually run the risk of undermining any of the enforcement mechanisms we develop for controlling other forms of predation by powerful figures upon the population within afghanistan. so we will eventually need to do with narcotics. i do not think it is the priority issue of today, however, and in fact i think you will be easier to deal with in sequence later in the process. i think that the primary mechanism by which we will eventually bring narcotics under control in afghanistan, if we do, will be by making the government run in the places where poppy is grown. until you can do that, i think it is gone to be very difficult to destroy enough of the crop eradication, for example, to make any significant dent in this. that suggests a solution to the narcotics problem is likely to follow substantial security and

governance improvement rather than to proceed it. i think it is necessary eventually to get to a stable system in which the level of predation is kept within tolerable bounds. but i think it is not the first priority. it is a downstream requirement. it would get substantially easier to resolve downstream once we have met the near-term requirements. >> i am going to use the guy with the microphone prerogative to ask the last question here. if i were a cynic, and i have been accused of being worse, could you say that in the end we are all enablers?

>> their rewards come from getting the package from point a to point z, getting a project delivered on time, and if they hacked to cut corners, paying off of some local element, that are going to do that. ultimately, relax of corner cutting in up perhaps undermining the entire mission. -- laxalt acts of corner cutting. ultimately it is a question of are there macro solutions here? >> i think this speaks to the standard issue in the counterinsurgency. of the unity of command and unity of effort. it is classically positive that to exceed in counterinsurgency, you get to cooperative behavior among a variety of dissimilar

governor at entities, aid agencies, government reform agencies, the military to run security. if any of them are substantially undermining the activities of the other, the result will be failure. this is an unusually difficult in counterinsurgency because of the complexity of the activity relative to conventional warfare. unity of effort is such a big theme in the counterinsurgency literature because it is so hard to do. it is hard to do within the military, and there you at least have a clear chain of command with very clear responsibilities and duties and obligations. getting civilian agencies to cooperate with a larger campaign plan that includes a their activities as a support and that element of an essentially militarily directed campaign is an extremely hard undertaking. that was probably done to an all

time world champion intergalactic record level in iraq in 2007, because ryan crocker and david petraeus were joined at the hip and shared a perception of the importance of unity of effort and the difficulty of it and the necessity of disciplining the respective organizations so that they cooperated. i think one could argue that we have been less successful in this domain in afghanistan that we were in iraq, but i think it requires at that the header level -- at the theater level, a joint campaign that includes elements that are integrated so they don't undermine each other and the right hand does not undo what the left hand is doing. if we continue to contract with razik, it is only because we are disempowering another network somewhere else first, we are

not sending a message to everyone in the military, go cut your own deals with no knowledge of what anyone else is doing. it has to be coordinated and controlled at much higher levels than that for this kind of prioritization, this kind of sequencing and this kind of cooperation of the civilian and military to work. if it can i get that because the ambassador and a military commander or not working together as closely as copper and petraeus did in 2007, we will not succeed. i think 2007 suggest that it is possible. it is not so difficult that it is unimaginable, but is obviously very hard. whether it will be done successfully in afghanistan is very much up in the air at the moment. >> i agree with what steven is saying. the conclusion there is that to a certain extent, the success of these kinds of operations is

personality dependent. this istoo loose a metric to hang art security abroad on. the military has achieved a level of coherence unprecedented in its recent operations in iraq and afghanistan from a military perspective because they are integrated. the key is integration, not coordination. there are hundreds of coordination meetings in iraq all the time, but they don't result in good fruit out in the field because of a lack of civil and military integration. in the past, there were problems with the failure of various branches to work together. goldwater-nichols resolve that. it created a structure that require that. we have a moment now, exhibit a

and b, in afghanistan and iraq, to develop something new in the interagency that goes beyond goldwater-nichols. it brings together those who play enormously important roles in protecting our national security interests abroad. but they are not integrated. they still work in silos of excellence. the whole of government solution, another often used term, but in civilian surge, these are phrases that have popped up. none of them amount to serious solutions to a problem that everybody agrees on. the civilian agencies and the military concur that there is insufficient integration that causes a breakdown in unity of effort, and it is traced back to the weakness in unity in command for the civil-military operation.

resolving that is going to take a bold step forward of goldwater-nichols-like frame work which could be something like the u.s. operations that would bring that military back on together with that civilian expertise and the elements scattered across the agencies that practice this as an additional duty which has been first and foremost in our national interest for eight years. yet we have not responded as a government to this continuing weakness. >> on behalf of the elliot school of international affairs, i want to thank you for sharing your sober and sobering insights on what is obviously a very difficult problem that is likely to challenge the u.s. operation into the indefinite

future. again, we appreciate your time and public efforts. thank you. [applause] >> president obama left today on a 10-day trip to asia for meetings with leaders in india, indonesia, south korea, and japan. the president arrives in mumbai, india, saturday, where he will meet with business leaders. on sunday he travels to new delhi to meet with indian government officials and on monday he delivers an address to the indian parliament. tuesday he is in jakarta, indonesia. wednesday he travels to seoul, south korea. thursday he marks veterans day by speaking to u.s. troops. from there he joins the g-20 summit. a closing news conference is planned for friday before he

wraps up his trip in japan for the asia-pacific economic cooperation meetings. he returns to washington the following sunday. >> this weekend "book tv", jonah goldberger discusses the next wave of leaders on the right. join our three-hour conversation with your calls, e- mail's, and tweets, sunday at noon eastern. now, a forum on the use of clean energy sources. this event is hosted by the atlantic magazine. it is about an hour. >> we will now move to the first panel discussion of the day, which is called "powering the future sustainably." it will be monitored by joshed

green, who will be joined by other speakers. to introduce our senior editor, greene, his particular areas of interest are politics and energy. he has done a terrific profiles and cover stories on people such as hillary clinton, chuck schumer, and most recently, tim geithner. in 2009 he wrote about efforts to create a clean energy economy. this year he wrote a piece about a california couple that are trying to be the owners and builders of the world's greenest home. those are his two areas of

focus, energy and politics. prior to his current role, he was at the "washington monthly." his work has been anthologize in books ranging from the best american political writing in 2009 to the bob marley reader. i will turn you over to josh green. >> we have a distinguished panel here today. our focus is going to be washington and policy. the term cap and trade has become ultimately politicized. in preparation for column a week ago i talked to a clean tech expert and ask him what the prospects were for federal

action on cap and trade. were they really as dire as i had been led to believe? his response was, cap and trade is dead, the course is very, never to be resurrected. anything that fails the senate four times is never going to happen. it is time to look elsewhere. >> i was surprised and heartened at dinner at the level of optimism among the attendees that we would soon have a price on carbon and that all was not lost. washington might act in ways that are helpful and forward- looking. with that in mind, i would like to discuss on the panel today what the path forward will look like with the absence of major federal legislation. i know that eileen is one of the optimist, so i will begin with her. if we are not going to have cap and trade, will washington act, and what might it look like if not major comprehensive climate

legislation, what positive can we expect to see instead? >> first i want to correct what you said. i did not say we would see it soon. i said we would see it. >> some day. >> sunday. i think you actually have a series of things that will make a difference on the climate- energy front. we could start with the internal protection agency and the moves that that will be promulgating over the next couple of years. you have to divide that into two pieces. the climate rules which i think will go very slowly, and the air pollution rules which i think will move forward because there are deadlines to meet. i think that will have the effect of closing down of fair number of coal burning power plants.

i think that will obviously have an impact on greenhouse gases. there is the regulatory front which will proceed in some way. the other thing is that i think the markets will keep moving, and the most important piece there is the discoveries of lots of natural gas, which is now very cheap. i think we will see a shift in the power sectors into more natural gas. as you shutdown cold building natural gas, it is a lot better than coal in terms of greenhouse gases, but i worry about it being so dominant that we are totally reliant on natural gas. not a good thing if you want to make sure prices are stable and there is reliability. i see that happening and more happening on the renewables front, not because we have a national renewables center, because i do not see congress doing very much constructive for the next two years, but because

the states are going to continue to move at that pace, and i think we will see more of that. >> on renewables, one of the good news stories from the stimulus is there was a lot of money there to back some of, which fell apart and lehman brothers is no longer with us. those have begun to expire now, and there seems to be considerable uncertainty as to what is going to replace them. as someone who works in the finance realm, what are your thoughts? >> you are absolutely right. history has shown us every time that we have stopped and started one of these incentive programs, that volumes have bilked and it has dropped dramatically in accordance with it. i think it is tremendous uncertainty in the capital markets as to what will back fill the tax incentives or the cash grants. the fundamental problem we have

had, even during this period with the incentives is that we have been able to take these pilot programs only so far before the capital numbers get really big. one plant requires a $1.5 billion guarantee. you have to be sure the economics are right and that there is someone to take the tax benefits. that market has gone from an audience of 30 or 40 major financial institutions down to a handful. it is less liquid, less available, and more expensive, which will have a negative impact on the number of projects it can do. >> the expected sharp contraction in the effort to extend these guarantees or do something to propagate the momentum that the stimulus allowed? >> i think the stimulus has been critical. the volumes have not gone up as

much as we would have anticipated. that is a function of the economy and gas prices. the economics are that much more strained than even when we entered into the incentive program. i do think we will see a material decline in the capital put to work in the space. >> one of your colleagues was quoted in "the new york times" as saying despite the fact that we have this influx of senate republicans, 19 of the 20 do not believe in global warming as a result of human activity. not people who would put climate change at the top of their list of concerns when they get to washington. it is not a good idea to just write off any chance of action on climate and energy in the senate. i wonder if you could give the case for if not optimism,

whether there is a possibility of -- >> we had to fireball. -- we had to fire paul. the dominant political theme in my mind going forward, i hope it is painfully obvious, is that framing these issues squarely within the traditional green climate renewables agenda is not likely to get a lot of traction over the next couple of years. sadly, we ended that energy climate debate with far less incentives that we started with, which was really troubling. the rationale for optimism is that many of the actions that we should pursue, because they strengthen the economy, reduce the deficit, enhance the efficiency of our economic activity, in certain regards can create real jobs, have

meaningful carbon benefits. i am not suggesting this will be a school uniform approach to climate change after the next election. the clinton snowball effort to get congress working in -- but i think there are a number of initiatives that have legitimate alternative purposes. the air talks in -- talks in standards first implemented in 1990, with the recent deadline of the end of the year, this is the real house. this is not what is happening through global view of the economy, this is kids and mercury and acid gases. there is debate in the scientific community about the health effects of acid gases. what is the chance of congress

pre-empting the ability -- epa is going to do it in an aggressive fashion and i think there will be carbon benefits. i think that is a real opportunity. ison't think a classic rps likely to get a lot of traction. i think toward the end of the climate debate there was some very interesting discussion around what people call the clean energy standard that factored in nuclear and natural gas and efficiency. that is a different frame. it seems at least viable that you could see some effort to pursue that. there was broad based agreement for some very aggressive energy efficiency standards. you might argue that everyone was so desperately pounding everyone over the head and not paying attention to those, so

you have to test how broadbased that consensus is. all these measures are significant, important energy policies that have good carbon benefits. the last thing i will mention is the austerity obligated by the deficit that we are writing, to our despair. it is going to be painful, but it suggests that maybe we can take another look at energy subsidies. we have tried that in the past and it never works because -- now is a whole new agenda. we have to eliminate tax expenditures or dramatically reduce them. the ethanol industry is about to see its ethanol subsidy expire. that made a very smart proposal to make it much more efficient, to reduce the cost, and i think

an opportunity for energy subsidies in a way from the classic energy and domestic production side to make it more efficient is something we could get more traction on. >> i spent last weekend in kentucky interviewing mitch mcconnell, possibly senate majority leader in a week. i asked about opportunities for bipartisan legislation on energy, and he indicated some willingness on coal and on nuclear. he thought those were areas of possibilities where he could work with democrats and the administration. a week ago, consolation walked away from a nuclear project in maryland. what is it going to take from the government in terms of loan guarantees for projects like that to make it through to completion? >> let me put it in broader

context. >> give us the inside story on constellations and what happened there. >> never say never. all five of us were sitting here at this date in 2000 -- if all five of us were sitting here, everyone but me would have said the energy bill is dead. yet in 2007, the energy bill passed with the biggest mandate on fuel economy in the history of the world. five major mandatory programs with broad bipartisan support, nancy pelosi joining with george bush, and if that was six weeks from now, this can happen. i want to put your piece in context.

when i look back over the last four years, and you look at what the states have done on a bipartisan basis, and you look at what the federal government has done on incentives, technology programs, and mandates, it is quite stunning. we have a price on carbon. is just not in a cap and trade bill. so or is $400 a ton. when is about $90 a ton. -- solar is about 400 dollars a ton. ethanol is $200 a ton. we have lots of pricing with policies, incentives, and mandates. it is not very well organized and it is not doable. anything we want to achieve it needs do ability. in the absence -- you get a

hodgepodge of what we are facing. if you talk to republicans and democrats, i was amazed that in the same week, lamar alexander was saying we need 100 new nuclear power plants, and barbara boxer was saying my climate bill would deliver new power plants so i am ok with that. that did not make the news because there was a big health care debate, but barbara boxer saying i am ok with 100 nuclear power plants is a big deal. we need at 10-year opportunity to figure out if we cannot find a way to capture the carbon from coal. it is worth spending billions of dollars to do that, because if that works, it is great. we know we need that much time, so let's get on with it. it is not that expensive to figure out the coal prices. a lot of republicans want to do that. the problem we face is will we try to roll it up into one major, one-size-fits-all

package. nuclear is a great example of that. it is remarkable, the level of support for return to nuclear power as one piece of the total puzzle. it is a zero emissions source and you do not have to invent a new technology. there are 400 of these things all around the world today. in the american system where we have a highly this aggregated power structure, and a lot of competitive markets. you do not have regulated markets they can charge the cost back to customers. you need a federal backstop. the bush administration was slow in getting it set up and clunky in the way they got it set up, but it did get set up. the obama administration picked it up and brought the level of expensive support and dedication to making it real. we went through the loan

guarantee process and came out the other end with something utterly unworkable. what the government is asking us to pay to get the guarantee, like points on a loan, would have killed the economic project entirely. it made it more expensive and more risky. that is an example of where the government can fall apart, notwithstanding bipartisan congressional support for this program. as i look out, i would really love to picked these outcome areas of agreement, nuclear, the transition to coal. it is great for the environment, climate change, and the economy, but other technologies have to be part of the mix. we need to focus on each of them. republicans want technology base programs. on the other hand they get off

when they criticize cap and trade, because the republican economists invented it. what was produced was not happen trade but they are using the name cap and trade as a critique, which is wrong. the republicans invented it, and the democrats launched incentive programs. why don't we find a nice bundle for those? i still think you focus sector by sector, there is a lot of opportunity for bipartisan agreement, but we have to dedicate ourselves to that. that is going to be the challenge. >> if you get outside of the consolation decision, there will not be a big wave of nuclear facilities built. some of it is a function of policy stumbles. some of it is a function of

macro internment. we may not need as much power as we thought we needed two years ago. with gas at its current price, it is very hard to justify the economics to a customer base to build these. they take so long that the commitment of a company -- the most important point by far is we have to have some duration of stability. we have to have a set of rules that last at least through the construction period. otherwise no one will commit the kind of capital. the benefits of or on an operating basis going out. with gas, it is not that way. construction costs are much smaller and the operating costs are much higher. >> if you look at the reports, across the board, always think

tanks have the same prognosis. we can get to our goals over 40 years. it requires a lot of other technologies including gas. everybody has the same conclusion. it can be done with reasonable turnover of capital. it is a systems problem, not a technology problem. it is a political problem. >> what you are likely to see over the next decade is a lot of gas, not a lot of nuclear or caloal. we have spent the last 20 years talking about carbon capture and not doing anything about it. i see this dash to gas as being a huge issue, assuming we rebuild and get some of the old cold. we will move heavily into gas,

and while it is ok up