the angel investor does not exist today. >> we are urging the martin luther king holiday on monday. i invite the person who submitted this question to stand up and we will have a dialogue. what did the president do to help minorities create jobs? . .

to provide him with data on contracting, on small business lending, and if you look at small business 24 out of the 27 million are people that do less than 10 million a year. so that kind of analysis is really critical to dealing with unemployment, dealing with

contracting, lending all of these things are a combination of those. >> this president has in a certain way, post racial, has not been an advocate of race specific solutions. he's been talking lower income or more less advantaged businesses. but what can be done specifically for minority businesses? >> we should talk about things that we are doing as well. i look at our role as actually filling a lending gap. our programs are designed to address where there are gaps in lending. and so with that said, it's very clear that our underserved communities are disproportionately hard hit by this recession we're going through. that's the facts. so to me that is a gap. that a of capital access for the sba

as to how can we fill that gap. one way is we recently announced our programs which are actually addressing our underserved communities. we are going to be offering our sba 7-a which is our flagship government program, which our nonprofit, small lending organizations that are inside of these communities all over our country that will now have the opportunity to provide nch-a loans to the underserved communities. now, why is that important? it's important important because i think we talked about this a little bit, technical assistance. before joining the sba i spent 27-some years as a lender. and i -- my philosophy is really simple. the attention that the small business owner places before

those front doors of that business first open can be all the difference between a successful business or not. so most of our under communities really need what we call our smaller loans, $ 250,000 and under. the challenge for many banks, larger institutions is in order for the economics of providing a loan under $250,000 it has to be a very streamlined quick decision, not a lot of hand-holding. these are built upon the platform of hand-holding. attention up front, and entrenched in their communities. they understood the dynamics of that community and that will translate into success for these small businesses in the future. >> sir, if this was your question, let me just ask you how satisfied are you with how the government is filling the

gap that steve mentioned and how effectively are major financial institutions filling that gap? >> they're not filling the gap. i think what he was talking earlier regarding the contracts. one of the great things about the bill in our opinion is the diversity congresswoman waters and barnie franks supported. that is a significant piece of legislation. it's going to have a great impact on minority owned businesses and businesses in general because it requires financial institutions and other corporations, when they're doing business with the federal government to submit data to them regarding not only the diversity of their employees but the board and what have you be the contracting. and as already pointed out earlier with the federal government we've been trying to get data from the department of defense for the past two years

to find out what percent of their contracts are minority to minority and women-owned businesses. right now the data we have is i guessie says less than 1% for latinos, asian owned business. so we think this data is critical. and we have taken it on ourselves to make certain that the banking industry as well as corporations who have contracts with the federal government adhere to that piece of the legislation. >> i want to ask you, why are the numbers so low as he cited and secondly why is the data not better? he was saying we need more data. >> i can't speak to the first issue. i don't know the numbers right now. i know that we have a strong commitment, the president has a strong commitment. i know secretary geithner has a commitment to this and i think

administer mills as well so ensuring that we do the most that we can to support the success of businesses in all parts of our communities. as to data, i think the speaker is exactly correct. data is crucial to getting a better handle on where we're doing a good job and where we're not. and i think this president and certainly secretary geithner are willing to own up to problems that are there in the government, and we want to work to do our best to ensure that a wide range of businesses have access to the opportunities that the federal government supplies. >> he says the gap is not being filled. >> and i don't want to speak to the numbers. that's not my area in the sba. but what i can tell you is our roles that we play to ensuring that small businesses have access to contracts. and i think that we've done great strides. i think that we've seen a

significant amount of progress made with working with other government agencies to ensure that our small businesses and our 8-a firms and minority firms have access to participate in the contracts. >> he mentioned one of the strength of the dodd-frank bill. how many here think the bill on balance is positive and is going to make a difference for the better in the financial system? and who thinks it would be better off if it had not passed? >> there are parts that are fine and not so good. i'm not sure i like the balance. >> what is the single biggest problem? >> they were saying do you want the old system or something new? we've got to go to something

new. what do you think is the biggest single problem? >> the biggest single problem is the whole regulatory structure that is going to be required of it. that doesn't mean something shouldn't have been done. quite clearly too big to fail is a major issue has to be addressed. this is ridiculous we haven't done it before and there are lots of aspects to it. but the whole way of going about it i'm not sure is the most appropriate way to do it. but i think in terms of long terms, in terms of small business, i'm not sure that's going to have a big effect on small business. this is going to be someone from a large bank may disagree with me but i'm not sure this is going to filter do you know to us. >> the impact is going to add some time, cost complexity to the lending process because we're going to have to gather more information. so it's definitely doable. we want as much clarity and

simplity as possible. but it won't inhibit small business lending. >> it will not? >> no. >> i want to shift to a different issue which of course occupied much of the first two years of the obama administration and that was health care and try to get a sense from the panel especially beginning with rebecca and kathleen as to how the passage of the health care bill is going to affect the viability of business in the near term. we had a question from the audience that said small business formation, particularly with so many people over 45 losing their jobs, is very dependent on health insurance. why not scrap the employer-based system altogether for a completely portable system? that's water urnled the bridge. but i'm wondering, having passed the big health care bill, whether you think it's going to make things better or worse. >> that's such a huge question. i think, with a lot of

regulation, there's a lot of unknowns right now. i'm still trying to figure out for my own plan what the impacts are going to be. there's a lot of new questions. it adds one more thing that small businesses are having to figure out. i'm of the camp that something needed to happen so i agree that -- >> you're glad it passed? >> i think so. but there are a lot of question that is need to be answered. >> i think it gets to what rebecca said. the uncertainty of how it's going to play out and what it means is just another thing that small business has to deal with. >> it's complex. and the health care bill brings a lot of positives. there's still a lot more work to do on this. it's far from over. but with businesses losing their health care services, they're dropping, the situation is a lose-lose situation because companies are losing policies, businesses are giving it up for themselves for the

employees. so the health care bill i think provides some opportunities for health care, minimal at least but it is positive, particularly given these times. >> i suspect i know where you're coming from and i'd like to hear you explain it. and also whether you think the bipartisan mover toward repealing that reporting requirement on small business transactions 1099, whether the -- that is going to make a big difference. >> first it's a financial disaster. you can't add 30348 people to the rolls -- 30 million people to the rolls and say that's not going to have an enormous demand effect. our major problem. >> the cbo said if the bill is repealed it's going to raise the deficit. >> just a second. first, you start out with -- yeah. first of all, the major problem has been for the last several years and it's clearing dean --

been small business. in the last decade it's gone up 130% where wages and costs have gone up for like 20%. you've seen this huge gap going towards health care. got to get controls on if ever the spending side. so what do we do? we go out and make it worse by adding 30 million more people so we're already going to be short 130,000 physicians if nothing else happens. now add this demand. so my point is essentially we're going to have a supply demand that's going to be just unbelievable. the second thing is along those lines is the financial games that have gone in. cbo has to abide by certain

restrictions. one of the ways that this thing supposedly works financially is that we start a system a long-term health care for seniors which we begin to pay for in the time frame but which extends way out beyond the time frame when the benefits have to be paid. the program doesn't come close to paying for itself. so you've got all these sorts of thing that is cbo has to abide by that are essentially allows anyone who wants to to really play with the numbers. so we've got a financial -- huge financial problems. our rates are going up. >> i respectfully disagree. >> do you disagree with my numbers? >> the millions of people who are now going to be able to

access safe and affordable health care is going to change the way that our economy functions. you are helping those folks who have been a drag on the economy, because they've had to go to the emergency room to get their services. you're putting them into a system where they can access the health care they need to visit doctors and be part of that process of receiving the health care so you can diagnose problems before they become acute. so i disagree with you. in fact it's going to be a long-term saver for the economy. secondly, for small and large businesses these employees are going to be able to be much more productive employees because they now will have the health care that they didn't have before. you won't find them taking sick

days or missing work because they weren't taking care of their health. they now have the ability to go to a doctor, take care of their issues, and come back to work and be productive. >> what do you think? >> i think that's a good point. but if you look at the small businesses, what is in small business lending is the bist itself has got to be able to make a profit. plus, now they have the threat of what's going to happen on the tax issues. so when you have the combination of the two, it makes them, is there a business demand out there for the lending? i understand. and some businesses -- >> the tax issue has gone away. >> but they are not applying for it. therefore, the banks cannot end it. now, when you get into if they qualified, some of them would be marginal and then we would hope that's where we could partner with our sba and have a

leveraging and then it would be what would work and be good for all and we could get those that needed it could get loans in part with the sba. but there's still to me the perception is that health care is a fear to the small business owner who wants to go out and create more jobs. >> let me shift gears. got a very interesting question from taylor web who is a congressional intern who is somewhere in this audience. and if you did show up, make your way to the microphone but his question was not about regulators or about financial institutions. it's about individual entrepreneurs. in light of the financial crisis, the appetite for risk has been reduced of the individual level. what do you believe is the best path to encourage individuals to take on large risks such as starting a small business?

who wants to take that? >> it's interesting because people are willing to take risks and that does not seem to have slowed do you know. >> you don't think this problem exists? >> it doesn't. this economy be pacts everything. but still, entrepreneurs still rise and start businesses. and if you look across the nation a lot of businesses are starting up, particularly for minority communities. the latino community has grown over 30% in entrepreneurship. but i think of course there are problems with lending these kind of things. but what i would like to suggest is again speaking from my point of reference in california there are a lot of opportunities for entrepreneurs that are developing in california. the access to capital programs for small and medium-sized businesses. there's work assembly big 1155 that offers money for these kind of investors that have gone away.

so there are a number of dynamic things that are in the works that we need to flush out and get government matching funds as well. >> may i suggest this is going to be a real problem and i'm not sure it has to do with attitudes as one would think of that the entrepreneurial sfrirt is dying. a lot is going to have to do with access to finance caused by housing. a lot of people who begin use their home as a piggy bank, unfortunately, if we can call it that. and what you're seeing is of course with the deflation of the housing market that isn't there any more. and so you are having a series of folks who might ordinarily go in who cannot do so. and we are seeing right now in the statistics are beginning to come through that for the first time in my memory we're having

fewer starts in the last couple of years than we've had in the previous years. and so we not only have this group going out but we have fewer coming in and a lot of it is tied to housing. >> i want to come back to the housing thing. but taylor, do you want to follow up? and how he was suggesting that the problem at the individual level was less significant than you think it is. go ahead. >> i -- obviously michigan has been hit by this crisis. my grandpa started a small business, my dad had a manufacturing business that's going do you know as well. so that's sort of the background for this question. but even so, like being from my hometown and just being in a family that has lots of relatives who started a small business i can see the pinch in their pockets when, yes, their home is sort of the base for the loan of small business. and secondly, as far as there

might be years in the country that are more conducive to smeeze small business loans being given out. but how do you see these new policies that are supposed to be put in place actually expanding and getting to some of the areas in the country that may be most hard hit where housing prices like michigan have totally collapsed? >> is it a small-town problem? >> it's without a doubt parts of the country that are feeling the pain much more than others and it's not going to be a simple we're out of the woods. it's going to be a regional. you're going to see parts of the country. i definitely see where we first started talking, we talked about are we headed in the right direction. i see good signs. i look at numbers every single day, where are we heading? what are we doing? i saw last quarter that the sba as far as my loan programs have the highest level of volume in the history of our programsr.

the week before christmas was the highest week of loan volume activity ever. that's all good. i think that that's -- but again, i go back to do i measure success by how much volume we do? no. i measure success by -- i would lover it in the gap was shrinking. that does also tell me that there has been a big gap. however, we're starting to see lending. they're taking advantage of these government programs. we provide tools. now, my mission really is i provide access -- i ensure access to capital to our small businesses through our lending partners to small business that is otherwise cannot access capital on reasonable terms and conditions. so really by watching our volume go up it tells me that we're doing something right.

with the rasht and then the extect of the jobs act the end of september, our flagship program had a higher loan guarantee and a fee abatement for our small business fees. so basically it created encouragement for our small businesses and it also encouraged our lenders with the higher guarantee. the other thing i looked at, and this was actually made me smile quite a bit, i was wondering, you know, i wonder how many -- because when businesses buy equipment, that tells me that they're making a conscious decision to make an investment and that usually translates into growth. that's a long-term decision. so i took a look at our flagship program and said how -- what proportion of those 746 as are going towards equipment purchases?

the recovery act kicked in in february of et and it extended to the jobs act in september. the charges incredible. it doubled the percentage of our loans that went to equipment purchases doubled february of 2009. so that tells me that the entrepreneurs, the business owners are making a conscious decision to invest. you know, and with the growth in our loan programs it tells me that our lenders are looking at -- lenders need to lend. lenders want to lend. however, everything that we've talked about are challenges. so it takes a little bit of time of finding out, how do i deal with those challenges? and one of the ways to deal with the challenges is to look at the credit enhancements that are available and how do we make it make economic sense and how can we also control our risks? >> i want to go back to the

real estate issue which was brought up in the preevets previous panel, too, and tom when he was asked, he said do something about the real estate problem. and of course on the one hand we have people saying government is pouring money do you know rat holes and the deficit is too big and they've got to stop spending. on the other hand, do something about this big real estate sink hole out there. let me ask our private sector types, what the heck should government do about the real estate problem? >> >> i don't know. i think this is such a regional issue, too, that i think it's very challenging. there's an unknown on the appraisals these days and where those valuations are coming from, how when markets, what you do where you're in markets where you're having to buy or sell properties, what does that

do to the underlying valuation. i think part of it is the world of regulators and how we're working through some of these problem credits. it is also very regional in terms of the local markets and how they go about doing it. >> i notice the first panel didn't answer the question. i was looking for their answer and i do think it's a huge issue. and no easy solution. but i think we need to get the foreclosures behind us. and we still have a lot of people in their homes who can't afford to be in heir homes. >> what is the role of gft? >> helping the lenders get through the process and we continue to hear about delays. and i think getting that problem behind us is very important for small business to move forward. >> let me ask you about that and throw in one extra thing. all of a sudden everybody is talking about tax reform. cool. let's take away deductions and get the rates do you know. mortgage deductions. is that a good idea?

and what do we do about real estate? >> i wish i had the golden parachute or the magic bullet on this one. i can tell you more about the problem than i can about the solution. but for smaller firms it's unbelieveably important. just a few numbers. 95% or 94% own a home. much higher than the average. on median it's 60% more valuable. plus, of those who don't have a home-based business, that have an office or whatever you want to call it, almost half of those own that particularly in the rural areas. and if we wanted to take a step further, almost 40% own investment real estate. over half of which own more than one. so the small business owners are heavily into real estate to say the least. and that's one of the critical reasons we have it. clearly the issue you talk about obtax reform is going to

come up. and my gut is that small business owners aren't going to like a particular provision of what probably will be a major discussion on tax reform, and that is either elimination of the home interest deduction or at least capping it. my guess is capping it will probably be the one. and it's going to be central, has to be central, the discussion. but in the short term it's going to be really tough because we have this horrible problem. and we have sat on it for two years and done nothing basically. it's been three, four years where we've just sat on it. and heaven knows what we're going to do. >> what should be done on the issue of corporate tax reform? secretary geithner is meeting tomorrow with companies and talk about the possibility of removing deductions that many businesses like and getting the

rates down. when i was talking with an analyst, they said half of all business income goes to businesses that aren't organized as corporations and you can't do corporate tax reform and bring that rate down because those businesses are still going to be paying 35%. >> that is the s. corporations that you're referring to. clearly i think tax reforms' on the agenda, should be on the agenda. i'm old enough to remember the 86 act that worked pretty well, then we started putting holes in it again. so i think this is something good that can benefit small firms in the long term particularly when it comes to simplification. now, certain parts of the code are going to have to remain relatively complicated, when you talk about depreciation but there's a whole series of things that don't have to be like they are. the home office deductions,

doesn't have to be anywhere close to that complicated. the whole idea, what is an employee. >> can tax reform at the individual or corporate level or both be done before the 2012 election or is it going to take longer than that? >> i think you can only discuss it for a couple of years. this is huge. this is very, very big. and i don't think that you can reasonably do it well in two years. >> all right. getting back to your housing question. you know, extraordinarily complex of course. but i think that the government can continue to play a major role in that instead of outlaying moneys for principal reductions which generally are just not working, if you have people under water for far more than a minor principal reduction, it's a waste of money.

but i think those moneys could be better used for home ownership counseling and i think that you could utilize these counseling sessions to put people into new homes which would i think reverse the trend that we have. that's a short note on that. but that's something that we've been discussing and taking a look at when you look at the principal. >> i think i know where she stands on it but i'd like to get yur perspective on it. and it goes to some of the things that congress did in 2009-2010 that sounded popular. let's limit bank fees. the question is at the end of the day banks have to be

profitable to help support small business lending. are the new regulations and restrictions on income from overdraft and interchange fees jeopardizing banks' ability to lend and ultimately hurtingberoers? >> when we look at overdraft fees, the fees that banks are bringing in a large portion of income for some of our banks. i think the policy that we have put forward is looking at the >> i concur with that, that, you know, drafts fees are certainly important to the community banks and large banks, too.

but there are still some constraints that twofe use to protect the consumers and that's part of it. but i don't think in where we see any of it that it has any reflection or creates any problems with lending. >> so from your perspective, then, if you don't think it makes real problems, do you see it as appropriate protection of the consumers as opposed to playing to the grand stand in terms of voters and doing something that sounds great but may have unintended consequences? >> yes. >> i think it is important and the premise is that we're trying to protect consumers making sure at again they know exactly what they're getting, what val they're getting for the cost that they're paying. >> do you want to smack these guys down? >> i'll be nice. i think this is a fascinating issue.

it also is one where all banks are lumped into one category. we're in the grocery store next these folks. we're not going to take advantage of our consumers. we have overdraft programs that allow them to clear checks when they need to. we don't have the automatic programs. the different stuff that has been created. just about everything i do these days is now being regulated. what does that do to our entrepreneurial spirit and our ability to balance and knowing that there are going to be times when balance is sought? how do we maintain a balance sheet so we can do what we do? and not take a stereo typical approach, which some need a tiered approach where we can get at the problems. i agree, some of these products have been taken advantage of. but things like interchange, it's something that's really going to get at the heart of community organizations. >> is it not a consumer protection issue or is it?

>> i think there are a number of parts of the legislation that would fit into the consumer protection bucket including this one. i think we needed to take some steps to ensure that consumers understood the products that they were getting or were not getting charged too high fees on those products. and that we did it in a way that also ensured the long-term safety and soundness of the system. so i think we struck a pretty good balance. the congress did a good job. i understand there are differencesank community in terms of size and the types of products and services that they offer. that said, i think what the legislation did was establish a baseline. this was not providing the types of fees of requirements on banks that a lot of folks i think in certain parts of the

lobbying community on or the advocacy community wanted. they weren't as strong as those folks wanted but at the same time i think they were appropriate and necessary steps. >> let me ask this. since you're from taos and you probably would have voted from the health care bill i am guessing you are a democrat. >> yes. >> as a democrat, you agree with the charge that the obama administration has gone bananas with regulation? >> no. you know, there's -- headlines in the taos news tomorrow. you know, there's a time and place and there's a need. i think what we're doing a lot with regulation these days is painting with a wide brush. and yes there may be some quick fixes but there is a lot of unintended consequences that go with them. >> i want to address and agree with rebecca until i found out

she was a democrat. >> she hit the nail on the the head about painting and it doesn't matter whether it's fees and exchange charges or what. but you know, we've got to realize that we can't all be painted with the same brush. and that has to do with state regulations and state regulators as well as it does the size of the bank and environment that it operates in. we've stit still got to go back to common-sense examination of banks and look at them individually, look at them geographicically and make sure that we're doing the best job to protect what is our main job, and that is protect, from my standpoint, the safety and soundness of the institution.

>> john is the federal government and federal regulators, are they capable of common-sense examination? >> that's a good question. and one that i will answer very candidly. they used to be. i see today more so that it appears that since we've had this financial problem banks have been suspect. we still have a number of problem banks on our list and it looks like now that whether you're a primary regulator as a state, whether it's the various organizations, we're all coming do you know from washington. and at least what i see is that everybody wants to say well we can't do or we can do but washington is making those calls. and to me that's not where we

need to go. we need to be sending the authority and responsibility down to that region to that person that should be able to work with that institution, know that market, know the economic conditions, and come up with a sound judgment. >> now wait i thought you said a minute ago it is a mistake to paint with a broad brush. >> it is. >> anthony, he is painting federal bureaucrats with a very broad brush. >> with respect, i'd have to disagree. when we propose regulations or changes in our procedures, a majority of the time all the regulatory, we put these out for public comment. now, we take those into conversation before we finalize any of our rules and the same thing when we get ready to pursue a corrective action,

that action is tailored to the specific needs for a specific institution. if it's capital management, whatever the case might be. we don't have a boiler plate that we just look at all troubled banks and say you've got to do 50 different things. each is tailored. >> let me follow up with you on a question that kathleen submitted and then see if cats lean is satisfied with the answer. the question is how do federal regulators communicate with their counter parts in the field and how do they ensure that there's consistency and coordination on lending standards across the country? >> one thing that we do is periodically, from a washington level, we have conference calls with our entire staff at least once a quarter where we talk about issues, regulations, talk about congressional action that is may impact the way that we're going to regulate institutions, and we're also issuing internally all types of

memorandums that details this is the way that we're going to consider. a couple of things that are public, you know some of our fio, and specifically to commercial lending and encouraging that banks do continue to renew credit, extend credit. and when we take those memos, we talk directly with our staff and encourage them. if you see a credit that's deteriorating or the collateral behind it is deteriorating but the individual still has paying capacity, let's not criticize that specific credit. let's use some judgment and balance here. >> is there anybody in the audience who thinks that there is a problem with consistency and coordination? if so, raise your hand. wow. ok. kathleen. >> we just heard that from community banks. if you're inspecting that, sounds like you've got the right routines in place. as long as you're inspecting, that's the case.

i've heard that from community banks. >> i think this is this is an issue that is like many others we're talking about right now, and that is we're in a process of flux what i call it. we've had this tremendous run-up in the amount of credit that smaller firms have been able to get going back in the 70's and all of a sudden it changes and goes back down the other way and we don't have rules and don't understand one another any more and everything is changing so we keep blaming one another as to what the problems are. and i'm not sure until such time that we don't get a little bit more stability and find out what normal means. we don't know what normal is any more. until we find that out, we're going to be pointing fingers at one another, and i think that's a real problem. >> any of our banks, if you, if

a banker feels they are not being treated fairly or that we're not being balanced, we want to hear about that, at our regional level, washington level. we're going to have an 800 number that banks and consumers can call into. but if you don't feel that you're getting a fair shake, that we're not using proper judgment, we want to hear about it. >> kevin, who may be in our audience, and if so i'd invite kevin to step to the microphone asks how can commune community-based organizations best work? >> around the country we talk with community-based organizations about how they can potentially partner with banks to do some activities. we also have an advisory committee that composed completely of community banksers and you can provide

input into our policies and practices that might be stymieing small business lending or individual lending. so a lot of our policies give the public an opportunity to give us input about our operations, what we're doing, what kind of obstacles that we're presenting to lending. >> i want to go to an offthe wall topic linked to something happening next week. the chinese leader is coming to meet with president obama next week. treasury secretary geithner gave a speech yesterday and talked about some of the issues relating to american competitiveness, decisions we want -- we can take and issues we want china to do. let me ask you, are you satisfied with the approach that the administration is taking to china? would it be better off for american business if they were

more aggressive in trying to press the chinese on protection of intellectual property, on currency? or would that risk trade war would ult mayly backfire on everybody? >> that's a little out of my area on expertise. >> i'm going to say the same thing. i don't feel competent to answer that question. >> i have some experience not a great deal but let me make some comments. there's no question that the president needs to engage more greatly impacting china. they're a major partner. they hold a great deal of our debt and we need i think to show more leadership. over the past several years i can that's hurt us. with regards to the devaluation but also with regards to importing businesses. i'm on the board of governors and we deal a lot with chinese companies and some of them that

are moving to this country, and being with a small business chamber we are looking to generate some contractual agreements with them to expand businesses for some of their products. so overall we need to play a much stronger role from d.c. we're doing some things in southern california. however, it's a far greater, far bigger issue. but on these kinds of things, absolutely, we need much stronger leadership in these areas. >> i know it's not your area of specialty but if you have a view, should the administration be tougher with china? >> i definitely think that we should toughen up and we should protect the dollar and that we stand a lot to lose that if we don't because they already own half of our debt or a big

portion of it any how, and i don't know that we want to get any deeper. >> i want to go to a question that hor hey had said. which is beside small business lending, what step would have the greatest impact on the development and creation of new jobs? we talked about real estate. what else either that government can do or that business can do that would have the greatest effect on generating job creation given the fact that we've got unemployment still near over 9% and is going to stay high for a long time? >> well, to some extent the whole idea of the payroll tax being rebateable to 2%age points i believe on the individual side is a good idea. that should have been a stimulus policy to begin with is focused entirely on this. >> but going forward >> i don't see that -- i think

we're limited by the amount of money that we've already spent. you heard senator warner talking about in the future the next couple of years we have to talk about deficit where we're going. so i think our option are really limited. and the idea that we now have begun to put out an actual stimulus into place is probably the best we're going to be able to do for a while as long as we're not talking about real estate. >> is there anything that the government can do? everybody is talking about the $2 trillion on balance sheets that's sitting there waiting to be invested. we've talked about the lack of debhand. is that a problem that's causing the money to sit there? what can be done about that? >> that's going to come when there's a demand for investment. you look at smaller firms right now and you look for either physical investment or you look

for inventory investment and i mean, we're barely back to kind of a very low level now. i mean, we're out of the very depths. >> does everybody like the 100% expensing? is that a good thing? >> yeah. so we're going to have to get in that but part of that is caused by sales. and the big guys, yeah, they get good profits but a lot are coming from overseas. and rather than from here domestically. so if we're going to get more investment we're going to have to have some more sales. >> you're in treasury. you're in charge of the economy. what can we do to help the creation of jobs given the fact we're broke? >> i don't think there's any one silver bullet. i think it's a range of the things you've already heard today. it's spurring additional lending to small businesses.

it's spurring innovation. and the president's talked at length about his innovation agenda. so it's helping small business owners, entrepreneurs to take advantage of the great ideas that they have right now and being able to turn those ideas into products and services they can sell both domestically and abroad. it's where i actually agree with my colleague den ni, it is finding a balance of protecting american companies but also ensuring that we are competitive globally 6789 it's working all across the globe to -- with our partner, our trading partners to make sure small businesses, large businesses have access to their markets but also have the financial wherewithal to do what they need to do. i think you've heard recently from the business roundtable that they expect their members to increase their hiring, to

increase their investment in their companies fairly substantially. and i think that will go a long way to turning around the types of increase in small business a like to see. but it's not going to be one thing. housing as well. it's ensuring that responsible home owners can stay in their homes, that they have everything they need so that -- it's really just stabilizing the economy as a whole. not just one individual efforts. >> a couple months ago i interviewed alan blinder. he's a princeton democratic adviser. he's generally considereded a moderate. we he said we needs to recognize that we're in a jobs crisis and we're going to be for a long time. we ought to think about direct government hiring. new deal kind of stuff. is that crazy talk? could it make sense? >> well, i don't know that

having federal programs aimed at hiring is the way to go and i'm probably not qualified to talk about that. >> is it a good way to go, direct government hiring? >> i think it's important. because, again, a look from our point of view in los angeles, from southern california, los angeles has about 600,000 small businesses. that's probably more than any large group of states put together. in the last years we've lost over a quarter of them. and if you look at the desperation of these kinds of businesses, sales is critical. people need to have money in their pockets to buy from their local retailers. without it, a lot of people are going under. so i think that is very much a part of the stimulus package. what's important to note is that we cannot slow do you know or stop this recovery by the absence of stimulating the

economy. and that's what we're taking a look at it. and i think it has real val there. >> my comment is this. this country is small businesses. this country was built on small businesses. this country has been pulled out of the depths of every recession we've grt gone through and this country, the opportunity for us going forward are our small businesses. you know, almost two out of every three of us work for small business. correct? why i have worked with these small businesses for 20-some fascinating by them. they will find the opportunities. they will find the opportunities. every single time. and so we go back to, we discuss sales. so we need to take a look at where, where are the opportunities? we're a global economy. exporting. these are the opportunities for

our small businesses and we need to take a look at that and we need to see, can we provide the assistance? can we provide the technical training? can we provide the tools for our small businesses that really define us to take advantage of that? >> let me follow up on that point and touch sentiment on the panel. because i've had conversations with economists left and right who usually this part of the conversation occurs tauf record because it sounds politically incorrect. but one said something to the effect of come on we way overromanticize small business. it reflects a whole lot of churn in small business starting and stopping and that sort of thing. but if you look at it candidly, the best jobs are in large business, the jobs that pay the best, we need to focus more attention on increasing, hiring among large businesses rather than small busineskse talking a

family farmers in an ee era where that's obsleet. >> i can drive through town and point out to my kids all the businesses i've helped. and a perfect example. businesses that i've maybe provided a loan for a restaurant to open up a second location and we talk about how many jobs does that create. when you say how many jobs has that project actually touched, the contractors, the equipment companies, it's mind boggling if you stop and think about it. i think we're underestimating that. >> is there too much mom and apple pie talk about small business? >> i think actually it's been interesting recently because you've got the economists coming out with these new sorts of things. but if you look at the bureau of labor statistics, when you

talk about the bed series business employment series, the 92 through ongoing, it's 54 to 65% of all net. underline net, not just gross. net. in other words, hires verse us layoffs or whatever. net jobs are created by smaller firms and the largor number is firms under 20. those are government numbers. and all the data that we have going back to about 1976 prior to that says approximately the same thing. so all of a sudden we get somebody who comes out and i know who the people are, the suspects here. no. they're good people and they're very bright people. but all of a sudden they say,

but a lot are brand new firms. well, hello. the way our small firms. they're new firms for the most part. we don't start films with 500, pless. so that's kind of superfluous to the whole argument. and so the job generation thesis is quite clear going into this recession. what's going to happen after this recession? we've been able to do this for years and years. a guy named david birch, who wrote the original thing has proven to be correct. so here we are. these are job generators. we went into this recession. we may be seeing something new happening from this recession. but basically, it's you just look at the government

numbers. with that stirring defense of the contribution to small business to the u.s. economy and with a lot of hope that things get a little bit better, than -- than they look right now, we want to thank our panel. and we've got two more >> each year, the washington center brings hundreds of students to washington to experience the workings of government first hand. tonight, they'll discuss politics, government, and their future. on c-span's "q&a". >> this weekend, on afterwords, former adviser to martin luther king, with a behind the scenes look at the lookgn up to get ou

e-mailed to your in-box. our guests include republican stratjist john hery and democratic strategist karen finny. then former assistant secretary of state richard solomon on chinese president's visit to the u.s. and relations between