>> i have never believed that the budget committee -- the actual authority we have the fits very well to that task of a

long-term plan to get the deficit under control. we do not have the requisite authority. but, you know, who else is going to do it? i know there are some press reports that i criticized. i am not criticizing the president. i am just working with reality. to me, " would be the most of effective is to have some kind of negotiation -- the third problem of the budget is the president never get the resolution. it is a congressional document. ultimately, the president has to be at the table because he can

veto legislation. maybe, with all of that said, -- you know, i have been really trying to think of a way to get for a the bodyy a plan debate that needs to occur. what is a way? that is why i made the comment that i did. i do not have a more formal plan. however imperfect the institutional boundaries are here for the budget committee to take this on, maybe we are just going to have to do it. >> a are you frustrated by a

lack of ideas? you wanted a budget summit, and you seem to be proposing this because nobody is a bleeding in it. biting it. >> yes, but this is not a criticism of the president. i think the president made a quite clear that working at it discretionary spending is now going to get us where we need to go. that the kind of comprehensive plan that was laid out by the fiscal commission is what is required, looking at both the spending side, and not just non- defense and discretionary spending, because that is such a small part of the budget. we have to look at all the spending of the federal government, and we have to look

at the revenue side of the equation. while the budget committee, because of the authority of this committee is really not well positioned to come up with a comprehensive multi-year plan of the type that is needed, who else is going to do it? that is the frustration i have. institutionally, of the way things are structured here, we do not have a mechanism, we do not have a place that really has the authority to deal with the kind of multi-year, long-term plan that is required. so, i am struggling with this myself. >> have you talked to other congressional leaders about a solution to this? >> no, i have not.

>> can you talk about the legislation you are working on? you guys are very close to introducing this. >> no, i do not think that would be fair. getting distracted a -- getting this drafted and scored is a large undertaking. we are a long ways off. >> [unintelligible] >> and different people might be talking about different things. one track is to get the commission report and a legislative forum so it could be considered. that is one track. there is another track to have a feel safe trigger that would be pulled that would have automatic effects if congress is

not putting in place a plan that gets us back on firmer ground. that is something that can be prepared more quickly. that is not nearly as involved. >> can you explain that a bit more? >> it is not agreed to. >> would that be in tandem [unintelligible] >> i am workshopping ideas. ok, i got to go. >> can you talk about the consequences [unintelligible] y >> of the federal government -- the rest of the budget which has been getting in flows from show so security -- from social

security, that has stopped. that is a cash drag on the rest of the budget. i have to go. thank you. >> thank you, sir. >> of the senate is in session today to consider a number of changes to a senate operating rules. members have agreed to consider five resolutions, from filibuster rules to amendment considerations, and the ability of senators to secretly block legislation. all require a super majority vote to pass. live coverage on c-span2. the house is not in session today. members completed all legislative work yesterday and are in recess through all of

next week. follow the house live on c-span tuesday february 8 at 2:00 p.m. eastern. >> this weekend on c-span2, almost 10 years after the attacks on the world trade center and the pentagon, in national security analyst looks at the longest work. he is interviewed by an author and columnist, max booth. and edward mcclellan on barack obama's first campaign on the illinois senate. a sign up to get our schedules emailed to your inbox. >> we will tour the home of a statesman frederick douglass.

jerry jones tells of the policies of woodrow wilson. then, daniel patrick moynihan. experience american history tv on c-span3, all weekend, every weekend. see the complete schedule online at c-span.org/history. >> 9/11 defined the presidency because it made it abundantly clear that my most important job was to protect the country. i made a lot of controversial decisions to do that. if i had to do them over again, i would have done them again. >> former president george bush talks about his memoir with students from southern methodist university sunday at 8:00 on c-span. >> next, a discussion on federal

spending and job creation. this is 45 minutes. ington journal" continues. host: i want to welcome back matt kibbe, freedomworks president and ceo. let's begin with "the washington times." guest: it's a shocking number, $1.5 trillion. longer-term, it is $14 trillion in national debt. it's a combination of a bad economy and way too much spending. we are spending too much money we do not have. the federal government is getting involved in too many things. those are the drivers of the deficit. host: what does freedomworks want done? guest: we need to look at every program in the federal government and cut spending. there is a lot of agencies that just do not make sense in this kind of an economic crisis. we also need to look at entitlements.

entitlements have been the elephant in the rome. both parties have been willing to ignore the massive growth in medicare and medicaid. it's all called mandatory spending. host: does the republican study committee's proposal for $2.5 trillion in cuts over the next decade go far enough? guest: i think it's a very substantial proposal to we have to see what paul ryan proposes. rand paul has proposed half of 1 trillion dollars -- hald of $1 trillion this year alone. host: paul ryan has said it is

only feasible this year to cut about $60 billion this year. guest: i think they need to go further than that. i think there's a lot of pressure inside congress to not cut spending. nobody likes to make tough choices. this is not a democrat versus republican problem. i would say it is the establishment versus reformer problem. paul ryan is getting a lot of pressure from his own members. that is what the tea party is here for. host: how will you hold paul ryan and john boehner accountable? if $60 billion is the number they get to this year, what will happen? guest: it is not just that number. that was their initial number to cut spending. we are really looking at the total number that comes out of the house budget resolution, which will probably happen by

april 15. it will probably happen in conjunction with the extension of the debt limit. we have a good short-term measure of where republicans are going to be. host: what are you looking for? guest: i'm looking for something that gets us to a balanced budget in 10 years. i'm looking for immediate cuts. we would like to see $100 billion, which is what republicans originally promised. more importantly, i would like to see the agency eliminations that guarantee that three years from now we have not promised long-term cuts and short-term increases. again, that is the typical budget game. host: let me go back to my question. if you want $100 billion and they just give you $60 billion, how will you hold them accountable? guest: we will look at who votes for that. $100 billion in spending cuts does not solve the problem. is an initial gesture towards

fiscal responsibility. it is an important one. if, for instance, the only come up with $60 billion in the standalone budget cutting measure but they are very bold in their budget resolution and offer substantive reforms and pass them, i would say that's a win-win. we will not know. can set out a goal of $100 billion, which is their number, but it's more important to see what they do with. host: a. robert samuelson talks about the proposal of making $2.5 trillion in cuts over the next decade. guest: there are two sides of this equation. one of the reasons that we have

such a massive deficit and debt right now is the state of the economy. when the economy is shrinking and jobs are getting destroyed, people are not paying into the revenue base. you have had a declining revenue base because of the economy and a massive increase in spending -- not starting with the obama stimulus plan. it certainly started in the bush administration. there has been a massive ramping up. that is the gap. what you have to do, and the reason we are sobel on the spending side is that we believe there's so much government spending right now and so much debt and so much government involvement in things that it is a fiscal drag on drop -- fiscal drag on job creation. we fundamentally disagree with the notion that more government spending can be the job creator in this country. host: was the tax cut package

approved by the president a mistake? guest: no. i think it was a central. if you had allowed a massive tax increase with 9.4% unemployment, you would have stopped any hope for economic recovery. again, you have to think about this in a. dynamic. -- again, you have to think about this in a dynamic sense. we do not always pay is in and out and spend from that. it creates on who is creating jobs and who is paying taxes. we need people to be working in order to balance the budget. host: this is more from robert samuelson's column this morning. he writes this.

it would exist even as the economies were at full employment. guest: i'm not sure i agree with that. if you look at what has happened over the last couple of years, there are two things we could go after in terms of spending blessing quite obvious. first, you could reduce the discretionary spending baseline back to where it was before we had this massive spending spree. you could go back to 2008. you could go back to 2006. when president obama proposes freezing discretionary spending, he is proposing freezing it at that very high level post stimulus, the $1 trillion of extra money. you have to go back to where we were. that is not a draconian cut. that fact to the historical base line that everybody agreed with. the other thing you have to look at is obamacare. there's $1.3 trillion of spending included in obamacare. why would we go after reforms

and other entitlements when we just created massive new entitlements that have not taken effect yet? if you're willing to talk about tough spending cuts, let's go after the things that we haven't really done yet. that's one thing that some of the budget cutters are ignoring when they go after other programs. we should have a robust conversation about which functions of government our most important. host: does freedomworks believe the pentagon budget is on the table? guest: yes. host: let's go to the phone calls. a republican in kansas. go ahead. caller: good morning. guest: good morning. caller: i do not know how we get out of this tangled mess. maybe you have some things you should -- you could tell us. in kansas, we just got a very small deficit compared to what we have nationally. half of $1 billion. government came in and decided

he was going to start making cuts. locally, we have an arts council. the governor proposed that we privatize that. he wanted to cut medicaid spending and education spending, or at least off the rate of increase. you know what happened? the arts council locally said, what are the artists going to do? they're all going to starve. the mental health center said -- we have long lines and all that stuff. half the deficit in kansas accrues to medicaid spending -- of that, i think $200 million for drugs for people who are kind of wondering the kansas countryside. how do we solve this problem? we are right at the edge of this thing. i do not know. . i'm.

guest: it's a problem that's going on in virtually all of the 50 states. there are a few exceptions. the problem in state budgeting is like the federal budgeting problem. in good times, when revenues are coming into the treasury, they propose new programs and a ratchet up the baseline. all the sudden, the economy fails and you have a huge gap between spending and revenues. that is what is going on in kansas. the only people that have typically shown up in the budget base have been constituencies, special- interest that wants something from government. i think the solution is to change the dynamics so that real people who pay taxes and pay their own bills and sit down of the kitchen table and balance their own budgets when their income declines -- these are the people who need to show up. i believe that's essentially what the tea party is. it's a constituency for fiscal responsibility that's not looking for some special handout

from the government or some special programs or special exemption. they just want the government to live within its means just like the rest of us have to. host: this is "the new york times" business section this morning. moody's investor service has begun to recalculate the state debt burden in a way that includes unfunded pensions. states do not show their pension obligations on their audited financial statements. if you look on your screen, there's a graphic that shows that when pension obligations for state employees are included, total debt for many states rises significantly. guest: i'm glad they're doing that, but it is going to create a real fiscal crisis. it's unconscionable that at the state level or the federal level we do not put these unfunded obligations on the books. at the federal level, it's much worse. we are about to have this crisis because of state pension funds. at the federal level, we have

over $1 trillion in unfunded liabilities primarily driven by medicare, medicaid, and to a lesser extent social security. these are the mandatory programs that grow automatically, regardless of our ability to pay. you have a demographic problem. fewer people are paying into programs that will have to pay more and more money. if you are in the private sector and you did your books that way, you would be in jail. the federal and state governments get away with that. we need to put everything on the table so people understand the severity of the challenge. host: maine, helen on the line for democrats. caller: good morning. i'm calling as a brother old nurse. i remember a time when we took care of people called patients. in recent years, we began to call them customers. the concept of this country being an uber business model

concerns me. we have too many so-called businesses taking on the corpses of what we used to call patients. we have gotten away from the whole idea of taking care of patients. there are many businesses who have nothing to do with patients with -- who have nothing to do with the direct patient care. that has been the driver in the health care costs. i second, it has to do with looking at the pentagon. i think we need to reload that the whole concept of our military. we've talked a lot about having discussions or conversations. i think you're overdue -- i think we are overdue about having a conversation about the real role of america in the real world. i think we have far too many military bases. i think our military pension

system needs to be looked at. our veterans pension system needs to be looked at. i do not think it is conducive to a healthy reentry into employment. there are a lot of issues we need to look at. i will take your comments off the air. thank you. guest: let me tackle the first question. i generally agree on your second point about defense. i do think you need to look at everything and assess what makes sense and what we can't afford. >> that is what we are proposing. on health care, the real problem has been the employer, or the federal government. there is always someone in the middle with an interest other than the patient compel, other than the doctor could tell. when we are proposing is a direct relationship where they could make those financial

decisions for themselves, and whenever you have a third-party making that decision, if you will get a sub-optimal results, spending you do not need, and you do not take care of the patients first. i agree with you, perhaps not in the way you intended, but i think the real solution is getting these middlemen out of the way. host: that is not part of the proposal put forth by house speaker john boehner when it comes to an alternative plan. this is a story in "national journal." what the speaker has proposed to allow health insurance to be sold across state lines. expand health savings accounts, and take on tort reform. the cbo says that would add just 3 million americans to the insured. it said the proposal constitutes

nearly 80% of private-sector premiums. guest: what i think those proposals are are basically republican ideas, most of which are pretty good, that have been around for some time. what we need to do, both republicans and democrats, is look at a fundamentally new approach that really allows patients to control their own dollars, their own decisions. you do not want a third party that does not know you making those decisions for you. health savings accounts are a step in that direction. i think you will see coming from outside groups like the tea party is something bigger when it comes to the replace part of the repeal and replaced.

host: is the road map for america part of that? guest: yes. host: would you like to see endorsed tea party candidates get behind the plan? guest: yes. i would say that if you do not like the plan, tell us how you will get there. the game we play in washington too often is that the few that put out a good idea, even if it is a wrong idea, the entire establishment goes after that. they stand back and let the leader get killed by all of the interests. that is what we will insist on. if you do not like the idea, and that is fine, but propose another one.

host: karen, on the republican line. caller: the tea party was supposed to die after the tax they. then there was the fourth of july tea party. we could go on from there. the tea party, there really is no tea party, but the tea party people seem to be getting stronger. we would know that here, in virginia. i am wondering, and we now have the spending, what would it be like if we did not have the tea party? guest: without this massive constituency that rose up two years ago, we would be in a much more dire situation, not because the actual numbers have changed. what we have changed is the incentive structure. we brought in this question

class. it is guys like senator rand paul, participants in the senate t. caucus. what we need to do is make sure that all of the community uprising we saw in the movement now translates into specific constituent support for specific proposals to cut the budget, cut spending, and take on government reform. those people do not typically show up in this process. host: here is the headline in "the usa today." the first meeting is scheduled for this morning.

host: what is your reaction? guest: it is a good question, and it is a debate that has gone on. how do you best represent what is essentially a decentralized leader-less movement? i do not usually quote chairman mao, but i just did. you have to let people organize the way they want to. creating a caucus does not undermine that decentralized ketose, as long as they did not say they are in charge. host: here is an e-mail from joan in vermont. she says i listened to the report yesterday about the budget, and they said a big reason for the deficit going up was due to the extension of the

bush era tax cuts. guest: right. if you look at the world in a static way, you could say that if we raise a little bit more taxes, and cut a little bit of spending, you could get there, and cbo quite often uses a static world view which sometimes turns out to be horribly wrong. the classic example of government bean counters getting a spending estimate from was medicare. they were off by 900%. one of the main reasons we have this huge fiscal problem is mistakes like that, where they do not look at human behavior and what happens when you change policy. if you raise taxes, particularly marginal income tax rates, you change behavior.

the investments you might have made this year, you will put off until a later time, or just off -- shift off's your business can accommodate that. host: what about the deficit commission? that had republicans and democrats. if they came up with a proposal. they said you had to have a combination of the two -- cut spending, and get rid of tax expenditures. maybe do not raise taxes, but if you get rid of the mortgage interest deduction, and the health care tax reduction, if you get rid of those things, simplify the tax code, and then maybe raise taxes for people, you might get there. what about that? guest:, one of the best reforms of our health-care system is to treat plans the same. right now, there is a huge bias that favors the employer plans.

i support fixing that problem. i support getting rid of all tax loopholes. it should be done in the context of tax reform. there were a lot of good ideas in that commission. you notice the president is not that enthusiastic about the results. the fatal flaw with the proposal is that if you look at total revenue as a percentage of gdp under their plan, the way they balance the budget is by ratcheting up total taxes in a historical the unprecedented way. if you could do that, but i think you do more our economy to -- and doom our economy for quite some time. caller: let me explain that i consider myself a ross perot-ian in my politics. i believe in truth, facts, and

results. i disliked liberals. their way to jenner's with somebody else's money. i equally hate conservatives because they are liars and thieves. let me explain something you have yet to say. the reason for the deficit is not because of spending. it never was. 25 years of tax cutting put us where we are. in 1986, they said if we continue on this trend, which will be in the trillion dollars in deficits. ross perot said you could stand -- stack $1,000,000,001 bills on top of each other, and you could not see the top. forget about trillion. when i see -- tea baggers talked -- you did not know what you're talking about. you make it up as you go along.

host: explain how -- explained growth? guest: was working on the budget committee. the proposed a series of tax cuts and spending cuts in in 1992, 1993, in 1994. we had a recession and what was hysterically -- and historically high deficit. the result, with of that and the massive new growth in spending restraint, revenues were able to grow up to the place that we held spending too, if you had budgets and budget surpluses for some years afterwards. that is all we are talking about. it is not enough to just raise taxes. you this incentivize people.

if you tax capital, you get less capital, tax waiver, less labor, tax investment, less investments -- this is economics 101. you have to find a place where the burden is not so high that they decide to do something else. host: matt kibbe is the president and ceo of freedomworks. he serves as chief of staff and house budget committee says it for representative dan miller. here is an e-mail from steve in the illinois. cutting back is a good idea, but what sector will create jobs? guest: it is presumptuous for any individual, whether you are the president or the head of freedomworks. how could we possibly know how the private sector is going to

expand and grow? i think it is dangerous whenever you have some bureaucrat in washington, d.c., say we should be involved in green jobs because that is the future of the economy. we do not know. the purpose of a private economy is that you get a multitude of individuals lying for the best idea rigidifying for the best idea. whenever you -- been vying for the best idea. if you get it wrong, not only did you get it wrong, but he stopped the guy who would have gotten it wrought -- right, from getting it right. host: paul, the democratic line in detroit. good morning. caller: i was wondering, where people as like-minded and during the bush years?

spending was out of control then. i wonder where you were when they belt of the banks who messed up all of the money -- bail out of the banks, last of all of the money. they should have given the people and the money. the people would have paid off the sub-prime loan spread to many politicians are in bed with large corporations. insurance companies are allowed to run rampant over people. when they give you a policy, they do not have to live up to that policy. i'm going through that right now myself. guest: it is a great question. i get that all the time. where we were was fighting with republicans. we were in opposition from day one against the tarp, wall street bailout that was both president bush, speaker nancy

pelosi, majority leader harry reid, and all, by the way, it was candidate barack obama, all of whom endorsed the massive bailout. go back. check out our website. we were there from day one. this was the seating of the tea party movement today -- the frustration with republicans and democrats spending money we did not have. we were trying to get an anti- year mark crusader fighting against republican year marks. he is now on the appropriations committee, looking to make sure appropriators to not go back to their old ways. host: norman, okla., karen on the republican line. caller: thank you for c-span. it is always funny when the democrats called in.

they dodd the people that are working -- they dog and the people that are working. do they think there is free lunch? freed medicaid? that is not free. people work. we take care of our poor people. republicans care about people. we are the ones that pay for all of that. we just want them to put out an effort on getting out and doing something themselves. we are tired of paying people -- for people that do not pay for themselves. you cannot afford all of those kids, do not have them. guest: i think when i have discovered spending the last two years with tea party activists is a real awakening of a basic american value -- hard work, on

this relationship with the government, pay your taxes. there is a self reliance that defines us as a movement. we believe in freedom. we believe in limited government. as you go through the crowds, you discover that most americans, whether they be disaffected republicans, independent, libertarians, we are all on that page. that is what binds us. host: this from the associated press yesterday. guest: those are obvious points that we made during the debate. you just have to look at

history, and house cbo has scored government health-care programs before -- medicaid, medicare -- the growth has been literally almost tenfold what they predicted. the problem is, you have a constrained budget. you will never have enough money to pay out the benefits that people would want if the benefits are free. you have increased demand, constraint cost. that is what creates these problems in government-run programs. on the spending side, all of the savings they used to supposedly paid for obama-care were part more -- primarily phony stuff. it is the budget game that both democrats and republicans have played in the past. the idea that we will cut medicare, which is currently facing a massive unfunded liability, to create a new program and the primary pay was cutting medicare -- it is just

not going to happen that way. it is not honest to do with that way. if there are taxes, all sorts of stuff that do not work. it was the worst type of political bargaining to get the last votes. it is not rationally- constructed. host: democrat, of virginia. caller: the deficit is not a big -- as big a problem as the republicans and the tea party is >> and now, the white house briefing with press secretary robert gibbs. [laughter] >> and that is funny. i feel awfully overdressed. everybody's shoes -- i am sorry.

>> could you comment on the financial crisis investigatory commission, and do you agree with the findings that the crisis was a preventable? >> let me say this. i think treasury has a statement on this. we applaud the efforts of the commission to explore the causes of for the financial crisis that occurred in 2008. our biggest task in assuming office as relating to the financial crisis was getting our economy back on track and taking the appropriate steps to ensure that it never happened again. that is why the president put so much effort into wall street reform to ensure, again, that what happened leading up to and during that crisis never repeats

itself. we are obviously focused on taking all the necessary steps to implement that legislation. >> what member of the commission said today that the financial system it is "not really different" from prior catastrophes? what would you say to that? >> there is a whole host of authority's, resolution of authority is being one of them, that is markedly different. we saw in the crisis, taking a i g as an example, a fairly successful insurance company that someone put a hedge fund on top of it. the hedge fund caused government

officials to have to put quite a bit of resources into the overall company, rather than just dealing with some of the root causes of the downfall. we now have the ability to break those things apart and deal with them separately. i would point out that aig money has been paid back to the government as a result of some of the steps, management steps, that have been taken. >> on 1 different topic -- could you comment on the white house and use of social media, which seems to be increasing? >> look, obviously, david is a big believer in the social media. are you talking about some of the interactive stuff around the state of the union?

>> [unintelligible] >> youtube was a reprisal of something we did back in 2009. the president thinks youtube is an on-line town hall meeting. obviously, a number of us use different types of social media like twitter to communicate what the government is doing to the people in this country. i think it's it is just another way of bringing people a little closer to the decisions that get made here and why. i think the president and the entire team will continue to look for avenues and opportunities to expand the use of those entities. again, whether that be twitter, youtube, or other aspects of

social media. >> the imf today singled out the u.s. as well as japan has a heavily indebted defense economy. [unintelligible] >> i think that the president demonstrated the seriousness and the issue of deficit reduction that must be taken. as you heard the president say, to win the future, on tuesday during the state of the union. the president understands that we have to take steps to reduce the level of government spending. he outlined a very specific steps as an opening bid of sorts in the state of the union to freeze and a non-defense

discretionary spending over the course of five years, saving $400 billion. and bringing it to the lowest level since president eisenhower. we understand and the president certainly understands this is an issue that will have to be addressed. >> do you think the imf concern is legitimate? >> i think the president believes it was legitimate several years ago. again, we did not get into this -- we are not dealing with $14 trillion or $15 trillion in debt because of the last two years or three years. this is a problem that will take a concerted effort by democrats and republicans working together to find a solution. >> in egypt, street protests are

continuing. a chief has returned to the country. does the administration sees him as a viable alternative to the leadership? >> let's have a little bit of discussion about some of the things in egypt. first and foremost, and i said this yesterday, that there is an obligation by the government not to engage in violence. there is an obligation by those that are protesting not to engage in violence by burning government buildings. a first and foremost, this is a process that should be conducted peacefully, and that is one of

our primary concerns. i am not going to get into the different personalities, except to say that we believe that this represents an opportunity for the president and the government in egypt to demonstrate its willingness to listen to its own people and to devise a way broaden the discussion and it takes the necessary actions on political reform. that -- those are issues that the president talks with the president of egypt about every time they meet. i doubt there is a high-level meeting that happens between the two countries were those issues are not brought up brickwork. >> [unintelligible]

>> i think it is important -- because every country is different and every country is that a different stage in its political developments, to not generalize all across the platform. so, i think you heard the president talk about the people of tunisia. i think myself and the secretary of state have said quite a bit on egypt. i would hate to generalized across the whole series of countries at different stages in their political development. >> does the white house believe that the egyptian government is stable? >> yes. >> [unintelligible]

full support of the president? >> and this is not a choice between the government and the people of egypt egypt, we know, the president has been a close an important partner with our country. every time the president meets with him, and that would point you to the speech in the cairo in 2009, when the president addresses this as well as the readout that we put out on the december meeting that the president had as a part of the middle east peace process, that we consistently have advocated for the universal rights of the assembly, free speech, political reform. all of those are important. we have at every turn encouraged the president of egypt to find a way to engender

that political discourse in a positive way. and we will continue to do that. >> on youtube, in addition of this being a chance for the president to reach out and promote jobs or the economy, is this an effort by the president to engage younger voters? >> no. i sank this is an opportunity to go to -- it is not a demographic gold slice. -- it is not take demographic 0 al it is not a demographicca slice. i think cn and hosted a youtube debate back in 2007. again, i think it is a perfect

opportunity to discuss these things, much like you would at a town hall meeting. i do not consider myself a younger voter. [laughter] >> one final question. are you closer to naming [unintelligible] >> the president and the team have the announcement to make on the job of the press secretary and others as a part of the organization that will be made. i do not know when that will be. i would refer you to my previous answer. >> robert, on the new color coded alert system, is the president confident that the new system will be able to communicate to americans appropriately and affectively? >> it is designed to take some

of the confusion out of -- you have seen this from both democrats and republicans. they agreed that there may have been disagreement in the beginning, it has caused some confusion. secretary napolitano is going to speak on this very shortly at george washington. i would point you to that. >> the cdo projected this week that the unemployment rate in the fourth quarter of 2012 and will be 8.2%. with the reelection coming soon, does the president feel like the message of "it could of been worse" will resonate with voters? >> the president is not focused on the date was the on and plummet will be in the first quarter of 2012. he is focused on what the

unemployment rate will peak in the first quarter of 2011. that is what animated his decisions in the tax agreement in december. again, a payroll tax cut which analysts have said it will increase economic growth and job creation. tax incentives. we saw some of this yesterday. that allow companies to accelerate the dispensing of investments, which we and others believe will help businesses and expand. we hope it will hire more people. i don't think people here are flipping to the fourth quarter. we are focused on today and tomorrow. >> has the president been briefed on his condition? >> the president to my knowledge has not spoken with anybody. we have seen the reports that he

is in the hospital. the president and first lady's thoughts are with nelson mandela. we will try to keep up-to-date on his prognosis. >> on it egypt, the leader of the -- the president has not vocally supported leadership. is that sending a message to the people that they should go full force? is that going to inflame this situation? >it sounds like he is being tossed aside by a lot of people. >> our government and this administration, and i presume previous administrations, are not here to pick the leaders of countries over the people in

those countries. we stand for universal rights that have been tried in our constitution and which led our country to be created more than two centuries ago. we believe strongly that those rights are held by those throughout the world. just recently, when president hu jintao was here, the president discussed universal rights. we do not see this as a choice between one or the other. i do not believe it should be. we think that, again, he is a close and import and partner. -- he is a close and important partner. every time they meet, the president talks about the steps he believes the president of egypt should be taking to have that conversation and have some

important reforms as a relates to political freedoms. we believe it -- they will have an opportunity to do this to have freer elections. we believe that the emergency law that has been largely in place since 1981 should be lifted. its extension was not a good thing, to give the government judicial powers which we think are unnecessary. all of these things we will continue to push and prod the president of egypt on in order to create a situation, peacefully, and i think that has to be underscored, both the government and the protesters, to get into a place where political dialogue can take place. >>

>> you are saying that the most important thing is the appearance to international tonight's, the rights of the people of egypt. would it be a good thing if he were overthrown? >> i'm not going to get into picking the leaders of egypt. that is not what the government of this country does. i think that what is important is we -- president mubarak and those that seek greater freedom of expression, greater freedom to assemble, should be able to work out a process for that happening in a peaceful way. >> there is a perception by many on the ground and egypt that the united states is taking sides, not with mubarak. is that accurate? >> this is not about taking sides -- >> their perception there is of taking sides.

>> let me try for the fourth time -- this is not about taking sides. [unintelligible] well, i hope he will play each of the four times at which it is not -- i hope you will play each of the four times in which i say it is not a choice that you make. when president mubarak was in the oval office and is it ever, these issues were brought up. when the president spoke with president mubarak about the events that were taking place in tunisia, the re-output out about that is very explicit where the president -- readout we put out about that is very explicit about the president talking about the kinds of reforms that have needed to take place in egypt. this is a sustained and important message that we want to deliver to president mubarak, the government of egypt. we think they have an important role to play. >> there are analysts who

believe that the president is expressing that mixed message much more forcefully than he did during the iran uprising, that he was slow and cautious and then at supporting people in the streets but he is not now. >> again, our response has been quite similar in speaking out in support of universal rights. the president spoke with you all in the rose garden prior to the iranian elections. again, as i said earlier, political conditions and developments in different countries are different and i hate to generalize. >> i am curious what the president on about the metropolitan area's response to the snowstorm last night. >> honestly, i have not talked to him about it. >> did it take them time to get in? >> it to attend a little

while. >> more than a little while. >> jackie can appropriately report that is on the conditions on the parkway, it was some evidence that we don't get a lot of the special treatment. i think it took -- it was interesting -- last night, it seems everybody was on the road, and this morning, it seemed like nobody was on the road. you see a lot of the stranded cars. even some of our staff coming from andrews found a conditions to be too hard to travel through, and parked the car i lot and took the metro. i certainly hope everybody is safe and accounted for in an

arduous and natural disaster of sorts. >> does the white house believe that the financial crisis condition was a good use of time and resources? >> again, we applaud their efforts to look into what caused the crisis and what steps might be taken to ensure it never happens again. that's why the president spent so much time over the course of the previous two years trying to ensure the steps we took in wall street reform ensure that we don't need a commission like that ever again. >> following up on something that someone asked, doug elmendorf said that the natural unemployment rate of 5.3% probably won't be back until 2016. does the white house agree with that? >> i would have to look at what

estimates of folks have. i know there is an economic report we have coming up. what we saw was in many ways a perfect storm. we have seen it with the financial sector, we saw it -- it continues -- we see the continuing effect of the downturn in the housing market. you know, i should have the graph that, again, it just shows the level of job loss -- again, today it but not quite apples -- red apples to red apples comparisons, because the size of the economy is marginally different. but if you look at the job loss in the recession of the early 1980's, the recession of the early 1990's, and the recession in the earlier part of the

previous decade, 2001, 2002, 2003, all of those dips added together don't equal the amount of the job losses we saw more than 8 million jobs as a result of this calamity. it is going to take some time. the key, though, is very much the path the president outlined in the state of the union, and that is that we have to take steps as manufacturing jobs have left or as companies find it more profitable to set up shop in some other place to provide incentives through research and development and manufacturing and exports right here. that is what the president focused on in the state of the union. how do we out-educate, out- innovate, and out-build countries, how do we reform the

budget in our government, in a lay theo th foundation so that the jobs we need created today and tomorrow or found here it? so that companies are expanding business not just in this part of the country but parts of the world where we see emerging markets take place? the will and it almost all that the president does this year. -- that will and made almost all the president does this year. >> some of the more traditional energy producers said that if you what the economy to do better, you should take regulations often in terms of making it easier to drill or coal -- you can develop those energies. >> i think this is embodied in the promise that the president -- or in the proposal that the president made, the promise to increase the amount of electricity produced through clean energy sources to double

from 40% to 80% through it 2035, not to take an either/or p approach. if the drilling was just the answer, if nuclear was just the answer, wind was just the answer, my guess is that the problem would have been figured out long ago. you see in the standard that the president of ford that yes, let's see all of that. nuclear,wind, let's do let's do solar, let's do clean coal technology. we have an energy problem because too much of our energy -- we are dependent for too much of our energy on other places in the world. the creation of the jobs around the newer forms of energy -- we cannot lose out to a place like china. as you heard the president talked about yesterday.

just not just pick out win or solar. -- wind or solar. let's pick everything. that is why democrats and republicans can all find something to like about that. the question is, are we going to have the courage to take the steps to do something like that, to continue to make those investments? ,he last stop yesterday watching the manufacturing process of creating a wind turbine that might said 100 meters upright and harness energy through wind, that's putting people to work right there, creating the steel, moving it in, manufacturing those towers, shipping of those towers out, putting those towers

up. we will have to decide whether we want to import that had a technology from china or india or someplace else or whether we are going to put americans to work, back to work, creating those energy sources right here. i think that very much about is what the president is discussing in the state of the union. >> what it easier to be on the side of the protesters in egypt if the egyptian government warrant such an important ally for us -- weren't such an important ally for us there? >> i think we very much recognize the right that those in egypt want more freely to settle the dispute and to be involved in political reform -- to assempt and to speak and to be involved in political reform. that is a bedrock american value. i think the government of egypt and the president of egypt needed to find a way to ensure

that this type of dialogue and these types of reforms can happen. >> you say that the president has spoken to president mubarak, but financially, we don't speak that way. it is in the top quarter of foreign aid, egypt is. why not use the carrot and stick approach if we were so concerned about the lack of democratic reform? >> chuck, this is just as the president talked about with china. we have a whole host of bilateral concerns and relationships. that does not change our desire to see free and fair elections,

the ability to assemble, the ability to speak more freely, the ability to be involved in a healthy democracy b. >> jordan, saudi arabia, yemen as well? >> i don't want to -- it is our policy to support a universal rights which i spoke about -- and which you heard the president speak of. i hate generalizing across different platforms, but when you say the president -- you said you know that the president brings this up, i would be happy to circulate some of this, because i know sometimes when we put out. out of a call or meeting -- put out a readout of a call or meeting or and it is not on the front page of the newspaper or the first five minutes of the newscast, that is understandable that you might not immediately focus on some of the things that are in those readouts.

but whether it was the president's meeting with president mubarak in september, the extension of the emergency law, or even the one we did just recently on the call to president mubarak about the tensions in tunisia, these are things that are brought up on each and every one of those calls. >> a couple other issues. what is republicans are trying to get rid of the matching fund -- one is republicans are trying to get rid of the matching fund, a check-off to basically save money for the government. how committed is the president and supporting t his? would he veto any sort of bill that -- >> let me -- >> is it one of these he will veto this -- >> i don't think it is getting -- [unintelligible] yeah. >> with the government

reorganization project development that you are entering now, do you expect it will result -- >> was that me squeaking or you? you don't have during her on -- have your ringer on, do you? a new one. >> my question right here. >> do you expect it would result in savings the government outlays, saving government money? >> well, i think the hope would be to see some savings, yes. but i think what is primarily most important in a reorganization like this -- i think you probably would see some savings as a result of the

duplicative nature of many departments and agencies and what have you all having certain equities in the same basket of issues or ideas. first and foremost, as the president talked about, it is reform for the creation of a government that hasn't been reorganized in decades, that needs to be more fully tilted toward the challenges that we have now and that we face tomorrow. i think those are the president's objectives. >> what we are talking about the debate that happened in washington over the size of government and how much we should be spending each year, is this something that should be part of that? >> i think so, but it is important to understand, as the president outlined in the state of the inning, domestic

discretionary spending -- if you did away with it all, you would still have i think what most people would consider to be a deficit of number -- deficit number that we don't want to live with. i don't think people think we are going to balance the budget based on -- >> part of the administration's response to that -- >> i think from the viewpoint of the president and the team here, it is to -- it is more so to align the priorities of our government with a structure that is able to more efficiently and adequately address these problems. >> why is he not going to colombia or pat nemaha on the trip, given that we have traded

deals with these countries -- colombia or panama on the budget, given that we have trade deals with these countries? >> i am not sure how each country was picked it the president seeks to expand alliance is in a very important region of the world. my guess is you could spend -- there are reasons to go and see virtually -- or most countries down there. we are, as we talked about in the briefing we did around the state of the union, hopeful that, first and foremost, we can get the korean free trade agreement through congress as soon as possible, and that the ustr and others can continue work on panama and colombia. >> when the president is ready to announce your successor, will he do it in person? >> i doubt it. >> really?

could it be paper? [laughter] twitter? >> no, i don't think it will be on twitter. i assume it would likely be on paper. snow, doesn'ty's raise questions that if there were an emergency and the president needed to get back to the white house or andrews, in a situation where there is not marine one available, doesn't it raise national security concerns? >> i talked to some of the detailed leaders when we got back to the white house. based on the resources that it would take in this instance to get enough equipment, manpower, what have you, to fully block

off that route, while we are having this emergency, they did not necessarily think it made sense at that time, given, again, how many people were also trying to get home. that having been said, obviously, if we were coming in in a weather emergency like yesterday, and needed to have that happen, i have no doubt that that could easily happen, because just as a matter of the resources that you move out there, and ultimately, how quickly those resources you might need to get back. >> does it raise questions about what might happen with pc to be evacuated -- with d.c. to be evacuated in case of a national emergency?

>> i am probably not the right person for an emergency management officials to address that. there might be an appropriate agency to address a. >> tomorrow, the president is going to be speaking at the health care families usa conference. >> i think the president will take the opportunity to largely reiterate what a lot of what was in the state of the union to talk about the economic challenges we face, but we have to do. also reiteratel what was said in the state of the union on route health care, the progress we have seen in getting benefits to the american people as a result of the passage of the affordable tax act. -- affordable care act. as you talk about the fiscal impact of the decisions the government makes, we know the

cbo says that the median in back is a couple hundred billion dollars. -- median impact is a couple hundred billion dollars. >> also come in the state of the name, the corporate tax rate -- the state of the unit, the corporate tax rate hampering businesses the ability to compete -- is that something that jeffrey immelt would advise the president on? will there be recommendations coming from the panel? bei don't think this would the primary policy driver, but at the same time, i think the president would certainly want the year from -- certainly want to hear from members of that group and other members in business, economists, academia,

that want to weigh in on that. this process where the president -- this is a process with the president will ages nicklas, a process that typically takes quite some time -- will engage stakeholders, a process that typically takes quite some time. >> is jeffry in all a person that the president would council on the corporate -- is jeffrey immelt a person that the president would council on the corporate tax -- >> whether it is mr. immelt or other persons with a host of experience, he is eager to hear their opinions. [unintelligible] >> i am sure we will have occasion to do that. i wouldn't do that today. >> i will just follow up on julianna -- when the president was deciding on how to proceed with tax reform, and there were talks for weeks that it was going to be limited to corporate

tax reform, he said in a speech there was the possibility to do individual as well. ben bernanke, when he testified recently before the senate, said he got tax reform should be done at a comprehensive way, individual and corporate done together. that was the way was on the last time. can you tell me about the president's decision making that he is singling out the corporate side of the tax code -- >> i think each of these are going to be longer-term projects. obviously, and that may indicate sort of a bit of a reason for the bifurcation, because i think the complexity on the individual side, and obviously, discussions that are half as it relates to the fiscal

side, are going to be important, and, again, it takes some time. we did tax reform in the mid- 1980's, or, i should say, started in the early 1980's and ended in the mid-1980's. we know it is a process that takes quite a bit of time breanna i know the president is eager to address corporate tax reform. we need to take the steps to make our country more competitive and create those jobs here rather than take the jobs overseas. >> you say each of these are going to be a longer-term projects. will he follow on with specifics on the corporate side -- >> i think the president wants to have an hear from

stakeholders, democrats and republicans, about what they want to see as part of a corporate tax reform. i don't think this the president has a take it or leave it plan and you take it or leave it. i think the president wants to in gander a discussion on the the size, scope, what all may look at. we are certainly eager to have that conversation. >> do you have any feelings about the tone and content and what approach in the future in terms of oversight? >> no, i traveled yesterday and i did not see a ton of the hearing. i think our posture hasn't changed from even before congress was sworn in. there is an obvious and necessary role for needed oversight. there is, and there has to be, the vigilance that it does not become and get into, uh,

political witch hunts in which we try to dredge up a fight or battles from many, many years ago. we are certainly -- we will certainly cooperate on ensuring oversight and efficiency. >> on of the storm yesterday, is the president satisfied that federal workers -- the way they were released yesterday, many of them stuck for hours and hours in traffic. that is under the executive office of the president. >> i have not had occasion to speak about this with him this morning. let me see if i can get further guidance from opm on that, which may honestly be the best place. you have a fairly large city that has few ways home, to date

-- >> taking more time to get out -- >> let me see if opm and address that. >> about earmarks -- >> the president was pretty clear about earmarks in the state of the union. the president would tell leaders in congress before the bill got here not to send it out here because he will send it back. >> did he tell senator reid that? >> there are 535 people he told that on tuesday and he is happy to reiterate. i think there is a reason why the piece of legislation that was contemplated at the end of last year never made it.

i think the days of those types of things have passed us by. >> sen. reid said the president needs to back off at the earmarks are coming back because he is going to be around for a long time. there is serious disagreement between the president and the leaders of the hill. as he talked to senator reid on that? >> i don't know who would be jesus. [laughter] [unintelligible] [laughter] no, no -- >> first jesus reference. >> no, not to be flippant or funny, but going back to the original answer, the president was clear on this. we are going to

make a very tough decisions, as the president talked about, in the budget. we are going to make decisions that cut programs that democrats and republicans alike and both say are important. but we are doing that because the government spends far, far more than it takes in. that cannot continue. i don't know why or how you could ask different agencies and different places to undertake an exercise that those on capitol hill are unwilling to take themselves. that's what animated the president's decision to include not just an end or earmarks, but eight specific pledge that if they show up in the legislation, he will veto it and send it back. he said that after the election in an interview with "60 minutes," and i, you know, take

him at his word. >> can you talk about the president's domestic travel schedule this year? will he be traveling more domestically than the first two years? he went to wisconsin, an important state. will there be a concentration on states that are important to 2012 -- >> again, i think you sought three fairly dynamic companies. they are adding jobs, they are innovating, meeting many of the challenges of tomorrow. it was -- there were good examples. m that is why i -- that is why manitowoc was picked. soak quickly after the bears lost, we would not picked something so close to green bay. i think you will see the

president traveled more. the president always feels better when he gets -- i don't mean out of the city, but you work and live in the same place, it is nice to get out, nice to see and talk to those that, like yesterday, are innovating, that are building. we will take trips to schools to see decisions that are being made at a local or state level. for those that are in the pool, he goes on to the stores with a genuine amount of a curiosity -- on these tours with a genuine out of curiosity to see how they build these things. they are fun trips. >> regarding what you said about the press secretary announcement, it could be either

today or tomorrow? >> it could. >> could come later? >> "or tomorrow" -- one or the other? >> i think what i said was the announcement will come when the president and all -- no, i was going to make a joke, but i will just get in trouble. the decision will be announced when all the decisions are made. >> the competitiveness council -- has the president made a decision about those members? and a related question -- is there anything that is going to change about that council in terms of the previous one and doing its new mission? >> i don't know about the timeline for the appointments, but let me check and see if there's anything on that. the structure of setting that

up to sometime -- took some time. that probably got it off to, in terms of presidential meetings, a bit slower than the president and i think members of the -- members of the group would have liked. i think the president will have occasion to meet with this group on a more regular basis. let me find some guidance on timing of that. bill? >> first, back on the press secretary, if it could come today or tomorrow, does that mean the decision has been made, just not announced, correct? >> i have not been told that, and out. -- not been told that, no. >> do you have any idea what gov. palin meant when she said --

>> gov. palin? commentk -- when her that "sputnik" in the state of the union was a wtf moment? >> we should talk offline. [laughter] >> what is she trying to say? >> i am sure all her answers are on her twitter. you think it needs world trade -- i? -- it means world trade? winning the future? wow. you're hired. [laughter] >> just going back to egypt, for 30 years, the president has been saying to president mubarak exactly what you said president

obama has been saying to president mubarak, with no effect. what additional leverage does president obama have? can you blame the egyptian people for seeing the president's pro forma statement on human rights to be more than pro forma? -- idon't know allowable don't know the level of seriousness or exactly how each of those conversations transpired prior to when we got here. i can only speak for our time here, and that is this has been an important part of not just ogueident obama's diale with president mubarak, but in talking to those here that are involved in senior meetings around government with -- that

would interact on a bilateral basis with the government of egypt, these are topics that we pushed each and every one of those times. i think what makes maybe this unique is -- and i would refer you back to the statement on this when we say this is an opportunity for president mubarak to seize in order to address the decades-long concern, concern that the people of egypt have for their lack of rights. i think our hope is that in a peaceful way, we can all witness

the government of egypt, president mubarak, and the people of egypt come together in an important dialogue in a forum where these rights and these universal values can and will be addressed. again, i think it is important to reiterate one more time that , as these discussions and as these protests happen, first and foremost we want to caution to both the government and the protesters to do so in a way that is peaceful and respects the very rights that we are having a discussion about. thanks, guys. [unintelligible] you know, i did go for about 3/4

of it. the president -- you guys have a roster of who was there -- the president got an update of the situation on the ground in afghanistan, both from a counterterrorism perspective as well as the security situation in afghanistan. the people of the meeting was spent -- the bulk of the meeting was spent discussing our goals for afghanistan and pakistan in 2011, goals and objectives and how we are going to meet those. that was the bulk of what the team went through this morning with the president. look, i think the assessment of where we are security-wise is not a lot different than when you heard the president in here during the af-pak review that

while we have seen progress, we understand that the progress is -- can be reversed if we don't continue to take the steps to ensure that as we clear, as we hold, as we build, and ultimately the goal as enumerated in lisbon to transfer those security operations back to the afghan government, the afghan people, and we see an in these in the training an security forces. >> there will be more than a token withdrawal in july? >> i would point you back again to the president has said repeatedly and reiterated in the state of the union just on tuesday. thanks, guys. >> thank you.

>> the senate is in session today to consider a number of changes to operating rules. members agreed to consider five resolutions. the changes range from filibuster rules to the ability of the centers -- of senators to secretly bought resolution. votes on those resolutions take place this evening. all require a super-majority vote to pass. like the senate coverage on a c- span2. the house is not in session today. members completed all legislative work yesterday and are in recess through next week to follow the house live on c- span when the chamber gavels back in on tuesday, february 8, at 2:00 p.m. eastern. >> listen to historic supreme court cases on c-span radio. saturday, from 1989, the court

considers copyright and ownership in the community for creative non-violence v. james reid. >> james earl reid and independent contractor and he was going to create a commission. >> listen to the argument on c- span radio, in washington, d.c., at 90.1 fm, nationwide onn xm, and online c-span.org. >> we created new entitlements on topless the ones we already acted -- on top of the ones we already have. >> republicans picked up all right and to respond to the president's state of the union address -- picked paul ryan responded to the president's state of union address. find out more about him on the deceased and video library.

it is washington your way. -- the c-span video library. it is washington your way. in the house, oklahoma republican tom cole offered a bill to reduce federal spending and deficit. follow the entire debate and the final vote on line with c-span's congressional con -- chronicle, with a time lines and transcripts of every house and senate session. c-span.org/congress. >> this morning, the financial press inquiry commission released a report on the causes 08 financial and economic crisis. the panel says it occurred because officials at wall street executives it ignored warning signs and failed to manage risk .

the republican members will release an additional two reports. this is an hour and two minutes. >> today we present to the president, to the congress, and to the american people this commission's report, and our conclusions about the causes of the worst financial and economic crisis since the great depression. the task of this commission was to first determine what happened and how what happened so we can understand why it happened. this official report about the causes of the financial crisis and our conclusions are based on our exhaustive and fact-based investigation, which we pursued for more than a year. we hope the american people will read this valuable report, because it is our belief that if we do not learn from history, we are unlikely to fully recover

from it. some on wall street and in washington with a stake in the status quo may be tempted to wipe from memory the events of this crisis, or to suggest once again that no one could have foreseen or prevented it. this report exposes facts, identifies the responsibility, a unravels midst, and helps us understand how this crisis could have been avoided. is our best attempt to record history, not to rewrite it, nor to allow it -- this has been of no small consequence to this nation. all of us are eager to see signs of recovery. we cannot forget that this financial of people will likely add that our economy for a generation -- impact our economy for a generation. it has wreaked havoc on

businesses and households across the country. with a 26 million americans are out of work, cannot find full- time work, or have given up looking for work. nearly $11 trillion in household and retirement savings have vanished. 4 million families have already lost their homes to foreclosure as a direct results of the economic fallout of this crisis. many innocent bystanders, people who followed all the rules, fear for their future, while our country faces no easy path to renewed economic strength. along our investigative attorney, we met many people from all walks of life who have seen their aspirations crushed by this crisis. many of these people look to the commission for answers, and perhaps some encouragement that the country's political and financial leaders, and indeed,

all of us, will choose a better path on the r -- from the road to this catastrophe. we kept these people in mind as we completed our work, with the hope that we never need another in a state commission like this, at least not in our lifetimes. over the past two years, there has been no shortage of debate and discussion about the government's decision to provide unprecedented and massive of financial assistance to rescue large financial firms deemed too important to fail. our mission, and the central question we address, was this -- how did it come to pass that in 2008, our nation was forced to choose between the two top stark and painful alternatives, either missed the total collapse of our financial system and economy, or inject trillions of taxpayer dollars into the system and private companies even as

millions of americans still lost their jobs, savings, and their homes? at the end of our inquiry, we reached six major conclusions. every commissioner here today stands firmly behind each and every one of them. we concluded, first and foremost, that this crisis was avoidable. despite the expressed view of many in the circles of financial and political power that the crisis could not have been foreseen, there were many, many warning signs that were ignored or discounted. second, we saw widespread failures in financial regulation. third, our report describes dramatic breakdown in corporate governance and mismanagement. fourth, we detail how the excessive borrowing, risky investments, and lack of transparency put our financial system on a collision course with the crisis. fifth, we concluded the key

policy makers, at our government, was ill-prepared for this crisis, and they're inconsistent response added to uncertainty and attic. finally, this report explains how can ability -- accountability became widespread it in the run-up to this crisis. i will start by focusing a few remarks on our first conclusion. this financial crisis could have been avoided. let us be clear -- this calamity was the result of human action, it in action, and his judgment, not of mother nature or computer -- misjudgment, not of mother nature or computer models gone haywire. the stewards of our financial system ignored warnings, and, importantly, fail to understand and manage it devolving risk in the financial system that is so

central to the well-being of our country. theirs was a big miss, not a stubble. there was an explosion in risky lending and securitization, unstable increases in housing prices and mortgage debt. going back to the late 1990's, there were widespread reports of egregious and predatory lending practices. by 2004, the fbi was publicly warning that a surge in mortgage fraud at the potential to become an epidemic that would have much of the same impact as the savings and loan crisis. there were other red flags. it is the trading activities grew exponentially. the unregulated market for derivatives exploded, as did financial firms' reliance on short-term borrowing. there was, however, and unfortunately, throughout this period, a pervasive permissiveness. this report documents specific instances where leaders did not take action to stamp out smoldering threats that eventually led to financial crisis.

the record is replete with evidence of the failures, and you will see these throughout the report. the federal reserve failed to act as our financial system was engulfed in a wave of toxic mortgages. financial firms made, bought, and sold mortgage securities and they never examined, did not care to examine, and knew to be defective. from the fall of 2006 on, even as the housing market was in free-fall, wall street created more than $1.60 trillion in new mortgage-related securities. from 2000 to 2007, moody's rated 45,000 mortgage securities as aaa. beginning this year, there were six u.s. companies with that rating. in 2006, it gave its stamp of approval to some 30-such securities each and every working day. the results were disastrous. none of what happened was an act of god. the greatest tragedy would be to

accept the idea that no one could have seen this crisis coming, and that's, nothing could have been done in. if we accept this notion, it will happen again. let me now turn to my colleague and good friend john thompson, the chairman of the board and former ceo of the fortune 5 wandered from symantec -- fortune 500 firm symantec, to describe another of our conclusions. >> one of the conclusions of our work was that widespread failures of regulation proved devastating to the nation's financial markets. it is clear that center is were not at their posts. this was in large part because of the widely accepted belief in the self-correcting nature of the markets and the ability of the financial firms to police themselves. this is less confidence in the regulation of by the competitive industry was championed by the former federal

reserve chairman alan greenspan and others and supported by successive administrations and congresses. our report describes how this laisseze-faire approach opened wide gaps in oversight of our financial system in which chileans of dollars were at risk. these included a huge trading market in over-the-counter. it is at the less regulated part of our financial system that can be called the shadow banking system. in some areas where federal oversight existed, the government allowed the financial firms to select their preferred regulators, setting off a race to the weakest supervisor. we, however, do not accepted the view that regulators lacked power to protect the financial system. they had ample power in many arenas and and they chose not to use it. where regulators thought they lacked authority, they could have sought new powers to fulfill their mission of protecting our country's

financial system. let me highlight four examples from our report where strong and effective regulatory intervention would have made it unnecessary for all of us to be here this morning. first, the federal reserve was the only entity in power to stop out-of-controlled mortgage lending setting prudent lending standards. it had the ability and the responsibility to step up, as well as avoid this crisis. but he did not. the securities and exchange commission could have required more capital and halted a risky business practices at the big investment banks. but again, it did not. the federal reserve bank of new york and other regulators could have clamped down on excesses' at banks it oversaw, such as citigroup, as a dangerously increased its exposures to subprime securities. but again, it did not. policy-makers and regulators could have stopped the run away

subprime mortgage securitization trained as danger signs emerged. but yet again, they did not. this report also describes how regulators continue to rate the institutions they oversaw as safe and sound, despite evidence to the contrary. and in case after case, downgraded these firms just as in the veered towards collapse. it did not surprise the commission that the powerful financial industry would push for a weaker or lighter regulation. but what troubled last were the failures of the overseers to intervene and enforce the regulations and they did have. these actions or inactions deprive our nation of strong and independent scrutiny of such a critical sector of our economy. the public leaders charged with protecting our financial system sought and accepted positions of responsibility, and with that comes the obligation to act.

tone at the top does matter. microphone turn my m over to my colleague, brooksley born, the head of the commodity futures trading commission from 1996 to 1999 and early on identified critical risks to our system. >> thank you, john. as john it noted, 30 years of deregulation and begin oversight changed our financial system and help the financial firms -- and how financial firms did business. some believed that firms would naturally shield themselves from a fatal risk taking as a form of self preservation. however, the commission concluded the dramatic failures of corporate governance and risk-management at many systemically significant financial firms were critical causes of the crisis.

our examination revealed stunning instances of the breakdowns and irresponsibility. this report details case after case where top executives at their financial companies that they led acted imprudently, including aig, bear stearns, fannie mae, lehman brothers, merrill lynch, to name a few. the government's handoff -- hands-off the loss of the and financial firms' increasingly perilous business decisions went hand in hand. to many of these firms acted recklessly, taking on too much risk with two little capital -- too little capital, and with too much dependence on short-term funding. over time, there was a fundamental change at these

institutions, but typically in the large investment banks -- particularly i need a large investment banks and bank holding companies. -- particularly in the large investment banks and ankle the cubbies, which focused activities on risky trading activities that produce big profits. many of these companies took on in numbers exposures by acquiring and supporting subprime lendiers and creating packaging -- creating, packaging, and repackaging and selling trillions of dollars in mortgage-related securities. some financial institutions expanded in ways that left them at too big to manage, let alone to big to fail. too many firms set aside a judgment by raising mathematical models as reliable predictors of risk. to often, risk-management became his justification -- risk

justification. compensation systems in environment of intense competition and light regulation rewarded the big bet, where the payoff on the upside would be huge, and the down side ignored. the biggest financial institutions drove the market in over-the-counter derivatives after these instruments were fully deregulated in 2000. in the wake of that action, the market for these derivatives spiralled out of control and out of sight, growing to $673 trillion in notional amounts by 2008. we concluded that over-the- counter derivatives contributed significantly to the crisis. the report explains that the unlimited leverage, the lack of

transparency, the lack of capital requirements, and the concentrations of risk that proved so disastrous. it also lays out how credit derivatives fuelled mortgage securitization and amplified losses from the collapse of the housing bubble. after that collapsed, derivatives were in the center of the storm. millions of derivatives of all types between systemically important financial firms were unseen and unknown in the financial system nearly collapsed. the obligations hidden from view added to the market uncertainty and escalated the panic we saw in the fall of 2008, leading to government must

use of financial firms. -- let me turn to my colleague byron giorgio. he is an entrepot nor whose career spans government service, business, and the law. he has spent much of the last decade protecting investors from securities fraud. byron is also a member of the advisory board of the harvard law school program on corporate governance. >> think you very much. -- thank you very much. this commission concluded that a combination of inadequate capital, risky investments, and lack of transparency were critical vulnerabilities and important enough to warrant separate attention by this panel. in the years before 2008, to

many financial institutions are extraordinary sums by operating with insufficient capital and left themselves susceptible to financial distress or ruin if the value of their assets declined even modestly. from banks with excessive leverage to participants in the deeply flawed mortgage securitization chain, nobody had enough skin in the game. for example, the major investment banks, bear stearns, goldman sacks, lehman brothers, merrill lynch, and morgan stanley were operating with extraordinarily thin capital. by one measure, as of 2007, their leverage ratios were as high as 40 to one, meaning that, for every $40 in assets, there was only $1 in capital to cover losses. so immodest 3% market moves against them could consume their entire capital reserve. to make matters worse, much of

their borrowing was short term in the overnight market. that meant that the borrowing of tens of billions of dollars had to be renewed each and every day. the kings of leverage or fannie mae and freddie mac. they were the two behemoths government-sponsored leveraged banks. their leverage grew 75 to one. it was often hidden in derivatives positions in off- balance sheet entities and through what is called window dressing, financial reports made available to the public. our report in detail instances in which lehman brothers and bear stearns worthy true leverage was masked. the heavy debt taken on by some of these financial restitutions was exacerbated by the nature of the assets they were acquiring with that debt. as the mortgage and real-estate

markets turned out riskier and riskier loans and securities, many financial firms loaded up on them. but these firms were not alone. households took on more debt as well. from 2001 to 2007, national mortgage debt almost doubled. the amount of mortgage debt per household rose 63% to $149,500 even while wages were essentially stagnant. within the financial system, the dangers of all of this that grew more ominous because transparency was not required or desired. massive short-term borrowing combined with the liabilities and seen by others in the market heightened the chances that the system could rapidly unravel. the shadow banking system that had evolved over the past few decades did not have the protections that this country built in the early part of the 20th-century to serve as a

bulwark against runs on banks. by 2008, the $13 trillion shadow banking network had become larger than our nation's traditional banking system. as it turned out, we had a 21st century financial system with 19th century safeguards. when the housing and mortgage market was created, the lack of transparency, the extraordinary debt load, the inadequate capital, and the risky assets all came home to roost. what happened was panic and for some, we had reaped what we had some. we will hear from senator bob gramm. after spending 38 consecutive years in public office, he let the office in 2005.

senator, it has been a distinct honor and personal privilege to share with you on this commission. >> as part of are charged, it was a corporate for the commission to review the actions taken by government in response to the developing crisis and to determine if any of those responses contributed or worsen the crisis. we concluded that the government was ill-prepared for this disaster. it is inconsistent responses added to the uncertainty and panic we saw during the course of the crisis. this report describes how the

treasury department, the federal reserve board, and the federal reserve bank of new york, which were best positioned to watch over financial markets, were caught off guard by the events of 2007 and 2008. other agencies were also behind the curve. they were hampered because they did not have a clearer grasp of the financial system they were charged with overseeing, particularly as it had evolved in the years before the crisis. the lack of transparency in key markets was an impediment. policymakers believe risk had been diversified when, in fact, it had been concentrated. time and time again, from the spring of 2007 onward, policy makers and regulators had to scramble as the contagion spread. they responded on an ad hoc basis, with sprint civic

programs to put the figures in the by -- what specific programs of the fingers in the dice. they had no specific plan for containment because they did not understand the risk and the interconnections of the financial markets. even some of the regulators now concede to these errors. the commission concluded that senior public officials failed to recognize that a bursting of the housing bubble could threaten the entire financial system. the evidence that that was a possibility was clear. for example, in june 2007, when bear stearns had funds that were heavily invested in mortgage securities imploded, they were thought to be relatively unique, although many other funds were exposed to exactly the same risk. in another example, the federal reserve bank of new york was still seeking information about

the exposures created by lehman brothers more than 900,000 beretta contracts just a month before the firm collapsed. -- 900,000 derivative contracts just befora month before the frm collapse. they made the decision to let lehman collapse into bankruptcy while aig receive government assistance. this inconsistent approach stoked uncertainty and panic in the markets at the heat of the crisis. it is now my pleasure to turn the microphone over to heather marin. she retired in 2002 as one of the most respected equity analysts in the nation. >> thank you, bob.

as we have witnessed, the integrity of our financial markets and the public's trust in those markets are essential to the economic well-being of our country. the soundness and sustain prosperity of the financial system and our economy rely on notions of fair dealing, responsibility, and transparency. americans expect businesses and individuals to pursue profit and, at the same time, to produce quality products and services and to conduct themselves well. but after careful research, we concluded that this crisis was fuelled by a systemic breakdown in accountability and ethics. these failures were not universal. but the breaches stretched from the living room to the board room. they resulted not only in significant financial consequences, but also in a loss of confidence on the part of investors, businesses, and the public. examples of these breaches

included borrowers who defaulted on their mortgages so rapidly after taking a loan that it suggested that they never had the capacity or the intention to pay them off. mortgage brokers worked with lenders to put many qualified borrowers into higher cost loans so that these same brokers could reap greater fees. lenders such as countrywide wrote loans that borrowers could not afford. mortgage fraud flourished in the collapse of lending standards and lax regulation. one estimate shows that losses due to fraud and loans climbed to above $100 billion. and when financial firms package risky mortgages and then sold them off to investors, our investigation found that critical information was not disclosed. yet we believe that the commission's conclusions must not only be viewed analytically, but also in the context of human

nature and individual and societal responsibility. it would be simplistic to pin this on human failings, such as greed and hubris. but rather, the failure to weaknessor human weeand -- for human weakness proved devastating. the breadth of the crisis does not mean that everyone is at fault. in fact, many firms and individuals did not participate in the excesses that we chronicle in this report. we do place special responsibility with the public leaders who were charged with protecting our financial system, those entrusted to run our regulatory agencies, and the chief executives of companies whose failures and drove us to crisis. but we believe that we must also, as a nation, except responsibility for what we

permitted to occur. collectively, although certainly not unanimously, we acquiesced and embraced a system, a set of policies and actions that gave rise to serious crisis. while we were not charged with making policy recommendations, the very purpose of our report has been to take stock of what happened so we can plot a new course. based on our report and the work of others who have investigated the crisis, it now falls to us, to each of us to make different choices if we want different results. thank you. i would like to turn it back over to our chairman phil angeles's. >> thank you. before we go to questioned, i would like to make some closing remarks. i want to thank my nine colleagues, especially vice chairman. i know i speak for all of us when i say how fortunate we have been to have won the albert as our executive director and the extraordinary staff who has --

to have wendy alberadelberg. the report and many materials sighted in it are available online at our website. before the commission officially disbands on february 13, will post additional materials gathered during our investigation. as of this morning, there are about 1200 documents already placed on this website. many are associated with the book. we expect to place approximately 700 plus additional documents and about 300 audio transcriptions summaries of an abused so there

is an historical record beyond this to send to the national archives. this report should not be viewed as the end of this nation's examination of this meltdown. in many respects, our financial system is still unchanged from what existed on the eve of this crisis. we believe there's still much to learn, investigate, and to fix. and now i do want to know that, please beforemham we're done, it is because he has to catch a plane. >> mr. chairman. >> thank you. >> ok. >> thank you so much for your

time. obviously, wheat, in the press, have noticed the absence of the republican appointed members of this commission. is the fact that their descent is likely to undermine how port and play this can be taken? >> let me make a brief comment and then i will ask one of my colleagues to comment. first of all, we're here to present the report today. there are two separate the sense that have been filed. the public and the media will have a chance to view the dissents. we can find areas of agreement in the conclusion. the seriousness of mortgage fraud. but i would say this, there are fundamental differences.

we believe that this crisis was avoidable. we believe that it was the result of human action and inaction. i believe that the report speaks for itself. would you like to add to that? >> i think it would be useful for the record for the questioners to say their name and their affiliation. >> thank you. >> i apologize. >> and i might mention also, on this one point, that in this report -- almost the entirety of this report, 490 pages of report and footnotes is dedicated to the backs of what happened to this country upon which we based our conclusion. i believe the report speaks for itself. i will let the might be handed over. >> hello.

can you elaborate more on the responsibility of the household factor, the borrower, and elaborate on the policy implications. it does not seem that a lot of the households were rescued and they carried the brunt of this crisis. >> the report itself does not make prescriptions for policy. it does add an awful lot to the evaluation of responsibility within the whole system, natalie failures that occurred by our regulatory -- not only failures that occurred by our regulatory agencies, corporations, and households themselves. i think that the use of this report for those who are making those decisions is to come back to a treasure trove of information that is inside of it and also on our website that relates specifically to the underlying investigation

analysis and research that we did. >> next question. i encourage my colleagues, if you have something you want to note on this, please just weigh in. let me know. >> i am a reporter with cnbc. you talk a lot in the report about was to blame for various aspects of the financial crisis. but there are key players that are still in power and making decisions about the recovery. what do you say about the roles of ben bernanke and timothy geithner? >> first of all, mr. bernanke himself admitted to us that it was a very serious failure of the federal reserve not to stem the flow of toxic mortgages. i think mr. geithner himself could have done more to curb the excesses of citigroup.

i think the report speaks for itself. the fax are on the table. there were failures and there was a government that was ill- prepared for this crisis. >> i think we should acknowledge those who were power at the moment of the crisis dealt with anomaly vote -- dealt with it in an unbelievable manner. in fact, our country is better off because of the actions that were taken there. our look is what -- i look his that would cause the crisis. the federal reserve was the stewart of lending standards in this country and -- was the steward of lending standards in this country and did not do anything about it.

on and on, regulator after regulator, they either chose not to act or turned a blind eye to what was actually going on. it is less about a particular individual that a systemic sense of deregulation and inaction by those who were in power to take action. >> have they learned the lessons of the financial crisis? >> that would be a better question posed of them than me. >> both chairman bernanke and secretary geithner, during the course of their interviews with us and their testimony, themselves upon reflection, have noted that there were certain decisions they had made that perhaps they wished they had made differently. i think it is very admirable for them to articulate that. it certainly was a rarity among all those who came before us to actually talk a little bit about their role in the financial crisis and to talk about how

they may have changed the actions they took. i think that is something that reflects on their character. >> really, i would like to add is that i do want to emphasize that -- i think it is very clear from our report that this government was very ill prepared for this crisis. when you read our report can you see that only a month out from the crisis the government is trying to figure out the exposure created by almost 1 million derivative contracts that lehman had, that is very sobering. when they go in to try to find out, they are afraid by even asking the question it will spread a panic. the federal reserve, the open market committee discussed this and they thought bear stearns was unique. so there were big misses along the way. we hope that lessons can be learned.

>> i think it is important not to focus just on those who are currently still in leadership positions. our commission was exceedingly nonpartisans in his criticism. mr. greenspan received plenty of attention in the book for the judgments that they made in the course of the time when they were at the helm of the responsible agencies. i think this is something that has been pervasive for quite some time. >> thank you. next question. >> cnn. i have two questions. number one, have you referred anything to law enforcement authorities for further investigation? if so, can you share as much detail as you're willing to? it snows here that all the sex received a bailout money from a

id. -- it shows here that goldman sacks received a bailout money from a id. aig.rom a i >> one was to examine the major institutions that would have failed if it were not for government assistance. we were asked to refer to the attorney general of the united states and any appropriate state attorney general that the commission may have found had violated the laws in relation to the crisis. where the commission found potential violations, it referred to those matters to the proper authorities. we will not comment on any specific referrals. secondly, let's talk about goldman sachs. [unintelligible] >> i said, where we found potential obligations, we refer them to the appropriate

authority. i will not spend a lot of time on this. on pages 377 and 30778, many people know that goldman sacks receive about $14 billion that it passed through to many other clients. but we found that goldman received another $3.4 billion retained two-thirds of it. unlike what might have been , it wasod broadwabroadly passed on to others. >> corporate crime reporter.

listening to you, flipping through the report, we hear words to describe the c o's of these companies, such as risky, reckless, imprudent, irresponsible. we do not hear the word "criminal." did you find corporate criminal activity or individuals and corporations who committed crimes? if you did, why have you not made that conclusion in this report? >> as the chairman said, our mandate was to refer to the attorney general or to the state authority any individual that

our investigation may have violated u.s. laws, whether civil or criminal. we made several of those referrals, but we will not talk about any of those details. >> are the public and the financial system better protected because congress gave cftc theand the ct regulation without the money to do it to? >> i hope that the statutory powers of the two agencies are fully implemented and financed. >> [unintelligible] >> i think a great deal of rule

making is going on now. they have some resources and they may well need additional resources for their additional responsibility. >> i am being told now that we will go to the phones. there are apparently a number of members of the media on the telephone. it is a snow day for those in washington and some remote. >> kevin hall, your line is open. excuse me, kevin hall? is open. ask your question. -- your line is open. ask your question. >> you had a very specific case where warren buffett was in front of you and you ask him to specifically whether or not he had been told by mühe these employees -- by moody's

employees that there were problems with structured finance and the there was a crisis ready to happen. he denied ever receiving that. you had documents and e-mail in your position, showing that he had reached out to them. can you talk a little bit about be buffett who'd showed to pretty indifferent to the workings of moody's? >> what was the end of that question? >> whether or not how much you touch on mr. buffett's testimony in new york in which you showed him during questioning to be a major shareholder who seem to divorced of the workings of the company and the earlier part of the question, whether or not you had in your position e-mail that shows he had been reached out to all from the structured

finance division. >> first, i will have to ask the staff to get back to you. that is about the e-mail exchange. i do not have that at my fingertips. we do talk about moody's extensively. we do talk about berkshire hathaway's large ownership in that company. i will have staff get back to you to point out where it is in the book and what we have. let's get to the next question. >> dave clarke with reuters. your mandate was not to make recommendations for policy changes, but congress obviously already made those. do you think that the dodd- is adequate? >> we hope that this will be a guidepost to policy makers as

our financial system is reformed. that journey has just begun. it has by no means added. there are major rules and procedures that have to happen. the jury is still out. would you like to comment on this? >> not particularly. [laughter] >> i just want to make sure that any other commissioners have any comment. >> i do not think we chose to take their work and shape it for dodd-frank at all. our task was to identify the causes of the financial crisis, not necessarily to safeguard investigation into a piece of legislation that might have involved. it is a circumstance that it did so during our investigation. i would hope that what we have outlined in our report does become a guidepost for what

legislators or regulators will do as they move forward. but it was not, by any stretch of imagination, intended to reinforce or support any particular piece of legislation. >> unaccustomed as i am to avoid or to pass up the opportunity to comment, i have changed my mind. i think it is important to recognize a couple of things. our financial system is really not very different today in 2011 than it was to the run-up to the crisis in 2006 and 2007. in fact, the concentration of financial assets in the largest commercial and investment banks is really significantly higher today than it was in the run-up to the crisis. as a result of the evisceration of certain of the institutions

and the consolidation and merger of others into larger institutions. i think it -- i think we would be remiss to suggest that whatever feelings we have uncovered in this report have all been addressed by dodd- frank or any of the legislation. it is our hope that what we have learned through an extraordinary process, this team year, and an extraordinary staff will inform going forward. like the possible need for the regulation. >> alexander free and, your line is open. >> london times. i would like to pursue further about the possible violations of

laws in the united states. can you tell us how many cases you have referred to the authorities? if not, can you tell us if it is 10 or more or less than 10? [laughter] >> more than one and less than 1000. we have made our statement on this. i want to emphasize that we are not a prosecutorial body. we were given a directive by congress and we referred those to the proper authorities. as a matter of fairness and appropriateness, those have been sent to the proper authorities to examine. that is all we will say on that. that is the right and fair thing to say because we have that obligation. we are not prosecutors. i think that is all we will have to say on this matter. but we respect your efforts to continue to press us. let's go back into the room. >> this is robert englund with

mortgage banking magazine. to what exact did collateralized debt obligations play a key factor in the crisis? and to what extent was the reliance on repos, which professor gary gordon has estimated a market as large as $12 million, a contributing factor? >> i think you're talking about the shuttle banking system. the repo lending market, and under regulated and overnight lending market, and grew to $2.80 trillion. that is not trump change. that was a big gap that people did not see. we have a lot of information about house gto's drug this crisis neared the end. >> we describe it -- about how cdo's drove this crisis near the

and. >> in the housing bubble, in the inflation of the mortgage- related securities, and in the later years in the use of synthetic cdo's, which essentially consisted of credit default swaps or over the counter derivatives that were unregulated, they continued the securitization process for a longer time and inflated securitization as the mortgage market itself was beginning to flatten and then decline. they certainly played a role in the enormous impact that the collapse that the housing bill had on the institutions. >> if you read this report in

full, you will certainly end up knowing more than most people will ever want to know about collateralized debt obligations. but we found them to be central in a variety of respects. the most significant of which, i think, is that, if you examine the structure of collateralized debt obligations, they were an attempt to convert the lowest rated truncheons of the underlying mortgage-backed securities into effectively higher-rated instruments. they took the triple b rated truncheons of other mortgage- backed securities, which were the ones most likely to fail above equity, and, by slicing and dicing them into another mr. mccall they cauterized debt obligation, the received -- into

another instrument they called a collateralized debt obligation, they receive a higher rating. they did not receive the fundamentals in which you could take risky securities into super-safe securities by amalgamating them together. in fact, what those cdo's did was create localized risk by putting them together. in fact, we now know from the downgrade of those institutions, of the securities and the failures of them, they were not safe at all. but nobody really fundamentally question them. the process went on. lots of people earn significant fees in the creation of them and reading them and so forth and there was little questioning of them. more than anything else, they

are emblematic of the type of head-in-the-sand attitude that some people approached these issues with. touched one of the most important aspects of the crisis, the housing bubble, in a variety of ways. one of the things that our report does extremely well is to lay out analytically the sequencing of events. if you look, in particular, at page 70, it walks through some mortgage-backed securities from beginning to end and looking at ways that those markets at cdo's were able to fan the flames of the housing bubble even after the national demand of real buyers began to evaporate. it is relevant in a variety of ways. it is threaded throughout this book. >> i believe that, a c of theod

-- i believe that, of the cdo's, by the end of the crisis had been downgraded. then they were just putting in their own cdo's. this is one of the areas where people ask what is new about this book. this is the first official government report on this crisis. we tie things in it anyway that had not been done before. based on documents and 700 interviews and the bank examination reports, there is a substantial amount of facts and data on questions like what really happened in this marketplace that has not been in the public realm before? i want to take new people. i will go to the microphone. add it -- identify yourself.

>> bob samuelson, newsweek. the crisis began to become clear in the spring and summer during 2007 when subprime loans began to default. what, if anything, could the government have done after that introduction or preamble, so to speak, to prevent the crisis that really exploded in the fall of 2008? or was the crisis that essentially preordained by 2007? >> much of the damage had been done by that point. let's just keep in mind that, from the third quarter, i believe, of 2006, when housing prices were already in decline, wall street created another $1.70 trillion in mortgage- backed securities and cdo's. i think it is a very good

question. the federal reserve had a chance to act on it out of control lending even in 2001. they adopted rules they thought would cover between 9% to 38% of the subprime loans. it covered 1%. they had a report in 2005 and 2006 of about the federal reserve open market committee and the fact that subprime lending was an accident waiting to happen in. but what is also striking is that, after the contagions started to spread, there was a lack of understanding of the interconnections. so you have the federal reserve in july 2007 when the bear stearns hedge funds blowup and they think they are relatively unique. they actually say in the books that they think they are relatively unique because not many other funds have these positions. the fact is that their response

is very slow-footed. .t is hard to do what if's >> let me just mention that, in the time that you were talking about, people like chairman bernanke and secretary paulson were assuring congress and the public that there would be little systemic in fact of the mortgage and housing decline. i think that, if the regulators had more fully and stood the markets that they were dealing -- fully understood the markets that they were dealing with and regulated the institution exposures to them, they may have taken earlier steps.

but i do not think they did understand that. >> one would have hoped that, at that particular moment in time, which is somewhat of an inflection point in retrospect, but there could have been a more examination on the variety of financial companies that held assets related to that. for example, the banks, the investment banks fannie and freddie, had the regulators and examiner's go in and understand more fully what exactly was on the balance sheets at that time. >> i think it is also symptomatic of a lack of accountability in the system that we discovered in our investigation that a number of financial institutions, even though these particular instruments were being downgraded, continued to pile them on because they had the opportunities to do so and had very little consequence, they

believe, at least on the people who were originated them, for the consequences of their failure. that, it seems, is a problem that we have seen throughout the system. it imperil the number of major financial institutions. if you look on a section of the book on moody's, you'll see that, at the same time that some of the ratings agencies were downgrading aaa rated securities, they were still in the current pipeline, rating the same types of securities as aaa at the same time that they were downgrading ones that they had paraded before. if you are compensated at the front end of the ratings process, at the front-end of the mortgage brokering process, without regard to the actual performance of the instruments that you are caused to create, that is incentive to continue the process and not to step

back and modify them. >> let me pick up on the comments. as secretary paulson said to us when he testified, that the toothpaste was out of the tube, let's be clear. goldman sacks and other companies, which mr. paulson headed, all the way up to 2006 and 2007, were squeezing it a lot of toothpaste out of that tube. certainly, much of what created this crisis happened by 2006. but the uptick was very slow and the actions continued. for example, goldman continued to create tens of billions of dollars of securities and to put them in the marketplace after 2006. in terms of government response, it is not until august 15 that secretary paulson gets the reports from the federal reserve and the office of the comptroller of the currency about the dire conditions that

for any may and freddie mac rain. three weeks -- that fannie mae and freddie mac are in. it was three weeks for him to convince mr. low-carb, who used to be the overseer -- mr. lockhart, who used to be the overseer, to take action. >> i wanted to find out more about the extent of accounting fraud. we know about rigo 105 and rigo 108 -- repo 105 and repo 108. >> that is a publicly known case. the attorney general of new york has filed an action and we account the transaction.

we do look at off-balance sheet positions. ok. >> ron oral, market watch. there was legislation that never made it to the final draft that would cap leverage of financial institutions at 15 to one. the argument was that it discouraged the u.s. to compete against financial institutions in other countries. based on your research, are you disappointed that there is not a cap on the rich? do you feel that it would have been in force properly if there was a cap? what are your thoughts generally on the leverage situation of these large financial institutions. >> let's be clear.

regulators had and have the authority to control leverage. the sec could have controlled leverage. other banks and regulators. citigroup, when you count their off balance sheet exposures, it grew to 43 to one. >> the ball will discussions are addressing some of these questions and with the permissible leverage ought to be. of course, the argument is commonly made that, if you constrain american institutions, they will love able to compete internationally. -- they will not be able to compete internationally. and if you regulate the institutions, there will not be able to compete with unregulated institutions and others. if somebody operates a business with what turns out to be

inadequate capital, in that a modest reduction of the asset base eliminates their capital, in the normal course, people are permitted to fail. that is part of what the economic system allows. and they go bankrupt and they go out of existence and others step up to the plate. the problem here is with institutions that have systemic importance in our society and to what extent we ought to permit them to operate within capital, such that, if and when they are threatened with failure, they come to the taxpayers for relief. that is the conundrum that i think we face generally. >> ultimately, decisions about leverage, whether they are made by regulators or by corporations individually or by individual households, ultimately and get into

the spectrum of action and inaction. there is the notion that this crisis was preventable in the regard that certain actions and inactions could have been changed. >> we will take one more question. i just promised them. [laughter] that is always a mistake. we will take one more question and we will wrap this up. >> thank you. mr. chairman and members of the panel, did you look at secretary paulson's inaction while his former firm exited the subprime market and even shorted it as a conflict of interest?

>> in that regard, you can look at the book. we have the tell about what secretary paulson did in his role as secretary and with the firm did. i will advise you to look at the book, look at actions taken, and draw your own conclusions as to what occurred. but certainly the book details, in very specific terms, what goldman sacks did. it certainly details also, in very specific terms, what treasury did at that same time. i want to thank everyone and i also want to remind everyone again in this room that this report is available through public affairs, a publisher and book stores and online in of an e-book version. if you go to our website, you

will see how you can get the report. you can download the report for free. you can also see on there that what we have posted this thousands of footnotes in this extensive report. what we have posted on the web today are all the documents related to them. what has not been posted yet is the audio and the transcript. as we wrap up our work on february 13, we will be posting additional research documents, audio transcriptions, to provide what we hope will be a good historical record. i want to close by thinking again all 10 commissioners for their work. want to thank my colleagues for being here today and thank you for your attention to what we believe is a critically important issue for this country. thank you so much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> this weekend on a book tv on c-span 2, on after words, almost 10 years after the attacks on the world trade center in the pentagon, peter bergen looks at the longest war. he is interviewed by author and columnist max boot. then the continuing growth of the military-industrial complex and edward mclaughlin on president obama's original

campaign. >> living standards are going down in america. we just created two new open- ended entitlements. we owe it to the country to show it a different path. >> paul ryan is the new chair of the house budget committee response to the president's state of the union address. find out more about it at 300 other c-span appearances on line at the c-span video library. search, watch, and share, all free. your washington, your way. >> 9/11 redefine his presidency because it made it abundantly clear that my most important job was to protect the country. i made a lot of controversial decisions to do that, many of which i described in the book. if i had to do them over again, i would have done them again. >> president bush talks about his best selling memoir "decision points." that is sunday at 8:00 p.m. on

c-span "q&a." >> next, a discussion on efforts to increase science and math education in the u.s.. from this morning's "washington journal," this is 45 minutes. host: charles vest, president of national academy of engineering. he is here to talk about efforts to boost science and math education in this country. the president talked about this in the state of the union address. national test scores are out this week. they _ the national academies point that the u.s. is slipping behind in science and math education. why? guest: first of all, it was wonderful to hear the president of the united states stand up very clearly that the world has changed. we have to start recognizing that and changing it. the national academy of sciences and engineering got

into the study about seven years ago. a bipartisan group of senators and representatives came to us and said, "we would like for you to put together a blue ribbon committee and tell us what are the specific steps that the federal government should take to keep the united states prosperous, competitive, and secure in the global marketplace in the 21st century." we came up with the report called "rising above the gathering storm." it was chaired by norm augustine, the former ceo of lockheed martin. we had 21 extraordinary americans that gave their time to the study. they were ceo's, current or former, of big companies. they were university presidents. we had two nobel prize winners. two of the members of the committee are now the secretary

of defense and secretary of energy. we had people from the philanthropic world and people have served in the government and passed in both democrats and republican administrations. we think there are four basic issues. one is improving the quality of k-12 education in science and math, or science, technology, engineering, and math. we needed to continue and sustain and expand the traditional support from the federal government for basic research, particularly in our universities and to some extent in small companies. we needed to continue to be the place world that checks the best and brightest young women and men into the fields, both in the united states and from around the world.

we'll have to come back to that point. finally, a set of issues around tax policy, intellectual properties, and so forth. we believe it can help make the united states the best place in the world to innovate. those are our four priorities. just last fall, we came out -- of course, we could not have those who are now serving in the government. we took a look at this again. what has happened in the past five years? unfortunately, the assessment of the committee was that during that five-year period, we have gone downhill from where we were. let me just say a quick word about the k-12 education, and then we can move into other things you would like to explore. we do not have the solution. we just know that this is the number one problem in the united states.

not just to produce ph.d.'s, professors, and researchers, but a total work force that is competent, that has quantitative skills, that understands the physical and biological world, that can be compared to compete with china, europe, india, singapore, and so forth in the future. unfortunately, we have some very daunting statistics. you mentioned the test scores. we know from about one month ago, the scores show that we continue to be very near the bottom in our mathematics performance, and our science performance. just yesterday, "the wall street journal" reported the national assessment test. again, and very little progress. only 3% of our young people were in the advanced region. we are between 25% to 30%,

depending on the age range, as proficient in science. it's not about taking science. it's about the work force and the citizenry for the 21st century. we have two high priority ideas on k-12. they are not original, but we think they're very powerful. part of the problem is we need a 21st century teacher corps that is trained and educated in the disciplines they teach. a good teacher has to have a knowledge base and proficiency and also has to have a good human qualities and pedagogy. where we have been the weakest is in proficiency. about 2/3 of kids in the united states study science and math under teachers who have no credentials in these fields. we have replicated a program that has been very effective in

texas called you teach. it helps young men and women become educated at the university level in the disciplines of physics, chemistry, mathematics, computer science, and so forth, and become credentialed to teach in k-12. by doing this at a large scale, we can begin to see the teacher corps of the future. the second is that we believe, based on data, that advanced placement subjects have -- having teachers qualified to teach at the ap level in more students taking subjects at that level begins to raise the whole system. we propose a set of incentives for teachers to be prepared to teach at that level and for students to take and pass subjects in science, math, and also in english at the ap level.

this has been shown to work. that has been picked up by a private organization called the national science and math initiative in dallas. we are in about 14 states around the country. we are bringing that up to scale. at the end of the day, only government levels of investment to bring these things to all our kids. host: let's show the viewers the numbers from what you came up with. the u.s. ranks 27th out of 29 wealthy countries in the proportion of college students with degrees in science or engineering. is it the way that we teach science and math versus the

way china and other countries teach science and math? guest: may be worse yet. we are so used to thinking that we are number one because we love this country and it is great. we are stagnating and going down. the other countries are coming up. it is some mixture of the way we go about education. frankly, also what the culture values and holds up. if you go to china, india, or singapore, or if you go to european countries, you will find great admiration for teaching at -- teaching as a profession. you will find families, communities, who really celebrate learning. the irony of all of this is that these countries have learned from us.

they have looked and said -- who over the last 100 years has led the world? the united states. who is the most innovative? the united states. where did the internet come from? the united states. they begin to look at that and they say, why? because we have this extraordinary system of public and private research universities. in the post sputnik era we did a quantum jump in the increase of the attention to science and math and that has faded. other people are simply looking at what we have been doing and doing better. host: we want to get to our callers and get them involved. by the way, we have a separate line for educators and students. we want to hear from you. i want to show our viewers what the president had to say in the state of the union address on this issue. >> over the next 10 years,

nearly half of all new jobs will require education that goes beyond a high school education. as many as one-quarter of our students are not even finishing high school. the quality of our science and math education lags behind many other nations. america has fallen to ninth in the proportion of young people with a college degree. the question is whether all of us as citizens and parents are willing to do what is necessary to give every child a chance to succeed. host: charles vest, he also talked about out educating other countries. "the new york times" yesterday, i believe, had a facts versus rhetoric of the president's speech. they noted that other countries do not send their students to school as long as we require and the united states. we require 13 years.

again, is it an issue of quality versus quantity? guest: it's both. we prided ourselves properly on getting everyone an opportunity in the united states. our goal should be to educate everybody well. does everybody need to be a scientist or engineer? no. are the best of china's schools as good or better than ours? yes. is the average school as good or better than ours? probably not. these other countries are coming up the hill. they are wending their way up. that is easier than it is to stay on top. it's one thing to improve your innovation capacity, to build more industries, to come up the hill. it's quite another thing to be the united states and have to compete in the rest of the world and maintain our quality of life.

we have a tough, double system problem. host: sheldon is waiting for us in pennsylvania. you are on the air. caller: thank you for taking my call. let me just explain a few things. i have been a -- i am a recently retired fifth grade teacher. i taught for 30 years. this great means all the subjects. you can apply what i'm saying to every subject. i was a firm believer in -- what ever you teach -- take science and math, for example, because that is the topic of the day. i think you should show the kids that there is a practical, everyday use for what is being taught. guest: first of all, thank you 4

having devoted your career to the most important profession in the united states. i absolutely agree that all of the research tends to show, especially in science and math and engineering, discovery based learning, understanding what the application is -- with a new generation, by the way, showing them how these are the tools with which they can build not just a better life for themselves but make the world better. this is crucial and that is a key part of the human side of teaching, which you have expressed so well. if you combine disciplinary knowledge and ability to show relevance and a belief in the kids themselves, to convince

them that they can accomplish great things -- if you do all three of those things, we're getting far down the track. thank you. host: if people want to read the report, where can they go? guest: the report is on the website of the national academies. it's pretty easy to find. it is downloadable, free in pdf form. host: nea.edu. what you do at mit and how has that played a role? guest: that is sort of background for me. i'm a graduate of west virginia university.

in 1990, i had the remarkable opportunity to serve as the president of mit, which i did for 14 years. that has been my main accomplishment and passion. i currently am on leave from mit for six years to provide paul -- provide further public- service. host: jim on the line for republicans. caller: thank you for taking my call. i have two comments. my wife and i have a son and daughter. they're both college graduates with degrees in education. of theking to them, one biggest problems both of them face in relation to public schools is a lack of discipline. i can remember 50 years ago, when i graduated from high school -- i almost went to school in fear of the teachers and the system because we were very strongly disciplined.

there was a very strong learning environment. also, the use of computers so much and video games by young people -- so many young people today have a problem relating to other people because there used to relating to a screen. guest: you raise two really fundamental and important points. i also grew up in a time in which we just assumed discipline in the schools. that's a bit why i use the word culture. the best performing schools -- they can be anywhere, including in the inner city, do have an environment that shows belief in the kids and does instill a sense of discipline and pride. it's a tough job for teachers today. it certainly has to be one of

the goals. your second flight -- second point. host: too much time looking at computers. guest: we have to wrestle with this. the world has changed. there are ups and downs. kids are beginning to learn in different ways. one of the big challenges for educators today is to understand how to use that creatively. if you think back to what the earlier caller said about practical applications and implications of what they learned in the classroom, and computers, stimulation, and so forth, -- computers and simulation can be a part of that. i know a few companies. when they start off their engineers, the put them into a boot camp and give them problems

to work on. they take away their computers. they say you have a paper and pencil. we have to have a combination. the fact is that a lot of computer-based, neuroscience driven things are emerging that can help tailor education to individual kids so that they can progress at their own pace and learn more. host: do other countries do that? guest: nobody is doing this on a massive scale. worked out of carnegie mellon iuniversity and others are beginning to develop these schools. i believe, in the united states and other parts of the world, in due course, the use of information technology and computers for learning is going

to increase. at the end of the day, education is a human endeavor. it takes both. host: debbie on the line for democrats. go ahead. caller: i am listening to you talk and i agree with you that matt has gone down. my son is in ninth grade in new york city public schools. i was informed that algebra, geometry, calculus would not be taught. it was too difficult for the kids. this was in 1995. when i went up to the school to ask them why this was done, they said -- we would like to have the kids graduate, so we are lowering the bar. i said, what about college? they said that was not going to be a problem because they can all take remedial math when they get to college. you are talking about five years ago. i'm talking about 16 years ago

that they started lowering the bar. we started this in 1995, before computers were a big thing. no disrespect intended, but you're a little bit behind. this started a lot earlier. guest: absolutely. this has probably been a 35-year slide. i did not mean to imply anything other than that. let me go back to my mit experience for a minute. i think it tells us something. mit is full of truly extraordinary, taunting, disciplined, hard-working, enthusiastic, creative young men and women. the vast majority of them have attended public high schools in the united states in big cities, little towns, all across the country. we know that some good education is going on out there.

at the same time, we keep looking at these average measurements, looking at the international comparisons, and we see the average is sliding. what does that mean? it means we have a top layer of really good students and really good teachers. we are getting more and more of our kids what -- kids away below that. we have to have the political will and the culture to believe that every young person can learn and we have to give them the tools and the opportunity to do that. host: pittsburgh, pennsylvania. go ahead debbie. caller: would you consider creating a website for people who are home schooling? if you're in a school district and they're not up to the levels and standards that you think they should be. guest: let me go out on a limb and suggest something. by the way, it's interesting you

mention home schooling. if i could refer back to my mit experience, we also get a very substantial number of extraordinary home schooled kids. unfortunately, every kid in america does not live in a home in which that is possible. one of the things we did at mit is to start a thing called mit open courseware. this was aimed at universities putting the primary teaching materials for all 2000 of our subjects on the web for free. they have now put a high school portal into the open courseware website that allows people and people involved in home schooling would be a great example of those who could take advantage of this. it gives them a look into the introductory courses. i urge you to take a look at

that. i know there are a lot of materials from carnegie-mellon university and others that i hope you will find helpful. if you will e-mail me, i will try to find other resources for you. host: dorothy on the line for republicans. caller: i was going to ask about his studies and what it had to do with home schooling. i have a comment. that would be that -- he i believe it began in the late 1970's or maybe the early 1980's. focus on educating our children would be to make them into little global citizens. they are not interested in having our children become smart. the dumbing down of americans -- there's a book that i do not think is in print anymore, but it is a book everybody should read. guest: the real point is this

bifurcation of kids who come from families, come from communities, and attend schools that are dedicated to educating great citizens for our country and in the world in the 21st century and those who have fallen far behind. we have to raise the bottom up and keep the top going up. i agree that there has been some dumbing down of education, but there are also a lot of places around this country where it has vastly improved. they are kind of bifurcated. host: santa rosa, california. bill on the line for independents. good morning. caller: good morning. do you believe our fear of risk or possibly lawsuits when it comes to children might be keeping us from giving them the kind of hands-on experience early that might be preparing their earlier for science and engineering study? i read in "life without lawyers"

a book that i discovered on book notes that in germany they have these concepts for children where the children can build things with scrap lumber and tear them down and build them again. it's hard to imagine such a thing here because of the risk of giving tools to children. guest: this is a really interesting observation and question. risk, of course, is really an important concept in the united states when it comes to starting new companies and things like that. a few years ago, i was at a very large luncheon that had an audience of a group of highly accomplished scientists and engineers. there were a lot of nobel laureates there. the state -- the speaker said,

"everybody who used to blow things up when you were kids,? raise your," and everybody raise their hands. if you look at a chemistry set, you cannot find any thing to do anything interesting. this nation educate about eight thousand ph.d. is and 44,000 lawyers. i think we crossed the bar in some ways in reducing or attempting to reduce risks that may debt -- that may get in the way. hands-on education and relevant education is what turns on kids and involves them. we have probably crossed the babar -- that bar. host: i want to go back to a question i asked earlier. i'm looking for specifics, if they exist, of how china and other countries teach math. do they do it differently than

the methodology in the united states? guest: i'm not a defense expert on this, but i can give you a couple of observations from things i know and have seen it from when i was in china and also in singapore. first of all, they insist on deep disciplinary knowledge of their mathematics teachers. chinese math teachers know mathematics. they note it to -- they know it to the level they have to teach and they know it in context. the second is a very intense education. there are some positive than negatives that we have to talk about. if you go to the best schools in china, if you talk to the educators in singapore, which i happen to know a little bit more in depth. they will say we are much better

than you in the united states and raising the average. we still think most of your schools do a much better job in bringing out the real creativity and flexibility in kids. one of the things i worry about looking forward -- they are aware of this problem and there went to work at it. singapore used to have a very strong focus just on science, engineering, and business. they are now bringing in humanities and arts. the same thing as a ploy to start happening in the -- the same thing is going to start happening at the k-12 level. they're going to catch us. then we will be in trouble. host: we will go to cambridge. jen on the line for democrats. go ahead. caller: good morning. it seems like so much of the major issue is -- you just

mentioned we are producing more lawyers than ph.d.. how do we create a culture where we revered teachers and we encourage the best minds in our country to want to go into teaching? that seems to be a huge part of the problem. guest: a thing this is the dream we all have. ipod offer a couple -- i would offer a couple of suggestions. first of all, our leaders, our president, corporate ceo's, people look up to two to lead our society, they have got to start talking about this. as i said, the most important thing we can do for this nation is make teaching the most respected profession. we have to start putting that down as a goal. the second thing is that i think

there -- i think that a culture that except that, and particularly young people, we are finding when we look at why kids do and do not study fields like science and engineering, we have a pretty idealistic generation coming along right now. they are interested in solving the big problems the world faces. energy, sustainability, health, and security. if we can relate education to the kind of world we could have, we could begin putting out a vision that will hopefully move our culture somewhat in this direction. you know that physics problems are a lot easier than changing culture. it has to be done. i think it starts with constant messages delivered by our leaders and following through on how important teaching is. host: what is the america

competes act? guest: it is a bit of authorizing legislation that basically took the recommendations of the original report from the national academies and put it into law. that law was passed five years ago. it was passed by unanimous consent in the senate. it was passed by an overwhelming bipartisan vote in the house and signed into law by president bush. it started this down, at least at the of the rising level, the path to begin to implement the recommendations. that law came up for reauthorization. at the very end of the congress, it was reauthorize to, again by unanimous consent in the senate and a much smaller bipartisan vote in the house, but it did pass.

it now provides the opportunity for congress to come up with the funding and the implementation. host: california, doug, good morning. caller: the president said in his address that we need to make the study of science and math and engineering more cool. it is obviously not in our country compared to places like singapore. i wonder if you can comment on what parents could do and what schools can do. you also mentioned that there are programs for college and high-school students who are thinking about going into teaching education for science and math. if you could repeat that. guest: yes. first of all, i wish there was a simple formula for making science and math cool as viewed by the country. the fact is, they are cool.

by the way, the national academies are working very hard on this. given where our society operates, i think the entertainment industry can be very helpful to us. by the way, they understand it. if you go to a company like -- they will say they are a group of artists and engineers. they know that technology underlies everything they do. take a look at what happened whencs happenedi -- what happened when "csi"went on television. a lot of people wanted to go into forensic science. i think that the entertainment industry can help us tap into this idealism and show how

science and engineering are relevant to solving the world's great problems. the second point about the teacher preparation -- i was referring specifically to the concept of getting universities to buy in and hopefully provide fellowships and scholarships for undergraduates to go to university, public or private, study a discipline, get a degree in math, computer science, or whatever it is, and simultaneously become equipped to be credentialed to teach in the k-12 system. host: tommy, in independent. you are on the air. caller: i want to salute mr. vest. i want to ask this question, but i have some comments.

this has been a great interview. the different nations that are part of the study you have been referencing -- how much do we know about their mandatory k-12 education? i'm sure that neither india or china, the average kids do not go to school, at least not for long periods they pump a lot of money into intelligence, including social intelligence. that is first. they are learning to be like ireland. find out all the genius is that are poverty-stricken and try to educate them. host: charles vest? guest: two parts for the very important question. thank you for asking. at the very beginning, when we were looking at some of these statistics, one of us mentioned that the united states among the oecd countries is no. 11 in the

fraction of our young people 25 to 35 years old who are high- school graduates. we can no longer fall back on the excuse that we try to educate everybody and the others do not. if you look at china or india, we have to be realistic. we are talking about 3 billion people across those countries. they are still developing countries. absolutely, it is the top lawyer that is being educated. that's the bad news. the good news is that it is a highly competitive situation in both countries. you have just a good chance, a little town in the western part of china as you do growing up in shanghai or beijing of studying hard and getting and added to a university. yes -- yes, they do a good job

with the top layer. if you look s singapore, hong kong, and so forth, there educating as much or more of their population then we are. host: troy, ohio. pat on the line for republicans. caller: good morning. host: good morning. caller: i have a question of how people, myself, might become more involved with the education process. i created quite a number of demonstrations in astronomy. astronomy is the first science. if you go back generations, it was the first observable science. where does the sun rise? where does the sunset? how high does it go in the winter, in the summer, at the equinoxes? my demonstrations are mostly about the moon, the sun, and

the earth systems. it requires an understanding of geometry to explain the lunar phases. there's nothing i would like better than to have a wider audience. i have affiliations with local and national astronomy associations. i would like to have more of an inroad to get into classrooms and so forth. i would like to know if you know of a way that people can become more involved in the teaching process with -- without renewing my teachers' lessons that came from kentucky years ago. guest: it's wonderful you are doing these things. i could just pick up the passion, even though i cannot see you. i can imagine how well that would rub off on young people. this would have to start at the local level. i hope you're getting some

receptivity, either through the classroom, clubs, and so forth. i agree that astronomy is probably -- has probably brought more kids into the understanding of the excitement of science than any other field. right now, i cannot give you a specific reference to tap into a national organization, but if you will e-mail me, i will find one and connect you as best i can. i have a granddaughter who is in the seventh grade now. she has a person who is a retired engineer from one of the companies around here who comes in after school. it's a huge turn onto her. in her case, it has to do with seeing his passion and what he has done and she can related to what hshe is doing. host: what is the e-mail? guest: cvest on the line for

republicansneau -- cvest at neau.edu. guest: at the poor schools, the teachers hands are tied. they're tied by federal and state regulation. some schools, the teachers cannot teach their kids and their multiplication the old- fashioned way. host: unfortunately we have to leave it there. we are running out of time. guest: it is a problem. we have got to unfreeze this system. some of the regulations are too tight and not allow the teachers to bring out their passion and creativity. you put your finger on something very important. the statistics we have been looking out are far worse

across our minority population and in our women. only 1.6% of u.s. women graduating from universities are engineers. this is a field we really have to work on. we have to give the teachers more flexibility in how they approach their subjects. host: charles vest, president of nati >> the senate is in senate today to consider a number of changes to senate floor rules, including the filibuster. with votes on the filibuster take place this evening. all require a supermajority vote to pass. live coverage is on c-span2.

the house is not in session today. members completed all legislative forth yesterday and are in recess through next week. -- all legislative work yesterday, and are in recess through next week. >> listen to historic supreme court cases on c-span radio. saturday, copyright and ownership is considered. >> of the inception of their relationship, james reed was an independent contractor. he was going to create madison through any standard and with any test. >> listen nationwide on ex-im channel -- xm channel 132. >> living standards are going down in america.

we just created two new entitlements on top of the ones we already have. we need to show america a different direction. >> find out more about paul ryan and his more than 300 c-span appearances online at this c- span library. search, a watch, a share, all free. it is washington your way. >> i philosophically have always been opposed to your taxpayer dollars being used for political advocacy of any kind. >> a bill to reduce federal spending and the deficit by ending taxpayer spending on campaigns. follow the debate on line with time lines and transcripts of every house and senate session. it is at c-span.org/congress.

>> earlier today, the senate armed services committee held adhering -- a hearing to discover how boeing and eads received similar confidential information about each other. they had access to each others' intellectual property, which could have serious consequences. this is one hour and 40 minutes. good morning. we are here to discuss the in a

release of intellectual information. this hearing will focus on first, the nature of the information's released by the air force, second, the steps that the air force took to determine what happened, and to determine if there was any damage to the fairness and integrity of the source selection process, and third, any remedial actions taken by the air force. i would ask both senators and witnesses to avoid any lines of inquiry that could compromise the source selection process. the issue then needs to be addressed is whether what was a clerical mistake, where the air force released sensitive data to competitors during an ongoing tanker procurement process, has damaged that process. my answers standing of the current situation is as follows.

boeing and the european aeronautic defense and space company known as eads are competing for the contract to furnish the next generation strategic repealing contact -- refueling a contract. as part of this competition, the air force's evaluating the capability of the competitors aircraft in a model referred to as the fleet refueling assessment. in this analysis, the air force is evaluating potential aircraft using several postulated real- world scenarios. in deriving a score, the air force uses a model to compare candidates aircraft with the

current tanker. as part of the official discussions within the current competition, the air force is intended to share with each contractor the assessment on that contractors aircraft to ensure that there were no substantive disagreements on the calculations on the score. in november, 2010, data files were inadvertently sent to both contractors. after the error was identified, the department of defense and the air force investigated the incident and determined that some data had been viewed by one of the two contractors. thenir force and

determined that comparable data should be released to the other contractors in an effort to ensure that the competition could continue on a level playing field, and it was released. joining us today are general -- wendy masiellowhen t and stephen shirley. these witnesses have been selected because they have a detailed knowledge of issues regarding the specific subject matter of this hearing. i want to extend a welcome to our witnesses. thank you both for appearing before this committee this morning. i know it took some doing to

get into into the snow. over the last month, the staff has met on two occasions with department of defense officials familiar with the release of the informational and the air force investigation. , offeredmade an to the chief executive officers of both companies to except written statements to the committee regarding this issue, should they choose to do so. we have received a submission from each of the companies, and without objection, we will make those two submissions part of the record at this time. we appreciate both companies' positive approach to this committee inquiry, and both of the company's cooperation with us. senator mccain. >> thank you, mr. chairman. i appreciate the witnesses

attendance here this morning. one of the duties of this committee is to conduct oversight of defense spending. in the knowledge that it is the right and responsibility of the chairman to schedule hearings as he deems fit and appropriate to ensure that the committee exercise its oversight responsibilities effectively, i approached today's hearing with a fair bit of concern and an even greater amount of skepticism that to this hearing will be beneficial to our job of oversight. this hearing appears to be designed to produce little new information about the pending award of the air force tanker competition. as we all know, the competition for the new aerial refueling tanker has been beset by problems for years. after considerable effort to ensure a competition process

that is as error-free as possible, the air force inadvertently and incredibly send data related to the competition to each of the respective bettors that they should not having had -- bidders that they should not have had. what did this mean to the competition? the urge to dive into the question is understandable, but this long, drawn-out process is nearing an end, and a final announcement will be made soon. to the extent that november's mistake could have an impact on the outcome, seems to be more appropriately addressed after a winner has been announced, not just weeks before the process draws to a conclusion. while this committee should continue to exercise aggressive oversight into the process, the witnesses here today have little

ability to shut relied on the facts that eventually need to be examined in this matter -- to shed real light on the fax said essentially need to be examined in this matter. -- facts that eventually need to be examined in this matter. everyone wants to ensure is that this competition is fair and above board and that no party gains and unwarranted advantage. paul we no corrective actions were taken. an effort was made to set things right. opinions were formed about the impact and whether it could be overcome. with these fundamental questions in mind and an attempt to exercise restraint as we involve ourselves in this issue, i look forward to the testimony of the witnesses. i also know that the chairman intends to release documents we received for this hearing, that

they be publicly released. i think this is a bad idea. i think we could wait until just a few weeks from now when the final decision is made and then make all of these documents public. i am understand the department of defense "does not object" to the release of these documents. given all of the controversy, a legal challenges, delays over a decade, why would we not want to just wait a few weeks before we release that abrasion which could cause further disruption to the it -- that information which could cause further destruction -- disruption to the competition? i say that as a person who has been very much an advocate of total transparency and knowledge

shared not only by members of congress but by the american people. i thank the witnesses for being here today. i hope that in february we can finally have a final resolution and selection of the tanker that is badly needed by the united states air force after nearly a decade of stories of corruption, abuse, mismanagement, and now this latest fiasco of releasing the documents relevant to the contractor, still, a rather incredible happenstance in this long saga of mismanagement and, in some cases, corruption surrounding the awarding of the contract for this tanker. >> thank you, mr. mccain. general. >> mr. chairman, senator mccain, members of the committee, thank you for the opportunity to

discuss the events surrounding the inadvertent disclosure of information. i should make it clear at the outset that neither i nor my fellow witness are affiliated with the case -- , affiliated with the selection, and we cannot discuss matters beyond the scope of this hearing. as a senior military officer with contrasting experience, i have been asked to review the redacted record of the incident. i appeared today to address the process that was followed and how the air force maintained the integrity of the selection process. i know that committee members are aware that the air force is in the midst of selection, and will appreciate that my testimony will be limited to the specifics of this event and the analysis of the actions taken. the air force remains committed to an open and transparent selection. the department has replied --

the department has provided all appropriate documents, the summary statements by the procuring contrasting officer, the independent review team report, statements from both companies, and the summary statement of a classified computer defense report. before responding to your questions, let me it provide this summary of where the air force believes the record stands today. the air force determined that the error was unintentional and that the actions did not constitute a violation of the procurement and integrity act. second, further statements provided by the employees to handle the desks from both companies certified in writing by both companies' ceos the air

force believe that the information exposed to one employee was limited to one screen of summary data related to the government integrated fueling assessment. none of the information was proprietary, and as has been previously stated publicly, there was no pressing data anywhere on the desk. the summary page and excel spreadsheet was opened on the screen for a matter of seconds before it it was closed when the company employee realized the mistake. the employees immediately secured the disk in a safe and contacted the program office. the program office immediately contacted the office and receive all of the desks the next day. . the employee you saw the screen shot was reassigned to an administrative position.

third, at the direction of the source selection authority and securing a contracting officer, an independent review was conducted as to the facts and circumstances regarding the incident. the review team also made recommendations to help prevent future occurrences. fourth, as a further level of verification, the air force requested and both companies cooperated by providing the computers that their competitors' desks were inserted into. using the forensics laboratory, the air force was able to identify that the record of the desk and file a accessed were is -- files access was consistent with the report given by both employees. both companies were provided with the same screen shots of each other's information. since both were at a stage where

they could continue to update their proposals, the procurement officer made it clear that those updates could continue. consistent with air force efforts to maintain transparency, both offices received analysis of their respective computers. the summary score is shared with both offers were interim scores, and were not the final score is that will be used in the evaluation. further, those offers will have the opportunity to provide a final proposal revision as a standard. no offer was impaired from continuing to produce its proposal. the two individuals directly responsible for the packaging the informationdept were removed from the program and no longer perform any duties related.

all recommendations from the independent review team to prevent recurrence have been adopted. transmittal of any classified material will be accompanied by a letter, not just a form, signed by an appropriate individual. the description of the material must matched -- must match the material being transferred. they will be accompanied by an appropriate security official. classified material must be a separate, clearly marked baggage to identify the recipient of the material for -- clearly marked package to identify the recipient of the material. the purpose of the transfer will be involved with the packaging of the information.

additional measures were taken to include supervised supervision, of oversight, and senior contracting officers to personally verify and validate packages. finally, while the department regrets that the incident occurred, department leadership is satisfied that both companies responded to the incident correctly and professionally. after reviewing the document presented to the committee, it is my opinion that the actions taken have assured a level playing field. i would like to thank the committee for your continued support of our men and women in uniform as we await the outcome of the selection. >> good morning. i have no opening statement, but m. present as a technical representative -- i am present as a technical representative to

answer questions. >> thank you both for being here in four years' service. -- can afford your service. let's try and eight minute -- and for your service. let's try and eight minute opening round. you talked about the screen shot. be much more precise as to what was seen and what then was shared. >> from my observation and reading of the documents presented, it was a screen shot at of the spread sheet that had 10 lines of information. it was data analysis, air force analysis of their individual data. that is all i know about what the content and details were.

>> it was one page? what is a screen shot? is that one page? >> yes, when it pops up onto your computer and has a spread sheet of information, is a picture of that. there is nothing but let's screen shot. >> one image? >> 1 image. >> or how long pause -- for how long? >> however long it presented. >> have you determined how long that screen was open? >> based on the forensics of the media provided by the company, we think it was on the order -- that it was viewed on the order of several minutes. that is based on statements from the company. the computer was powered for a