my view that there should now be a full investigation of why and how that happened? >> i thank my honorable friend for his question. the public accounts committee can do a lot of that work by unveiling some of the appalling decisions that were made, which were just about off-balance- sheet accounting, rather than good value for money. i see the shadow chancellor nodding, but he was in the treasury when all that happened. as in so many cases, what we will find is that the mistakes that we now have to pay for are the responsibility of gordon brown's two henchmen sitting on the opposition front bench. >> the prime minister used to talk rather a lot about fairness, but he has not done so well on performance, so here is a test for him. the banks have walked away from the talks on bankers' bonuses. what will he do about it? >> the talks are ongoing, and i will tell the right honorable gentleman what i want. i want the banks to pay more in tax, and they will pay more in tax, up from 18 billion pounds last year to 20 billion next

year. he says they have walked away. they have not. these talks are ongoing, and i want to see the taxes go up, the bonuses come down, but vitally, the lending increase. i am confident that we will achieve all those three goals. >> i know that the prime minister regards blackpool as a special place, as indeed he should. does he agree that it is about time that blackpool's unique status as the first working- class seaside resort should be recognized with unesco world heritage status? >> my honorable friend makes a powerful case for his constituency. i have a warm feeling whenever i think of blackpool, because of the many conferences that i have attended there and the time that i have spent there. i understand, as i know he does, the pressures that it faces because of changing patterns of tourism and development, and the government are committed to helping blackpool to map out a strong future. it is also wonderful to see blackpool where they belong in the premier league.

>> with the economy shrinking by 5% and inflation rising, having followed ireland on the path of cutting too fast and too deep, are we not now in danger of following ireland further down that slippery slope? >> i am sorry to tell the honorable lady that the 5% reduction was under her government, not this government. if the former shadow chancellor's primer has gone missing, perhaps she could get hold of a copy. when we came to office in may, the idea that there was some acceptable plan to reduce the deficit is a complete fiction. let me just give her this one figure. if we went ahead with the plan of halving the deficit in four years, in four years' time our deficit would be bigger than

portugal's is now. does anybody think that that is a credible path back to growth and confidence? it is not. >> one of the most important strands in the government's growth strategy has been the creation of 75,000 additional apprenticeships. does the prime minister agree that the forthcoming national apprenticeship week and the gloucestershire apprenticeship fair represent a great opportunity to get young constituents to earn while they learn, especially in the manufacturing sectors, which are growing faster now than at any time under the previous government? >> my honorable friend makes an excellent point. in the spending review, we had to take difficult decisions, particularly on welfare and pay, but as a result we are able to expand the number of apprenticeships to a record level, an extra 75,000. yes, the growth figures are disappointing, but manufacturing and exports are up, and we are

starting to rebalance the economy away from the unsustainable booms that we had under the labour government. >> order. >> each week that the house of commons is in session, we share the prime minister's questions. at c-span.org, you can find a video archive of past prime ministers questions. >> tomorrow, the white house launches a start up america, an initiative to spur the economy. you will hear from gary locke on the obama's administration's plan to create jobs. there will also be remarks from the head of the small business administration and a t w o top house economic advisers. >> tune night, on road to the

white house, former minnesota gov. tim pawlenty at the first politics and egg breakfast of 2011. politics and eggs is a regular stop for presidential hopefuls. mr. pawlenty says that he is considering a presidential bid. right now, he is on a book tour that takes into a number of the early primary and caucus states. this is almost an hour. [applause] >> [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] and i am honored to be here. thank you for the sponsors. i just wish my wife could do with me this morning, the former miss bausch first lady of minnesota. she is a big part of my life. she gives me pretty good advice

and keeps things on the road. when i was thinking about running for governo in 2001, i was winding up my time as the majority leader in the minnesota legislature and i have decided that i was not going to run for governor. gov. venture was an office and had not decided if he was quick to run for a second term or not. it could have an uphill for a republican in a deep blue of state. i came home to the suburbs and i said that i was not going to run. it was time to turn the page and to movon to the next chapter in our lives. she came across the living room and she literally grab me by the lapels and looked me in the eye and said that i cannot quit. she said that i have to fight for everything that we believe in would get washed away if we do not get in there and stand up

for our principles and our values. i thought, wow, i am rocky balboa and here is a tree and in she is giving me this into -- this inspirational speech. through hard worand good fortune, i was able to become the governor of the great state of minnesota, but not long into my time as governor, i had a big budget deficit and a state of the state speech and the schedule have become quite difficult and burdensome and i came home one evening about two months into my governorshipnd merritt was holding me t account for not being home enough. there was a little tension in the discussion. i told her, don't you remember, your the one that told me to do this and you gave me that inspiring speech and told me to get in the race.

then there was a pause. and she said, yes, but i never thought that you would win. [laughter] she says she just wanted to get out of my system. i share that with you because in our country, today, we have a sense where there are some question marks as to whether the future is going to be bright or not and whether the future for our children and our grandchildren is going to be brighter and better than the opportunity that we had. i believe that this is the greatest and most prosperous nation in the history of the world and will continue to be in the future. but in order to ensure that, all of us in minnesota and across this great country have to make sure that we will remind each

other what those things were, the values, the principles, the things that made this nation great and how we can apply them to the challenges and opportunities of our time. i refer to it as restoring american prosperity by restoring american common sense. i want to share with you just a few of those principles and reflections. i think those values and principles apply to the public policy discussion and then i will be delighted to take your questions and answers. as we talk about this concept of american common sense, people would derive their black perspective from a variety of different things. not just from principles and documents of government, but from your personal experience. how you were raised, what your parents taught you, what you learned in faith, what you

learned in community and in family. for me, my background was growing up in a small suburb, which was the home of some of the largest meatpacking plants and the world's largest stockyards. this was a blue-collar town with a lunch buckets and a gritty background to a -- to it. i have a wonderful neighborhood and a wonderful upbringing, but it was not easy. my mom died when i was 16. she passedway from cancer. my dad was a truck driver for much of his life and he got promoted to dispatcher and we thought we hit the jackpot. at a very young a, and not only saw this massive meatpacking plants and stockyard's begin to shut down summarily and see the economic dislocation and were ready and

uncertainty, but in my own family, i saw these challenges very dramatically at a young age. you learn some things along the way through that experience. just to give you one example of that, when my mom was not long from passing on, she called together two brothers and sisters and that they were not ab to go to college, not because they did not have the cacity, but they did not have the opportunity. she pulled them by the bedside and said that whatever you guys do, promise me that you will get him to college somehow. get tim to college somehow. i knew that the way out for me was not just hard work, but it was making sure that i had an education that was relevant to

the economy and the future. that is onof the things i want to talk about today. let me start out by saying that the main issue for new hampshire and for minnesota and for our country, beyond a national security which is the firstriority and focus of government, but the main issue is the economy and jobs. all of the politicians at the state level, the local level and the national level, they say that in the jobs president, jobs governor, jobs mayor, etc.. but if we want to be able to ask and answer the question of what we can do to make sure that jobs will grow in new hampshire or minnesota or our country, we should ask the people that prove the jobs. that is an important perspectiv.

we need to listen to people that know what they are doing. this depends on asking the question correct please -- correctly. besides your fate, in addition to your family, what brings you the most joy in your life? what brings you the most meaning? there is a series of things that people worry about or hope for that might be getting their health insurance premiums paid or how they would get a son or daughter to college or they might be worried about a simple thing like how they might get a half a tank of gas in their car so they can get to the next job interview or maybe they are worried about a home repair that is critical, particularly this time of year when it is cold. what you will see is that it all

depends on something. it depends on people having a job. for most of our fellow citizens, the best thing that we can do for them as public policy leaders is to make sure that we have an environment where we are doing those things to make it more likely that jobs are born to grow and that people who are entrepreneurs are going t take risk and start something and grow something and at employees and build a bill that -- ability of -- and build a building. we are born to grow not a government economy, but a private sector economy. when you ask the people who actually do that, the people who are the engines of our small businesses and provide these jobs, there are pretty clear answers about what members of

congress should do. as former governor, you have to keep my cost competitive. you cannot price me out of the market. you cannot do something to make the burden heavier, you have to make the burden lighter. you have to give me confidence that the environment is going to be more encouraging, not less encouraging. as i relates to energy costs, as it relates to unemployment insurance costs, as it relates to lawsuits, all of those things, together, add up a basket of costs that is the cost of doing business in new hampshire or massachusettsor minnesota or iowa or wisconsin.

those costs are not a matter of rhetoric, right versus left or some political kabuki theater. you can see how we are doing. you can see how it compares. this cntry's costs are not competitive enough in a hyper competitive world. we need to have a great debate abouthe details of those categories that i mentioned, but the clear direction for our country as it relates to competing in this hyper- competitive global economy is to make this more competitive, not less competitive. principal number one is that if we want to grow jobs, listen to the job providers. understand and implement those things that ey say and grow the private sector economy and

not a government and economy. the next one is hard. i know you have had only 1 cup of coffee. it is a little complex. i have been dealing with this for a lot of years. are you ready for this one? this is really important. here it is. we cannot spend more than we've .aken in - it is not that hard. but we have the government at all levels, particularly at the federal level, that have been spding money for a long time then they take can. -- more money for a long time van they taken. they take him.

we had the wall street bubble. we had the housing bubble. we have the i.t. bubble and now we're going to have the government bubble. we need to hold our government officials to account. it has to live within its means. in my state, and generally, we are not under taxed. we pay enough in taxes. we have a government that needs to control its spending apatite and needs to get spending under control. people say that it is difficult. it is hard. you have to understand the challenges that we are up against. tell me about it. i came from minnesota to this breakfast. this is the land of hubert humphrey. this is the land of walter mondale. this is the land of jesse

ventura. now it is the land of the united states senator al franken. if we can do this in minnesota, as frank sinatra would talk about new york, we can do it anywhere. we took th spending trajectory of my state which was 21% every two years for 40 years. that was the average spending pattern increase in my state. we got that down to a low over 1% a year during my time as governor. we were able to bring in government spending in a historic way. we actually reduced government spending for the first time in a 150 year history of minnesota. of course, that is not easy when you are up against a culture

that leans pretty hard the other way. there is a lot of hard work that went into that. including having t first government shut down in the 150 year history of my state. but the point was, we were not going to have business as usual. we will want to draw lines in the sand and we were going to get government to live within its means and we began to see a big change in my state. the unemployment rate is below the national average. the job growth rate was above the national average. since the crash,ur unemployment rate is below the national average.

we police had to get minnesota of the top 10 in taxes. in minnesota, that is a big deal. no governor ever did it. i did. these changes are possible. if we can do it there, we can do it anywhere. the first principle i want to leave you with is this. if you have a chance to go to policy seminars and stay up all night and watch cable television, i hope that you can do that. and there is great information available. i know that many of you are busy and have busy lives. what you really nd to know about government and government reform, you can get an

abbreviated version just by doing this. go to two weddings. go to one wedding where there is an open bar and the refreshments and the alcohol are free or perceived to be free. go to another wedding and they will have a cash bar and you will see two very different sorts of behaviors. if people think something is thaty do not have to be concerned about price or quality, they can consume it endlessly and only have to worry about the volume being provided. there is a myth created that the bill magically goes somewhere else and gets paid for and it is " and " free -- is: " gosh region -- quote unquote free.

>> someone asked who had a cash bar any more. as we change the systems, whether it's education or health care or anything else, we have to move in the direction of giving consumersr purchasers in charge of and responsible for decisionmaking. we have to give them good information about price and quality and performance measurements. we have to give them incentives to make wise decisions, including financial incentives to make wise decisions as people provide service. we do not want the service to be a government monopoly where there is no accountability other than how much volume is provided.

we then create the image or the myth that the bill goes somewhere else and disappears. like i said, that is too much of what we have in government right now. in health care, t answer is not to drag it into a state capital or washington d.c. and create a one-size-fits-al bureaucratically inspired staff and range of options that are limid model. that is not going to work. there is no notion that a government run monolith is going to be good. it is the wrong direction. i believe strongly that the obamacare legislation takes the health care and the country in the wrong direction. the solutions that we have for that and for public policy more broadly is to say to consumers that you were going to be in charge and you can shoot -- and

you can choose from a range of options. we will give you some guard rails and protection in terms of consumer protection. if you need financial help, we will givit to you directly in the form of a tax credit or a voucher or a stipend but you will be in charge of that decision making. to the providers of the service, we are going to say that we are not going to just pay you for endless volume, we want to pay you for things getting better, so in the area of health care, if i say to bill need for volume, what will i get? more volume. we have to pay for not just volume but outcomes. minnesota has led efforts in this regard and we have an astoundingly good results. we said to our state employees that you can go wherever you want for your health care, but if you choose to go somewhere that is higher in quality and

more efficient in terms of cost, you will pay less. if you go somewhere that is less efficient, you will pay more. guess where they go? 80% of our state employees migrated to higher-quality, more efficient providers and the cost of that program over five to seven years has been dramatically below the average interstate. astoundingly good results. people are in charge and they have good information about price and quality. they have financl incentives to make financial decisions and it i working. let me close by telling you that our country faces a lot of challenges. one is the federal spending issue. there is an opportity to address it now than congress because in order for them to spend more, they have to raise the debt ceiling that you may be hearing about in the news. i wrote an op-ed in the washington post that was

published sunday. it basically says not to raise the debt ceiling. the president has set this up as a choice between defaulting on the national debt obligations and raising the debt ceiling. that is a false choice. in the country can pay its bills with the cash flow that we have in terms of the outside debt obligations of the country so that if you take the issue of the fault of the table and what we have left is a debate about how to you prioritize and reform and reduce the discretionary spending that is left. we need that debate. it is coming. this nation is facing great challenges financially. just because we followed grease into democracy, it does not mean we call them to the edge of bankruptcy. we need to stand up and look the american people in the eye and

tell them the truth about how we got here and not just scare them. they are there. the answers are there. the question is, do we have the will to actually do it? it will not be easy. but if freedom were easy, everybody in the world would be free and they are not. if it were easy, everybody in the world would be secure. if prosperity were easy, everyone of rubble world would be prosperous. we have succeeded because we are a free nation. it sets us apart from much of the rest of the world for most of time becauseur people have the freedom to worship and to associate and to dream and to invest and to take risks in ways and measures that most of the rest of the world does not know. it gives us a huge damage. but we are going to have to come together and put our head down

and plow forward to a stronger and better future for our fellow citizens. settling the west was not easy. going to the moon was not easy. the heroism that we saw on flight 93 was not easy. winninworld war ii was not easy, but we are the united states of america. the people were given the task to help and they were frozen and fixed the problem, but it starts with engaged and involve citizens coming together and sharing ideas andolding public officials accountable for the results the results. that is why i am so glad you are here. thank you. i will be happy to take your questions. [applause]

>> i will give you my views on deficit-reduction. if you look at a chart on deficits spending -- federal spending, if there is non- discretionary spending, that includes social security, medicare, medicaid, interest on the national debt and a few other things. the red part is already over the halfway line on the pie chart. it is growing at such a rate that in 15 years, it wille over the 3/4 line on the pie

char what is left in blue is defense spending. if we have as a goal, a nation that faces the security threats we face, to maintain our commitment to defense, the pie chart gets difficult to change unless you tackle head on the red part of the pie charts, the non-discretionary spending on the pie chart. there are a lot of things we can slow down and reform. the heart of the matter is being able to look the american people in the eye. we have a mathematical problem. it is junior high math. we can all see it. here is the commitment on spending. here are the revenues. it is not in dispute. what do we do about that? there are things we can all agree on. there is a reasonable diague

in the country. on social security, we have to say, we have got to get this fixed. we have to get it fixed soon. here are somthings we should agree on. as it relates to the cost of living adjustment in social security, not the whole program, i think we can say means testing is andeal. amongsthe suboptimal choices we have in front of us, means testing, just cost of living increase, is a reasonable step. what that means tha in the future, if you are wealthy, your increase in social security will be smaller than if you are middle income, lower income, or poor. that will not solve the problem by itself. it will help substantially. we now know the history of life expectancy is and how long people are living. i do not think you can change the rules for people in the program. for a new people entering the

program, we have to sav the retirement age will be pegged to some reasonableorrelation for life expectancy that is different from the way we do it now. we also have to give them the often -- the option of individual accounts if they want to choose that route. many in the younger generation would be comfortable with that. medicaid is a program that is growing at levelshat are simply unsustainable. providing health care for the poor remains an important program for our country. the federal-state partnership needs to be fundamentally redesigned and overhauled. starting with this premise, let the states do it. that the nation decide what we can afford to spend on this program. require the congress to come in every year to actually appropriates the money without a

built in increase. block grants that money to the states and get rid of all of the micromanagement in the program. tell the only obligion or the money is to use it for health care for the poor. they have complete freedom to reform its in a way that is suitable to their system. get the laboratories of the mark as the, the 50 states that compete an experiment with each other -- it the laboratories of democracy, the 50 states, to compete and sperry -- and experiment with each other. we have some dramatic examples of that when the federal government let the states do that. medicare is a much longer answer. the short version is medicare was designed in the 1950's. it is largely a cost plus about him based system. if you have been historically a

high-cost provider, whether the results were good or not, you have been paid more. if you we in a more efficient place, you get paid less. you have this weird upside-down in version in the results of the money that went out. inhe mayo clinic, they get paid substantially less than places in the country where they have dramatically higher costs and worse results. all that we know about health care reform in terms of consumers and purchasers been in charge, information about the quality of the market, incentivizing providers, as we have done in minnesota, medicare looks nothing like that. it needs to. there is a lot under the hood of that statement. that is the direction we need to go in with medicare.

we are going to have to slow down and prioritize what we do on the discretionary side. not all that the government does is of equal value. i said to the state, were not reducing military veterans, national guard, or related programs. we will not reduce corps public safety programs. we will try our best to make sure we maintain our commitment to k-12 education. everything else got reduced because it was not as high a priority as the rest of the stuff government does. another thing i did not talk about in the interest of time i will mention now. in a country of 309 million people is not going to be the world's biggest country. it is not, demographically. if we are not going to be the cheapest place, we need to be more competitive. if we are not going to be the biggest or the cheapest, we have got to be the smartest. there is a whole agenda around

and reforming our education system to make sure all of our citizens have an education or skills that is relative -- relevance to the economy today and tomoow. the biggest factor on how a child will do in school is their parents. we cannot legislate good parenting. if you have some ideas, let me know. the second most important determining factor in a child's educational success is the quality and professionalism of their teachers. there is an argument around the countr about who is going into teaching and whether they are properly prepared as they enter that profession. before we let them into the colleges, do we have some minimal expectations before we let them in. are we making sure they have subject mastery before we let them in? do we have a minimum

expectations about what they know? once they enter the teaching profession, are we properly training, developing, and supervising them so we can see who is effective and who is not? if we cannot make them effective quickly, how do we remove them from the profession? i will not go into the details of that. we were the first day in the nation to offer statewide performance pay for teachers and begin to change the mentality and culture firm, we are going to pay most of the money on the issue of how many years you have been around to where it wento pay the money on whether students a learning. i do not know about you, but how many of you get paid for how many years you have been around? i do not-teachers. we celebrate and respect teaching -- i do not bash teachers. we cebrate and respect

teaching. there are some who accept the status quo and block some of these kinds of changes. our country cannot succeed with 1/3 of our children dropping out of high school and being unprepared to work in the 21st century. it is not going to work strategically. those of us who know that my stand up and look these interest groups in the eye. i will not name them, but we know who they are. we are not going to put an adult organization in front of the interests of our children. [applause] >> thank you for coming to new hampshire. nice to see you again. one of our biggest problems is getting the economy going again. as a business owner, we deal with taxation issues all the time.

the united states has one of the largest corporate tax rates in the world and our competitors have some of the least. what is your recommendation on how we stimulate the business economy so that it picks up and we can hire people again? >> our tax rates in america are too high. if you compared the american tax rates to oecd nations, it is too high. it needs to be reduced. there is one other aspect of tax reform i would suggest we look at. we need to have our tax system be flatter, more transparent, and more simple and user- friendly. i would like to see a law passed that every member of congress should have to complete his or her own taxes without a tax professional under penalty of perjury. [applause]

i filled out a w-9 form. it was one half of a page, but came with a papal of instructions. it is so frightening -- it came with half a page -- can with a page of instructns. it scares people from being entrepreneurial. we get debate in the country about your marks on the spending side. i agree with that completely. but let's also expand the debate to the earmarks in the tax code. we have aystem where thousands of pages are dedicated to whether some interest groups got the right lobbyists to go down to washington, d.c. and get this little thing in the taxode. let's lower rates for as many as

possible. let simplify theystem ithe direction, and the spirit of what ronald reagan did in the early 1980's. let's also remember that the bulk of the job growth comes not just from our large companies that pay the couple -- pay the corporate tax rates. the bulk of the dow growth comes from medium and small -- job growth comes from medium and small businesses. they do not use or utilize the corporate tax rate. and if we are serious about inspiring large companies and large -- large compies and medium and small businesses, we have toeduce the individual rate and create an exemption on business proceeds for individual returns. there are a lot of good ideas.

all of them would be helpful and stimulus to of. theenal goal is to get as many of -- all of them would be helpful and stimulus to give -0- imulative. i would clean out all of them and have them as a taxable for the country. next question? >> thank you for being with us today. you talked about health ce and competition, particularly in the prescription drugs, which people use when they get older. how you feel about the secrery

of health and human services negotiating as they do in other countries? what do you feel about legalizing getting prescription drugs from select countries? >> thank you. good questions. on the issue of importation of prescription drugs from state countries like canada, -- safe countries like canada, i think we should be open to that. canada has a distorted system in that regard. their argument is, it cannot import from canada. we can report everything that we can import everything from communist china but we cannot allow grandma to get her drugs from canada? congress has taken a run at that many times. they have never had the votes to get it done. on the issue of negotiating inspection drug prices, i do not think we want the -- negotiating

prescription drug prices, i do not think we want the government to do that. i think the future should be abtrying to empower citizens and purchasers and give them good information and let them make their own choice in health car some people might want to choose a health savings account. some people may want to use a place like the clinic and had it back up with catastrophic care. if government is in bald -- if government is involved in some fashion, they negotiate that on their own behalf for their programs. >> tom horgan with the clege and university counsel. -- university council.

congress is talking about states -- congress is talking about allowing states to declare bankruptcy. what do you think about tha >> the question is that congress is looking and allowing states to declare bankruptcy. as i said earlier, we are going to have a government bubble. we need to pop the bubble in a way that is least destructive and harmful. it is a bubble. it is not like general motors or chrysler or these other countries -- these other companies where you have management and labor running up money so high for so long that no reasonable assumption about revenues will allow the picture to catch up with itself. it was reckless and now the chickens have come home to roost. you are going to see new york and new jersey, places that were

particularly large in the bankrupt division that are going to have to reconcile this first. how does general motors do it? they run to the federal government for a bailout. we should not bail out the states. the politicians are like water going down a hill. it goes to the point of least resistance. we have to make sure we give them the courage to make the tough decisions. do not bail out the states. forced them to reconcile their decisions and x the mess. number to, if you are general motors or chrysler or these other countries, they run to a bankruptcy court. someone comes out of a room with a black robe pen gives you a do over. we should force the system to sell their own problems. the federal bankruptcy laws allow municipalities to have

that kind of restructuring. it does not allow the states. it is worth looking at or considering. i prefer that we do those stains that would force the states to fix their own problems. at the state levels, they have balanced budget requirements in 49 out of 50 states. they have to fix the problem if you do not bail them out. if they have no result, some creditor is going to get a court order saying you must pay. judges ithe courts will start weighing in on tax policy and how to pay those bills. i think it is worth considering. ok. thank you for listening and thank you for coming out this morning. [applause] thank you.

>> you have to do one for him, too. put today's date on it. >> it is the 20 cents today, right. >> right. this one in is to mike. e -- and you have to sign my egg, too. i take this very seriously. with the date. i will remember you forever. >> thank you. thank you for being here this morning. you are nice.

>> will you sign mygg as well? >> of course. >> we appreciate you being here today. >> thanks, ken. >> a little tricky. >> they are a little slippery. hi, heather. how are you? >> i am well. thank you for coming. >> i was glad to do it.

>> good to meet you. >> the to meet you. -- good to meet you. not an easy place to tackl.e e. have a great today. >> thanks for everything. >> happy to do it. >> you were wortthe wait.

>> how is life for you? >> terrific. >> thank you for coming in. quite happy to do it. >> it is a traditional day to come in. a little snow.

>> have a great today. >> i am back again. >> i enjoyed your remarks very much. [unintelligible] >> thanks. good luck. >> one of the interns in my office introduced herself to you. hi. how are you?

>> good. it was good to hear some common sense. i hope catches on. >> thank you. take care. >> if you can just sign. i still want to go to heaven. die.t don't want to

>> thanks again. i appreciate it. how are you doing? good to see you. good morning. >> i wrote this because i am thinking about running for state rep. thank you.

i appreciate you being here this morning. have a great day. you are back. good to see you. >> byron actually apply to us to this event. he had to leave rly. [unintelligible] >> do you want me to sign these, too?

>> i know a lot of workers over there. >> make sure paul has the informatn. he can send me a note or an e- mail. good to see you. >> i gave you a copy of president bush's out ahead.

ed.present bush's op- >> i like your speech. i like your speech on a -- i liked your thoughts on education. >> thank you. >> where are you off to next? >> manchester, new hampshire. i am going home tonight for a

little while. >> i wish you luck. >> tnk you. have a great today. good to see you. >> he was going to try to work this into this schedule. >> where you at the event last summer? [unintelligible]

>> are you guys getting busier now with the merger? [unintelligible] >> better to have addition and subtraction. >[unintelligible] >> she is seven. >> that is terrific. how does she spell it? >> k-a-t-e.

thank you. >> tomorrow, the white house launching of start up america. also, remarks from the head of the small business administration and two top white house economic advisers. that is at 11:00 a.m. eastern here on c-span. jay carety will be the new white house press secretary. learn more about him and watch c-span coverage of his other appearance at the c-span video library. with every shows is 1987, all

searchable and free. it is washington your way. we want to welcome tom ridge. welcome back to cspan. let me begin with some of the news this past week. your successor and homeland security announced changes to a system you put in place. let me show with the original system look like this was the color coded terrorist system. it has remained high for the last seven years brett was your reaction to these changes? guest: it is long overdue. is the third iteration of how the country and the president and the departme communicate potential terrorist threats to the country. whether you have two levels which i believe they have which is 5 and the russians have three, informed the public about the nature of the threat and tell them what they are supposed to do. in years ahead, there may be further refinement.

we have to look at how we can more effectively communicate to the general public about the nature of the threat. you also have to tell folks what you'd want them to do about it. if this advances those interests as a country, i am comfortable and pleased. i remember going out with john ashcroft and our warnings did not work. we came up with a different system. we came up with the five levels. secretary has refunded. whether you have two or five, critical information as to be shared and you have to tell people what to do about it. because of the trust we have in americans to share in our collective security, today i would like to announce the end of the old system of color-coded alerts. in their place, we will

implement a new system that is built on a clear and simple premise. when a threat develops that could impact you, the public, we will tell you. we will provide whatever information we can so you how to protect yourself, your families, and your communities. under the new two-tiered system, dhs will coordinate with other federal counties tossue formal detail alerts regarding information about a specific or credible terrorist threat. these killers will include a clear statement that an imminent reat or elevated threat is present. the alerts will also provide a concise -- a concise summary of the potential threat, informationbout actions being taken to ensure public safety, and recommended steps that individuals and communities can take.

the new system reflects the reality that we must always be on alert and be ready. when we have information about a specific, credible threat, we will issue a formal alert providing as much information as we can. host: online security -- holand security had janet napolitano and the former head with us now. guest: there is no pride of authorship. the challenge is costly to refine a system so that government has credibility and there is sufficient transparency so the government's call for action is believed and people act upon it. the continuing chalnge for secretary napolitano and previous and future secretaries

is they should give purse -- specific information. they can only act on the information they receive from the fbi and cia and intelligence agencies and everyone else. the secretary has to have the information so she will share it with the rest of the country. the refinement isong overdue and i am comfortable with it. host: your department was formed because of what happened on 9/11. there's an article about getting a osama bin laden. his influence over al-qaeda remains enormous. his ability to stay alive and free is a great morale booster 2 al qaeda and its allies and allows the elusive leader to keep setting the agenda for the global jihadist movement. guest: that is ll-stated. e name has not risen into many

public discussions within this administration. there is not too much personal comment about been locked and bin-laden. he has enormous impact on al qaeda but the inspirational impact he has on sister organizations. a global jihad is something other organizations have embraced. he still plays a very significant role symbolically and inspirational late. host: why have we not been able to capture him? guest: i wish i could give you an answer that was positive but i think the challenges are enormous. to a certain extent, some of those in the tribal lands along the pakistani border, if he is still there, he is viewed almost as a hero.

he survived and he participated in the effort by the mujahedin to get the soviet union out of afghanistan and now he has avoided capture by the united states of america and its allies. you can well understand what an incredible folk hero he is to some minorities to buy into his quest for global jihad. host: tonight at 8:00, our conversation with former president george w. bush. we conducted at the campus of smu university. his book is number two on the new york times best-seller list. he says that shortly after 9/11, he appointed tom ridge to be -- to oversee our homeland security efforts. he brought valuable management experience. by 2002, it had become clear that the task was too large to be coordinated out of a small white house office.

initially, president bush did not want a homeland security department. guest: you are right the are of 9/11 is etched in everyone's mind permanently. shortly thereafter, we had the anthrax attacks. no one is quite sure if they were a continuation of a terrorist effort on the part o osama bin laden or separate from that. there is no mechanism within government to deal with any kind of security at our borders. the president appropriately, at least initially -- i was in the cameroon when he's told senators that he is not sure what we will do. he said he appointed governor ridge as the head of a homeland security and we will make a determination thereafter. for years and years,

congressional studies and administration studies have suggested that we build a border-centric agency. as the world becomes sller, people before 9/11 asked if we should have by way of monitoring goods and services across the border. the imperative after 9/11 was to be more aggressive in monitoring both people and goods. it sets up an incredible balance from 9/11. how do you balance security and prosperity? the border agency was set up to try to do both host: there's a photograph fm portland, oregon. ever since the u.s. reinforce its defenses, al qaeda has been unable to launch a similar terrorist spectacular like 9/11.

the top planners in al qaeda began looking for other ways to strike america. itas been a long time since i had inside information. the terrorists wouldtill look to a major event, orchestrating a major attack on the united states. it is clear since 9/11 that other organizations either directly in response to directions from al qaeda or took it upon themselves have gone to the smaller events around the world when we -- and we have seen some futile attempts in this world with regard to the airline. i think al-qaeda still exists and is planning a major attack on the united states. because of their success and the fact that osama bin laden has

not been captured, his strategic value being out there talking about a global jihad is something that organizations -- other organizations needed. we are in this for a long time. many to read -- many generations will deal with this threat. host: what worries you the most as an american citizen and former cabinet member? guest: i guess that question a great deal. probably iran and nuclear capability. you get a country like iran that seems, in spite of our discussions, in conversations and meetings year after year around their nuclear capabilities. given mahmoud ahmadinejad's mine mindset, it is diabolical

in nature. i worry about them becoming nuclear-arms. with impunity toward the united states and united nations and the rest of the world. a nuclear-arms iraposes the greatest threat to the western world. host: we will get your phone calls in a moment. send us an e-mail or go on twitter. you serve 6.5 years as the pennsylvania governor. the present governor is facing a deficit of three-$5 billion. 48 of the 50 states are facing budget deficits of this year. guest: one of the challenges of leadership is to take on the really tough issues. and try to solve them. i told tom corbett and people on both sides of the aisles facing these challenges that it is easy

to cut ribbons and wenjoy those moments. it is a real challenge for leadership. you have to feel good about the opportunity that the citizens elected you to solve these problems be bold and te the initiative. you have the bully pulpit. explain it challenges you face, explain what you will do to meet the challenges, and by and large, americans understand the mistake perspective, the national debate about the deficit, the benefit of that debate goes to republican and democratic governors making tough choices. i think the american public understands this. over the years, republicans and democrats have automatically raised the annual budget up to 7%. we have compound interest and compound principle.

budgets naturally growing, tha era has ended. host: governor christie says he wants to cut corporate taxes and governor cuomo in new york says he will not increase taxes. governor corporate says he will not raise taxes but governor clinton in illinois is raing taxes to try to overlook -- president -- gotquinn in illinois is raising taxes guest: . we will see wh works. i cut taxes for many years. you have to relieve the regulatory burden. if you overreach, it is effectively a tax. there's a cost in doing business so you have to be careful h you raise taxes.

the best antidote to these challenges now, they will have to make tough decisions and some programs should be cut and others should be co main goal. i tnk you have to keep downward pressure on spending. you have to have more technology. i am not giving recommendations to tom corbett but you may not be seeing more public seants hired as they get the deficit under control host: we heard from the president this past week. what i the state of the union as we speak? guest: from my perspective, as the to go, i thought it was powerful. let's make no mistake about it, this manelivers an extraordinarily impressive speech. he is light on details. if you are serious about the budget, you have to lay the foundation and talk to america about sacrifices that we will

have to make as a country until we get our fiscal house in order. on the international relations side, i was disappointed when sudan and tunisia get more air time than iran and other challenges. i think they missed an opportunity to make a stronger statements about america's role in the broader world community in some of these crisis areas. host: market is joining us from england, good afternoon very caller: good afternoon. i am an american but i live in england. if we are wary of islamic jihad and other movements, why over the years have we flooded iran, kuwait, iraq, afghanistan, pakistan, saudi arabia, and with our arms?

guest: thank you for your question. the u.k., the united states, western democracies have always had a challenge on their foreign policy, trng to balance their interest with a value system that we hold dear. it is a very complicated balance that you have to deal with. it is in our interest to advance human rights because that is who we are in part of our value system. it is our interest to ensure that there are stable governments in an unstable world. the criticism that you point out suggests that you can have one or the other.

i think you need to balance the value stem you have is a democracy and western values system with the interests you have that our geopolitical, economic, and military. sometimes there appears to be an imbalance. we take a look at our policy in the middle east of the last couple of years and we have provided arms in that area and we probably have not pushed as hard as we could have on the human righ agenda. you cannot anticipate flipping the switch overnight. we needed a more the subject -- aggressive approach toward incremental change. we would not have seen the crisis in egypt today. host: secretary of state hillary clinton says sveling the egyptian government is not enough. what egypt has free elections and they elect someone that the u.s. does not approve of? guest: we have heard that question asked many times. we saw what happened to in

lebanon. we promoted democracy there and it looks like the president is supported by hezbollah and he has prevailed. we saw what happened in the palestinian community with hamas. in the long run, a freedom agenda promoting that cause among peoples everywhere is in the long-term best interest of the united states. guest: you serve with newt gingrich became -- before he became speaker the house and you work with john boehner who is the secret -- speaker of the house. what to these two men bring to that job-host:? guest: new gingrich has big ideas. on my way to become governor of pennsylvania, he hadhe contract for america and he was so good at getting it done, we

probably did not market it as well and there are complications associated with his leadership and he moved on. they both have operated from a conservative base. their styles are significantly different. for quite some time, speaker gingrich had a bigger style and john boehner is a more thoutful manut he is tough as nails. i think you'll see an honest effort on his part to reach out to the other side of the aisle. in the long run, you will not see him compromise his basic principles. to his credit, when he was minority leader, he was able to hold a caucus together.

he is a very effective leader host: newt gingrich is likely the possible gop presidential candidate. guest: we have a varied dpbench. -- we have d veryeep bench. having new gingrich taing about his ideas, i think you give someone newt and mitt and some others, america will be listening closely. we know what the problem as but we are more interested in specific solutions. you will see a very spirited and am -- an animated primary season within the republican party. it is pretty exciting. host: do you have any personal preference to guest:? i am looking for the candidate to support. host: will go to alexandria, va.

at next. are you with a caller: stack us? caller: i want to say how much i admire your record of service to the untry. i worked in cairo in 1977 and 1978 went on war as a doctor turned to the west and asked the russians to leave -- a an whenwar sadat as the russians to leave. wasident hmubarak sitting next to him an whenwar sadat was assassinated. i think it is personal. the person who was brought to trial and finally ile for the assassination was the number two

man in al-qaeda and he was the leader of the moslem brotherhood in egypt. if we look at it from that perspective, i observed that when i was there, the recruitment and power building that the moslem brotherhood used and they are using the unrest in thune asia to seize controlf egypt. guest: i appreciate that powerful historical reminder as to when mubarak sa anddat and the impact of that owls are zawahiri had on that. the islamic brotherhood is lurking behind if not quietly participating. if the islamic brotherhood is quietly participating, in my

judgment, you will probably find in time that iran has placed its dissidents and has offered various support to continue to promote the unrest. one of the challenges that the country has is because more barrick has had tight control for 30 years, -- because mubarak has had tight control for 30 years, even if the government announced that the next election will be internationally supervised and open and free, even under those circumstances, there is no pathway to begin building a more stable democratic government. at this point in time, there is a call in the middle east for a tear down the wall moment. hmoud ahmadinejad stole the

election and remarks are more aggressive with what is going on now. i hope the administration comes up more forcefully in demanding that either mubarak or the vice presidency is that elections are done openly. . . for the last 30 years we have supported president mubaraka. are there parallels and lessons that we could take from the shock in our support of president mubarak? guest: the western world is probably learned that sooner or later much as you may think that

stability is the most important characteristic of a government in a troubled part of the world, all the influences of globalization, of communication, the internet, just a natural yearning of people to be free, to choose their own government ultimately will prevail. that is a mind-set we have not quite figured out yet. but i think the 21st century, people do yearn for freedom. there is a freedom president reagan started talking about and certainly president bush promoted, and certainly now it is coming clear in tunisia, yemen, egypt, jordan. it is about time we realize this. hofe this is -- host: this is what the town square looks like.

there have been more than 70 deaths as a result of the uprising over the last five or six days. you can see the pictures and see the crowds rig there. guest: what's remarkable to me so far is the fact that they have the tanks in the streets. they have demonstrated now they have a military capability. but so far -- well, there have been 70 people killed. that shows you how turbulent and how challenging it is for the demonstrators, but they have not seen a bold and assertive military take action. what happened in tunisia is a good reminder. if the military chooses to stand up or ultimately sides with the demonstrators, mubarak is gone. it happened in tunisia. whether it can happen here remains to be seen. but one of the reasons the

demonstrators were successful is that military even under orders, presumably, did not act. you know mubarak said the police haven't done enough, even though they killed 70 people which in your mind and my mind is way overdone. the military is there. it will be interesting to s what happens in the next sever days. host: next our line for republicans. good morning, bob. caller: i think we should have a noninterventionalist policy, as ron paul promotes. rudy guilliani met with a group in paris that was advocating for the removal of m.e.k. from the terrorist watch list, and it is a federal crime for someone to act in that way. i wonder why the double standard, why mr. rich gets away with doing this and we are