each other's with sticks and some were injured. let's just reflect on these images we are seeing. when there are moments of violence, how do you interpret that? how significant is that on a bigger scale? isest: it is clear this the part of a strategy to run out the clock. i want to break the momentum of the demonstrators. -- they want to break the momentum of the demonstrators. these are people that have been brought in by the regime. this is a worrisome sign. it means that should the regime- affiliated forces prevail, you will see a more oppressed egypt. if it has rarely been an repressive in the same way that syria has been repressive.

but, if the regime prevails, you will see something you have not seen since the late 1950's. >> a follow-up on twitter has a question. what the implications to other middle eastern nations if mubarak manages to stay in power? guest: if mubarak manages to stay in power, it will be and important lesson to these leaders about how to manage these type of popular protest. if mubarak is able to hold on, you can be sure that other leaders under pressure right now in yemen, where jordan, and there are calls for protests in syria, in algeria, they will learn an important question from mubarak, and those winds of change will likely come to a halt.

host: let's look at the piece you wrote for foreign affairs back in march. you talk about his return to egypt last year, nearly one year ago, back in february. you explain a little bit about who he is. you have a 12-year absence from egypt. he has always played a role in the ultimate, international bureaucrats. it has been purposely tenuous. this makes it somewhat surprising that he has talked to political station since his plane has touched down in cairo. you wrote this in march. >> it was an extraordinary -- guest: it was an extraordinary moment that 1000 people showed up to welcome him back to egypt after a 12-year absence.

he calls for a genuine reform, and his statement that he would not run for president until there was genuine reform captured the minds of many egyptians. let's not get behind our sells parity does not have the broad, deep following that he would need, but he is someone that people would look to as a conscious of egypt, and the desire for freedom and change. whether he could do that is another story. nevertheless, his return really sent a ripple through the egyptian politics. off until that point, it was assuming that president mubarak would succeed him. i think that his return really complicated that succession, and contributed to an environment in which people were demanding more democracy and change. they could put a focal point on those demands. host: let's hear from an independent scholar in maryland.

good morning. you are on with steven cook. caller: first of all, i am african, from cameroon. i have a comment and a question. the first comment is that mubarak and a lot of african leaders, including the president of cameroon have tried or are trying to rein it back to a kingdom society. [unintelligible] it happened -- like two or three african countries already. that was the plan. they knew his plan.

he was trying to either win the election and again, and nominate his son, and hand over power to him. that is what is happening all over africa. my point is, why can't america use the leverage that it has, and be pro-active in these type of problems? how can a democratic society in afterwith the president's 20 years, or 30 years? host: we will get a response. guest: it is a good question. it is important to recognize leverage. it is important to recognize that this is a concept that tends to be overblown. sure, the united states contributes $1.5 billion in aid to egypt every year. $1.3 billion of that goes to the

egyptian military. in the end, it is not biased to much because the united states needs things from egypt as much as egypt things -- needs things from us. more generally, it helps to create a regional political order that makes it easier for the united states to pursue interests in the middle east. we have a lot less leverage with mubarak and other leaders that we would like to believe that we do on the question of the united states and its principals, in looking at these countries that are clearly non-democratic, there has always been a tension between the way americans like to believe that we live here, at home, and the way we like to believe we act abroad. really, it is a messy word, in which we need to look out for our -- world, and in which we need to look out for our interests, and sometimes that puts us in bed full with -- with

people we would otherwise not want to associate with. host: you said what would seem to be his biggest weakness, his long absence from egypt, is actually his greatest asset. how so? guest: his security file is fairly small. if you look at other dissonance,, they had been in egypt, and there were -- there had been plenty of opportunity for files to be built on them, and subsequently for them to be smeared. he did not have that problem. he did not involve -- he was not involved in egyptian politics. he is a nobel laureate. the fact that he was away from each of actually insulated him from the machinations of the

interior ministry. yet, -- host: yet one of the negatives he brings is that he might not be as a -- as familiar of a face. he has not been there. he said people in the western media tend to give him more importance that he is given in egypt. gee, i think that is true. i think he could become a focal point for these demands for change, but he does not have the broad and deep following that he is talking about. nonetheless, his return was important because it complicated the succession plan, and he did capture the mind of the liberal elites of without much leadership. host: al jazeera is reporting

that clashes have also broken out on the side streets, and there are some reports of injuries. we have some images there, brought to us live from al jazeera. next, democratic caller, florida. welcome. caller: i was a rescue worker at 9/11. i am retired now. i moved down to florida. i just want to say something. these people do not want our kind of democracy. where i'm living now, in florida, they brought a governor in who swears he is going to lower taxes. he turns around and he says he wants to double the homeowners' insurance by 100%. they are going to double the water bill, the electric bill, everything. do you think these people want

that kind of democracy? that is not democracy to me. that is just people lying to us. guest: i am not sure about the people in florida, but in egypt, there is overwhelming sentiment that they would like to live in a more open democratic society. if you look at the perhaps even millions of people in the street, they were calling for hosni mubarak to go, but their demands also included a more open and democratic political system. i think it is not accurate to suggest that the egyptians, arabs, muslims, cannot live in democratic societies. it is basically the racism of low expectations. host: diane writes from his new hampshire. guest: the israelis are very concerned.

the egyptians have been cooperative with the israelis on keeping a lid on the gaza strip, and pressure on hamas. they are concerned that a more democratic and opened egypt will result in changes. it is no secret that the peace treaty with israel is not popular. he is regarded as something that keeps egypt we, and allows israel to free to pursue its interest. you can expect that if mubarak does bell, and a new government comes to power, there will be a re-evaluation of the relationship with israel. the would-be leaders are already talking about those kind of changes. host: we have a phone line setup for each of americans. -- egypt and americans. elizabeth, new jersey. republican line. good morning. caller: you just mentioned the

elephant in the room. you're talking about israel. it is funny that america tries to pretend that we are a just and fair nation. you are talking about egypt and policy, but for the past 50 years, the palestinians have been suffering. recently, a leak from the palestinian papers came out and it showed how complacent the egyptians, the israelis, the jordanians, and the saudis have been in terms of repressing the palestinian people. it is the same situation in gaza. hamas was voted in as the leading political party. and we do not even hear anything about them anymore. israel designed the movement

pair they are the cause of this problem in the middle east and in africa. guest: i think the caller is expressing a sentiment that is held by many in the middle east. >> we are leaving this segment to go live to the white house. here is today's white house briefing with spokesman robert gibbs. >> i'm wondering if you could start off by telling us is the president's personal reaction to the bloody chaos in the streets? >> the president has been updated throughout the morning on this, both as part of his pdb, as well as written updates. the president's administration strongly condemns the outrageous and deplorable violence that is taking place on the streets of cairo -- that is taking place on the streets of cairo today. we have said that brought this process. obviously, if any of the

violence instigated by the government, it should stop immediately. that has been our message throughout this period i think this underscores precisely -- throb this -- throughout this.. i think this underscores the time for a transition has come, and the time is now. the egyptian people need to see changed. we know that meaningful transition must include opposition voices and parties being involved in this process as we move toward free and fair elections. but, that process must begin now. >> he said last night that he wanted to commend the egyptian allowing the th peaceful protest and protecting

the people. when of the thoughts this morning about the way the military is handling this? >> we are watching, as people are thrilled the world, what is happening today. we continue to -- as people are throughout the world, what is happening today. we are continuing to urge restraint. i think the role that had been played by the military was exceedingly important did what i think many people thought might have happened late last week. again, it is imperative that the violence that we are seen stocks, and that the tradition -- stocks, and that the tradition -- transition we spoke about begin immediately. >> when he talks about the transition beginning now, can you explain how this situation moves from president obama

talking about change now, and president mubarak talking about change in september? is president obama powerless to estimate that at the next -- to make that happen? >> let's be clear as these are fluid and dynamic events. what we have seen happen over the last few days are events that many people have not seen -- nobody has seen in their lifetime. i think you heard the president last night pretty clearly. i am certainly here to say that the conversation that the president had with president mubarak was direct, it was frank, it was candid, and without getting into exactly what was said, i think the message that the president delivered clearly to president mubarak was that the time for change had come to.

>> i'm trying to get the core question of what this president can do about that. >> i think changing all of these instances -- what we have seen transpire has been over the course of many days and has taken place as a result of change that has needed to happen from within the country. i think you have seen statements from throughout the world both in the region and outside of the region where president obama and leaders have been clear about what needs to happen. many of these changes are going to have to happen on the ground in egypt, and only those in egypt can determine when those demands have been satisfied. it is clear that the egyptian people need to see progress and change immediately.

>> finally, we have not had a chance to ask president obama and the questions since the crisis began. there have been a couple of occasions that could have been open to the press. can you explain why we have not been able to talk to him? >> i think you will get a chance to talk to the president later in the week when prime minister harper is here. we have had a couple of occasions where there have been still photographers. those were part of the coverage plans that had been in place for a bit now in terms of those events. i will say that i think we have, like you all watch a series of rapidly-moving events -- you have heard from the president in what is happening in egypt. we will continue to keep you up- to-date as best as we can on what goes on, knowing quite honestly that some things in foreign policy have to be done

away from television cameras. those other types of direct and frank talks of the president had last met with president mubarak. >> was a to avoid questions on egypt? >> i said it was not heard >> protesters are clearly unhappy with mubarak insisting that he stays in power until september. to put pressure on him, what are bought spa's -- what are the specific steps the a administration is considering to put pressure on him, could they include discontinuing a? >> these are very quick, rapidly moving event. where are watching them as you are. the question specifically on aid, as i said, i believe last friday, we will evaluate the actions of the government of egypt in making and reviewing

decisions about aid. that continues. >> secretary clinton said that was not part of the discussion this week compared >> that is not what she said. she said had a decision been made to cut off, and she said no. i will say no decision has been made. she also said later in that answer that we certainly review our assistance posture, and that is what we are doing. >> the president says he wants to bar to begin the transition now. hissy asking him, which those words, to say -- is he asking him, with those words, to leave before september? >> some of these are decisions that need to be made in concert with a whole host of voices on the ground in egypt. i am not going to get into a greater level of specificity as

to the direct nature of the conversation that was had, except to reiterate what the president said in terms of that transition beginning now. >> what is the level of contact now? is the president going to be speaking to mubarak? >> i do not know of plans, as i walked out here to speak with president mubarak -- walked out here, tuesday with president mubarak today. he ended the phone call by so aying he would remain in contact, and president obama would feel free to call any time if he needed to speak directly with president mubarak. obviously, there are a range of conversations that are happening throughout our government at many levels. we have a very, very capable

embassy and an ambassador there that is working with former ambassador wisner on a full range of these problems. >> i assume the president and the national security team have been looking at all of the outcomes each step of the way. is that a safe assumption? >> i think we have done them as events have transpired, and as events have changed. sure. i will say this, i would go back again and look at what this administration, what this president has said specifically about changes that need to happen to respect the universal rights that we have spoken of both in egypt and throughout the middle east. i would point you to secretary clinton's recent speech as outlining a series of these steps. >> as you game this out,

what is the best-case, and worst-case scenario? >> i am not going to get into hypothetical now. i'm just not going to get into them here. we are planning a full range of scenarios. i think it is important, jake , to understand -- at think it is hard to imagine the event that happened yesterday. several of these events across the landscape are happening very quickly. we are watching those events. we are planning notes -- for those events. there is a committee meeting that starts very shortly where they will get into a whole range of issues. obviously, we are concerned about the violence that i talked about. we are concerned about reports

of food and fuel shortages in some of the cities, and the ability to get what might be certain entry point reports over to people that are in desperate need of them. >> do you think mubarak is a dictator? more importantly, does the president think that mubarak is a dictator? >> the administration believes that president mubarak has a chance to show the world exactly who we is by beginning this transition that is so desperately needed in his country and for this people out. >> does the president have any regrets that when this crisis began to unfold and that his public statements were not more in line with the speech she gave in tyrolean 2009? the initial comments were a lot more pro-mubarak, cautioning

demonstrators not to engage in violence. >> let me be clear. eight days later, we do not want to see violence on protesters. we do not want to see you building. >> yesterday, the protesters were an inspiration. his comments are on friday were that they should not engage in violence. >> that continues to be our posture. i think for us to not acknowledge -- again, i do not know what you guys from a coverage standpoint predicted it would be what we were looking at on wednesday, last thursday. again, we are watching event set at naught transpired as they have in this region of the world in thousands of years. we have, obviously, a considerable amount of staff

time spent on this. some of the president's time, obviously, has been dedicated to watching, taking notes of, and responding to the event that have transpired. again, what we are watching is history being made. >> so, no regrets that it is initial comments were not more in line with the cairo speech? >> i think what we have said in public and in private at all levels of our government to all levels of the egyptian government, to governments throughout the middle east, have not been with the cairo speech is simply wrong. in the cairo speech the president stood up for a universal some of values and actions that had to be taken by governments, as you have heard

him say, that has to be responsive to their people. that is precisely what the president believes. these are not going to be determination's that are going to be made by us. nobody in washington will determine the range of freedom of assembly or freedom of speech for those tyro. i do not think anyone in that square is looking for us to gauge what defense posts are. >> i think they want the president to be standing up more for them and less than mubarak -- less for mubarak. >> i do not know to the degree that they have heard everything the president has said. i think that the notion that the president has somehow shifted from one side to the other is completely inaccurate.

>> you talk about the transition happening now. how do you define now? >> now means yesterday. when we set now, we met yesterday. -- meant yesterday. again, i want to be clear. we are in the here and now and now started yesterday. that is what the people of egypt want to see, not some process that starts one week, when month, were several months from now. [unintelligible] >> it is unseasonably warm, but it is not september. now means now. there are things that the government needs to do. there are reforms that need to be undertaken. there are opposition entities

that have to be included in the conversation as we move toward free and fair elections the we have advocated for quite some time. >> is the white house unsatisfied with the bark in power until september? -- mubarak in power until september? >> i will not get into the details of what they discussed the transition has to begin now. the conversation was frank. >> white was the major event that seems to cause a shift, seemingly supporting mubarak -- >> i am not in the editorial meetings at cnn. i do not know when week ago what you guys thought we were seeing now. >> i am saying what you were saying then. >> you are asking me if the events have changed over the course of the weeks?

>> i am saying what one event. >> there have been a series of events that have shifted. when you shift anchors into the region, i assume that is what is happening on the ground. events have, again, most enormously quickly in a very volatile auto region of the world. -- region of the world. again, the likes of which we've not seen in our lifetime. that simply demands that we continue to watch, and continue to insure that we are taking the steps to communicate directly with all of the entities of their government about what we expect in terms of non-violence, what the world expects in terms of non-violence, and the steps that need to take place in order

.o see that transition eric >> yesterday, the presence of the transition must begin now. when you walked in, you did not say begin now. were you ratcheting it up a little more by not putting the word "begin" in? >> i think the events of yesterday began that transition yesterday. most importantly, that is what the people of egypt expect. i think the people of egypt needs to see progress. and what the president object to a decision to step down now? >> that is not a decision.

>> would he think that is a bad idea? again, i am not going to get into fleshing out some of the very specifics of the conversation that was had. i think progress and change must come to cairo and to egypt, and it needs to happen quickly. >> is there going to be a time lapse of some point? is he not going to have to get out before september? >> i assume those are discussions that are being held by the top levels of their government. >> are they being had by the top levels of our government? >> i think they are looking at a full range of scenarios and the events. they are being watched and discussed in many buildings throughout washington, including more pressure on -- washington. >> including more pressure on

mubarak? >> i would point to what the president said last night. >> where you in the room when he was on the phone with mubarak? was there some frustration on the part of the president? >> i do not want to get into, reading out some of gets tough. -- into reading out some of that stuff. >> do you believe the president has that kind of power in the situation to make a difference? >> i think we have been clear with the government of egypt before this, the steps that need to take place. i think we have communicated publicly and privately the important steps and the important reforms that need to take place. i think though it is important to understand that we are

obviously watching. we are watching the event based on what is happening on the ground there. i think the world is watching, and the world is commenting on what we have seen happen, and what we know must take place over the next many days and weeks. >> as far as what president mubarak did, and what he will do in the future, is president obama basically calling the shots? >> look, i do not know the direct answer in terms of that. i think at each juncture of this we have, again, made public and private comments about the situation, and what needed to happen. i think you will hear this administration, whether it is that -- at the pentagon, the

state department, inside of this building, continue to communicate with the government and the people of egypt about what the world expects. >> do we have evidence or indication that some of this violence is been instigated by the government? >> i have not done -- i have not seen the latest on that. in terms of whether or not we do, i do not know the answer. >> suspicions? >> i should not hypothesize. again, i think what is important is that the message must be that of violence stop, and in the event that any entity or any government entity is behind any of this, it must stop. >> some of the reporting out there indicates that it is government stocks responsible for this -- sod is that are

responsible for this. did the president asked president mubarak to supervise the transition? the asking to not leave, supervise a transition of power? >> again, i am not going to get into specifics. i think the president was clear, and he was clear publicly that the transition must begin now. >> senators john kerry of massachusetts has suggested a caretaker government. >> i have not seen what he has suggested, and i am happy to take a look and bad. >> did the president get any indication from mubarak that there would be a crack down today? >> no. >> i understand you cannot talk about hypothetical, but did the president make clear to mubarak said there were consequences in

the american-egypt relationship if he did not say the president's suggestions? -- take the president's suggestions? >> look, we have been clear with the government. the president was clear on continued stances on violence. quite frankly, we would not have accepted anything less. again, i think we have made it fairly well-known what we think needs to happen, and what is and what is not acceptable. >> we have made it clear that there are consequences if they do not abide by what we believe is the correct thing to do? >> we talked late last week about posture, and i think first and foremost those are -- that

is precisely what is happening on the ground right now. i think the people of egypt in need to see change. the people of egypt need to see progress. that is what the world needs to see. >> is there a fear that you will lose -- if you push marked too hard, you will lose the ability to influence -- mubarak too hard, you will lose the ability to influence? >> i will go back to what i said earlier. week evaluate a whole range of activities and scenarios -- we evaluate a whole range of activities and some areas. >> it seems like you are avoiding using the word spread are there policy consequences on the table that mubarak is aware of -- word. are there policy consequences on the table but mubarak is aware of? >> you have to realize if there

are limits to what i can say. >> you cannot say what is on the table, but is it clear -- >> i do not think the president could have been clear -- more clear with president mubarak last night. >> the president praised the egyptian military. right now, the military is getting criticized for not helping protesters that are being brutalized. is there such a thing of a sin of omission, and want the u.s. government -- would the u.s. government call for -- >> let me see if i can get a direct answer from some military contacts. >> the back to the review love -- review of u.s. aid. you brought that up.

can you tell us where the review is, what is the status of that review? >> let's see if i can get an update. i said that woodbridge of that review would be based on actions going forward -- that a review would be based on actions going forward. i've not gone further guidance. >> how important these think [unintelligible] >> any violence, in any role the entities play, will take part in that. i do not want to -- i do not have anything to announce on that. obviously, we will evaluate what has happened and the images that we see based on that, and a full range of options going forward.

do want to, if i can, be clear in reiterating that we have said this from the very beginning. the president has said the set every opportunity and every official yet our government in speaking with officials in egypt and government have used every opportunity first and foremost to reiterate that any steps that are taken must not include violence. we reiterate that call today. i think the people of egypt do not want to see appointments, they do not want to see speeches. they want to see concrete action by the government. i think that is what the world waits for. >> since the beginning of the uprising, you called for

egyptian to stop the shutdown of the internet. in the foreign minister of egypt seems to suggest that a transition is going to inflame more violence. do you get the impression that your insistence falls on deaf ears? >> i think not just president obama, but leaders to rob the world have in many ways signal the same call that we have made. this was a topic that has been discussed in some of the calls that he has had with leaders in and outside of the region. there is no except a bowl excuse -- acceptable excuse for not turning back on the internet, getting people the ability to communicate with cell phones, to access social

networking sites. as you are the president said throb the world, those are a part of the -- for route the world, those are part of basic freedoms people should enjoy it. [unintelligible] >> i think that given the reports that internet reception remains spotty at the very best, they have not yet done what needs to happen as it relates to fulfilling that individual and basic right. >> following up, what was your motivation for raising the specter that the egyptian government may have been involved in investigating troubles today? -- instigating troubles today? >> we want to make sure that the message that is sent -- the reason i said the first message

that is talked about in what we say, what i say, and what ec others say -- see others say it is the need to respect the rights of individuals and to insure this is done in an orderly and peaceful way. i just want to make sure, peter, that everyone understands that violence at any level is unacceptable. >> there are reports said the administration does have evidence that someone in authority in the mubarak government gave the go-ahead for these people to go into that square. >> again, i have bent get -- in getting ready to go into the. of last meeting i was in on this was earlier this morning. i could go see if there is anything that i know of. >> excuse me, you have had a lot

of questions. >> you listed a number of things that the deputies were taking up in this meeting. would it be safe to assume that they would be talking about the very stability of the egyptian government? >> we have talked to rob this process about the -- is throughout this process about the transition been peaceful and orderly. i think stability in the country and throughout the region is important, mostly important for the people. >> de think it will be an orderly transition? >> i am not claim to get into taking either transitional or future leaders of egypt. that is something that the people of egypt and a broad

cross-section of those in political entities are going to decide for their country. >> is the u.s. preparing any further aid package for egypt? >> as the president said last night, we stand ready, and one of the topics likely to be discussed this afternoon was what assistance needs or could be provided to meet some of the basic needs of the egyptian people. what process is can we undertake? what process is can we undertake to see if we can move resources from entry points or ports into cities and areas that are in need of those resources? >> any idea on a specific dollar amount? >> nothing i have to announce. >> was in the region as the

administration made contact with? -- for a loss in the region as the administration made contact with? >> the president spoke late last night with king of della of jordan. -- king of the law from jordan. >> what was the president meeting with senator mccain today about? >> senator mccain as a whole host of issues ranging from domestic to foreign policy that i anticipate the two will discuss i have not been in the chamber for the speech itself -- discussed. i happen to be in the chamber for the speech itself for ending earmarks. i remember two people standing up and clapping, senator --

senator mccain, and son of sam cassell. it was a bit of a lonely group. i know they will talk some of that. obviously, you have seen announcements made on the senate side that it appears as if we have seen the end of earmarks. obviously, senator bingman plays an important role in the development of ideas around clean energy. i think a large part of the conversation will center, around the proposals that the president outlined -- center around the proposals that the president outlined to increase the amount of electricity that we create using clean energy.

research and development around clean energy, and the manufacturing jobs it could create. >> the president said he is open to some change in the health care law. is the mandate something you would be open to? >> i think the president outlined in the state of the union some adjustments to the way small businesses are treated, particularly around the 1099's. but, we are not going to go back and fight the battles of the previous two years, and we are certainly happy to talk to those who want to see belloc improved, -- of the block improved, but we will not go backwards -- a lot improved, but we will not go backwards.

>> [unintelligible] what the president speak about other dictators in the future? -- will the president speak about other dictators in the future? >> let me speak broadly to this in the sense that you have heard the president now on two occasions talked quite clearly off of what is happening in egypt the -- about the obligations of those in power have to those they represent. i think you can go through a whole host of our discussions on both public and private level with leaders throughout the world about steps that we taken toeed to be improve human rights, the basic rights, to uphold individual liberties -- those are

discussions that the president will continue to have in public and private with leaders to rob the world. >> -- throughout the world. >> wikileaks has been nominated -- [unintelligible] cue think their tactic -- do you think their tactic has been altered? >> there is a school of thought that if elections were true and fair, to islamic extremists would come to power. >> we are getting way ahead. there is a lot. we need to get to the transition in order to get to

the point of free and fair elections. i do not want to get into hypothetical about what it's. what we would like to see is a continued, stable partnership with a country that has played an invaluable role in providing some stability to a molotov region in the world, and we -- to a ball tile region in the world, and we would expect that whatever government comes next, bad government respects the treaties that previous government which the egyptian government has entered into. >> is an almost be careful what you wish for? >> we look a lot of different scenarios. >> on israel, do you have any special concerns for their security? these have no coordination with israel, and are you still

pushing for the peace accord? >> first and foremost, our consultations -- we have had consultations, as you know, between the president and the prime minister over the weekend. our position has not changed about either our involvement or the benefit of comprehensive peace in the middle east. >> when you talk about your support for a transitional process, it does it seem to contradict what people want on the ground? everyone says that president mubarak has to go. how'd you reconcile the contradicted messages? >> i will not get into the very specifics of what president obama and president mubarak talked about.

i would direct you to what he said last night about the timing of that transition, and has he has mentioned now, both in washington speaking about cairo, and in cairo speaking about a broader middle east, that we hear and respect the aspirations of those throughout the world to seek greater opportunity, to seek greater freedom, and the promise that it holds for them and their family. >> is the minister still in cairo, and easy still in touch with president mubarak? gutsiest go -- >> he is still in cairo. he is there on our behalf to

speak with all levels of the egyptian government. we asked him to go. he is, obviously, a very respected former ambassador, a respected widely by the egyptian government, and provides us an opportunity to speak directly with the president. >> two other things -- was the president angry this morning when he saw the violence in cairo? it does seem that there has been some change in marching orders to the police on the ground. >> again, i think the president found the images all regis and deplorable -- outrageous and deplorable. everybody did. >> did there seem to be a message of some kind about the interactions between the administration and mubarak

yesterday? are they in some way a reaction? let me also ask about the message to u.s. friends in the region. is there a suggestion that there is a template for other relationships between the u.s. and other leaders in the region, and what has transpired between president obama and president mubarak? is the message that these ideals are important to the people they represent? you were just talking about the obligations of those in power. is that part of the message? >> let me do it couple of things. as i have said here for many days, i think if you -- be different countries throughout the region are at different stages of political and development. regardless of that, as the

president has said, and as i have said, there is a responsibility to be responsive to those who you represent. the conversation the president has had with allies or partners in the region have continued to reiterate what we have said in bilateral meetings, or in conversations of the president has said previously about the important steps that need to take place to honor and adhere to the individual freedoms the president has talked about. so, you know, those have continued to take place. they have started as a result of this. what the president has said in these individual meetings, and into acicular what secretary clinton said in her -- and in

particular, what secretary clinton said in her speech, i think provide you some good road maps as to what our feelings are with regard to what countries need to do to respect human rights. >> you have used the word "transition" 15 or 20 times. is that definition a government that does not include hosni mubarak? >> i think what president mubarak said yesterday is that he is not going to be the next leader of egypt. i think that was clear. >> but does transition now mean without hot -- hosni mubarak? >> i will not get into specifics about what the two presidents spoke about. >> you mentioned that we are having discussions with all levels of the egyptian

government. are we speaking with speakers in the army, and what are we talking to them about? >> and admiral mollen has spoken with his counterpart. secretary gates has spoken with his counterpart. officers throughout our come and ranks have spoken to their counterparts. -- come and ranks -- command ranks have spoken with their counterparts. being able to have the relationships and the knowledge of who you are talking to and to you need to talk to -- and who you need to talk to in times of great crisis. i think it is safe to say that each and every one of those conversations starts off with a conversation about restraint and non-violence, and that is what the president spoke about

yesterday. >> do you think desktop maintained -- maintain that restraint? >> i do believe they have. >> following up, with the military-to-military communication, was there any communication about timeline is -- when the military could or should step in? >> i will not get into that. >> with e motion so high, realistically, what is the timeline so -- that you think the violence will slow? >> it is in the power of all those involved to step away from violence. that -- and i have said very early on, the legitimate concerns and grievances of the

people of egypt will not be addressed with the violence or by violence. it is our hope that what we saw today we won't see tomorrow, or friday or into the weekend. obviously, this is -- this is going to take -- this is not all going to be wrapped up in a matter of hours. it is going to take some time, regardless of the amount of that time, it is tremendously important that restraint and not violence carried the day during this important transition. >> one more domestically -- we are seeing a major storm hitting the country. could you tell me about the economic impact, what americans

should be expecting, power is out in some places, businesses shut down, airlines are not -- >> i would say a couple of different things. each of the past two days, the president has spoken directly with fema director craig fugate on the preparations we are assisting with in a number of states that have been at affected by the breadth of this winter storm. you all got a be out yesterday that indicated that fr -- fema had coordinators across the arc of where we were that predicted to see the winter weather. they spoke again today. the president received another update. emaelieve that the f director was going to do a

briefing on camera to talk about some of the preparations that and had as we assist state and local entities, and as we help businesses deal with the repercussions of, say, and losing power and things like that. obviously, we anticipate that we could see appeals for disaster declarations, again, which come from the state level up to the federal level. i think at this point it is hard to make some broad macroeconomic determinations about the impact of this storm. obviously, we have had tricky whether for, as is the wont of this time of the year, many weeks. how that affects some economic statistics or hiring certainly remains to be seen. >> numbers just on the airline's

shutting down -- >> i would point you to at dot and faa for the particulars on that. obviously, some of the pictures being received in places that are used to dealing with a pretty tough weather, dealing with snow on the magnitude of 20 inches, it is a stunning thing. >> [unintelligible] chicago today? >> my son gets excited any time it turns cold because he knows there is a decent chance he won't have school. i guess is the first time in 12 years that kids have shown that same feeling across the city schools in chicago. >> [unintelligible] >> that is a very good -- [laughter] -- margaret.

where rham was. -- rahm was. >> a quick one on egypt, then -- >> you think egypt is an easy one? [laughter] >> did at president mubarak explicitly commit on this call yesterday with the president to nonviolence? >> the president reiterated that any action -- any events should take place with the same restraint and not violence that we have seen. as i said to shock, we have seen no indication -- i said to chuck, we have seen no

indication on that call of any action that might take place. again, the president reiterated our strong call for nonviolence. >> my second question is sort of a little broader. was there any debate internally about whether president obama should come out and make republic remarks? >> know. -- no. >> what you hope is gain domestically? -- what do you hope is gated domestically? what does president obama want americans to hear about his leadership, command of foreign policy, and why anything i need it affects us at all? >> i can tell you, margaret, of the three scenarios you have outlined, i have not heard discussion of the first two. we have had -- and we've talked about this in here -- we've had

an extremely important it government a partnership the past many years with egypt. as i've talked about even today, providing the cornerstone for stability of of the camp david accords. i think there is a great inherited that the relationship that we have with egypt and with -- great imperative that the relationship that we have with egypt and with countries throughout the middle east -- again, those are important relationships. we seek to bring peace and stability to that region, and we seek to engage all of those entities in bringing about comprehensive peace to the region. i think that outlives any particular administration, and i think that's what people throughout the world expectancy.

>> sorry i'm taking a lot of time, but americans are very upset right now with the economy, if you look at all the polls do you think that the average american makes a connection between the state of egypt and the state of the united states? what is that connection? >> you know, margaret, i don't -- i think -- i don't think that anything that's happening is going to change that, whether it is their personal economic situation -- somebody just asked about the weather, which is the great cause of concern for a huge swath of this country. but we understand what peace and stability and what uncertainty and instability bring to the

global economy and to the global economic recovery. i think that this is an administration that obviously has spent a considerable amount of time working on the storm, on egypt, but continues probably a majority of what we're doing to work on aspects of the economic recovery. >> one of the partnerships with egypt is with counterterrorism. is there concern that the situation will undermine u.s. security in that area? >> we have, as you mentioned, an important partnership with them, and with a number of countries throughout the region. obviously, not just that, but a whole list of issues like that, we are monitoring very closely. >> the commission issued a

report giving a rather extensive discussion of the buildup of prices in the last few decades, indicating in particular that deregulation and the revoking of the glass-steagall legislation which build a firewall between commercial banking and investment banking, was because of this trouble. given the fact that you did not go back to glass-steagall, even though there was discussion in congress and a large number of congressmen who were supportive of that, the house leadership and the white house was not in favor of that. now that the report is out and the eye and vigorous conclusions were drawn that this is -- the unand it was conclusions were drawn that this was a cause of the crisis, -- unambiguous conclusions were drawn that this was the cause of

crisis, will you go back and -- >> i think the steps that this administration has taken and the time that we of dedicated to the passage of financial reform in ensuring that what happened -- there are common-sense regulations that ensure the that kind of thing never happens again. i think the report underscores that we went out to do that. we have put in place resolution authority. you have seen the beginnings of the consumer protection bureau, the full role -- the volcker rule, a whole list of important policy developments out of that legislation to ensure that that never happens again. the administration believes we have taken a giant step forward in the passage of that to ensure that the impacts to our

economy because of regulatory failures are not something that we see again. thank you. >> much of today's white house briefing spent on the protests in egypt, continuing today, despite the announcement by president mubarak that he will not run in the fall election. the white house once that if -- warns that if the egyptian government is instigating any of the violence in cairo, it was called immediately. prime minister david cameron talked about the uk's reaction to the situation in egypt. >> let me ask him about the wider issues on egypt. i think everybody has been moved by the images we have seen in the last few days of hundreds of thousands of people against overwhelming odds demand a more

democratic future. with president obama's's statement last night, can i ask the prime minister if he agrees with president obama that the stable transition to democracy must be meaningful, peaceful, and begin now? >> we absolutely take that view, that transition is to be rapid and credible and needs to start now. we should be clear, we stand with those in this country who want freedom, who want democracy and wrights the world over. that should always be our view. you cannot look at the scene at a cairo without finding incredibly moving that people want to have those aspirations in egypt like we have them in our country. the government takes a very strong view that political reform is required, not repression, and we've made that clear at all the calls i have made, including to president mubarak, and yesterday the egyptian prime minister forgot the key question is have they done enough? -- and why did he do to prime

minister. the key question is have they done enough. the more they can do to give its people that it is true, the more the country and settled down -- to convince people that it is true, the more the country can settle down to a stable and democratic future. that farit also clear from indicating support for extremism, the people on the streets of egypt are actually demanding some very basic things -- jobs, freedom of speech, the right to choose by whom they are governed? we have a clear interest in stability in all countries of the region, but isn't it now apparent that the best way to stability and egypt is precisely through democracy? >> i agree with that. we should take the view that the long-term interests of britain are through a stable middle east and unstable arab world, and we won't get that stability -- and a stable arab world.

we want it that stability unless they move towards democracy. when we talk about democracy, we don't just mean the act of holding an election. we mean the building blocks of democracy. i want to see in partnership for open societies where we encourage stronger civil society, stronger rights, a proper place for the army in society, proper and senate judiciary. it is these things, the building blocks, that will give us a more stable, democratic future there will be in our interests and theirs as well. primeportion of today's minister's question time in the house of commons. you can see the program in its entirety on our website, c- span.org, or you can watch it sunday at 9:00 p.m. eastern on c-span. we expect to get the latest on egypt in today's state department briefing. spokesman p.j. crowley will brief reporters. live coverage at 3:00 p.m. eastern. remarks now from joint chiefs

chairman michael mullen, talking about the evolving relationship between the pentagon and the state department. it is part of a conference for a master's abroad taking place in washington. we hear in a deduction from secretary of state hillary clinton. this lasts about -- we hear an introduction from secretary of state hillary clinton. this lasts about 15 minutes. >> good afternoon, everyone. i love the volume of conversation that is occurring. it is one of the ancillary benefits that we hoped would occur, because of the opportunity for people to come together and share ideas and catch up with each other. we are really fortunate today to have someone who really understands what civilian power means. although he has committed his life to serving our country in the united states navy, he is someone who grasps in a very

deep and profound way addition of integrated american power -- a vision of integrated american power, and is one of the state strongestt and usaid's advocates and champions. i've personally really appreciated the opportunity to get to know admiral mullen, to work with him. before i had this job, i did not know how many hours i would spend in the situation room, usually sitting across from secretary gates and the chairman of the joint chiefs, admiral mullen. we have spent many quality hours together talking through some thorny, difficult problems that don't have any easy answer. time and time again he has brought sensitivity and insight

into the causes of the dilemmas we are watching unfold, the forces that are at work, and he has also graciously on two occasions opened his home on navy hill just across the way to very important and serious discussions with high-ranking civilian and military leaders from pakistan to try to get beyond our usual and dialogue into the kind of strategic consideration that we hope might need it to some better understanding and mutual efforts. so we are very fortunate to have mike mullen here today. he has graciously offered to make some remarks, but then he wants to answer questions.

and when he finishes his remarks, we will have the press leave, so you can ask him anything. [laughter] if that isn't inviting enough, we will think of something else. [laughter] please join me in welcoming the chairman of the joint chiefs, admiral mike mullen. [applause] >> thank you, madame secretary. i certainly appreciate that kind introduction, i just the introduction alone says a lot about the time wwe have spent together, and certainly not just myself and bob gates, but so many in this room who worked so closely with those of us in the pentagon. i would hope to leave the several messages today, but first of all, one of them would be just to say thanks. thanks for what you do, thanks

for what you for our country, and thanks for what you do for people around the world. certainly, as someone who grew up in the navy, i was trained very early part of the world how important the country team was, and it was a very well blended interagency team in whatever country i existed. i came to have an understanding at a mucht and a look higher level and cannot say enough about the importance of the team right now. as someone who has spent over four decades and the military -- in the military, i am fond of saying we don't create policy, we execute policy. policy has the lead, and you are at the fore in that regard. obviously, we have been going through some fairly significant challenges in the last few days. it is very easy to see in that

this relationship between policy thei'm sorry, between civilian lead and the military support. i will just use this as an example -- there is a better example of that right now -- there isn't a better example of that right now. i appreciate all, in a very difficult situation, the strength of the leadership and the conviction of that leadership. we are, from the military standpoint, here to support. it hasn't just been a $1.30 billion investment in egypt over the last three years. it hasn't just been dollars. it hasn't just been a military investment in their armed services, which have been a critical part. it is an investment on the part of the united states that goes back actually a long way, even

further back than 30 years in terms of low relationships -- in terms of the relationship, at the historic relationship we have had with the country to see this gel and focus in a very difficult time is a wonderful example. as a look round the room -- i am not sure we had this many countries around the world. [laughter] i think the number is 178 of you who are here. it is just terrific that you come to washington every now and again, because washington has a mind of its own. i don't have to tell you that. but your participation and feedback is absolutely critical in everything that we are doing. many of you i know, many of you i don't. i will tell you a story. part of what i've always tried to focus on is our young ones.

i am always concerned about what comes next. how we growing the bench? it was last july i was having lunch in kandahar, and there were half a dozen to 10 at thirtysomething who were sitting there who were so engaged and seventh used about what they were doing -- and so enthused about what they're doing. when i asked where they came from, my recollection is that they it came from lima and tokyo and london and lisbon and places, and probably one and they joined up, they wanted to go and end out there, and they had i asked, how many of you expected to be in kandahar? the answer was none at that point. but the work performed a central part of our mission, and interface between the two and

the military. listening to their dedication and enthusiasm -- kandahar is a pretty tough town. it was last july, it still is. the summer of 2009, i was in helman just after the marines went in -- was in helmand just after the marines went in. this young state department foreign service officer was there the second day after the marines went in. i have seen that time and time again, whether it is in iraq or afghanistan. i don't get to travel to -- i get invited to london, i get invited to paris, which are places i used to spend a lot of time. i have been to london once in this job, and to paris once in this job. i don't get to go there anymore. i am in baghdad and kabul and is, by and others that we have challenges in -- baghdad and kabul and islamabad and others

that we have challenges in. the relationships are critically important. but i've seen the merging of these two teams in these wars, and these wars have changed us. they've changed how we think accommodate changed how career paths, certainly in the military, at an are going to be. i hope that they would certainly have that kind of impact in the foreign service world as well. i have great pleasure of rejoining up just a few minutes with it and patterson -- anne patterson. i have watched anne in pakistan, a country with an exceptional number of challenges. i remember the attack that she had -- and had -- the impact that she had an state department diplomacy had in resolving a critical, time-sensitive situation.

cameron is here and as certainly jump to the challenges that are there. not here? i think the challenges -- the evolution over time -- having come from venezuela, going to colombia, and you look where colombia is, a wonderful example, and some of our most difficult military challenges were supported by great judgment on the part of an ambassador like to build. -- like bill. i see our great russian ambassador here. we just came from the white house, and ambassador byerly and others, many people. that is changing the world and we do that in ways now that some don't imagine we could a few years ago. kathy stevens this year. certainly the whole issue of

this team with respect to what is going on in the peninsula. the policy elite, the policy and diplomacy -- policy lead, the policy and diplomacy lead, and the constancy of it. there are a growing number of challenges that get on the plate and art in some times difficult to get off the plate. and my capstone view is to be fortunate to literally watch two masters in secretaries clinton and dates together -- and gates together. many of you have grown up in this business where the secretaries of state and defense did not necessarily have dinner every often. [laughter] it is actually fun listening sometimes to in particular secretary gates regale with stories of the past. but quite frankly, those are

stories of the past. we cannot, in this world we're living in right now, live with that kind of relationship we have right now between these two secretaries. the difference that they make in terms of setting the example, the standard, and it resonates throughout both organizations. you can see it weather from the very top to the most junior people we have in the field. i think it is an example for the 21st century that we fundamentally need to adopt. i have seen that here in town as well. for the first time, certainly in my career, we now testified -- secretary and gates -- secretary gates and i testified before the foreign relations committee. it is a very powerful message. secretary clinton has testified on our side. there are an awful lot of signs of change that are on going because of the world we're living in.

i think we've got to continue to foment that to meet the challenges that we have. i give you and so many people great credit. i run into cheryl -- i just got an update on haiti, of on other things, because of the huge talent there, but i've watched cheryl and others make a huge difference. in haiti, we had a huge footprint, and the concern we weren't going to stay, and yet, the enduring part of this to continue to support efforts there is being led by cheryl and others as well. i know secretary clinton led this -- we were close enough to that to see what is going on, and if you compare qdr with

qddr, that is another example of how we move to the future together. i said a long time ago that i thin -- in i think 2004, 2005, that we have got to get the state department budget right. this has nothing to do with the past, everything to do with the future. we took too much money away when you take money away from the state department, or that anything else you take people away. -- more than anything else you take people away. people here main battery, your main effort. -- people are your main battery, humane effort to maintain a robust enough a budget is it mandatory. i have not gone so far as to say you can have much of mine -- [laughter] which is what the secretary of state would like me to say. but i recognize that if the team is going to work together, the budgets have to be right. one of the things you will see, if you are back in time for a

little while, is a little closer view of the fiscal crisis, which we all recognize we are in. more than anything else, i want to say thanks, thanks for your sacrifices, thanks for the difference that you make. any of you i know well, many of you i don't know at all, although the fight should your hand, you probably say, a -- " although if i shook your hand, you are probably say, "great to meet you, when are you coming to botswana?" there are lots of places. clearly, our focus has been with the sites have been, and i understand that, but we are also trying to -- our focus has been aware of these fights at them, and i aunderstand, " we are also try to be -- but we are

also tried to be where it they do not occur. jim jeffry is here, and we are talking, i think when i was out in iraq and having dinner with him over the holidays -- there is not enough speed to deliver the kind of capability we like in iraq and afghanistan or pakistan or some of these countries that are so -- where the sense of urgency must be what it is. jim is as there is another 250 ambassadors out here who are doing the lord's work are on the world that the state department also has to focus on. it is not just this may have -- not just this place where we are losing our people, and i recognize that. thanks for all you are doing. i hope, and i have great

confidence, actually, that you are raising your gone to continue to do this, because it is a wonderfully impactful way of life. this generation that is coming up. -- this generation that is coming up -- i am an american that has great confidence in our future, because this young generation is wired to serve. we just have to figure out how to give them paths to serve, because at some point we will transcended this business to another part of life. it is great to be with you. i would be happy to take questions. [applause] >> remarks earlier today from joint chiefs chairman admiral mike mullen at the state department. an update on the situation in egypt at the state department briefing. we will hear from spokesman p.j. crowley. at live coverage at 3:00 p.m. eastern on c-span.

the house is not in session, but the senate has been working on legislation related to the health-care repeal a law. we heard from our reporter covering the story. the issue of health care is once again being debated in the u.s. senate. what are they talking about? >> they will vote on an amendment offered by senator mitch mcconnell could there is also an appeal for a tax reporting requirement in the bill that even president obama says they want to do away with. >> what is that the likely outcome of those votes? >> we don't expect the repeal vote to succeed. a budget point of order against mcconnell's comment raises the requirement to 60. it looks like all the democrats will stick together in opposing the repeal. and the tax reporting provision, both parties are for it.

it is an amended by debbie stabenow from michigan. we expect that when to succeed. reiddn't majority leader say a week ago that it would not make it to the floor? what changed his mind? >> he did, and part of the agreement with senator mcconnell opened the door for him to allow the gop to offer these kinds of amendments in return for the gop not filibustering all the bills. >> in terms of the gop, they got what they wanted on this particular vote. is that going to satisfy senate republicans who are determined to repeal the law? >> it doesn't seem like this will be the end of the story. i have heard from republicans who say that there will be a lot more of these amendments. this is by far not the end of the story. >> these repeal the men are coming up on a bill by the -- repeal amendments are coming up

on a bill by that faa. you say they could, on any bill? >> anytime they want a repeal vote, they can do so in the amendment process. expect to see this type of thing again. >> republican senators lindsey graham and john barrasso of wyoming -- what can you tell us about this legislation? >> this would allow states to opt out of requirements of the bill, such as paying a tax penalty, the requirement for employers to offer insurance to their employees, for states to examine the medicaid rolls. lindsey graham was very honest about this, saying that this was a way to bring the law down. if enough states opt out of these provisions, the law becomes financially unworkable and congress would have to repeal it because it would be such a mess and disaster. -- in terms of the

debate and the mechanics, that could be in the form of a future bill, right? >> exactly right. >> thank you for joining us. >> thank you. >> you can see that senate debate on our companion network c-span2 between 5:00 at 6:00. the house returns next tuesday at 2:00 p.m. eastern. you can see live house coverage here on c-span. this weekend on "booktv" on c- span2, "after words" with michael reagan on his father's legacy, ron reagen, and emily lambert on the futures markets. "in debt" with -- "in depth" with r. emmett tyrell.

>> because of the extraordinary use of the filibuster, the ability to legislate it is jeopardized. >> isn't it true that senator byrd says that for some accommodation with the threat -- forceful confrontation with the threat of a filibuster -- he did not want us tampering. what the debate with c- span's congressional chronicle. c-span.org/congress. >> a quick reminder that today's state department briefing is at 3:00 p.m. today. we will have that live for you on c-span. until then, a look at the white house's initiative to improve the business climate in the u.s. guest: we were thrilled thae

talked about innovation almost 10 times. he talked about the american dream. he provided a vision of where we should go as a country to realize that dream. it was all based on innovation. host: the obama administration this week started a new campaign to increase investment with small businesses. i am looking at the washington post article. the co-founder of a o l encourages innovation -- how significant is this development? guest: is a very well funded foundation and is focused on .ntrepreneurial shi

ultimately, as president obama has pointed out, it is about gathering money that is already out there and focusing on entrepreneurship. every little bit forward is a good step forward for entrepreneurship and innovation. >> in your book, "the comeback: how innovation will restore the american dream, " you talk about an incident in china. an official said china is up and america is it down. the realization that america is on the decline. >>guest: i think any american would feel the same. the chinese basically telling him at the country is going up, which is true, but i still get emotional and feel the blood rising because it bothered me because it was rude, but also it

later bothered me because it is true. china is expanding dramatically and educating their people. we have closed off our borders to the best and brightest people and to trade. we have not had a free trade agreement in four years. host: as the obama administration talks about innovation, what actual details do you want to see come out of the white house and out of congress? guest: the last two years has been pretty difficult.

it is this been a very difficult time. clearly, president obama has turned. americans want jobs. . . >> we are always talking about the kauffman foundation -- estimates that the most important contributor to the nation's economic growth is the number of start-ups that will grow to $1 billion of revenue within 20 years. to maintain america's historic average growth rate, we need 100 companies like that every single year. what we are all doing here

within the federal government, but particularly in the private sector -- there are a lot of initiatives being led by innovators and companies for- profit and nonprofit -- are going to need all of us working together. speaking on monday about the white house effort -- the pro-business campaign to increase startup companies and small businesses. what is your reaction? host: guest: he is showing the heart of the administration is in the right place. i think the challenge is a much bigger one, and that is the fundamental policies which determine where these places are to invest abroad. you are right now under our present laws, you cannot bring any money you make abroad

without being double-taxed. you cannot hire the people he wants around the world because of our visa powers. as president obama said in the state of the union. even when you train someone -- you kick people out of the country. companies cannot hire the people they want. we have fundamental problems. our legal system discourages investment here. i would like to see teachers added, frankly. we need good teachers. we have way too many lawyers. 30 years ago, 100% of the venture capitalists were in the united states. now it is less than half, for a lot of very good reasons. we have to capture that. it is not just about investing. it is an act of government,

whether it is high taxes, litigation, lack of free trade that we have today. we cannot isolate ourselves as president obama has said. >> -- host: the consumer electronics association has been the trade association for more than 2000 companies. and it runs the largest annual trade show. let's look at some of the recommendations that you go through in your book. businesses lower the corporate tax rate. enter more free-trade agreements. asked that noon -- every regulation and law have a measurable goals. told us through this one, the idea of of having regulations and laws and with the stated,

measurable goals. guest: congress gets so excited. they come up with their solution, washington solution. yet, things change. so we have the case of law as being on the books, it may not be possible, and every law has some set for five years. the point of this law is to measure against what congress said and see what happened. we have too much loss into many lawyers it is easier to do business, it easier to start a factory, easy to employed elsewhere. we want jobs here. we want good jobs. what has made as great for 100

years -- the last 100, was the century of america, the fact that we are an immigrant culture. we have the best and the brightest. the challenge the status quo. they wanted to do better. we have a constitution that protects us from our own government squelching us down. think about it. every innovation threaten someone else. the people who fix typewriters. travel agents. those jobs to not exist anymore. why? technology. it is good for everybody, but it is harmful for the people who are dislocated. what president obama said a week ago in the state of the union was, those days are over. we are competing worldwide. he laid out the framework for the country. he did not say it that way. he spoke about strengths, weaknesses, opportunities, and threats. and he applied that to the nation.

that was the first time i heard about innovation. he has laid out something really good. what i disagree with -- targeting specific industries. we have to do the exact opposite. host: let's go to the phones. paul, democrat line, washington, d.c. good morning. caller: the obama administration had been hard on industry for the last three years. why isn't that -- guest: i am sorry? i did not hear that. host: record profits. guest: it has to do with the difference between your revenue

and your expenses. this is not because of the president. we were in a brutal recession. that led to cost cutting. that part of the business cycle is -- in america, we have a business cycle that has not ended. we were rescuing companies like general motors and chrysler and aig when companies go under and fail, it hurts the employees, but it is good for their employees. general motors has no debt. it has absolutely nothing to do with the obama administration. host: good morning, republican line. caller: good morning.

first-time caller. i started listening to c-span over the last several months. thank you for inland need to be reality. i am a little bit nervous, but i appreciate you. you know, since the obama administration has come into office, the over and down the number of regulations, deregulation that have been placed in all industries has done nothing but increase paperwork. i come from martin silda, va., one of the largest furniture- producing counties in the country.

now it is the poorest city in the state of virginia, probably one of the poorest cities in the nation. might address to you is, when is the country going to wake up? he addressed where he won in this country to go come and i do not think we need government spending, i think we need to cut back on regulation. need to let all jobs expand. guest: thank you for calling in being a great american. people all around america need to be vocal. that is what is happening.

i think the challenge we face is we'd are interested in the short term and making ourselves feel good. there is a long term of there. there are two potentially unwinnable wars, troops in correa and health care. we are making decisions that really hurt us for the future. you cannot take on in and spend $1 for every 50 cents you take in. we are in serious trouble. you can raise taxes. you can cut spending. you can grow the economy. i am concerned about growth through innovation. americans are so good at it. it is on in our blood.

it is our destiny, i believe. we have to address taxing and spending. we have to get real about it. we are in serious trouble. need shared sacrifice from every american. host: russell writes on twitter and asks what percentage of the 2000 companies that belong to cea make products in china compared to what percentage is made in u.s.a.? this issue of buying american. it does not always work of the way they hope.

there are companies like amazon and even a, lots of companies like teal, which was started a couple -- a couple decades ago in lexington, ky. we also have companies that employ thousands. we have companies like best buy and fries. obviously, we have exported to china. free trade is so important on the bilateral. all of us agree we have to enter these free trade agreements.

there is concern -- something's -- there is concern china imposes rules on its partners. china does not respect property. it is unfair. we have to be firm. i think both president bush and president obama have dealt with a complex relationship with that route or crew statements. host: you were critical of the buy american clause in the stimulus package? guest: of course. we have some of the world's greatest software companies, and they can compete anywhere. we're anyone is doing software

acquisition in the world. so, the problem we face is, if u.s. government does this, if other countries retaliate, they have our reason not to buy u.s. products. any country is not going to have a preference. they want to fight fairly. there are canadian provinces. what are the treatment plants? things like that it is a very simple and answer. ultimately, it is very harmful to the competitiveness of the united states. >> -- host: tennessee, good morning. barry? caller: it's larry. host: good to have you, larry.

caller: i had a question about welfare. does he feel like the burden needs to be shifted to the people who have already earned their income through the years that they worked for the company, and for so long, they make that the pensions that they earned with the company? is that the way we need to get america back on its feet? guest: thank you for the question, larry. your question is is it right or fair for a company not to pay its pension obligations. you have to keep it in corporations for the most part. you contribute, they contribute. what is fair, you get.

i do not think corporations are interested. the challenge is what happens when a corporation goes bankrupt where is the pension benefit? those are serious challenges. and i think even more serious challenges faced by the local, state governments. is it right in california when you have a locality higher state workers and pay them $800,000 a year and a pension for the rest of their lives when they are 40? in the answer is of course, no. that is wrong. that is fraud. governments will have to be sent these types of pensions. generally, if the company is still around, it will pay up its obligations. the system is under great stress now.

host: you mentioned immigration reform a couple of times. and in your blood, you tackle that issue. -- and on in your book, you tackle that issue. you say citizenships given to students allow for a quick pass for the financially able it also allows a quick path to citizenship for on to the norse. -- entreprenuers. guest: absolutely. the challenge with immigration is we should be strategic. almost all of us come from immigrants, and that is a great thing. that is the strength of america. we have creativity. i think we need a way of

screening so people do not become hordes of the state'. we want the immigrants, which will make us stronger. it could be if you have $500,000 every three years you could be qualified to become an immigrant. i have no apology for speaking english. my wife and her family are immigrants. they had to learn english when they came here. all of them are very productive, contributing to our society. i think we need to focus.

host: jeff, republican, north carolina. hello. go ahead. caller: i want to talk about how ge went overseas, went to mexico, i mean to make a plant. that is not productive for america. they just did that last year. to make solar panels. they started a solar panel here in america, and it was too expensive. so they went to china. we keep on saying, we need to be businessmen. everything seems so negative for the american person. i do not see how we can accomplish anything.

host: jsue says -- guest: we all feel emotionally like, how could we lose those jobs? how could we keep those jobs? we keep the jobs with a strategy that cuts back on elimination, cut back on what we impose on american manufacturers. ed some of the factory jobs -- they announced they were losing that plant to mexico and the work creating another one in another part of the united states. this hurts people, but that is just part of being part of a world competitor. we have to improvise. does. we cannot stop companies.

i still believe the american worker is one of the hardest workers, one of the most educated. apple, for example. what a great american company. when i go to china, they complain that apple only has $4 of their products that they sell for $3 in china. the chinese have simple manufacturing. i have been in chinese factories. they have the highest percentage of college-educated people in united states. how does that reconciled? what germany has done is they have highly-skilled people and they put them to work in factories where still matters. such as automobiles and medical equipment. we are highly skilled, we have great people in detroit. with people looking for work now.

and they are free americans. -- and they are great americans. it is not the job of the government to do much other than get up of the way. we are saying, what are the barriers? i will tell you -- we think about manufacturing in detroit. if you go to detroit, what happens is there are workers, and we cannot lose everything we say for. -- he cannot lose everything we saved for. host: you spend part of your time in detroit and part of your time in washington, d.c. contrast those? guest: washington is a healthy economic environment. there are a lot of wealthy people here. we do not make anything in washington accepts trouble for other people elsewhere in the

country by making rules. heine median income. -- high median income. i go to detroit and see the houses boarded up and for sale and it breaks my heart. in washington, we have one qualified. in detroit, we have a precision barrages now. -- garage now. wow, what a wealth of talent going underutilized in detroit. it is a great a city. -- it is a great city. people looking for something to do. caller: good morning.

we used to have the headquarters for mack trucks, and we used to have these zinc mining industry. just a couple years ago, everything that came down came up of every administration because of regulations with trade that killed the industry in this area. i would also like to say that people who have hands on, who can actually turn our ranch, use a hammer, stuff like that. it is an unnecessary curriculum. back in the day, when you talk to young people how to maneuver with your hands, you could build and create a with like to know why the regulations cannot be wiped a side -- aside? guest: i was meeting with the

new governor of alaska, and he was telling us a bell building -- and he was telling us about building a bridge and it was stuck in the epa even though there is no record of an environmental problem in that area. it is as baffling. if there is a moratorium on regulation, some way of sunsetting them, we would have a base of injury. yes, working with our hands, there is something really satisfying. americans are good at it. it is difficult to have that come back, and it is so much worse before it hits better -- gets better. it is going to get some much

worse as things run of of money. the federal government is going to run of of money. what we have done -- we are shifting all our money from our youth, our kids, our investment to people who are older, who are retiring it is a vast inter- generational rift of money. older people demanding social security, health care, getting every single entitlement. and now we are stealing from our kids with two years of unemployment. they will not be able to have much of anything. it is quite a shame, frankly. i think it is something this generation will be known as -- the first generation in american history that did not do well by their kids. instead of sacrificing for their kids, they have heard their kids and -- they have hurt their

kids. i will not sleep as long as that is happening. host: democrat caller in ohio. good morning. caller: good morning. i have a general question. we keep hearing about education, and i am sure you probably read, for the first year ever, china will surpass us in academic statistics. what will do you see higher education plane in the comeback of america, and do you think we should invest much more? thank you. guest: thank you for that question. when i wrote the book, the editor asked me to put onion something about patents.

there are two kind. there are copycats. a lot of that happens with asian companies. i think a lot of the major innovation is in united states. i am encouraged about that. i do think the university system is important. we do need to follow what the chinese do. they do not have a top 100 hot list. but they are so important. my child is being educated by a nanny who speaks only chinese to him. i believe in the future of china in terms of having to deal with it for our people. in terms of universities, as bad as we are in k through 12 and an objective measures, our universities are the best. we're getting competition from europe and australia. we are hurting ourselves because

we are on welcome to foreign students. before september 11 used to be welcoming. that is a huge hit. i was on the board at george mason at the time. he sought a falloff in applications from international students. -- we saw a falloff in applications from international students. education is something, as president obama noted, -- we ask questions. we do not learn from rote memory. i believe our schools could be much better. we have to get people to become teachers, which is why i would like to see more lawyers get out of law and become teachers. there are a lot of things coming on. my father was a union organizer for teachers. and he was passionate, but he said it was not just about the

teachers. he said it was about the parents. parents have to take responsibility to keep kids away from the video games, get away from their tv set. my child has not watched anything on television no other than perhaps an exercise video. we have obligations as parents and we have to be better teachers. host: david, good morning. caller: i agree with you 100%, but not only do we need to destroy the regulations which, i said we believe, our president and majority of his party as liberals altogether believe in, the government should control everything. we have this problem, the unholy alliance between government and unions, like laborers and unions and teachers' unions.

our educational system seems to be more interested in teaching ideology instead of the true science and everything. that is a big problem. of course, there is deep tax and spend agenda. as a military veteran, i remember every time it seems like -- they want to cut us down to the bone furious -- cut as down to the bone. the troops need. guest: thank you for serving our country. the reality is we have a lot of young people in iraq and afghanistan risking their lives. there are great americans who have served our country. those of us who are here are not

prepared to make the tough decisions and a sacrifice and in any way at all. there is no sacrifice going on in america that i can see. that imbalance is incredible to me. i do not know how a country could be at war, and we are talking about cutting taxes. we're talking about three years of unemployment. spend, spend, spend. and where is the sacrifice? there is no question. people when they get into washington -- that is the problem. you cannot be fired when you're working for the government. you can have a belief system that what you're doing is great for the world, but you know what every business does, and they have to be regulated because they will hurt us unless we regulate them. then you have the political appointees to going to an agency like the epa with their own

biases. is very difficult to do business in this country. we are losing jobs because of washington. we are losing jobs because of some many laws and regulations. that has to end. host: james writes on twitter, please talk about the importance of energy prices to manufacturing. guest: it is obviously a huge consolation that any company will do as to where they manufacture. what are the costs of inputs? businesses -- every american ceo has a bias to want to manufacture in the u.s. you lose a lot of time getting to your market to the u.s. if your market is abroad. there is the cost of transportation.

so, all these factors are important. energy usage. you want low-cost electricity. some manufacturing, for example, manufacturing means less of a factor. the energy is less of a factor by design. it is definitely a factor. host: georgia, a democratic plan, good morning. caller: the morning. he mentioned health care as one of the reforms that needs to be done in united states, and i am sure one of the attractions for doing speakers overseas would be that those countries have nationalized health care. i am wondering how that would translate to employers with that seems to be a tremendous

burden and cost to business? guest: i appreciate that question. he seemed to imply by the question that the cost of health care is a burden for manufacturers. it is an attraction to some companies. the reality is, when they have u.s. citizens abroad, where there is a test involved in it could be serious, u.s. companies often take their employees from abroad back to the united states because they do not want to have to get a test to see if they have cancer which needs immediate action. the cost is really not that great in cases where you what early testing in detection. second, we have the best health care facilities in the world. the wealthy people the rest of the world comes the ninth dates. for that reason, employees are

often flung back to nine states. i have a chapter in "come back" about this. how do we get uninsured americans on insurance? the reason health care costs more in the u.s. is because we have a very diverse, overweight -- we have expenses and we do everything we can to keep anyone alive, whether or not they want to stay alive. families often keep patients alive because he never expressed their desire. host: quick response -- if you are worried about your children and grandchildren's future, you and everyone else will have to pony up to taxation to pay down the national debt.

americans really ready to feel taxes? this generation will have to make big sacrifices to help to two generations. guest: democrats will oppose any cut in benefits and republicans will oppose any increase in taxes whatsoever. we will have to pay more taxes, otherwise we will have to lose some services. trickle-down implies that it ignores the economic reality that the higher the taxes, the less -- for some reason, there is an income device in politics going on. people who make money and no resented. i look at doctors. they struggled to be paid and they work their butts off, and then made make a little money, but why should that person be

taxed more for someone who coasted through high school and party all the time? someone who did not work 60, 70 hours a week to save lives? i think a society is based on income inequality. the top 5% of the population is already paying onion taxes, and this tax the rich is class warfare, and frankly, it is very american. steve jobs, bill gates, these people created wealth for themselves and for others. they changed the world. host: >> we will have the state

department briefing live, expected to focus primarily on questions about the anti- government protests in egypt. the white house says they deplore and condemn the violence in egypt and they're deeply concerned about attacks on the media and peaceful demonstrators. a spokesman said u.s. was concerned about attacks on the news media and that the civil society includes a preset -- free press. again, we will have the state department briefing for your live, when that happens. in the meantime, charlotte, n.c., was the impact. -- been picked.

guest: we had setbacks are like everyone else. it is a shot of good news in the community that was really hungry for it. host: how much speculation was there that the democrats have chosen north carolina because of the hope that the president or the democratic nominee, who was presumed to be president obama, could carry that state again? guest: exactly. the state was a surprise in 2008. they are hoping to replicate the that. -- that. i think using charlotte is a statement for them. chairman tim kaine said as much yesterday. they are confident, not only about picking up the three

southern states they won again, but the lack toro math. -- de e left for all map. -- the electoral map. host: how was the political climate looking in north carolina? guest: it has been a tough year. the new poll came out last week that said more people approve of president obama's job performance than disapproved. they have him leading all the potential major republican candidates. this is a city and a county that really energize the campaign last year. he had a 100,000 vote margin in winning the state by 14,000

votes. they're hoping to recreate the magic. host: "the new york times" pointed out that charlotte is the second-largest banking center in the country after new york and they say it could create an awkward visual for democrats who want to portray themselves as the party of the people. has that been expressed where you are? guest: it has been a little bit. i do not know if we would make as big audio out of it as they might. if we did lose one bank headquarters. the bank of america got a lot of top mark -- tarp money. if i believe they paid a lot of the back. who knows how big that issue will be in 18 months? a lot of things could change. we have the banks, and a lot of other businesses. we have a lot of textile industries. the city is struggling to reinvent itself.

host: thank you for being with us. guest: my pleasure. thank you. >> we expect live coverage of the state department shortly, focusing on the anti-government protests in egypt. we will have that for you when the briefing happens. the senate is in session today, debating a measure that reauthorize the federal aviation administration. senators are allowed to offer amendments dealing with health care. a few votes are expected today. we talked to a reporter about that. >> we are joined by emily elkridge. unsustainable spendg of this administration, this president and his majority in both houses, that they are up on this issue. now, before i get to my two amendments, i want to mention one other thing, that i was going to have as an amendment to the f.a.a. bill. and, unfortunately, there wasn't time to put it together and so i

will be doing this sometime this summer but i want to serve notice. i have >> what is the likely outcome of those votes? >> we do not expect them to succeed. it seems like all of democrats are going to stick together in opposing repeal. for the 1099 repealed, we definitely expect that to pass off of. both parties are for it. it is an amendment from the senator from michigan. we expect that to succeed. >> did not majority leader read say health-care repeal will not make it to the senate floor? what changed his mind? >> part of a gentleman's agreement he made with minority leader mcconnell last week opened the door for him to allow the gop to offer these kind of amendments in return for the gop ninth filibuster in all of the bills as much as they had before. >> off in terms of the gop, they

got what they want on this vote. will that satisfy senate republicans who are determined to repeal the health care law? >> if this does not seem like it will be the end of the story. i have heard from republicans and we will see a lot more of these. this is by far not the end of the story. >> if so, these repeal amendments are coming up under of bill on the faa. you are saying they could come up under any sort of future bill? >> if any legislation that comes to the senate pretty much whenever republicans want to bring up a repeal vote. they could do so. expect to see this again. >> there was another piece of legislation introduced by republican senator lindsey's -- lindsay gramm. what can you tell us about that piece of legislation? >> this is legislation that would allow states to opt out of some provisions in the bill, such as requirements that most people have insurance or else pay tax penalties, the

requirement for employers to offer insurance to their employees, for states to extend medicare rolls -- lindsay gramm was honest about this. he said it was a way to bring the law down. no states opt out, the fine. the law becomes financially on workable. he would be a mess and a disaster. >> in terms of the mechanics in getting to a debate on that legislation, that, too could be an amendment to a future bill? correct? >> exactly right. >> and molly elkridge, thank you for joining us. >> thank you. >> still waiting for the state department briefing. we will have that live, here on c-span. los angeles times writes that the nobel peace prize laureate emerging as egypt's paramount opposition leader said he feared

the violence in cairo could escalate into a bloodbath. we will try to get an update. until then, a look at the cost to taxpayers to defend former executives of fannie and freddie back. ap says several thousand supporters of president hosni mubarak, including some writing verses and camels -- we wanted to give you that update, keep you in the know. let's go to gretchen, our reporter for the "new york times." thank you for being with us. you look at the cost of tax payers to defend the former executives of fannie mae and freddie mac, and you estimated

the cost at $100 billion so far. guest: that includes the defense of the company as well. it is not, strictly speaking, $100 million for the defense of those three executives. the issue is why are the american people paying these legal bills, which are quite large. they are former executives who left the scene quite a few years ago and who were found by several different investigators at a regulatory agency to have really conducted themselves in a questionable fashion. host: he said in this he's from monday -- taxpayers have spent millions of dollars defending the top executives. --

call surprise were you by these numbers? -- how surprised were you by these numbers? guest: i was really surprised. that is a lot of money what it indicates is you have teams of lawyers working furiously and killing many many hours -- billing many, many hours. there is no incentive to settle the cases, move quickly to trial. the perverse incentive is to drag this out as long as possible, and that just does not seem fair. host: you can call with your questions and comments. for republicans --

let's dig into these numbers a little bit more. $132 million including accounting irregularities. give us some context. this has to do with the money crisis. guest: absolutely not. this is one of the infuriating aspects. in 2004 and 2005 both companies were found to have inappropriate collaboration's. fannie mae and freddie mac had overstated its in come. -- income. in the outflow of that, the top

executives were onion a big scandal at the time. -- were on in a big scandal at the time. they were proding enormous losses for the taxpayer. this is really years before the subprime thing happened, and yet we are still paying these legal bills. host: and you have written about how the lawyers for these executives have received tens of millions of dollars. guest: the former ceo, the former chief financial officer, and the former controller together -- the taxpayer has paid since the government takeover $24 million in their defense. here are three people who we found by the sec and the office

of housing oversight to have accounted improperly for the company's results, and yet here we are years later, still being asked to pony up. host: this graphic is from "the new york times." where the money has gone we c see the numbers here -- the cost for the top executives, also the executives, other executiv. former and current executives. even 195 non-executives. over $17 million. let's get to the phones. shreveport, louisiana.

chles joins us on the republican line. good morning. caller: god bless c-span. it is about time we are having something like this. every morning i watch c-span. the first comment is -- bill clinton may have this on tape. he said he was part of the problem when someone asked him about fannie mae and freddie mac. he said all his buddies made them give that these loans, knowing these people could not pay for them. knowing they could not pay for them. but they were black and they could -- and they had to give it to them. and barney frank -- c-span has it on tape -- "we e jt going to have to roll the dice on fannie mae and freddie mac and hope it works." barney frank's words and not

mine. the republicans will have to get to the bottom of this. and some dam hence better role. -- -- some damn heads better role. guest: the costs for the lawsuits are dwarfed by the losses fannie mae and freddie mac has already reported in mortgages. in the scheme of things, $150 million for legal fees does not sound all that bad. ihink it adds to the element of unfairness. what is very interesting, too, this number was very hard to pry out of the companies and the regulators. thank heaven the republican from texas really went after it and asked for them. we would not have been told, we were paying if we had not been forceful in paying for these

figures. to me, that is a sign. they do not want us to know what we are paying for. host: t washington times had a piece yesterday - lawmaks not likely to evict fannie, freddie. how realistic is it to essentiallyplit up or reward the federal government for what is going >> we will leave the snow to go live to the state department for the daily briefing. >> good afternoon. welcome to the department of state. a couple of things to mention before getting to the current situation in egypt. first of all, this evening, we are waiting for the release of the final results of the first

round of the elections in haiti. we expect those results to be released by the provisional electoral council sometime late tonight. we reiterate our strong desire that the results reflect the will of the haitian people, and enable he be to move on with the follow on elections they have already announced for next month. today, the secretary of state jim steinberg held productive meetings with government representatives. he was joined by assistant secretary johnny carson, and a special envoy. the envoy will continue his visit to the region. we recognize that the referendum is not the final chapter in the implementation of a comprehensive peace agreement between now and july the parties

must prepare the groundwork for a peaceful implementation of the referendum results. they must resolve the issues, including the status of restoration of the border areas, hold timely and meaningful consultation in blue nile, and reach an agreement on citizenship that reflects international norms and does not arbitrarily strip any one of their citizenship or lead to the expulsion of any citizenship. there is a lot of intensive work that needs to be done leading up to july, when the results of the referendum are able to be acted upon. today, our ambassador at large for global warming issues talked to our global investors'

conference, and she will be leaving tonight for travel to the democratic republic of the condo. she will speak in the the city of joy, a center that will help victims of sexual violence the opportunity to heal through innovative programming. if she will meet with government officials, media, local and international, non-government agencies, -- organizations, and activists. [laughter] -- not ponzi? >> thank you. turning to egypt, first, to update you on current progress with the ordered evacuation of

u.s. government personnel and american citizens, today we had two flights. one went to frankfurt. the other went to luxor, where it added passengers. roughly 200 americans flew out to date perritt that leaves us with about 1800 that we have -- to date. that leaves us with about 1800. that continues -- we continue to assess the need for charter flights. that this point in time, and we do understand and many americans have left egypt through available commercial means, but certainly, the demand for seats to leave egypt has subsided.

>> does that include the officials said art at the order of departure? >> yes. we still have a small number of official personnel and family members who have yet to leave, but for the most part, the evacuation has been, you know, completed. >> the last time it was like 2600 -- 43000, i'm sorry. >> i am thinking we are over 3000 in terms of the people who have been rescued. we are moving anyone who gets to the airport or indicates in other parts of egypt that they are in need of assistance. at this point in time, we are able to fly out anyone who comes to the airport. [unintelligible] >> for the most part, the order

the evacuation of u.s. government personnel and family members. with the handful of people that have yet to leave, those people that we have wanted to move a lot of cairo, for the most part, we have completed that movement. [unintelligible] >> we keep a record of those who have registered with the embassy. that number hovers around 50,000. there are a larger number of americans who are in egypt. a number of them have dual citizenship. some -- as we say, many have left through their own means. >> and they offered any help to get [unintelligible] >> as of wednesday, we were

happy that we could move to some americans out of a canadian flight. we have assisted other countries and have moved them out. >> and the ambassador was not one of the index -- ambassador wisner was not one of them? [laughter] >> how many american citizens? >> we do not have the number. >> do they have to pay? >> we seek reimbursement for any private citizen and any foreign citizen that we are able to transport. >> do you have countries, and all, any idea? >> we will give a number and a catalog. >> can you give any information on what the ambassador did today

and yesterday? >> while he was on the ground, he met with president mubarak. he also meant -- met with a general. i can also tell you that secretary clinton today also had a conversation with the vice- president. she emphasized again our condemnation of the violence that happened today, and encourage the government to hold those responsible fully accountable for this violence. we do not know at this point who did it. >> do you think it is loyalists to president mubarak? >> she strongly encourage the government to investigate and hold those responsible for the violence accountable, and she

continued to stress to the vice president of of that the transition has to start now. now, we do not know who unleashed these thugs on the streets of cairo. they have been identified as supporters of the government, but whether they are, there needs to be accountability. this was clearly an attempt at intimidating the protesters who have been communicating to the government and insisting on change. as the president said last night, there needs to be a transition, it needs to start now, there needs to be a national dialogue, a serious conversation among a variety of players, and a clear process that the people of egypt can see that all parties who want to

shape egypt's future are taking specific actions leading to elections and a new government as soon as possible. >> is that what you mean when you say the transition must begin now? do you mean president mubarak should transition out of power? are you suggesting he stepped down? what exactly are you saying the transformation begins? >> we are having a full range of conversations. all our ambassador in cairo is in continual contact with various officials and the egyptian government's. the secretary has maintained close contact, as has the president, the vice president, and the secretary of defense. the issue here is not a lack of communication.

we are making clear privately and publicly what needs to be done. we are not subscribing what egypt needs to do. president mubarak has committed to a transition. but now is the time the government needs to take concrete steps to demonstrate that it is moving down a path of -- to elections and the current -- democratic governance, of governance that response to the aspirations of the egyptian people. the buy list debate underscores how urgent the situation is. a longer this goes unresolved, the danger of further violence, and it is imperative that this process begin now, and we could bring together this national dialogue with members of civil

society along with institutions like the army and key officials. the people have spoken. . those officials want to play a role in each of's future. >> your counterpart, the egyptian foreign minister rejected suggestions that the transition should start immediately, and said that comments were interfering in egypt's the internal affairs and inciting the situation. given that statement, what basis do you have for any hope they're hearing your message? >> what is imperative is that officials in egypt heed what the egyptian people are demanding. these are demands that _ the on

fulfilled aspirations of the egyptian people. these demonstrators are not going away. this is gathering momentum. are sending a clear message. it is important for the government's opposition to come together, have a serious conversation, and begin the process to a genuine democratic elections. [unintelligible] >> let me differentiate between those who can bring forward their perspective on current events, as opposed to the thugs we saw in the streets today, who are clearly trying to intimidate those people who have been peacefully protesting and expressing their strong views about a different kind of future for each shift. we do not know who won least these people, but we know there

should be full accountability. our concern is a longer this process goes unresolved, the greater the risk for further violence. >> there are those that believe that president mubarak has been good for each, who believe that his departure to quickly would bring chaos to the country, and that he has promised to stay on until the election, that is good enough. >> that goes on to the point made earlier. that necessarily means that actions need to begin now. the government cannot say tomorrow is not the day. there has to be a sense of urgency. there has to be a national dialogue. there has to be a coming together of all of those elements of the egyptian society who want to play a role in shaping the future -- a different kind of future.

if the government -- the government cannot afford to hold that. there is still a gap between what the government has done, and what the people expect. the government has to take affirmative steps to close this gap. this is about leaders coming together and responding to the aspirations of the egyptian people. it is not for the united states to say you have to do this, this, and this. his fourth leaders to step up, and begin to lead. it is for leaders to take action. our advice is that this and can no longer wait. >> they are already beginning to talk to the opposition and a point of the things they have done, a new cabinet, announcing he will not run again, the changes to the constitution, opening a dialogue, etc. are you saying they are not?

>> the steps need to be broader. they have to be more visible. a lot has to be done to demonstrate to the people. it is not enough for the president or others to say that we urge you. people have spoken. it is time for the egyptian government to demonstrate that it is taking aggressive steps to respond to what the people are demanding. >> what beyond all of that would you like to see that would be more of -- the only more visible stock would be for him to go. he made the laundry list of stocks. you are saying he needs to be more and visual, more substantial. everything you just mentioned, he said he was going to do, and it has not been 24 hours yet.

beyond him stepping down, what else specifically could he do? >> again, we are giving our advice to egypt, public and private. it is not for us to be paid this. there are elections already -- for us to dictate this. if there are elections already scheduled. how are government officials going to do this? you mentioned that the government has indicated that constitutional changes may be necessary. how was that going to happen? who will be involved? who gets to contribute their views? how does the government, the existing government, solicit ideas from across society? there is already a schedule for elections. how does parliament figure into this? as we said, there has to be a broad, national dialogue, where

the people get a chance to participate. this is not about having actions taken behind closed doors. this is about demonstrating to the people of egypt that leaders are coming together to take specific and concrete actions that lead to democratic elections later this year. >> is what president mubarak said yesterday's satisfactory or not satisfactory for -- yesterday satisfactory or not satisfactory for the united states? >> again, that is not for us to say. president mubarak has responded to the people. only the people will determine whether what he has done thus far is enough. we believe that more needs to be done. we believe that more needs to be done faster. that has been our message to officials that we have talked

to. if that was the secretary's message to the vice president today. if the foreign minister is saying in essence, tomorrow, that is not good enough. >> do you think this could polarize the army further? mubarak's speech, could serve to polarize egypt? >> again, what we are saying is that speeches are not enough. the speeches have to be followed by specific actions. regarding the army, we have been impressed by the professionalism of the army. >> even today? >> can i finish first? >> i will let you finish. >> the army has performed in a professional way. clearly, we are condemning the

violence that we saw today. i have not seen any indication that the military is responsible for that violence. clearly, the military is a respected institution. it has performed professionally. it has a very important role to play to help create the kind of environment that could lead to democratic change. that is what we want to see, and that is why we remain concerned about the prospect of further violence, and we continue to urge restraint. >> on this issue, it was clear today if you watch tv, anyone could tell the army was standing on the side while these thugs were attacking protesters. did you see that? it was not only on al jazeera. it was everywhere. >> i do understand that the army has been placed in a very difficult position. the army is trying to be a stabilizing force without being

forced to choose sides, and, perhaps, risked further violence. it is not my place to critique the performance of the army. i think what we have seen over several days is the obvious report and bond that exists between the army as a respected institution in egyptian society, and the egyptian people. we hope that that bond continues. we hope that the actions by these thugs does not change the dynamic on the street. we are very concerned that this unleashing of violence today and this attempt at intimidation will change the dynamic on the street. we are very concerned about that.

>> extremely briefly, i have four things. can you contain your enthusiasm for answering these -- you keep saying the people have spoken. egypt is a pretty big country. are you confident that the majority of egyptians are demanding the kinds of things you're calling for the government to do? >> yes. >> ok. if you keep talking about previously-scheduled presidential elections that are now supposed to be held in september. if we like to see those elections moved up? >> those are decisions for the egyptian people and leaders to make. if they choose to move them off, and there can be a credible political process, that is up to them. >> but, that would speed things

up, correct? >> again, we want to see -- >> is that one thing you would like to see? >> what we want to see is a credible process that leads to free, fair, and legitimate elections. that is currently scheduled for september. if that could be in advance -- is the destination first and foremost. there is an important process that leads to the kind of result that the people of egypt are calling for. . .

>> you mentioned the ambassador was on his way back, were there additional meetings to the ones they had, or new ones? >> i am only aware of the ones today. i believe they were both monday. >> secretary clinton called today. did she speak with president mubarak, or is that something the president did last night? >> the president did that last night. >> the general said there would

be no dialogue until the protesters leave the street. what is your reaction? >> the protesters are a fact of this process. they are in the streets, making demands of leaders in egypt. it is up to leaders to respond. i would not think it would be credible to say that no dialogue can begin before the protesters disperse. the protesters will go home when they have confidence that leaders are addressing their corps demands, which is fundamental change in a process that leads to credible free and fair elections. it is up to leaders to lead, for the leaders to take six steps. the sooner this kind of serious

conversation among broad elements of egyptian society occurs, then that can give the egyptian people confidence that not only have their voices have been heard but the leaders are responding to their aspirations. again, our message out to egypt publicly and privately is that the transition needs to start now. it cannot be delayed. cannot be delayed until there is a perfect set of circumstances. the transition needs to start now. >> the demonstrators asked president mubarak to leave. does this mean that you support their demands? the demonstrators asked president mubarak to leave, and you said you supports the

aspirations of the egyptian people. do you support president mubarak leaving? >> again, these decisions will be made in egypt. they will not be imposed from outside. the transition needs to start now. that is up to the egyptian leaders and the egyptian people. >> can you give us a list of five leaders -- >> again, we do not have such a list. there are a broad range of figures. we have indicated -- who have indicated publicly they wish to be involved. >> can you name -- >> i don't have to, you can name one, two, 3. do we want to bring forward more names? again, this is not our process.

this is not our list. we did not have a favorite candidate or candidates. we're not going to anoint any successor to president mubarak. these are decisions to be made by the egyptian people as part of a transition that occurs in egypt. our point is this transition, this process to fundamental change needs to begin now. if any figure wants to play a role in this process, they can come forward. if any group wants to come forward and play a role in a democratic process, a peaceful process, that is their right as egyptians. it is not for us, the united states, to dictate this. >> can you talk about the muslim brotherhood, and if you think they should be part of any political process? you say you will not anoint anybody, but what if a figure from the muslim brotherhood

emerges as a primary candidate? >> again -- >> we have not met with the muslim brotherhood. we have had no contact with the muslim brotherhood. >> should they be part of the political process? they obviously have a following in the country. >> again, that is up to them. but there are a fact of life in egypt. they are highly organized, and if they choose to participate and respect the democratic process, those are decisions to be made inside egypt. the army, obviously, will play a role in this transition. there are a broad variety of political figures, political groups, political actors that can participate if they choose. these are decisions to be made inside egypt.

>> you have met with other opposition leaders. can you say to you have met with? >> i don't have a list. we're doing aggressive active outreach to a broad range of figures. we have always done that. we will continue to do that. we have been very active in the last few days. i cannot detail all of the people we have and have not. u.s. a specific question, we have not met with the muslim brotherhood. -- you asked a specific question, we have not met with the muslim brotherhood. >> why not? >> we will meet with figures. >> do you give conditions before you meet with the people? >> -- with the moslem brotherhood was false? >> i was in touch with the ambassador.

we had a meeting with president mubarak and the vice president. >> so the report is not false? >> i am just telling you that we had two meetings. >> why is it obvious the army will play a role in this transition. this is a democratic transition. should this not be led by civilians? >> again, it is not up to us to determine who participates. the army is a respected institution within the egyptian society. you are going to go through fundamental changes in egyptian society. the army as a respected institution can play a role, but these are decisions to be made inside egypt. >> you keep talking about the private advice that you are giving the government. he sent a trusted emissary over. you had at two meetings.

was there nothing more for him to do? >> we have an ambassador who conducts our day-to-day business with the government of egypt. she is doing a brilliant job. she is engaged with members of civil society, political figures every day, and she will be our point person on a day-to-day basis as egypt goes through this transition. >> does this mean that wisner accomplished what he was sent to do or the response was such there was no point in him stang any longer? >> the ambassador has a longstanding relationship with president mubarak and other key leaders within the egyptian government. we thought it was useful for the ambassador to go over and have a two-way conversation, as a means of providing his perspective to

president mubarak, given their friendship, and also to bring back his judgment as to what the situation is at the highest levels of the egyptian government. he will report back to the president and a secretary when he lands. >> does the israeli egyptian peace treaty signed in 1979 factory to the discussion when you discuss the future? >> obviously when a new government is formed, it will have to review its policies with regard to its foreign pour solly rigid foreign policy, which will include its immediate neighbors, israel. it has a tremendous volume to the united states, to the region that egypt make peace with israel -- it made peace with israel 30 years ago. it has been an enormous value

that jordan has made peace with israel. we want to see that same kind of relationship with other states in the region. egypt has been a leader in the peace process, it has been an anchor. we would value and welcome them continuing to play that role. we hope the new government will follow that. >> so any future government would abide by the peace treaty? >> there is a peace treaty between israel and egypt. is of tremendous value to both countries and the region, and we would hope that would continue to be respected, just as it has been for more than three decades. >> in you're aggressive outreach to opposition figures, has the secretary been involved in that? and also, have you been telling protesters is time to get off the streets and into negotiations? and on a separate issue in the

region, you think the president of yemen has done enough to head off crisis? >> we will start in egypt. first, there has been brought out reach to a variety of figures across egyptian society. i cannot give you a catalog. we have detailed the secretary's call with the ford minister -- with the foreign minister and the prime minister, down through the under secretary and the assistant secretary, the ambassador, others across the agency. we have done an aggressive outreach across egyptian society. we will continue that. i cannot really give you any more play-by-play than that. your second question? >> are you encouraging them to get off the streets and into

negotiations? >> we have been very clear during this last week of respecting the universal values of freedom of assembly, freedom of expression, freedom of the press. it is not for us to tell the egyptian people to leave the streets. it is for us to encourage the egyptian government and egyptian leaders to respond to what the people of egypt are telling it about the future. and on the president of yemen, there have been a number of significant announcements regarding exclusivity, reform, reconciliation with the opposition, and we welcome any decisions by their president that advances their political development through nonviolence and democratic means. >> so you welcome any steps?

are the some of the "any steps" that you will walk in? -- that you will welcome? >> these are positive statements. it just as we have seen in egypt, it is important for the governments across the region to follow statements with action and to undertake political and social and economic reform. >> can you tell us around what time the call took place? >> i actually cannot. it was early afternoon. >> last night, people of egypt hurt their president, up they still want him out now -- heard their president, but they

still want him out now, not waiting until the election. are you comfortable waiting for the election, or you have somebody else to replace him? [laughter] >> i have been going all -- these are decisions to be made inside egypt, not to be determined outside of egypt. we want to see a national dialogue. we want to see a transition. what happens during that transition is not up to us, it is up to egypt, so that if any figure is involved, stays longer, stays shorter, again, the key is there is a process that needs -- that leads to fundamental change in response to the people of egypt, and those are issues that are being

debated inside of egypt and i will leave it there. >> you keep saying that you will not say what he should do or what he should not do, but you obviously told him not to run. so you obviously have some explicit things he should do and should not do, so why won't you -- why won't you let us know your thoughts about whether you think what he did -- is this going to be enough to satisfy the streets, or does he have to step down? >> again, this is a matter for the egyptian people. at the egyptian people came out to the streets and demanded change. president mubarak and other leaders have made some moves. as to whether those moves are sufficient, that is a matter between the existing egyptian government and the people of egypt. that is the fundamental relationship and the fundamental

calculation, and that is the matter between the egyptian people and their president. >> through 30 years of american support of the same guy and his family and his regime, when the moment comes when the people are asking him to step down, you are not going to interfere? you are not going to say what you really think? do you feel like you're foreign- policy should be blamed for him being in power? you used to call him a moderate. do you still think he is a moderate? he used to distinguish between radicals and moderates, is he still a moderate? >> i will not put a label. president mubarak is the president of egypt. he has announced he will step down in september. he has been a partner of the united states. this relationship has been a bilateral relationship of great significance.

egypt possible role in the peace process, led by president mubarak, -- egypt's role in the peace process, led by president mubarak, has been of great significance, establishing support for jordan as it reaches peace with israel. egypt has played a leading role in the peace process and has been very supportive. it was one of the first countries to embrace a new. -- it has been one of the first countries to embrace a new iraq. they have been of great value to be that states and the region as a whole. that said, the people of egypt have demanded change. the government is responding to the aspirations of the egyptian people. we are encouraging the government to move farther and faster.

there needs to be a transition. the people need to see that transition and action now. that was the president's message, buckley and privately, yesterday. -- publicly and privately, yesterday. but as to who was involved in leads this process, those are decisions to be made in egypt by the egyptian people. >> does he feel betrayed by the united states at the moment? >> no. >> depending on the level of the street protest and depending on the kind of volume for the calls of change will dictate what your statements are? right now you are not making dramatic calls for change. you say that yemen needs to reform, but you are using the same measured statements. if the protests there get larger, would make a more larger call and dramatic change there?

how much are you letting the street dictate what the u.s. policy is? >> no, let's go back to weeks to the secretary speech. it she advanced and enunciated a policy of the united states. we want to see it representative government. >> the secretary urged change and the secretary said you need to get on top of these movements, but it was not -- >> i would not say it quite that way. you need to respond to the political, economic, social, and demographic challenges. >> but since then, according to the demands of the street. so if we see these protests growing in other countries, or your calls for change in the country's going to grow louder? >> in tunisia, we're going to

help them advance towards democratic elections. in egypt, we're going to help them advance towards democratic elections. we have had both military and civilian support and egypt -- in egypt to try to improve the performance of the yemeni government and we have worked within their society to resolve internal conflict within the country. we will continue to do that. we continue to encourage governments to respond to the aspirations of their people and take very specific political, economic, and sociological steps. >> would you support the aspirations of the syrian people? >> we do support the aspirations of the syrian people, but it is to see the advancement of active, responsible, and

democratic government wherever it is. whether that is syria, lebanon, iraq, other countries in the region. this is our policy. >> one thing president mubarak did not mention in his speech is a state of emergency. is it your view that any of this can take place while a state of emergency is in place? >> we have long advocated repeal of emergency law. >> but can it take place while the law is there? >> you have underscored the message to the egyptian government. there has to be changed, it has to start now, and it has to be tangible, where the egyptian people can see that the government is moving. they have seen some steps, and our view is more needs to be done and faster.

>> when the ambassador was talking to president mubarak, did you mention lifting the state of emergency? yes or no? >> hang on a second. there is no failure to communicate here, to quote cool hand luke. >> i don't know who that is. i am sure he is a great communicator. >> one of the great movies of all time. no, in "cool hand luke." our cspan audience can see how much fun we have here at the department of state. there is no failure to communicate here. the egyptian government knows exactly how we feel about emergency law.

the issue is, is it going to change, is it going to take concrete steps that changes the perception of intimidation that has been a reality in egyptian society. there was a dynamic that assault on the streets. the dynamic has been disturbed by the violence today. we hope that dynamic can be resumed, where the aspirations of the egyptian people are clear and the government is scene, along with other leaders from the opposition, from other parts of civil society, that there will be tangible change coming to egypt. >> given the size and significance of egypt in the region, is this a major historical moment? >> yes. >> anymore? >> we are at a transformational

moment. the president underscores that -- underscored that last night. >> did president mubarak asked for american political support from the criticism? >> we are giving public and private advice to president mubarak and other leaders. i will keep the private advice private cred. >> are you concerned about his son running for office, and was the urged to include his son and that? >> i don't know how i can communicate this any better. we want to see a real, open, democratic political process unfold. we want to see elections held in egypt that are not rigged. whoever wants to participate in that kind of process, where it

is a competitive election, free, fair, and credible election, can have the opportunity to protest pay and have the opportunity to win. we're not picking candidates. we are not picking favorites. whoever wants to play this kind of role in egypt's future should have that opportunity. >> we have been hearing about this peaceful transition, but there are only two ways to compete transition. one is elections, the other is if president mubarak steps down before the election. it does the u.s. think it would be beneficial for president mubarak to step down before the election, and would be beneficial to the international community? >> these are decisions to be made by president mubarak, and as he continues to have this dialogue with the egyptian

people. >> are you concerned that president bart may state into september and that may -- and president mubarak may state into september and that may cause additional strife? >> again -- >> the new government in egypt, the share their concern? >> we would hope that the next government of egypt will play a constructive role in the peace process and will recognize the importance of having a peaceful relationship with israel. >> are there any updates on the decision about aid to egypt? i think last year it was $1.5 billion. the new proposal for the share was about the same. any changes, any updates? >> no changes. as robert gibbs said last week, this is something we will continually review based on the

ongoing events. we have a range of security and civilian systems -- civilian assistance to israel. as secretary clinton said, we have no plans in any way to cut aid. >> so that aid that is in the pipeline already? >> the egyptian army and its stabilizing role, is it fair to say that cutting off aid to the egyptian military is not true? >> as secretary clinton said, we have no plans to cut aid. >> on the one hand, you are saying that aid is being reviewed and will depend on the actions received by the egyptian government -- >> to clarify, roberts said we will review aid as needed, based on an ongoing events.

>> it is not an ongoing review, there is a hypothetical review in the future? there is no review at the moment at all? >> we have no plans at the present time to change our aid to egypt, but we will review assistance as we need to, as events unfold. >> so it is the same as every other country in the world? >> that is a fair point. the situation in egypt is very different than the situation that we confront and other countries. there is a crisis going on in egypt. the government is acting. we do provide assistance to that government.

if we need to make adjustments based on what the government does, we will do so. >> what would be a cause for adjustment aid? >> for example, there are the goal requirements in terms of how our assistance can be used. -- there are legal requirements in terms of our assistance can be used. >> can you give some examples? >> in the context of our assistance where we provide food aid to north korea. if we are concerned that food aid is being diverted from the north korean people to the government, we are prepared to cut off aid. we do not have an 88 going into north korea right now, but we put conditions -- we do not have any aid going into north korea right now, but we put conditions on them so that we think -- if we think the actions are inconsistent, with adjustments. >> most of the 80's to the

egyptian military. how would you adjust that? -- most of the aid is to the egyptian military. how would you adjust that? >> we will take action as we deem necessary. at the present time, nothing is being contemplated. >> i am wondering about the contrast between north korea and the military assistance going to egypt. >> and < not, for a brief time, after reporter incident, -- and 11 non, after a brief time, after a border incident, we reviewed our aid. as we need to, we will do so. >> is there any reason to believe that some of the tear gas canisters that the police used against protesters were given by the united states? >> i will double check this, but

i do not believe those canisters were involved. they were made in the u.s.a., but there were not part of any of our assistance programs. >> do you have any message for the rest of the global dictators? are you seeing changes elsewhere? >> that is a pretty broad question. our policies are clear. we want to see an effective governance, responsible governments. we want to see countries serve the interests of the people, attack corruption. our policies are clear. we provide support to a range of governments around the world, and governments have a fundamental obligation to understand the dynamic that is going on in the world today and respond appropriately.

>> any update on the diplomatic packet? >> there is no change on the ground. we continue to encourage the government of pakistan to respect his diplomatic immunity and release him. >> earlier you gave the trouble what about pakistan. -- the travel warning about pakistan. in disputed territories, how many miles are you saying, 10 miles? >> i am not going to parse the statement. >> the pakistan supreme court has put restrictions, are you sending a strong messages to their government? >> i guess, we are in constant

contact with the government of pakistan. >> thank you. >> the associated press reports the egyptian health minister says three people have been killed and 596 people injured and cairo. the floor of the u.s. senate today, they have been talking about health care through much of the day, the underlying regis -- the underlying legislation the reauthorization of the fha programs, but most of the day has been spent talking about health care repeal and proposed amendments coming up for votes between 5:00 and 6:00 this evening, and you could follow those on our companion network, c-span2. >> this weekend, we will visit the old naval observatory, which operated from 1844 to 1893.

we look at the fugitive slave law of 1850 and how it expanded the underground railroad, and a look at political cartoons of the civil war. experience american history tv on c-span3, all weekend, every weekend. for a complete schedule, go to c-span.org/history. >> sunday, the founder of the american spectator magazine has written over half a dozen books, and his latest, "after the handover, the conservatives road to recovery." join our conversation on "in depth," on cspac-span2.

>> and to address the critical problems that severely jeopardize, is it not true that senator byrd says forceful confrontation to the threat of the filibuster is the antidote? and senator byrd did not want us tampering. >> the filibuster remains intact, but there are some new rules and the senate. find out what they are and watched the debate with c- span2's "congressional chronicle," at c- span.org/congress. >> now the senate budget committee look at possible changes to the u.s. tax code and how it might impact the federal budget deficit. we will hear from former economic advisers to president george w. bush. this is almost 2.5 hours. [captions copyright national cable satellite corp. 2011]

[captioning performed by national captioning institute] >> the committee will come to order. i want to welcome every one of the senate budget committee today. today we focus on tax reform and the important role many of us believe bacon play and addressing our nation's long- term budget challenges -- believe it can play and addressing our nation's long- term budget challenges. we have dr. gene sperling, senior fellow at the urban institute. he has been before this committee many times. we have the director of the urban parking's tax center. -- the urban brookings tax

center. we also have a professor of economics from rutgers university, and the president and ceo of the lindsay group. we thank all of you for agreeing to give us some of your time. we deeply appreciate it. but me begin by reviewing the state of our fiscal affairs. last week, the cbo released its annual outlook report. that report should serve as a wake-up call to everyone who is concerned about the nation's finances. wake-up call to everye who is concerned about the nation's the chart depicts their 10-year baseline projections, with additional policies added in, which are likely to be adopted. we know they did not do a forecast of what might be

adopted, they do a forecast based on current law. of what might be adopted. they do a forecast based on current law. then we try to add to that things that are most likely to be adopted to get the most realistic look at where we're headed. that shows that due to passage of the tax exception package, cbo is now expecting to see deficits of more than a trillion dollars a year continuing through at least 2012. it then shows the deficits will briefly fall befe rising again as the bulk of the baby boom generation begins to retire and health care costs continue to climb. if this isn't a sobering picture of where we are headed, i don't know what would be sobering. make no mistake, we are at a critical juncture. we are borrowing 40 cents of every dollar that we spend,

spending is at the highest level as a share of our economy in 60 years. revenue is at its lowest level as a share of our economy in 60 years. many of us believe that tax reform must be part of an proach to addressing our fiscal problems. the current state of the tax code is simply indefensible. our tax code is out of date and clearly hurts u.s. competitors. number two, it is hemorrhaging revenue. the tax gap, tax havens, abusive tax shelters undermine the effectiveness of the tax code, depring the treasury of revenue. i believe the combined effect of the tax gap, offshore tax havens, abusive tax shelters is leading us to lose more than $500 billion a year, more than

500 billion already dollar a year. in addition, the tax code is riddled with expiring ovisions. this creates enormous uncertainty for citizens and businesses making it difficult for em to plan. if we took steps to simplify and reform the tax code, we could reduce tax rates below whe they are today and still get more revenue. let me repeat that. if we were to broaden the base and fundamentally reform the tax system, we could actually lower rates helping america be more competitive and generate more revenue. along with lower tax rates, tax reform would then allow us to increase revenue to help reduce the deficit. i think we also need to be realistic about what is necessary to meet the needs of the nation. and return the nation to a sustainable, long term fiscal trajectory.

looking at revenues has led some to argue that revenues should be held at the historic level over the past 40 years. about 18% of gdp. revenues, i want to point out, at that level, would not have produced a single balanced budget in all of that time. because spending exceeded 18% of gdp in every year. in fact, on the five occasions when the budget has been in surplus since 1969, revenues have ranged between 19.5% of gdp and 20.6% of gdp. it is this higher level of revenue that i believe provides a more useful guide post for what is needed. if we hope to dig ourselves out of the fiscal hole and set the budget on a sustnable path. let me indicate thatould mean we would have to have very significant cuts on thepending

side, because we are well over 21% of gdp on the spending side. we are over 24% of gdp on the spending side. tax reform gives us an portunity to lower tax rates at the same time we are raising revenues. tax reform achieves this goal by broadening the tax base, by eliminating or scaling back so called tax expenditures. tax expenditures are all of the deductions, exclusions, credits, set jasides in the tax code. they are costing the treasury more than a trillion dollars in revenue a year. that matches all of domestic discretiony spending. many are no different than traditional spending programs. they are simply spending through the tax code. here's how well known conservative economist martin feldstein described it, "this is from martin feldstein, cutting

tax expenditures is really the best way to reduce government spending, eliminating tax expenditures does not increase marginal tax rates or reduce the reward for saving, investment or risk taking. it would also increase overall economic efficiency by removing incentives that distort private spending decisions. and eliminating or consolidating the large number of overlapping tax based subsidies would also greatly simplify tax filing. in sort, cutting tax expenditures is not at all like other ways of raising revenue." i think this is a critically important point. the president's fiscal commission of which i was a member issued its report last december. i believe the tax reform may be the most important component of the fiscal commission's plan. here are the key elements of tax reform included in the fiscal commission's plan. one, eliminates or scales back

tax expenditures and lowers tax rates. this promotes economic growth and damatically improves america's global competitiveness. it makes the tax code more progressive. the commission's report included an illustrative tax reform plan that demonstrates how eliminating or scaling back tax expenditures can lower rates. instead of six brackets for individuals, the plan includes just three brackets of 12, 22 and 28%. the corporate rate would also be reduced from 35 to 28%. helping improve the competitive position of the united states. capital and gains and dividends are taxed at ordinary rates. the mortgage interest and charitable deductions will be reformed better targeting these tax benefits. the child tax credit, earned income tax credit would be preserved to help working families, and the alternative minimum tax would be repealed.

that is the kind of tax reform that i believe we ne to adopt. the commission plan waslso important because it showed how to reduce the deficit and debt in a balanced way. it included cuts in discretionary spending, entitlement reform and tax reform. you need to have those three fundamental components to be successful. at least i believe that that is the case. in total, about two-thirds of the deficit reduction between 2012 and 2020 in the plan resulted from reductions to spending. proposed spending cuts were significant. i would even argue on the domestic side, probably went too far. taking revenues out of the equation would have made it impossible to attain theesired deficit reduction goals. cutting spend iing alone or as some would suggest, only cutting nondefense discretionary spending would require such

draconian reductions that they simply could not be sustained. let me just conclude on this chart. chairman ryan's road map that he has laid out, this is the chairman of the house budget mmittee, i believe proves the point that he revenues have to be part of a plan to reduce the deficit and the debt. he proposes discretionary and mandatory spending cuts but actually makes things worse on the revenue side. the result is that his plan increases the debt as a percentage of gdp for the next 30 years. in fact, he doesn't achieve balance for 53 years. he does not achieve balance for 53 years. he dramatically increases the debt, both in collar terms and as a share of gdp. to solve the long term challenge, it will require real compromise and a gat deal of

political will. we need everyone at the table, and we need to have both sides, democrats and republicans, willing to move off their fixed positions in order to achieve a result important for the nation. we cannot continue to put this off. we need to reach an agreement this ear. it is time, i believe, for the administration, leaders of congress, democrats and republicans, to sit down and hash out a long term plan. we'll now turn to senator sessions for his opening remarks. i apologize to my colleagues for the length of that introduction, but i thought it was important in light of the subject we have before us today. >> thank you, mr. cirman. i'm glad to see your passion and leadershiphowing itself on this issue, because we've got to do some things. we cannot continue business as usual. the article in the wall street

journal in which the international netary fund, i believe it was "the washington post," in which the international monetary fund called on the united states to get its house in order like other nations in the world, used the phrase all the other developed nations who are facing debt crisis, most of them are, are entering into a dialogue withheir people to explain to them why changes ha to occur. so i have been critical of the president's state of the union address in which he spent very little time in an honest, direct, open way discussing with the american people why business as usual cannot continue. i so much appreciate your statement that this committee,

may be where the leadership has to come. i would be there with you. i am totally appreciative of the concept that you, senator widen, deficit commission and others, conservatives, writers, intellectuals who favored tax simplification. mr. lindsay, was really -- i hope you don't mind me quoting from your remarks, but you quote "a number of economists who say that a sensible revenueeutral tax reform could result in 5 to 10% -- 5 to 10% more of gdp growth, 18% growth in gdp output. larry summers found, the rece

former adviser to president obama, in another study, there were 19% more growth. this is stunning numbers. i mean, we would leave that on the table. frankly, i doubt they're that high, but if we could get close to that, if we could get a third of that, that would be marvelous for us, because as you indicated, it would be sort of free money, as you indicated, mr. chairman. it would create more growth which would create more revenue. president obama, in his state of the union address, said, for example, over the years, a parade of lobbyists have rigged the tax code to benefit particular companies and industries,hose with accountants or lawyers who worked the system can end up paying no taxes at all but all the rest of us are hit with one of the highest corporate tax rates in the wor. it makes no sense and has to change, so tonight i'm asking

democrats and republicans to simplify the system, get rid of the loopholes, level the playing field and use the savings to lower the corporate tax rate for the first time in 25 years without adding to the deficit. it can be done. well, i think if we simplify the corporate tax rate properly, we can, in a revenue neutral way, could probably create more revenue. let me tell you, the problem is far more serious than that. we have, and even in the real rate terms, one of the highest, if not the highest corporate rate in the developed world. corporations are making decisions every day, where to expand, where to hire workers. we learn things in airports. i happen to be on the plane with a very impressive ceo of an international corporation, ceo

north america at an alabama plant. he was so frustrated. i ended up with an empty seat. he came by and sat by me and told me the story. this is the story he told, that they had competed within their plants worldwide in this big company, to do a new chemical process that would create 200 jobs. they had worked extremely hard at the alabama plant and had won the competition. they submitted in, they had the lowest cost per gallon chemical stuff, and the plant was going to be expanded in alabama, we were going to gain 200 jobs until the people back in europe said we've got to calculate the taxes. and they recalculated the bid based on taxes. we lost 200 jobs. this is not academic. this is going on every day. we have an unemployment rate that is unacceptable and to have

the highest corporate tax rate virtually in the world and other nations are seeing the light and reducing it and we remain high. even if we eliminate certain deductio and have a flat rate that appears lower, it seems to my simple mind, that we've got no less real burden on the corporate community than we had before. i think we had need figure out a way to reduce the rates. if it has to be paid for by some tax increase in some other area, i'm willing to consider doing that. so i believe we need to simplify, but i also think it would be a big mistake if we don't reduce t rates. of course the u.k. is reducing their rates. canada, i understand is going to 16%. so if we're at 28, 27, after we've adjusted, we are still way above that, and a company making

a decision of where to produce a product might well choose another country than our own country to produce that product and cost us jobs. mr. chairman, that's kind of where i am. i don't think i'm prepared to support just a tax simplification of the corporate rate, because i bieve the entire world is recognizing that the corporate rate is a job factor, a big job factor. and i think, terms of the laugher factor, if you want to call it that, redung the corporate rate, i believe, is as one of our colleagues said the other day, a study has come out if you reduce that rate, you get more economic growth than you would in almost any oth place in the economy. thank you for your leadership. thank you for this good hearing. i look forward to the testimony of our excellent panel. >> thank you very much, senator

sessions. now we'll turn to our panel. we'll start with gene sturly. welcome back and please proceed. >> thank you, mr. chairman, mr. sessions and members of the committee. many tax and budget reforms know no party boundaries. no one favors the unequal justice, inefficiency and complexity we see in our tax code today, neither does anyone favor the way tomorrow's scheduled deficits threaten our economy and our children. you have asked that i concentrate my remarks on what makes reform most likely. reform often starts from a common consensus that a variety of fixes would be better than what we have. bipartisan agreement led to past successful fax reform such as in 1986, 1969 and 1954. such bipartisan consensus also informed close to two-thirds of the members of president obama's

debt commission. such agreement, i would suggest with admitted bias was displayed bay the panel before you. three of us are from the tax center where former heads of cbo appointees by both republicans and democrats often come at a very common conclusions. we're not led by any party idenfication. the more general point is that good government either 17% or 23% of gdp trumps bad government at both levels. with the myth cal king of athens went in to slay the bull, he was april able to escape the ball of string. if we were to escape the tax levee, i suggest we follow the string back along four dimensions that define our larger budgetary problems. first, we must move to an air of more fundamental reform.

a simple explanation of the tax code's evolution is it broke away from its nar woe revenue racingoundation a began to evolve like the spending side of the budget. large systemic reforms for our fundamentally different strategies than the tax cuts and benefit expansions that seem only to identify winners. many domestic reforms, like tax reform in 86 are the hash, inc.ers are the types of tradeoffs that modern government must increasingly engage. second, we must limit how much any congress can commit to the future before that future arises. i no longer divide the budget balance sheet into spending and taxes, but to give away and take away, especially after the 1990 and 93 budget agreements. it is political suicide to operate on the takeaway side of the budget to balance the sheets. the consequence of fiscal

democracy i have developed shows that in 2009, for the first time in u.s. history, all revenues were committed before the new congress even walked in the door. third, we must account for our report to the public in a more honest way. right now, for instance, tax subsidies show up in the budget as a reduction in taxes when they are bigger government in disguise. fourth, we must cut across institutional boundaries. even today, tax reforms are unable to replace an education tax credit with the higher pell grant or housing tax credit with a housing voucher. at the same time, i believe that serendipity arises by playing the odds in the right way. tax reforms, probability of success can be increased by the following steps. first we must seize todays and not yesterday's opportunities. yesterday's included large individual tax shelters, high tax