i'm sorry. not the three people -- jim do you think it is appropriate to personally attack a judge's ruling striking down the law saying that the judge must prefer particular policy results that the critic opposes? >> no, it is not proper. anybody can add if they want to. is it fair to say that the judge's decision aims to take away benefits of millions of americans that are already putting insurance companies back in charge of your health care? >> it will have that effect. quite possibly, he greatly regrets it. >> and do you think that judges should decide cases based on their best understanding of the meaning of the constitution or on whether they think their

rulings would have good or bad policy consequences? >> the former. >> obviously it's good to have that understanding, that we are a society based upon law and not upon what judges just happen to think it might be. >> you are right. >> i always have to watch out for those tough chairmen. on that last question, do you know anybody who disagrees with that? >> yes, i am afraid i do. they don't admit it. >> but do you know anybody who should disagree? >> no. >> i thought so. mr. kroger, it's good to have

you here. we always like having attorneys general here. we have fortunate to have two former attorneys general on this committee, senator blumenthal and senator whitehouse. you represent the state of oregon. you said that oregon is a sovereign state, but i am trying to summarize your testimony in terms of protecting the health, welfare of its citizens, do you have any concern about the constitutionality of the requirement that -- to purchase health insurance? >> none whatsoever. >> thank you. now, as attorney general, were you asked or did you -- on your own review, the legal basis for the affordable care act? >> yes, i have, senator. >> you think it intrudes on oregon's responsibility to protect the health and welfare

of its citizens? >> senator, i think it greatly assists the ability of the state of oregon to protect its citizens. >> thank you. and professor fried, having been here actually from the time of president fo, when you were solicitor general for president reagan, i almost feel like i should call you solicitor general, but do you believe the requirement in the affordable care act individuals purchase health insurance represent unprecedented extension of congress' authority to regulate insurance under the commerce clause? >> it is a new requirement. i don't think it's unprecedented. i think the language which i quoted to you from chief justice marshall at the beginning of our nation amply covers it. >> well, then, let me just

explore that a little bit further. do you believe that there have been new limitations on the commerce clause by the current court or other courts that give you concern that the affordable care act is not a constitutional regulation? >> there have been -- excuse me. >> no, go ahead. >> there have been limitations. i sat at counsel table with the prevailing argument in mother us -- united states v. morrison because i believed the relevant provisions of violence against women act were unconstitutional. and the court so held. but that was because the court found correctly that as despicable and criminal as it is for a man to beat up his girlfriend, it's not commerce. well, there's no doubt health

insurance is commerce. >> and on the violence agast women's act, did not the congress go back and redraft it based on the ruling in morrison? >> i believe they did but i -- >> or a version of it. >> i believe they did but i can't swear to that and i have sworn to my testimony. >> thank you. again, one of the reasons why i enjoyed yourenure as solicitor general with president reagan. anybody want to add to this? here's your chance to disagree with mr. fried. >> i never pass up a chance to disyes with charles. it rarely happens. again, senator, i do think there's a fundamental difference in two respects. you are compelling people to engage in commerce. and what's the rationale? is it that by not contracting with insurance companies that somehow acts as impediment to

congress? no. what it does -- to commerce, no. what it does do is prevent this free rider problem that congress created by imposing the preexisting condition. i call that a distortion of commerce. i didn't such that in an enormous sense. congress interferes in the private market all the time. what they've done is impose certain restrictions on insurance companies and they therefore are compelling people to ameliorate that problem, so the individual mandate does not carry into execution the regulation of commerce, it corrects a distorting effect of the regulation o commerce and it seems to me that distinction is critical because otherwise, again, you could -- when you're talking -- if congress skis -- dedes to limit what banks can do with mortgages or credit cards or car companies, then obviously they could conscript the citizenry to offset that. >> this is a repeating of your earlier argument. m ly cutting you off because my time is running out.

>> i was about to finish. >> thus your time is running out. and professor dellinger, if you can very briefly -- >> all i wanted to say, senator, i wanted to talk about the two quotes profess fried mentioned, one which refers to congress' pow tore use any ordinary means of execution. a mandate is not an ordinary means of execution, it is extraordinarily. in gibbons versus ogden, judge marshall said the congress may prescribe the rule by congress to be coverage governed. nobody up here thinks the ability to buy health insurance is itself commerce. that's not what anybody thinks. that doesn't fall under this language either. neither one of those quotations directly apply to the situation we currently face. >> professor dellinger? >> yes, i would like to respond to what i think is one of michael carbon's best point, by disagreeing that this matter would stand for the proposition that where congress imposes costs on companies, it could then makup for that, fix that

and going out and telling -- making people buy that company's product. that's not true because in this instance congress is dealing with a dysfunction in an important national market caused by the fact that companies have an incentive to deny coverage to people with preexisting conditions as a result of that they're not covered, in order to makehat market work efficiently, you need to encourage people to join the market so that they don't wait and ord up their health insurance on the cell phone in an ambulance on the way to the hospital. that's a market problem congress can address and fix. it is unprecedented, quote, unquote, but only in theen that the health care -- the affordable care act uses a market-based system giving people more choices than has been our previous custom of providing a single governmental payoas we did under social security and largely did under medicare. so the idea this is unprecedented is only one that

it is a new use of the market-based approach, less intrusive, providing mor choice. >> thank you. >> thank you, mr. chairman. >> thank you, senator durbin and thanks to all the witnesses for being here. i feel like i'm back in law school. but we areciate the fact that each of you are giving us the benefit of your expertise and your opinions on a very important issue, no doubt. was attempted -- tempted to say, mr. chairman, i wish we had done this before the law was passed, which we did not, as opposed to now but professor barnett you make an important point that congress' duty with a law like this does not end when it passes a law, indeed if in fact we are -- the opinion it does exceed eitr the prudential or constitutional bounds of congressional power under the commercelause, we can repeal it. and i would just say to my

friend, who's chairing the committee, senator durbin i know suggested earlier it's either this or nothing. i think they call that the fallacy of a false dichotomy. there's not just two choices. there's many other choices that are available to congress if this were to be repealed and replaced and i'm sure we'll talk about that a lot more. but let me just -- let me say, i was -- went back to look at the federalist papers where federalist 45, james madison talked about the powers of the federal government being enumerated in specific and the power of the state being broad and indeed the heading for the federalist 45 is the alleged danger from the powers of the union to the state's governments considered. it was exactly this sort of relationship between the state government and state power and individual citizens and the federal government that i think

is causing the most concern here because my own view is that the individual mandate is an unprecedented overreach of the federal government's limited and enumerated powers and i know lawyers can disagree and we do disagree and we usually do so in a civil and dignified way and that's great. by the way, mr. chairman, i would ask unanimous consent to introduce a letter from the attorney general of texas, greg abbott. he was one of the 26 attorney generals who were successful in the litigation and recently concluded in the district court in florida. >> without objection. >> i thank the chair. so really i think what worries people more than anything else whether they articulate quite this way or not is i think a lot of people feel like the fundamental relationship between the federal government and the american people has somehow beenltered in a basic and sweeping way, and whether they can say, well, that's a

violation of the 10th amendment or it's a violation of the commerce clause or the necessary and proper clause, whatever, i think it depends on the individual and their background and expertise. but i just want to ask whether you agree -- let me ask professor fried this question. jonathan turley, a law professor who testifies occasionally here before us said that if the supreme court upholds the individual mandate, it's hd to see what's left of federalism. you agree or disagree wit that? >> i disagree with that. i disagree with that. i recall in the violence against women act, there must have been attorneys general from 52 states arguing that that act was constitutional. and it was thrown out anyway because it was not commerce a that was a correct decion.

i supported it. i helped procure it, indeed. but i think the scare here is quite inappropriate. as i recall, the great debate in the senate was between this device and something called the government option. and the government option was described as being something akin to socialism. and i think there's a bit of a point to that. but what is striking, senator, is that i don't think anybody in the world could argue the government option or indeed a single payor federal alternative would have been unconstitutional. it would havbeen deprable. it would have been regrettable. it would have been western if

not eastern european, but it would not have been unconstitutional. and it's odd this which is an attempt to keep it in the private market is now being attacked that way. >> you made a very good case that congress can pass some very bad laws that are still constitutional. >> yes, sir. >> because time is running short and i hope we'll have a chance for a second round because seven minutes doesn't give us enough time. but i did want to explore professor fried, you did say while you're not troubled by the individual mandate, you are troubled by this huge unfunded mandate imposed on the states by the medicaid expansion and indeed there's a whole body of law that you are no doubt expert in that talks about the federal government's coercing the ates and commandeering the states to pursue a federal policy that is beyond the federal government's authority to do. and i will have to tell you

that one of the consequences of this in my state is a $27 billion unfunded mandate over the next 10 years for the medicaid expansion which is crowding out spending at the state level for education and transportation and other important priorities. and i just want to ask you to expand briefly on your concerns in this area. >> the case that comes to mind is south dakota against dole which required the states, and that wasn't even a fding mandate, required the states to alter the drinking age p. and threatened them with a withdrawal of 5% of highway funds if they didn't comply. and the supreme court said, well, 5% is so little that it's not that much of a threat. implicit in that is, would you

believe 10%, how about 50%? and the unfunded mandate here is huge. and that's why i said to senator grassley that i think there really is a constitutional worry about that . >> that was one -- if i can just concluded by saying that was one of the basis for the texas challenge and i believe the other attorneys generaln the florida case. i don't believe the judge got to that issue because -- >> he rejected it. >> i may stand corrected here. but i -- although we're focusing on the individual mandate, i am interested in your testimony with regard to the coercion or commandeering of state authorities and state budgets. thank you. my time's up for now. i hope to come back. >> thanks, senator cornyn. senator franken. >> i feel like i'm back in law

school. >> i got it. >> i didn't go to law school. >> thank you, professor. >> attorney general kroger, mr. carbon said and then repeated essentially this in his testimony, a decision not to buy health insurance doesn't affect commerce. is that inago -- is that an accurate quote? >> in the preexisting band, true. in other words, if you took the preexisting conditi ban out of the law, the insurance company would be able to contract with its patients in the fact that some stranger to that transaction sat at home wouldn't affect that contractual relationship. the argument i'm making is that the preexisting ban enables congress to reach out and bring that stranger of the transaction in.

>> without the mandate you couldn't have the preexisting condition, it wouldn't work in the law. but this is a question for attorney general kroger. a decision not to buy health insurance doesn't affect commerce. mr. kroger, when the uninsured in your state go to emergency rooms and can't pay their bills, how much does that cost oregon hospitals every year? >> you know, senator, i've spoken to the c.e.o.'s of various hospitals around the state. the amount of charitable care, care of persons who don't have insurance varies from hospital between 3% and in some cases as high as 12% as the amount of care they're providing. the idea that being uninsured doesn't affect commerce is jt factually incorrect. evy american pays higher insurance premiums to cover that. >> i under the cost of $1.1 billion every year for oregon hospitals.

how much does that -- do you know how much that costs uninsured -- costs insured oregonians in terms of higher premiums? >> senator, the different studies show between $450 in higher individual premiums up to $1,500 for families who are required to help carry that cost of the uninsured. >> so this basically sounds to me like insured oregonians are subsidizing uninsured oregonians. >> that is correct, senator. >> so would you agree with the decision not to buy health insurance doesn't affect commerce? >> it clearly does affect mmerce, senator. >> thank you. professor dellinger, my understanding is that when the supreme court decides cases they are interpreting the constitution, or if they are ruling based on precedent they are ruling based on previous

supme court interpretations of the constitution. is that correct? >> yes, sir. >> ok. i have to say that i'm confused and maybe it's because i didn't go to law school, by mr. barnett's testimony when he says no one claims that the individual mandate is justified by the original meaning of the commerce clause or necessary and proper clause. instead, the government and these law professors who support the mandate have rested their arguments exclusively on the supreme court. first of all, i'm confused because i know of at least two scholars, jack ballen and akil amawho do think the original intent of the commerce clause supports constitutionality. are akil amar and jack balken no one? >> they're pretty esteemed. and so is professor barnett. but i may proceed. >> well, yea i'm sure akil

amar and jack balken have made ridiculous statements, too. i'm sorry. i didn't mean that. >> it's ok. >> i did. i did. ok. anyway, see -- but to me, on this -- and i didn't go to law school but it seems to me that there's a transive property, a equals b and b equals c and c equals d, a equals d. and since the courts are relying on precedence, they're relying on a supreme court that was interpreting the constitution, right? so isn't it true that by relying on precedent you're really interpreting the intent of the founders? >> that is true, senator franken, but i would also be perfectly willing to go back to

the original understanding and find that this is fully consistent with it. in the following set, the frers did assume in787 that there would be substantial areas that were matters for local regulation only. and the national government would be limited to regulating only that commerce which concerns more states than one. what happened over the ensuing two centuries is that the category of what affects more states than one has increased dramatically because of developments in telecommunications and markets, etc. we now have a single national market so that congress' authority to regulate that commerce which concerns more states than one is greatly vaster than the framers would have imagined, not because of any difference in constitutional principle that they adopted but because of the extraordinary developments in

technology, communications, and other matters. >> like airplanes. >> which have made it common. yes. >> senator cornyn made this 10th amendment point. as i understand it, the 10th -- the way the 10th amendment was written, and if you go to the federalist papers, it was written specifically to exclude the word "expressly." this is the 10th amendment. the powers not delegated to the united states or prohibited by it or reserved to the states respectively or to the people. now, i remember that during -- when they were writing this, some south carolina representative wanted to put in "expressly" which had been in the articles of the confederation and madison say no and madison writes in the federalist papers that if you put "expressly" in then every

possible power of the federal government would have to be written in an encyclopedic way into the constitution and then that would be absurd. is that your understanding? is that everybody's understanding of the 10th? is my history right? >> it is mine. yes. >> thank you. >> i'd like to welcome to the judiciary committee senator lee of utah and recognize him at this point. >> thank you, mr. chairman. i want to thank each of our witnesses for coming today, it's an honor to be here and interact with each of you. i want to oak something that's been -- oako something that's been mentioned but requests it again. i think it's important we do this as senators because i believe among the founding generation, the founding fathers, there was no understanding that was more ubiquitous than the idea what

we were creating at the national level was not an all-purpose national government possessing general police powers, but a limited purpose federal government. and i think one of our jobs as senators is to make sure that regardless of what the courts say that wean get away with in court, regardless of how broadly we may exercise our power without judicial interference thate take a second look and say, separate and apart from what the court says we can do, should we be doing this? is this consistent with our role as legislators operating within a government with decidedly limited powers. i also like the quote from justice jackson that was pulled out a few minutes ago. i think by mr. kroger, to the effect that certain decisions are wisely left for congress. the courts lack the authority to be a sort of roving commission on all things constitutional. we have to make a number of these decisions o our own regardless whether the courts

are going to do them for us. i wanted to ask a few questions of mr. dellinger if that's ok, professor. do you agree, first of all, with james madison's assessment that mr. corn inquoted a few minutes ago, that while the powers of the federal government are few and defined, those that are left to the states are numerous and indefinite? >> i do agree. and i think senator cornyn correctly cites federal list 45 or that proposition. as i said, senator lee, within the area of congress' authority to regulate national commerce, what has grown is the interdependencey of national commerce, not our understanding of the constitution. >> sure, sure, it has grown but they had interstate commerce then. they were interconnected. in fact that was the whole reason why we needed to be a union in the first place, right? >> correct. >> we couldn't survive. so they understood this intercnectiveness. it's not new and been

facilitated by jet airplanes and the internet. >> but if you got sk in north carolina in 1787, it had no affect in utah. >> or in mexico. it's still a lovely place. >> it had no affect in pennsylvania. >> ok. but they were interconnected so perhaps the changes we've had have been changes of degree, perhaps we're nor interdependent then than we are now but you would agree it's still accurate to say the powers of the federal government are few and define and those reserved to the state are numerous and indefinite. >> yes. >> and yet if this law is upheld, if this law is within congress' limited power to regulate commerce among the states, notice it didn't say commerce, it said commerce among the several states and before the nation. if this is within congress' power, wouldn't it also be within congress' power to tell every american, including you and me and everyone in this ro that we must eat four

servings of green leafy vegetables each day? >> no. >> why is that? what's the distinction? >> the distinction is that a regulation of commerce, to be constitutional, has to be a permissible regulation of commerce. and something which intrudes into the area ofersonal ataun my doesn't meet the standards. >> like deciding where to go to the doctor and how to pay for it? i'm trying to understand the between the personal autonomy issue there and that prented by this law. >> the case about broccoli is a case that's covered both by lopez and morrison, that is you're regulating a local, noneconomic matter, what you eat and whether you exercise, and it is also governed as well, it is doubly unconstitutional because if government is well by the principle in cases like looksburg and vacco and cruzan to say an individual has a right to refuse unwanted medical treatment. you have a constitutional right

to refuse -- and i think -- >> in that i'm talking about commerce clause. >> i understand that. >> let's keep our discussion limited to the commerce clause. >> if you talk abouthether congress could require people to buy other products, what would be congress' legitimate reason foroing so? i think there would be many constitutional objections. >> i can come up with one right now. look, if we are going to make sure everybody has health insurance and the government is going to pick up the slack behind, then congress could assemble a panel of experts, let's say your functional equilent from the dietary council industry who would come and tell us if you eat four servings of een leafy vegetables every day you're 50% less likely to suffer from heart disease, cancer, stroke or a host of other ailments, that will cost the government less money. so it's a pretty tight nexus there. >> yes, but as the court said in gonzalez versus rage, that's a morrison and lopez matter

dealing with noneconomic matters and the court said in gonzalez where the act under review is a statute that directly regulates direct economic activity, it casts on morrison's unconstitutionality. it's a direct result of commerce activity, not something that affects a commercial activity. >> let's change the hypothetical slightly. instead of saying you must eat them, it says you must take the first $200 out of each month's earnings and purchase the equivalent of four servings of green, leafy vegetableso eat per day. this all of a sudden is economic activity. this is not lopez. where we're talking about noncommercial possession of firearm in a school zone or morrison, noner state act of violence. >> it seems there's two responses to the argument that would wholly stand for the proposition that congress can force anybody to buy anything. the first is that this is a

requirement that you make a provision to buy something which you cannot ever be assured you will not use and cannot be assured you won't transfer theost to others. i think it's distinguishable. secondly, the very form of that argument was used to attack the minimum wage and social security. >> social security was an exercise in spending power. >> the question is it the constitutionality of the minimum wage law of 1936 you would be asking me, is it a regulation of commerce for congress to have a minimum wage of $5,000 an hour? and that has never been a legitimate -- is it a regulation of commerce to say if you buy one car you have to buy three cars? that form of argument, i think, was used against social security and used against medicare and congress in fact never abused that. they never set the retiremt agat 25 as the opponents of the social security act said would be possible if you upheld a requirement plan for people over 65. so the very form of the argument i think deflects

attention from what is basically a completely unremarkable regulation of an important naonal market. >> mr. chairman, i see my time has expired and i have a brief follow-up question, can i ask that and be finished? i was pleased to see in your written testimony you've become such a huge fan of justice scalia's jurisprudence and he's also one of my favorite justices on the court. you quote him repeatedly as a source for the courts wickerby-filburn jurisprudence under the commerce law. is that the case it necessarily reflects his view as an original matter as a matter of first principles or are those views made in recognition of the fact he's bound by stare decises. >> that's a good question and i don't know the answer. it could be he's reflecting stare decises. he cast the critical vote for the position that sustained my argument and not yours.

>> he couldn't have been more wrong, could he? >> thank you. >> thank you very much, senator chairman. i'm taking a different tact than mr. lee in terms of the practicality of these decisions. if you look at people who i think mr. kroger is well aware of this who already small businesses taking advantage of the discounts that they're getting and the fact that you've got people who are -- ds who are getting to keep their insurance that are preexisting conditions and states who are now struggling to figure out what they're going to do in light of these decisions. so my question, i know senator durbin asked this of professor deinger but maybe a few of the witnesses want to chime in and that's what is the practical immediate outcome of the decision in florida monday? and i understand some state attorneys generals are telling people they don't need to do the work to comply with the law since judge vincent does not stay his ruling pding the government's appeal. other states think it would be irresponsible not to continue

making preparations for implementation of the act in case judge vincent's opinion is overruled at higher levels. i guess i'd start quickly with you, mr. kroger, just from a practical level, what are you telling your state what they should do in light of the florida ruling? >> senator, i hate to sound as a lawyer, as a practical matter. >> aren't you a lawyer? >> yes. if i was giving advice to state government it would be covered by attorney-client privilege and wouldn't be prepared to share it with you here. >> ok. >> i can say generally that i think it would be a huge mistake for a state to pretend that this is the final word. obviously we have decisions on both sides that have come out. they're only district court opinions and so, you know, my sense is it would be an enormous mistake for a state not to continue on with implementation of the act. >> professor fried? >> i don't have a judgment on

that. it seems to me odd tt one judge in florida could govern the nation. so -- >> if they were in minnesota, that might be different? >> not to me it wouldn't. but i can't really speculate. i hadn't thought that one through. >> the next two, mr. carvin, professor barnett? >> i'll join professor fried's agnostic response, i'm not really sure. >> i've been asked this, too, senator and don't think i know the answer but can say without violating attorney-client privilege, i saw attorney general abbott from texas on the news last night, and he sa, himself, that he was counseling texas, that they -- thlegislature, that they should continue to act pursuant to the law until it's ruled upon by above. i don't know if he's right but i do know that he is someone whose opinion i respect and that's the advice he's giving

his own state legislature. >> along these same lines, judge vincent struck thentire affordable care act down because he found the individual mandate was unconstitutional. that is a step that an earlier decision which also found problems with the act of an eastern district of virginia did not take. do you think the constitutionality of the whole law is contingent on the individual mandate? anthen i guess the secondary question was how important it is to you there wasn't a severability clause included in the bill. we'll start with you, professor dellinger? >> i think it strikes me as far too sweeping. and i will pass that question on to my colleagues. >> professor fried, then? >> i don't believe that judge vincent said that the other parts of the statute were unconstitutional. what he said was because there was no severability clause and because the rest of the act

becomes unworkable without the mandate which is something, of course, that many of us have been arguing, therefore in striking the mandate, he's really in effect striking the rest of the statute because the rest of the statute becomes unworkable. but he's not saying that it's unconstitutional. if i read him correctly. >> ok. i just meant more broadly. so you think it matters there isn't a severability clause? >> severability clause, senator, would not be dress posstive and help the court -- despotitve and help the court. in the absence of the severability clause the judge must figure out what the intent of congress was and the government said in its brief the insurance regulations imposed on the insurance companies were not severable from the mandate. then the only question was for the judg and that seemed pretty obvious, whether he could go in the 2,700-page bill

and look at all the provisions that weren't regulations of the insurance companies, sort of like the 1099 requirement and say those could stand independently of these and said that's not something he thinks a judge should be able to do and go inside a bill and find the ones he thinks could work or not work and he said it's outside of my purview and i'll have to go with the whole thing. >> all right. professor dellinger stated the minimum coverage requirement in the affordable care act is no more intrusive than cial security or medicaid. what do you think about that statement, professor fried? >> well, it's distinguishable because, after all, the argument is being made, you don't have to buy insurance, you can pretend you'll never get sick and so on and so forth. but with social security, you only get into that system if you earn money, if you have a job, if you make a living. well, for goodness sake.

>> professor dellinger? >> although the mandate applies to everyone who's not exempt because they already have medicare, their income is too low, etc. like social security, the penalty provision only applies if you enter the market and earn money. and so what strikes me as so remarkable about the attack on this law is it seems t me to be in two ways everything conservative should abho first of all, it seems to establish the principle that congress can address a major national economic problem only by providing a monolithic government solution and is precluded from using a more choice friendly marketplace. >> you're saying the argument would lead you to believe under their argument it would be constitutional? >> i know professor barnett acknowledges that and mr.

carvin does, too. so if the only way congress can address a market problem is by having the government step in and be an exclusive provider strikes me as an odd position which is why the idea of using the market and step in, it's been more a conservative idea and very akin to what the previous preside bush wanted to do with parts of social security is give people a financial incentive to go in the private market. that private market approach was adopted here so it seems odd to attack that and say you can only use the government approach and also seems odd to say that five justices sitting in washington should decide a matter of economic regulation for the whole country. both of those seem to me approaches that ought to be anathema to anyone who marches der the manner -- banner of conservatism. >> thank you very much. senator hatch? >> thank you, mr. chairman.

i wanted to place a few items in the record. >> without objection. >> i have a statement of myself and one submitted by mr. schtliff. mr. bennett stated utah as being out of it as well. they stated for individual liberty and state sovereignty and i'm proud of utah's rule in this. i ask consent of judge vinent's opinion to be part of the record as well as the brief filed in that case by 32 senars, including several members of this committee. and finally, i ask consent a few of the article i've published on this subject in newspapers such as "the wall street journal" and "chicago tribune" and the recent journal of law and public policy, if i could have those in the record as well. >> that's already been said that the distinction between activity and inactivity is not in the text of the cotitution. i think most all of you have said that.

a text dsm uralist is born, and neither is broad regulatory scheme or anything else the supreme court came up with that the defender of obama care rely on and there's no quote intrusiveness, unquote, standard in the constitution either. would you agree with that, professor barnett? >> of course. that's not a constitutional standard or doctrine i'm aware of. >> none of them are. mr. carvin? >> no. obviously things that substantially affect commerce is something the court says are within the commerce clause but has been pointed out is a number of things that affect commerce, violence against women, possessing guns, which the court has said no, no, those don't come within the ambit and i would argue economic inactivity is far more afield from the commerce power than things like buying and

possessing guns. >> i'm very grateful to have professor fried here, a grand old friend and professor dellinger is an old friend, both of whom i admire greatly. i don't know you, mr. kroger, but i'm sure you're just fine. now, the congressional budget office in the past has said that requiring individuals to purchase a particular good or service was, quote, unprecedented, unquote. now, that's a congressional budget office. the congressional research service recently concluded that, quote, it is a novel issue where the congress may use the commerce clause to require an individual to purchase a good or service, unquote. i think it is a novelssue. i submit because congress has never done it before. now, i'll throw this question to each of our witnesses and hope i get straight answers. can you give me an actual example other than obamacare of

congress requiring individuals to purchase a particular good or service? >> senator, if i may, my parents own a small business, they're constituents of senator cornyn and if you told them the government had never required them to buy a good or service, they would be astounded. i mean, the federal osha law and regulations require all kinds of sole appropriators and small business people to go out and buy equment, whether it's orange cones or hardhats or a fire disposal system in a restaurant. the environmental laws require a huge range of small business owners to buy air filters, up to, you know, sulfur oxide, scrubbers, the reason small business people tend not to like government regulation, particularly federal regulation is because it does require them to extend money on goods and services. so i don't think -- i think those are --

>> only as a condition of being in business. >> you know, senator, the -- >> i mean, these people p are trying to get into business. >> it's true that my parents could close down their business p, all people could close down their business. >> they don't have to because they can go into business. but as a condition to going into it they have to meet certain laws, right? >> yes. >> in this particular case we have an inactivity of people, if you want to use that word, i don't find it the greatest word in the world, but we have an inactivity here that they don't want to do. and they would make their choice not to do it. let me go to you, professor fried. >> i think the idea that one can me a choice not to seek health care throughout one's life is simply not realistic and cannot be the basis for an attack on the

constitutionality. >> that isn't right. i have to concede that pot. i -- it begshe question whether it should be mandated. >> i think once you've made the first step and you've made that first concession, the rest follows. >> ok. and i am -- brought to mind the various things that were considered in the senate and which t previous president, i think very sely suggested as an actuatyive -- alternative to social security, and as an alternative, it was suggested that you could buy mutual funds from vanguard, from fidelity and you wouldn't have to buy it from the goverent. and may one would say that, well, you don't have to work. you can simply, you know, sit on a corner and say "spare change" and then you wouldn't

ha to pay social security. but i think that's unrealistic as well. >> let me go to mr. carvin. >> no, they've never done it before and if you buy any of the analogies that have just been agreed to, then there is no limits on congress. the notion that health care is unique because you have to buy the goods is facially incorrect. you have to buy transportation, clothes, housing, shelter, food. and the notion that health insurance is somehow a core requirement is kind of silly and of course if you started drawing these distinctions between transportation and health care, you get back into the sort of principled -- nonprincipled distinctions of debyilied commerce clause jurisprudence prior to the 1930's. >> mr. barnett? >> it has never been done before, senator. and the fact is even though everyone might be said to one day you needealth care, the bill itself exempts people from buying -- health insurance is not the same thing as health

care. everyone doesn't go in the insurance market and the bill exempts people for religious reasons from having to obtain health insurance. so clearly even congress recognized not everyone has to obtain health insurance just because they may or may not one day seek medical care. so the fact that medical care is inevitability which it isn't for everyone, but to the extent it's likely doesn't mean insurance, a completely different product, is an inevitability. >> nor, my understanding is that the very first congress required every adult free male to purchase and equip themselves with muskets, with ammunition, with even certain forms of dress to carry the weapons with them. it is true that -- >> but you got to admit -- >> it's been a long, long time. >> provide some guidance for that. >> it's been a long time since then. yes, you can say when something

hasn't been done before it's novel or unprecedented but no matter howuch one says those words it doesn't amount to a constitutional argument. this is novel in the sense the congress h decided to use a market approach and has used it with regard to the purchase of a commodity that truly is unlike others. there's nothing else in our economy where an individual who ha made no preparation for the expense can go in and get a million dollars worth of goods and services provided to them, the cost of which is passed on to others. there's nothing like that. so in that truly unique market, an incentive for people to make provisions through insurance seems unremarkable. >> the reason i raised it is for the purpose of showing that it has never been done before and i think there are good reasons why it's never been done before. bui've asked the distinguished chairman, just let meake a couple more remarks. i have a lot of other things

i'd like to ask but my time is up and if you'll indulge me, i'd appreciate that. you know, because no commerce clause cases involve congress regulating decions rather than activities, rendering this -- that renders this case as a case of first impression, which is my point. the obamacare factor cites mandates that arise from different enumerated powers and argue, for example, as some of you have argued here. i've been very interested in these arguments, that congress has imposed mandates on individuals before such -- as jury service and military draft or social security. professor fried has made this argument. and simply because one provision of the constitution allows congress someone would do something cannot mean the commerce clause allows the congress to impose an

individual insurance mandate. jury duty, for example, that has been mentioned has multiple layers of exceptions and they make it far less compulsory for most people and is quote, necessary and proper in order to exercise congress' power to establish lower courts and the sixth amendment of a right by an impartial jury. the congress may impose a military draft which again has layers of exceptions pursuant to enumerated powers to raise and support armies and they can close them and ask them to have gunss well and maintain the navy. and the social security system, which has been raised here is unlike this insurance mandate. unequivocally an exercise in congress' pow tore tax and spend for the general welfare. it's a completely different issue as far as i'm concerned. now, each of these examples

stands clearly with an enumerated power. . if congress could impose any mandate on an individual because it may impose a particular mandate on certain individuals, there would be no limits to federal power at all. that's where i am having a lot of difficulty. i have studied this matter. i have to say, i respect all of you. i respect the differences in points of view. but for the life of me, professor fried, i have a great regard for you, but i am really amazed at some of your arguments here today, great man that you are. now i expect them from mr.

dellinger. >> thank goodness, i have general fried with me. >> it's wonderful not to lose one's power to surprise. >> you've never lost that power. i have to say, much more on other issues than here, but i've really enjoyed this. i really appreciate you taking the time here. this is a very, very important issue. professor dellinger, i want you to at least realize that the bigger point of view should be protecting our right, not necessarily broadening them in the sense of making us have to buy health insurance. >> just a brief comment. i think you make a very good point that most legislation -- >> points. >> you made one. >> ok. >> that is that most

legislations, state and federal, prohibits a person from doing things. but there has always been some legislation that opposes affirmative obligation. in that sense it's unremarkable to impose affirmative obligations, so -- >> you can find those in the constitution was my point. >> well, but it's also true -- it's the commerce power that congress uses to build interstate highways and tells people that they have to move and take a check from the government. it's the commerce power that does that. so there are lots of affirmative obligations. i think we should be very attentive. affirmative obligations can be more intrusive and we have to take a careful look to make sure they don't transcend any limit. this to me seems easily does not. >> i have transcended my limit and i apologize to the distinguished chairman, but i appreciate him giving me this leeway. i have to leave and i want to thank you for coming. >> thank you, senator hatch.

if any members of the panel would like us to take a break for a few minutes before we proceed, give a sign. should we just keep -- >> i need to get back to boston if i possibly can. but that's on a 2:00 train. >> i swear we will get you to the station on time. we are honored to have a new member of the committee, senator blumenthal of connecticut, who was a former attorney general. welcome, senator. please proceed. >> thank you, mr. chairman. thank you, panel. i have to make clear at the very beginning, i do not feel like i am back in law school. if law school had been this interesting, i would have gone to more classes. i just wanted to join senator hatch and other members of the committee in thanking you for spending time with us today and giving us the benefit of some very important testimony. i want to say, particularly to general kroger, that i

appreciate your being here and your having the courage to do what you have done in declining to join what may be a popular stance in some quarters in challenging the lawsuit. i declined as attorney general to join in that challenge partly because this new act actually saves money for many states, including connecticut, saves connecticut $53 million through september of 2011 and perhaps does the same for oregon and other states, but also because i believe that the lawsuit is without merit. and i think that the two opinions we have to the contrary from judge hudson and judge vincent show clearly that it is without merit and partly because of this distinction made out of nonconstitutional cloth between inactivity and activity, which

is nowhere present in any previous case of the united states supreme court, but also because i think they give very, very inadequate attention and weight to the doctrine that laws should be presumed constitutional. judge hudson in effect rejects the idea because of a footnote in city of chicago vs. morales. judge vincent considered it almost not at all. in fact he said that, as i recall, i can consider -- i assume that i can consider the constitutionality instead of i presume that it is constitutional. so i want to direct this question to you, general kroger, and also other members of the panel. aren't you troubled by the lack of weight given to this

presumption, which is so fundamental to the work that you and other attorneys general and the attorney general of the united states does day in and day out in defending statutes against constitutional attacks? >> senator, i would simple hi agree with you that the presumption of constitutionality is extraordinarily important and likewise the deference that is shown to the democratically elected officials in the state to craft the right policy that will govern the country, and i think probably both of those could use greater emphasis in the decisions that go forward. >> and would you agree that one of the reasons that this presumption should have stronger and special weight in this case is that in fact united states congress, as senator leahy pointed out earlier, consider these constitutional issues in deliberating and debating this

law? so it isn't as if the courts have discovered this issue or the plaintiffs have discovered it. congress considered it and a co-equal branch of government is entitled to that respect. >> senator, i think ultimately of course it is the court's province to declare whether the law is constitutional or unconstitutional, and someone who appears in front of courts all the time, i would hate to in any way imply that they don't have that responsibility. but i do think closer attention to precedent would make a big difference in these cases going forward. >> let me ask mr. carvin and professor barnett, perhaps your views on this issue and whether you are not troubled by the overreaching, and i don't use that word lightly, the judicial overreaching that very possibly could be seen in this disregard

for the presumption of constitutionality? >> i certainly think the presumption of constitutionality is important and i think the congress has very broad discretion in its commerce clause regulation. i think the key thing to focus on is congress is given prod -- broad discretion and for reasons that i won't repeat i think congress is seeking to achieve an illegitimate toned this context. in both instances, who the

judges are not been won a thing should do -- are not doing what i think they should do. >> i know some people outside of this room are you kidding. upholding an act of congress. although, it is being challenged by 26 attorneys general. in terms of the way this challenge, he uphold law while the funds and other part of the law unsatisfactory. i think that should be added to the record. >> thank you very much. >> i will recognize senator sessions for the last senator to

ask in the first round. >> i would like to offer for the record the written testimony of florida attorney general for this and were also be offering a statement from alabama's attorney general. they are of the belief that the act is unconstitutional. the u.s. government is the government of limited power. this is how it was created. there are explicit grants of power for the federal government

and there are certain powers that were not given to the government. in recent years, there has been a feeling about the federal government being able to do anything it desires to do on any subject. i think the ruling is attacking this statute are refreshing to me in that it causes our nation to, once again, enter into a discussion about what it means to be a government of limited powers. i would just suggest how much we have gotten from these issues when there are explicit constitutional provisions, the right to keep and bear arms, when we have four members of the court -- they want to leave that out of the constitution. it has a specific provision that provides individuals the right to not have their property taken except for public use.

it has specific provisions that allow for free and robust debate and the ability to speak out in public forum. both things are individual rights and our courts, somehow, have gotten to the point where they are not very important anymore. in those cases, the state either one or almost one that it would diminish individual rights of the states. i think this is a fundamental point that we ought to note. we have had hearings in this committee about the constitutionality of the health care bill. people raising on the floor on the senate who were ignored for the most part and were dismissed out of hand. we also had a congressman say what does the constitution have

to do with this? disrespectful approach to the constitution. congress did not do a good job, frankly. we did not seriously engage in a debate over whether this power was legitimately granted to the federal government. of course, the comment was made about states and the money. i would just note that my governor has told me that he is startled by the economic impact that this would have. the expected $27 billion hit on medicaid requirement for the state. if the courts were to allow the individual mandates to stand, and thereby grant the federal government the authority to compel private citizens to

purchase goods or services to promote some broader government policy, can you identify any limiting principle the would allow the government the purchase of anything more everything? >> i cannot. there have been a few efforts to try to identify them today. if congress can require you to subsidize a corporation because of furtive -- because of burton's the federal -- because of federal government set the -- because of burdensome that the federal government has imposed on the company and, perhaps there may be some restrictions requiring you to purchase healthcare because that requires personal autonomy. most people would decide on how they pay for it and decide what doctor to go to would be evicted

.ersonal autonomy appeare professor fried thinks is ok to purchase vaccinations citing the ferguson case. at the end of the day, all that can be agreed on, in terms of the living principle, is what congress cannot do under the clause of it being unconstitutional. congress can never do anything that is unconstitutional. all it means they cannot do is i'll let the bill of rights. that would be true if you -- can i do it is violate the bill of rights. -- cannot do is violate the bill of rights. i have to buy food and transportation and housing and clothing every day and i think

people would feel much more of a compulsion to buy that product than health insurance, particularly a 27-year-old who is healthy and quite rationally things they will not go to the doctor for the next 20 years and get a much better deal than being compelled into what everyone agrees is an extraordinarily overpriced health insurance market. >> thank you. i think that is a very important point. at some level, if we eviscerate the logic of the commerce clause, which is regulates the commerce among the states fundamentally. i heard you make a reference to the judicial activism question. i believe the president said that this judicial ruling was

activism. i strongly believe and have stated repeatedly that a decision that invalidated an act of congress, if that act of congress is on stuck -- is unconstitutional, it is not activism. would you agree? >> everyone believes that striking down an act of congress -- no one in this panel will tell you that it would be judicial activism that struck down a law that denies women the vote. we can alter the constitutional and realize that that is blatantly and caution national. a think these labels are thrown around to describe judges were tried to grapple with a very nuanced and constitutional issue. >> i agree with that.

>> thank you. >> i am sorry to have been laid. i had a budget committee. >> thank you, senator sessions. if i could enter into the record of the congressional record for december 23, 2009, in this section were senator hutchison of texas raise the constitutional point of order concerning the affordable health care act. in stating her constitutional point of order, she said that she objected to it being unconstitutional because it violated the 10th amendment ensure referred to the mandate that it would impose on texas to buy health insurance for teachers and employees. it was then considered and voted on by the senate on december 23, 2009 and the roll call vote was yes, sustaining the point of order and 60 votes against the point of order. so there was a constitutional

raised on the floor during the course of the debate. i would like to ask professor freed. the point raised by senator lee, the body of vegetables, that eat your vegetables point, i would like to ask you to comment on that. that is what i am hearing most of them. people say, if the government to require me to buy health insurance, can it require me to have a membership in a gym or eat vegetables? we have heard from professor dellinger on that point. please comment. >> we hear that quite a lot. it was put by judge vincent and i think it was put by professor barnett in terms of eating your vegetables. for reasons i set out in my testimony, that would be a violation of the fifth amendment and the 14th amendment, to force you to eat something. but to force you to pay for

something, i do not see why not. it may not be a good idea, but i do not see why it is unconstitutional. i suppose that under the food stamp program there are all kinds of regulations which distinguish between healthy and unhealthy foods. and if there are not, perhaps there ought to be. in the case, if there were, it would be no -- it would not be unconstitutional. you have a situation where you will get your money will lead to buy your broccoli. that is all we will give you money for. you can say, well, you do not need food stamps. a lot of people do not need food stamps. but some people do. those kinds of mandates are all

over the law. the mandate that you eat your vegetables, that you go to the gym, i would love to argue that case beyond constitutionality of that before any court in the country and before the supreme court. but on liberty crowns. >> first of all, my last question relates to sections of the testimony that may have been taken out of context and may have been and, -- may have been misconstrued. in the decision by the president's action that the bank is a necessary come improper and unconstitutional, you saying your concluding second-to-last paragraph, in short, just because the supreme court the first year, it does not mean that the constitution much to do anything you like. i want to make sure that i understand and give you an opportunity to state. if the law of the land is a

supreme court decision, whether i agree with it or not, whether i think it is constitutional or not, it is in fact the law the land and i have to follow it. correct? >> absolutely. let me expand. the point i'm trying to make is that much of the supreme court doctrine involves the resumption of constitutionality in which they defer to the congress's judgment beyond the scope of its own powers. president jackson says that, if the court will defer to was -- to us, then it is incumbent on us to say whether we think something is unnecessary and improper and a caution on -- and unconstitutional. >> but the law of the land, until the president acted, was clear. the decision of the court was

controlling, whether i happen to agree with it as an individual citizen. >> you are absolutely right. nothing in that statement was meant to apply to the contrary. >> may i add to that? >> i think there's a great difference between the congress deliberately passing a statute which the court said violates the constitution and refusing it stop -- refusing to pass a statute that the congress thinks is unconstitutional even though the court has said it is not unconstitutional. i think there's a big difference between those two things and i think that is what president jackson was talking about. i think that the renowned citizen of illinois abraham lincoln made much the same point in his debates in respect to

dread scott. there is a difference. professor bernau is dead right on that. you have an independent judgment. you have no leeway to violate with the court has said, but you're not bound to say that, if they say it is constitutional, i guess it must be. >> i also agree. they have an independent obligation to make constitutional decisions. i want to clarify the point where i think it may differ. we both agree that one can easily dismiss hypothetical stuff with laws requiring you to go to the gym and eat broccoli because they implied liberty interest that are invalid. but in terms of by commercial

products, i think by and does -- i disagree that the court need not go anywhere near having to hold requiring people to buy commercial products outside of the world find context that presents itself here where virtually everyone has the choice to participate in the health care market and $45 billion is transferred from people who are under injured two others and 94% of the long-term uninsured have access to the health care market and where congress is carrying a dysfunction. those elements were unlikely ever to be presented again and, therefore, i think that this is an unremarkable incentive to buy insurance and will not be predicted for a parade of horribles marching through the city of washington. >> i had a chance to ask

professor fried and professor dellinger about this, but i would like to give the others a shot at it. i asked about professor turley is comment about holding of the individual mandate. it is hard to see what is left of the federalism. let me ask you to consider this in your answers. it sounds to me like professor fried is arguing that there is no limits on congress's the power to require individuals to buy insurance. in the argument, it sounds like the distinction with regard to broccoli and other leafy vegetables is that you cannot require them to keep it. but you might be able to require them to buy it under the commerce clause. i would just like to ask

professor barnett and professor carver to consider this. the health care costs imposed by diabetes, which is a ticking time bomb in terms of our health care costs and especially with children who are obese, because it gets here is still and have a premature end to their lives as a result, i do not really understand how, if you concede that requiring the purchase of health insurance because of the costs on taxpayers of uncompensated care, that is different. if you look at the cost of diabetes and what that imposes on taxpayers and you say that you can require them to buy insurance you cannot requirement -- cannot require them to buy a membership or

fruits and vegetables. it sounds to me like you're saying you cannot make them eat them, but you can require them to buy them. it sounds very strange to me. would you care to respond? >> i think everyone agrees that the skyrocketing health care costs are more the chernobyl to the highest cost of -- are more controllable to the higher costs of health care than a higher cost of health insurance. your diabetes example is an excellent one. i assume that even walter would agree that they can require you to attend smoking cessation programs if you're a smoker or you few acquire these other unhealthy habits, i cannot imagine where they could not go at it. to address the larger point, that the system unique system -- we have so regulated and subsidized this market that

these people who decide to live their lives are becoming these sorts of free riders and it means that you'll always have an excuse to force people to engage in purchasing insurance the more the government is regulating the particular area. that is the point that judge vincent made yesterday. it has a very perverse bootstrapping effect. the more the fed government encroaches on markets and in local areas, it gives them greater power under the commerce clause to get to these people who are so-called free riders because of the subsidy issue. it literally build on itself such that the distinction between local and national is quite literally obliterated. >> professor barnett? >> yes. 2 professor turley is. -- charlie -- to professor isley's point, where there the end of federalism, it is based not only on states having

independent rights or powers, but based on congress having limited and enumerated powers. after this, there's no justice symbol limit then -- no justicible power. the only other point i would make is that professor fried has, in his testimony today, he has conceded the basic claim that, if congress can make you buy this, then they can make you buy anything. he has not conceded to the claim that they can make you eat anything that you buy, but, in his testimony, he says that they can make you buy a gym membership, but they cannot make a go to the gym. that may not be everything because they cannot make of the gym, but it is a whole heck of a lot. i think people would really be surprised that there is nothing

improper under the commerce clause. was the back to first principles. the power of congress to regulate commerce among the several states that takes place between wednesday and another goes all the way down to make you the individual person by a gym membership at your jim. that includes that power. that is a stretch. that is a stretch that would and the doctrine of enumerated powers. >> if i may ask one more question, then i would be glad to have other witnesses who would like to respond subject to the chairman's time limits. i want to as one specific question. you talked about the police power and the power of the state's relative to the federal government. i think some people are confused by the fact that states like my state requires an individual to drive -- who drive to buy liability insurance and why there is a different argument when it comes to the power of the federal government.

would you care to respond to that? >> obviously, the state can play and a -- can pay a paternalistic role. i am not an expert in car insurance laws, but they do not require you to ensure yourself. there require you to have insurance in case you run into somebody else. but unlike the the doberman, they might require you to -- but unlike the federal government, they may require you to ensure yourself the way they require you to wear a motorcycle helmet. >> no state requires you to buy a car and operate a car. if you choose to operate car, you have to buy insurance. this gets back to an earlier

line of questioning. it is absolutely garden variety regulation to tell you, too telesis and that, if you're going to do something, this is how you have to do it. that is something that the government does. that is a fundamentally different proposition than telling the citizen that they must do this thing. not if they're going to do it, this is how you do it, but they must do the thing itself. that is the line that this bill crosses that congress, and the commerce power, has never crossed before. >> it is similar to the auto liability insurance. if you are going to drive some of the state says you have to have liability insurance. here it's as, if you're going to use health care, you need to have health care insurance. this is a product that everyone will use and no one can be assured that there will not one of the hospital. then it seems quite similar. i may say that i will never use a flat screen tv and you hold it to me. you do not have to buy

. i do not agree with -- you do not have to buy me one. i do not agree that holding up this legislation would give congress the power to force anyone to do anything. since 1944, the court has upheld that the law is about a commercial transaction. >> professor dill wonder, the point those tried to make and perhaps i did not make it very well as a professor bollinger, the point that i was trying to make and perhaps a did not make it very well -- prof. dillenger, the point that i was trying to make and perhaps i did not make it well was that,

the power that the federal government is different than the power of the state. >> i wholly agree. there is nothing in the defense of the constitutionality of this bill that calls into question the decisions like united states vs. lopez or the supreme court held that, when congress tries to regulate local crime because of its supposed effects on commerce, that the court will draw a line there because it is a regulation that is local and not economic. here is a regulation that is part and parcel of national economic regulation and therefore does call into question those limits. >> senator blumenthal, you have the last question. >> thank you. i will try to ask this question very simply and it may be a follow-up to the other line of questioning. tax or penalty, there's a lot of

discussion outside this room and almost none here that i can recall. is there a tax or penalty? does it make a difference? >> if the congress had frankly enacted a tax on everybody, which they would then remit to those people who bought private health insurance, it is hard for me to imagine that we would be having this discussion. but congress did not. it did not do so for political reasons. it did not want to have this viewed as a tax. and i think there are now paying the price in the fact that they have to confront this discussion. it was not, for better or worse,

put as a tax, although the penalty is something that is collected by the internal revenue service, i believe. but it is not viewed -- it was not enacted as a tax. if it had been, the power to tax for the general welfare and spent for the general welfare is pretty puny. punary.retty q nour >> i do want to agree with everything he just said about that. that is my assessment as well. the only thing i would add is that, if you tried to justify what was done as a tax, essentially, here is the sense in which it does not matter. again, it would be an unprecedented proposition that congress can require american

citizens to do whatever it chooses to require and then enacted monetary penalty under its tax power to penalize them for not doing that. that is really no different than the debate we just had for two hours, over whether this exceeds congress's power or not. whether you call it a tax or a fine, it still gives congress the limited power to order or command the citizens to do anything and that has never been done before. the tax power has never been used for that before. that is the only thing that i would add to what professor fried has said. >> it is relevant in the following sense. there is an impression out there that the law is that federal agents arrived in helicopters and ninja costumes and shut down your bedroom door and drag you out at the point of bayonets to an insurance agency. for those who are not otherwise exempted and when they're filling out their federal income-tax returns, if you are

not maintaining minimum coverage, you have to pay an additional two 0.5% in social -- and additional 2.5% in social security. >> thank you very much to the panel that has joined as. this has been an excellent hearing. it is an honor that you'll join us for this important consideration of this major legislation. many organizations have submitted testimony and will be added to the record. without objection, there will be placed in the record. it is possible that written questions may come to you in the

next week or two weeks. this meeting stands adjourned. >> senator, as a citizen and not a subject, may i say that, once a the senate has shown and -- what the senate has shown an with this committee has shown is this government inaction and i am proud to participate in it. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> both chambers of congress are in session next week. the senate returns tomorrow at

2:00 p.m. eastern to continue work on the measure that reauthorized is the federal aviation administration. that bill aims to modernize the air traffic control system while improving the safety and availability of air transportation in the u.s.. watch the senate live on c-span 2. and the house returns tuesday at 2:00 p.m. eastern for legislative business. among the bills to be debated is a measure that would renew some expiring provisions of the counter terrorism law known as the patriot act. that legislation comes to the floor tuesday afternoon. follow the house live on c-span. >> the whole environment the politics had come apart. it had become polluted and destroyed and violent. >> "q&a" tonight, mick colette on cuba h. humphrey. >> the purpose to do the document do was to show a different side of it.

everyone remembers humphrey as someone who was licking lyndon johnson's boots all the time and did not have a mind of his own. people did not understand the pressures that he was on. -- the pressure's the u.n.'s under -- the pressures that he was under. >> "q&a" on c-span. >> chairman ben bernanke said thursday that the u.s. economy should grow at a more rapid pace this year. but repeated as -- but he repeated his previous admonition that it would take several years before the unemployment rate falls to starkly normal levels. speaking of the national press club, mr. bernanke also warned about the growing u.s. debt and said the federal budget is on un "unsustainable path." this is about an hour. >> [applause] >> thank you. thank you and good afternoon. i am very pleased to have the

chance to be here at the national press club. i'm especially glad to have a conversation with journalists, who write about economic policy from our nation's capital. your job isn't easy, but it is essential. virtually every american is affected by developments in the economics and economic policy. contemporary economic issues are highly complex, and few non specialists have the time or background to master these issues on their own. the public has to rely on diligent reporting, clear thinking, and lucid writing. reporters are determined to go beyond bumper stickers and sound bites to help people understand what they need to know, make the decisions in their personal finances and theirthe polls -- and at the polls. i know that journalists take these responsibilities seriously. thank you for what you do. today, i am going to provide a brief update on the economy and are expected to evolev in the near term.

then i will turn to implications for monetary policy. some of the daunting fiscal challenges that we face as a nation. the economic recovery that began in the middle of 2009 appears to have strengthened in recent months. today, growth has not been fast enough to bring about labor market. the early phase of the recovery in the second half of 2009 and early 2010 was largely attributable to the stabilization of the financial system, the effects of expansion or monetary and fiscal policies, and a strong boost to production from businesses are rebuilding their depleted inventories. economic growth slowed significantly last spring as the significant of these events diminished, and as europe's debt problem roiled global financial markets. more recently, however, we have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold. notably, we learned last week that households increased their spending in the fourth quarter

in real terms at an annual rate of more than 4%. although a significant portion of this pickup reflected strong sales in motor vehicles, the recent gains in consumer spending look to have been broadbased. business investment and new equipment and software also grew robustly over most of last year, as firms replace aging equipment and as demand for products and services increased. in contrast, in the housing sector, the overhang of bacon and foreclosed homes continues to weigh heavily on -- vacant and closed homes continues to weigh heavily on a construction and pricing. accommodative monetary policy and more supportive financial conditions, including an apparent increase in the willingness of banks to make loans, seems to lead to a more rapid pace of economic recovery in 2011 than we saw last year. while indicators of spending and production have been

encouraging, the job market has improved only slowly. following the loss of about 8.5 million jobs in 2008 and 2009, private-sector employment showed gains in 2010. these gains were barely sufficient to accommodate the inflow of recent graduates and other new entrants to the labor force, and, therefore, not enough to significantly reduce the overall unemployment rate. data provides grounds for optimism on the employment front. initial claims have been trending down. indicators of job openings at firms hiring -- showed that firms' hiring plans have improved. with reporters -- employers still reluctant to add to payrolls, it will be several years before the current limit rate returns to normal level. until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly establish. on inflation, we have seen

significant increases in the highly visible prices, notably gasoline. prices of commodities have risen lately, largely as a result of strong demand from fast-growing, emerging-market economies, coupled, in some cases, with constraints on supply. nevertheless, overall inflation remains quite low. over the 12 months ending in december, prices for all goods and services purchased by households increased by only 1.2%, down from 2.4% over the prior 12 months. to assess the underlying trends in inflation, economists follow a number of measures, including core inflation, which excludes the more volatile food and energy components, and can be a better predictor of where overall inflation is headed. core inflation was only 0.7% in 2010, compared with a round 2.5% in 2007, the year -- around 2.5% in 2007, the year before the recession began.

the downward trends in wage and price inflation are not surprising, given the substantial slack in the economy. in sum, although economic growth will probably increase this year, we expect the current limit rate to remain stubbornly above and inflation to remain persistently below the levels that the federal reserve policymakers have judged to be consistent over the longer term with their mandate from the congress to foster maximum employment and price stability. under such conditions, the federal reserve would typically ease monetary policy by reducing the target for short-term policy interest rates, the fed funds rate. however, the target range has been near zero since december, 2008, and the federal reserve has indicated that economic conditions are likely to warrant an exceptionally-low target rate for an extended period.

as a result, for the past the of years, we have been using alternative tools to provide -- two years, we have been using alternative tools to provide monetary accommodation. we have further ease monetary conditions by purchasing long- term securities on the securities market. we purchased almost $1.70 trillion in -- term treasury and agency -- longer-term treasury and agency-backed mortgages and securities. we want to keep the size of our security holdings roughly constant. we began to signal to financial markets that we were considering providing additional monetary policy accommodation by considering further asset purchases.

>> in early november, we announced a plan to purchase and and that -- an additional $600 billion in long-term securities this year. the result is that suppository -- depository institutions hold high levels of reserve balances. although large-scale purchases of longer-term securities are more familiar tool than targeting the federal funds rates, the two types of policies affect the economy similarly. conventional monetary policy works by lowering market expectations for the short-term interest rates, which contributes to an easing in broader financial conditions. these changes, by reducing borrowing costs and recent asset prices, bolster household and business spending, and thus increase economic and activity. by comparison, the federal reserve purchases of longer-term securities have not affected interest rates, which remain close to zero, but instead, put

downward pressure directly on -- but, instead, put downward pressure directly on interest rates. these actions increase spending by households and businesses through, essentially, the same channels as conventional monetary policy, thereby strengthening the economic recovery. a wide range of market indicators supports the view that the federal reserve security purchases have been effective at easing financial conditions. for example, since august, when we announce our policy of reinvesting in maturing securities and signaled that we were considering additional purchases, equity prices have risen significantly. volatility has fallen. corporate bond spreads have narrowed. inflation compensation has risen from low to more normal levels. yields on five-to-10 year securities initially declined as a market price in perspective -- prospective purchases. these rose as investors became more optimistic about growth and traders still back expectations of future securities purchases -- scaled back expectations of future

securities purchases. this is what you would expect to see when monetary policy becomes more accommodative. these developments are remarkably similar to those that occurred during the months following our march, 2009, announcement of significant expansion of securities purchases. the fact that financial markets responded in very similar ways to each of these policy actions lends credence to the views that these had the effect on financial markets and are thereby providing significant support to job creation and the economy. my colleagues and i have said that we will review the asset- purchase program regularly in light of the incoming information and will adjust it as needed in order to promote maximum employment and stable prices.

in particular, it bears emphasizing that we have the necessary tools to effectively exit from the asset-purchase program at the appropriate time. in particular, our ability to pay interest on reserve balances has -- held by the federal reserve will allow us to put pressure on short-term market interest rates and tighten monetary policy when required, even of bank reserves remain high. we have developed additional tools that will allow us to drain or below book -- demobilize bank reserves when conditions warrant. if needed, we could tighten policy by redeeming or selling securities that we hold. let me turn to fiscal policy. fiscal policy makers also face significant challenges. the federal budget deficit has expanded to an average of more than 9% of gross domestic product over the past two years, up from an average of about 2% of gdp. two years prior to the recession. the extraordinarily wide deficit reflects the actions

that the administration and congress took to ease the recession and steady financial markets. even after economic and financial conditions return to normal, the federal budget will remain on an unsustainable path with the budget gap becoming increasingly large over time, unless congress enacts a given changes in fiscal programs. for example, under plausible assumptions about how fiscal policies might evolve in the absence of major legislative changes, the cbo projects that the budget deficit will fall from about 9% of gdp to roughly 5% by 2015. it will rise to about 6.5% of gdp by the end of the decade. after that, the cbo projects the budget outlook to deteriorate more rapidly, with federal debt held by the public reaching almost 90% of gdp by 2020 and almost 150% of gdp by 2030, up from about 60% at the end of the fiscal year 2010.

the long term this will challenges confronting the nation are especially daunting because they are most of the product a powerful, underlying trends, not short-term, temporary factors. two most important driving force is to the federal budget are the aging of the u.s. population and rapidly rising health care costs. the cbo projects that federal spending for health care programs, including medicare, medicaid, and subsidies to purchase health insurance, will roughly double as a percentage of gdp over the next 25 years. the ability to control health- care costs, while still providing high-quality care to those who need it, will be critical for bringing the federal budget on to a more sustainable path. the retirement of the baby boom generation will also strained social security, at the number of workers paying taxes into the system rise more slowly than the number of people currently receiving benefits. by 2030, when most of the baby

boomers will have retired, the ratio will decline to about 3. overall, the projected fiscal crisis associated with social security is considerably smaller than the pressure -- crisis associate with the federal health-care program, but still it is notable. it does not account for the likely adverse economics of high debt and deficit. if government debt and deficits were to grow up the pace envisioned, the economic and financial effects would be severe. sustained, high rates of government borrowing to bring funds -- could bring funds away from private investment and increasing our debt to foreigners, with adverse affects on u.s. income, output, and standards of living. moreover, it could diminished investor confidence. it could lead to sharply-rising

interest rates on government debt and to larger financial turmoil. high interest rates would cause debt service payments to grow even faster, calling -- causing a further increases and making a just and more difficult. how much adjustment is needed to restore fiscal stability? to help into this question, it is useful to apply the concept of the primary budget deficit, which is the government's budget deficit, excluding interest payments on the national debt. to stabilize the ratio of federal debt to gdp, a convenient benchmark for assessing the fiscal stability, the primary budget deficit must be reduced to about zero. under the cbo projection that i noted earlier, the primary budget deficit is set to be 2% of gdp in 2015, then to rise to almost 3% of gdp in 2020, and 6% of gdp in 2030. these projections provide a gauge of the adjustments that

will be necessary to achieve fiscal sustainability. but the budget on a sustainable trajectory, policy reductions on spending and increases in revenue must be made. by definition, the unsustainable trajectories of deficit and debt that the ceo outlines cannot actually happen. creditors would never be willing to lend to a government whose debt, relative to national income, is rising without limit. economists -- one economist described this type of situation by saying to that if something cannot go on forever, it will stop -- saying, "if something cannot go on forever, it will stop." [laughter] the question is whether these adjustments will take place through a careful and collaborative process that raises priorities and its people adequate time to adjust, or whether the needed fiscal

adjustments will be a rapid and painful response to a living or actual financial crisis. acting now to develop a credible program to reduce future deficits would not only enhance -- it would also yield substantial benefits in terms of increased consumer and business confidence. plans recently put forward by the president's national commission on fiscal responsibility and reform and other prominent groups provide a useful starting point for a much-needed national conversation although these proposals differ on many details, demonstrate that realistic solutions for our fiscal problems are available. of course, economic growth is affected not only by the levels of taxes and spending, but also by their composition and structure. i hope that, in addressing our long-term fiscal challenges,

the congress and administration will seek reforms to the government's tax policies and spending priorities, that will serve not only to reduce the deficit, but also to enhance the long-term growth potential of our economy. for example, by reducing dense -- disincentives to work. by promoting research and development and providing necessary public infrastructure. our nation cannot reasonably expect to grow its way out of our fiscal imbalances, but a more productive economy will ease the trade offs that we face. thank you for your attention. i look forward to taking your questions. [applause] >> thank you, mr. chairman. first of all, we're extremely grateful for your decision to return to the national press club. we think it is very important, as a journalism organization, that we have transparency in government.

it is important to give the american public the opportunity to hear your thinking. in that regard, these discussions also occur behind the scenes at the fed with your colleagues. there was a notation from a video conference of october 15 where it said -- and i love how some of the official language is displayed -- "participants discussed whether it might be useful for the chairman to hold occasional press briefings to provide more detailed information to the public regarding the committee's the session -- assessment of the a look and decision making included in the committee's short post-meeting stickman's." it seems that that is an official way of saying, "should we be holding more press conferences? should we be going to places like the national press club?" your colleagues in europe hold regular post conference -- press coverage is. what is your approach to holding regular press

conferences, as opposed to the piecemeal approach? >> let me say first that i think transparency is very important because we live in a democracy. the public's needs to know what we're doing and why we're doing it. our policies were better if markets anticipate and understand the actions we're taking and what is likely to cause changes. the federal reserve has come to an enormous difference. you may not be aware that, in 1994, the fed did not even announce when it changed the federal funds rate target. now, we have an after-meeting state and with the votes. it is unlikely any central bank -- it is unlike any other central bank. we release full transcript with a five-year lag. we have extensive mechanism. central transparent bank and we have made a lot of

progress on that front. on press conferences -- it has been a difficult decision. on the one hand, real time transparency is very important and valuable. on the other, we did not want to create unnecessary uncertainty and unnecessary volatility in financial markets by saying things that may be misinterpreted if they are too ad hoc. that being said, i put a lot of value or transparency. we have moved substantially in that direction. we're looking -- we have a committee, headed by richard janet yellen, which is looking at the whole range of communications -- and vice chair janet yellen, which is looking at the whole range of communications. >> can you update us on where that stands? how far off in the future a

decision might come on that? >> not too far. [laughter] the committee is working on it. i think they will have some recommendations pretty soon. whatever comes out, there will certainly be additional steps to try to make is more transparent and more clear about what we're doing. >> they will share those with us? >> absolutely. >> the next question is the personal side, coming from the audience. what other three -- you do not have to do three -- what of the most frustrating things about being the chairman of the fed? is it that the world is hanging on every raised eyebrow and the possibility of an overreaction in the financial markets, i.e., "irrational exuberance" as your predecessor had to deal with way back when? >> i think i want to answer that question seriously. this is a very challenging job and we face a very challenging period. we have had enormous problems -- issues with the financial markets, with financial stability. we have had to address those. i believe we address them adequately in terms of stabilizing the system.

now we have to implement a new set of laws and rules to ensure that come in the future, we do not have this kind of instability again -- that, in the future, we do not have this kind of instability again. the economy is growing more quickly, but still in a deep hole, still very far from where we would like to be. we need to manage policy, both monetary and fiscal, to try to bring this back to getting people back to work in the way that this incident was stability and low inflation -- that is consistent with stability and low inflation. i have a great staff, great colleagues on the fomc. in that respect, it is tremendously challenging and interesting from my perspective. it is frustrating because it takes a long time. it takes awhile to make the kind of progress in the economy that we would like to make. >> from today's headlines -- a question from the audience -- do believe that the political unrest, especially in tunisia and egypt, is linked to higher

food prices, which the questioner says, result from the fed's large-scale asset purchases? >> i will not address the first part of that. i do not have much insight into the sources of the unrest. i would guess it -- thinking about egypt, for example -- there is a lot going on there. issues about democracy representation, the broader economy. i am not sure i accept the premise of the first half of the question. i will talk about food prices in general in the fed policies. when you talk about food prices or commodity prices, you talk about supply and demand. in some cases, in food, for civil, there are some constraints on supply. there have been -- for example, there are some constraints on supply. there have been -- we have a two-speed recovery or industrial economies are growing relatively slowly.

industrial economies are just now coming back doubled output and demand that we were in before the crisis three years ago -- coming back to the level of output and demand that we were in before the crisis three years ago. monetaryal reserve's policy is aimed at stabilizing the united states economy. in the united states, i do not think that anybody can argue that our economy is overheating or growing too quickly. we're using our policy to address stability in the united states. the question is, where is that demand coming from? as i said, mostly from emerging markets, which are growing quickly for a couple of reasons. when this is the fact that there has been a long-term trend for emerging markets -- one is just the fact that there has been a long-term trend for emerging markets to develop very quickly. that has been positive because it means that millions of people who were living in pop " -- poverty are moving to a middle-class standard of living.

as people's lives become more sophisticated, the demand for food, energy, and the like grows. that is the primary, long-term factor affecting the real price of commodities and food. in some cases, some of the emerging markets are facing inflationary pressures because their own economies are growing in some cases, some of the emerging markets are facing inflationary pressures because their own economies are growing perhaps even faster than their capacity. that is, their policies have not been such to keep growth and capacity balanced, which means that inflationary pressures are rising from those emerging markets. i'd think it is entirely unfair to attribute excess demand pressures in the emerging markets to u.s. monetary policy, because emerging markets have all of the food they need to address excess demand in those countries. for example, they can use monetary policy of the road.

they can adjust paris -- there exchange rate, which is a big they have been reluctant to do in some cases -- they can adjust their exchange rate, which is something they have been reluctant to do in some cases. the continued growth will put pressure on the prices of commodities, including food, around the world. one final comment on why federal reserve policy cannot be primarily responsible is just that -- you ask about the middle east. food in egypt is priced in the egyptian pounds, not dollars. if the dollar is weaker, the egyptian pound is stronger. clearly, what is happening is not a dollar-effect. what is happening is a growth- defect, primarily in the emerging markets, greeting this tremendous demand for commodities -- creating this demand for commodities. >> to leave the causation question aside for the moment,

as you look at events unfold christ -- across the world, you see the price of oil rising. how does that present arrested u.s. economy as you try to do your job -- a risk to the u.s. economy as you try to do your job? >> there are two kinds of risk. the higher oil prices are a kind of tax. we are trying to stimulate the economy. we are trying to get consumers to be more confident, be able to spend more, and to help put people back to work. the extent that part of their income gains are drained away by higher gas prices, for some -- for example, that is going to be an negative. it is definitely a negative from the perspective of consumers and household budgets and economic growth. the other place where it is an issue, and we're watching it very carefully, not was then

that prices are coming -- not withstanding that prices are increasing because of the global economy, we also have to watch inflation. right now, inflation overall, including food and energy prices, is quite low in the united states, lower than any of the other industrial countries, not to mention industrial -- emerging-market economies. higher energy prices add to inflation because they raise the price of oil and gasoline and the like. if they begin to feed into their prices, -- other prices like wages, goods, services, then he might get a broader inflation problem. we're absolutely determined to do whatever necessary to keep inflation low and stable. in that respect, that is one challenge we have to address.

>> in light -- in your speech, you talked about the bond-buying program. there was a time when "qe2" was thought to refer to an ocean liner. how do you see the process of helping the u.s. economy filtering through various sectors of the economy as you go about engaging in this process? >> first come to be very clear, the purpose of monetary policy -- first, to be very clear, the purpose of monetary policy is not to increase stock prices, perce, but to put people back to work and create price stability. the way price stability works is the interest rates and asset prices. by changing those prices and the financial markets, that is how it works. i think are taking these securities of the market and pushing investors into alternative assets, we have led

to higher stock prices and lower stock market volatility. by the way, the last time we did this come in march from a dozen 9, it was about a week before the absolute minimum -- the last time we did this was in march, 2009, about a week before the absolute minimum. the policy is affecting the stock market in two ways. one is by lowering, essentially, long-term yields and forcing investors into alternative assets. but, also, because as this process has been working through -- as we have seen both in the earlier abbasid -- episode and this time, beginning the progress in august and now we are seeing a stronger economy a few months later -- this is

incorporated into expectations about future economic activity and it causes markets to rise as well. it is a virtual circle in that respect. as i described in my remarks, the whole idea is to move interest rates -- asset prices in the direction that will stimulate more economic activity, but more people back to work, and get rid of the deflation, creating a more stable price environment. if you look at developments, i think things have moved distinctly in the right direction. >> and then, of course, the extension of that is that people want to know what you look at to decide whether to extend the program. is there a qe3, qe4, etc.? what kind of things to you look at to decide where to go from here? >> well, first of all, as we have noted in our statements and commentary, we are reviewing the program on a regular basis. we want to make sure it is

working as intended. we do not want it to have adverse side effects. to answer your question more generally, the approach is more or less the same we always use or monetary policy. how we make decisions about the fed funds rate? we do our best to create an outlook for the economy. where is employment, output, inflation going? given the level of monetary accommodation we have now, it is the economy on a trajectory that will give us the best possible outcome in the medium- term? if not a -- a condition looks to be very low or deflation risk is there -- if inflation looks to be very low or deflationary risk is there, that may require additional stimulus. if the economy starts growing very quickly, that would be a reason for us to scale back. by looking at the a look and tried to gauge whether the economy is growing at -- outlook and trying to gauge whether the economy is growing, we look at the outlook and will either

provide more stimulus as necessary or scale back or stay with what we have. it is really not a simple answer. we have to do the best we can in terms of our forecasting models to try to assess where the economy is headed. >> at the same time, perhaps the most politically-charged question, that of the unemployment situation, you have said you think it will be a matter of years before the unemployment rate goes down to a level that is considered to be more normal. is that something you look at as you decide whether to extend or not? >> certainly. half of our mandate is maximum employment. we want to get labor markets working better if we can. it is very important. not only is 9.5% unemployment a very large waste of human

resources in a very taxing burden on many families around the country, but about 45% of all of the unemployed have been employed for six months or more. if they do not find work in the next six months or year or two years, if they find work again in the future, it could well be at a reduced wage or part-time. people who are not employed for a long time lose their skills, connections, knowledge of their line of work. the consequences could last a very long time. it is very important to put people back to work as quickly as it can. it is going to take a while. the very nature of this is that the economy has to grow about 2.5%, real terms, just to accommodate people coming into

the labor force. in order to keep the unemployment rate constant, we need to 0.5% growth. in august, when we were thinking about this -- we need 2.5% growth. in august, when we were thinking about this, the rate was about 2%. we are looking forward into 2011 and thinking it will rise above 2.5%. therefore, we would expect to see unemployment declining over time. it is not going to be as fast as we would like, but there are a lot of indicators, including -- we have is once again. new claims for unemployment insurance, which is a pretty good number. looking at the whole range of statistics on the labor market, the sense is that employers are becoming more willing to hire. we were stark -- will start seeing some lower unemployment rates pretty soon. >> another question from the audience, talking about the same program. it says, "he announced the purchase is before the congress passed the tax -- you announce the purchases before the congress passed that. have you any consideration of

ending your latest purchase program early? -- early?" >> we tried to base our decision on where we should be and whether we should do more or less on the outlook. in this case, when we were making our projections, we had already taken into account most of what was in the package. we had anticipated that the bush tax cuts would most likely be extended, at least in large part. we anticipated that the insurance would be extended, at least in large part. the part of the package that was surprising in creates additional stimulus is the payroll tax rebate. we factor that into our analysis. on the margin, we will respond to the way that affects the outlook. it was not that we were surprised by this package. we expected much of it to

happen and it was built into our forecast when we made our policy positions. >> you referenced the jobless claims numbers. obviously, data flows on nearly a daily basis. what do you think is the single-biggest bank, if there is one, holding back companies from hiring or increasing their hiring right now? >> there are a lot of factors. it is not simple. certainly, one issue -- perhaps one very key issue -- is uncertainty about how much demand there is going to be. remarkably, at the beginning of the downturn, firms laid off large numbers of workers and they were able, through very significant productivity gains, to meet existing demand with many fewer workers. only as demand has begun to grow beyond a level where it was when the recession began as their -- has there been any

pressure on firms to add to their work force. we're now seeing an increase in sales. we have already exhausted the obvious productivity gains. it is time now to start bringing on new workers. uncertainty about the direction and sustainability of the recovery is a key factor. it explains why firms have been using temporary workers. they can bring them on. when the economy or if the economy weakens, they can let them go. it will be really good sign when we start seeing temporary jobs been converted into permanent jobs. i am hopeful that is where we're heading and then next couple quarters. but you have been exhorting congress and the federal government to attack this fiscal -- >> you have been exhorting congress and the federal government to attack this fiscal situation sooner rather than later. what is the risk that the financial markets will force a solution before the lawmakers and administration do it themselves?

them that it is really impossible to give any projection right now -- >> it is really impossible to give any protection right now. the market is behaving as though it thinks these problems will be addressed. the u.s. government can borrow for longer periods of time at reasonable interest rates. evidently, investors believe that the u.s. economy is strong enough and our political system able enough to deliver stability in our budget situation over the medium term. in one respect, they are certainly right. this is a very wealthy, productive economy. there is no sense that we are economically unable to find solutions to these problems. we are which -- rich enough. we have enough resources to find solutions. some of the commissions have put out some plausible possibilities. i am not endorsing any particular one, but there are various ways to go about doing

this without ripping apart our social safety net and without radically raising taxes, etc. it can be done. the question is, do we have the political capacity, the political will? i think that is what the markets will be following. in europe, it has been less a question of -- everyone believe that europe has the resources to meet the sovereign debt claims. it has been a question of, will the country's air -- countries there demonstrate that they have the political will to solve these problems? i believe they do. it is the political uncertainty which is the key issue for the markets, not so much the economic capacity. >> have you seen any evidence in the recent past that there is political will of that magnitude, to attack the problem of this size? >> it is typical tuesday. i think there is a lot of

interest. there have been a number -- it is difficult to say. members of the press have pressed for this to be addressed. there have been clearly -- has been considerable interest in the public in trying to address these questions. i am not a political prognosticator. i would not try to make an assessment. i know there is an increasing understanding among the residents of congress and the administration and the public that these are important issues and that there is only so far we can kick the can down the road. we have to address this. the sooner we do it, the better for our economy. >> there are more near-term issues. one questioner says, "we know that you make monetary policy, not fiscal policy." who does the fed had enough options left to make a difference if a government shutdown cascaded -- does the

fed had enough options left to make a difference if a government shutdown cascaded down to the public? >> what is being contemplated is not a shutdown of the government, but a refusal to ratify the debt limit extension. this is a very serious matter. under current law, if the debt limit is not extended for a time, -- for a time, the treasury has resources it can use to make payments on the national debt. beyond a certain public, it would not have those resources. the united states could, conceivably, but remotely, be positioned to default on its debt. the implications of that for our financial systems, fiscal policy, economy would be catastrophic. so, i would very much urge congress not to focus on the

debt limit as being the guardianship in this discussion, but rather to address directly the spending and tax issues that we all have to deal with if we're going to make problems on this -- progress on this fiscal situation. the debt limit itself is something where we need to be very careful in that we do not create any impression that the united states is not going to pay its bills -- creditors the interest on the national debt. again, that would be a very bad outcome. >> we talked earlier about some of the legislation that is percolating on capitol hill. can you talk about where the policy stands now by virtue of the dodd-frank legislation and why you think some of the proposed legislation is not the right thing to do? >> the dodd-frank legislation, with the cooperation and a lot of other fed initiatives, has basically created a completely transparent fed, as far as the

financials are concerned. when people say audit the fed, what they mean is open the fed's books. currently, every program that we initiated during the crisis has been completely open to the gao. all the information has been provided to the public. on december 1, we put out a complete record of all 21,000 loans that we made during the crisis. they were paid back with interest. we explain what the program was, the criteria, who was the bar, what was the collateral, when was it repaid? the information was all provided. we provide we the statements of our balance sheet. we have an outside auditor who audits are books and publishes the information every year. every action in the fed's financial dealings is wide open. we have invited the gao to come in and look at all of our activities, both the

extraordinary activities of the crisis and all of our ongoing financial activities. there is no sense in which the fed has secret financial dealings. every asset, every transaction is open to the public and will be open to the public. i have committed to that transparency. now, what "audit the fed" means in the language it has been used by some members of congress is not about the financials of the fed. rather it is about "auditing monetary policy," which means that the deal would be assigned by the congress to look at monetary policy decisions and to take the materials prepared for the meetings, to depose members, to provide evaluation to the congress of a very short horizons of whether or not the fed is making the right policy decisions. this is very much different from what most people think about when they think about an audit.

what this is a very significant challenge to the notion that, while the congress has every right to set the goals and objectives of the federal reserve, it should be up to the fed to make monetary policy decisions independently of short-term political influences and with an eye toward the long term objectives of the economy. what the kind of legislation would do has nothing to do with financials. it would be very much a significant step toward directing congressional oversight of the decision process itself. personally, i think that would be very -- a very bad outcome. we can see a round the world that there is a great deal of evidence, -- around the world that there is a great deal of evidence, that central banks are independent in their decision making, and they have a clear mandate, providing a better outlook than a commercial -- a central bank that is dictated by short-term

political considerations. that is an extremely porn -- important principle. >> is this helping to unite you with your colleagues on the federal reserve board at all? >> on this issue, every member of the federal reserve, both current and past, would be extremely united. this is a fundamental principle of our central banking. if the federal reserve becomes an arm of congress in making monetary-policy decisions, i do think that would lead to much worse outcomes in terms of inflation and stability in the u.s. economy. >> here is a banking question. bankers say that, while leaders and regulators are telling them to lend more at the bank level, the examiners and regulators on the day today basis -- on a day-to-day basis are less concerned about lending and more concerned with the daily health of the bank.

what are you doing about this? >> we have been focused on this issue for quite a long time. there is a problem here. we do not want banks to make bad loans. we did not want to make loans that are not going to get paid back. we want them to make sound loans. when you have a credit or the borrower asking for credit, it is in the interest of the bank, the borrower, and the whole economy for that loan to get made. we need to find the appropriate balance between loans that are appropriately prudent and save on one hand, but -- safe on one hand, but can also allow those who are credit or the to get credit. we have been providing extensive -- were credit or the to get credit. we have and providing extensive guidance -- we have been providing extensive guidance. we have had training classes, phone-ins, meetings across the

country with bankers and small businesses. we have put an enormous amount of institutional resources into trying to find that right balance. i think we have made significant progress. as we move into 2011 and beyond, i expect we will see increasing willingness of banks to lend. if there are good loans to be made, it is very clear that banks should be allowed to make them. we will, in fact, encourage them to make them. >> just a couple housekeeping matters -- we're almost out of time. we have a couple of important matters to take care of. futures speakers -- harry shearer will discuss media myths on march 14. we might try to get him to do a few voices for us. the boys of taxation, does shulman -- the voice of taxation, doug shulman, will be here with us at the meeting

after that. i want to present you with the npc mug. perhaps you will share that with a loved one. [laughter] we will be watching ebay inc. to make sure it does not show up there. you have been so kind to join us on multiple occasions. we want to present you with the highly-coveted national press club baseball cap. [applause] our last question -- i have visited having you here today is a big deal for us, for me -- i have been covering business and economic news for many years. it is a little bit like the super bowl for business journalists. the super bowl is this weekend. do you watch football? do you have a favorite in the game between pittsburgh and green bay, which will be in

dallas? [laughter] >> i definitely do watch football and baseball season is not around. i'm looking forward to the game. the redskins did not make it this year, once again, unfortunately, so i will be studiously objective. one of the teams has a quarterback named ben. [laughter] i am looking forward to the game. i think g.d.p. will drop to nothing during that three-hour span. [laughter] >> thank you, mr. chairman. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> for more immigration about join the club or how to acquire a copy of today's program, please go to our website.

thank you, we are adjourned. >> the brookings institution hosted discussion titled immigration policy, highly skilled workers and u.s. competitiveness and innovation. is a look at immigration policies toward the highly skilled and the changes needed to capture the benefits of a high skilled immigrant workforce. live coverage begins at 9:00 a.m. eastern on c-span to. -- on c-span2." >> the whole environment of politics had come faapart. >> tonight, hubert h. humphrey, the art of the possible. >> everyone is remembers humphrey as someone who is

leading johnson's boats all the time and had no blood of his own. >> "q&a", tonight at 8:00 on c- span. >> friday at the white house, president obama and canadian prime minister stephen harper met to discuss a number of issues, including energy, border security, and trade between their countries. after the meeting, the two leaders spoke with reporters. this is about 25 minutes. >> ladies and gentlemen, the president of the united states, accompanied by the prime minister of canada. >> good afternoon, everyone. please be seated. i am very pleased to be welcoming my great friend and partner, prime minister stephen harper, back to the white house to reaffirm our extraordinary friendship and cooperation between the united states and canada. i would like to talk a bit about

what we accomplished today and then address the situation is unfolding in egypt. the united states and canada are not simply allies, not simply neighbors. we are woven together like perhaps no other two countries in the world. we are bound together by our society's, all our economies, by our families. that reminds me, my brother-in- law's birthday is today. i need to call him. in our many meetings today, i have come to value stevens candor and his focus on getting results, both when it comes to our two countries and to meeting global challenges. i have not had the pleasure of seeing him and his band jam to the rolling stones, but i and japan have become a sensation on youtube. we have had a very successful day. our focus has been on how we

create jobs and economic growth on both sides of the border. canada is our largest trading partner and the top destination for american exports, supporting 1.7 million jobs here. today we have agreed to several important steps to increase trade, improve our competitiveness and create jobs for both our people. first we agreed to a new vision for managing our share responsibilities, not just at the border but beyond the border. that means working more closely to improve border security with better screening, new technologies, and information sharing among law enforcement, as well as identifying opportunities. it means finding new ways to improve the free flow of goods and people. with over $1 billion in trade crossing the border every single day, smarter border management is key to our competitiveness, job creation, and my goal of doubling u.s. exports. mr. prime minister, i thank you for your leadership and

commitment to reaching this agreement. we have directed our teams to develop an action plan to move forward quickly. i am confident that we will get this done so that are shared border enhances our share prosperity. second, we are launching a new effort to get rid of outdated regulations that stifle trade in job creation. we need to obviously strike the right balance while protecting our public health and safety and making it easier and less expensive for americans and canadians to trade and do business, for example in the auto industry. a new council we are creating today will help make that happen. third, we discussed a wide range of ways to promote trade and investment, from clean energy partnerships to the steps canada can take to strengthen intellectual property rights. we discussed a range of common security challenges, including afghanistan, where our forces service and sacrifice together. to that want to thank prime

minister harper for canada's decision to shift -- its commitment to focus on training afghan forces. the transition to afghan lead for afghan security will begin this year and canada's contribution will be critical to achieving that mission in keeping open country safe. finally we discussed our shared commitment to progress with our partners in the americas, including greater security cooperation. i appreciated the prime minister's perspective on the region as i prepare for my trip to central and south america next month. let me close by saying a few words about the situation in egypt. this is obviously still a fluid situation and we are monitoring it closely. i will make just a few points. first, we continue to be crystal clear that we oppose violence as a response to this crisis.

in recent days we have seen violence and harassment erupt on the streets of egypt that violates human rights, personal values, and international norms. we are sending a strong and unequivocal message that attacks on reporters are unacceptable. attacks on human rights activists are unacceptable. attacks on peaceful protesters are unacceptable. the egyptian government has responsibility to protect rights of its people. those demonstrating also have a responsibility to do so peacefully. everybody should recognize the simple truth, the issues at stake in egypt will not be resolved through violence or suppression. we are encouraged by the restraint that was shown today. we hope that it continues. second, the future of egypt will be determined by its people. it is also clear that there needs to be a transition process that begins now.

the transition must initiate a process that respects the universal rights of the egyptian people and that leads to free and fair elections. the details of this transition will be worked out by egyptians. my understanding is that some discussions have begun. we are consulting widely within egypt and with the international critique to communicate our strong belief that a successful an orderly transition must be meaningful. negotiation should include a broad representation of the egyptian opposition, and this transition must address the legitimate grievances of those who seek a better future. third, we want to see this moment of turmoil turn into a moment of opportunity. the entire world is watching. what we hope for and why we will work for is a future where all of egyptian society seizes the opportunity. right now a great an ancient civilization is going through a time of tumbled and transition.

even as there are grave challenges and great uncertainty, i am confident that the egyptian people can shape the future that they deserve. as they do, they will continue to have a strong friend and partner in the united states of america mr. prime minister. >> first of all, thank you for your friendship, both personal and national, and thank you for all the work you have done an older people have done to bring us to our announcement today. [speaking french] >> i would just repeat that

today, president obama and i are issuing a declaration on our borders, but it is much more than that. it is a declaration on our relationship. over the past nearly 200 years, our two countries have progressively developed the closest, warmus, most integrated and most successful relationship in the world. we are partners, neighbors, allies, and most of all, we are true friends. in an age of expanding opportunities, but also great dangers, we share fundamental interest in values just as we face, and challenges and threats. -- common challenges and threats. at the core of this friendship is the largest bilateral trading relationship in history because since the signing of the canada- u.s. free-trade agreement, that partnership has grown spectacularly. not only is the u.s. canada's major export market, canada is also america's largest export markets, larger than china, larger than mexico, larger than japan, larger than all the countries of the european union combined.

8 million jobs in the united states are supported by your trade with canada. canada is the largest, the most secure, the most able, and the friendliest supplier of that most vital of all american purchases, energy. it is in both our interests to ensure that our common border remains open and efficient, but it is just as critical that remain secure and in the hands of the vigilant and the dedicated. just as we must continually work to ensure that inertia and bureaucratic sclerosis do not impair the legitimate flow of people, goods, and services across our border, we must of our game to counter those seeking new ways to harm us. i say us, because as i have said before, a threat to the united states is a threat to canada, to our trade, to our interests, to our values, to our common civilization. canada has no friends among

america's enemies, and america has no better friend than canada. the declaration of president obama and i are issuing today commits our governments to find new ways to exclude terrorists and criminals who pose a threat to our peoples. it also commits us to finding ways to eliminate regulatory barriers to cross border trade and travel, because simpler rules lead to lower costs and only two more jobs. -- ultimately to more jobs. shared information, compatible procedures and inspection technology will all be key tools. they make possible the effective risk-management that will allow us to accelerate legitimate flows of people and goods between our countries while strengthening our physical security and economic competitiveness. so we committed to expanding our management of the border, to the concept of a north american perimeter, not to replace or eliminate the border, but were

possible, to streamline and decongested. there is much work to do. the declaration marks the start of this endeavor, not the end. an ambitious agenda between two countries, sovereign and able to act independently when we so choose, according to our own laws and aspirations, but always understanding this, that while a border defines two peoples, it need not divide them. that is the fundamental truth to which canadians and americans have borne witness for almost two centuries, and through our mutual devotion to freedom, democracy, and justice, at home and abroad, is the example we seek to demonstrate for all others. >> we have time for a couple of questions. >> thank you very much, mr. president. is it conceivable to you that a genuine process of democratic reforms can begin in egypt walt president mubarak remains in power, or do you think his stepping aside is needed review for reform to even begin?

to prime minister harper, do discuss canada's role as a secure source of oil for the united states, and in particular, did you receive any assurances the u.s. and nutrition looks favorably on transcanada's proposed pipeline to the gulf coast? >> i have had two conversations with president mubarak since this crisis in egypt began. each time, i have emphasized the fact that the future of egypt is going to be in hands of egyptians. it is not us who will determine that future. i also said that in light of what happened in the last two weeks, going back to the old ways is not going to work. suppression is not going to work, engaging in violence is

not going to work, attempting to shut down information flows is not going to work. in order for egypt to have a bright future, which i believe it can have, the only thing that worked is moving an orderly transition process that begins right now, that engages all the parties, that leads to democratic practices, fair and free elections, representative government that is responsive to the grievances of the egyptian people. now, i believe that president mubarak cares about his country. he is proud, but he is also a patriot. what i suggested to him is that he needs to consult with those who are around him and his government. he needs to listen to what is being voiced by the egyptian people, and make a judgment about a pathway forward that is

orderly, but that is meaningful and serious. i believe that he has already said that he is not going to run for re-election. this is somebody who has been in power for very long time. having made that psychological break and decision that he will not be running again, i think the most important for him to ask himself and for the egyptian government to ask itself, as well as the opposition to ask itself is, how do we make that transition effective and lasting and legitimate? as i said before, that is not a decision ultimately the united states makes or any country outside of egypt makes. what we can do is affirm the core principles that will be involved in that transition. if you end up having just gestures toward the opposition

but it leads to a continuing suppression of the opposition, that is not going to work. if you have the pretense of reform, but not real reform, that is not going to be effective. as i said before, once the president himself announced that he was not going to be run again when his term is up, relatively shortly, the key question he should be asking himself is, how do i leave a legacy behind in which egypt is able to get through this transformative period, and my hope is that he will in of making the right decision. >> you asked me about the question of energy. yes, we did discuss the matter is raised. let me just say this in that context. i think it is clear to anyone who understands this issue that

the need of the united states for fossil fuels, far in excess of its ability to produce such energy, will be the reality for some time to come. the choice that the united states faces in all these matters is whether to increase its capacity to accept such energy from the most secure, stable, and friendly as location it can possibly get that energy, which is canada, or from other places that are not as secure, stable, and freely to the interests and values of the united states. >> do we have a canadian reporter? >> prime minister, can you answer this in english and french? canadians will be asking, how much of our sovereignty in privacy rights will be given up to have more open borders, and i want ask you about egypt as well, what do you feel that mr. mubarak should be stepping down

sooner if it would help the transition. mr. president, on the sovereignty issue, you are welcome to answer. you don't have to speak in french, though. [laughter] >> thank you. i love french, but i am just not very capable of speaking it. >> the declaration is not about sovereignty. we are sovereign countries that have the capacity to act as we choose to act. the question that faces us is to make sure that we act and a sovereign way that serves canada's interests. it is in canada's interest to work with our partners in the united states to ensure that our borders are secure and insure that we can trade and travel across them as safely and openly as possible, within the context of our different laws.

that is what we are trying to achieve here. we share security threats that are very similar on both sides of the border. we share an integrated economic space where it does not make sense to constantly check the same cargo over and over again. if we can do that at the perimeter and decongest the border, that is what we should be doing. if we cannot harmonize regulations in ways that avoid unnecessary duplication and red tape for business, these are things that we need to do. that is what this is all about, the safety of canadians and creating jobs and economic growth for the canadian economy. [speaking french]

let me just agree with what president obama said. i don't think there is any doubt from anyone who is watching the situation that transition is occurring and will

occur in egypt. the question is, what kind of transition this will be and how it will leave. it is up to the egyptian people to decide who will govern. what we want to be sure is that we lead toward a future that is not simply more democratic, but a future where that democracy is guided by such values as nonviolence, as the rule of law, as respect for human rights, including the rights of minorities and religious minorities. [speaking french]

[speaking french] >> with respect to this security and sovereignty issues, obviously canada and the united states are not going to match perfectly on every measure with respect to how we balance security issues, privacy issues, openness issues, but we match probably more than any country on earth.

we have this border that benefits when it is open the free flow goods and services, resulting in huge economic benefits for both sides, and so the goal here is to make sure that we are coordinating closely and that as we are taking steps and measures to ensure both openness and security, that we are doing so in ways that enhances the relationship as opposed to creating tensions in the relationship. we are confident that we are going to be able to achieve this. we have already made great progress just over the last several years on various specific issues. we are trying now to look at this in a more comprehensive fashion, so is not just border security issues but a broader set of issues.

i have great confidence that prime minister harper is going to be very protective of certain core values of canada, just as i would be very protective of the core values of the united states. those will not always match up perfectly. i agree even more with his answer in french. [laughter] thank you very much, everybody.

president obama delivers remarks on u.s. competitiveness and job creation before the u.s. chamber of commerce. he is expected to discuss how to make america more competitive and how to cooperate in the creation of jobs. live coverage beginning at 11:00 a.m. eastern on c-span. >> the whole environment of politics had come apart. it had become polluted and destroyed and violent. >> "q&a" tonight, hubert h. humphrey, the art of the possible. >> the reason for doing the documentary was to show another side of this. everyone remembers humphrey as someone who was leaking lyndon johnson's boots all the time and had no mind of his own. people did not understand the pressures he was under period runs through the vice

presidency in 1968. >> "q&a", tonight on c-span. >> in a speech today, the israeli president address the political unrest in the middle east, including egypt, and the importance of a peace agreement between israelis and palestinians. he spoke at a security conference in israel. joining him was an israeli government professor who talked about the changing dynamics of the middle east and u.s. policy in the region. we begin with the president's remarks in progress. >> the riots have undermined human. division is tearing up sudan. there is revolution in tunisia. riots in egypt. there is more investment in

missiles than in the war on poverty, and on the other hand, there are still important strategic answers, and there's a strong desire on the part of young people in all these areas for real change to correct the mistakes of the past. we cannot overlook the possibility that the younger generation may succeed. let us not assume that only conservatism and fundamentalism can triumph. the events of the reason period raised the need to free our agenda of the israeli- palestinian conflict as soon as possible, but the conflict is exploited by all sides. israel must maintain its strength in the face of all enemies that rise up against it. at the same time, it must stretch of its hand in peace to all those who are willing to

conciliate with it. our efforts must be trust for the invisible, and our efforts for peace with our neighbors must see that peace is a crucial need, not only for us, but for our neighbors, too. compromise, no matter how painful, is preferred to the alternative in the absence of peace. the peace process is limping slowly because officials on both sides -- we have seen in the past that the palestinians were open, that arrive just government in israel, we believe that a righteous government would never agree to the two- state solution. were wrong. we thought that they would continue to insist on the right of return of 5 million refugees. we were wrong.

we have learned that negotiations began with huge gaps, and we have seen that we must overcome them, not with hammers and drums, but creatively, with wisdom, with patience, and without talking to much. the negotiations are in process at the beginning, which each side tries to gain the maximum, but later on both sides realize that they must depart from their declared positions and reach practical culminating positions. we know that alongside the opening declared positions, there is a tacit agreement on a number of central issues. two states for two people, a

jewish state israel and an arab state, palestine. the two states will live alongside one another in good, neighborly relations, and will fight against terror. this will enable the palestinian state to be demilitarized. this will enable a complete end to the conflict and will open a window, or perhaps a gate, to regional activities. the size of the territory will enable the establishment of a palestinian state and agreed upon defensible borders will give israel rejects the into the conflict will enable the palestinians to be able to benefit from a glowing review growing global economy, and israel will benefit from

relations across border. peace will bring a momentum of tourism, openness, the opening of a joint, modern pitchers in the area of energy, water, environment, free-trade, in fact, in every area of life. the younger generation will be able to rise -- to buy it and iphone instead of stones. i am turning to our palestinian neighbors insane come, let us compromise. let us reach a compromise that can serve as a model for everything that is occurring, for all those who are seeking a true response for the younger generation, whose demands are justified. establish a palestinian state, but let it be a democratic state based on science and technology, and in israel we have learned that there is no contradiction

between science and religion. science can contend with physical property, just as faith can contend with spiritual property. establish a democratic, scientific palestinian state that will live alongside the democratic, scientific state of israel. the two-state solution of the nature of this kind can be a model for other states in the entire region. i believe that it can create enthusiasm among those who seek change in the younger generation. let us go back to the negotiating table. all negotiations must be open and hidden at the same time. i, too, look at the public opinion polls, which are sometimes concerning an

infuriating, but i have learned that a survey represents a passing mood. it does not represent the future. the future must be shaped, not a guest. both sides can reach a reasonable agreement that will address the aspirations of independence on the partbased on political and security of like, i can tell my friends that knowing the making of peace is like crossing -- parting the red sea. it is extremely difficult, but the alternative absence of peace is far more dangerous. there is no contradiction

between rogaine helped to the region and healing the conflict -- between bringing help to the region and healing the conflict. if help comes from an economic quartet, not a political, government quartet, it is possible the current storm will become the required change. it is in our hands. thank you very much. [applause] and [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> the president and founder, major general in the reserves, the chairman of the conference, professor franco, lawrence summers, and professor rubinstein, the subject of my lecture is on israel cost side. .- israel's side for many years conventional wisdom had it to the time was on the side of israel. the consequence of the word is that israel has expanded its territory -- consequence of the war is that israel has expanded its territory. israel is a prospering economy.

arab nations rival each other in recognizing their inability to defeat israel on the battlefield, but i will argue that this process has reversed itself and time is playing against israel. i will discuss the factors of led to the strategic change and recommend a few policies for israel to reverse the process. let's begin with an analogy to the electoral map of the united states. you are familiar with the electoral map during a presidential campaign. some states appear as clearly democratic. others are clearly republican. others lean toward the democratic candidate, and others lean toward a republican candidate, and others are too close to call. i would like to show the strategic map of the middle east as of a few years ago and

compare it to the current map. this basic into two camps. the moderate and a radical. i will demonstrate the changes that have occurred in the region over the past few years and why does it happen and what needs to be done during get a few years ago this is what the level is looked like. israel is a stable democracy in blue. we have the good guys, the moderate states. the light blue is leaving to moderate states. the dark green is the radical islamic countries, and the leiter green is increasingly radical. on the other hand, now what is happening in 2011 -- iraq is no

longer moderate, and turkey is not either. lebanon is half or more radical, and egypt has a? . -- has a question mark. what are the reasons for this strategic shift for the changes that time is not working in israel's favor. first, the transition to the missile era, which makes israel more vulnerable under missile cover. there is the campaign to they- legitimize israel by composing legal and political constraints. there is the radicalization of lun -- of the region and the consequences of the unsuccessful

war, the lack of victory in afghanistan, the global financial crisis, and the post- american era. we have internal conflicts among jews, and that does not help. we have internal fights over crises of government with israel, which have implications for social solidarity, and israel is also a society between settlers and those who want to resolve, but most importantly, the arab countries never had the ability to defeat israel, and we are pointing -- approaching the point walden -- where they will think they can, and one reason is what i call the king of alliances.

they have the king of alliances, and that is the president of iran, ahmadinejad. let us not take his appearance slightly and his strange behavior. he is inferior a thing, but he is the catalyst and initiator of the radical axis, and he is the champion of the radical axis, and he does it successfully. we are lucky there is the sunny nni-shi'a ate sun avaya, and the axis can be represented by an equation. the equation states the the collected aggregated ability of the state's-the damage they will incur will of some point the greater than israel's capability plus a partnership

with the u.s., and this aggregated capability will help them concede with a concerted effort to defeat israel. there is a nice equation i will put on the website, so it's time on israel's side? look please let this slide. looking at this time line. what we are seeing an -- i am not saying we have already extended -- accepted these things to happen, but our strategic advantage is in danger. we should add the fact that the second lebanon war demonstrated that israel's home front can be attacked, even though it has performed admirably, and the

doctrine of moving toward rapidly is the right to doctrine, but tens of thousands of missiles can reach virtually every point in israel, or justice you cannot replace soccer or basketball or any -- just as you cannot replace soccer basketball or anyone, you cannot engage in war without this. this does not provide a complete answer, and it is expensive. we will see we are very vulnerable, so what can be done? the elector ofo mouth of the united states -- electromagnet of the united states. the goal of any candidate is to change the position, moving it into any column.

this is not rocket science. the web of formal and informal alliances and non-state alliances and threaten israel from afar even before iran has become militarized mean that a penny must drop. israel must engage in a diplomatic initiative to move syria away from the radical alliance. the president, the chief of staff, the outgoing chief of support this. the leaks by aljazeera says there is a partner on the palestinian side and the gap between the israeli and palestinian positions can be a bridge, and israel must make a considerable effort to bring turkey back to the neutral position it held until recently. this is the best interest of israel, and the principle that must guide us is simple.

the best defense is a systematic offense. even in iran they know this, and they are successful in engaging in this policy when they create alliances. here there is a diplomatic freeze. let's look at a diplomatic egypt, the median-voter model. even if egypt becomes democratic, radicals will gain more power at the expense of moderates. this can be shown using the media and voter model. when the majority of opposition groups are high style, and -- hostile, they will be based in the margins, and this could push ruling power in two positions less -- that are worse for israel and in the direction of the iranian radicals, because

of the perception mubarak has been abandoned. this is my model. eduction models are only on this side of the model common and -- he egyptian models are only on this side of the model, and many are asking why did obama disassociate himself so quickly from president mubarak, it is true that obama believes this will cut him closer to the arab masses that are hostile to them, and do not forget that he declared islam is part of america. it also is compatible with his philosophy regarding human rights end engagement and non- revolution -- resolution of conflict.

obamacare and take credit ferritin with his health, the tyrannical middle east has become a democratic region, just as george bush senior contributed to the fallen. the key is this is a democracy. dick cheney spoke in favor of mubarak, but was you can see in this model, the median voter is what we are going to have. he maintained this last week or last week that it might become the mubarak of the peace process in the middle east. it took me trying to understand what friedman was saying.

we also show they are navigating between some constraints from the right, which are tying his hands, and he is working in and democratic system. as far as conclusions, the process in the middle is currency weakness in the sense the the radicals and iran are working against us. israel must engage in peace initiatives before it is too late. [applause] >> the u.s.-japan research institute hosts a seminar in examining issues including cyber security, climate change, and natural disasters and

efforts to engage other partners including israel -- korea and india. >> next, the outgoing prime minister of ireland, brian cowen's farewell address. voters will head to the polls february 5 to elect a new prime minister. we will also hear from the opposition. >> before proceeding, i wish to announce the received a letter of resignation from the deputy on friday -- friday, the 20th.

the resignation took effect on that day. we wish to make an announcement. >> [speaking gaelic] [speaking gaelic]

>> 50 years ago on the 30th of january, 1961, john f. kennedy delivered his first state of the union message, noting the members of congress were "among my oldest friends, and this house is my oldest home." these words resonate with me today. i have made many friends in this house, and its traditions will always have my deepest respect. there are enduring relationships that go beyond politics and any concerns we may have had about the issues of today. is that the reason i chose to come into this house. it has been a privilege to serve the people of ireland and their

government. my overriding objective was to do the best by the irish people. politics is public-service, and it is an honorable profession. i say that with conviction and with experience. i have no time for the cynics who the little people in public life. members will be aware that i announced my decision yesterday. it has been my mnc privilege to represent the people in this house for the past 27 years, and i will be forever grateful for their loyalty and support during good days and bad days in my political life. i also want to express my gratitude to my late father, who gave me a good grounding in

community service against the love of politics. i entered this parliament at the age of 24. i have been privileged to learn a lot from many fein representatives on all five of this chamber. i know from years of experience that representatives to their utmost to serve the people unselfishly. the time is once again closed at hand, and the people will decide who to send to represent amanda. this election will define our economic future. it will decide whether ireland moves forward. the choice in many ways is for them. i urge people to examine the policies and of each party and to cast their vote accordingly.

this election should not be about personalities. it should be about serious debate, a reflection, and the solid business of democracy. it is my hope over the course of the campaign will conduct a mature, responsible to update, where we show respect for each other and the democratic process. all parties share responsibility to be honest with people about the solutions on the path where to recovery -- half way to recovery, and we have a duty to given confidence to the people. this is especially so, and there are still plenty of reason for confidence in ireland's future, our potential, and what we can achieve in coming years.

we are the fifth best country in the index. we have the highest performing graduates in the european union. our exports are performing better than ever. aren't new investments are better than india and china combined. -- our investments are better than india and china combined. our competitiveness has improved. we have leading companies such as ibm, google, intel, and facebook, and ireland is consistently in the top-10 places in which to start a business and to grow one one.

we are increasing productivity across the country. these are just a few reasons why the real irish economy will prosper in the future if responsible policies continue to be pursued. peace in ireland has always been a collective endeavor in this house. we must work collectively to protect it. the institutions of the good friday agreement established in 1998 are now working as people intended.

the successful conclusion on the evolution of peace and justice aided by the new party leader insured but we will not see the longest ever pawnbroker in time of power-sharing in northern ireland. i have always said the genius of the good friday agreement is that we agreed to go on a journey together without predetermining the destination in advance. we must continue to take that journey together in the new and renewed spirit of friendship, and reconciliation, and respect that is the essence of the agreement. i believe the forth coming decade of anniversaries will be

a time of reflection and renewal across this island, a time not for dwelling on the past, but a time for shaping a better future with deepening cooperation across all major policy areas to our mutual benefit on this island. today is not a day for me to list of achievements are engaged in the contentious debate, but i want to say while the past two and a half years of been a time of great trial and test, i believe we have worked hard to correct past failures and to secure the future recovery of our country. i know some of the decisions were not popular, but they had to be taken. people should remember sometimes

it is not just the content of policy that defines a political decision but context, too, and it is the motivation that inspires the decision. i believe politics is about serving the interest of the people first and last. that was my motivation starting out in public life, and i stayed true to its from the aunt your eager -- true to it in the end. i can honestly say common good was my concern, and loyalty informs every choice i made. i want to quote wise words. i refer to the poet whose book contains a poem called "for a leader."

a recommend it to all in the house and particularly to those who will be in leadership. may you have the grace and wisdom to act kindly, learning to distinguish between what is personal and what is not. may you be hospitable to criticism. may you never put yourself at the center of things. in a new act not from arrogance but out of service. -- may you act not from arrogance but from service three in a those who work for you know that you see and respect -- from arrogance but from service. ney you work with those that you respect. may you have a mind that evokes from tears so you can evoke the

field that lies beyond the view of the regular eye. in a you have good friends to mirror your blind spot. new leadership before you a true adventure of growth. [speaking gaelic] i wish to inform the house then i will see the presidency, to advise the president pursuant to the constitution, and to meet at 12, mid day, on the ninth of march, 2011. as we have witnessed in recent weeks, there are people in many countries across the world who still fight for the opportunity to cast their ballots in a democratic election, so i don't they will use the opportunity to

cast their vote in the forthcoming general of the action here. i wish those members of the house who are not seeking reelection a very happy and healthy future. if i wish all other members very well in their endeavors to return to this house. [speaking gaelic] [applause]

>> i now connor and on the deputy -- call on the deputy, the intention being that we will call the members of various parties. >> i am glad you are calling all of leaders. it is important they all debate. i welcome the confirmation of the people of ireland will get to choose a new team and a new direction for our country who get arlin working again -- ireland working again.

we want to bring the new hope and new life to government, our people, and our country. i want to wish you, your wife mary, and your daughter well as you retire from this house curator of must say i set aside year at national celebration common -- celebration, and she said, that is my dad, and you have one strong supporter there. despite strongly disagreeing with many policies you and your party have pursued, i have no doubt about your personal integrity as a politician during

your -- politician. [speaking gaelic] us he retires -- as he retires, having led one of the worst governments in history, they must be accountable for their collective governance of this country over the last 14 and a half years. none of them will be a bill to dodge the responsibility for driving ireland into the arms of

the imf. i have listened to the people. i have understood the death of the anger felt by people all over the country, people who have -- the depth of anger felt by people over the country, people who have lost their jobs. that anger will not get ireland working again. that is why we offer people the chance to turn that anger into action. we say, please come and work for us. we have a plan to get arlin working. -- to get ireland working. it is effective to get people working, to get government working. right now public ireland is not working. if they are lucky enough to

still have a job, people are working harder than ever, coming up with their plans. have our entrepreneurs who run out of ideas and, they are full of more of them, more brilliant than ever. the trouble is well our ministers have a double job or triple job, government is just not working. the systems people depend on are just not working, or they are not working as well as they should be in the people's interests. with our plan to get ireland working, we will change that. our plan gives credibility and life to what will been in a difficult journey in a better future ahead. the first point is to protect and create jobs, because of jobs

and opportunities are the best chance to help our young people at home. we plan to create 20,000 jobs over the next four years, by creating a system that encourages work, by investing an extra 7 billion euro from state pension funds and from the sale of strategic state assets into developing infrastructure that will make our economy really competitive for the future. in doing so, we will make arlin the best small country in the world in which to do -- ireland the best small country in the world in which to do business and we will -- to do business breyer we will fix the economy by cutting waste, and we will keep taxes down.

we will change and create a completely new health system. 17 billion euro year are currently spend on health system that does not work the way that it should. our plan will end the problem in our health service. we will offer equal access to everybody once and for all. there will be fewer hospital stays and lower costs for the health care payor. a stronger and better government with people's money spent wisely on services.

by cutting red tape, and we will reduce public service costs by 5 million euros. we will protect the services provided byron and workers and the redundancies will be voluntary. a political system that achieves more and costs less superior we will cut the number -- cost less. we will cost -- cut the numbers by over a third. we will ensure proper accountability for decisions. a single system will holden ministers to greater account.

-- will hold ministers to greater account. when sacrifices is needed, it starts of the top, not with the court. if people give us the most precious possessions they have, we will have a duty to respond in kind. we will replace old government cynicism with new government compassion. we will place -- replace old government indifference with new insight. we will replace this function with a government but holds the hearts and the needs of the people. governments that will show understanding of the fragile and shattered lives of many thousands of people for whom politics has not worked.

he von weber and -- need reassurance politics will work. we will need to charge the steps to a new future where there will be a quality of working lives. i know i can offer that. what they do not need is more of the same cliches. that is why leadership in politics is more fundamental than ever. the fundamental job is to make decisions in the best interest of the people. i know what it takes to rebuild to a point where we can legitimately challenged. that is why i will offer my

party and myself to rebuild our country and provide a quality future for all of our people. no incoming government elected by the people has ever faced scale of a challenge facing our country. we have strong and powerful friends in europe and beyond. our time is analogous to the first government of the stage. that government built a new young country from the ruins of a country. the next government will have to build a future from the ruins of the economy appear eager -- of the economy. i know the people now have the influence and power to

determine our country's future. i am happy to have us put our plans before the people. our know i can deliver on what i said i will do. -- i know i can deliver on what i said i will do. [speaking gaelic] [applause] >> i welcome the fact that at last people of ireland will have their say in a general election. i want to join the deputy in

wishing well to all the members of the house who are retiring you have an announcer on retirement from politics, -- now retiring. you have announced the retirement from politics, and i want to wish you the best. you have always stood by your physician, and i have stood by mine, and now the time has come to put our case to the verdict of the people. we just have over three weeks to decide the verdict of our country. the future of ireland lies in the hands of our people. all of us are equal, and each of us has an equal responsibility for the way we market our ballot paper.

we have the opportunity now to decide the future of our country. ireland is a great country, and we have a great future. we have problems, but nobody should ever doubt what we are capable of. the weekend, and we will get through this recession. we will get on the road to recovery, creating jobs and forging our future. and we can and will fix the system that is broken. our country's best days are still some crown -- our

country's best days are yet to come, but we have to come together and decide on change. that is what this is all about. change is nothing new for most people, because most people have had to change their lives out of necessity. now we have to change our country and politics, and we have to do it together, to change from being the victims of change to being the drivers of change. and we can elect a government.

for the first time people have a choice to alert the new government led by labor. this is a choice of the future direction of our countries. this election is a three-way contest. those who want more of the same can sell themselves out to the thanks. people can choose a government tied to the same old ideas the have already failed. they are comfortable with each other's policies. they are both happy to embrace austerity, to line up behind the you-i am of deal -- the eu, imf deal.

or we can say, enough of the barrier and we want real change. -- or we can say, enough of that very good we want real change. a change that brings the real concerns of the people to the heart of the government. labor will fight this election on three issues -- jobs, and reform, and on fairness. labour has insisted jobs must be at the heart of what government is doing. labor is the party of work, and a labor-run government will have jobs at the top of its agenda. we will work to provide opportunities for those without work. we will work to develop new opportunities, finding new markets and goods and services to sell common -- to sell, and we will work on the basis that

every job counts. labor is the party of reform. labour has championed a progressive change in ireland. we are determined to lead a new wave of change, to fix a broken system, a system that has failed the irish people. labor is the party to reform our rush politics because we have the best record on reform. labour is the party to reform public services, because we believe in public service, and we have the power to bring about reform. labor is the party of fairness. we have led the way to show how the system can be fixed. we have led the way in demanding fairer taxation, and we will make literacy not just the policy objectives but a national call. labor is the position of one ireland where we are driven by what unites us.

our country is too small and our problems too great to indulge divisions of interest. this is not a time for division or the politics of hitting one group against another. this is the moment we must come together. government is not a hospitality tent rudolph for vips and -- broke off for vips. government is not a business of insiders. it is the business of us all. it is the time to put the business of the people at the center. that is why our time has come. one ireland, those with jobs and those looking for work, employers and employees, rural and urban, women and men, gay and straight, now is the time to pull down the walls of the sand

between people and the government. -- the walls that stand between people and the government. let's leave our government behind. [applause] >> i call on the deputy. >> i would like to join previous speakers in wishing brian cowen the best for the future. i would like to wish his wife and her family the best. i would like to wish him good health. far too many members are suffering from hill health, and that is often overlooked -- suffering from bill health region -- ill health, and that is often overlooked. politics have been denigrated for too long, and our civil servants have been denigrated,

and they have performed admirably in my view. i would like to pay tribute to the civil service. i would like to thank the staff, and i would like to wish all of the members here the best for the future. you also said you did not want to talk about achievement, and perhaps that was being modest, and perhaps the fact that politics are defined by the economic crisis means we overlooked those achievements, but i am proud to have served in a government that produced civil partnerships, and only yesterday, a couple came to me and saying to me -- thanked me. i am proud of we will not revert to the responsible over-zoning of land, which led in part to

the property problem. i am glad we have financial reform and an independent financial regulator in this country. i am proud we have of a new governor of the central bank, a person of independence, and these measures do and will make a difference. i am proud we have investments in renewable energy, and i am proud we have been part of a government that has produced real political reform, the fact that we've reduced the number of junior ministers were previously there had been increase. the fact that we reduce ministerial salaries common -- ministerial salaries, the five that we reduced expenses, the number of civil servants working in ministers' offices. these are all things i think are

absolutely necessary, and that program of reform should continue, and as we leave this house to participate in a general election, i think we have to ask ourselves the fundamental question. what has to be done? what has to be done in terms of political reform? it is very clear that the political system and the of the taurus system has not served the people of this country well and -- and the electoral system have not served the people of this country well. when you saw people had to emigrate in the 1955 as and in the 1980's when i had to leave myself, and so many people are facing the pain of unemployment and immigration. we ask ourselves, have the political institutions, has our electoral system served the people well? can we do better?

the answer is yes, and that is why in this time of crisis that offers an opportunity to debate this issue, in this electoral competition that will take place, we have the opportunity to debate these issues. i believe it is time for a new electrolysis him in this country, where we do have are reduced don't -- a new of the taurus system region in -- new electoral system. that is the best way forward. it serves the people of other countries well. it would serve us well. we could draw on approval of expertise. we could have more of women participating in politics. that is the way forward. a is the type of the electoral reform that is now required, and

i hope we will get a change in the next time, and it seems we will have a new government consisting of the labour party. deputy gilmore, and do people really believe that is going to deliver change? i do not believe that will deliver change. i do not believe for one moment you wilson and never the cuts, and i believe we are going to get an election full of false promises -- do not believe for one moment.

i believe we will get an election full of false promises. i am afraid we will revert back to old politics so many of you are decrying. i believe it is absolutely important that we have a strong representation of the green party, and i do regret -- i have always found you to be a decent person very good we have had strong disagreements, but i hope you will agree there is a great regret that we did not give some very important legislation, the them on corporate donations, to break the link between a big business and political parties. are you prepared to do that? are you prepared to put through a climate change bill which

recognizes that the oil is a reality, that dwindling resources are a reality, that we now have a population of 7 billion, going to 9 billion in 2015, and you can smile about this, but this is the reality, and if you do not have the imagination to face up to that, i am afraid it is the politics of old, we will dumb, and it will dominate -- tweedle dumb and tweedle dumber. let us ensure that in the next dail we will have the strong presence to hold the parties to account. i wish all well in the upcoming election, and let us have a fair

competition, and may i say, we talk here about regulations. we talked about sir play, and it is a pity you have to break calotte -- talk about fair play, and it is a pity you have to break the law. let us have a fair election. can i thank you all. i wish you all well. [bell] >> i welcome the dissolution of to dave.l -- today. [speaking gaelic]

all deputies received calls to office by members of the public spirited -- of the public. often they are old, sick, and vulnerable, and our office received a call from an elderly man whose pension was cut from the government. he had one simple message -- give us a voice, so we must all listen to him and to countless others like him. we must all listen to all of these. on tuesday, the cut to the minimum wage comes into affect. that is just one way the least well-off have been forced to pay for what i have said is the disastrous decisions made by the outgoing government. people are being impoverished so the government can throw money into the bank in black hole.

873 million euros was cut from the recent budget, but only yesterday, the anglo-irish bank paid out $750 million, almost as much for a maturing bond, despite the fact of the debt is not covered by the state's guarantee. we are proud of the part we have played in defending people's rights and in holding into account one of the worst government's ever seen not only in this country but anywhere. we played a key role in exposing the full extent of the context they executives. we have stood firm, and we have stood for the democratic rights of the people going on to win

the by-election in that constituency, but i want to stay the events that have resulted in the fall of this government. we have stood against the imf, and today i used the opportunity to call on all parties in this is general election to make clear the european union and the international monetary fund and the wider international community, that this deal is not an acceptable, and it is ruinous of the irish people. get it is negotiated end imposed by the government, and it must be set aside, and in the parties should make it absolutely clear -- any parties should make it clear if they are to form a government greater than -- form

of government to review warned it would reduce political sovereignty if you're a good -- sovereignty. where are the jobs now? for our young people, they are in australia and elsewhere. this election will be about what we and the other parties stand for. we are at least agreed on this, i hope. that is employment. we cannot protect and create jobs without strategic investment to develop infrastructure, foster enterprise, and enhance public services. sinn fein has put forward a plan to do that. we need to protect our public servants. they are the people's servants in health, education, and those

dependent on support for welfare. all of these areas must be defended. we need to stop the attacks on the incomes of families struggling to survive. we need political reform. we need politics based on commitment, not careerism. need of vision and strategy for ireland that is united. sinn fein will be setting out our proposals in detail. we look forward to the debate. we are confident we will return to the next dail with a greatly strengthened mandate to serve irish people. more importantly, the irish people need a new dail that will put the people's interests first. i listened with interest to the deputy and his closing remarks. he has made a prediction in relation to the formulation of

government. i have been listening carefully this afternoon and for some considerable time. i am not so sure that your prediction is on solid ground. facing tweedlee dumb and dumber -- i think it is going out the door today. i think it would be totally remiss of me. i want to extend my personal good wishes to our own deputy. i want to thank him for his service and his years in this chamber since 10,002 -- 2002. i take the opportunity sincerely to wish all retiring dail

deputies in the best for their prospective teachers. -- for their respective futures. i want to extend to you and your wife and children my personal best wishes for the future that lies before you all. i will conclude with words from the democratic program for the first dail. [speaking gaelic] we desire our country to be ruled in accordance with the principles of liberty, equality, and justice for all. it is now over to the people. the people will decide. [applause]

>> before i adjourn, i want to say a few words. as parliamentarians, we turn to those who have the right to designate the will of the people. some of our numbers retired during this term. some passed on. let us remember them and the good work they did in the service of our people. some today have signaled their intention not to seek reelection. i would like to pay tribute to you now and thank you for your work, some spending many years. you can be proud of your achievements. to those who seek reelection, i wish you well. you will bring to others your policies so that they can decide national policies according to the requirements of the common good. it is now for them to decide what past to be followed. the dail now stands adjourned. [applause]

[captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> whole environment of politics has come apart. it has become polluted, destroyed, and violent. >> documentary producer on hubert h. humphrey. >> the reason for the documentary was to show another side. he has been portrayed as having no mind of his own. people did not understand the pressures he was under. >> tonight at 8:00 on c-span. >> now, remarks by former vice president dick cheney, the keynote speakers saturday night at a banquet commemorating the 100th birthday of ronald reagan. this was hosted by the young america's foundation at the reagan ranch center in california. this is 55 minutes.

>> i am delighted to participate in the events at the center. it is an historic occasion. it has given us the opportunity to think back and reflect on president reagan and what he meant to us and the country. i have a few remarks. it is short. i wanted to say something appropriate at the outset. it is my understanding that frank and i are going to do sort of an interview. he will ask questions and i will give sparkling answers. [laughter] except for the questions i do not want to answer. [laughter] it is always nice to get out here to santa barbara in the

sunshine. i just came from texas. we had an ice storm yesterday along the rio grande. i am working on my memoirs. i have a deadline creeping up on me. i have not seen a lot of daylight. i cannot think of a better place to come -- a better inspiration than to come to reagan country. people say they look forward to reading the book. that reminds me that i need to finish reading it. [laughter] i can tell you is going well. i am enjoying the work and it should be in bookstores this fall. [applause] right now, and deep into my years as vice president. let's just say that i am not having writer's block. [laughter] plenty to talk about. it is a longer story than that. some of the early highlights involve my dealings with ronald reagan when i was working in the

congress as part of the congressional leadership and with president ford. being out this way makes me appreciate more with a privilege it was knowing him, even though my opinions were colored by the politics of that day. i was asked to sign on as president ford's chief of staff. some of our responsibilities with the struggle in 1976 with the republican nomination. it really was a special event in the history of the party. outside of a movie screen, my first glimpse of ronald reagan was on a 1974 trip to los angeles with president ford. i was in the room when the two of the met dressed in tuxedos before going downstairs to attend the republican fund- raiser.

i believe they were sizing each other up in a prelude to the battle for the 1976 nomination. i remember being a little distracted. i was late making last-minute travel arrangements for the president. i saw enough of governor reagan that night to know that we, in the white house, would have plenty to worry about a peace decided to get into the race. it is safe to guess that many of you were not around then. it is hard to convey the tension in republican circles as reagan geared up to challenge board. it was a big deal. it did not stop. in the first bid by ronald reagan for the nomination, i was on the other side. i worked for jerry ford. i had the greatest respect for him. i watched him hold the country together in the aftermath of watergate. taking the nomination from a sitting president is a tough proposition. in the end, not even ronald

reagan could pull that off. after ford's victory at the convention in kansas city, i liked the idea of putting governor reagan on the ticket. it is probably just as well it did not happen. in the next four years, everything came together to set the stage for the reagan. can see -- presidency. it took the carter presidency to set the stage for governor reagan's election. , all of us were reaganized. [applause] at that point, i was the congressman from wyoming. wyoming only had one congressman. small delegation, but we liked it that way. we ended up, i ended up serving in the house of republican leadership for the eight years the president was in the white house. those were great days.

we had ronald reagan and people like frank working for him and many other close friends. we had some great folks up on capitol hill. these days at a distance of more than a generation, even liberal commentators reminisce about the reagan years in a way that does not always ring true to me. they speak of it as a gentler time in politics when supposedly debates were more cordial and opponents on capitol hill were unfailingly civil and respectful towards the president. i hope i am not disillusioning anyone, but i do not quite remember it that way. [laughter] in some cases, there was a cordiality that did allow for bigger accomplishments. the speaker and president got together to save social security from collapse. president reagan also had to

deal with some tougher players. if they had warm feelings for reagan, it did not always show in their tactics. late in his second term, there were major policy differences over iran-contra. i watched all of that is the ranking member on the select committee sworn to investigate iran-contra. i have rarely seen politics get rougher than it did during that time. it was true that we do attach certain good feelings and memories of the 1980's. that has little to do with the conduct and spirit of the president's opponents. america remembers the time that way mainly because there was a gentleman in the white house. brawled his geniality, ronald reagan himself was a custom to political battles. -- for all of his geniality, he was accustomed to political battles. he expected to fight for what he believed in. as governor of the state and

union leader in hollywood, he was a persevering advocate for his principles. he understood what was its stake in the great debates. reagan was sure of himself and his abilities. more than that, he had confidence the people themselves at a time when big issues were riding on their good sense and character. as he said it is first inauguration, "i do not believe in a state that will fall on this matter what we do. faith thatve in the fa will fall on us -- there was a lack of resolve in the face of the cold war. if there's any instance in history when the presence of one man made all the difference and for good, it would surely be ronald reagan's standing down an

expansionist empire and vowing it would not gain another inch of ground. margaret thatcher called him a providential man. i found a lot of people agreed when i got to the pentagon as secretary of defense. more than anything else, it was the reagan military buildup that assured our victory in the cold war. he left that and much else to his successor. when iraq invaded kuwait in 1990, president bush and i had all that we needed to throw back the army of saddam hussein. we deployed half a million troops to the desert. the campaign using the assets that ronald reagan gave us meant that ground operations to only 100 hours to prevail. when it was over, there was one person wanted to talk to. i placed a call to bellaire and said, "thank you, mr.

president." [applause] when we think back and try to sum up all that he accomplished, thank you is still a good place to start. the oldest man ever elected president was also the most idealistic. he brought out that quality in the american people. he inspired the kind of affection that even great men cannot claim by right. it goes only to the truly good. kindness and decency marked his entire life, long before he 1st journeyed here to california, and long after he returned here from washington. remembering his final years, we might also courage for the

galloway left as. there is much more that could be said. we will turn to that in a moment. there is great respect and admiration of his generation feels for our party of president. it shows that the work in the reagan ranch center is well- placed. 100 years after his birth, history shows reagan's standing tall in memory. let us be grateful that such a man came along when this nation and all the world needed him most. thank you very much. [applause]

>> thank you for those remarks. let me explore some of the things you said. recent polls show that americans think that ronald reagan is the most successful president in the post-world war ii era. there are surveys showing him ranking just behind washington and lincoln in terms of all 43 american presidents. what is it about reagan that makes him even more popular today than when he left office and the special injuring qualities he seems to have for america? >> -- and the special, enduring qualities he seems to have for america? >> you are going to get in trouble with the other presidents. [laughter] i think of it as that he has worn well. he dealt with big issues and

took on the tough problems. when you think about the end of the cold war and how it ended, i have always been absolutely convinced and and to this day that what happened was the soviets decided they could not keep up with the united states once ronald reagan laid down markers that we would rebuild american defenses and the with the strategic defense initiative. the soviets were unable to contemplate a situation in which they have the resources to keep up with us. in the end, they folded. it was peaceful for the most part. president reagan developed a good relationship with gorbachev. they were able to manage that. the collapse of the old soviet

union, the establishment of democracy is all across eastern europe -- it really was a world- shaping set of events that he helped precipitate. we have now had enough time after 20 years so that we are able to have more perspective than we did before. these are lasting achievements. these are not momentary battles over a piece of legislation. i always thought margaret thatcher had it right. she described him as a providential man. he was there when we needed him. >> that is the way history turned out, that the soviets us.ld not keep up with th one of my jobs at the time was to stay in touch with conservatives. there was a lot of grumbling at the time from conservatives that

reagan was being snookered by gorbachev. it took a really providential man to see the possibilities of how the cold war could end. from your vantage point in congress, you were always a very strong advocate of a strong national defense. did you have any concerns like that, that maybe reagan was being snookered a bit by the younger gorbachev? >> i am tempted to say that i am going to save that for my book. [laughter] let me say that i was one of the most conservative members of congress. you can look at my voting record when i was there. one of the first things i did with a television interview where i predicted the demise of gorbachev and said he would never last -- that caused some trouble in the state department, a bit of heartburn and in the

white house. i was a skeptic, i must say. i thought for a long time it was very important for us to stay focused on this additional relationship -- the traditional relationship. gorbachev did the right thing. he could have called out the truth. he could of smothered eastern europe the way his predecessor had. he did not. i think he will always deserve a lot of credit for that. looking back on it now, that was made possible because he established a relationship of trust with ronald reagan. as much of a skeptic as i was, i would have to say a think

president reagan got it right. >> how about the strategic defense initiative? it was not talked about that much prior to his famous speech in 1983. how much of an impact did that have on the eventual peaceful end to the cold war? >> i think it had a big impact. it said to the soviets that the united states would use its technology and our lead in a lot of areas to be able to build defenses against incoming missiles. they were worried we would build a system so big that it could defeat their deterrent. that was their major concern. the fact was the estimates on the soviet economy were inflated. i had an economist working for me who got it right. they -- the official estimates

were based on soviet statistics on what the economy was doing. those were inflated numbers. when they were building defenses trying to keep up with the united states, there were not spending 15% of their gnp on defense. they were spending something like 35%. it was much smaller than they said. they could not keep it up. that was crucial. one thing i think we did well in the bush and the restriction is that we continue to push hard on defense. we abrogated the abm treaty. that was essential to get the restrictions lifted that interfered with a lot of what we were trying to do in terms of

testing missile defenses. we do not have a plan of building a massive show that would be able to intercept all the soviet missiles. in an era when north korea now has missiles and weapons, iran is trying to get weapons, we are in a position where we badly need to be able to defend ourselves against the rogue regimes that may have just a handful of missiles they could launch in a crisis. we have been able to make significant progress. we tested our system a couple of times during the bush administration. we need to do more of that. you can trace it back to the commitment president reagan made when he said we would do sdi. >> during your time in congress, republicans were in the minority. yet reagan was able to get through many important bills like the tax bill, the budget bills, aid to the contras, etc.

what techniques to use -- did he use to when the democrats and keep the republicans together to get the majorities? >> there is a story i love to tell the captions the essence of the reagan legislative strategy. it captures the essence of the reagan legislative strategy. the bill was coming up. he was going through the house. the democrats controlled the house. what came out of the ways and means committee was something a lot of republicans did not want to vote for. we arranged -- we did not want to vote against the president directly. we arranged to defeat the rule under which the bill would be debated. when they brought the rule of,

we killed it. that created consternation at 1600 pennsylvania avenue. we got word that the president would like to, and reason with his republican friends at the congress. on the appointed day, he came up. he had a stop he had to make that morning in north carolina. he had to go and preside at a memorial service for some of our servicemen who had been killed. he walked into one of the large hearing rooms full of house republicans. he walked in and began talking about patriotism and sacrifice and what it means to be american. it was so effective that there was not a dry eye in the crowd. then he stopped and said, " know about that tax bill." people were jumping up all over the room saying they were with him.

he switched 70 votes in that session. he never said a word about the tax bill other than, "now gentlemen, about that tax bill. iis sent it over to the senate. [applause] >> it is always easy with the hindsight of history. in terms of the first tax bill, the 25% across board cut over three years. that was hugely controversy with a time the controversial at the time because it seemed to increase the deficit. as one of the most conservative members of congress, how did you approach analyzing that bill? did you have concerns? had you become a supply-side advocate by that point? >> by that time, i was a supply-

side advocate. i spent too many hours with jack kemp. [laughter] i was a great believer in the tax policy. i still believe today it was vital for us to remember that the private sector is what creates wealth, jobs, and opportunity in the united states. it is the strength of our private economy. it was a very important piece of legislation. one of the secrets to his success was that the democratic caucus looked different in those days. there were boll weevil democrats like phil gramm from texas. he had been elected as a democrat to the congress the same year i was, 1978. he came to town, but he believed

in a lot of the same fundamental principles that president reagan believe in. he signed on and join us. we had a number of democrats, conservative democrats, who worked with us. the help us pass the legislation. for the first couple of years of that first term, we had a situation where even though republicans were in the minority in the house, with our conservative democratic friends on the other side of the all, we put together a majority on economic issues and so forth. it was enormously successful. it is also a big tribute to ronald reagan. the democrats overreacted and penalized some of the guys on the other side like phil. he made what i thought was a principled decision.

he resigned. he announced he would be a republican. he went back home and ran a special election as a republican to replace himself. in other words, he switched parties, but he was honest about it. he did not continue to camouflage himself as a democrat, if you will. i always thought that was a principled move. it was that kind of thing that helped a lot. nowadays, i would say the democratic party has drifted further left. you had nancy pelosi as speaker. the sentences the democrats run the house. -- the sentence is the democrats run the house. i better be careful what i say. -- the san francisco democrats from the house. i better be careful what i say. a lot of the members of the converted or were replaced by republicans. that is how we get to the

numbers we have today. there are not many boll weevil democrats left. >> we have some questions from the audience we collected before the dinner this evening. there on contemporary topics. we would like to ask a few of them for you. we have two questions on egypt. two people have a question about egypt and the uprising. i will try to paraphrase the questions. in light of the bush doctrine of trying to spread democracy around the world, how much of that influence do you attribute to what is going on in egypt now? hell is the administration doing in the delicate balance -- how is the administration doing in the delicate balance of promoting democracy in the country? >> that is an interesting question.

the way i think about it, i think it is important for us to remember that this issue is going to be resolved by the egyptians. there are a lot of people with opinions. the bottom line is in the end, it will be determined by the people of egypt. we need to remember that. i think is important for us to remember that we believe in and most administrations have endorsed the notion of democracy and freedom. we think it is the best system devised by man. our hearts are gladdened when someone else operates in a similar fashion. there are also other issues

important at the same time. i will say it the outset that i have known hosni mubarak for many years. i first started working with him in 1990 when president bush sent me to saudi arabia to arrange for the deployment of u.s. forces to defend saudi arabia and the persian gulf and eventually liberate kuwait. my second stop on the trip was in alexandria, egypt, to meet with president mubarak. there was consternation throughout the region. many of the arab states signed on with the united states. congress supported it. united nations supported it. all of these folks sent forces as part of our coalition. president mubarak was at the outset signed up for overflight

rights to get our aircraft in the region for access to the suez canal. he ended up sending two divisions of the egyptian army to fight alongside americans to liberate kuwait. he has been a good man. he has been a good friend and ally of the united states. we need to remember that. it is also important that you try to have an open channel of communications that is private to whoever it is you are dealing with. it is very hard for some foreign leader to act on u.s. advice in a visible way. you tell me i have to do something publicly and i do it,

my people think i am not my own man. i do the bidding of the americans. that is the wrong way to go. there's a reason why a lot of diplomacy is conducted in secret. there are good reasons for there to be confidentiality in some of those communications. i think president mubarak needs to be treated as he deserved over the years. he has been a good friend of the united states and a lot of other folks that we do business with and work with. you are looking for balance here. i do hope that there is a channel of communication. >> do you think mubarak can survive? is it in our interest for him to survive? >> i do not want to make a prediction because i do not know. i also think there comes a time for everybody went it is time to hang it up and move on and for

somebody else to take over. it is true if you are running a company or if you are a vice- president or if you are a president. you get to the point where the years at up. the burdens become tougher to deal with. as i say, that is a decision that only the egyptians can make. i think they will handle in an appropriate fashion. i like egypt. i like egyptians. i am fascinated by the country in history. they've also been good friends and allies of the united states. we need to treat them all with the respect they deserve. >> another area questioners wanted to know about was afghanistan. the president said he it is going to have his own surge in afghanistan, a commitment of additional american forces. general petraeus is now involved and is running our forces there.

is the president doing enough in your judgment to ensure that we are successful in afghanistan and pakistan? >> i think the petraeus appointment makes a lot of sense. he is one of the most capable officers i dealt with in government, including my time as defense secretary. he is a great choice and will do a great job. i think the surge of forces that the administration committed to and is now implementing is a plus. afghanistan is a very difficult set of circumstances. it is one of the poorest countries in the world. it is the leading producer of heroin. it has never really had a strong

central government. it has always had warlords operating in various places around the country. you are not going to get a full- blown democracy overnight out of a place that starts as deep in the whole of the afghanistan is under normal circumstances. on the other hand, we have got to get it right of the long haul. it was the base of operations for al qaeda when they killed 3000 americans on 9/11. that is where they trained. it is very important that they not revert back to a safe harbor or sanctuary for terrorists groups trying to kill americans. it is a worthy objective. i would like to see the administration not get tangled up in deadlines about when they will start the withdrawal of forces. i think that is a huge mistake. that says to the people in

afghanistan and the region that the united states will not stay the course. if they just wait this out, we will pack it in and go home. that would be a big mistake and raise questions in the minds of a lot of people about the worth of american commitments and whether or not we are prepared to do what we need to do. in the end, we can not send forces every place in the world. we have limited resources. it is also important that where we do operate that we help the locals get into the fight and be able to control their own circumstances to maintain the sanctity of sovereignty. pakistan is a related problem. they are neighbors of afghanistan. there's a lot of flow across the border. pakistan has a large population,

a strong streak of islamist fundamentalism. it has a significant stockpile of nuclear weapons. if pakistan ever goes to the dark side, we're going to have a big problem on our hands. we cannot afford not to be involved in that part of the world. we need to be there. it is a lot at stake. the strategy and so forth are subjects for debate. we cannot walk away. we did once before. we were actively involved. i was on the intel committee and house supporting the malaysia being -- mujahadeen against the soviets. then everyone turned and walked away. the next thing you know, you have the taliban government in afghanistan. in 1996, they invited osama bin laden to set up shop.

the net result of that was 9/11 and our loss of 3000 americans here at home. this is not the place we can wash our hands of and say it is done. >> a number of people in the audience wanted you to talk about your views on terrorism and preventing terrorist acts in america. you have been critical of the administration not taking advantage of some of the techniques that you believe were developed illegally during the bush administration -- were developed legally during the bush administration. >> the reason i spoke out on the counter-terrorism policy was because the first week in office, president obama was talking about how he was going

to scrap the surveillance program, enhanced interrogation techniques, and so forth. the thing that really offended me was he started talking about prosecuting the people at the agency that had been carrying out our policies. the policies have kept us save for seven and a half years. they were talking about going after enforcing these folks to hire lawyers, and prosecuting them for following the lawful orders of the president. think of the kind of precedent this sets. it says to people that you get a difficult order to execute, have to perform certain duty and responsibility on behalf of the united states government, and they have to look over their shoulder to decide whether the next administration will prosecute them for what the last

president told them to do. it is a huge mistake. the good news is that i sense they have backed off on some of their more outrageous propositions. i know that guantanamo is still open. [laughter] [applause] of the notion that we broke the law on the programs we have in place is simply not true. we went carefully to the justice department. we got their view of what the statutes provided for. things like the terrorist surveillance program, for example. this let us intercept incoming calls and communications between suspected dirty numbers, al qaeda in kabul and who they're

contacting in the united states. we put the program together and briefed congress. we got the senior leadership and got the elected leadership and have them down to the white house. i used to brief them on a regular basis. some controversy developed over the program. i sat them down in the situation room and brief them on what we were doing. i showed the results and asked if they thought we should continue the program. they were unanimous. everybody said absolutely. i asked if we should ask congress for additional authorization to continue doing it. they said absolutely not. it would blow the program. you will tell the enemy what we're doing to read their mail. that was unanimous.

nobody objected. that was an either house on the authorization we had. it all came about later in the 2008 campaign and so forth. i am hopeful that he will see a solid, steady hand and we will not have the kind of decisions about counter-terrorism policy that we talked about during the last campaign or that the president said they would pursue when they first got into office. >> let me ask you a question about the domestic policy of the bush and ministration. a lot of people at this conference have made this comment to me. i know you have heard it. it is not new to you. a lot of conservatives think all

of the good things the bush administration did that the one area that they could've done better was controlling government spending. they say that undermined our brand as republicans and led in part to the bad results for the party in 2008. do you have a comment on that? >> i cannot argue completely against it. the fact of the matter was we had a republican congress for several of those years. when the question would come up on whether he should veto the spending bill, the response on the hill was often about what he would accept. we want to work with you and not against you. if you say you are going to be to the bill, we will not send

it. we will send a different one. there was a natural inclination because we have the white house and house and senate, it tried to cap the notion of out and out conflict. i think we could've done a better job on spending. i will be the first to admit it. i was always concerned when we got into prescription drug benefits. the original objective was to grant additional benefits. modern medicine without prescription drugs is not much. i am living, walking proof of it. prescription drugs are often the key to survival. it has to be part of the package. in return, we wanted significant reform in the medicare program. we wanted to get a handle on medical costs and the huge

entitlement program that has yet to be dealt with. we got a prescription drug benefit but never got any reform. i think the criticism had some justification. the other thing i referenced was 9/11. it had a huge impact on our priorities. after 9/11, we felt that we had to undertake a lot of activity to make the nation safe. everything from setting up the homeland security department to military operations in afghanistan. there was a lot we had to do fast. it was expensive, no question about it. but we saved thousands of lives that would have otherwise been threatened if we had not responded as aggressively as we did.

i am glad to see the congress now, i believe the republicans appear to be serious about going after some of the spending. >> richard from santa barbara has a question. you may want to save this answer for your book also. he announced he could give us details on your meeting with then governor bush when he asked you to run as his vice president. were you surprised or shocked? did you accept immediately? what can you tell us about that meeting? >> i talked about that before. i will talk about it again. i had been approached earlier in 2000 by one of his associates about whether or not i will allow my name to be considered

for vice president. i said no. i had a good job. i was happy living in dallas. i have health problems. that would be an issue. i was in the oil business. that would be an issue. we're both from texas. that would be an issue. you cannot have the taxes electoral vote the past for two guys from texas. i had to go back and read- registered -- re-register in wyoming. we would not have been able to count the taxes electoral vote -- texas electoral vote. joe is not a bad guy, but you would not want him for your vice-president. [laughter] the second request was when the governor asked if i would help

him find somebody. i said i could do that. it was a temporary assignment. we could get it done in a couple of months and i could go back to doing what i wanted to do running the company. we went through that process. it was right after the fourth of july, a couple of weeks before the convention. i went down to the ranch outside crawford. this was before they have the new house built. there was a little frame house they were living in at the ranch. we sat down and spent the morning reviewing all the candidates and then had lunch, just the three of us. he took me out on the back porch. it was about 120 in the shade that day in texas. he said i was the solution to his problem.

i told him -- he did not offer me the job, but he made it clear he wanted me to be on the list. i told him i would run the traps and see what i would have to do if i were to make myself available. i had to worry about who would take over halliburton when i left. i would have to register in wyoming. a long list of things that had to be addressed. also said i wanted to come down to austin and sit down with him and others and tell you all the reasons why you should not pick me, why i am a bad choice. he said ok. the following saturday, and went down to austin and sat down with

and laiddent and cakarl out the case against me. i said i was from wyoming. there are only three electoral votes. [laughter] we went through the whole exercise. karl agreed with me. [laughter] he did not think i should be on the ticket. i went back to dallas. within a day or two, i got a phone call early in the morning. i was on my treadmill. it was the governor saying he wanted me to run as his vice presidential candidate. i have often have the suspicion that he never really gave up after the first request earlier in the year and always had it in his mind. he has never admitted that to me. maybe he will after he sees this. [laughter]

the thing that changed my mind and affected my judgment on it was that i worked with him over several months. i could observe his mind working about what he wanted in a vice president and what he was looking for. he was not going down the normal path of picking a vice president were you take a guy like lyndon johnson and bury him someplace. they did not even let him go to senate meetings as vice president. you get him out of the way and send him to funerals or whatever. he was not just worried about the electoral college vote and politics. he was really looking for somebody who could serve alongside him and be a participant in the process and get actively engaged. he liked my background.

he liked my experience and resume. i came away convinced that he meant it when he said i could be a major player in the administration and get involved in whatever i wanted to get involved in, have access to the meetings and policy debates. it sounded very attractive. he kept his word. we avoided a lot of pitfalls a lot of administrations have not avoided. it was not clear sailing all the way. we had our differences. but always got to voice my view. he always made the decisions. all things considered, for me it was a fascinating experience.

i loved it. [applause] >> we have a lot of young people in the audience. a number of them ask questions along the lines of what advice you have for them who are interested in politics and what to do something for their country, for those who want to pursue a career in public service. >> do it. [applause] i started out and was going to be an academic. i thought i wanted to be a school teacher. not that there is anything against schoolteachers. it is honest work. i got to washington on a fellowship, internship. there are a lot of internships now. there were not a lot when i started out.

there were only two in the wyoming state government in those days. i got one of them for 40 days in the state legislature. now there are tremendous opportunities out there all the time for young people who want to get some experience and participate. put your name on the ballot. there is a need for candidates. start at any level. you do not have to be president first time out to have a major impact on events. you can do it in your local community, the school board, the state legislature, whatever turns you on. it is a rare privilege that most of us come to appreciate the more we travel and get out around the world to see what is going on out there. there are a lot of troubles that a lot of other people have. you come back home to the united states of america and is whenever we make of it. you have the opportunity and

obligation to get out there and spend time, effort, and resources serving. if that turns you on, there are a lot of ways to serve. it does not have to be what you think of as successful political wars. you bring youngsters in, students, and give them exposure to the legacy of ronald reagan and ideas and principles that he operated in accordance with. it is a tremendous privilege to be able to live in a society and country like that. it will only be what it has been for all of us to the extent that we get actively involved with the next generation coming along. we have an obligation to pass along to the next generation in the best possible shape we can

leave that. the young folks have an obligation to pick up the burden and see if they can do it better than we did. >> the final and most important question on everybody's mind is who will win the super bowl tomorrow. >> packers. [applause] >> i am not sure there is unanimity on that. join me in thanking the vice president for being with us. [applause]