this resolution does not do anything to deliver on that promise. and furthermore, i hope that this body, both democrats and republicans, will begin to focus on the fact that we have millions of people who are poor, who are low income, and chronically unemployed, and whatever we do we need a yardstick and we need criteria and standards so that we can look at how -- what we do here on this floor elevates and lifts up people who are below the poverty line and helps them move into middle income status. this resolution does not do that, it's really a bunch of rhetoric -- i can't figure out what it's about. it does nothing. and it certainly does nothing to create jobs for those who we care about. thank you again. i thank you, mr. assistant leader, for the time. .

the speaker pro tempore: the gentleman from texas. mr. sessions: mr. speaker, at this time lide like to yield two minutes to the favorite -- i'd like to yield two minutes to mr. roskam. mr. roskam: thank you, mr. speaker, and i thank the gentleman for yielding. today the folks on the other side of the aisle are actually arguing in the alternative. we heard the gentleman from new jersey say, well, republicans, at least you're finally getting to. it you don't need this resolution. and the gentlelady from california says, the resolution isn't good enough. i think what is clear is one thing. what we've seen from the past two years has been failure, i mean, it's ironic. there's nobody, mr. speaker, that's on the floor today defending the economic policies of the past two years. the stimulus that promised 8% and obviously the overpromising and underdelivering. jobs are job one of this congress. it is imperative that we focus and what we're doing with this resolution is putting an --

putting work on these committees saying, your priority is to go through chapter and verse on these regulations and separate them out. the ones that don't add value, the ones that aren't making people safer, the ones that are complete nonsense, let's focus in on them, highlight them and remove them. we have to remove the barriers to job creation. that is our responsibility. that is what should be bringing us all together. and i urge the swift passage of this resolution and yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the gentleman from south carolina. mr. clyburn: may i inquire as to how many speakers on the other side? sex session -- session sgs i appreciate the gentleman asking and -- mr. sessions: i appreciate the gentleman asking. we have concluded. mr. clyburn: i would like to yield to close on our side to mr. carnahan, i'd like to yield him the balance of the time. the speaker pro tempore: the gentleman from missouri is recognized for the remaining

balance of time which is 4 1/2 minutes. mr. carnahan: thank you, mr. speaker. we just spent the past two days telling committees to do their jobs. why aren't we focusing on creating jobs? creating jobs for the american people. let me be clear, i'm in favor of a strong and vigorous debate here on cutting red tape and finding bipartisan solutions to our nation's problems. but to pretend the commonsense oversight measures, to protect families and businesses are inherently burdensome with no benefit fails to acknowledge the reality of the financial disaster that was brought upon this country on wall street. it fails to acknowledge the disaster of the b.p. oil spill in the gulf of mexico. it fails to acknowledge toxic toys and drywall coming in this country. it fails to acknowledge the increase and deadly food-borne

illnesses from lack oversight of our food safety system and it fails to acknowledge what the american people want us to work on right now and that's creating good jobs to support their families. i believe that we all want what is best for the people we represent, although we often have different ideas about how to get there. but to structure a debate that is so one-sided, that attempts to gloss over the very events that created this recession is not serving the american people. let's look at the entire picture. i will be offering a motion to recommit that will ensure we place a high priority on protecting the safety of america's food supply, safe drinking water and the safety of children's toys in this country. this is and should be an essential function of our nation's government. just last year a known carcinogen was found in amounts in excess of 90% in children's

bracelets imporlted from china. this stuff -- imported from china. this stuff happens far too often and without strong oversight and commonsense regulation, american children will continue to be put at risk. i don't believe any of my colleagues here are against protecting public health and ensuring that we are doing our can duty as elected officials to protect our constituents. that's why i'd like to reach out to my colleagues on the other side of the aisle and ask them to join us, join us in this motion to recommit which will instruct house committees to make the health and safety of our families a priority also. preserving commonsense safety standards is just as important as reforming overly burdensome regulations. let's work together to help create the environment that protects our citizens, let's move quickly to the jobs agenda that americans want and deserve. americans are still waiting for this house to take up the jobs

agenda. i yield back the balance of my time. the speaker pro tempore: the gentleman from texas is recognized. mr. sessions: thank you, mr. speaker. my point to the democratic party and the leadership of that party is, wait no longer. the republican party is now in charge in this house and our agenda is about jobs. it is about reducing spending. and it is about reducing the size of government. and today after 9 1/2 hours of debate we start with rules and regulations that not only stifle innovativeness that stifle it's inventions and jobs -- stifles inventions and jobs and job creation creags, but it's harming the way of the life of the free enterprise system and sapping the energy from that system. by reviewing existing and pending regulations from h.e.c.'s of the federal government, congress can begin to assist small and large

businesses' focus on job creation, economic growth and innovation. we first need to understand the too true impact that is being placed upon the free enterprise system. we know with the current rules that are in place, $1,750,000,000,000,000 is the cost annually to the economic free enterprise system. it's time for congress to reevaluate these rules and regulations. regulatory burdens are hindering jobs growth. they're hindering investment and innovation is eroding from the most basic elements of freedom in america. congress and this administration must work together. it made me proud to hear the minority leader, steny hoyer, say today that he would be a part of and vote for this bill. however, our opportunity today must direct our committees and the entire focus of congress to

take the first step in reining in big government, reducing our deficit and encouraging job growth and economic prosperity. this bill will shine the light on that process and will provide the necessary transparency and accountability for congress to be looking at federal agencies and rules and regulations. mr. speaker, my republican colleagues and i remain committed to putting america back to work and this legislation is a step in the right direction. i encourage my colleagues and all of the members of the congress who are here today to say that we want to bring jobs back to america, but we're going to look at the rules and regulations that inhibit that. i say we should all vote yes on h.res. 72 and i yield back the balance of my time. the speaker pro tempore: the gentleman from texas -- the gentleman from south carolina still has a minute and a half. do you yield back or reserve? mr. clyburn: i yield back.

the speaker pro tempore: the gentleman from south carolina yields back. the gentleman from texas yields back the balance of his time. all time having expired, pursuant to house resolution 72, the previous question is ordered on the resolution as amended. for what purpose does the gentleman from missouri seek recognition? >> i move adoption of the motion to recommit. the speaker pro tempore: does the gentleman call for the motion to recommit? mr. carnahan: read the motion to recommit. the speaker pro tempore: is the gentleman opposed to the resolution in its current form? mr. carnahan: i am opposeed to it in its current form. the speaker pro tempore: the gentleman then qualifies. the clerk: mr. carnahan of missouri moves to recommit the resolution, house resolution 72, to the committee on rules with instructions to report the same back to the house for thewith, with the following amendments, at the end, add the following new section, section 4, priority in carrying out the requirements of section 1, relevant committees shall place a high priority on preserving the standards that ensure the safety

of the nation's food supply, safe drinking water and the safety of -- safety of children's toys. the speaker pro tempore: the gentleman from missouri -- without objection, the previous question is ordered on the motion to to recommit. the question sont motion. those in favor say aye. those opposed, no. the ayes have it. the gentleman from missouri. mr. carnahan: i ask for a recorded vote. the speaker pro tempore: does the gentleman ask for the yeas and nays? mr. carnahan: we ask for a recorded volt. the speaker pro tempore: both sides ask for the yeas and nays. the yeas and nays are requested. all those in favor of taking this vote by the yeas and nays will rise and remain standing until counted. a sufficient number having arisen, the yeas and nays are ordered. members will record their votes by electronic device. this will be a 15-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of

representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

1:30.

the speaker pro tempore: on this vote the yeas are 178, the nays are 242. with zero answering present. the motion is not adopted. the question is on passage of the bill. those in favor say aye. those opposed, no. the ayes have it. the gentlelady from tennessee. mrs. blackburn: i ask for a

recorded vote. the speaker pro tempore: a recorded vote is requested. all those in favor of taking this vote by the yeas and nays will rise and remain standing until counted. a sufficient number having arisen, a recorded vote is ordered. members will record their votes by electronic device. this will be a 15-minute vote on adoption of the resolution. pursuant to clause a of rule 20. this will be followed by a five-minute vote on appeal -- on approval of the journal. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the speaker pro tempore: on this vote, the yeas are 391, the nays are 28 with zero answering present. theres. sugse is -- the resolution is adopted and without objection the motion to reconsider is laid on the table. pursuant to clause of rule 20, the unfinished business is the question of agreeing on the

speaker's approval of the journal on which the yeas and nays are ordered. the question isen agreeing to the speaker's approval of the journal. members will record their votes by electronic device. this is a five-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the speaker pro tempore: on this vote, the ayes are 344, the nays are 50, with one voting present. the journal stands approved. the house will be in order. would those with conversations on the floor in the well, at the railing, please take the conversations off the floor. again, the gentlemen to my left if they would take their conversations off the floor.

the speaker pro tempore: again, the house will be in order. for what purpose does the gentleman from maryland rise in mr. hoyer: i ask unanimous consent to speak out of order for one minute for the purposes of inquiring from the majority leader the schedule for the coming week. the speaker pro tempore: without objection, so order. mr. hoyer: thank you, mr. speaker, i yield to my friend the majority leader, mr. con tore. mr. cantor: i thank the gentleman for yielding. on monday, the house will meet at 2:00 p.m. for lebling -- on thursday the house will neat at 9:00 a.m. for legislative business, no votes are expected

in the house on friday. the house will consider two bills next week. on monday the house will consider h r. 514, a bill to extend for the short term three expiring provisions of the u.s.a. patriot improvement act of 2005. as the gentleman know we passed the rule for its consideration yesterday. the balance of the week will be spent on h.r. 1, a bill to fund the government through the remainder of the fiscal year. i yield back. mr. hoyer: i thank the gentleman for yielding. let me can the gentleman, he mentioned on thursday, is the gentleman confident we'll be leave big 3:00 or shortly thereafter on thursday? he doesn't expect us to be here on friday? mr. cantor: the gentleman is correct. the gentleman asked about the time in which we will be finished -- mr. hoyer: mr. speaker, i can't hear. the speaker pro tempore: the member is correct. the -- the gentleman is correct. the members will suspend. if we can ask those having

conversations of their own on the floor, in the aisles at the rear of the chamber, before we hit you if you will take the conversations off the floor. . if you'll suspend just for a moment still. thank you. the gentleman may proceed. mr. hoyer: thank you, mr. speaker. mr. cantor: i say to the gentleman from maryland, he is correct that we expect to abide by the calendar and the provisions set forth therein intending to depart here by 3:00 p.m. on thursday of next week. mr. hoyer: i thank the gentleman for that comment. i know the gentleman will be brief today, but i do want to ask a question with reference to the 302-a allocation, 302-b allocations that the appropriations committee dealt with and dealt with a product consistent with those numbers. it is my understanding, am i

correct, that that has now changed, or is expected to change in terms of the 302-b allocation numbers? and that they are being modified as i understand it they have not been modified in the appropriations committee, will not be subject to a vote in the appropriations committee, and that that number out of the appropriation committee may not be the number that will be reported out to the floor next week, is that correct? mr. cantor: i'd say to the gentleman 302-a was always intended to be spending brought down to 2008 levels or less. that is the intention of the bills that will come to the floor next week, h.r. 1, that we will abide by our commitment to reduce discretionary -- discretionary nonsecurity spending by $100 billion for the remainder of the fiscal year. mr. hoyer: i thank the gentleman.

will there be another markup of the appropriations committee to attain that number? i yield to my friend.

called to receive filling out her taxes. or take george, again a resident of the 21st congressional district, a senior who suffers from seizures, who called because he couldn't afford medicaid deductibles. these are the benefits of 2-1-1 northeast region. mr. speaker, i yield back. the speaker pro tempore: thank you. the gentleman from oregon. is recognized for a minute. mr. blumenauer: thank you, mr. speaker. this next week we are going to have a very interesting conversation here in washington, d.c., where the deal that some of our friends -- zeal that some of our friends have for both an ideological agenda an effort to try to cut government spending wherever they can will put

public broadcasting in the crosshairs. i think it's an unfortunate development, one that's going to be a disappointment to the 170 million americans who rely on public broadcasting every month. it's going to be particularly unfortunate if this agenda succeeds because it's not going to punish people in new york or portland, oregon, or seattle, or san francisco, they will always have public broadcasting although it will be diminished because of what some of my friends on the other side of the aisle hope to accomplish. but the real losers are going to be people in small town and rural america. it costs 11 times as much to broadcast a signal to the far reaches of eastern oregon than it does in the metropolitan, -- metropolitan portland area. people should watch this discussion carefully. a lot depends on it.

the speaker pro tempore: the gentleman from virginia. mr. moran: unanimous consent to address the house for one minute. the speaker pro tempore: without objection, is recognized for one minute. mr. moran: mr. speaker, both sides of the aisle agree that the top three priorities for this congress are jobs, jobs, jobs. but when you look at what the new majority wants to do with the federal budget, you really have to wonder are they serious? now, in the private sector we have actually seen job growth for the last 12 months. 36,000 more jobs last month. but we have lost hundreds of thousands of public sector jobs. and what should be of most concern to all americans is that since 2008 more than 200,000 public sector jobs in the education arena, primarily teachers, have been lost. and at that very same time student enrollment has gone up by 750,000 students.

so you lose 200,000 educators while student enrollment goes up 750,000? that's our seed corn for our future. and what's going to happen with this new budget that we will be debating next week is that it is going to be far worse than anything we could have imagine. that will hurt the future of this great country. thank you, mr. speaker. the speaker pro tempore: thank you. are there other requests for time? seeing none, pursuant to clause 12-a of rule 1, the house will stand in recess subject to the call of the chair.

>> treasury secretary timothy geithner today unveiled the plans for home mortgage companies fannie mae and

freddie mac. he called for unwinding the companies over the next five to seven years and sharply reducing the government's role in the housing market. the administration also proposes requiring a 10% downpayment on home purchases among other proposals. from the brookings institution, it's 30 minutes. >> i'd like to welcome everybody to brookings. i think we have a very exciting day. we're going to start off with a great treat, which is to welcome treasury secretary tim geithner. tim, of course, needs no introduction. as you know, he has been one of the key players with ben bernanke, larry smors, henry paulson in stemming the tide of this financial crisis and starting to turn the economy around. he also has been the architect of the financial reform proposals that bames became the

dodd-frank bill. and one of the pieces not included was what to do about the g.s.e.'s. so now today treasury released a white paper describing their plans on that issue. and we are just very delighted that you chose to come here to brookings to talk about it. so let me ask you, first of all, if you would give us a sort of brief description of what the plan is and how is it going to be implemented. >> thank you. nice to be at brookings. you guys have good timing today. i'm glad you've given me a chance to come in at the beginning. so we have done a lot of things wrong in the housing market in the united states. and it is a complex system. and reform requires a careful strategy that includes a number of different elements. let me just lay out the pillars of the basic foundation of what we think is a incredible reform

plan. the first, of course, is that we need to wind down fannie and freddie and substantially reduce the government's footprint in the housing market. that's a process that happens gradually because they are now the dominant source of housing finance. we want to be careful that that process happen in a way that doesn't interfere with or impede the process in repairing the housing market that still has a long way to go. for the private market to take on a greater share of the burden of providing housing finance, we have to have in place outlined and understood a new set of rules of the game for all the pieces of the mortgage market. that means clarity on the capital banks have to hold against mortgage risks. it means stronger underwrying so that homeowners hold -- underwriting so homeowners hold more equity in their homes it means better protection for consumers and all others involved in the basic chain of housing finance.

if means -- it means better incentives for securization. that comprehensive set of reforms that are laid out in dodd-frank have to be put out to the market to give investors and banks time to adjust, to understand what will be the new economics of making mortgages in this country. the third piece is to define a substantial but more targeted role for the government in supporting affordability both for people who want to own a home and people who want to rent. the paper lays out a series of basic elements of a reform role for the government. concentrate on the f.h.a. in helping support those basic objectives. and finally, of course, is the end game. taking advantage of a lot of work that many of you have done, we provide a brief overview of the full spectrum

of options throughout for future reform. and we try to narrow the field to a more credible set of ultimate reform options. the three we lay out on the paper, just to summarize briefly, are an approach that's limited to the role the f.h.a. provides, a proposal that would complement the f.h.a.'s role with an emergency backstop mechanism that would only be deployed in crisis. and a third option is an f.h.a. alongside a re-designed and much more limited but standing guarantee or insurance mechanism that would be available for broader class of homeowners. those all have very different implications for the nature of the government support, for the vulnerability of the market in future housing, crises, future recessions. and we think it's helpful for the broad set of stakeholders in the country and on the hill to spend some time trying to

fully understand the implications, the disadvantages of those mix of options. in laying this out, we do take the view where a government plays no role. we also think it would not make sense for the government to be in a position of ongoing basis of guaranteeing 80%, 90% of the mortgage market which many people have suggested. so we start this process of legislation with a white paper, which i think is a good way to do it. there's going to be a long process of hearings on the hill. when we get a little further in that process, then congress should be in a position to legislate. we will, at that point, provide our views more directly on what mix of those final options makes sense. but, again, we're going to make sure we have ideas. there are a lot of good ideas. we'll try to draw on those on this paper and continue to work very closely with the stakeholders off this process so that we're take willing

advantage of the best ideas for reform. of course, we need to proceed carefully and gradually not just because this is very complicated, but, as you know, we are still living with the traumatic damage, scars, by this recession. you see those in housing most powerfully. >> in the plan, you retain an important role for the government in helping affordable housing. helping people either rent yam housing or ownership -- rental housing or ownership. we have a range of papers for this conference that cover the spectrum. but there is a view that the effort to provide affordable housing is really what brought down the housing market. that was, you know, do-gooders that thought they should get everyone into a home, and we ended up through c.r.a. and through these affordable housing goals, that that brought down the global market. could you comment on this sort of affordable housing and the role you think it may or may not have played in the housing

crisis? >> i think it's absolutely the case that the u.s. government provided too much support for housing, too strong incentives for investment housing. we just took that too far. alongside that basic set of mistakes in the incentives we created, we allowed our financial system to take on too much leverage. we allowed a huge amount of basic mortgage business to shift where there was no regulation and oversight. we allowed the market to build up really terrible incentives around underwriting secure advertiseation. we allowed underwriting septemberers to erode dramatic -- centers to erode dramatically. i think they were avoidable mistakes. again, it's foreign recognize that this was not just about what fannie and freddie ultimately did to follow the market down. it was about a much more comprehensive set of failures in the basic design of

oversight and incentives in the system. so absolutely the government did too much. and what it did, it did quite poorly. and, as you know, a lot of the basic subsidies in a sense the government provided were not really targeted to people who were at the lower side of income across the united states. so our general view is there's a very important role for the government not just in providing access to affordable housing but in getting the incentives better, oversight better, constraints on risk taking better, underwriting that is more conservative. that's a critical part of this reform plan. >> now, sort of in the other direction a little bit, there is a viewpoint -- well, there are two parts to it. let me take this part, which is, that inevitably there's going to be a huge mortgage market. we have $10 trillion -- who knows if it will be bigger in the future.

at some future time, maybe 20 years from now, there might be another housing crash like this one. so that risk, then, who's going to bare that risk? is that going to put our financial system under stress even if we have no fannie and freddie? and is there a role for the government to provide emergency assistance when you get that kind of crash of the housing market? i think there are things you're trying to build in which would make such a crash less damaging. >> all financial crises have at the center -- most do -- this real estate bus and bank mistakes. we're not unique in that context. to make sure the system is more stable in the future, more resilient against the risk of future recessions or house price booms and busts, you need to have a system where again

banks hold more capital against risk, people have more equity in their homes. and the government is not creating incentives that magnify the chance you have these huge imbalances over investment in housing over time. now, i think it's worth noting, at least my view, is that even if you get that stuff substantially better -- and we will. i'm confident we can do that. we're still going to have recessions in the future. you want to be very careful you don't left country vulnerable as we were in this crisis to the risk that the shock that causes a recession turns into a crisis of these dimensions. and that require there be some capacity for the government to step in and protect the economy from the collateral damage that can come from that sort of crushing deleveraging, a big withdrawal of private capital

that happens in chrisees. but, of course, doing that is terribly difficult. governments don't do that well. people think guarantees are cruel and -- cool and interesting, but they are very hard to do in a way that doesn't create the risk that political forces end up making them too generous, too cheap and und mining the insen -- undermining the incentives. why we laid out the options we did is it's very important for people to think through the design questions so, again, we don't end up re-creating some of the same risks that got us in this mess. >> could you say a word about the role of securityization -- secure advertiseation in this? historically, the last 20, 30 years or so, the u.s. has been a large capital importer. i think you and i would like it better if we had less of a capital import. >> capital was at the peak, i just want to say.

>> sorry? >> our current is half what it was. that's a good thing. >> definitely. but anyway, we are somewhat reliant on in flows of capital and securization, therefore, tends to play an important role if that in flow will support the housing market at all. we got into a lot of trouble with securization. nontransparent c.b.o.'s. you talk about that in the paper. could you say a bit more about, do you think we should revive securization? how do we revive securization? and how do we stop it from getting into trouble in the way it has in this crisis? >> we should preserve a financial system that in which banks are a substantial source of credit but not the only source of credit. and their voluntarily complemented by a capital market including securitization

market. we are somewhat unique in that system. and making sure that works over times requires the reforms i laid out. and that the design of capital requirements, other things like that, are more evenly applied and better call brate to take into consideration -- calibrated to take into consideration in the future. but i think those are achievable reforms. i think it's pretty clear what we got wrong. i think there's a lot of consensus on changes to make a big difference. i would not support trying to create a system where banks are the overwhelmingly dominant source of credit. think that would leave economies more vulnerable to the inevitable problems that comes with banking, you know, familiar problems to many in this room about banking. but, again, just to go back to

one thing. again, there were a lot of mistakes in how we designed the housing market. but at its core this crisis was caused by a whole range of people -- lenders, homeowners, investors, policymakers -- not imagining the possibility of a severe recession that would include a very sharp housing crisis. central to anything about reform in the financial system is that you make sure the capital regime, the oversight regime, credit rating processes build in more care and caution about the risks of the severe event in the future. >> in the paper you talk about wanting to move to a 10% downpayment regime. so two questions. is 10% enough? some people say we need 20%, which a lot of countries have. and the second is, how do we

deal with the sort of second mortgage issue that people in fact, say they're getting at 10% but then the primary mortgage holder doesn't know that there's a second mortgage on top of that. so talk a little bit about what i think is right. we need to get the loan-to-value ratios in the right place. how do you set 10%? how are you going to enforce something like that? >> i think fundamental is the basic proposition that homeowners have to hold more equity in their homes and build in a greater cushion in their homes. we want underwriting standards and whatever the role the government is playing to make sure they're reinforcing that basic process. what the report says is that we think -- if you think about fannie and freddie for the initial state of this transition, there should be a combivende limit -- combined limit l.t.b., combined limit, at 90%. again, i think there's an overwhelming case for moving the system over time to where homeowners hold more equity in

their homes. now, there are costs to doing that. there's like hundreds of stories of businesses started in this country financed by people being able to borrow against the value of their equity at inception. not just on the credit card but against their home. we're going to have to figure out how to make sure we don't go too far in the other direction. because, again, ultimately what's the critical test of a financial system? you really want to make sure that it has the possibility of channeling the savings of americans and investors around the world to finance innovation. including a lot of innovation comes at that level, in the garage classically or somewhere else. we got to be careful we don't push the balance too far. >> we've mentioned already a little bit about rental housing.

but part of what you're saying in this white paper is that maybe we went too far on the homeownership and we need to make sure that people who want to rent or it's better for them to rent have the opportunity to rent. so what is the plan to improve access to rental housing? >> that's something my colleagues at hud are going to be responsible for shaping. i'll leave it to them. . be principally responsible for shaping and i'll leave it to them. we make suggestions in the paper but again the fundamental point is too much of the assistance the government has provided to individuals went to homeowners. d there is a fundamental unfairness in that. and so we think we should alter the balance where the government is going to provide a subsidy in a way that redresses that basic unfairness. >> you have laid out some options. could you just clair pfy what a

the options you want congress to consider? >> i want to start with one observation. if you look across untries, people do this in different ways. and in a sort of simple way you could say there was our model where you had a variety of quite broad-based and very poorly designed guarantees by the government, explicit/implicit. alongside a privatemarket. and you have at the otr extreme in lots of countries a system where banks really hold an overwhelming share of mortgage risk. and people tend to think about this about a guarantee or not a guarantee. that's not the way to think about it. in an alternative model whe banks hold all the risk, the governments provide a guarantee but doing it through the classic broad support for the banking system. they don't charge for it. it's not explicit and it's -- it has a lot of other risks to how

you think about financial stability in this context. some people say you can manage risk in banks more carefully, more easily. we understand the risks there better, which may be the case, although as you saw it's not as easy as people think. so the choice is not really between rough going to provide a guarantee or not. it's in designing it so that where it is, it's explicit. the taxpayers aren't too exposed. you're not creating bad risk ta. and that's sort of i think a helpful context. the three broad options we lay out are what we call the fha only model where the government's role is limited to a guarantied mortgage that would only be available to people up tothe median income. second option we allow as a complement to that is an emergency backstop framework that we deployed only in the context of a crisis. a good example of this is a

suite of facilities that the federal reserve. it's nice to see don cohen here, put in place in the fall of '0 and early '09 to provide a backstop for markets. in the context, the way that would work, you would set up this mechanism whereby the market would be more willing to provide financing to mortgages because there would be a backstop in place temporarily, and if you get the prici in that right, as things improve, demand for the backstop will recede and you can wind down the facilies as the fed did so deftly in the crisis. a third option, there are a lot of proposals in this arena, in this neighborhood, is a fundamentally redesigned, much more lited guaranty or reinsurance mechanisms where there would be a lot of private capital ahead of the government, and the markets would be charged a fee for that guaranty. it would be explicit by the

government, but the taxpayers would be behind a lot of private capital, and if the government mispriced the guaranty and was exposed to loss, that would be recouped in the form of a fee on the boader market over time. it has some similarities to the fdic regime, deposit insurance regime, although et cetera much more complex in this context. that's the credible set of options, but you can't think of them in isolation. it's possible, of course, that what we'll do in the end is decide on a mix of those options. again, you have to think about them interms of what risks do they pose to the taxpar, how difficult is it going to be designed the guaranty in a way that doesn't get the insennives wrong and leave the taxpayer too exposed. what kind of protections do you want to build in for the country in the next crisis, and whether that can be provided through an emergency backstop mechanism or requires the government taking

even at normal times some of the extreme risk of credit and mortgages off the burden of the private market. but that's a mix. we're in the, i would say -- a lot of ideas and those dimensions. again, just to magnify the challenge, for this to be done -- we, you have to take it away from politics. you can't take anything away from politics, but we have to take monetary policy away from politics. hugely important fundamental reform in central banking. it would be nice to take fiscal policy away frompolitics, that's not foreseeable. if you're going to do this, you're going to get into this mechanism of designing a guaranty, the people charged with doing it will be more independent from political affection, enthusiasm, influence

than our system proved to be before. >> you're sort of talking about a pretty staged out wind down for fannie and freddie, it would be over several years. i personally think that's inevitable, you've got to do that. i think someone could look at that and say, you know, on both sides of the aisle, people complain about fannie and freddie. at the end of the day, they want those mortgages because they're so important to their constituents and you're going to put it off for three years, five years, six years. actually this never going to happen. what would be your answer to that? >> well, i think it's a good question. of course, any framework, let's think about fiscal policy. any framework where you're promising future virtue is -- will suffer from credibility issues, but this is really the only way you can do it. what we're proposing, we laid

out the first stage of more economic pricing, more sensible set of initial reforms to get the economics better, and what we're suggesting is the fhfa which has the legal authority over this for fannie and freddie and the fha lay out to the market an indicative transitional path for comment, in a sense, for feedback. they can lay that out. the market c figure out wt that path is. we have to revisit over time, because we won't have perfect knowledge about how long this process of repair will be or where the pricing should end up. that will help reinforce the momentum, the change and make it harder for people ultimately to step back from that transion. now, again, we have some important things working in our direction apart from the general recognition that this system is untenable, that is that they don't want the taxpayer exposed to loss in the future. they recognize the model we have is fundamentally unacceptable, and the option of doing nothing, leaving ourselves only with the

legislative authority that exists in what's called harrah, woulput us in a position where weisk recreating a lot of the flaws we created in the system. we did financial reform when the crisis was still burning in the united states. we did that in part because we thought that you want to act when there's still a substantial amount of political will. and i would s the same thing in housing. you don't want the process of reform to wait until things are fundamentally better and the memory has receded. it will take a long time for the memory of this to recede. although we're starting with this white paper, we don't want legislation to be too far deferred. we can do this initial transition thing without legislation, but ultimately, we're going to have to explain to the market what the end game is going to be. we can't wait too long to lay that out. >> fannie and freddie will remain as government held utilities in this transition peter. >> they will.

they have to. >> let me take a question or two from the audience. karen? >> thanks. karen dinen from brookings. your paper lays out several alternative proposals. we're going to see more alternates laid out over the course of today's conference. all told, it seems like we might be a ways away from locking in on a plan. i was wondering if i could build on your last response. do you think this lack of a plan is hindering the mortgage market recovery, hindering mortgage origination and securitization while at the same time increasing the government's exposure to risk? >> i think the three things that are still in the way of broader recovery are, one, the economics ofhat the government is doing now, because what the government does now in mortgages is more attractive than what the market is willing to do, you're right. that's why we want to begin the process of changing the pricing

and the ltv conforming limits to help facilitate that transition. the second thing is lack of clarity about what the rules are going to be over the rest of the private market for mortgages. the act requires a complicated set of rule writing acrs the board. we're the responsible agencies are starting to lay that out. but until that is in place, people can see them, those final rules people can see, it is going to be harder for banks to decide how much capital they want to put against this and for investors to decide what role they want to play in this. that's a necessary precondition. the third is realistically, just a little bit of time. again, we're three years into the process of adjustment of the housing markets. we probably have three more years left, and, you know, we're still pretty close to a deeply damaging financial panic, so we need a little -- we need to have a little more time for that

uncertainty about the future to be reduced a bit. i think those things require a little bit of time. i think we lay out at least notionally, a three stage plan, the three steps in walking about the government's role, comes alongside putting in place the broad rules of the game er the private market, and then, i say -- we say two to three years cause we feel the housing market still needs two to three years to recover. the second stage which is going to accelerate that process of transition. ultimately, we have to choose this framework. i think our suggestion is that congress try to legislate the next two years, even though you don't have to lock in that successor regime until probably five to seven years from now. the way we describe this, we're going to drive west. we're driving -- everybody wants to go west. we know where we want to go.

somewhere around salt lake city, we'll make a choice about ultimate options. >> questions? yes. alice? do you have a microphone? >> your paper basically supports the role of the government in affordable housing, both rental an home ownership and suggests that we do it on budget. we appropriate a balance for this rather than try to hide it somewhere. that all seems to be good, but in a moment of great budget posteri posterity, when everything is going to be facing cuts, won't it be sort of a hard sell to set up new kinds of programs that are oriented toward affordable housing? >> i do think it will. but as you know better than

anybody, you know our long term fiscal sustainability oblem is fundamentally about long term entitlements, particularly the cost of health care. i think there is -- we, as a nation, can absolutely afford to make and commit to a set of targeted assistance for low, moderate income americans. i think the challenge again is to do that in a way where it's more targeted and more transpare transparent. i think that's something we can afford. as you know better than anybody, we're not going to serve our long term fiscal problems by just by spending less in what we call nondefense disctionary spending. we're going to spend less in those areas, but we're still going to have to make sure we

can sustain the capacity and we can afford it to make sure we're making investments in things that are critical to our capacity to grow in the future and to make sure we're providing broad opportunity to americans acss the income spectrum. i think it's affordable. the polits of all this stuff will get muchharder. >> thank you very much. secretary geithner. >> a look at the white house where president obama will address the nation shortly on the situation in the egypt. he will speak from the grand foyer and we will have live coverage starting at 3:00 p.m. eastern. then we open our phone lines for reaction and take calls until spokesman robert gibbs told his last briefing. we will have that live right around 3:30 p.m. eastern. developments continue to unfold egypt. early this afternoon the egyptian military released a

statement. this is about two minutes. >> statement no. 3 from the supreme council of the armed forces. at this historical defining moment in the history of egypt and after handing down the evolution -- resolution by president hosni >> to run the country's affairs. we are all aware of the gravity of this matter. in the face of the demands of our great nation, nationwide, to implement radical change. the supreme council of the armed forces is examining this matter , taking support and assistance

from god in order to -- the supreme council of the armed forces will later hand down resolutions and statements defining the measures and actions to be followed, emphasizing at the same time that there is no alternative but legitimacy acceptable to the people and the supreme council of the egyptian armed forces. within this context, the supreme council of the egyptian armed forces will extend all the appreciation and salute the memories of all the martyrs who have fallen, who have sacrificed their lives for the

freedom and security of their country, and to all the nation's world wide, who seek guidance and assistance from god. >> those comments brought to us by the elder 0 network. a quick reminder that we have lots of information -- by the al jazeera network. there are links to our social media site, where we welcome comments and reactions to what is going on in egypt. that is all at c-span.org now to take us to the top of the hour in the president's remarks, here is a look at the house intelligence committee from today's "washington journal. host: we have that the table this morning the top democrat and republican of the house intelligence committee.

the new chairman is mike rogers, republican of michigan and his democratic colleague, dutch ruppersberger of maryland. thank you very much for being with us. i want to learn more about your views of what you heard about global stress, but i also want to talk to you about how you want to organize this committee. you have been talking very publicly about your collective goals on bipartisanship and oversight. i want to play what you heard from egypt yesterday and use as a jumping off point for your views on the kind of intelligence you think the white house and the congress is getting. >> because of what happened in tunisia, we were in a much better place to look at egypt and what was happening in egypt. we provided a number of reports about what was taking place. as you can see, i got the same information you did. there's a strong likelihood

mubarak will step down this evening, which would be significant. >> if you had to give it a great, how would you give a real-time intelligence as is currently unfolding and has unfolded in egypt? >> i would give it at least a b- plus. host: mike rogers, what grade would you give the intelligence? guest: a-minus. they did a great job early on of saying we know there are problems in egypt. they knew there were problems in tunisia. it could not pick the time that it was going to happen, but intelligence about the problems were there clearly. more importantly, once it happens, once the protests started, the real question was, did we have real-time intelligence? what were people thinking?

i thought it was very good in real-time intelligence so that policy makers could keep up with the decision-king matrix -- the decision making matrix. i thought all that was very good. host: mr. ruppersberger, when you have leon panetta saying that is likely mubarak is stepping down and then it turns out that he does not in fact step down, what does that signal to the public about what washington knows? guest: as far as confidence, i have great confidence in our intelligence community. we have dedicated men and women throughout the world collecting information and analyzing information. it showed that you just cannot predict what is in someone's mind. you look at what happened. the issue started when a person

set himself on fire in tunisia. that started an uprising. the dictator of tunisia, who everyone thought would come down strong of any type of protest ended up leaving. you have the situation with the mubarak and it shows there's no crystal ball. we're looking for the trends and information. end-game is to protect our country from globalized threats. host: we will be opening our phone lines. you can also contact us by twitter and e-mail. we welcome your comments or questions. we hope you had an opportunity to see all or part of the hearings before the committee yesterday where they heard from the intelligence chiefs about the global threats.

the headline coming out was the threat from al-qaeda. can you tell us a little bit more about the state as a threat to americans' right now. guest: al-qaeda, over the last 10 years, since 9/11, has changed quite a bit. they have hathen affiliated with groups who would not have considered themselves al-qaeda members, but were terrorist groups who used violence to complete their goals. they started to get these affiliate's joined together. in northern africa is a great example and al-qaeda in the arabian peninsula and yemen and places like that. they have joined the al-qaeda network. that increases the number of threats that the united states had to defend against. the challenge for us is that they have gotten more sophisticated and they have gotten larger through their affiliates. and it means that their finances

have gotten stronger because all of these affiliate's now pay into al-qaeda to sustain the efforts. when they say it places a bigger challenge today than 9/11, that's what they're talking about. host: in a written statement, mr. clapper suggested that the complexity of the threats and the ubiquity makes the challenge for intelligence community's even greater. what should americans feel about the level of safety or threats overall? guest: we always have to be concerned. 9/11 showed we were not ready for that attack. when you look at terrorism from a global point of view, we have to focus on how al-qaeda recruits individuals. that's why it's so important that we start working with the hearts and minds of different countries. for instance, in pakistan, afghanistan, trying to stop the

training and education of extreme right-wing radical groups that are anti united states and anti israel. we have an example in afghanistan. we are trying now to educate young your children and counter what is going on in a lot of the other areas where these individuals are being trained -- even further, being trained to be suicide bombers. from our point of view, we have to look at the worldwide threat from each country. we have to look at the training and analyze it to protect our country from terrorism. host:. cia director leon panetta once again on the threat of cyber attacks. >> the cyber a green that is

this vastly growing area of the information that can be used and abused in a number of ways, but when it comes to national security, i think this represents the battleground for the future. i have often said that i think the potential for the next pearl harbor could very well be a sniper attack. host: what does he mean by that? what does a cyber attack to the equivalent of pearl harbor mean? guest: think of where we have come. this started with a guy in his mom's basement trying to hack into the local bank and bragging about it to his friends. it has grown from that to all nations states dedicating a huge portion of their budgets to develop an offensive capability on cyber, meaning they can shut down or attack our servers in government or the private sector. what he is talking about -- if

it were to be successful, and our folks are getting good and better every day, to be successful to shut down whole portions of our government to attack infrastructure energy grids and shut them down and have a major impact on the economy and on our ability to defend ourselves, not only from a government perspective, but a commercial perspective, as well. there are tens of thousands of attacks every single day. this problem has grown exponentially in a very short period of time. we only see the number of attacks increasing, not decreasing over time. host: how are we girding ourselves in the public sector and the private sector against the threat? guest: i will give you the long answer. i was chairman of the technical tactical community of the intelligence committee that oversees cyber security. in my opinion, based on that four years serving in that

committee, i think the cyber threat is one of the largest we have in our country. we are being attacked every day. other countries are getting information, whether it is military information, intelligence information, commercial trade secrets, corp. information, because of these cyber attacks. for a while, we were not where we needed to be as a country, but i give credit to admiral mcconnell, the former director of international intelligence, who made this a major issue. what do we need to do? nsa is as good as anybody in the country in developing technology to try to protect us from cyber attacks. .

what we need to do first is make the public aware, and the public needs to understand how serious this threat is and how we can protect ourselves from this threat. it's going to cost millions of dollars to protect not only did the government cannot pay for it all. we have to make sure that the private sector understands where the threat is. an example of what is occurring out there is wikileaks. wikileaks hurt our country and our ability to get information. when certain companies that we are dealing with decide to pull out from the relationship, they were attacked, and the public so that they were attacked. it is very, very serious. especially when it comes to bank records of every month. it is all based on records. suppose that your account has been hacked and you have a million dollars loan. there have been cyber attacks on

individuals those doing this have the ability to wreak havoc with our technology. i think right now is a major issue. the confidence level, nsa is one of the best at what they do. bridge to coordinate with the public. we will be dealing with this a long time. host: i am getting messages from twitter like this. concern about privacy rights and people's own constitutional rights and growth of surveillance, and also the cost. we will come back to those after we hear from a few callers. baltimore, aaron, republican line. caller: yes. the number two terrorist fox news reported he was eating at the pentagon after 9/11.

explain about government involvement and why that is never talked about. just focusing on american people. host: i think it is a concern about conspiracy. guest: sure. i think there is a lot of misinformation out there about these types of issues. he was in the united states and was trained here, went to school he here, really self-radicalized here and reached a point where he wanted to go overseas and declared himself a non-u.s. citiz citizen. affiliated himself with al qaeda and joined the declaration of war on the united states. so this was a transformation of an individual who had pretty strong beliefs and now presents

himself as a dangerous terrorist in the al qaeda network. i say that because his goal is to recruit americans and western europeans who have no visa requirements to come to the united states, to radicalize and commit acts of violence to kill u.s. citizens. that is the concern of the united states, how do we stop that and educate them to make sure they are not being radicalized here at home to cause what are terrorist events. the great example is the fort hood shooting or times square bomber in new york. both of them were people who were radicalized by external forces and were driven to do and attempt to commit acts of violence. and unfortunately in the case of hassan in texas he did commit an act of violence. host: chairman rodgers was a

u.s. army officer and company commander. he became an f.b.i. agent and personal agent investigating public corruption as a member of the chicago bureau's organized crime unit. that was 1988 to 1994 then michigan senate in that body before coming to congress. dutch ruppersberger is in maryland's second district on the intelligence and armed services committee. he was a baltimore county executive and on the county council but is a lawyer and served as a county prosecutor. so, lots of experience in the justice system and with organized crime, gangs and brings that experience to bear. i will go to the next call from chico, california, steve is a democrat. caller: hello.

i understand we are talking about national security, and i have an issue here within the united states i was wondering about as far as national security. being terminally ill and having aids i have to wonder why i face having my door kicked in over medical marijuana when we can't control the tpfederal borders t make sure immigrants are not growing it to trade for other drugs or weapons. guest: the first thing, let's talk about knocking your door down. we live in a country that has checks and balances. our forefathers created a great system of government. law enforcement is not going to knock down your door unless there is probable cause which means law enforcement has to go to a judge to go into your home. there are many issues we deal with in the united states. you alluded to immigration. i feel strongly we need to deal with the borders and you mentioned marijuana. we need to deal with the issue of mexico.

we have put so much money into the middle east and to fight terrorism but we have turned our back on one of the real threats to the world and that is drugs. not only people who sell them, people who use them and the crime as a result of that. it is a matter of prioritizing what is best for our country. that is what we are elected to do and as far as constitutional civil rights, we are a very strong people on that and if they are violated people will be held accountable. host: back to some of the >> remarks from this morning's washington journal." you can see this segment in its entirety on a website, c- span.org. we are standing by for remarks from president obama this afternoon. he is expected to give a brief statement about the change of

power in egypt, with the announcement today of egyptian president hosni mubarak stepping down. a military spokesman made a brief, televised statement, promising the armed forces will pave the way for the changes egyptians want. after the president makes his statement, we will open our phone lines and take your calls and thoughts on the changes in egypt.

>> good afternoon, everybody. there are very few moments in our lives where we have the privilege to witness history taking place. this is one of those moments. this is one of those times. the people of egypt have spoken. their voices have been heard, and egypt will never be the same. by stepping down, president mubarak responded to the egyptian people's home are for change -- hunger for change. but this is not the end of each of transition, it is a beginning. i am sure there will be difficult days ahead, and many questions remain unanswered, but i am confident that the people of egypt can find the answers

and do so peacefully, constructively, and in the spirit of unity that has defined these last few weeks. egyptians have made it clear that nothing less than genuine democracy will carry the day. the military has served patriotically and responsibly as a caretaker to the state, and will now have to ensure a transition that is credible in the eyes of the egyptian people. that means protecting rights of egypt's citizens, lifting the emergency law, revising the constitution and other laws to make this change irreversible, and laying out a clear path to elections that are fair and free. above all, this transition must bring all of egypt voices to the table, for the spirit of peaceful protest and

perseverance that the egyptian people have shown, it can serve as a powerful wind at the back of this change. the united states will continue to be a friend and partner to egypt. we stand ready to provide whatever assistance is necessary and ask for to pursue a credible transition to a democracy. i am also confident that the same ingenuity and entrepreneurial spirit that the young people of egypt have shown in recent days can be harnessed to create new opportunities, jobs, businesses, that allow the extraordinary potential of this generation to take flight. i know that a democratic aide to can advantage role of responsible leadership, not only in the region but around the world. egypt has played a pivotal roles in human history for over 6000 years. but over the last few weeks, the wheel of history turned at a

blinding pace. the egyptian people demanded their universal rights. we saw mothers and fathers carrying their children on their shoulders to show them what true freedom might look like. we saw a young egyptian say for the first time in my life, i really count. my voice is heard. even though i am only one person, this is the way real democracy works. , we arerotesters chante peaceful, again and again. we saw a military that would not fire bullets at the people there were sworn to protect. we so doctors and nurses rushing into the streets to care for those who were wounded, volunteers checking protesters to ensure that they were unarmed.

we saw people of faith bring together enchanting muslims, christians, we are one. we know that the strains between faiths still divide to many in this world, no single event will close that chasm immediately, but these scenes remind us that we need not be defined by our differences. we can be defined by common humanity that we share. above all, we saw a new generation emerged, a generation that uses their own creativity and talent and technology to call for a government that represented their hopes and not their fears. a government that is responsive to their boundless aspirations. one egyptian put it simply, most people have discovered in the last few days that they are worth something, and this cannot be taken away from them anymore,

ever. this is the power of human dignity, and it can never be denied. egyptians have inspired us. they have done so by putting the life in the idea that justice is best -- putting the lie to the idea that justice is best gained through violence. not terrorism, not mindless killing, but nonviolence that meant the ark of history toward justice once more. while the sights and sounds that we heard were entirely egyptian, we cannot help but hear the echoes of history, echoes from germans tearing down old wall, and tunisian students taking to the streets, condi leading his people down the path of justice andhi leading his people

down the path of justice. those were the cries that came from tahrir square, and the entire world has taken note. today belongs to the people of egypt. the american people are moved by the scenes from cairo and across egypt because of who we are as a people, the kind of role that we want our children to grow up then. the word tahrir means liberation. it speaks to something in our souls that cries out for freedom, and forever more it will remind us of the egyptian people, what they did, the things that they stood for, and how they changed their country, and in doing so, changed the world. thank you.

[applause] >> he watched on the air force one as hosni mubarak spoke last night. the caught -- president commenting on the departure of president mubarak and today after 29 years in office, stepped down and resigned as leader of that country. we are opening up our phone lines for your reaction to today's historic events. the lines are/party. -- the lines are divided by party. make sure you mute your television or radio, and if you have called and got in free before, give others a chance to call in this afternoon. our plan is to go back to the white house when robert gibbs comes back for his briefing, which is expected at about 3:30 p.m. eastern.

michael in queens, your first up on a republican line. >> my reaction to the resignation of president mubarak is freedom, liberty, and democracy. from hope, there is change. with peaceful protest, any people, any freedom loving people can actually get the things that they want. we have heard people crying out that they want freedom. today they say, we are free. the egyptian army has continued to show that with honor and respect, they can retain that respect of both the egyptian people they serve in the military as well as those who are under their protection. we almost hope that the egyptian military will continue to retain our respect, and we must all fight and believe in our freedom. as we can see, change does happen, if we believe.

>> we will share the comments from the military leader shortly. >> i am glad that mubarak is done. you know, he was a communist. >> let's hear from faith on our independent line in detroit. >> i understand that we are about freedom and liberty and justice. that is what i wanted to say. >> the president said it was the moral force of non-violence that been the ark of history toward justice once more.

>> the first thing obama did when he stepped up, it sounded to me like he was talking about himself community, democracy, and transition. that sounds very, very familiar. sounds almost like he is campaigning again. thank you. >> honor democrat line, maxine. >> i am a first-time caller but a long time listener. i want you to know that i think the president's remarks were very much in keeping with what we have to have and the spirit to go forward in our own efforts to deal with our own economic problems and other problems and to understand each other around the world, as well as in our nation, because the short speeches of some of our callers alarm me. they seem to have no view of

what it is really do when we a democracy. >> how important an ally is egypt to the united states? >> i would say very important. you have to look at the map and see the suez canal and see its proximity to other nations to seek out important is strategically. has been a bulwark against the overlapping jurisdictional possibilities of force that people might use because if they are supplied with arms there are eight proposition, as i understand the proposition, we have been supplying them with military equipment and things that they can use for a strategic limitation against anybody causing aggression with those with whom we have to read it -- with those with whom we do have interest in the area. >> we go next to dayton, ohio.

dannell on the independent line. we watched some of the video you have become familiar with from tahrir square. >> it is actually danielle. i just want to congratulate the egyptian people for doing it in such a democratic manner. it was peaceful. the surrounding countries, i applaud them for not going in and using violence, and it is that [unintelligible] >> this is steve on the democrats' line. no, we will go to syracuse. randy is a republican there. >> i want to comment on president obama response to the whole egyptian problem. there may be things that we don't know about, but i find his

response to be very amateurish. especially yesterday when leon panetta apparently was not very tuned into what was stepping down and what was going on, and the comments that the islamic brotherhood was a strictly secular organization. that is clearly wrong. >> you said you thought the president's comments were immature. >> i said amateurish. he clearly should have been a little quieter in his -- the situation could have gone either way and he was clearly advancing a change agenda. >> here is patricia in san diego. go ahead, you are on the air. >> i want to comment on the

knuckle head to said president obama is immature. he is doing the best he can, and i honor him. second, the people of egypt, i commend them for what they are doing, standing up for what they believe. thank you, c-span, for giving us the true picture of what is going on there. i say hooray for them. we need to take note as u.s. american citizens to see what we can do for change. >> the announcement was made about 11:00 a.m. eastern via television on egyptian state television. it was a very brief announcement by the vice president, omar suleiman. here is what he had to say. >> my fellow citizens, our country is experiencing --

president, hosni mubarak has decided to waive the office of the president of the republic and instructed the supreme council of the armed forces to run the affairs of the country. may god guide our steps. >> egyptian vice president omar suleiman earlier about 11:30 a.m. eastern. we are waiting to take you back to the white house to hear from press secretary robert gibbs. this will be his last press briefing as white house press secretary. we will continue to take your calls up to that time. >> i think egypt is important to america and also israel. the only thing that bothers me is when the president said we will stick by him. >> hang on one quick second.

i am just going to ask my director to fix my earpiece so i can hear your comments were clearly. go ahead. >> if the brotherhood takes over -- can you hear me? >> yes, go ahead. >> if the brotherhood takes over, what are they going to do then? israel is the only true ally that we had in the eastern countries. >> your biggest concern is the muslim brotherhood will have a large amount of power in this transition? >> yes, sir. >> let's hear from honolulu from sam on the democrats' line. >> the egyptian people in their search for democracy, they must agree to the idea of separation of church and state. i don't see that as possible for the time being. what is your opinion of that? >> you said you don't think it is possible.

what is it that makes you think it is not possible? >> well, the minority of [unintelligible] speaks louder than the silent majority. >> you have probably seen a lot of the video and the demonstrations going on. do you think this is being driven by religious organizations, whether the muslim brotherhood or another organization? sure, i think the more vocal rest of the majority would be afraid. it happen with our country, the founding fathers had trouble in uniting the people because of religion, so that is a problem in the middle east. to jacksonville,

florida and adrian on the republican line. >> i am not a huge obama fan. however, just looking at how he has stayed neutral to the whole egyptian conflict over there, it has kind of change my opinion about him in general. i don't think we have really given him a fair shot with being in office for just two years like we have given other presidents in the past. i wonder if we are making the same mistake with obama as with ronald reagan. he has a lot to offer us. >> by president biden today was not in washington, he is at the university of louisville in kentucky, and he praised the

unity of the message between republicans and the white house. next up is ruth in cincinnati on our democrats line, as we wait for robert gibbs possibly in five minutes or so. >> i would like to say that i was so proud of all the individual citizens of egypt doing this peacefully, because so many people were afraid of war breaking out, and the way they stayed steadfast. i have been watching many different outlets as well as c- span. thank you for c-span. on al jazeera, the president of iran, it is so ironic, talking about the way the people united together peacefully and now they were free nation, and we all watched what happened to the people of iran.

but i am very happy that this went peacefully, and i praise president obama for the way he handled it. >> he said you are watching free-speech, are you watching that on-line for your cable system? >> for my cable system. >> and you are in cincinnati? >> yes. >> thank you for calling us. we are waiting for robert gibbs at the white house. next up is aurora, illinois. >> clearly mr. obama is clueless in cairo. he has been on every side of this issue. he was former bar, he was against the board. he should have just stayed silent -- he was for mubarak and he was against mubarak. the national intelligence director is clearly incompetent. he made a fool of himself. this is not going to end well.

today is the anniversary of the iran revolution, thanks to jimmy carter, another democrat. this thing has been inspired by al jazeera and qatar. this is an iranian-backed mission to destabilize the sunni regime in the middle east. this is not going to end well, martin words. within one year the muslim brotherhood will be in power. >> we had a call from the director of national intelligence, james clapper, and also leon panetta and testified yesterday on capitol hill. one hearing dealt with national security threats and the other with egypt in particular. there are broke our website, -- that are both on our website, c- span.org. we showed you earlier the

comments of the vice president, omar suleiman. shortly after that a military spokesman came out to speak to the nation on egyptian tv. >> in the name of allah, the most graceful and most merciful , from the supreme council of the armed forces, egyptian fellow citizens, at this historic defining moment in history of egypt, and after handing down the resolution by president hosni mubarak to give up the post of the president of the republics and instructing the supreme council of the armed forces to run the affairs of the country, while we are all aware of the gravity of this matter, in the face of the demands of our great nation, nationwide to implement radical change, the

supreme council of the armed forces is examining this matter, taking support and assistance from god, in order to materialize the aspirations of our great nation and the supreme council of the armed forces will later hand down resolutions and statements defining actions to be followed, emphasizing at the same time that there is no alternative but the legitimacy acceptable to the people, and the supreme council of the egyptian armed forces extends all reading to president hosni mubarak for what he has delivered to give priority to the national supreme interest. within this context, the supreme council of the egyptian armed forces.

we extend all the appreciation to the memories of all the marchers to have fallen, who has sacrificed their lives for the freedom and security of their country, and to all the nation worldwide. >> that video courtesy of the al jazeera that work dread that military spokesman came out about midday. we will show you those again shortly. we are waiting for robert gibbs and the briefing at the white house. president obama said the egyptian military had served patriotically and responsibly. bemis in short transition of power. let's continue to take your calls. austin, texas. >> what a great day. i am in all of these egyptian

protesters. they -- their control, there non-violence, they are wonderful. i wish american activist could take a lesson from that, especially the tea party people. they were worse than unruly children the way they acted at a public hearing. they are trying to make it all about obama because they hate him. it is their number-one goal to get rid of him bread i think our president will go down as a great president. he has acted as a statesman with self restraint. is bush would have been in control, they would have invaded egypt. i am very proud of our president. i am very proud of the people in egypt. i feel very confident that they will have a true democracy. if we had had video cameras when

the american revolution had taken place, we would be so proud. i am ashamed of these callers that are just making this about hating obama. >> president mubarak step down today after 29 years in power. >> good morning. i have been watching all this unfolds. i am a registered democrat. i stick with the truth. i am afraid that -- we all know that egypt has control -- >> robert gibbs is coming out. thank you. >> [laughter] >> obviously, robert gibbs

departure is not the biggest one today. [laughter] having said that, i want to say a few words about my departing press secretary. as some of you know, robert started very early it with me on this wild ride that has been done. i had run for the united states senate, i was not expected to win. when i won, the democratic primary in illinois and, i realize that i would have to start staffing up a little bit. at the time, i only had six or seven people working for me. i still did not have a lot of money. all i could afford was robert gibbs. [laughter]

robert came to work with me and we had what appeared to be a pretty significant general election. then alan keyes came and and, and that not been our primary focus, we then had an incredible opportunity to speak at the national convention in boston. a lot of you think that most attention was devoted to the speech that i delivered, the keynote speech in boston. in fact, the most challenging problem was what tie to wear. this went up to the very last minute. 10 minutes before we were about to go on stage, we were still having an argument about the tie.

michelle did not like any of them. then somebody turned and said, you know what, why don't you wear gibb's tie? frankly, robert did not want to give it up. eventually, and he was willing to take one for the gipper. he took office tie and i put it on and that is the time that i wore at the national convention. he has not said anything about this time all these years. but i have to tell you that i know there is a simmering resentment that he never got it back. as a consequence, i wanna does

on the record, on camera. i am finally returning roberts tied. if the chooses to break the glass, he can. this will be a reminder to me that robert has not only been an extraordinary press secretary, but he has been a great friend. you could not ask for somebody better in the foxhole with you during all the twists and turns of my candidacy and the incredible challenges that we have faced over the last two years. i am so proud of him. and everybody here loves robert. he will be working closely with us. i do not think we could have a better press secretary. jay is going to do an outstanding job, but i could

certainly not have a better friend. i want to say congratulations. [applause] >> i did not actually sign the tide. he may decide that he wants to wear it. i thought you should -- i thought i should finally give you your tie back. you helped me get started. thank you, brother. [applause] you notice, by the way, that he bought one just like it. >> i like that tie. let me say a few things before we get down to talking about what we have every day.

that is the business of the country. it is a tremendous honor and privilege to do this each and every day, to serve and to take part in days like today that are so momentous. i want to thank the president tand all of this team up for the privilege to serve. i do not want to spend a lot of time during this period i do not talk about myself well. i would be remiss if i did not talk about a group of people that does not work for me, but i have a great privilege and unlucky enough to work with.

-- and i am lucky enough to work with. i would not want to do this job, as amazing and as exciting as it is, without them. i would not have made it through without them. i do not intend today or tomorrow to tell any of you could buy. i do not intend to go anywhere. you are a forever -- you are forever a part of this experience. you has become a greater extension of my family. we have shared a lot of extraordinary times. i will miss boring days like today at the white house. [laughter] for all of you that are looking for help on your morning shows,

at j. likes to call around 4:15 in the morning. if you do not get through the first, keep dialing. it has been extraordinarily -- an extraordinary bull average -- an extraordinary privilege. i will have more to say to these guys and to those in the back of the room that of men some much to me and continued to mean some magic to me. before i lose it, we should start the briefing of the obama administration. >> thank you, robert. first of all, congratulations and best wishes. >> i would have lost that. >> shifting to egypt, a few

questions. can you tell us whether president obama was surprised by the news this morning? >> look, throughout the morning, we have got indications that the last speeches may not have been given. the last changes, particularly this morning when -- would everybody reporting that there would be a statement from the office of the president to -- the president was in a regularly scheduled meeting in office when a note was taken into him to let him know what had been announced. since then, prior to giving the statement, he spent an hour with his national security team from

about 1:30-2:30 in the situation room talking about what is going on there now and what we have to plan for now going forward. >> so he learned with the rest of us? >> healer and precisely what had been said. i do not want to get into what other information he might have gotten. >> is this change helpful or harmful to the interest of the united states? >> anytime that a government changes based on the popular response of its people is important. all governments have responsibilities to those they represent. there will be -- there will be

many bumps along this road. this transition continues toward free elections. i do not doubt -- there is much work to be done. this was the beginning of that process, not the end. >> does the president have any concerns about the unknowns? the instability? >> the partnership that we have had with the people and the nation of egypt for 30 years has brought regional stability and has brought peace between the countries of egypt and israel. it is important that the next government of egypt recognized the accords that have been signed with the government of israel.

a lot has yet to be determined, but it is clear watching the events unfold over the last couple of days, that real friends of egyptian society that has been out seeking the type of change that we saw happen today. this is not dominated by a single group or a single ideology. >> robert, since the protests began, all the statements about egypt have been very carefully worded. last night's statement from the president was especially carefully worded. mubarak was not even mentioned proposed. >> luck, it is safe to say that the very same context that we have in egypt are some of the

very same context that many of you all have. they seem to tell everyone that a different speech may be what we would hear. we did not hear that last night. at that point, it was a missed opportunity for the government of egypt to take the necessary steps toward that orderly transition. that was -- that has been building throughout the week. you have seen as the government failed to take the necessary steps, to broaden the coalition, to make some fundamental reforms that would signal to those of the opposition that they were serious, the problem to larger and larger.

-- the crowds klimt larger and larger. there is no doubt that this is a situation where there is writing the needle. there are a lot of equities and the country and the region. ultimately, this is something that started it, was driven by, and will ultimately only be solved by the people of egypt. i think that is true in the lead up to the historic announcement today, and be even more important in the days ahead leading to elections. >> can you talk about any [inaudible] >> the president has not made any phone calls either to those in the region or heads of state.

>> [inaudible] what kind of assurances can you give israel and jordan about how this may affect them? >> do not this process, we have wanted to see -- throughout this process, we have wanted to see protests that were peaceful. are all, and this process, we wanted to see how it happened in an orderly way to ensure some of the very stability. i think that if you -- that is what has guided us this entire time. the president has not spoken with anybody. i do not believe, at this point, there has been any contacts. we had pretty good

relationships on a military to military bases. it is remarkable to watch how iran is dealing with this. we saw a week or two ago, they made some provocative statements about what these marches meant. we now know how they are responding to the images that we see in the square. they are arresting people in iran. they are blocking international media outlets. they are turning off the internet. for all of the talk about egypt, if the rod in government -- iranian governments, the

government should allow people to exercise the very same right to peaceful assembly and the ability to demonstrate and communicate their desires. we have all seen their response. the head of the revolutionary guards said today that -- we will severely crushed any of their movements. but you have seen in the region -- what you have seen in the region is the government of iran scared of the will of its people. >> thank you, robert. good luck. i hope you get to spend a lot of time with ethan. i've also taken the liberty of looking over questions that you said you would get back to last with an answer.

gwynn was last time president obama spoke with president mubarak? -- when was the last time president obama spoke with president mubarak? >> i think it was right before he spoke -- it was monday, right? the monday he spoke. >> under the obama administration state department , it did not directly fund civil society groups for the last two years as the bush administration had done. it also lowered how much civil society groups were funded. in retrospect, does the administration regret that? >> i can get you a little bit longer -- our commitment to the

universal principles that the president has talked about throughout this process in countries are around the world are best exemplified by what he said standing in congress. saying many of the things he has said over the last several days. obviously, we are watching the situation. we will, as members have testified in the last day or so, tailor our system -- or assistance to a changing situation. >> lastly, egypt has been a tremendous allied to the united states, according to the government, on the issue of counterterrorism. where are you concerned that there might not be as much support in the next government,

whoever it is? >> obviously, we are going to watch the events as you and many others will. in the days and months ahead. i can say that the important relationships that we have at different levels and our government with their government, the president was in short -- assured continued. >> thank you, robert. can you talk to us about the role that the vice president played and what ended up happening in egypt? he he sent a strongly worded letter to his counterpart to days ago. can you describe -- he had vice president' -- a counterpart to counterpart relationship with the vice

president omar suleiman, and has spoken with him directly. he reiterated the very same set of points that you have heard us may publicly. the genuine step that needed to be taken to address the concerns that the people have had. he has been on the phone fairly regularly. obviously, he has brought to meetings and the situation room and the oval office -- last evening, quite a bit of knowledge and experience in foreign affairs and foreign policy that has helped guide the administration along the

last 18 days or so. >> was that phone call -- digital readout of some of the demand? was that a pivotal moment? >> it is probably hard to go back and penpoint all of them, it was hard to be any clearer and more blunt than the vice president was on that call. the international committee and the people of egypt needed to see happen. that has helped move this process along. >> when the president made his -- at the top of his remarks in michigan, was the white house fairly optimistic at that time

that mubarak was going to step down yesterday? >> i think any of the same contacts are many of the same contacts you had in reporting what might happen in egypt yesterday. i think the president talked about his -- we have seen them play out each and every day. but what is important now is we have to look forward and work through a process to get us to a free and fair election. >> finally, this notion of concern from the white house as to what happens from now until

the elections. is there concern about what the structure will be like? what could potentially happen before the people get to start voting? >> i do not think we have to fear democracy. i do not -- i think the international community upheld the to the international committee has laid out a series of steps they need to see taken. it is important to understand that this was a group of demonstrations and protests that were -- that demonstration -- demonstrated a concern across egyptian society. i do not think you can look at it and say, this was a group that to did this or these are the people who -- again, you have seen mothers and daughters.

you have seen this process led by somebody that works for one of the larger companies in silicon valley. what you have seen is a brat and cause of concern that had to be addressed and needed to be addressed by the government. what happened today was the very first up in that process. >> thank you, robert. congratulations. i hope the was as good for you as it was for us. obviously, there will be some bumps in the road. what is going to be the role of the president and vice president and secretary of state publicly over the next weeks and months? did they now hold back? did they keep up the public pressure would statements?

>> first and foremost, this was always about the people of egypt. it was always going to be solved by the people of egypt. in a statement here. no statement here. no comment that was made here was going to bring the fundamental change that people were looking for in egypt. the people of egypt have their concerns and they're not going to be the definition of how to solve the concerns is not going to be solved here. we will continue to try to play a constructive role in helping this process along. this started with the egyptian people and double into the egyptian people. >> do you think they will be as publicly you out there?

>> add every step, we have been very clear about the response of all the islands. i think it is -- about violence. i think it is remarkable. " we have seen in terms of the types of sweeping change is it -- unlike anything we have ever seen in a short period of time. the next process of this is going to play out over a much longer ark. we will continue to be involved and to ensure that the transitional government in egypt and the government that the people choose to represent them, if they take the steps that necessary to meet the concerns of those in egypt, this government will be a strong

partner to all of our friends in the region. >> why did the president choose not to call for an leaders in the region? >> let me go back and see if there is -- he has not talked to anybody today. i think we are watching events and monitoring them. i do not doubt that the president will reach out to those in the days ahead. this is an egyptian story today. >> is there any hope of the white house that the example of egypt could inspire another uprising in iran? >> there is quite a contrast between the way the government of egypt and the people of egypt are interacting and the government of iran is threatening its very young people. if the government of iran were

as confident as they would have you believe, they would have nothing to fear. with the peaceful demonstrations like those you have seen in cairo and throughout egypt. they are not that confident. they are scared. that is why they have threatens to kill anybody who tries to do that. they have shut off all measures of communication. i think it speaks volumes about the strength and the confidence that they have in the killing the wishes and the will of its people. >> are the images from egypt somehow getting into iran? is there a chance that the message is getting and somehow to iran? >> we of all seen reports that over the past many days, those

in iran want to march and demonstrate peacefully. the government of iran has met those concerns of its people with a threatening to kill them. it speaks volumes as to what the group that they have, or lack thereof, on the popular beliefs of their own people. >> he talked about the vice president's role at this point. is he still in a key role or is he on his way out as well? >> that is a question for the transitional government in egypt. >> talk about the communications challenge with this event unfolding halfway around the globe, try not to get ahead of the message.

how challenging was that? >> there are a lot of different audiences. the bottom line was that this and will be solved by the people of egypt. we spoke throughout this process about the universal values that went into the creation of our country and what those marching fought needed to go into the creation of their new government. i think -- it has been challenging and there has been -- we have one topic take up so much space over the past 18

days. it is a challenging topic for us to discuss. there are challenging days ahead. for those in egypt to construct what our country will look like. >> do you mind giving out your personal e-mail address? >> i probably should not set it on tv. >> you don't want the american people to have? [laughter] >> that is the thematic of the briefing, is in it? >> the events of yesterday or today -- which are the bigger surprises? >> everybody was surprised yesterday.

you can go look at my transcript from yesterday. i was on the cautious side because it was clear that things were happening. again, it is remarkable to stand here or to sit there or anywhere in our country and watched what has happened over the span of the 18 days. it is a remarkable art in human history. many people were surprised yesterday. >> how much -- is there a sense of relief versus trepidation? >> i do not think we need to fear democracy. i think that whenever the will of the people shapes the demands

of those that government, that that is what we had in mind the democracy and representation. that is an important step. this is about -- and about its people. >> does this change middle east politics? is it fair to say that this is going to change america's foreign policy in the middle east? >> we do not know the ultimate outcome of what free and fair elections will be. we do not have a sense of to the next leader will be. we do not know that person's exact identity, i should say. i think we will continue to have important relationships.

this is a volatile region of the world. relationships bring some measure of stability and peace to the region. obviously, there is still great work to do to bring peace throughout this region. the president has worked tirelessly with the team to work on that. there are many days ahead to see what comes next. i also think it is important. we will continue to talk about the universal values that we hold dear. >> you made a decision to do something. [inaudible] >> [inaudible] >> you guys have always wanted this line with iran.

you do not want to look like america is interfering. talk about that line today. >> we are not interfering. a week or 10 days ago, i said, if that is what they believe, that they would not have any problem letting their people demonstrate about the concerns that they have. now we know they did not really mean that. now we know that what they really are scared of is exactly what might happen. they are scared of that and they're threatening those who might do it with death. it is a strange -- it is strange, to say the least. it is a strange reaction to the government and a military --

government and military are poised to protect their citizens. the government of iran is quite -- >> [inaudible] plenty of college football. >> auburn will be here in mid april and i will be back. >> i am following up on -- are there any regrets that the ministration did not do more to support the revolution in iran at the time? >> what we said then is true now. we supported universal rights and we support the ability for those to exercise them. it is up to the government of iran to allow that to happen to read -- happen.

there are different degrees of development in society. >> on a different subject -- on the budget, do you think that what you put forth on spending cuts will be enough to be credible in the eyes of the republicans? the things you can have a credible budget without taking on entitlements? >> it is important that we not just talk about cuts. we need to talk about the impact on the deficit. i make that point because i think the serious -- the seriousness with which anybody

approaches this has to be taken at some to task. we will have a debate for a number of years about tax cuts for those who make over to enter $50,000. we have had a debate that takes us back to the debates over the last two years about whether or not we should repeal health care. we know the impact of both of those is to had far more than anybody pledges to reduce and cut. i think that what the president would put forward on monday will certainly make the measure of credibility. the five-year spending freeze that results in a 10-year reduction of about $400 billion.

i think the president has been clear that there is more that we need to do. that will be part of the conversation. be followingll every path of that budget process. >> i will e-mail j. repeatedly about that. >> looking back at the full scope of everything that has been said, starting on january 25, when president -- when secretary clinton talked about the stability of the mubarak government. the think that you have been proactive or reacted to what has happened there? >> we have spent -- i think we have been fairly steady in what we have said. you can charge what the president said today and what and when he talked about publicly the first time, and when i talked publicly about this. the measure of what we were for,

the fact that this was about the people of egypt, i do not doubt that there are some people in the region that saw us as too much on one side and others wanting the same statement. the president and his team showed steady leadership that continued to voice the concerns of those that wanted greater rights and greater opportunities. >> what happened today -- is of the results that the president desired? >> the president and the team desire to see greater recognition of the rights that he talked about in cairo in 2009. those who have marched in cairo in two dozen 11 soph. i do not think we have to fear

-- 2011 saw. those that are in government have the opportunity to represent the will of the people. that process, that long transition has just begun in egypt. >> would you like to see what happened in iran -- which led to see what happened in iran today happen in tirana? -- tehran? >> if the government of iran did not hear the voices of other people, and they would do that. >> [inaudible] >> we have conversations with

governments throughout the world in this region and in other regions about adhering to universal values. >> following on karen's question earlier, how concerned is the administration about unrest spreading to georgette -- to jordan? how closely are you looking at that? >> to allow this process, we have watched throughout the region. i reiterate that when we have meetings with rigid bilateral meetings with these countries, we discuss the universal values that we discussed on many occasions with the government of egypt. >> are you concerned about unrest spreading to jordan? >> i am not going to get into that. >> can you talk a little bit

more about the role of the mental -- of the egyptian military? >> i am not going to go through each and every step of this process. the president was cleared and the responsibilities as a transitional government that they have, some of the changes that are necessary and that need to take place and the importance of the steps that have to be demonstrated and the constitutional change that we need to see on the road to free and fair elections. i think they have those obligations. >> best of luck, robert. are you going to recommend today that there is a pattern of a very heavy questions from the first two or three rows?

i have been here for 43 years. >> i am only moments away from not having to wade into the politics of the rose in this room. i know that you guys will solve all these problems together. >> will you recommend that you have some prearranged questions? >> we do not have a prearranged list of questions at the press conference. >> questioners, i think. >> is that what you meant? i think we bring some order to how the president calls on you guys. i want to be clear. the president -- does the

president have a prearranged list of questions that the press conference? bill i will leave that aside. -- i will leave that aside. the president does not have a prearranged list. >> dana is writing all this down. he is absorbing all this. [laughter] >> i cannot remember my last question. [laughter] will you keep your excellent press staff? >> absolutely. these guys -- there is no better group othat i have ever worked with. i took my first job in politics february 14, 1994.

i will walk out of here on february 13, to dow's 11, 17 years -- 2011, at 17 years. i have never worked with a greater group of people. they are terrific. each and every day, they make the president and all of us look good. they are, and will continue to be, the backbone of the white house press office. >> this is a prearranged question. what is the president's message to people in jordan and saudi arabia who are looking to egypt and saying, we want to have the

same non-violent revolution. >> i do not think is -- it has not been during the 18 days here and it is not our role to make that kind of statement. it is important that we have bilateral relationships. we said publicly and we say privately that governments throughout the world -- we did this when the government of china was here. they have to recognize individual and basic freedoms. that has been true for this administration and previous demonstrations. >> thank you, robert trent now that you have more time, you'll be returning telephone calls and e-mails? [laughter]

no comment. i will departure from the egypt questions. the house republicans have been very divided among themselves over how much cutting to do. conservatives are pressing for additional cuts. the president met with speaker john boehner earlier this week. how closely is the president watching this debate among the republicans? will it make it more difficult for him to reach some kind of agreement with republicans on the budget? >> i think the president is a pretty big consumer of news. i have not heard and discuss and the past few days the articles about the pressure that house republicans have come under from different entities in their caucus.

at that lunch, and even well before the lunch, we had a -- we're able to make some important decisions for the people of this country to take some important steps like reducing our deficit. it only can be done when we both seek common ground. that is what will be the end of this. there will be some agreement. i think there'll be some tough decisions along with the way. . i think that in the end,, you will see that two parties have

to come together. >> [inaudible] >> i think there is probably some serious concern in the republican caucus of not wanting to repeat that. i think you have heard the notion of -- we have to make some tough decisions and some tough votes on the debt that require us all to the adult. >> the government has mentioned today --

>> what was clear in the bilateral talks that quickly broke down earlier this week between south korea and north korea was that north korea genuinely lacked the seriousness to be involved. before we return to six-party talks, north korea has to demonstrate the seriousness to employ to live up to their commitments. when talks broke down earlier this week, it was clear that they had no real intention of entering into a constructive dialogue. i think it results in further isolation of north korea. they can make a conscious decision, but it will require

that a conscious decision in. >> [inaudible] >> the broadest thing is that they have to show a willingness to live up to their commitments and to denuclearize. that is what we have said due out this process. they need to demonstrate how serious they are. >> thank you. egyptians can change the world. it looks liked your administration has not yet to -- could you walk us through -- >> i think i gave this answer a couple of times. i will repeat it.

we spend time in public and private throughout governments -- with governments throughout the world. i am not sure what that noise is. there we go. sorry. i thought that was in my head. [laughter] i felt much better when you guys recognized the noise, too. there are certain basic universal rights that people during forth throughout the world. and that is exactly what the president talked about. that is the responsibility of government, to meet those rights. >> he ultimately said, grow and change.

has any kind of policy change can we see dealing with this state? >> again, i want to try one more time. we have these conversations directly with the governments throughout the world. i mentioned what happened not too long ago with the government of china that resulted in the leader of the chinese saying that there was much work to be done. >> you worked for the president -- as we move toward the 2012 campaign, will we see you again sometime during that period? do you think he can make governmental decisions and leave politics out of bed? is he the kind of person that can make governmental policy decisions without always

thinking about his own political future? >> like that brilliant auto bailout? i think part of that is because we had a calendar of elections and a recovery that may not aligned with an interim election. this is a president who has made a serious -- series of unpopular decisions to make sure that we did not go from a great recession to a great depression. i think -- you will see a lot

more of the president trying to tell the story of why we are making these decisions. that is one of the threads that we lost in the first two years. we made a series of decisions that had to be made quickly and we forgot to tell the larger story. >> i will tell you that i remember being in the final decisions around what to do about the auto companies. it is a tremendous story. people have done a tremendous job. i remember sitting in that meeting. the notion was, even if you give -- if you make some of the required management changes and give them a lifeline, it was still a 51-49 proposition. it will go down as one of the

best decisions that we made. now you see companies that are fundamentally restructured and capable of surviving and thriving in this economy and double only get stronger. >> can you talk about what they are going to be reflected in the budget that we see on monday? >> it is happening up the road and a number of potential candidates are speaking, with the dearth certificate controversy, i am wondering if you -- >> it did well in minnesota.

although he did not talk about it a lot, what governor romney did on health care was one of the decisions it was a tough decision but it was a series of the right decisions. it will be interesting in the next two years if health care comes out of his mouth. >> can you give us a little look ahead -- will you give us a week ahead? >> i had a beat ahead. you want to ask for that this whole thing. >> in the chicago elections, you know how the president intends to vote? >> he has requested his absentee ballot. the first lady has voted, and

the president -- >> when did you check? >> i think the last time i checked was yesterday. she voted some time in between. i do not know whether the president has voted. i will check on that as soon as i get out of here. >> how would you assess the president's relationship with the press? >> i look for to sharing that with them. >> wait a minute. >> just to do that april. if you could see the size of the grand on a ben's face every single day. i am sorry. i do not need to stir the pot. >> for the last time, you have

promised -- >> i will try to find out. i promise i would call you at all. >> you said you would call me that night. [laughter] >> can i have that follow up? who were you talking to that promised to call you. i will go find out -- i will go find out as soon as i walked out of here. >> on egypt's -- >> quite a segue. >> now that there is a change in administration. should we expect to see some change in the price of a barrel

of oil? >> i think inherent in the pricing of oil is some volatility. as much as i would like to talk about the few subjects they told me never to talk about, i should not do that in the last briefing i have. i will say this, on a daily basis in the deputy meeting that have been taking place around egypt, we have discussed what is happening with transportation, ports of entry, in the suez. we continue to monitor that and do not see a disruption on that. >> congratulations on your new chapter. >> thank you.

>> on monday do you think you will be going through news and information? >> no doubt. >> how will you handle monday when a comes? >> i will do that in my week ahead. >> i wanted to follow up on mitt romney's of mission on his remarks today. has the president been watching coverage and white do you think -- do you think it is important for mitt romney to talk about his health care plan? what would that be important? "i do not know what it would not. >> i have an egypt one, believe it or not. as a secretary clayton -- secretary clinton and then come

together now? on how to push the change and how much is enough change. is the white house and the administration all on the same page? >> i think we have all been on the same page for quite some .ime during >> >> congratulations. you have been talking about bilateral relationships. i am wondering at this moment, is there not more he could be saying publicly? does he plan to play a greater role in terms of trying to empower the people of other countries like egypt should people? >> i do not know anything of his plan to do that. i would point you to what he said today.

i think what is important to remember about all of this is it did not start -- we did not start it. and we did not finish it. this is an issue for the people of egypt and the countries around the world to petition their government. >> the president said the egyptian people move through peaceful means. >> i think the line you point to is one with some very specific meaning. i think if you go back to what the president said in his inaugural address, there are

those who seek to change by building and those who seek to change by blowing up and destroying. i think what we have seen in cairo goes greatly in contrast with -- into the likes of al qaeda who have killed people in order to scare and terrorize. >> will we be seeing more of an emphasis for pushing for democracy in the middle east? >> i think you will see the president continuing to hold up the concerns of those throughout the world who seek greater recognition. i am going to do the week ahead. let's just do the week ahead. i am going to give you my weekend.

are you ready? on monday, the former press secretary will travel with ethan gives to school. he will catch some sports center, and a bike ride if the weather holds up. in the afternoon he is hoping for a nap before walking several hundred feet to the boss stopped to greet each then. -- bus stop to greet ethan. i do not participate any event for the rest of the week. the president on the other hand has a very busy week. on monday he will travel to baltimore county, maryland. he will speak to the children at hartsfield middle -- parkfield middle. he will join the president for a

visit for key priorities in the 2012 budget and investing in education to prepare kids for the global economy. the president will honor the recipients of the medal of freedom in the white house. the medal of freedom is the highest civilian honor awarded to the individuals who make a contribution to the national interests of the united states, world peace culture, or other private endeavors. on wednesday, he will meet with state legislatures at the white house. on thursday, the president will attend meetings at the white house. he will leave in the afternoon to travel to the west coast. on friday the president will visit intel corporation in oregon. he will tour the world's most advanced semiconductor facility as well as learn more about intel's science and math

education program. it has been a tremendous honor and a privilege to do this over the past little more than two years. i wish you all good luck. i will miss you. i had a lot of fun. i hope that we covered some serious subjects, and watch the world changed, i hope you had some fun to. o. robert gibbs wrapping up his final whitehouse briefing as press secretary. kearney will take over next week. president obama started by wishing gibbs best wishes. he earlier had spoken about the resignation of mubarak as

egypt's president. we will show you those, the president later this evening about 815 or so after our coverage of mitch daniels at the cpac meeting later this week. it also see at c-span not work. -- at cspan.org c-s[captions copyright national cable satellite corp. 2010] >> in are content any time through the c-span video library. we take c-span on the road with our local content vehicle. it is washington your way. "the cspan network." provided by a public service.

>> a former federal reserve chairman alan greenspan said that home prices will have to rise unequivocally and perhaps by 10% or more before signs of a full-fledged housing recovery becomes on ambiguous. he speaks at the brookings institution and it took questions on the housing market. this is just under an hour. >> it is with great pleasure that i introduce alan greenspan. as you know, allen became chairman of the board of governors on the federal reserve in 1987. and a stable growth during that period. he is now at greenspan and associates. he is extremely active in economics and research.

he gave a paper at the brookings panel. recently i had the power -- the privilege of talking to him. he is very much still a part of the world of economics. alan, welcome. [applause] >> thank you very much. you did not say that i have been around here for 40 years at the brookings panel of economic activity. >> i apologize. >> i see. [laughter] >> if you go into one session today versus 40 years ago, you are -- >> you have not been coming off and off. >> the rest of the seminar is devoted to the structural

mortgage finance. i thought it might be useful to finance is ultimately all about, home building. the last 20 years have exhibited the longest, uninterrupted rise in single-family housing starts, and by far the sharpest collapse in the post war years. starts in recent months half languished at a little more than 400,000 annual rate, less than 1/4 of where they stood at the top of the boom in early 2006. nothing reassembling this collapse has occurred in the six decades following the war. to find such a data, we have to go back to the 1930s, when single family housing starts between 1925 and 1933 fell by

almost 90%. housing starts did not regain their 1925 level over the next eight years prior to the war. starts, in fact, did not recover to their 1925 levels until 1947. i do not expect a similar hiatus this ime, but the trudge uphill is not going to be easy. during the recent boom years, demand for single family units and their financing was predominantly demand for owner occupancy. the level of additions to ownership was significantly driven by the rate at which households chose to ow rather than rent and could aord to do so. the ownership rate in turn was fostered by rising home prices and the implementation of afrdable housing goals. after a protracteperiod of stability, the ownership rate at

64% in 1994 began its historic rise to more than 69% a decade later, producing from 2001 to 2004 an average annual increase in new, single-family, owner-occupied dwelling units of approximately 1.2 million. absorbing all and more of the gain in household formation. in addition to the demand for owner occupancy was a significant demand for single family residence by investors. according to the home mortgag disclosure act data, the share of total investment and second home purchases rose from 9% of home originations in 2001 to 14% in 2004. that combination coupled with a

200,000 annual rate of demolitions and some loss of single family units to multiunit conversions supported over those years an average annual level of single family unit completions and mobile home placements, amounting to 1.5 million. the demand for homeownership peaked at the end of 2004 as the limited backlog and higher prices began to take their toll. ownership rates turned downward in the fourth quarter of 2006, ultimately, incidentally, falling below 67%. single family housing starts peak in early 2006. but it took another seven months for starts to turn to completions, and not before adding an unstoppable and unprecedented 430,000 units to the inventory of single-family

homes for sale over the four quarters of 2006 on top of 170,000 added during 2005. by the end of 2006, the level of vacant single-family homes for sale had reached 1.8 million. a staggeringly historic overhang of more than 700,000, the equivalent of six months of sales. for years prior to the surge, completed homes available for sale had been relatively stable at a little more an million units. following the topping out of demand late in 2006, home prices proceeded to fall for three years. the largely futile endeavor to uncover enough demand to absorb inventory excess. but homeownership b then no

longer held the seemingly irresistible profit-making attractions of earlier years. home builders and other owners of newly constructed but vacant homes have been able, through price discounting, to fully liquidate their share of the overall inventory excess, about 200,000 of the more than 700,000 for sale excess. the remaining vacant homes offered for sale by investors, the bulk of the vacant market were still hovering around 1.5 million, less than % below their all-time peak reached at the end of 2007. the level of home completions declined by more than 2/3, but demand fell almost as much, placing new supply only modestly below demand.

even at current depressed levels of new single family construction, the inventory overhang cannot be credibly absorbed quickly. a stabilization of the homeownership rate would help in the sense that a falling owrship rate severely undercuts single family unit demand. the ownership rate moving from negative to zero is, in fact, is in that sense, i guess, a positive. nonetheless, marke pressure could keep completions below demand for much of this year or longer. as excess inventories are gradually brought under control. new demand creation must come from either an increase in the rate of household formation or increase in the share going towards owner occupancy.

temporary tax credits rarely do either. it is thus no surprise that the recent first-time home buy tax credit produced little, if any, permanently higher demand. certainly the currently more than 2 million single family units in foreclosure has not helped. recent history suests that approximately 2/5 of the surge in foreclosed properties on completion of the foreclosure process will be sold, possibly into a still-troubled market. that would amount to an additional several hundred thousand overhang, bringing t total excess to more than a million units. home prices after falling almost 30% from their late 2000 peak stabilize by most measures

between early 2009 and the spring of 2010. by the summer of last year, however, they began to soften again, largely as a consequence of the pick-up in distressed foreclosure sales, especially in december. there was, however, some evidence of price stabilization at the end of 2010. seasonly adjusted core logic prices, excluding stress sales rose as the median price of newly built homes. stabilization is important, not only to the housing market you about econom recovery as a whole. since approximately 8 million homes we financed with conventional conforming mortgages during 2005 and 2006. most of their 20% or more original down payment plus

recent amortization of that debt has eaten into the 25% decline since origination. another 5% to 10% decline in home prices that many are forecasting would place a significant part of the 8 million homes under water. to be sure, the propensity to default on underwater conventional conforming mortgage debt has been much less than for the more vulnerable subprime home mortgages financed homes. nonetheless, a price weakening itself could set in motion the contagen for further decline. however, with the rest of the economy currently recovering rather impressively, i'm hopeful such an outcome can be avoided. but it would be unwise to fully rule it out. as a consequence of the near 30%

decline in home prices, equity in homes by the end of the third quarter of last year had retraced all of the $7 trillion rise between 2000 and 2006. its composition had changed. currently, it is highly concentrated. subprime and alt-a financed homes are net under water. there is some net equity in prime jumbos, and surprisingly, in the niche market of homes financed only with home equity loans. nationwide, well over half of home equity is currently in homes free and clear of debt. conventional conforming financed homes are running a distant second. prior to the crash in 2006, they had simila shares of net equity, but that was a time when

virtually all homeowners had positive net equity. with home prices after their crash landing have been flattened out over the past year, the number of homes under water has stopped rising. the number of homes in foreclosure has also stabilized at approximately 2.3 million, seasonably adjusted, at least for now. but they presumably would move higher should home prices slide again. the rapidity of housing markets will depend on trends what we used to label equity extraction. equity extraction, the raising of cash by borwing against the market value of equity in homes has faded as a key positive determinant in economic activity, but it remains important to the housing and mortgage markets, and it will

surely re-emerge as a factor driving the household saving rate and personal consumption expenditures in the future. today, equity extraction is negative, as debt write-offs and the new owners add equity to the nation's own hos rather than extracted it. deite flat home prices, equity has risen by $500 billion since march 2009. the overall stock of home mortgage debt is in a constant state of turnover and revaluation, owing largely to changes necessary home prices and/or the degree of refinancing of the debt. but to understand the equity extraction process better, we can usefully separate quarterly

debt change into two components. one, that part of the increase or decrease that is solely the difference between a mortgage originations on newly-built homes and the scheduled amortization of debt that exists at the beginning of each quarter. in short, the amount of debt accumulation that occurs solely from the financing of newly-built homes. and two, the remainder of debt change that owes wholly to actions that in total we measure as equity extraction. equity extraction is capable of being fully accountedfor in three buckets. first, debt changes owing to the sale, that is turnover, of existing homes. the buyer of an existing home will almost always add more debt on that home than the seller

will repay as part of the transaction. secondly, cashout refinancing. the difference between the balance on a refinanced mortgage less the mortgage balance being refinanced. finally, three, unscheduled repayment of debt unrelated to a property transfer or a refinancing, including especially delinquent scheduled amortization that may or may not more than offset burgeoning writedowns. in years past, jim kennedy at the federal reserve, and i, went through a set of detailed calculations to separately estimate each of these three components. equity extraction inotal can be approximated more expeditiously from a simple regression in which equity

extraction per capita is reessed against the refinanced share of total home mortgage iginations and a cumulative moving fr-year change in home price. i mustay that the latter is by far the most potent part determining the issue of equity extraction. the results overhe past 15 years are statistically highly significant. moreover, the regression accurately traced equity extraction in the boom years, as well as its small negative during the past year. what the price variable suggests is that it takes four years of cumulative capitalains on homes, on average, before homeowners endeavor to extract equity. mainly through a sale of home or cash out refinancing. the regression coefficient can be employed along with the

calculated ortization rate and value of home originations estimated as the product of the number of one to four family completions and the average price of sales of newly constructed homes. these inputs estimate the change, and hence, the level of one to four family regular mortgages. regular mortgages are the usual numbers you look at, x construction loans and equity lines of credit. this simple model suggests that home prices will have to rise by 10% or more before signs of a full-fledged recovery in housing, and the mortgage finance that goes with it becomes unambiguous. thank you very much. i'm open to your questions. >> thank you.

we have some -- yes. we have some microphones. let's get some questions. somebody needs to get us started. yes. can you identify yourself? >> yes, sir. i'm arnold king, mr. greenspan, how are you doing? yes, sir, my question is about the receipts. how did they play a role in deconstructing the u.s. market? the balance sheetad caused a fall in the housing prices. >> i don't quite get the question. which balance sheet are you referring to? >> how did balance sheet play a role? >> company balance sheets or household balance sheets? >> very much .

indeed, another way of looking at the equity extraction issue is to recognize that that is the far most important determinant of what t asset side of the equities are in the household balance sheet. so what we were beginning to see all through the period of the boom was a very dramatic rise in the market value of real estate matched only in part by a rise the liabilities. the effect was to very significantly augment the equity that the personal sector, meaning households or nonprofit organizati organizations and in some calculations, noncorporate busiss. there was this big surge going up on the asset side. and almost comparable surge on

thliability side, and it went into full reverse on the down side. a goodly part of the decline in the level of debt was actually write-offs and effectively very significan part of the housing stock going into foreclosure. that moves it off individual balance sheets. >> can i ask you a question? the treasury paper that just came out raised three options they gave to congress for the role of government going forward. one was an fha-onlyoption, a small narrow role for government. second was that the government would provide a backstop to the mortgage market at a time of prices. the third was more extensive, the role for the government as a reinsurance vehicle for the mortgage market. you may not want to answer this

question, but i'm asking it in iway. do you have a preference among those three or do you have a different view of what might be, if any, the role of government going forward? >> i'll pretend to answer the question. i'm aware of what tim said, the secretary said. i thought it was a good presentation, frankly. the problem i'm having is that we have gotten a housing market into such a state where, as y know, virtually all mrtgages are one way or another government financed, government guaranteed. >> right. >> we get the impression that because of that, the private market is dried up. of course it has. the difference here is that we don't have any good sense of

what is out there ex the actios of fannie, freddie and other organizations. i would like to see at least in an academic simulation what the yield spreads would look like if the government was not there. this may sound like ancient history, but i served on a savings and loan holding company board in 1962. all we had really to finance mortgages was savings and loans. it was anible credibly effective market we had huge amount of home construction because baby boomers were buiing up. you had levitt towns and other types of operations going on. i will tell you, aside from the very chronic concern that those of us as economists or finance

people who are in the s&l industry feel very uncomfortable about the fact that a savings and loan institution is constructed at that point. it required inflation was low, therefore interest rates were low. you could play the yield curve which is how a lot of those holding companies had stock prices at 50 times earnings. it was really extraordinary what was going on back there. it struck me, especially after the s&l debacle manyears later that there is nothing wrong with that particular model if we could get the people to swap their short-term overnight liabilities into longer term debt. it would have cost another hundred basis points, i'm not sure what it was. the short sidedness was

something u couldn't get around. when you look at northern rock and the recent crash, that was the same thi. they went from deposits which were reasonably stable to shorterm financing. why? because ey could get a few basis points less. i would be very curious to get a sense of what the current housing market would look like if the government were out. i know there are several things. one, interest rat, mortgage rates would clearly be higher. the question is, how much higher? the size of the market would be smaller because of that. is that all bad? we went through a period of hyping up housing in every con seasonable respect, and i think it was the general economics pr that we were putting too much of the nation's capital into

ownership. and the fact that it turned around so dramatically, we erased virtually all of the runup in home ownership in a very short period of time tells you how unstable that is. in any event before we get into the notion of which of these various different pockets we wish to put the new sets of regulation in, it would be useful to get a sense of what the alternatives are. to start merely with saying we're going to start somewhere in the middle presupposes a degree of subsidization the size of which we do notave the slightest clue about. i think we get a much broader notion of what would work and be the nation's interest if we first have some view of what level of degree of subsidization

we find desirable and acceptable and i don't think we're getting into that discussion. it sounds to me as though we're sort of starting somewhere in the middle, working our way backwards and forwards, and i've been looking at this market for generations and i don't have a clue what we have here. i do know that a home mortgage, amortized 30-year mortgage has a value to an investor. the only question is, at what yield? i mean, i have no doubt that you could probably sell subprime mortgages at almost any volume if people wanted to take the risk that would be implicit in the mortgage and accept the 13% yield or whatever the number would be. >> right. >> but let's get a sense of what it is we're trading off here, rather than making the key decision before we go to square

one. >> thank you. that was the best pretend answer i've ever heard. bob post has a question. >> so actually some of the papers here try to answer that question and give you some modeling and i think it's a fair statement that if you looked at those papers, the sources, and the sources, that there would be some increase in interest rates, decrease in the supply of mortgages t i think that my sense is politically we could handlehat. there is a second argument and that's what i'd like to know what your view is because it's essentially that that's a normal but the reason why we need insurance all the time or as a backup is because, one, there is a liquidity crisis whether it's every 20 years or 30 years, whatever you want to define it. at that point the notion is that even at a higher price that

people walk by and implicitly the notion must be that the fed doesn't have powers to deal with it, so i gus i would just like to refine your excellent answer from before and try to get you to take one step further, because i think that when that work is done, actually people might be willing to accept that as normal times and then it's the second argument that seems to motivate people to say, we need either back up insurance or full-time insurance and that implicitly assumes that the pricing mechanism you've just described won't work and also implitly assumes the fed doesn't have other tools to deal with it. >> well, 13.3 essentially gone the fed does not have the tools it did have. but this is more a nonhousing

question, because it rests very critically on the issue of how unusual this recent crisis was. from what i can gather, this crisis was the greatest financial crisis ever. it was not as large an economic crisis obviously as the great depression, but the short-term money markets did not go out of business during the great depression. money rate went up to 20% but it still traded, but in this particular one,e had major aspects of the shortened of the market collapsing and that is the -- the short, overnight ra is the ultimate deteination when it goes how bad the crisis is. the last time we actually had a shutdown in a short-term market as i recall, i wasn't there but some people think i was, was in

1907. >> remember it well. >> the cold money market shut down for one day. and going back in history, it is very difficult to find anything like this. now, i grant you that when you get a structural breakdown of the type which we had, you have no substitute for other than substituting sovereign credit for private credit and that's indeed what was done and i happen to have been a strong supporter of t.a.r.p. i think it was the right thing at the right time and i think it worked. the question of whether the repayment was out of the capital gains, they all got as the stock marketent up is a secondary question. what it did do is when the market was going down, it stabilized a lot of institutions. i think we have to do that periodically because the system has human nature associated with it and human nature is a

remarkable tendency to do very punitive things. i first say if you're going to make it every 20 years we're going to have a problem like this, then i'd have to agree with you, but i don't see it that way. i see this is a much rarer event and i think the critical issue you have in the catastrophic insurance issue which is basically what everybody is talking about is how in the world do you price it? i mean, we know that if we actually had a probability distribution of potential outcomes and we had a full measure of the tale risk we would probably calculate the costs of the subsidy. in fact, almost by definition, at the margin where people who are borrowing money would be indifferent as to whether they would be getting either one or the other. and i will tell you, however one does this catastrophic insurance calculation, the numbers that

come out really implicitly only refer to, quote, normal times. and so it is a degree of subsidization and i think you have to ask yourself, is it worth while or not? and this is where the issue comes in from your point of view you would say it is wort while. from my point of view i would say i would agree with you if i agree with the underlying premise of how often we have these crises. but that's the type of discretion we need to have, just not parading out a whole series of different ideas unconnected to anything in particular. >> there's another question coming but can i just sneak in, you mentied the 13-3 is gone and that the t.a.r.p. was helpful. though t.a.r.p. was very hard to get, took a lot of political effort to get congress to pass it. do you think with 13-3 gone we

still have enough tools to deal with these rare but very severe cris? >> i don't think that if you have a committee of diverse people that you could get 13-3 acted in a timely manner. i mean, don kohn is sitting there. don probably could tell you that it wasn't self-evident to everybody that tt was the desirable thing to do and the reason why that happens is that we all have this very unusual psychological problem. we believe we can forecast. and we can't. and in a financial crisis, by definition, is a dramic decline in asset prices virtually overnight, and if that were anticipated by the great majority of the people, it would

be the way. and indeed, don't know how many crises we never even were aware are in the process of brewing which got arbitraged away before we knew it. the only one i would say we were clearly aware of was my recollection that the trigger of the crisis that was going to occur after say 2005 whenever it happened was going to be a collapse in the doll because of our current account balance being out of whack. everybody agreed with it. so what happened? the dollar basically moved down very sharply over a number of years and arbitraged the crisis. and the only thing that had nothing to do of any significance with the crisis was the american balance o the dollar. so i think that there is this just general implication that we can have committees which can somehow anticipate events.

good luck. it will not work that way. i sat in meetings for years and years and years and it is remarkable what amnesia overcomes you after the fact. you forget how little you knew, and i just question how successful we will be in setting up some of these things. >> dwight? >> i'm one of the researchers that have actually looked at the question of what might be the level of u.s. mortgage rates in a private, nongovernment market. the key evidence we have is of course most of western europe has mortgage markets with very little govnment intervention with a wide range of fixed rate and variable rate mortgages and the evidence is that by and large their mortgage rates, the spreads of their mortgage rates to their treasury rates are lower than ours. and of course the immediate question is what are they doing that makes it work?

and i think there's two answers. first, a lot of the options that are free in our mortgage such as the prepayment option, are actually priced there, and that's wheorth 50 basis points immediately you've knocked off 50 basis points if you make the borrower make a decision whether they want a free prepayment option or not. >> used to be able to do that. >> advocate going back that. and then of course a lot of those countries have recourse, which means that in a sense the borrower has a much more difficult process of default and the bankruptcy laws do not allow bankruptcy to be an alternative to the recourse. so i think the question -- i think if we move to a safer mortgage market and a safer instrument, we actually would probably end up with lower mortgage rates. the question in a way is, is this political system up to creating of mortgages and allowing the consumer the ability to make a choice among them and pick the one they actually feel is best.

>> well, there is double entry bookkeeping. if you find that so structures which help one group disadvantage another and vice versa. and the whole purpose of getting market pricesis this is supposed to be a nonpolitical, anonmouse way of making cices among democratic societies. i, you know, i'm usually arguing on your side but there is another question here. in fact,societies. i, you know, i'm usually arguing on your side but there is another question here. in fact,among democratic societ. i, you know, i'm usually arguing on your side but there is another question here. in fact, a quasi-implicit guarantee in europe that banks will not be allowed to fail. when you've got that it is

almost the equivalent of fannie and freddie not being allowed to fail. >> we had this argument earlier. i'm glad you're on my side. >> it's made a much easier job when the underlying mortgages are very safe. in other words their mortgages are like double-a securities so it's a much less of an onerous task on the banks and the regulators to have them than if you have a system where the underlying mortgages are bs. >> they've been having covered bonds for generations. but they don't have nfdics. for those of you not aware of the problem, what we have on covered bonds in the united states is the sequen of where claims fall in a bankruptcy proceeding and the fdic insists it not only be on the top but on top of the top and that's not going to work in this context. >> you talked about the recovery

is doing okay. but that need other things to keep growing in order to grow. nonresidenal construction is still fairly weak, so where is this impressive growth going to come from? i agree with you by the way but i'm a little nervous about where we're going to get thisgrowth from, exports or consumption? >> well, martin and i have discussed this previously so i'll just repeat it, but -- >> i wanted to give the world your --. >> my view is that one of the consequences of the extraordinarily long period of

virtually no contractions in the american economy from the early 1980s forward, very little, and indeed it was interspersed with 1987, stock market crash, which historically would almost always have brought economic activity down because the wealth effect was dramatic at that time. and then we had the dot com boom. we had a soft landing in the process. and thconsequence of that is that all the vast proportion of capital investment was for a longer lived market expanding type investments longer lived market expanding type investmen longer lived market expanding type investments and the result was a dramat change in capital stock and activity but it did create i should say an unexploited backlog of cost

saving investments. when theeconomy went into the sink, all of a sudden you had this large amount of potential, very, fairly safe investments, and the result of that was that we have had, up until very recently, an extraordinary rise in cost saving investments, which largely of course boosted labor productivity but also shows up as significant gains in energy productivity and materials productivity and the result was without any increase of significance in sales, margins opened up wholly because of the productivity changes. is cated a surge in profitability which under ordinary circumstances would have created a major increase in

investment in long-lived assets. but if you take a look at the ratio of fixed capital investment, illiquid capital investment, as a share of cash flow, you find very quickly that what you are looking at is the willingness on the part of corporate management to convert liquid cash flow into illiquid fixed investment. their propensity to do that is a very important measure of their sense of confidence or lack thereof and data show that what has happened in this particular period is looking at the lowest ratio of fixedapital investment to cash flow up until, i should say maybe 6 to 9

months ago, the lowest since 1940. now, i want to just parenthetically say i'm not talking about liquid markets. liquid markets are very different. baa corporate ten-year note, for example, is highly liquid and therefore has an effective maturity of five minutes. you you're looking at effective, short-term instruments which often happen depending where the maturity is, highly volatile interest rate risk and credit risk, but not liquidity risk. this is the reason i might say parenthetically that a nonfinancial corporation keeps capital at 50% of its assets or

as ainancial institution like commercial banks it's 10. and what i'm raising here is the fact that something very significantly dampening is occurring the american economy, which is suppressing it. i'm just finishing up an article, which will be published by the council on foreign relations on this. i did an op-ed piece for "the financial times" a while back in which i tried toxplain his. but i think this explains something very unusual. it's the reason why the -- best way of putting this -- it's either price earnings ratio or, more importantly, equity premiums are at the highest level in a hf century. and that means that with a surge in profitability in the context of a very high degree of risk

premium, stock markets have been going up very gradually agast the pressures of extraordinarily high equity premiums. what this means is that we have a very significant backlog in which we have been getting a major wealth effect, which has been spilling all over the place. remember, what energized the financial markets from their lows in the early months of 2009 was a dramatic rise in equity prices, which essentially created for the banks a big increase in the market value of equity and it is the market value of equity which determines what level and risk type liabilities you can sell. and with the market valuof equities doubling in the banking system, all of a sudden they

didn't quite open up for lendg but the issue of solvency disappeared. and this is true as it spills over into the nonfinancial sector and to make -- and to end this answer on a more positive note -- what it's now -- in the process of what we are seeing is a fact of the wealth effect in consumer markets. in the last four or five months, these markets are beginning to look very much like they used to prior to the crisis. personal consumption expenditures, last quarter was up 4.4%. annual rate as i recall in real terms. the monthly running data say that the first quarter of 2011

are really quite strong. and this is mainly consumption. and it is mainly the fact that part of the whole collapse in the home market and stock market induced a dramatic rise in the savings rate as one would expect. and i think we're now working in the other direction. so i think this thing is just building and if we somehow could get beyond this very heavy overhang in the residential markets, it would be very helpful. but remember, with 400,000 single family completions, and no vibrant multi-family construction, we're getting nothing out of home construction and the nonresidential construction part of capital investment has been flat to

date. all of the increase that has occurred has been in short-lived assets. in fact, one of the calculations and i think i mentioned this to you the other day -- >> yep, yep. >> -- that if you take, reconsuct the gross domestic product by age of the type of elements within the gdp, what you find is that if you look at the gdp of only those assets which are 20 years of prospective life or less, since i guess the last three years the gdp h been growing one percentage point more than the official numbers. if you translate into the total gdp, we didn't have the collapse in these longer lived assets, mainly construction, we would have had a gdp going up enough to have pushed the unemployment rate, if you just, you know, do

something which i hate to do, leave everything as though it were, you get under 8% unemployment rate. just merely by the growth rate using the same productivity levels and all the various other elements. it turns out that the equivalent of that accumulated 1% over three years translates into well over a percentage point in the unemployment rate. and so you can -- this is a very unusual situation and i think there are so many things going against it, that it's very hard not to start to pick up because we are beginning to see a degree of lesser activism, which i think has been a major contributor for the suppression of t level of illiquid risks. and the numbers are just gradually now beginning to soften and look somewhat better

and ordinarily i don't listen to businessmen when they're complaining because it's usually why they can't get a subsidy. but when they tell you that they are very much at sea as to what the future is going to look like, if that is true, what is happening to the degree of illiquid risk in the economy is precisely what you would expect if that were their view. so without taking what they're saying at face value, they are behaving as though they really believed that. >> other questions. one at the back there. >> hi. i'm with the pew economic mobility project. running through the discussion so far has been this undercurrent about how

attempting to help the disadvantaged creates in its own way a lot of problems for broader macro economic policy. in his recent book there is this idea i wanted your thoughts on, which is that the united states has a relatively thin social safety net and that in turn puts pressure on fiscal policy but also monetary policy to stimulate the economy more aggressively perhaps than might be best, which he argues in this case led the housing bubble. in your view is there any merit to this idea that broader safety nets orhe thinness of them does actually translate into impact on monetary policy? >> i doubt it very much. let me just say with respect to

the argument about easy fed monitoring policy, i'll refer you back to the paper i just wrote for the brookings annal, and i addressed that subject. while i acknowledge the possibility it could have been, the data swed that it was not. and the fact is, what we're looking at, is the real world. were we dealing with something in which monetary policy was a major contributor to the bubble? and i would say you look at the evidence as to what was gog on in these markets and the evidence is you can't find it. now i will grant you that there's a tendency for somebody sitting in the middle of the federal reserve to come up with that conclusion, but i do have a wife who tells me, you know, be careful. the question is, theata have to stand on their own. if i am wrong in that, i wish

somebody would take a look the brookings panel paper that i wrote which relates to that issue. if they can find a hole in my t-values oriases in my regressis, i will change my mind. i'm waiting for somebody to do that and i'm prepared to change my mind. but no one has tried it yet. i don't know if they'll succeed, but have fun. >> there is a slightly nuanced version of that, though, which is not around monetary policy, per se, but that is all these incentives for housing which we either kept or srengthened were a way for -- to provide additional wealth to middle or low and middle class families that weren't getting much increase in their labor income. so i think that's part of the argument as well, that this was

a policy conspiracy of let's buy off these folks. they're not getting any money. so let's generate a housing bubble. i don't actually believe that but that's, i think, part of the story. >> if that were the -- i mean, one of the rare advantages of sitting at the head of the federal reserve system is you are right where all those conspiracies are supposed to happen. 18 1/2 years, i don't think that i recall a single instance of that sort of thing going on. you know, i always used to are that when the congress would say you guys do everything in secret and so copiratorial, and they were pressing us to open up our minutes and this and so i finally invited down a couple of

senior staff people from the congress to sit in and listen to the actual oral transcript of a meeting. they went away. i never heard from them again. one of them actually said as they were going out the door, you know, you ought to play this for high school students and they would see the way our government functions. now that is as far away as you can get without naming names some of the conspiratorial views of what goes on in government. it's not that bad. >> question here and then i think we'll -- >> nyu. i just want to pick up on that fact aut stagnating incomes for all but the highest parts of the distribution and come back to this issue of housing prices. because you talked a lot about faors that may be contributing to an excess supply but we

didn't talk a lot about what people are going to be willing to pay for housing going forward giving the stagnation of income, increases of medical costs, energy costs that housing is not going -- at least in the short run going to be vied as a great investment. how much will people be willing to pay for housing? how will that affect the evolution of housing prices until we get to some new floor? >> yeah. this gets down to the critical question of what proportionat propensity of buying homes during the boom period was attributable to the expectation and in fact the need to get a capital gain? the data do showome significant part of it is there. what you have to essentially do i guess is try to separate that factor out and you've got a normal market or as close as we can get to it. i'vectually not seen that done. i'm sure that peop in this room have done that.

but i think it's important to realize the extent to which housing is a very critical investnt vehicle for a very substantial proportion of the population. it's their sole major source of increased wealth and decreased wealth. and we should be able to ferret out from all the various surveys that we have where the dividing line is between adding to the owner occupancy capital stock as a function of price expectations and not merely the desire to live in your own home. >> alan, thank you so much for talking. that was just terrific. [ applause ]

>> we have a few minutes where people can take a little break, finish their lunch, and we will reconvene at 1:30. 1:30 sharp. >> and that is how we maintain a healthy lifestyle to the kids to have the strength and the judgment to say no. >> the president of southern

methodist university will discuss college students sunday night. q&a.an's thee're waiting to see if house will come back for relief -- for a brief preliminary work. they are determined unveiled a bill today that would cut billions of dollars more than they are originally envisioned, going to a timetable that would lead to a vote next week. the vote would cut $100 billion from president obama's proposed fiscal 2011 budget. in the meantime coming up, we will bring you more live from the conservative political africa -- action conference. governor mitch daniels will speak to the group.

we will have his remarks live on c-span at 7:30 eastern. next, our earlier at the conference today, representative tom price of georgia and marsha blackburn spoke to the group. this is a half an hour. >> doctor price is an orthopedic surgeon. he served four terms in the state senate in georgia before being elected to congress in 2004. congressman price served as the study committee chairman, and i must say that i believe with all my heart and soul that it was the house conservatives standing up 100%, of voting no on the

stimulus bill, voting no 100% on the first obama budget. he did not even bother to submit another the budget. tom price was right there leading the charge. he now serves and has been neglected by his colleagues to be the chairman of the republican policy committee, which develops conservative solutions to america's's problems. tom price was doing health care before anyone had ever heard of "obamacare." his signature piece of legislation is the empowering patients first act, which is to help through private solutions. tom price is one of the leaders in 2009 when the republicans refuse to go home for the august recess because they stayed on

the house floor and talk about energy when gasoline was over $4 a gallon. tom price is a leader. he is a true conservative. he is a man of conviction, a man of faith, and i am proud to call him my friend. tom price. >> thank you. our all those conservative patriots out there? thanks so much. i want to thank each and every one of you for coming out. a year ago i had the privilege of addressing this great conference, and at that time, as some of you remember you can feel something was in the wind, you could feel the awakening of the american people to the onslaught of freedom and liberty that this administration have put into place.

one year ago i said to this very group, we are on the present this of an historic political revolution. next year i am confident we will have a conservative republican majority in the house, and you did it. in history the story goes that at the close of the conflict -- constitutional convention, benjamin franklin was leading constitution hall, having signed the constitution, and he was approached by a woman he said, doctor franklin, what have you given us, and monocacy or 8 democracy? he said, we have given you a republic. and then this five famous words -- if you can keep it. in that same vein daniel

webster said hold on, my friends, hold on to the constitution and to the republic for which it stands, for miracles do not cluster and what has happened once in 6000 years may never happen again. all on to the constitution, for if the american constitution should fail, there will be anarchy in the world. why did the settlement give us those warnings? i believe it is because they understood how precious liberty is and how fleeting liberty has been in the course of history and what a remarkable work it would be -- it would take to preserve our freedom and our liberty. this past election showed a remarkable amount of that eternal vigilance that is required to preserve our liberty. the members are astounding -- the numbers are astounding. 87 new republican members of the house of representatives.

63 of those individuals turning democrat district republican districts, at 37 of those 87 never having served or run for office before in their lifetimes. they are so incredibly inspiring and passionate and patriotic. it does your heart could deserve that. much of that banks goes absolutely to the folks in this room. we come together now in the wake of a momentous election. their lives of americans stood up and they demanded to be counted because they saw our nation movie had a direction that was in conflict with the fundamental american principles that we all cherish. our liberty has been threatened by government, impressed with its own power, hungry for more authority, and blind to the failings of its policies. the deficits and debt, the sluggish economic recovery, the disasters "obamacare," these are

all symptoms of the arrogance in washington that puts government first. clearly the policies and the trajectory of government over the past few years have been a mistake, but not because the democrats meant to do something different. were no failed policies accident. these failed policies were their goal. i'm here to tell you that their goal is not have to be our vision. why does it have to be our vision both because conservatism is alive and well. the american people have been awakened and they are more involved than ever. where do we go from here? in short, your government and the leaders who espouse the virtues of conservatism need to walk the walk.

we owe it to you, we owe it to those that we have the privilege to represent, and we owe it to future generations to get this moment in time right. we all went to those inspirational leaders who have steered our movement with honor and pastimes of great challenge. this past sunday was the 100th anniversary of regin's garth. i had the privilege, the incredible privilege the at the museum a few weeks ago. what a giant of a man he was. there was a man who taught us what positively this could do, when they set about motivating a passionate and a patriotic american people into action. here was a leader who walked the walk, while communicating gracefully the purchase of principle solutions. reagan proved it was not enough to identify the failings of government or the imperative we have to pass on to our children

and grouch -- grandchildren and asian stronger and more secure than the one we found. we had to with the moment by putting those police to the test. to show skeptics what it means that the government that gets out of the way and protect our and then it -- unalienable rights within constitutional boundaries. for most of our country right now, that test begins with the job, with the economy, and job creation. president obama has told the american people countless times i have lost count that his administration and his allies on capitol hill into the focus on job creation. that is focusing on job creation for those who have never created a job. the retreading of this

administration is more oil, using invest in such as spinning, and it will not change the same government-first philosophy that has compounded our challenges and turn our nation care it will fall to you, as individual voices of conservatism and it will fall to the house of representatives, where a new majority has the opportunity to move forward positive and optimistic solutions, even if we are met by a stiff arm by the senate or the president. in the face of their opposition we will move an agenda that demonstrates the american people you do not have to suffer a government that ignores of voices, bankrupt your future, and redistributes wealth. you do not have to abide a government that tells you to sit on idly by because it has figured out how to dictate your

education and your health care and your energy needs. their math does not add up. the deficits we have seen over the past few years are truly jeopardize in the future of our nation. what we need is a little honesty, a lot of hard work, and a resurgence of that wonderful american can-the spirit. our job creators across this land the not need washington to tell them where to invest or how to create jobs. what on the report ignores need is greater certainty and stability that will only come when washington stops the try to pick winners. the current administration should is to regulate because they did not trust you with your own money. they think the american people need washington to tell them to invest here or to support this cause more to keep this or to

buy this like all. meanwhile, they have no track record whatsoever that their policies actually work. they have little faith if unique in the american people or and .ur founding fathers' vision they want you to have faith that washington will do that for you. we know it is not washington that gives us our freedom. we know our freedom comes from god almighty. and that for an orderly society that preserves our rights, we cede a portion of that freedom back our government, but only a portion. i'm here to tell you that the government has taken too much.

did not get me wrong, it is not an easy task to balance freedom it's a dirty. -- freedom and security. a lazy brand of leadership and its consequences are destructive to a healthy society. never before in our history has we witnessed a government and crutch -- encroach on our liberties as it has in the last few years. taxes have limited the freedom of americans and the power of the american free enterprise. many people have lost their homes and their jobs and their security, and most tragically, some have even lost their faith in our country and in the american dream. the obama administration, the democrats in congress, have fallen short on their promises, and then only have themselves to blame. county and then overtly build

robots that success. unfortunately, their failures are shared by our nation at large. we are already working to rein in the size and scope and power and the cost of washington. republicans in the house have only just begun to take action to put our nation by fiscal house in order, and yet the democrats decry our efforts as unreasonable and extreme. what is unreasonable is the tragedy that that there the government has amassed in just a few short years. government can certainly do with less. republicans have pledged to lead by listening and acting on behalf of and with the consent of the government. that is something novel, and that requires more active participation. we did not get here without your help and we will not be a success without your help. it is time for some tough decisions. the circumstances demand that we

be bold. if conservatives are timid, we will lose this battle. you can rest assured that those who believe in a more active and an interest of government, will firstly fight to increase and protect our power. we have along road ahead of us. what our pilots that the grass is our people and our spirit and our perseverance, it is that that provide our shared prosperity and our stability, not our government. ronald reagan said we believe faith in freedom must be our guiding stars, for they show us the truth, they make us brave, they give us hope, and they leave us wiser than we were. those who profess that they and freedom, you are part of the bedrock upon which this nation has been a great and part of the foundation upon which our nation will probably stand and immigrate. we are blessed to live in this republic if we can keep it.

with your faith, which will support, and with your great work, i know we will honor our founders' legacy and those who have defended it ever since. god bless america, and keep fighting for freedom. >> please welcome michelle easton with a clear blue lose -- with the claire booth luce policy institute. >> welcome. at the institute, we celebrate and promote a strong conservative women leaders, so it is my pleasure today to introduce representative marsha blackburn, who is a champion of

conservative principles in the united states congress. she was elected in 2002 to represent tennessee's seventh congressional district, the first woman in a state when a congressional seat in her own right. she serves on the powerful energy and commerce committee, which has jurisdiction over health care, energy regulation, and telecommunications issues. she is also the author of an excellent book, "life equity." she put a study guide for this book at the internet. i recommend it to you. she is a popular speaker when she speaks at the institute, and she inspires the women and men in our audience with her intellect, hard work, and can

commitment to conservative principles. marcia and her husband lived in tennessee. he had two children and two grandsons. she is a native of rural mississippi. please join me in welcoming an exceptional leader from tennessee, representative marsha blackburn. >> we do love this conservative crowd. cpac is one of my favorite events of the year. you come here with thoughts and turn them into action and you take principles and apply them to policies. you energize us. you stand up and say let's take a stand on some of these issues. and turn the clock back to some of our conservative values.

and i've got a specific issue that we need to have you take a stand on today. this is one that you can help us with. we must act now, now, to completely turn back the federal communications commission's regulation of the internet. [applause] if we do not, we will have failed to check the single largest unilateral imp position of executive authority in a generation. if the american experiment is to succeed in a hyper connected century than conservatives cannot fail to defend true internet freedom. here's how i see this. when a president or his administration and partisans in congress propose even minor expansions of government

authority into the only sector of the economy showing consistent and sustained growth, then conservatives must be heard. when the president threatens innovation by expanding regulation, conservatives must stand up and object. when bureaucrats believe that they know better than activists and small businesses and entrepreneurs, then conservatives have to say absolutely not. we know what is good for the u.s. economy. [applause] now, the president of the united states and his basketball-playing buddy, the f.d.c. chairman, decided to enact the first-ever -- first-ever regulation of the internet. it was done not by congress, they tried it for years, but

they did this during christmas week. after congress had already adjourned. now, all conservatives must stand and say we are not going to stand for this. the administration's net neutrality plans, which is basically the fairness doctrine for the internet, will tell internet service providers that they no longer have sole control over the networks in which they annually invest. annually invest $60 billion private sector job creating dollars. invoking powers previously reserved for third world countries, the f.t.c. will change the terms of broadband leases and bear in mind your internet service providers have already gone to the government and leased this spectrum. they're going to change these leases after the fact.

and exercise powers that they have created for themselves in defiance of congress and the courts. because of this, it is not an overreach to say that net neutrality amounts to nationalization of the internet. if there was ever a cause to rally the conservative movement, it should be nationalization of our most innovative economic sector and a free speech tool that you and i use every single day to get our conservative message out. [applause] if conservative action was ever urgently needed, it should be when a bureaucracy, staffed and advised by those who would regulate political speech, is asserting control over the most aggressive platform for free speech ever. net neutrality is not needed. the american people do not want

it. it cannot work, and i need your help to be sure we can defeat it. many of you come to cpac not only to be inspired and motivated but to really learn about the issues. and i want to put a couple of items on your reading list. here you go. those of you who want an excellent deep dive into this issue, go to reason.com. and read the remarkable internet comp article by peter sutterman. go to "wall street journal" and read john fund's column from december 21 about how the net roots have created this issue from thin air. to summarize these, net neutrality is an hysterical reaction to a hypothetical problem. it seeks to restrain internet service providers from actions they have never taken, nor have any market interest in pursuing. in the name of preserving fairness over an open system,

the f.c.c. establishes a regulatory beachhead that will be very difficult to turn back. basically, if you like the internet, you have, net neutrality promises to ruin it. the arguments that we must defend the internet from evil corporate greed are fiction. there isn't a need for it and i want to give you an example that you're going to appreciate. last year, the aclu in arguing for net neutrality laid out 10 instances of i.s.p., internet service provider, misbehaviors that argued for urgent need for intervention by the federal government. so we looked into these. here's what we found. three of those instances were resolved through customer interaction in a matter of days. one was an action taken by at&t

to protect itself from illegal activity. others were software glitches or content decisions not made by the i.s.p. two of the cases happened, get this, in canada. of the 10, none, none, remained unaddressed today and none were resolved by the federal government. [applause] there has been no market failure. since congress decided in 1996 to adopt a hands off approach to the internet, we have had staggering success. online, status quo is defined by a creative economy that has given you facebook and youtube. the status quo has advanced business models from e-bay to itunes. the current model has facilitated freedom movements from tea party rallies in nashville, tennessee, to the

remarkable events at tahir square. this is the status quo that conservatives really want to defend. how many of you have ever heard somebody say, well, if the internet as much as provider would get off my back, then i could go hire more people. and how many of you know any who would say that this company that is plugging them in to the world wide web is restraining their freedom? i think you agree with me on this. the truth is that broadband has become a modern synonym for enfranchisement. when companies seek to relocate to the rural communities in my state, the first question they ask is about broadband and internet access. so that they can remotely monitor their machinery and

operate those plants when schools want to enhance their curriculum, they go to virtual books and to the internet rather than waiting for the school board to issue next year's appropriation. when the unemployed want to aggressively search for a new job, they go to online employment offices and to online universities. washington creates a disincentive to expand those networks. by removing the i.s.p.'s ability to manage those networks, consequently, the profound enfranchisement offered by broadband would be enabled by free people in a free market. but what they want to do is have you dependent on the government and washington for that access and this is something that conservatives should be enraged about. now, who is pushing net

neutrality and why? a cursory survey of the anti-free market sponsors of net neutrality, from confirmed socialists like robert mcchesney to netroots activists like freepress and move on tell you all you need to know. another example yesterday, the director of free press, garrick turner, argued that it was up to washington to foster appropriate competition and ensure the disenfranchised had the right access at the right price. well, we've all heard this argument before. so i've decided i was going to have a little bit of fun with this article. so i went through the column and i replaced the words "wireless communication and digital" with the word "health care." and i wound up with the statement that is reminiscent of another fight against government expansion, and we

conservatives are leading the way to repeal that one. [applause] you know, it is really quite amazing the liberal presumption that costs can be lowered, access expanded, and enfranchisement achieved only -- only through washington fiat. it's the motivator behind both policies, both are wrong, and guess what? we can't afford it. the success of the internet is a direct challenge to the liberal philosophy of government. a successful and open internet amplifies individual voices and has spurred democratic revolutions around the globe. it allows the entrepreneur to prosper without the burden and regulation associated with traditional brick and mortar establishments. it proves that free people create and seek free markets.

it does all these things without assistance or permission from washington, d.c. in this, the internet is incomprehensible to big government liberals. that it persists equally without market failure or regulation confounds the left. as such, they are anxious to apply one of their central maxims and reagan always had this right on him. with liberals, if it produces, tax it. if it moves, regulate it. and that is what they are trying to do. i believe that the f.t.c.'s recent net neutrality regulations, if they're allowed to stand, they will shortly prove themselves to be a colossal failure of historic and devastating proportions. but sadly, we all know that more regulation is brought

about by failed regulation. they tried and tried again. for some time i've argued that conservatives need to wake up and understand that our core values are being challenged and debates over technology, policy, and we have got to rise to the occasion because all too often, we have been absent from this debate. and in our absence, the left has insidiously laid the groundwork for a massive expansion of federal authority. the left talks about we need bipartisan agreement on issues they say are small issues. like bandwidth which is not small at all. and then they want to talk about regulating the next gadget that is going to come to the marketplace. they brag about building that consensus. but their goal is this. their goal is to expand their reach far beyond anything that

conservatives would ever accept. many of you have joined me in this call. and god bless our conservative online bloggers who are leading the fight on this, the night against net neutrality every single day. you wonder as do i, if the remarkable conservative expansion that we have seen in the last few years could have been possible if blogs and apps and streams had to be approved by the federal office of internet innovation. so now the left claims that we are going to take a bipartisan issue and turn it into a partisan issue. they say how dare you? and you know what? nothing is further from the truth. we're standing solid on conservative principles and we have a plan. let me tell you what it is.

this is how we're going to stop net neutrality first. congressman fred upton, chairman of the energy and commerce committee, and congressman greg walden, who is chairman of our telecommunications subcommittee, are bringing forward the congressional review act and we will pass a resolution of disapproval on the f.c.c.'s actions. secondly -- congressman john cull better son from texas is leading -- culbertson from texas is leading the fight to block the f.c.c. from spending one thin penny on implementing net neutrality rules and regulations. [applause] and finally my bill, h.r. 96, will answer this once and for all. it will scomplistly -- explicitly say that the federal communications commission has

no authority to implement net neutrality rules and take over the internet. [applause] to pass these things -- to pass this legislation, we are going to need your help. we need you to help educate your friends and your families and your colleagues. we need you to make certain that we take this fight for free markets and free speech to everyone we know. the next great fight against government expansion is here. it is over the internet. i am asking you to stand with me, defeat the f.c.c. overreach. god bless you. thank you for being here. i appreciate your time. thank you. [applause] >> marsha blackburn earlier today at the conservative political action conference in washington. we'll have more coverage coming up live from the conference this evening at 7:30.

indiana governor mitch daniels will be speaking to the group. we'll have that live for you on c-span. right now more from the conference. john thune of south dakota, senators -- senator from wyoming and john thune of south dakota spoke to the group earlier as did mike lee, the new senator from utah. this is about an hour and 15 minutes. >> and honor to introduce you to senator, doctor john barroso. known in his home state, the cowboy state, as wyoming's doctor. dr. barroso knows of what he speaks. when he talks about health care. serving thousands and thousands of patients in his home city of casper, wyoming, as an orthopedic surgeon for 25 years. he also has provided practical medical advice to citizens throughout the state on regular public service and television

news programs for the last 20 years. he also is medical director of wyoming's local health fairs. no federal government money involved to provide low-cost screening to wyoming citizens. his colleagues have demonstrated their confidence in him that as a newly elected senator, relatively newly elected, elected in 2008, an overwhelming majority, he's serving on -- in leadership as vice chairman. senate republican conference. so no one should tell dr. barroso that he doesn't know what he's talking about when he knows -- talks about health care. he's been a leader and continues to be a leader in the fight to repeal obama care. he has introduced legislation to provide flexibility and

freedom in health care. and every week, since this legislation passed, he has gone to the senate floor to provide a second opinion on this legislation. and the destructive effect it is going to have on seniors and young people and families and taxpayers and freedom-loving citizens. please join me in welcoming dr. and senator john barroso. [applause] >> well, thank you, incredible introduction. i'm going to talk about you in a second. but i want to tell you the topic, the topic here today is

obamacare, can it be stopped? and the answer is yes. [applause] not by me. but by all of us. we need everybody involved because remember, you are the ones through your activism, through your commitment, through your focus, through your dedication, you're the one that sent the chasmry to the united states senate by sending us 13 republican senators, six brand new ones. and you're the ones that fired nancy pelosi. [applause] you had a chance to visit with senator mitch mcconnell yesterday. and i'm sure he told you that what we really now need are four more republican senators so that we will be in the

majority. you've done it in the house. we need you to help us do it in the senate. [applause] and the bottom line is this -- we need a new president. now, if you need to be motivated about this fight, all you need to do is read four articles. four articles by grace murray turner. four articles. one, chopping off the many heads of the obamacare hydra. two, states preparing to fight back against obamacare. three, dismantling of the new act needed, piece by piece. and this is if you can't wait for the book to come out. the book's coming soon. four, your rights under obamacare. what are your rights under sbome care? well, the right to lose a job.

the right to see the federal debt soar. the right to lose the coverage that you have. the right to pay higher premiums. and the right to have the government decide what insurance you must have. you read that, you're going to be ready to fight. and when i say obamacare, and the obamacare health care law, everybody knows the one we're talking about. this is the one written behind closed doors, in spite of the fact that the president promised everything would be on c-span. this is the one that was voted on in the middle of the night on christmas eve. this is the one where they had sweetheart deals in exchange for votes to get that last vote so that this would pass. you all remember the cornhusker kickback, the louisiana purchase, the gator aid, all of these special sweetheart deals. you remember, this is the one that caught $500 billion from our seniors on medicare.

not to save medicare, not to extend the life of medicare but to start a whole new government program for someone else. this is the one in a also increased taxes by $500 billion. it crammed 16 million people more on medicaid, a program that's failing and continued to fail all across the country. and this is the program that was crammed down the throats of the american people as the american people were shouting no. that's the health care law that we're going to repeal. [applause] no matter where you go, no matter when you talk to people, people say, what's in this for me? am i better off or worse off? here we are on the 100th anniversary of the birth date of ronald reagan. and i so vividly remember that debate with jimmy carter where ronald reagan said basically, are you better off, are you worse off than you were before

jimmy carter? so let me ask you some questions of you in the audience and i'll ask you for a show of hands from different sides here. ask questions about you and your family and what you think is coming out of this health care law. so how many of you believe that you will actually be paying more for premiums for your health insurance under the obamacare health care law? the hands are all up. how many of you believe that the availability or the quality of your own health care will actually go down under this health care law? all of the hands are up. how many of you believe that the health care, this health care law will add to the deficit? i know. and with the national debt of $14 trillion, how many believe that if obamacare is allowed to stand, it will bankrupt the country? every hand. and these are the same answers we get at town haw meetings and

the same answers -- town hall meetings and the same answers that i get with dr. coburn in the senate doctor show and people will pay more, get less. this is not the right program for american -- it is unaffordable. it is unsustainable. and ladies and gentlemen, it is unconstitutional. [cheers and applause] so this is a fight that we are going to conduct on three fronts. in the courts, in the congress, and all across the country. we need your help. in this fight in the courts, what is so offensive? well, it's an individual mandate. a mandate that says you must buy government-approved insurance. have to do it. no choice.

you have to do it. the courts in virginia got it right. the courts in florida got it right. and five more states this year have added their names to the 21 states that are already part of this. we've had since january 1 kansas, ohio, oklahoma, wisconsin, and my home state of wyoming, all joining in this suit. [applause] this is not likely to get to the supreme court until 2012, even if they take it up now. and it seems like the administration is trying to drag its feet so that more and more money gets spent and effort gets spent before we get a ruling from the supreme court. mike lee who's a senator from utah is going to be talking to you a little later. he does a great job. thank you for helping us with mike -- he's in the -- on the

judiciary committee and last week in the senate the judiciary committee had a hearing as to whether or not this health care law that they passed and they voted for and the senate passed and the president signed whether or not it was constitutional. a little late, don't you think? and at this, mike lee asked the question, can you really mandate people under the guise of health of the nation to do things? and one of the witnesses, the experts said oh, yes. so can you actually make people if you think it would be in the best interests of everybody to eat broccoli? can you make them eat broccoli? and the answer essentially came back, we can make them buy broccoli. we just can't make them eat it. tion that the way people think who are not the typical people who attend this meeting. the fight in congress is going to be held in a number of

different steps. and the first step was defunding this. and we did this when we defeated the big omnibus spending bill last december. that cut $1 billion off of the funding. the house and again, thank you for giving us the house of representatives. thank you. [applause] the house as you know voted to repeal overwhelmingly. but harry reid said you will never, ever see the senate have this brought to a vote. mitch mcconnell said oh, yes, we will. and we got it to the floor through mitch's incredible leadership and now every member of the united states senate is on record. everyone's on record. [applause] you've seen this ridiculous

1099 business paperwork deal. people said, how did that get in the bill? well, maybe the democrats should have read the bill before they voted in favor of it.