support, using reconciliation ultimately. that's going on while the commission is meeting and somehow terrific credit to erskine bowles and alan simpson managed to hold the commission together to have constructive meetings in terms of looking at the problem and various options and hearing from people like maya testify before the commission and so forth. what the commission delivered in the end was a couple of things that i think are very important. the first was it got the country focused on the debt problem. erskine bowles has been -- i have forgotten his exact words. but he's been very clear and very blunt about the fact we have to tackle this problem or it's going to tackle us. the next thing it did, it put forward great reforms. it has discretionary caps which we've been advocating on discretionary spending. that's 40% of the budget. not a huge piece and social security proposal that made the

program solvent over the long run. it had a blind spot to me which is completely understandable. it had a blind spot on health care reform. this was the president's commission on health care and while it's meeting the president is doing everything he can to pass the bill. they took a pass on health care. there's stuff about congress ought to fix it in the long run but no real reforms in health care, significant structural reforms being done. my boss got together with alice rivlin on the commission and they put forward a proposal that would address medicare's long-term problems. the one last thing they did which was terrific i think was tax reform. they ended up doing -- they got a discussion going about -- which i think is terrific which is if we can get rid of the distortions of tax code in lower rates it will help economic growth and i think they helped move things forward on that. the commission didn't get the necessary votes. my boss ended up voting against it for two reasons. they think if you fix the long

term problem you have to start with health care, not put it aside. and the next thing is the commission's proposals had large rev knew increases, which we think it leads to a situation where the revenue is chasing higher health care spending. so what bowles did and what simpson did was terrific. they've advanced the debate. they have a lot of good ideas. i think that for the people that have been in this town for a while, it takes a while to develop solutions to issues. we have a cumbersome process in terms of our government that moves in a cumbersome way and so forth but i think we've had a lot of terrific things happen in terms of moving the debate and focusing on the long term problem. >> you want to talk a little about deficit commission and prospects for any movement forward? >> just lining i'm feeling increasingly concerned we'll have some kind of a shutdown, a brief one, the bigger picture is i'm increasingly optimistic that

we're moving really in the right direction on fiscal policy and we haven't been doing that in so long. i remember when the fiscal commission came out with proposal i sat down at the computer saying i haven't written a nice press release saying good job in so long. it's encouraging the things we've seen. it's a multistep process. in many ways, i think it did start with paul ryan. i think when paul ryan put his road map out there, he was kind of the sole political leader who said we can get specific. we have to get specific and we can focus on the important parts of the budget. and i think he didn't have many followers but he showed you could do it and return stronger. his -- the attention that he's received for it -- the positive attention has risen tremendously. i hopes that serves as a model you can get specific and talk about what you believe.

he'll tell you if you go to town hall meetings and tell people who don't agree with you why you're doing what you're doing they will be impressed for the candor and straightforwardness that it takes. we need other voices doing the same thing. now we have the bowles/simpson commission and i think that exceeded expectations in a remarkable way and put a lot of things out there that weren't out there before. it showed we could come up with comprehensive solutions that could meet the challenges. i can tell you my best guess is if you have pass something of the mgdz of their recommendations, we would have made an immense step. we haven't fixed health care. the weakest part is the long term health care savings. we don't know how to fix it yet. i think with a we're getting a sense of is health care will have to be in some sort of a budget. it can't be open-ended indefinitely. what paul ryan and alice rivlin have done and hopefully others

follow is put oit a model to keep it in the budget through premium support. it's no magic solution. it requires real sacrifices but it's an important structural change to keep health care in the budget. the other things the fiscal commission showed us is in order to meet the challenges, i think everything has to be back on the table. to give credit to paul rinl for specifics it was remarkable but his plan showed you can't get to a sustainable place without revenues because his plan takes a long time to get to where the debt levels are, wla would say is sustainable and if you put revenues on the table to fill in the gap after reforms then you have a deal people should talk about. the bowles/simpson commission like likewise has a detailed plan on social security reform. it doesn't structurally fix health care but it has $400 billion savings in health care. back to tom's point you have to talk about reducing health care

costs and can't beat up people when they say we're going to make changes to medicare. we have to make changes to medicare. so i think what's amazing is that plan has now become a starting point. then it looked as though it would go programs the way of other commissions where the president didn't acknowledge it in a strong and billiwelcoming embrace but something really impressive did happen. four senators in the senate signed on and it's an important bipartisan group because it has conservative members. crapo and coburn. dick durbin in the republican side a real progressive staying at the table working on this and kent conrad a leader in these issues all signed on to it and then two senators, senator warren and chambliss who said we're going to take this commission report and keep it alive and offer it in legislative language. what's happened in the senate, which has not been the perfect example of a functioning body in

recent years, is you have a real bipartisan effort. and i look at this as step three. so if paul ryan got specific and then the fiscal commission plan developed a real comprehensive plan, the third step we're seeing now is bipartisan effort because this cannot be done with one party alone. whoever were to go at it alone would obviously be killed. we can all imagine the attack ads. they're sitting down and talking on a regular basis with more and more colleagues kind of joining support. i think the reason it takes long is you have to put it in legislative language but my understanding is they still plan to put this out there and have this be the starting point of the discussion. there will still be changes and opportunity for people to come out and say i think we should have more structural reforms on health care, other entitlements. there will be people say i want to achieve as much to fix social security and make it solvent for the long run, which tom was saying it's strong until the trust funds run out. okay. that's an accounting way of looking at it. the way that the trustees tell

us every year is that social security is going to need changes. we have to make them sooner rather than later. there is nobody who cares about this program who could be arguing that we should continue in making the changes. making them as soon as possible only gives people more security, spreads those changes over a longer time. that's what the trustees tell us we need to do every year and i think there's really no serious policy person who wouldn't say we should start looking at the program to strengthen it and make it solvent as quickly as possible. but putting the commission idea out there as these six senators say they're working to do and will do in the near future is the perfect start for this real discussion about all these pieces of the budget and how to change it. you could put out a paygo for the commission. if you don't like one piece of it no problem. offer a different way to achieve the same savings. i think what you saw with the warne warner chapel blils bliss group is remarkable.

it's a dramatic pivot from where we were recently. >> all this optimism is great. what do you think, tom? even if tom coburn and dick durbin and all these giles get together and say this is what we do, there's this house that has nancy pelosi led republicans and john boehner led republicans it would be like no thanks. we'll shred it. >> we're actually starting to h kumbaya. austin and i are going to be holding hands with our bosses as we walk down that beautiful path. i like to share your optimism. i tend to be an optimist. i've been staff director of the budget committee for 14 years and on capitol hill longer than that. i think the problem is this. i think the problem is many americans like the idea of cutting spending in general. the concept that government spends too much is something that i think many americans agree with. but when you get into the specifics. when you get into specific benefits then all of a sudden people go south on you. many people believe, for example, that all we would need

to do is cut foreign aid and we could balance the budget. it turns out of a budget of $3.7 trillion, foreign aid is about $50 billion. it's very small. i shouldn't say 50 billion is small, but relative to the budget. to cut spending and put revenue on the table is going to require people to make sacrifices. i could be wrong. the commission, let me say, my former boss, john sprat served on it. it was thoughtful, responsible and i think what it shows is really to make prag res over the long term is going to require everybody sitting down on a bipartisan basis in good faith an putting everything on the table and giving up things they like. that means all spending but it also means revenue. you can't just do it with spending alone and you can't just do it with revenue alone.

congressman ryan's road map, again, i thought was a very thoughtful plan, but it actually would cut taxes significantly. it would eliminate the corporate income tax, eliminate the estate tax, the capital gains tax and pays for it by making dramatic changes to entitlements, specifically medicare and medicaid. medicaid would become a block ran program. medicare a voucher program. that's tough medicine. it's critical however we go forward, we need to protect particularly the most vulnerable americans who depend on key services, medicare, medicaid, source. it's got to be done in a fairway. the republicans, for example, have been calling for the essential of all the bush tax cuts, even the upper 2%. that would cost between the income tax upper bracket 2% plus the estate tax, that would cost about a trillion dollars with debt service. do we need to do that? do we need to provide additional

tax cuts to people at the top. if we do so, at what price? that's very troublesome. we do need to move forward on that, on the whole idea of a long term process. it is not going to be easy though. >> can i jump in? >> go ahead. >> first of all, this talk of real sacrifice, cuts in benefits and that talk, i think we get lost kind of in washington with something called the baseline, medicare can continue to grow, the projections are that it grows. we got 80 million baby boomers that are going to move through medicare. spending per capita is growing 2% faster than the economy. it's called excess cost growth. when you look at the long term projections, i'm going to go deep in the weeds. that's not sustainable over the long run, you know what the actuaries in cbo do? they say because it can't grow at 2%, they slow it down.

this awful picture we see, it's actually worse than what we see over the long term. if the discussion is about we're cutting medicare or it's about we're going to slash social security, that discussion needs to be in the context of what happens if we do nothing. let me tell you what cbo what happens if we do nothing. they say debt soars. by 2037, their models can't clear, they can't conceive of an economy that can function at that level of debt it. turns out to be the same year social security goes under. if the government doesn't have the ability to borrow money and function, we're in worse shape. we don't have the capacity to operate to fund these programs. one thing that has to happen in the discussion is there has to be a discussion not in terms of medicare that can continue growing at the rate it can, because it can't. it needs to be reformed and slowed down in some fashion. so the discussion isn't what

it's about. it's about real sacrifice. the real sacrifice comes if we fail to act. if we fail to act, we're going to end up in a situation like greece or something like that. as troubling as the financial crisis was, we had a federal government that could step in and provide unemployment benefits. if the federal government goes under, there is no government to bail us out, to provide money to us. we were able to get through the financial crisis borrowing money for essential nothing. if we can't borrow money because interest rates are so high and our debt is so high, that is an extraordinarily difficult situation. i don't think people understand what the consequences are. the 2037 date is when cbo's models say they can't function. cbo put out a report saying it's going to come earlier. investors don't wait. they're going to move earlier. they can't pinpoint that. there are huge risks. talking as the status quo, everything continues the way they are, no risks to the

benefits and the economy, i think is wrong. it's inaccurate and wrong in this debate. on health care costs, the president's budget, i want to touch on this on health care reform. rick foster, the actuary for medicare, this is a career official at hhs, said the health care bill would increase health care costs. cbo, the director said, it's going to have no discernible effect on health care cost growth. if our biggest problem was is health care cost growth and the baby boomers, hopefully we're not going to do anything to the baby boomers, i'm one of them. if the issue is the excess cost growth and what cbo and the president's own actuary is teg us is it did nothing to excess cost growth and all we did was add a brand new open end entitlement on the order for about 30 million people.

there's an issue there i want to touch on. last on taxes. cutting taxes. let's go back to the baseline. taxes in paul's road map, what he does is he assumes that you extend the path he follows is similar to the revenue path, if you extend 2001, 2003 tax relief and the amt and estate taxes. if you do that, even extending those -- those tax laws, revenues naturally rise over the next five to ten years to 18% of gdp. that's been the historical average for the past 40 years. the issue isn't really whether we're cutting taxes. the issue comes down to are we going to raise taxes above their historical average, because only in a baseline sense are we cutting taxes. when you look at the president's budget, over the past 40 years spending has been about 21% of gdp has been the average. gdp being the economy, gross domestic product. revenue has been 18% of gdp.

we've run deficits over 2% has been the average. that's we're at 11% according to omb on deficits. when you look at the president's budget, again his own data, he doesn't really close the gap. revenues go up and spending go up. the issue in my mind comes down to getting spending under the control. you know, other people are advocating revenues need to be part of the deal. in the end the issue is focused in terms of the debt and problems looking out is getting the spending line under control. you cannot fix this problem unless you get the spending line under control. if you don't get the spending line under control, what's going to happen is that those will be most affected by it are those that depend on the government the most. when the government loses ability to fund food stamps, medicare, social security, that will eventually occur if we do not tackle this problem. the challenge is to correct our fiscal situation for two reasons. one, we'll get economic growth,

more certainty, take away certainty, show that we've got our fiscal situation under control. increase economic growth, increase jobs and the other reason to do it is to make sure we can retain the capacity to meet the missions of health security, medicare, retirement security, and take care of those and our populations and food stamps and during recession and unemployment. >> we're getting close to the question and answer phase. tom wants to weigh in. >> go back and forth. >> we can go back and forth all day. i'm still concerned about 2037, as someone who hopes to retire there. we want to pull this back into the moment because 2037 is 26 years from now. we've got five days to figure out fiscal 2011. >> over the long term, we do have serious problem. over the long term, we do need to address it. in the short term, we have to be focused on the economy and jobs. what the president's budget does by the year 2017, first of all, he cuts the deficit in half over

four years. by 2017 he reaches what's called primary balance. that means that when you back out debt service, interest on the debt, that the amount of money coming in and going out are roughly the same. that's a mid point. obviously over the long term, we have to move better than that. the idea is that that's about 3% of gdp. the economy grows around 3% a year. if the debt is growing by 3% a year, the economy is growing by 3% a year. that is sustainable. it's not outstanding, but it's a marker that we should go to. but i do want to say something more about taxes, josh was discussing. first of all, we all acknowledge that the spending cuts are going to be painful. there's no way around it. the spending cuts, whether it's entitlements or discretionary, these are going to be services which people really depend on. now, there are two sides to a balance sheet. i'm a lawyer not an accountant.

there's revenue coming in and spending going out. to too large a degree, the republicans focus on the spending going out and not the revenue coming in. it's hard to sort of grapple with the notion that the deficit and debt are serious problems at the same time the tax cuts for the people at the very top are extended or expanded. i have no doubt republicans are very sincere about grappling with the deficit, but i can't figure out how that marries with the idea of tax cuts particularly for people at the very top. one last thing, the 19%, the historical average, it's important to bear in mind on the historical average for revenue is that the historical average is not a helpful guide to the future. why do i say that? well, number one, baby boomers are retiring. we want to make sure martin gets his social security benefit or medicare benefits. >> when i'm 80. >> so the baby boomers are

retiring. that's why costs are growing significantly more than they were in the past. secondly, health care inflation is growing much faster than cpi. thirdly, we have a number of new costs at the federal government since 9/11, we have homeland security. we passed medicare prescription drug bill back in 2004, significantly more expensive and we have debt service. unfortunately, it's fastle to say if the percent of gdp was 18% or 20%, therefore that's where we go in the future. we need to understand an artificial cap like that will have serious consequences for services. >> we want to open this up to questions. >> can i make quick responses? >> okay. >> just because on the president's budget, so it stabilizes the debt, but at a level that i think everybody would agree is way too high. you want to get the debt so it's not growing as a share of the economy but bring it back down. the debt was below 40% of gdp.

under the president's budget, not realistically would be high 70s, realistically, it would be much higher than that. the bulk of those are not specified, on the spending problem, i agree with tom's point. i think i agree with both points. i'm so comfortable in the center. >> we agree with you. >> see. it's kumbaya. it will happen. it is a spending problem. if you look forward, what do you have? we have a spending problem. what do we have in terms of a solution, it's going to have to be a solution that entails both. there are huge changes in our world and our economy from the aging society and growing health care costs and even paul ryan's plan would protect all current retirees. nobody who is a politician, igh talks about current retirees as being part of the solution. again i might see that differently. i think that's something that should be on the table. it's really not.

we know that the changes are going to come down the road. that means it's going to be very, very hard to make these changes in a structural way that has enough savings that revenue isn't part of the solution. it would be more helpful if we open that discussion. anybody who says you can do it without raising taxes needs to show a whole policy where debt stabilized at a believable level without revenues. nobody has done that. there's a gap if you keep it at 19%. in terms of the kumbaya, i think it's important effort going on in the senate. the important thing is it is a bunch of realists, folks that have different political ideologies coming together. they're not focusing on the pain that is cutting spending. they're focusing on the gain that you get from putting in a fix that averts that fiscal crisis and keeps the economy strong for future generations which is the whole reason to do that. it's not because we want the numbers to add up. it's part of a strong economic policy that you'll never get without coherent fiscal

policies. it's a realistic approach with a positive narrative that is going to need that bipartisan component to move forward. >> question time. >> erik watson from the hill. on that issue of the senate bipartisan talks, we have two staff members from the budget committee. this is going on in the senate. what's your involvement with this? obviously the house has to play a role. are you involved now? do you see it being a discussion in terms of the next few weeks and months with the debt limit coming up or is this something that happens in 2012 context? two short questions for austin. one, when you say medicare has to be where you start, are you giving us a sign that paul ryan will try to tackle medicare in his 2012 budget proposal? also on the cr, you were deeply involved in this original cut of half as much as they've gone on to. is it not fair to say that house leadership thinks the cut is too deep?

you seem to dismiss what goldman sachs is saying. why didn't you go with the 61 billion to begin with? >> do you want me to start? in terms of the senate, it's the senate. we've got a fair amount on our plate right now over in the house. we're not involved in those discussions. that's a senate group. on the cr, and the allocation that paul filed, the original level, we had an issue in terms of our original proposal was to take nonsecurity spending back to 2008 levels. that proposal was put forward in september, before the fiscal year began. and we calculate that point that if you got nonsecurity spending back to 2008 levels, you would not $100 billion, there was an issue of what do you do if you are five months into the fiscal year. we went around and around on

that. we ended up in terms of our number. paul was pleasantly surprised that the house ended up voting for those amendments and voted for the house passed cr. we went lower. i think he was pleased by, that the issue is we tend to use these allocations as floors. in this case, it became a ceiling on spending which i think he was pleased with. with respect to the -- i'm trying to remember your third question -- let me touch on medicare, on medicare. we are -- tom could speak to this as much, because he's done it. i haven't done it in the house for awhile. we're in the process. we haven't started our process because where we are in the process, we got the president's budget. it came essentially two weeks late. usually it comes at the enbeginning of february. it came on the 14th of february. jack lew's confirmation was held up in the senate. that pushes us back by two weeks. how our process works is we need to wait for the congressional budget office to evaluate the

president's budget and then they make some adjustments to their baseline which is what we use. we use all cbo numbers for the purpose of building our budgets and forcing our budgets. that takes them about a month. we're just at the beginning part of the process. i think paul has made it clear that he wants to address the structural problems. how we do that and how the speaker and leaders have talked about entitlement programs. we're starting to look at that. when paul talks about the road map, he talks about it as being a consensus of one. he needs a consensus of 218 of the republican budget. we're in the early stages of that project. i can't comment on the specifics of that. it's too early in the process to answer that question. >> i was going to add, the irony of the debate over the cr and the original number which chairman ryan came up with, which ended up being more spending than in the end, what house republicans, particularly

the ferbmreshmen were willing t agree to, made paul became a flaming liberal. the reality is the number they picked, $61 billion, would be harmful for the economy. that's not my opinion. that's goldman sachs' opinion. hopefully cooler heads will prevail. we will realize cuts of that sort when the economy is as fragile as it is would hurt jobs and the economy and hurt a lot of people who depend on those critical services. we look forward to go forward with the budget process, the budget resolution. i've offered my help to austin. any advice you need, we'll give you for free. i would say one thing, paul ryan and chris van hollen, my boss get along very well. they talk a lot. we've been looking for some areas of common ground, maybe on budget process or other things.

we'll keep talking. >> don, you wanted to ask a question. >> don wolf with the wilson center. first for tom, what was the main reason your committee was either not able or allowed to put out a budget resolution last year? and do you see the minority putting forward a substitute this year? for austin, what did you see as the biggest obstacle for getting a budget resolution adopted this year? >> in terms of last year, we did not put a budget resolution on the floor. we did put a budget enforcement resolution, which did pass. obviously, we would prefer a budget resolution instead of a budget enforcement resolution, but it set the discretionary spending level. that was significantly below the number the president requested. what we believed is with a budget enforcement resolution with statutory pay-go and the bowles simpson commission working, it would have the

functional effect. why did you do it? you need to get 218 votes to pass something. it's extremely difficult to do that. it's a pleasure austin is having, which is passing something in the house. it is really a challenge. people like to say getting 218 votes -- getting 218 members to vote for something is the equivalent of trying to herd cats. i would say rather than cats it's more like trying to herd squirrels. it's very, very difficult. austin, i wish you good luck with it. >> sort of the beginning of my remarks -- let me start off and say i don't know what the biggest obstacle is going to be, but we'll find it. i think we have enormous challenges in terms of what we're doing. we're in the midst of trying to work through the cr. we don't know -- usually that's set, what your discretionary spending level is for the year you're in. it may be resolved, but we're probably going to get a short term cr. i don't know how long that

extends. we got the president's budget late. that's a huge challenge. we've got a historical high on deficits and debt as a share of gdp. you have to go back. they were higher, deficits were higher during world war ii, but that was an extraordinary situation. since we're talking about the obstacles, i'm going to try to be like my boss, the chairman, which i think he kind of looks at this as an opportunity. he's very positive on it, and he really views it as an opportunity. the budget now -- he's been worried about this, put out his original road map in 2008. he saw these stormy seas coming and was worried about it. we're in the seas now. he views it as an opportunity to move forward and try to start, advance this debate further and start putting towards proposals and solutions to address it. >> another question from the

audience? >> would you comment on the strategy of the warner chandliss proposal. i understand the reforms in the tax code that senator warner is proposing would in fact increase revenue at the same time that he is addressing cuts. >> you're up. >> well, what senators warner and chandliss are doing is an impressive framework for thinking about tax reform. they looked at tax expenditures which are the tax breaks, deductions, exemptions which make it so complex and lead to a loss of over a trillion dollars in revenue every year. it's basically this whole shadow

budget that's run through the tax code. it looks like swiss cheese. that's why none of us could pay our taxes. it allows you to actually, if you're thinking about tax reform have the benefit of starting from a really, really bad tax code that doesn't make a lot of sense. many of these tax breaks are regressive, they would never pass muster if you put them as spending policies, they don't have the oversight that a normal spending program would. they're on automatic pierlt entitlements. what the fiscal commission came up with is if you wipe out these tax expenditures and start with none of them, you can bring rates down so dramatically, i believe it's in the 20s to where nobody had really thought you could get them. suddenly, a lot of people around the table, i assume said that sounds like a pretty impressive tax plan. realistically, you're probably not going to wipe out all the tax expenditures. they created a framework that they would layer each one back.

if we want to keep the home mortgage to subsidize more medium priced houses, your rates would go up a little bit. if you want to do something different on charitable giving, they go up a little bit. they created a budget framework for expenditures that hadn't existed before. that allowed them to bring rates down so aggressively, think through the tax expenditures and bring in more revenues for the closing of the fiscal gap. the plan is more spending reductions than revenue increases, the smart thing is they are all part of a fundamental tax overhaul we desperately needed. i give them a lot of credit for that. as the senators work forward to put forth the fiscal plan, that would be a piece of it and give us the beginning important step of a fundamental overhaul of the tax code, not a blind let's raise taxes in a way to harm the economy. this would be good for the economy. >> couple things. as good as much of the

recommendation of the commission was, one area it fell short is on the ratio between revenue increases and spending cuts. >> i like that ratio. i wasn't seeing a fault. >> i'm not saying you agreed with it. you alluded to the issue. the ratio of tax increases versus spending cuts was three to one. spending cuts versus tax increases. i think most people believe, democrats, that if we're really going to come together, find a middle ground, middle ground means everything is on the table and it has to be equitable and a disproportionate amount of spending cuts is an imbalance. in terms of tax reform, again, it reminds me a little bit of the discussion of spending cuts. everybody agrees the tax code is too complicated. everybody agrees that it would be great if we had a simple tax code. it's got an appeal to bring down rates. when you look at the tax

expenditures of $1 trillion in tax expenditures, these are things that are popular, home interest deduction, charitable deductions, so when people realize there's going -- people are going to have to think about what are they giving up in order to get a more simple code. i think that's -- >> simple code and lower rates. >> that's right, lower rates, although the effective rate may not change, their effective tax burd be may not change very much. >> but the work incentives will be better. >> it's going to be an ongoing process to see how this all plays out. i think in general, simplification is a good thing, but i think the devil as always is in the details. >> can i speak to the fiscal commission, it's important when you hear these deltas, what they're measured from. the fiscal commission measured its spending reductions from and revenue increases relative was the president's budget.

relative to the president's budget, it's a two to one ratio. relative to a current policy or different kind of baseline, the president's budget in 2011 increased spending and increased revenues. so if you take that out and measure it differently, we came up with a different ratio, i have to look it up, but we came up with a ratio of two to one but the other way around. it was higher revenues than outlay reductions. important you look at it. by saying that, i don't want to malign what the commission did on tax reform. we think that it generates too much -- it's focusing too much on raising revenues, diminish the economic benefits of the tax reform it has. it started a terrific discussion about how lowering rates and removing distortions from the tax code can help economic growth and make us more competitive in a global economy. >> question? >> danny ma low. we're talking about the short

term cr and long term cr. we got 61 billion on one side and zero and work towards the middle number. is it about more than numbers. can you see the republicans caucus voting for something that doesn't defund obama care or make big cuts to epa. is this about more than numbers? >> i think it's going to end up being -- i think it's largely going to focus on the issue of what the overall funding level is. that's -- there are a whole lot of other issues that came up in the debate. the debate largely focused on what level of reductions we're going to have and my guess is that's where the primary focus will be. we're in a -- where i began, we've got 85 new members in our caucus, one-third. there's an interesting dynamic here. some historian can tell me the last time we had a republican house, a democratic senate and democratic president. i can't come up with it.

we're at interesting times in terms of how this is going to operate. the one thing i find very, very interesting and it's a little bit off your topic, but i'm going to make it anyway, all this discussion of how much we're cutting spending, the cr is 3 billion below on nondefense, 3 billion below 2010 levels. the president freezes funding at 2010 levels, by definition, not even getting to the nonsecurity category, by definition, he's $3 billion above 2010. when there's discussions about the president freezing nonsecurity spending, relative to what the discussions are now, he has zero savings. in fact, his budget has a cost. in terms of how this all ends up, i think it's an interplay between the senate, president and republicans in the house. >> i would like to say something. i don't think there's any way to escape the reality that many of the spending cuts in the cr were

political. that's not to say that the focus was bringing down the total number. when you see things, for example, like defunding public broadcasting or huge cuts in the environmental protection agency, clearly that has an ideological bent and is regrettable. i don't think that's where the american people are on all of that. >> any other questions from the audience? >> yeah. george warner from government executive magazine. we'll start talking about actual government agencies now, but mostly an economic discussion. i would love to hear more about how the revolution could affect daily government function at different agencies. i know the sec has been talked about a lot, but -- >> go ahead. >> the short answer is we don't know entirely. a lot of this is what is

quote-unquote essential services or who is an essential employee and will be going to work. we know certain things aren't going to happen. the national parks are going to close, museums are going to close, passports are going to be difficult if not impossible to get. social security checks, i shouldn't say, but many government services are going to be -- are yet to be resolved. and that's not good. that's not good for the country. it's not good for the american people. and so a government shutdown is really a bad outcome. we hope -- democrats hope very much that we can somehow resolve this in a way that does not lead to a government shutdown. >> any other questions? all right. >> i have a question about the shutdown. within individual agencies, it's my understanding that the agencies themselves would come

up with a determination of who was essential and who is nonessential. will they do that based on some percentage? how will they know how many people they can designate as an essential? >> i certainly don't pretend to be an expert on this. there are certainly government essentials for example, the tsa, people in airports. that work is going to continue, obviously. the work of our military is going to continue. it's interesting, as i was driving here, i was listening on national public radio which is going to be defunded, you have an issue of, for example, national institute of health where there is research going on with animal laboratories. now, if the research -- if the scientists are not supposed to go to work because they're not essential workers, what happens to the lab animals? who's going to feed them? i think the short answer is in

terms of what's essential, it's going to be on a case by case basis. it's interesting, because the cr, the $60 billion, it's designed to go 100 billion below the president. that 100 billion is for the 12 months, even though we only have seven months to go. some agencies are getting smaller cuts. other agencies are getting huge cuts. overall, the overall average is about 24%. that's phenomenally high. that's hopefully where we can find a resolution so we don't face them. >> there was a crs report dated february 18th from last week that lists all the functions that would continue, what types of people would have to come to work, that are essential, national security functions, care of patients, border security. i think it's on an fas.org. it's an easy ten page report. it walks you through step by step exactly who reports to work, who doesn't, what functions continue, what don't.

it's a pretty good report. >> other questions from our journalists, other guests? anything else? >> no. let's see what happens a week from today. maybe traffic will be less by next monday, maybe we'll have a shutdown averted headline in all our papers next friday or saturday. >> i really want to thank all of our guests. you've been terrific. we're going to present you on behalf of the center on congress at indiana university, politico and the national press foundation. we have a certificate for each of you and thank all of you for coming. >> thank you very much. >> thank you, we enjoyed it. >> thank you.

>> please spend a couple of minutes before you leave to write comments on the evaluation form. we appreciate that very much. thank you. >> thank you to the c-span folks for being here. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute]

>> both the house and senate return tomorrow from the president's day break. on tuesday, the house plans to take up the temporary spending proposal that would cut $4 billion from the budget. current federal spending expires friday. an agreement must be reached between house and senate to avoid a government shutdown. also on the agenda, surface transportation reauthorization and the small business tax provision related to the new health care law. you will have live house coverage -- we will have live house coverage. they will take a bill to overhaul the patent system and consider judicial nominations in georgia. live senate coverage starts at 2:00 eastern on c-span-2, >> the former arkansas governor and presidential candidate shares his thoughts on president

obama, social and fiscal issues, and a possible run for the 2012 election. "road to thes white house." >> i think our system of government is breaking down. i think the system of checks and balances is not operating properly. >> he has written two just published essays in "the pentagon levirate." >> congress has three key powers. the power to go to war, the power of the purse, and the power to investigate. the first two powers are meaningless if congress does not exercise the power to investigate. it is not doing that. >> see the rest of the interview tonight on "q&a."

>> we are at the national governors' association meeting in washington, d.c. we will be bringing you the final panel of the day at 3:00. before we go to that, let's take a look at a political roundtable from today's "washington journal." send it roundtable. we want to welcome felicia sonmez. welcome. and kara rowland of "the washington times." the president is sitting out the budget brawl. his been largely absent. why? guest: he reased his three- point trillion dollar budget for next year. the administtion has spent a lot of -- focused on the spending freeze next year. as far as the argument about the

shutdown and continuing resolutions this year, we have not seen much from them. they put out of ego threat against the house republican bill to cut $61 billion, but it was a vague. they did not get into specifics about what they would likeo see. there were general and said, if it threatens national security, he willeto it. it was interesting to begin negotiations with a veto threat. what do you guys want in cuts? he was careful not tget in the weeds there. host: for the short-term, there is agreement to get the government going through march 18. guest: up until then, no one knew if the government was going to shut down or not. i think the threat of that is receiving and that is due to the senate democrats' response to the hoe republican plan

released on friday. it would keep the government funded for two weeks and it would cut the $4 billion over that period of time. at first, the senate democrats that holds the majority did not like that plan. they did not like to see any cuts at all and rejected it. as it turns out, those cuts that were proposed by house republicans are cuts that were included in president obama's budget request for 2012. becaus of that, senate democrats are pretty much on board. that looks like for the next week or so, at their what -- the threat of a shutdown seems unlikely. host: you posted the story about a potential showdown between harry reid and john boehner. in a piece yesterday, mitch mcconnell said, the senate is irrelevant. why? guest: senate democrats do not have the power to block or change the house bill as it is right now. if they wanted to add changes or decrease the number of spending cuts, ey do not have the

number of people to be able to do that. and so it looks like right now that the bill that has just been introduced on the house republican side will be the one that goes ford. they are planning to vote on that this tuesday. then it will head back over -- host: newt gingrich argues that the 1995 shutdown helped america and the gop. the facts are the opposite from the mainstream media. the shutdown it did produce some short-term pain. it did set the stage for a budget deal in 1995 that led to the largest drop in federal discreonarypending since 1969. guest: he has a point. despite the fact that the shutdown is not very popular, it did achieve an end,which was cutting more money. let's like this week as well, despite the fear on both sides of a shutdown, it did end up

exceeding $4 billion in cuts. there is a point to that. the fact that it got to th pointe point that they are talkg about shut down is something that the public will not respond well to. host: gingrich could announce he is running for president. guest: i have read conflicting reports that he will announce this week or next. it is pretty much in flux. you have seen at the senator from south dakota deciding not to run. so i don't know. host: the other story that is getting attention from "the new york times", how budget battles go without earmarks. congress remains in a disagreement over spending, but one thing that has got away are the earmarks, which is

extraordinary. guest: i would say it is. in the house republican plan released on friday, a lot of the cuts, $2.70 billion would be earmarks that would be eliminated. these are special pet projects proposed by one lawmaker in a special sense. that in itself is something that is pretty interesting for congress. guest: the president did get some flak. omnibus bills.of mrs. bil that was one of the things he regretted he had to do. there was some pressure with it, why don't you back that up with a veto threat? he said, i will. if both parti have come around and senate democrats were the ones, that was the big question. ok, are they going to meet what

everybody else is doing? they c round. let's remember. a lot of them are saying, we will revisit this later. we will do this for now, but it is less than 1% of the entire budget. it still is absolutely an extraordinary achievement. host: "newsweek" magazine -- who ruled america? retired people. power is the ability to get what you want. aarp runs the government budgetary process, not presidents or congressional leaders. no one wants to strip the seniors of essential benefits, but social security and medicare have become for many relatively healthy and economically secure americans middle-class welfare. it is the issue of the entitlements -- 2/3 of the budget coming from entitlements and defense spending. that seems to be the area that nobody wants to touch, especially entitlement programs.

guest: there was a lot of criticism when the president unveiled his budget last week. hands off does not begin to tackle entitlements. a lot of people are saying, that is political. he is using a strategy. he has his own reelection. this is a way to a republicans who have said that our plan will tackle entitlements. when they propose their budget, it will pretty much, that is going to be the one that everyone will talk about. the president's is dead on arrival. it is supposed to begin the debate. it left it out. guest: i agree. the house republicans said earlier this month that that will be part of their budget proposal for the next fiscal year when they release that in april. so it will definitely set the stage for a showdown, because the larger fact is that the president's deficit commission it -- this wasne of the things they advised him to tackle. one of the main points of

criticism is that this is something that he has punted on so by house republicans being able to take initiative on this, they are saying, we are trying to tackle the problem. the president has not let on this. -- led on this. it has always been a tricky political situation. voters are worried that anyone that is trying to tackle entitlement reform that their benefits will be on the line. report -- house republicans will have to tread very carefully. host: our phone lines are open. 202-737-0001 our line for republicans and 202-737-0002 for democrats. if you are an independent the number to call is 202-628-0205. you can also send us an email -- journal@c-span.o. do you tweet? guest: yes, i absolutely tweet.

as far as your job goes, it really helps. before i was going to google news. pele will break news via twitter before the right an article. guest: calls and calls to them were not successful and did not work. committee put the tweet out, it is a public forum and they got right back to me. host: let's show you what the president said yesterday in his weekly address, setting the stage for congress and the white house, trying to work some sort of agreement to pass a continuing resolution to keep the government running . here is the president yesterday in the weekly address. >> i am willing to consider any serious ideas to help us reduce the deficit, no matter what

party is proposing them. instead of cutting investments education and innovation, we need to out-compete the rest of the world. we need a balanced approach to deficit reduction. we need to be willing to sacrifice, but we cannot sacrifice our future. next week, congress will focus on a short-term budget. for the sake of our people and our economy, we cannot allow or gridlock to prevail. both democratic andepublican leaders in the house and senate have said they believed it is important to keep the government running while we work together on a plan to reduce our long- term deficit. given that, i urge and expect them to find common ground we can accelerate and not impede economic growth. it will not be easy. there will be plenty of debate and disagreement, and n either party will get everything at once. both sides will have to compromise. that is what it will take to do what is right. i look forward to working with members of both parties to produce a responsible budget that cuts what we cannot

afford, sharpen america's competitive edge in the world, and helps us win the future. . . they certainly seem, there is some observation that going rich kind of relished the idea of a shutdown. some folks were saying that. and that's certainly not true of saker boehner. he seems to be doing everything

he can not avoid it. host: mary is joining us from oklahoma. welcome. caller: good morning. i think we need to step outside the rut here to solve the problem of the economy. the workers need cash flow and according to the school of finance, cash flow is the life blood of any economy. and to cut it down is the wrong step. the federal reserve's been printing currency now at top speed for many years, and it's been wasted. i think that the congress needs to decide first and foremost that there goingo declare that the minimum wage should immediately rise t $60 an hour and let the fed keep printing

their questionably worthless money and funnel it through the i.r.s. computers into the hands of themall business people to subsidize a wage increase. and i think that this is the primary thing that needs to be done. we also of crse need to stop the war machine, and i think on a temporary basis that we should become slightly more isolation yigses and strengthen our own economy and that would restore us a position of being a beacon to the rest of the world and let all of everyons economies become strengthen. host: i thank you for the call. there's also an editorial this morning about what is the role of government. so i'm going to take your point and ask both of your guests

that the snerpiece of this debate is what should the role be of the federal government? what's the outcome? guest: it's an interesting fight that you're seeing playing out in the the house where you've got 87 new republican members and a lot of them have been pushing for a much more limited role of government. but you've seen on some of the amendments there were about 103 votes on the bill and tons of amendments were thrown out there and the speaker opened up the process to let the house work its will and what ended up happening, and you got a very good sense of where lawmakers are right now in terms of what government's role should be. the house republican freshmen did push for an extra couple, millions of dollars more for this continuing resolution to fund the government but on the other hand there was an additional 22 billion on top of that funding resolution, and surprising number of tse republican freshmen voted

against that. so i think it's, you're still seeing lawmakers trying to find thr way forward but that large freshman class definitely is pushing things towards the direction of less government. guest: i just think it's fascinating as someone who remembers studying political science in a class, it's no longer an abstract conversation. we're seeing for the first time at least so out front these debates take shape and take place. i mean, we're going to have serious, serious conversations about the role and the size of the federal government unlike anything that we've ever seen. and ain, it's kind of like what's going on at the state level. everybody is facing these shortfls but to look at their party and how the philosophy shapes, what am i going to do? am i going to do things? the president is calling for investment in some areas or are we going to slash like some folks have said? so as a student of political science i think it's great.

host: let me read one sentence. guest: absolutely. you're seeing that, the whole bigger argument over the role of government playing out on the macro scale in wisconsin. and, just some pretty surprising effect there. i think at the national governors meeting, what's happening here you definitely saw governors trying to work out a way forward on that. and i think it's always been a group that has tried to not be partisan and not get consumed by a lot of the battles taking place here in d.c. so it's interesting to see what's

happening in states and wisconsin is playing out here in d.c. at their annual meeting. host: the republican response to the president's weekly address is senator rob portman who served in the bush administration, is the director of budget and management. >> instead of making the tough choices all americans know are necessary to get our fiscal house in order and strengthen our economy, the president's budget locks in the higher levels of spending over the past two years and doubles the national debt. as the democrat cochairman said, it goes nowhere near where they'll have to go to address our fiscal problems. having chosen to duck the tough choice force the coming year and beyond, the democrats and president are now rejecting any spending congress can control in the current budget year, despite the fact that this year's $1.6 trillion deficit is at record levels and or the past two years under democrat

leadership this type of spending has increased 24% and over 08% if you include the -- 80% if you include the stimulus. our goals is to make sensible reductions and create better environment for job growth not to shut down the government. getting our debt and deficit der control is the single most important stetch we can take. -- step we can take. host: let me begin with the point about where do you begin the budget cut. his point was we want to bring it back to 2007 levels. the president is saying let's bring it back to 2010 levels. and we've seen the debt increase to now $1.5 trillion this year and approaching $15 trillion by the end of this fiscal year. guest: the thing that the administration is very concerned about, at least that they've said and has been echoed is cutting too much too soon is going to threaten the

recovery. and describing these, the 61 billion that house republicans want to cut as being potentially very harmful on that level. but at the same time, what the president has really done is proposed this five-year nondefense discretionary spending freeze on which they've actually advisers say this is essentially a cut. but the one thing to kee in mind when talking about the president's budget, though, is that it's based on a number of ecomic assumptions about the growth and gdp and economy over the next several years that a lot of independent economists say are pretty rosey. so the big thing to look for is when the congressional score keepers and the few several weeks do their own analysis of the president's budget, that could be the thing that puts the nail in the coffin of that budget if they just throw out and co with these less rosy assumptions and then all the 1.1 shaving off the deficit that the president says his budget entails will completely

vanish. host: last week you pointed out 61 billion. that's what the republicans want cut from the budget this year? guest: correct. that's something important to keep in mind and not conflate the debate right now over the government shutdown and the so-called continuing resolution orurns on cuts to this year's spending. and of course congress didn't even pass a budget for this year. and the president's budget like i said earlier the administration's been focused on the 2012 fiscal year fight. but that is correct. house republicans passedhat bill, $61 billion in cuts from this year. it remains to be seen. it doesn't look like judging what senate democrats have said, and the president issued a ve threat, they're going to get that. but the bigger thing is what kind of fight obviously democrats have said ok the short term, there might be some fight over time. but how, where is the eventual number going to be for the longer term cr. host: and this is from john.

guest: that's basically the argument that the house republicans are making. on the poi, that number basically is a pro-rated number from the $61 billion that would have been enacted over seven months in the current fiscal year fundinglan. but i think the argument that's playing out is essentially, will cuts of this magnitude have a good effect on the economy or not. democrats are saying no. they're saying that the economy is still fragile and we need to be investing as much as we can right now in things like infrastructure. and they point to things like the report that came out by a goldman sachs analyst this week showing that if the $61 billion plan does go through that could result in about two percentage points worth of damage to the gdp growth. over the next -- over the next

several quarters. and they point to others that say that 800 jobs will be lost if this plan goes into action. but house republicans counter that ifing has been working so well, why isn't the economy working as well as the white house said it would be. genuine opinion difference on that. host: let me show you this headline from the financial times and get your reaction. guest: why it took so long and why when we spoke, a lot of folks poipt out he never even mentioned gadaffi by name when he did come out and give that statement on wednesday. but i think now there's been

this realization after friday when the ferry and then the chartrd aircraft with all the americaniplomats and then citizens, i believe, everybody who wanted out getting out, you immediately at that, the press briefing was actually delayed til those folks could leave. and it was just like a switch was flipped. and the rhetoric was just much tougher, carny saying he was zero legitimacy, saying we're pursuing unilateral sanctions, multilateral sanctions, using the full force of our intelligence. and then you had the president like you mentioned yesterday it came in the form of a readout of the call he had with german chancellor saying khadaffi must step down now. so just completely back and forth. and the reason for that was the white house was concerned that the safety of those american citizens before they got out depending on what the president said, their safety could be jeopardized. and we all remember the scene, the iran hoffsage situation and

that's something he wanted to avoid. and he said he was willing to take a few days of consternation in the press to make sure those folks were out. and then it was a like a switch was flipped. host: in the "weekly standard." caller: hi. thanks for taking my call. host: certainly. caller: i've been over here 15 years, was a teacher in california for many years, came over here two kids in college, no hope of any decent pension over in the states, so i came over here and started teaching and retired here. i just wanted to say that two things. the u.n. veto was the first time that i noticed any of my neighbors or friends even noticing a u.s. veto in the u.n. security council.

and that was with -- and nobody was mad about it. everybody took it to be very hopeful in that it was very noticeable. that his words were used. i don't know if you got that in the press over there but it was his words that were used in the draft of this amendment. and still, he vetoed it. but the idea that with all these revolutions in north africa, it's going to be very difficult for america to take that unilateral stance against israel for -- and all the -- we get a selection of press over he. we get aljazeera and bbc and russia tv and sky. so, and there was a consensus of opinion even mostly amerans interviewed for this that this was a domestic decision on obama's part that, as your guests have said, this was a congressional

conversation and a reelection one. and in the states you couldn't possibly not veto this and get away with it. so to the people over here, it was a questn of how noticeable is this? and there's no way that that's going to be -- go unnoticed any more, the very, very staunch zionist backing of america. especially considering it was against what obama had said he was in favor o especially using his own words. that's the first point. second thing, we're not paying too much attention or worried too much about obama not stepping in, though hillary does wave her finger a lot. but because cameron over here is taking -- i don't know if you've noticed but he for example just is doing a lot of walk about and he just took an enormous trade mission over to kuwait to sell them more arms,

and over here the guns that are being used in libya are recently sold to him in 2003 by blare -- blair. so over here everybody is pretty annoyed with cameron saying he's all against pro-democracy and everything and -- t against violence when even on his recent walk about he's taking this troop of arms dealers. host: i'll stop you there. more of a comme rather than a question but do you want to respond? guest: i believe the caller was referencing the u.s.'s exercise of its veto power on a u.n. resolution that would have condemned certain israeli settlements as illegal. i don't want to tread too far. i'm prett sure that's what the caller was mentioning. and that has put the administration in a tough position in the past where they have criticized those

settlements as possibly undermining the peace process. but at the same time, you know, as i believe the caller also alluded there's a lot of support israel on both sides of capitol hill and so that's always something you've got to tread very carefully on. so i do believe that the u.s., our u.n. folks up in new york believe this particular resolution was too strong. i want to say that it would have declared those settlements ill legal. and even for us that was going too far. host: rahm emanuel is now the mayor elect of chicago. this is the headline today from the chicago tribune. and he will inhit pottially a $600 million up to $1 billion budget shortfall. guest: absolutely. it's hard to find a locality that doesn't have some kind of a budget shortfall. and what's going to be interesting is what his approach is going to be. again, if you just look across the country, you've got all kinds of folks doing different

things. we've got scott walker in wisconsin. speaking of rahm emanual yull, never let a crisis go to waste. he's not only going for more contributions but also going after collective bargaining rights. then you've got democrats like cuomo in new york who is going after his budget shortfall and promised not to raise taxes. and then jerry brown in lirnia wants to do it through a mix of tax increases and cuts too. and republicans like chris christy who want to do it through all cuts. so i think it's fascinating to watch how all of these states are choosing to tackle these problems. they've all got them. >> governo christy, the subject of this piece. guest: his profile has been heightened to the point where this past weekend at, when all the governors are in town here, you saw the boards, o'malley,

the governor of maryland taking aim at christy. i forget the exact phrase he said but the biggest comedy routine or something along those lines that republicans have. i mean, he's definitely becoming someone that is emblem atic of in a similar way to scott walker, these drastic ts and setting himself up in a way to these uons. he keeps tamping down on the speculation that he is pursuing a national bid. doesn't look very likely that he would run in 2012 but you could see him doing something down the line. host: next, charles from maryla. good morning to you. republic le. caller: yeah. the congress and senate want to vote on cuts for old people. how come they don't want to cut their own salaries? most of their constituents make between $30,000 and $50,000 a

year. how come they don't cut their own salaries down so they understand what people are going through? it seems to me that if they cut a lot of their perks out, cut their salary down, it would help the budget an awful lot. host: and some of those members are sleeping in their congressional offices. guest: absolutely. you've seen this influx of new members who say they're s serious about cutting back that they are actually camping out in their offices, and using the full range of amenities that are in there. that's taking it to a level. but on the other hand you could argue that by them living in their offices they'reot saving the government any money by doing that. but it is sort of a symbolic step for the lawmakers to say that, hey, we are serious about cutting government spending. as for them cutting their salaries, something that often comes up, understandably among

lawmakers here, not a very popular idea, but one that probably will come up again over the course of this. host: tom is joining us from new york democrat's line. good morning. caller: i have a couple comments and a question. i'm 62 years old. i've never seen such an attack on the middle class my entire life. it's very disheartening. and turning workers against each other. the slightly higher paid union workers getting the rest of the people suffering for years to show envy toward them. and now you see people attacking social security and seniors and you know, the richer, the richest they've ever been, they pay the lowest taxes in 75 yearsith the exception of maybe two years. and yet you cannot step on the middle class and the poor and in this country, right now,

apparently tea partiers. as far as spending goes, quick comment and then a question. spending is needed now. economists know this. there's no debate. what got us out of the depression, whether you give us credit for world w ii or new deal or combination of both was massive spending. but we're not going to recover if we have another recession, which is what we're headed for. look at the gdp. people talk about spending allegedly reducing the growth. and it did. cuts in spending i mean. host: do you think in today's political environment if the president put forth a stimulus plan that was several billion dollars congress would go along, democrats or republicans? guest: they're clueless on this. the real problem is not the spending. it's the recession. and we just barely got out of a depression that was pending. but could i make one -- my main comment. by the way, pentagon spending is the biggest portion of the budget that's not dedicated.

and that is almost always a sacred part you can't touch. it's -- and obama proposed $78 billion in cuts over ten years so that's nothing. that's off the table almost. and raising taxs. that seems to be off the table. but my question is regarding social security. the two reporters on your show keep repeating this thing that i keep hearing and it's not true, that first of all, if you look at a budget pie yes social security and medicare account for the biggest single percentage but that's money already collect. the budget, the social security does not add to the debt or the deficit. that's a fact. it by law cannot add to the debt or the deficit if you read the social security law. it cannot take money out of general tax revenues to support it. it does have treasury bonds that have been placed to replace the surplus because the money has to go somewhere. the government buys the or

takes the money that's the surplus of social security and gives treasury bonds an exchangeor that. and yes yearly it has been spending more than it's been taking in. host: let me read to you what robert samuelson wrote. guest: that's political spin. the medicaid possibly adds to the debt. the medicare i believe and certainly not the social security because they're in surplus for another -- well, the medicare is in surplus for 10 years. the social security for 25 more years. they doot add to the debt. they are spending, yes. but it's spending that's been llected. host: i'm going to sp you

there because i want to get a response. let's take social security off the table. what about these two other entitlement programs? guest: those seem to be the two. taking social security tauf table is what the president and democrats have said. they kind of have made the points the caller has made. i'm not an economist. whether as far as the nitty-gritty goes or whether that's true about adding to the decit. but i think what's clear and particularly with those two other entitlement programs you mentioned there are long term problems but as we touched on before, unlike his bipartisan deficit commission, the president and his budget hasn't really proposed anything to tackle that, just saying we need to have a bipartisan conversation. so what exacy we'll see, i mean, the house republicans again have said that they're going to tackle it. andf course house budget chairman paul ryan has his road map plan whichoes tackle timets bute has said that any plan that he does come forth with will have to get the majority support of the caucus. so we're probably not going to

see anything that extreme, if you will. but that's what's going to be dominating the conversation. and a lot of folks have been out there saying whatever it is, let's not even deal with social security. host: mary has this point. union activists there saying they want to see this spread to other states around the country. guest: i think that one of the controversial aspects of the organizing there was that the organizing for america which is president obama's campaign arm, had actually been reported to have been involved in that and that sort of drew attention to what is the white house's role in this and is the president sort of putting himself again these republican governors. i think one interesting

ramification for this in the campaign going forward is that you'll have a lot of activists on the left who were not really mobilized before and these issues weren't really on the tae before, they're going to be paying a lot of attention going into the 2012 cycle and this could be something similar to some of the thing that is you're seeing here in congress. some of the bills focusing on defunding planned parenthood or some of the other measures targeting federal funding of abortion. a lot of those issues just hadn't really been on the radar for a while and now you're seing that activists on the left getting energized. and even democrats congressional campaign arm is running calls i believe in some districts where there are house republicans who voted in favor of those measures. so i think all of this tied together just on the whole sort of energized the left in the way that they hadn't been the past couple of months. host: in a briefing on

wednesday. rush limbaugh on friday aired the comments. but for now kind of side stepping that. guest: what carny said in response is look he haslenty of ways he can stand with workers and the president did weigh in in an interview with a wisconsin tv station where he described governor walker's assault on unions. then you saw, it's not back tracking but distancing from the white house's standpoint of their involvement baw his wading in attracted a lot of criticisms. don't mettle in the states and also led some folks to say these weren't organic, that they were being engineered by ofa. so once he weighs in, that just elevates ieven more so to where it was. and you would see fol,

pelosi, john boehner, people weighing in everywere on what's going on. and i think a lot of that was driven by if the and his comments. host: o.f.a., referring to organizing for america. steve joining us from the independent line. caller: i'm back on social security. i'm quite a ways from collecting it. but i'm worried that the proposal of the budget, the deficit commission would kind of turn it into a ponzi scheme. a lot more people are going to die between 67 and 70 years of age. and it would also create kind of a pension gap. you retire, your private pension collects somewhere between 60 and 65. but you wouldn't get your full potential retirement income until you're about 70. as an alternative proposition, i would suggest that they get rid of the cap on the social

security taxes. you know, every year come early mid november i hit the ceiling where the additional income isn't taken out any more in taxes. so let's get rid of the ceiling. and, quite frankly, the democrats would probably love it because it's higher taxes on the more wealthy people. host: how old are you? caller: i'm 53. host: are you willing to retire at 70 and pay more for the next several years into social serity? caller: i personally have no plans to retire. i love my job. but it's just, there's going to be a lot of people who have contributed all their lives and they'll get nothing because they die first. and that's not fair. host: thank you. guest: i think that's part of the reason why this is such a difficult issue to tackle is th raising the retirement age is not a very popular idea among voters out there.

even although advocates of that will say it's a necessary step and will say we're broke. how do you convince voters to go along with that? is very problematic. host: another point from one of our viewers. guest: it's not a new talking point. it's something that we've been hearing for a long time. i mean, look, their argument again, is as felicia enumerated earlier, if spending we're going to bring about prosperity we should be even just completely in a different position than we find ourselves now. i mean, you know, there's a lot that goes into that. but i think it's even more also the one factor being the regulations and the size of government overall. obviously spending goes into that.

but just the uncertainty, too. i think there's a little bit more to that. but -- and i think they have been challenged on the i. democrats certainly have. as another caller was saying earlier, some folks and economists are saying we do need to spend now in the short term. host: both share something in common. you both write for d.c. newspapers. you tweet, you blog, you also provide video descriptions of the stories that you cover and post them on the web sites. explain a typical day. guest: typical day. well, i guess this is a good opportunity to introdouse our new congress blog. it's called two chambers and starararond thushes. it's, we're covering both ends of the cap toll both chambers. and a typical day is when congress is in session, i'll be running around the capitol building from the senate side to the house side back and forth interviewing members, going to the leadership press briefings. and watching what's happening on the floor getting aense of

what's happening and what the pulse is. and en they're not in session, like they were this previous week, it'a lot of time on the phone or e mailing with people to get a sense of where legislation is moving. and, you know, getting out as much as i can to talk to people to see what they think about what congress is doirning. it ended up being last saturday there were a lot, it, there were not a lot of people around but there were a lot of hours spent at the capitol. there was one final vote on the house passed spendinbill. that ended up being at 4:30 in the morning and there was a small contingent of us that ded up staying because we did not want to mizz that final vote. that was a very interesting week becse you saw there we four ds of votes on amendments to that spending bill. and the vast majority of members were there for all those votes. but there were a handle of them not there.

and for various reasons, they had to go out of town for a funeral or wedding or things like that. but their overall percentage of votes that they've missed now is something like 40% just from having missed those couple of days of votes. so in a nutshell there's not really any typical day on the hill but some of them last until the next day. host: and you're in your spacious office. guest: oh, yeah. host: tongue in che. but your stories are on all platforms. guest: it's really fun but it's also tough being a reporter now just in the sense of all the multitasking and tweeting, blogging, you know doing a web story then building on it for the paper or jus-- but on the flip side it's nice because there are now vehicles by, for when you get something it's like, this doesn't really warrant a story but it's interesting. i can do a few graffs on it and now people and readers can see that and you don't have to

worry about whether it's going to get in the paper. and it can be tough. there's no typical day. a week like this where there's a fast-moving situation, with libya and before that egypt. because every once in a while when there's not much news, you kind of feel like ground hog day. it's kind of the same thing one day after another. but when the actual facts change so quickly it really is fascinating to be at the zphert of it all. host: another headline. the tea party patriots meeting in arina. tea party group issuing a warning to the republican party call for deeper budget cuts or else. one of the speakers, former republican governor of minnesota and likely g.o.p. presidential candidate. tonight on c-span's road to the white house, our interview with former arkansas governor. that airs at 6:30 and:30 eastern and pacific time. pete from robinson, texas. republican line. go ahead.

caller: good morning, appreciate you taking my call. i have a phd in chemistry, started my own business in 1969 when i put up my first production plant. in 1999 i turned it over to my two sons. we had four different companies of over 700-something employees. we have half the companies now and half the worrs. why? because of our federal government. now, what i want to ask you right off is that you got this corrupt big media talking about the republican slash 61 billion out of the budget. hell, girls, the fedel government budget loses 60 billion out of medicare eve year in fraudulent payments. so that's not too big of a number. is it? now, the other thing is that we don't plan to hire any more until we get this government off our back. and i'm not the only one. if you look at nfib, only 13%

of the small businesses plan to hire. and i wonder why. well, because again, overregulation. now, i want to ask you this one question. how many jobs do you think just three agencies in the last two years have killed? the bureau of land management ere they are confiscating land out west, the illegal moratorium out in the gulf, and of course those of us that furnish all of the fuel, oil, and everything else you need to get around to light your homes and whatever. host: if you have the answer. how would you answer that? caller: how would i answer the number of jobs? host: yes. caller: well, we did a little calculation and we figured somewhere around 772,000 jobs. because all you've goto do is look at the gulf moratorium and read your own papers, and you'll find out how many people have, were laid off. they had no issueance of

permits for deep water. they went into the shallow water. they were anywhere from 14 to 16 permits issue every month. since obama got in there and fouled it all up there's only about 1 to 2 per month. so you think about it. so what we're dealing with is an overreaching, overtaxing, getting in our face federal government, running this country down into the ground. and so until the american people have actually stood up and said we've had enough, we're going to have an unemployment rate of the u-6 with about 16 to 17% for the foreseeable future. host: let me ask you one question. do you have faith in the republican party in speaker john boehner and senate mitch mcconnell to make the cuts that would satisfy you? guest: of course they're coming around. but let me ask you something. right now, the only individuals

that have voted to keep this government running for the next until september 30th to the end of the fiscal year is the republican house of representatives. now we're going to find out whether the democrats senate and the democrat president can keep this government running. host: thank you. guest: well, going back to the interesting point that the caller made on regulation. you know, we've been focusing so much on spending and on the role of government and that way, but actually on the issue of regulation that's another detes that's been happening on capitol hill recently. darrell issa, the republican congressman from california he's the new chairman of the house oversight and government reform committee. he's been holding hearings to discuss ways that congress can cut down on the number of federal regulations out there. and that's another way that house republicans say that they'll be able to spur job creation. they've had a couple hearings

on that and the house passed a measure last week or two weeks ago that would call on 13 or so committees to take a look at regulations and try to find out one that is are duplicating each other or ones that are harmful to job growth. so i think that over the next couple months we'll see that play out a little more. but it's an interesting approach on both cutting the spending and cutting regulations has something that house republicans are looking at . host: give you a moment to think about this question. in the first hour we asked if the president could meet with one person who advise him, who would that person be. martha is joining us from north carolina good morning. caller: good morning. this is martha. i'm going to make two point to the members living in the office. the senators i saw on a program like 117,000 a year. and if they can't afford to live in their offices, how do

they think that the american public outere having to live on social security or unemployment can live? and if the american people were homeless trying to live in public buildings would be thrown out as vague rants. why are they not being thrown out? guest: that's a good point. i suppose because it's their offices that they are technically allowed to stay there. they can say they're working perhaps. i don't know, maybe you have a better idea on that than i do. host: bill is joining us fm oklahoma city. good morning. caller: yes. why do they give congress all? host: you mean this last week? caller: yes . host: they were off for president's day week but they're back tomorrow. caller: why don't they retire

some of them old farts in there and get some young blood in there that's college educated instead of them old farts that's been if there forever that's soaking up the seat. host: we'll stop you there. but we do have new blood in congress. do we not? guest: absolutely. on the house side especially, 87 new republican freshmen, a handful of democraticreshman. host: and yet the leadership remains the same from the last congress. guest: and that's an interesting point. the house democrats despite ffering this massive loss kept their same leadership team intact and seaveed lot of criticism about that. so that's -- yeah, thrp a couple of weeks when i think house democrats were sort of trying to find their way and they had a lot of closed-door meetin to try to convince the leadership was trying to

convince members of the caucus that this was the right step to do and the former house speaker nancy pelosi was, some of the members challenged her actually and heath shuler from north carolina was running against her. he got a fair amount of votes but not enough to unseat her. and yeah, it's interesting that the same leadership team is intact. host: so here's your cnce. one person for the president to meet with. guest: would the meeting be open tthe press? host: i hope so. guest: because if it would be open to the press i do think, although chrishristy is in town and they're having a dinner and then a bipartisan meeting on monday. but just to see the two of them hang a discussion i think would be f. host: i would have to say scott walker just because he is the man in the news right now host: and walk us through the president's week ahead. he's here. guest: it is going to be a big week. he's meeting with u.n. secretary general who is going to be in town to meet with him

at the white house and that's to discuss the ongoing response to the situation in libya and we should add if we haven't already that the u.n. security council did come together yesterday and pass sanctions. but there's also discussion should we have military action? what about a no fly zone. then he is have a bipartisan meeting of governors. he already met with the democratic governors. he is having them tonight for a dinner and tomorrow for a meeting. then thursday there's going to be a meeting with the president of mico. so i'll sure they're going to talk about border violence and some of the issues there. and then on friday he's going to be going to miami for a senatorial democratic fund raiser. host: unless there's a government shutdown. guest: i have a feeling the president would be deemed essential nernl. host: week ahead in congress? guest: the house is back tomorrow and the senate is back

on tuesday after their work period. not vacation technically. and the house is going to be voting on tuesday on this short-term two-week funding measure. that will se it over to the senate. and friday is the deadline that they need to come to some kind of agreement. ototherwise, thingless shut bid >> also happening here in the nation's capital, we are here in washington d.c. for the national governor's meeting. they are talking about cyber security and state's roles in dealing with cyber attacks. jan brewer is this, which includes the commander of u.s.

fighter command, the man who deals with protection and programs. we will also hear from william pelgrin, chief of the information sharing and analysis center. while governors inside the hotel talked about medicaid. , outside the hotel, protesters were demonstrating their support for protesters in wisconsin. governor walker is not attending the conference in person. but the vermont governor is there and he addressed the crowd in washington, d.c. [crowd chanting] >> thank you and solidarity for all.

who knows how to sing "solidarity forever"? [singing "solidarity forever"]

[random crowd noise] [crowd cheering]

>> i am the only governor who sings. i just want to say this. you all are the backbone of america. what gets lost in this debate is that it is not the hard- working middle class who got us into this mess. it is the people on wall street who bailed out the big banks and the too big to fail. we are not going to let it happen in vermont. this is america. what america wants is reasonableness. what america wants is zero leaders that work together with labor to make america -- wants is thoughtful leaders to work together with labor to make america a better place. in vermont, we know that we get

more with maple syrup and we get with vinegar. you all know that the vermont cheese is better than wisconsin cheese, right? not all governors are born the same. we rely upon you, upon labor, upon the ability to collectively bargain for basic human rights in a democracy. keep on keeping on and thank you for everything you do for america. governorhear it for shumlin. thank you for coming by.

>> that was the scene on the streets outside the hotel here in washington, d.c. where the national governors' association meeting is going on. you can see people getting ready to go to the next panel, the final panel of the day. yesterday, state leaders had this bill-held discussions on education and the county. the first panel's topic was medicaid. the final panel will be on cyber security and what states can do to prevent terrorism from happening. you can see all of those discussions online at c- span.org.

[random conversations]

>> they are getting ready for the final panel today at the national governors' association. the final panel is dealing with cyber security. the chairwoman consul -- the chairwoman, jan brewer, is getting ready to take the podium. martin o'malley is the vice chair of this committee coming up on homeland security. as participants get ready to head into that panel discussion, we will take a look at some of your phone calls and e-mails from earlier today on "washington journal." us,you're just joining we are asking the question for the president, if you could advise him to meetith one person, would that be? this is based in part of your call on friday and the comment of charlie cut.

we are getting interesting responses thus far from our email and journal@c-span.org. a viewer from seattle? i think it should be ralph nader. another of your saying that he should meet with john william templeton, on how to create new manufacturing jobs in areas of high unemployment. president obama should get advice from a candidate obama circa 2007. that guy had a lot of good ideas. 202-737-0001 is our line for republicans and 202-737-0002 for democrats. if you are independent, the number to call is 202-628-0205. "the weekly standard" hazmat -- exit gaddafi. how a no-name new jersey governor became a republican superstar. next is ken from oregon.

go morning. caller: hi. good morning. i'm ok. thank you. essedust -- real bl to speak with you and hopefully with the public this morning. i am in oregon. and i just got done marching -- watching the economics show with the wonderful harvard finance, what is it? harvardporter, business school. this morning, i spent my entire evening -- i would call myself ground level. i have much to say this morning and these are things that i have as a member of one of the

poor citizens in this economy and state. i just -- host: if you can advise the president to meet with one person, who would it be? caller: i would say or governor from oregon. as a citizen here on the second- largest bay on this side of the coast, i would talk to our governor, if not me or any of us. i agree with the other callers. we, the little people, have lots of ideas. we have aifferent point of view. host: we of t story from inside business week -- the

union jack. when five different state houses take up similar pieces of legislation at the same time, is suggest a conspiracy or a crisis. wisconsin, ohio, tennessee, -- would limit the rights of firefighters, teachers to rgain collectively. if all five states were so flawed, it would be easy to reject this idea, but ohio opposed to legislature is a more serious piece of work. it abolishes collective bargaining without suggesting specific cuts, removing them from the discussion. the urgency to narrow any immediate deficit. $8o's immediate deficit is billion. union members make up 7% of the private-sector work forc down from 20% in 1980 and 36% of public-sector workers. in 2011, the recession exposed

every one of america's -- every one of america's inefficiencies. it may be time to rethink public unions. next is christine from pennsylvania. one person for the person to meet with. who would you advise him to talk with? caller: robert reich. he has a terrific plan for the taxation of the american people. he starts out with no one getting taxed until $50,000. the top ta rate is 70%. the point of this whole taxation plan, i think, is when a ceo is offered these huge, huge amounts of money, instead of taking it and being taxed, they will put the money back into businesses, fire some more people, do the united states some good -- hire more people. i disagree with a previous article that you just read. disturbing.

host: thank you. our twitter page is twitter.com /cspanwj. it is down right now. from the "new york daily news", two headlines muammar gaddafi ups the ante. no more moammar. cathy joins us from oklahoma city, oklahoma. one person for the president to meet with, what is your advice? caller: first off, he needs to start listening to the citizens of this country. he has pretty much puts us back. he does not take us seriously. that is why the tea party is so succsful. it is about time that he realizes that we employ him. as far as business goes, i really, i think that ross perot,

guys that are successful businessmen, talk to him about how to get a business. what about president of the past -- reagan, clinton? they did an outstanding job. if he would just review all the material that he has and stop playing president. he did more vacations than any president has ever done. in a time when the economy is at its worst. it is time he grows up and starts taking his job seriously. and it seriously, take us serious. listen to what we have to say. i think it is about time as far as citizens go, we need to get these bums out of congress. the democrats are running away. they should be fired. this is crazy. could not do that on my job.

just take off and not suffer consequences. it is about time this country gets back to the basics. and what the constitution stands for. he needs to listen to the citizens that elected him. host: from our twitter pag it is back up. the one person would be an accountant because president obama clearly does not understand money into debt. we talked about new gingrich, the front page of "the new york times" -- the headline is that we could learn this week and possibly an announcement of the former house speaker entering the presidential race. he would be the first entering the gop field. there is also a piece in the outlook section of "the washington post", y el schaub downbeat's standing down. the washington establishment believes that the government shutdown in 1995 was a mistake that accomplished little. the facts are exactly the opposite. while the shutdown produced

short-term pain, it set the stage for a budget deal in 1996 that l to the largest drop in federal discretionary spending since 1969. the discipline imposed by this budget, overall spending grew at 2.9% a year while i was speaker of the house, the slowest rate in decades. it allowed us to reach a balanced budget deal in 1997. tracie joins us from albany, new york. one person for the president to meet with, who would that be? caller: good morning. i am going to say he needs to meet with someone like ron paul, someone who can give me advice on the dollar. as a reserve, it is the cause of all of our economic problems globally and worldwide. on employment, taxation. if you get the dollar back by something, you know, it would be worth more.

right now you cannot even buy anything with the dollar. if we get the dollar stronger, that should be the goal of the united states of america. therwould be no reason for it -- wisconsin to try to tax the teachers more money. you know, everyone woulde happy if you could save your dollar, but what you want to save a dollar for? host: from this morning, "governor's fear that federal debt may hobble recovery. federal budget cuts could crimp a fragile economic recovery. governors of both parties asking the president to give them more flexibility in running education and health care programs. the recession may have ended, but we are faced with unprecedented fiscal challenges. that is the comment from the governor of washington state. she is the chair of nga.

states cut $75 billion from the budget in two years and collectively face a $175 billion gap in the next two years. live coverage of the winter eting next on underway -- that got underway yesterday. one person for the president to meet with. what is your advice? caller: i would like to be me, actually. host: what would you tell them? caller i do think he is surrounded by politicians and a think tank persons, i believe he needs to hear from someone who is an average, ordinary person who has a variety of life experiences. i grew up in a coalminer's daughter. i became an award winning teacher through adverse circumstances. then i became ill and has dealt

with a very serious illness. i know what it is like to deal with the health care system and all of the intricacies of that. i would also like to know if c- span could pluck out a deal with the president where he could come on maybe quarterly and allow us to call him and or ask hime him questions. as you have guessed that are on the sunday shows and live collins, it would be a wonderful thing if you could make the arrangement with him and he could connect with people like >> we take you live to the national governors' association meeting here in washington d.c. for the final panel of the day on cybersecurity.

>> that afternoon everyone, and welcome to a meeting on homeland security and cybersecurity. to my left is the distinguished governor from arizona, jan brewer. the briefing books for the meeting were sent to governors in advance and they include the agenda and the speaker's biographies, as well as other background information. to my immediate right is a member of the national governors' association's senior .anagement' i encourage you to please see them if you are in need of materials or additional copies or any other assistance. our agenda does provide a legislative update today on where we stand on important things an important issues.

joining us today is a former colorado congresswoman and newly appointed secretary for department of homeland security. betsy, thank you very much for being here. [applause] will forward to working with you. this committee was a recent creation that came into being about two years ago, the special committee on homeland security. we hope it is a help to the administration and the secretary in working together with the nation's governors. the proceedings of this committee are open to the press and all meetings attendees. please take a moment of gtec a moment to ensure that your cellphone and other electronic

devices are silenced. we live digital lives on facebook and twitter. i am sure many of us rely heavily on blackberries and ipad scum some of us on both. that connectedness -- blackberries and i pads. from the hacking of googles corporate infrastructure to the emergence of highly sophisticated computer viruses like conficker, we are facing threats like we've never seen before and some of which we would never have imagined before. stuxnet was first detected in june 2010 and is believed to be the first known malicious computer virus to specifically

target controls of industrial facilities. like nuclear power plants. even just this past weekend, the website of the governor of guam was attacked by computer hackers. it is clear that cyber attacks have become a great emergence threat. our enemies might one day have the ability to shut down the city's power grid or intercept confidential communications from half a world away. this data requires all levels of our government to cooperate. governors have received the front line of defense of some major networks containing sensitive information. an attack on the systems would have national security implications. at the core, cyber attacks fall into least one of three categories, information that, damage to systems, and/or in the destruction of the regular flow of information.

an attacking anyone these categories could be costly from a loss for compromise of bible information or financial losses, or in extreme cases reject for compromise of valuable information. cybersecurity has the unique opportunity to create a whole new realm and sector of jobs, security jobs, i t jobs, jobs that are needed to defend our nation and cyberspace. maryland has more than a quarter million people working in the technology sector, over 60,000 working in computer design systems, the linchpin of cybersecurity. last year we announced an initiative called cyber maryland where we are aligning our efforts so that we can fuel the needs that our nation has for cyber defense. it is our goal to create secure jobs while at the same time advancing the cause of

cybersecurity. governors are eager to your former speakers today, and in that mode, let me ask our co- chair from the state of arizona, governor brewer, if you like to give some opening thoughts and comments. >> i would like to start by forking governor o'malley his leadership and cooperation with the special committee on homeland security and public safety. we'll focus on issues facing our nation's critical cyber infrastructure and strengthening protection of that infrastructure from outside attack or even system failure. today, state information systems store and manage sensitive information of our citizens, such as medical records, tax information, and even voter registration. as governors, it is our

responsibility to ensure that states are doing everything they can to prevent this information from being compromised and falling into the hands of those that would do us harm. the subject of today's discussion is one of great importance that affects everyone of us. cybersecurity is a major national concern. from the state's perspective, this protection is essential to effectively service citizens by protecting their privacy and other sensitive information in addition to securing federal programs administered at the state level. especially mission critical homeland security activities. this past january, the center for strategic and international studies released a report which stated that two years ago, cybersecurity was not a major issue for public policy. two years later, the reports suggest that we are still not prepared.

while we have progressed very little in protecting our cyber infrastructure, the technology of the threats we face have advanced far beyond what we had ever imagined possible. our state networks and critical cyber infrastructure are attacked on almost a daily basis. some attacks are benign, like replacing the web page, but others pose serious breaches of security. cyber attacks have been known to disrupt whole state governments and their networks and could potentially impact our response to an attack on our homeland. our success in defending our state and our country depends upon our ability to work with local governments and federal agencies represented here today. and with each other to find best practices to safeguard our information systems and to do our best to eliminate our vulnerabilities. as budget crises will continue to challenge available security

resources for several years, greater information sharing and cooperation and coordination and contingency planning will be imperative. i look forward to discussing how we can continue to build these relationships and to focus our energies toward these common goals. again, i would like to welcome our speakers and look forward to hearing from you. governor o'malley. >> governor, thank you very much. we have three tremendous leader setter here for the committee today and i really want to thank each of you for making time to be with us. we are pleased to have general keith alexander, the commander of u.s. soccer command, director of the national security agency and chief of the central security service in fort meade, maryland. he previously held assignments as deputy chief of staff at the headquarters for the department of the army in washington d.c. and as commanding general of intelligence security command in

virginia. he has also served in command posts in germany and saudi arabia during operation desert shield and operation desert storm. general alexander holds a number of degrees including degrees in electronic warfare, natural -- national security strategy. see to his left is undersecretary rand beers from that part of homeland security, who was appointed by president obama to the department's national protection and program directorate to oversee its integrated efforts to reduce risks through physical, cyber, and communication infrastructure. he entered foreign service in 1979 and civil service in 1983, serving mostly in the department of state. he went on to serve on the national security council under four different administrations until his resignation in 2003. previously, he was the president of the national security network, seeking to foster

discussion of progress of national security ideas around the country an adjunct lecturer in 2004. to his left we are pleased to have with us the founder and chair of the multistate information sharing and analysis center. it serves as the focal point for cyber threat prevention. protection, response, and recovery for the nation's state, local, and territorial tribal governments. it is a 24-your watch and morning center that provides real-time network monitoring, dissemination of early cyber threat warnings, along with education and outreach aimed at reducing the risk to the nation's multiple governments.

he was appointed to serve on the commission on cybersecurity and participate in president obama's 60 days of our policy review. we are honored and very grateful and thankful for being here. i will turn it over now to general alexander. >> thank you very much. many of the words that you said are some of the things i would like to talk about. that is the role of the states in cybersecurity. in getting to that, some key points on that. i thought it would be of interest to talk about what is going on in cyber, in the whole field. you have given some indication of some of the things going on in our country today. when you look out in 2010 globally, they are 170 trillion

e-mail's that went on in cyberspace. 89% of those are spam. when you look at the volume of how this is growing, facebook last month just went over 600 million people. if it was a country, it would be the third largest in the world. the ipad and the smart phone, the technology -- we have an innovation nation and the technology we are creating is absolutely superb. what we can do in the terms of the fields of technology and medicine, look at some of the classic events that have taken place. snowball fights on the mall. that probably was not the best use of collaboration, but it shows what you can get with some of this technology. and what happened in egypt with social network sites, it changed

that country's governance. it is huge. tremendous opportunities, and is growing every day. as we look at it as a team, we see tremendous vulnerabilities. huge problems that are coming up with the capabilities. we want to collaborate, but we need to do it securely. what are some of the threats we are facing? in many ways, the department of defense and the intel community are partners with dhs, and dhs has the lead for our government within the united states, working with both the rest of government and with industry. when we look at the threat, there is a number of things i would lay out. why should we be concerned about cyber? governor o'malley hit some of the key types of threats that are out there.

look of what has happened in the past. in 2003, a power outage in the northeast was cost because of a glitch in software. caused because of a glitch in software. folks who were operating the system in ohio could not see the problems that were going on on the grid and could not react to them. 45 million people in the united states and 10 million in canada lost power. perhaps a more devastating what happened in russia. this dam is perhaps the biggest generating power for russia, and what happened there, they had 10 hydroelectric turbine engines there, 640 megawatts each.

that way 1,890 tons, and they spin to generate power. what happened was a fire caused the power to go out, so they brought one of the turbines online remotely. the software that looks at the vibration in those turbines was not operating properly, and as a consequence, that turbine broke free. 1,890 tons were being pushed by a lot of water, about 95,000 gallons per second. it rose 50 feet in the air and slammed into the top of the dam and destroy the whole damn, killing 75 people and shutting down power in that portion of russia. most recently, one that is very public was the mistake on the

stock exchange that stopped the -- cost the stock market 1000 points. it shows you the problems that our systems have. for the government, many of you have heard the talk about finding malicious software on our networks. that happened in october 2008 and was the catalyst for putting together the united states server community in taking two separate entities and bringing them together as one team. that is how we form cyber command. it was a smart move, and something that got us the right structure. when you think about all those changes and what is going on,

and number of things come out as you start to talk about it. what is the way for? president obama in 2009 said that are digital infrastructure is a national security priority. he also said in that statement, the importance of digital literacy -- i support the program of educating more people in this area, absolutely. i think it is exactly the right way to go. when you look at the capability of technologies, and you look at where we are, we have to take some jumps forward. the defense department is doing its job. last september, secretary gates and secretary napolitano signed an agreement that will leverage the foundational capabilities of the national security agency for the department of homeland security. i think that is a great step

forward. in these difficult times, we cannot replicate nsa. the national security agency has those technical capabilities that our nation needs to defend and operate in cyberspace and we need to make that technical capability available to the department of homeland security. of course that raises some issues. what about a civil liberties and privacy? here is my perspective, from having been the director for almost six years. no one protect civil liberties and privacy better than the folks at the national security agency. we get tremendous oversight from the courts, congress, and the administration. we cannot publicly say everything that we do in this area, but from my perspective it has been a huge step forward. more importantly, we can and must do both together, protect civil liberties and privacy and

cybersecurity. how does that impact the states? as both governor stated, the states have a tremendous amount of citizen data available. securing that data is a state responsibility. it will be dhs and the team that can provide that help, but there are couple of areas that we need to put on the table. add to the educational program a program that takes the bench of some of the modern capabilities that we have. working with your cio's and your communications information officers and a technical folks that run your networks, knowing those is the first key step. who are the key people that run the state architectures?

many states information, architectures are vastly separate and we need to bring those together. let me talk about from the federal government perspective on that one point, we are finding that we can create a lot of savings in that area by bringing these together. why do our bring this up here? it does not only take money. from a cybersecurity perspective, it is a much more defensible approach. that is one of the things we need. more importantly, that is where industries -- we will want to leverage the smart phones, these ipad. now we have to have a secure way for dealing with those. we all have driver's licenses. most all of us have driver's licenses.

that is a joke. we want that security. i think we all want security. how about banking data? what about all the information we have out there? we absolutely want to know that is secure. there is a the partnership with dhs and dod that states will benefit from. the second key area is the national guard. maryland, governor o'malley has really taken this to a new level. i get extra credit if i named the unit'. the 175th has done great work in cybersecurity. there are some great things we can do with the states in this area by train the national guard to do things that would help look at stake infrastructure. we can train them nationally. they will all be trained to the

same standard, and use them locally. i think there is huge benefit in a great program that maryland and seven other states are already doing. i think that is a huge step forward and good for the nation. what we need are the best standards. we need to lay those out and we can only be that if we act as a teen. we cannot do that unilaterally. i believe that form that team and training our people together is in the best interests of the states and of our federal government. so governor o'malley, governor bruce, thank you very much for this opportunity. i will pass it back to view -- governor brewer. >> thank you for having this session. secretary napolitano and i and the cyber team at the department homeland security appreciate

having opportunity to talk at a meeting such as this with the .eadership of the state's i would like to talk briefly today following on the presentation about things we are doing at dhs that our efforts to reach out to the state and to the localities as well in order to help them with cybersecurity and how we need to think about the future. the department is the principal federal agency to lead and coordinate implementation of the efforts in civilian federal park -- civilian departments and the private sector. we are as deeply committed to

dealing with the cyber threats to this country as we are to the physical. in the last year and a half we have added cybersecurity as a fifth essential mission of the department of homeland security in recognition of the increasing importance of this to the federal government into the country as well. candid here. general alexander indicated this, too. no one agency alone is capable of dealing with this issue unilaterally. it requires partnership between federal departments and agencies and with the state, local, trouble, and territorial governments and with the private sectors. partnership becomes the essence of what we are thinking about. secondly, from a purely fiscal

perspective, there is no one part of this equation that could take on the funding responsibilities for dealing with this. so we are absolutely, critically ballot in working together on this set of problems. in recognition of that, ending. we have put a dhs team at fort meade to work closely with general alexander staff. he has seen his representatives to work closely with us at the the part of homeland security, in making sure that we are bound both intellectually as well as operationally. we in the department are very much dependent upon the capabilities and that of -- thought processes that the national security agency can

bring to support us. in many ways, a lot of this is bound up in a new organization that we have at the department of homeland security, the national cybersecurity and communications integration center. it is the point to bring together the cyber expertise and collaborative capabilities of the government to reach out to the private sector and to the states in order to coordinate responses to cyber threats, in order to build relationships and in order to solidify procedures. the multistate information sharing and analysis center will have an analyst there in mid march for that to take place. what we have here is that during a significant incident, we are responsible for coordinating efforts and working directly with state and local

and territorial governments in leveraging the operational capabilities of all the organizations in order to be in a better position to respond to these issues. in association with that, we and the federal government as a whole have worked on a novel -- on a national cyber incident response effort to set up a common way in terms of dealing with different incidents that might occur in cyberspace and to come up with responses for that. this is a structure that in conjunction with our federal partners we are taking very seriously. it is not just our federal responsibility. also involves the state and local and tribal and territorial governments. as we are working on this plan,

and we expect to have a final review version done in the next several weeks, we will be reaching out to the state and local governments for your comments and your participation, because if we don't build this as a common effort and we don't have similar procedures, then our ability to respond to these kinds of events is going to be piecemeal, haphazard, inefficient, and perhaps unsuccessful. so is very, very important that we all work together on this. as we look forward to the future, we have a number of programs that we have been working on with folks from the states. i want to just briefly enumerate them so that people are aware of them. these are programs and tools and

resources, and i want to say that we are not asking for funding for this. these are things that we want to be able to provide to you all and work together with you on. the first of these is our basic engagement program in which representatives of the department of homeland security work with and build partners with the state and local governments. with a homeland security advisers and the chief information security officers. it is basically an outreach program. supporting that we have a homeland open security technology program. this is because we recognize that most of you are looking at open source software to reduce your costs. our science and technology office has initiated this program to develop governance, acquisition, and deployment

policies so we are all working from a secure information base and that our information assurances is as high as it can possibly be. the third point i want to make is the federal emergency management administration homeland security grant program which is responsible for providing grants across the entire homeland security spectrum. included within that's is cybersecurity. over the last four years, from 2006 to 2009, we have distributed about $27.5 million devoted exclusively to homeland security and cybersecurity, and 9 million in fiscal year 2009. we do not have the 2010 figures in yet. that has led to some innovative programs. south carolina they set up a security operation center and

delaware they have an information security program. what we are trying to do here, because the way that we give grants, for those of you who do not know about grant giving, is we have some broad categories and one category within that is cybersecurity. what we are looking at in terms of working at dhs is to create a specific cybersecurity grant program so that the money that is available will only go for cybersecurity, in order to ensure that this critical area is in fact funded to the extent that the federal government can provide that kind of assistance. the fourth point i want to make, and this is also absolutely important. if we are born to do with these problems together, we have to be a will to deal with these

problems at a classified level. general alexander indicated that obviously in an open situation like this, there are a lot of things we cannot talk about, but we have to be able to talk about these issues to the right officials in the right state and local governments, in order that we can in fact do a better job of preventing the kinds of problems and incidents that are causing us problems, whether it is a hacker or all the way up the scale to some kind of nation states problem. we are working diligently now to increase the number of security clearances that are available to appropriate state and local officials so that we can pass bottle and classified information. the fifth item -- a vital and classified information. we have already worked on this evaluation program with seven states as well as 34 local,

tribal, and territorial entities in order to evaluate the security of your own networks, and we would be very interested for other states who are interested in this kind of evaluation to help strengthen your own cybersecurity programs. the sixth item is our exercise program. we had one this past fall, for storm 3 in which a number of states participated, which i think has been a valuable lesson learning opportunity for those who have participated. we hope as we move forward that we will do more. that is a very broad exercise. we have also sponsored a defend the flag exercise, and my colleague is absolutely essential to that. it is focused exclusively on

state officials. that is why i think that can be a really valuable opportunity for everybody. i will let will speak for himself, but let me just say that we could not survive without the multistate information sharing and analysis center. what they give you and us are absolutely critical to defending the cyber domain and they are working with the number of programs that we hope will be in a position to expand, and we are looking at ways in which we can help and support the expansion of those programs. i think we have a fairly robust agenda here, but we are not there yet. there is a lot more work to be done. there is a lot more that we need to do and think about. congress is in the process of considering cybersecurity

legislation, hopefully in this session. general alexander's team and mine have been working diligently on how the u.s. government would work together with the congress in order to bring this legislation and to fruition. we think it is vitally important in defining our roles and held the federal government can be in a better position to help. back to the point i started with, which is that working together in partnerships are absolutely critical to this, because no one of us, as wonderful and great as the national security agency is, they cannot do it all along. we cannot do it all alone. we have to work with you and the private sector. that is the essence of where we need to be going. thank you very much. >> mr. pelgrin. >> i would like to thank

governor bruce and governor o'malley for bringing cybersecurity to the forefront. we also like to thank general dunbar. we have been partnering with the homeland security advisory council for a number of years now and have adopted the, which i am very appreciative of. it really brings to heart both physical and cyber sides of the house. i am so honored to be on this panel with general alexander and undersecretary beers. the staff is incredible and it is a pleasure to do with them on a daily basis. i have been off caffeine for about six months, and hotel has

a starbucks back down in the lobby, so i am back on. i have had three triple vente espressos. if i am shaking, i am not nervous, it is just the caffeine rushing through my veins. this is the highlight of my career, and based on that i am starting to focus -- what can i say, how can i narrow this down for anyone who has seen my presentations? just like in all my presentation, i decided not to cut out slides, i will just talk faster. lastly, i recognize that i am the last speaker for the end of the day, and i am the only thing between you and going to the white house and meeting it the president and mrs. obama, so

that puts a little pressure on me as well. as mentioned, the themes are there. we recognize what those themes are and i am going to be visualized some of them for you. i believe cybersecurity is everyone's responsibility. the collective view is more important than the singular view, and it really is a call to action. it is about plain speaking. i am a lawyer by education, not a technologist. i have been government for 28 years. i am pleased with all the support from dhs, the white house, and congress, but with that, the reason i was hired originally it was that i was not a technologist, i could understand the technology, but hopefully i could explain it in a way that those that had to make decisions could understand it and move it forward. my belief is that it is about the good, the bad, but most

importantly about the truth. we are not going to talk about the truth about what is going on i used to start off and say there had been a security breach. i got a congratulatory note at home. i clicked onyx, open it up, and my machine crashed -- i clicked on it, and my machine crashed, totally destroying the machine. someday when i get my -- i am going to go down there and break it up. we have to talk about what is going on and talk about the situation. it is important that we have learned lessons from the extraordinary challenges we face after september 11. it impacted us all across the board in different ways so

deeply. we all recognize that it was a horrific physical event that occurred, but some of us don't recognize that it was also a major cyber event that occurred. in new york state, 250 of our circuits were damage that day. mission critical applications went dark. right away use our relationship between the physical and cyber side that up until that point, i had not recognized. i have the slide on the board courtesy of at&t. the red line that you see, all of those calls below the red line went through. anything above that red line did not go through. this was on september 11. what happens during a major event of that nature? we want to call our loved ones and make sure people are safe. we need to communicate and share. this is when the plane's first hit the world trade center.

the new see it go right back down to normal. again, a major secondary consequence to a physical event. next, does anybody know what happened on march 18, 2003? the event was very narrow in its effect. that is the point that everything below that point went through. everything between the two points did not go through. does anyone want to hazard a guess? usually people guessed the black out. how many of you have kids? this is "american idol voting for the very first time. the general metacomet earlier, it doesn't matter to me whether or not is "american idol" teenagers voting or a terrorist trying to do us harm, potentially the consequences are the same to us.

fundamentally, what i think happened after 9/11 for me is that we saw a convergence of both the physical and cyber sides. we all know how to secure physical structures. that has been second major to us forever. we know how to lock the windows, locks the doors, padlocks, security alarms. but how do we secure cyberspace? understanding that cybersecurity issues are daunting, i don't discount the fact that sometimes it is overwhelming. there is a lot on our plate. the thought that stops most of us will we think about cyberspace, when i was working for the state, i went from the chief technology officer and almost the day after i said yes, i said what did i just agreed to? this was so enormous.

when you don't know where attacks are coming from, you cannot see and touch it in most situations. the way to do is to take one step at a time. my measure of success is if i am more secure today than i was yesterday. if i had planned a traditional trajectory, five virginia is down the road i would have been so far off about where we are today -- five or six years down the road, i would have been so far off about where we are today. we are talking about transactional security. how big is the problem? what are the threats we are really seeing? there is a malicious software program that cannot steal your data or corrupt your system. from 2001 to 2009, there was a huge percentage increase of new

malware detected. the average survival time of an unprotected computer, it used to be about 40 minutes. if you plug a computer into the internet, how long would it take before someone could compromise it? it used to be 40 minutes, now is down to mere minutes, maybe even under a minute. we all did computers at holiday seasons are other times. when i first plug one in, it's that i needed 175 mb of patches before ever started doing work on it. most of them are security related. these machines are necessarily -- not necessarily built that day. their bill may be a year before

you get them, so you need to make sure they are up-to-date with patches. if you plug in and went and made a cup of coffee, but the time he got back, someone else was probably controlling your computer. that is how vulnerable they are. these are real attacks that we monitor and track. the different lines are going from the attacker to the attackee. this is the geographical representation of it. each one of those points, each a little red x is not a victim, it is a point on the earth. if i click on one, it will expand and show you the magnitude of what we are seeing on a daily basis. if you type in hacking tool is in to google, you will get 39

million hits back. if you go to some of those sites, some of them are legitimate and some are not. sometimes you can tell and sometimes you cannot. they like to find you and they know you have been there and they will try to do you harm as well. 39 million in about 4/100ths of a second. a great study survey the states and indicated that

approximately 75% of states reported having a breach in the last 12 months. my theory is that the other 25% had a breach in just did not know it. they need to go back and look at their system. i will only talk about a few of these because of time. the first is data loss. data loss has become rampant. in 2005 the state's restarted -- started reporting public and private sector records. 46 states had reporting requirements. it used to be when there was a day to reach, it was front-page news. -- used to be when there was a

data breach, it was front-page news. some people get compromised more than once. 25% of those records were from government. when i first started the job, protecting data was different. just a few years ago, we had the data behind strong walls. we knew where our data was. it was in data centers and we had very strong protections around that. we had fire walls that protected data from going in are now. what happened is -- going in or out. the way we look at things is totally different. our job now is to protect you

wherever you are. it is because of those mobile devices the general talked about. it is not like i am against it. we have to recognize what we are doing. this is now the new norm of where they is -- aware of data is. by 2013, 1 billion mobile devices will be accessing the internet. what keeps me up at night? many things. we are storing and encrypted sensitive data on these devices and these devices do not lock automatically. i have a very long password. i told them it if you have a strong pass word but you do not have a machine that times out, after so many minutes it

doesn't shut down, it will not do you any good if the advice does not stay on. disposing of broken an old devices -- i had a situation where someone brought me a device that was broken and they said it was no good anymore. even though the screen was cracked and a taxicab ran over it, i turned it on and i could read anything i wanted in the device. knowing how to dispose of devices is absolutely essential. more than 10,000 laptops were reported lost every week at the 10 largest airports, and only 65% of them are reclaimed. outrageous. the other day i heard that

someone had left their issues and they wanted them to go back and get them. -- had left their shoes. did you have a black -- the password on your blackberry? this is the deer in headlights. 100% security is not assured. it is all about layers of security. you want to be able to sit in front of those cameras and be able to say i have done everything in my due diligence to be sure i was secure as could be. this is a thumb drive. this guy is dangerous, don't approach him. this is what we say in the profession, it is a clue, but this is something that when hard drives look like this, you knew

when someone was stealing your data. when they look like this, it is very difficult. we have some dry policies in our company. -- some drive up policies -- thumb drive policies in our company. think about how much data could come out on one little thumb drive. why do hackers attack government? because that is where the date it is. rejigger the data is -- that is where the data is. the government also runs critical infrastructure.

hackers do want to come after governments, not just going after private sector. why can we not build a firewall for the human factor? it is because the evolution has not gone to where we thought it had. insider threat -- could be just a normal user. did the normal in users in your agency or business have access to your network from home? do they have personal, private, and sensitive data on their home pc? did they connect to the internet from non secure access points? do they allow their kids to use the same computer? so often that is the case. if your kids are out there playing games and everything else, the likelihood of that machine being compromised is high. lastly, do you think this is ok?

can you do the same thing securely? when you look at this, over 600 million e-mail messages are sent daily that contain confidential information, and they are not included. over 300 passwords were identified in this breach. what are the most common passwords? 123456, i love you. theseif we are using these typef passwords. here is my theory. it has not been proven, but it is my theory. "i am attaching a document. the document is malicious code, and if you open it, it will

steal data." people will still click on it. here is what we have all seen. is your pc virus free? you know how to get out of it as quickly as possible. is your pc virus free? people click on it anyway. my theory is proving itself. in this one particular case, this was a number of years ago, but i think it is important to reference, and i do not do this to criticize any one company or entity, but this individual wiped out the servers, and files were defeated because -- were deleted because his bonus was

not as big as he wanted it to be. he got a bonus, but it was not as big. sending emails out. this is lightning speed. actually, it is laser speed. however, we have to stop and think. we have to take a breath. it is really absolutely essential. and then, we keep the records, but who is watching what is happening at night when you are not in the office? is your machine logged off? what is on your desk? phishing, we all know what that is. malicious activities will ensue after that. enticing or shocking sometimes. there was one that went out and told the recipient that it had

pornography on it, and "click on this link," and it looked so real, i think it had the real telephone number at the bottom of it. people should be smarter. hackers have learned how to spell checker now, so the words are spelled correctly, so they look like they are coming from corporate sources. it is now looking at, and it is not just government but government in particular, they are not going for everybody. this is not a mass email. it is going out to some of the executives within your agency or within your company. the fear is credible. it could be because you're at a certain event, not unlike today, and a note will go out to

certain individuals that say, "this is important for you to read before you go to this event." i am positive that sometimes, i would fall prey to this. this is all about subject relevance. it is now very much targeted on the individual. this is from the fbi. fraudulently from the fbi. toxic chemicals. it was targeted pay-tv -- to the .mil, .gov. but we are going to be using this in my office. it is absolutely right thing to do. there is a risk associated with this. cyber attack are up 70%. do with policies in place -- do

it with policies in place. if you do not allow people to do certain things on your network, because you are allowing social networking sites. cloud computing, i think that is terrific. we have to move to types of services that are easy, efficient, however, i think it needs to be done wisely, and, again, i am a lawyer by education, and i think this is one area where you want to have the lawyers involved right from the get-go, before you start putting data out on the cloud, what else is in the cloud, and do you have rights to it later on? can you have security to your? -- to your data?

so what can we do about it. it gets to that the time to cooperate is now. information sharing must be second nature, and this is the old model of security. no problem. with the network settings, messed up, yes. no? anyone else knows? no? yes, you are screwed. with the network settings -- were the network settings messed up? and this is my favorite, can you blame somebody else? no, you are screwed. the reason i even news that is because people who really want to do a good job for their bosses, when something is going wrong, they want to clean it up

quickly. if operations are going to be impacted, they do not want you to know. they want to make sure that the checks are cut on time. checks and balances. this must be about sharing information. leadership is key. the president set the transformational moment when he embraced cybersecurity as one of the top priorities of his administration. beers and thery governors. last year, we had all 50 governors signed proclamations or their equivalents. we do this with the national cybersecurity alliance, and i can tell you, it makes a big impact on your staff. partnership is key.

partnership starts with all 50 states, local governments, and now, the territories are coming on board quickly. it is built on the foundation of trust, collaboration, sharing, 50 states, and u.s. territories, and situational awareness, all up to the federal government. the partnership cannot be done alone. it is about the private sector. it is about the governor's association and others, homeland security, working together, and i will stop here. i just want to show you the note operational center. -- the operational center. we are monitoring when they came on board, and we are looking forward to do more. as the undersecretary said, we

will have more by march, and lastly, it is all about sharing cyber intel to really make a difference across the board. with that, i will stop, and i appreciate the opportunity to be there. >> can you go back to the slide that had the number of states? >> sure. state and local governments and one territory. >> and that is what is represented? >> yes, and there are some others that are coming on board. again, it is all about the collective view. what is so important about this is if we were doing this individually, and i can tell you, we have documented proof that what we see in one entity, when we are seeing it across entity lines, a phenomenal situational awareness occurs.

information is shared with the multistate members, so we have an incredible group, and the governors should be proud of those who are participating. they are so dedicated, so passionate. they have incredible expertise, and what we do is we believe we do it multiple times. there is an efficiency here, but more importantly, the collective view is absolutely essential if we're going to protect state and local territory governments. >> what is the cost? >> it is minor. i can talk to you about it. it is about $92,000 a year. >> ok. >> when you talk about what it is that we do, both monitoring and other services. >> general alexander, i have listened to all three of you. i am wondering about our

networks in maryland, and you mentioned what we did with our national guard. does every national guard unit have some cyber capability? in every state, is there some cyber capability in bogar -- in the guard? i do not know that. >> not all of them. they are located predominately in cyber areas, so the northeast, washington, texas. it is only seven at this point, so i offer this as a great way to move forward. the national guard comes from -- also, members from these companies, so they have technical competence in this area that we can we leverage. >> is there a standard to which we want all states -- i mean, is

there a standard in terms of cybersecurity that can be widely recognized that can be deployed and that will work against that standard? are there differences, practices, that you are looking for every state to have? >> i think so. in terms of the standards, here is the way i would look at it. first, it is something the homeland security department and others have to look out and see where the threat is coming, both from hackers, which will has done a great job explaining, and the nation states, that goes beyond, so when you look at what we are going to do, if you can think of it as the imaginary line for defense, and now look at an active defense that now ads in what semantic -- add in

what semantic states can do, and two, we can provide classified signatures and you can secure -- that you can secure, something that the department of homeland security and the defense department are pioneering right now. we have a program to test -- test that. we have to shift to an active defense. one of the key parts is training people to hunt in networks for anomalous activity. normally, they have the capability we do not know about. it is not in your anti-virus.

when they get in, somebody notes that. a patch is made. and then the system is fixed. and then we wait for the next problem to come up. that is the way we have done it, and i think you had a great characterization of it, so i would have, how can we do that better? -- so i would add, how can we do that better? and training our people to those, so the training you bring up is absolutely critical to our future. >> will, did you have an offer that you wanted to make? an open offer to all governors? >> i went by quickly on all of the topics, but i am available if any of the governors want to do a capital level briefing, come to their state, and do a

more detailed briefing. so i would be more than happy to do that. >> rand, from the homeless and securities -- homeland is itities' standpoint, the power grid? >> this is one of those very delicate questions so that you do not insult anybody. did not name and that, but, yes, it is the power grid -- so that you do not insult anybody that you did not name. there is only so much back a generation, power generation, that you can have, -- only so much backup generation, power generation, that you can have,

even for emergencies. a virus is just but one example of things we can see or that we can imagine that would, in effect, affect the electric grid and other control systems for power, for natural resources that are moved around the country using controlled systems, and the backbone of that is electricity, yes. >> and what role did the states play in this? -- do the states play? is this something the governors need to do? to enforce standards? or is this something somebody else is taking care of. >> right now, what we need to focus on, and what i mentioned with respect to legislation, is how do we as a country,

recognizing that each of us has a responsibility, but if the system is vulnerable for all of us as a result of some of us not practicing good computer hygiene, but also, some of it goes beyond what any one individual can do, so in terms of creating the system, we need to have a common understanding of what the standards ought to be, and then we need to have a common program to have both the public and private sector building towards those standards, and it is going to take some time, and it is going to take some money, but what we are hoping to do is that people in government and people in the private sector will come to appreciate that cybersecurity is, in fact, a cost of doing

business. for all the innovations we have had through the internet, for all of the innovation that we have been both the public and private sectors and the value that that provides us, it has also created a level of vulnerability that can come in a worse-case scenario, lead to major damage or even a catastrophic damage to the country because of the vulnerabilities from not practicing, for not building towards good cybersecurity, so the message is it is not an afterthought. it has to be a first thought, or we are not going to stop this problem. >> general alexander? >> yes, i would like to add to what rand has said on this, because i think this is a key

point as far as what the states can do. when you look at the networks today, many of them are stand- alone networks, that tie together two different venues. if you were to ask your cio, like some of our networks in the defense department, mapping out is almost impossible. if you cannot map it out, you cannot see it, i would theorize that you probably cannot protect it, so step one, you got to, with your cio and security officer, you have to come up with a network that meets the standard that rand is talking about, but if i were in your shoes, i would talk about going to a cloud-like support. dish network, but you would own

it. i am a avid user of computers. i only use one of those about 10% of the time, which means they are sitting idle with 90% of the time. with modern servers, you can have many on a server. that service could handle it to london and 40 or more people, at a tremendous savings in a more defensible architecture that could be distributed cloud-lie, -- cloud-like, so this is a great way to step forward that would allow you to bring in many of your disparate databases and structures into a common structure that is indefensible. building that i.t. structure. the first key step. the second is the partnership between federal, state, local. i think that is a huge step

forward. we have a responsibility there, the intel department and others, and together, that teamworker will come. think about estonia in may 2007, georgia 2008. if that were to go against one of our states or one of our banks, we have to work together to stop it. we have to have an architecture. in these fiscally constrained times, you want to do both. a cheaper i.t. architecture that is more secure, and i think we can do that. >> so much of this reminds me of the early on, when we were trying to figure out which way was up and how we can do a better job of securing infrastructure in terms of transportation and other infrastructure that we never had to think about defending before. it is a very similar exercise, is it not? i mean, you have to do your

vulnerability assessment. you have to map it, and you have to know if you have taken precautions or to increase the monitoring, or watching of it, when it is not possible to harden it. it is not a dissimilar thought process, is it? ok. the standards, where is the standards that says, "thou shalt have," you know, "this level in place"? is there something like that? >> it really is a broader based community that needs to work on standards setting. it needs to involve the national security agency, for sure. it needs to involve dhs, which

has a much broader capability because it protects both physical and cyber infrastructure, and then, without making it a regulation, it needs to then hear from the customers about what those standards are, as well, so as we try to define that, we are not coming up with a made in washington, for example, solution that may not fit annapolis or phoenix, so that is an absolutely critical part the we have learned from other efforts in standards. unfortunately, that takes time. fortunately, we have a method for doing that, but we need to move much more quickly in that regard and we have been. >> ok. governor brewer, any final

thoughts? >> no, i think you have covered it pretty much, governor. i just want to thank the panel. >> we have a number of new governors this year. who do recall? i mean, if a governor wants to increase cybersecurity of their networks in their states, are you the best opt for us? >> we act as a team, so absolutely, they can call us. we would be happy to. do it once, many times. there are a lot of standards out there and grade standards, it is just starting. >> they are all different. >> they are more similar than you would think. dhs and others have best

practices, as well, so it is really just getting moving and doing it. >> the executives or the governors, we like to be the second one to do things best, so we actually increase standards, and you have already worked out the are indeed -- the are indeed -- research and development kinks. german, thank you very much for being here. [applause] david is going to give us a brief update on the legislative issues and homeland security. >> governor, i will be very brief. there are only a couple of issues, but they are of great importance to the governors. the first one is in the 100 mhz

d-block, that can be used for public safety for a nationwide network. there is an opportunity to reallocate that spectrum for public safety use, something governors have called on for more than a year. recently, some have introduced plans for the reallocation of the d-block, to ultimately get a national-broad-band setups -- set up. it could very likely move this year. the second issue i wanted to raise is a statute that came into affect many years ago that

set national standards for drivers licenses. it has had issues with regards to implementation. may 11, 2011. this year. one of the issues is that there has to be an electronic verification system in place for states to comply. most do not exist or are not nationally deployed. it means that that line will have to move in order for states to comply. there was legislation last year to try to remove some of the deadlines and make it more regulatory lee mccutchen regulatory -- to make it more regulatorily available. everyone's eyes were on the budget. i just wanted to point out a continuing resolution of the house. it does have an impact on homeland security, specifically

with regard to the grant program. we would take a hit of about 12.4% for this year under the continuing resolution for this fiscal year. in the upcoming fiscal year, the president's budget recommends a little bit more for that program, in addition to the 12.4%. i will leave it there because time is short. >> david, thank you very much. i wanted to mention that this executive committee will be voting on whether or not to continue the special committee. this was a creation that happened two years ago and has done great work. i want to thank the staff and the director of homeland security and public safety division. the nga center deals with challenges we face, and we delivered to the governor's a

summary of the core capabilities -- we delivered to the a summary of the core capabilities. we asked about the core capabilities that they are looking to develop and in some cases korea for the first time in their state, in this world of asymmetrical threats that we face -- and in some cases create for the first time. it was thought to be a great publication when you're out there, and it is an excellent source for all governors -- when we were out there, and it is an excellent source. april, the nga center is hosting a meeting focusing on issues to counter-terrorism as well as other areas, cyber.

these are just a few of the services available through the nga center, and when to encourage the governors to take advantage -- and i want to encourage the governors to take advantage. i think we are now moving to the consideration of our policy. we will consider amendments to three existing policy provisions. they have been distributed. as a reminder, the policy process began this fall. there is the special committee. they negotiated those amendments. we never do anything in the nga without exhaustive conversations and negotiations. there will be an opportunity to do that in the spring. if the governors to take no action at all, the policies would sunset.

i ask is that there is a motion -- i asked if there is a motion could >> governor o'malley, -- i ask if there is a motion? >> governor o'malley, i move. >> a second. i want to thank you all. this concludes our procedures. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute]

>> and that wraps up the final meetings of the national governors' association in washington, d.c. they will be on our website, c- span.org. and tomorrow, microsoft founder bill gates was dtv -- will speak to the nga. that will be at 2:30 p.m. eastern on our companion network, c-span3. yesterday at the governors' meeting, the importance of states globally. the remarks were part of a morning session focusing on improving state economies and job creation.

>> good morning, everyone. >> as the chair, i would like to welcome each and every one of you to the 2011 nga winter meeting. i want to start by apologizing for my laryngitis and to assure you that you can shake my hand. this is just an overzealous reaction to the boeing tanker award. this is an attack for allergies. i took your advice last night to shut up. they have a motion for the adoption of the rules of procedure for the meeting. it has been moved and seconded. any discussion? all in favor? those opposed? part of the rules require that any governor who wants to

submit in a policy resolution for adoption at the meeting will need a 75% vote to amend the rules to do so. please submit anything in writing by friday. i would like, if i could, to take a moment to recognize our new colleague. this is a historic moment for the national governors association to have 29 new colleagues. congratulations to each and every one of the and welcome to the national governors association. [applause] all of us who are incumbent governors would say to you that it is one of the best jobs in america. we would also say to you that based on the circumstances of our times that it is truly one of the most challenging jobs in america. we have a wonderful group of

governors, spouses, former governors, state officials, federal officials, foreign government, dignitaries, corporate partners, members of the media and many others here today. i want to thank all of you for coming. anyone around this table knows that we did not get here without the tremendous support of a spouse, a friend, a family member. gov. heineman, our two spouses are leading them as they go to this meeting over the next three days. he would like to introduce to you are two responses to tell you that today they will make all of us proud as they lead the spouse's delegation to walter reed. there they will participate in supporting our military families. they will read to children there and they will greet their families.

they dedicated their time to the veterans of my home state in the washer tanned of veterans across america. my husband, mike, and gov. heineman's wife, sally. if you would stand? thank you. [applause] we're joined here today by a delegation from the hunan province. we also have a delegation from canada who has joined us today. a point of personal privilege, if i might. to all of us who have known ray, he served as national director for the nga for 28 years. he has seen us through amazing times. this is his last meeting. please take the time, if you would, to thank ray for all that he has done on behalf of all of us over the 28-year span.

join olla said the reception following to honor ray and all that he has done for our nation and the governor. [applause] [applause] for those of you who do not know where he is headed, he is moving to higher education to inspire a generation to join us in the public service and to lead the nation of tomorrow. let me begin today by saying that we certainly live in interesting times. the times are downright challenging for all of us. from conflicts abroad to fiscal challenges on the home front to

families needing to save and build for their futures, these times are testing all of us. as americans, we always face up to our challenges and our job as governors is to leave those solutions to find a path for root for a competitive america. we're now just beginning to regain our footing from the severest economic downturn that most of us will ever experience in our lifetime. we have not yet fully recovered and we may have many tough fiscal challenges ahead. as we gather here this morning, all of us have one thing on our mind and that is how do we regain quickly our competitive edge. we're going to address that question over the next three days and leave you a lot of good ideas to take your home

state to grow your economies and balance your budget. that is what the governors do at these meetings. we share ideas and experiences. we figure of solutions to the problems that we face. that is with the national governors' association is all about. our greatest opportunity in the most fervid challenge is building a strong, competitive state economy in each of our home states. all the demands that we face, health care, pensions, infrastructure will all be much harder to meet if we do not have thriving economies with more people employed in high- quality jobs in growing industries. we also know that having a more educated population is an essential ingredient for a competitive economy. the days when jobs paid middle- class wages and required only high school diplomas are behind us. the job market of tomorrow will belong to those who have some credentials beyond high school. a certificate or a degree. the jobs will move to where

those skilled workers are and if we're not careful that means overseas. that is why we are opening the 2011 winter meeting with the discussion about competitiveness with one of the leading experts in america on this subject. it is also why i am focusing on productivity in my chairs initiative, complete to compete. in front of you are materials that to the little bit about this initiative. i would like to draw your attention to a couple of points. complete to compete is about promoting better measures of performance for our higher education institutions. it is no longer and have to know how many students are enrolling in our colleges. we need to know how many students are actually completing their certificates and agrees. how long is it taking them? are they taking up a spot that to go to entering freshmen? how many students end up in remedial class is making a for

the k-12 system are preparing their students. it also highlights what is working in our state. when it comes to graduating year students, there will be new and innovative ideas for how we fund and maintain high quality higher education in america. we will be hearing more about this initiative and opportunity to participate over the course of the meeting. i encourage your to contact the nga staff if you need more resources to deal with these higher education issues that are facing us today in these difficult economic times. we are truly fortunate today to be joined by dr. michael porter who has spent his career examining factors that allow nations, states, and businesses to compete in the modern, global economies.

pressure porter's 1990 publication, the competitive advantage of nations, printed a new theory that is well accepted today about nations and regions competition and what powers their economic prosperity. his theory of industrial clusters has given rise to new ways of thinking about how governments create environment for high quality job growth and strong business expansion. his way of thinking recognizes that human talent is a critical element for such growth and that a state higher education system can be a powerful engine if it is properly aligned with the region's economic goals. prof. porter is recognized as the father of the modern field of competitive strategy and has been identified in a variety of rankings and surveys as the world's most influential thinker on management to competitiveness. he's the bishop william lawrence professor at the base at harvard business school. this position is the highest

professional recognition that can be awarded to a harvard faculty member. in 2001, harvard business school and university joined nacreous the institute for strategy and competitiveness dedicated to furthering progress reporter's work. i commend his reza made to you. you will find it both interesting. one thing i found more interesting is that he is the senior policy adviser to the boston red sox. my home team could use a little strategy session with dr. porter. this is why you guys are doing so good. prof. porter has been kind enough to bring to each of us some very specific analysis regarding our state's economy and competitive strengths. if you pay for this backup, it would cost you thousands of dollars. you will find that analysis and materials in front of you. i think i speak for all of us in saying, tell us how we can use this information to grow

our economies and their citizens back to work which is the fundamental challenge that each of us as governors face. dr. porter, think for joining us and we look forward to our discussion with you. [applause] >> thank you, governor. that is very kind. we are very hopeful for the red sox this year. hopefully we will have a good year. i am so honored to have this opportunity to speak to all of the. it is really quite a remarkable moments in our country's history and also in the history of many of our states. you had your hands full. all of you. the country has their hands full in terms of our competitiveness. this is a time when i think our position is challenge of a level that i have never experienced before as states, we are of focusing on a

fundamental challenge of trying to get fiscal houses in order. ultimately, that will not solve our problem. as governor grigory just said, the only way to create prosperity is to actually build competitive economies. that is a long term agenda. at a time when there's so much pressure on now coming the here and now, dealing with the fiscal problem, what i like to talk to run to dave may seem a little difficult to think about at this moment, but ultimately, i think it will be single greatest agenda that will determine ultimately the success of your states. that is building an economic strategy in which you can get the consensus of of the key

stakeholders in your state to create competitiveness. that is the fundamental agenda. if we can do that, they will have the resources to deal with the other problems and issues in our society. that is the ultimate agenda. that is the core agenda. how do we build competitive state economies? we have very limited time this morning and we will only be able to give started on that discussion. in order to try and make this discussion continue from each of you and from a year has a presentation that we prepared about your state. it has a lot of very rich data to try and benchmark where you are, talk about the nature of your economy as it is today, how it is progressing and the stars to provide some of the

facts that i think you will all media and many of you probably already know which of the necessary to create that economic strategy. i would like to put the presentation the side for the purposes of this discussion. i'm not going to follow those presentations. i will talk to you now about strategy for the next 20 minutes or so. this presentation is background information for you. as we go out of this meeting, we would offer to work with any of you. we would work to continue this discussion. hopefully, we can have a dialogue. we want to create successful economies in your states. this ultimately, i believe is the fundamental challenge that you face. as i said one minute ago, already has some very short- term challenges in terms of achieving fiscal stability in

your states. gov. gregoire talked about that. when you are doing short-term things like cutting, it is important to do long-term things at the same time. you have to offer not just a challenging short-term agenda to the citizens of your stay, but you have to offer some kind of a positive longer-term agenda. if you can do these two things together, we have found over and over again the you'll be a lot more successful. if all of you talk about is the negative stuff, you will get much less of traction and willingness of citizens to move ahead than if you could also offer a positive agenda. that is why even though it time like this, you talk about economic strategy, and you get by, it is incredibly important. we see that states differ tremendously and the economic performance. this is one of the many charts

that talk about how the states are doing in terms of the fundamental agenda of prosperity. we see tremendous differences. we see states with very high levels of prosperity that are not growing. we see states that are moving up, states moving in every possible direction. you have to get a handle on where your state stands and that will dictator particular strategy that you will pursue. the question is, how do we think about that economic strategy? what will it take for your state to actually build some momentum and build a competitive economy that will allow you to create jobs over time? that is the agenda that we would like to talk about today. in order to do that, we have to understand this idea of competitiveness. but i have found is that

competitiveness is widely misunderstood. it is misunderstood in ways that create unnecessary divisiveness and controversy in states about economic strategy. combativeness is it fundamentally the productivity with which you can use the state's people and capital and resources in order to produce valuable goods and services. if you are a productive state, you can produce a lot of value in a de's work. they could be able to support high wages. it is as simple as that. your prosperity is determined by your productivity. but if you're never productive, you have a really hard time competing against other locations. if you are setting policy is that improve productivity, you're going to have ultimately improved wages and create jobs. if you are setting policies

that make it harder to be productive in business, you will be moving in the wrong direction. productivity determines wages. productivity sets jobs. productivity determines the standard of living. this is the fire loss of the modern global economy. the more we are open to the rest of the world and the more our businesses can invest, it is productivity that determines whether your particular state is going to succeed. your agenda must be limited on your question of how can we improve productivity. we also need innovation. if a company in your state is doing the same thing that it did 10 years ago, using the same production process, producing the same product come it will be hard to succeed. we have all these other nations out there with the low wages. this is why innovation and so on fortin.

we have to keep moving the bar, particularly in the united states where we want a high standard of living. we need to stimulate innovation and process these products. part of a stay competitive this agenda has to be how can we step up the level of innovation in our state? to do that, again, we have to create the right environment for business. that is your job. the job is not to compete but create the right environment. when we find is that if you can trade the right of barman for productivity and innovation that competitiveness is not a zero sum game. your state success does not mean that another state needs to fail. few are addressing fundamental productivity, we could now get more prosperous. that is something on which there

is no doubt. if we think the wrong way about competitiveness, the making their cells in serious trouble. we will talk with iran about how state should compete. when some level, you all the compete. the question is how should we do that from a strategic point of view. this benchmarks the performance of this state. i've got some of gov. christie because he also works with princeton university. i will take an opportunity to use him as an example. you can see that it is the seventh most prosperous state in america. look at the productivity metric here. it is also the seventh most productive state and that is not an accident. prosperity depends on productivity.

is the fifth highest wages stayed. that is the maximum. these are all connected. in order to be so productive, we see that new jersey has a very high ranking in innovation. they have been a great state in generating patents and new ideas. as you look at this chart, you can see that there are some yellow and red highlighting. new jersey, although they are in a good position today, they have slowed down their productivity improvements. they have slowed down the rate of innovation. the clusters are not growing any more. gov. christie's fundamental challenges non the level of

productivity. his fundamental challenges to had to get the engine of innovation and change improvements going again. that is the fundamental challenge. other states will be in very different circumstances. some of you have to create stronger foundations so you can move up in the first place. others of your starting to progress in you're going back to make some transitions in terms of industry. every state has a different strategic challenge. every state must have its own unique strategy. that state's strategy will require, will demand that you engage the private sector. if you do not engage in the private sector, all of the strategy in the world will fail. it is 85% or more of everything economic in your state. you have to give the private sector on board. is a challenge when things are little bit partisan. competitiveness and economic strategy, you cannot be partisan. you have to fundamentally and

gives the private sector to be successful. let's talk about strategy at the state level. at the state level, there are three big strategy issues that we see over and over again as we have a chance to work at the state level, not only in the united states but elsewhere in the world. one has to do the general business environment. everyone of you that has estate offering a business environment. the business environment has to support productivity. how do you improve it? where are the constraints in your business environment relevant to peers at your level? what will it take if you want to move up? that is agenda number one. number two are the clusters.

what fields are you strong in? where do you have the merging or existing strengths. it is not about having firms in a lot of different industries. it does not work like that. the way to build productivity is to have critical mass is of expertise, suppliers, and supporting industries in particular fields. every state economy is specialized in a certain set of fields in which it builds up some unique position. the question is where is your state specializing in how can you reinforce and improve that? that is the second agenda. the third agenda of is the one that has to do with multiple levels of geography.

it is partially due to federal policies but your competitiveness is also affected by how well your neighboring states do, what we found is that you want a strong neighbors. strong neighbors making more prosperous. that is an actual fact. your state is not homogeneous unless your tiny. most of your states consist of multiple subregions, different metropolitan areas. in some cases, your actual economy crosses state borders. four of its successful strategy is to manage across geographic levels. you need to work across state borders and effectively with the federal government. they're better leave a piece on that shelf. what you're going to find is that you will not achieve the success were hoping for.

the business environment can consist of four big pieces. one is the input available. you have to improve the uncut. if you're going to be more productive, you need to have more input. yet the better people if you want to be more productive. the second piece is the set of rules that you put in place about how businesses than in your state with other rules and regulations that govern competition. you want rules for efficiency and productivity. with their peace has to do with the relevant to the -- the supporting industries in your state.

finally, the demand conditions. whether the state is a sophisticated market for goods and services because the regulations that encourage sophistication because the policies you said there really encourage new businesses to grow because you're really encouraged -- encourage it accumulates that demand. of the state level, there are many differences in instances, but there are a number of issues that are important in almost every state in terms of the business in burma. one is regulation and permitting. getting that to be efficient and fast is fundamental. most do have that issue and almost all of you do better. two, there is a lot of unnecessary costs of doing business that we have allowed to grow up in america and your states.

unnecessary costs in the sense that we're spending more of the value that we're getting. whether it is energy, health care, you have to find a way to reduce those unnecessary costs. when there are unnecessary costs to doing business, do you know what that does? it reduces the wages in your state. the depend on productivity. if companies are wasting money because they're spending too much time on permitting, that means they can pay less. do not think of this as some abstract thing, these costs. think of this as coming out of the pocketbooks of your citizens. states have an obligation to make the environment as efficient and supportive of productivity as possible. again, time is short. most of you need to get your training system better aligned with the needs of industry. we see that in state after

state. many of you need to improve your infrastructure. we spend a fair amount of money on infrastructure, we just do not spend it smartly. we do not spend it on the pieces of infrastructure that really have a big economic impact because we tend to spread it around because of the political process to put in place. if you could do a better job of prioritizing investment, it would make a big difference. infrastructure investments that speed up commerce, support productivity in the economy. anything you can do the ease the burden on small businesses will pay big dividends. we know small businesses really generate most of the jobs. any cost falls disproportionately among small businesses because they're small. anything they have to do hurts them more. finally of course, there's the issue of education. education is fundamental and there will be more discussion of that in the session, so i will not cover that. without the talent pool and the

skill base, we simply cannot be productive. this is the biggest single issue facing america. we do not have a strong enough talent pool to allow us to justify our high wages. that is a challenge of the state level as well. the business in burma is part of the story and improving that overall, for all companies but also we find that true competitive success requires you go further and really understand the composition of your economy, what kind of business is the state in? by the business is developing these clusters? we look a state economy, there are two types of industries. one of is what recall local industries. these are industries that every state will have a retail come utilities, health care.

these are industries that serve almost totally the local market. there are based on serving the population that lives in your state. there are the majority of all jobs, local jobs. there are also what we call the traded clusters. these are industries that have to compete across state and across countries. it is this traded a part of your economy that really drive you to prosperity. they have much our wages. they have much higher productivity. they have much higher rates of innovation. we have given you the data on your state in terms of the mix of your state economy in terms of the treated and local clusters. what is a cluster? it is a critical mass in a particular field. this is the crown jewel in massachusetts, as governor matthews knows.

is the life sciences cluster. it is not only manufacturing companies but also service, support, supporting institutions like universities that all come together with expertise and technology in a particular field. here is another cluster in the oil and gas in houston. this got its start selling oil. because houston has built this enormously successful cluster, now they did not sell much oil. when it sells technology, services, skill, and supports a very high wages. this is what happens when you truly can build a cluster. this is how productivity gets built. this is how innovation occurs making it a critical mass a series of fields in your states and reinforce that process. you let the state government support those clusters. that is how successful

economies. we have growing evidence of helen fortin these clusters are. -- how important these clusters are. here is what we know. if you can build a strong cluster, it will create faster job growth. we know that if you can build a strong cluster that it will provide higher wages. we know that if you can build a strong foster that you will have more parenting and other types of innovation. we know that if you can build a strong cluster, that is where the new businesses form. they do not form randomly in any field in your state. they tend to bird is proportionally out of the clusters that you have. if you can get the fly wheel turning, and it spits out of touch of the things. not only do more businesses form, but they grow better, survive better over time. these are something very

fundamental to the success of your state. this slide is complicated and it is in your packet. there is a tendency to think that some clusters are better than others. some clusters, like financial services, have higher wages than other clusters than, for example, tourism. what we have found is that it is the wrong way to think about it. what we find is the dominant influence on prosperity is not what clusters you are in. the dominant influence on prosperity is how you compete in each of the clusters that you are in. 75% of all the differences across the states in terms of wages are not determined by the mix of cultures that you have in your state but by how good you are in the cluster you are in. the last thing for economic development here is very clear.

build on your strength. do not chase hot field or try to get into biotech because that is whatever losses as cool. you have to build on your existing strength. you have to build on your emerging strength. that is the way to build your state economy. do not dream about some field where you have no capability or assets. it will not work. for strategy is to build on your strength. for each of you in your presentation, i have given you the portfolio of clusters in your state. this is south carolina. the red clusters are losing jobs. the green clusters are gaining jobs. the ones in the upper right are gaining market share. the ones on the left are losing market share in america. everyone of you has your own

portfolio. everyone of you has your own circumstances. getting a handle on this, what is going on, and how you can help is going to be fundamental to your strategy. this will really this proportionally drive your prosperity. what we find is that clusters in an economy are interconnected. some of them are related. this chart is a little schematic in the sense that it is try to capture multiple dimensions. see the areas that are overlapping? these are the roughly 40 coster's that exists in any modern economy. when these overlap, that means they are synergistic. with that says is that if you are in education, it helps to compete in the medical devices. if you can put those two

together in your state, that will create an even greater strength. the way states diversify is not random. it will not scatter shot over the chart. it will follow the connections. if you are in medical devices, you have a better chance in analytical instruments. this is how economies develop. here is m massachusetts. you can now see why it is so prosperous. it has an array of clusters. they are synergistic. the challenge is how to keep the vitality going. ok.

having the dreaded computer issue here. thank you. there we go. it's done. ok. now, this picture is a great story about how economies evolve. this is san diego. it is a some region of california, but it is its own defined economy. california needs a strategy for not only california, but each of these defined regions. you can see that the california economy built from one cluster to the next. there are a random.

the position in one area give the region some assets that allowed them to get into the next area. this is how each of you needs to think about this state. where do you have assets to we can build upon and had we facilitate diversification process? let's talk for a second about multiple geographic levels. you all are affected by federal policy and federal programs. one of the jobs the you have to accomplish is that you have to do a good job of getting your fair share of the support. you all work on bottle law. all of you are affected by your neighbors. the department of commerce, when it defines what an economy is, usually the concept is an economic area. there are regions in which the

data shows that congress takes place. i have shown a picture of the northeast of the united states. what you can see is that massachusetts is part of three different economic areas. it is connected to the albany economic area, boston economic area, then down with the connecticut area. when you are thinking about economic strategy for your state, you cannot think of this has the right unit. they're usually not the right economic unit. your state is often connected to multiple economic units. setting the policies to understand and it established that will be very important. the other thing is that you have both rural and urban areas.

they're systematically less prosperous. the average rural wage is $32,000 and urban is $45,000. had to get those connected is a fundamental challenge. we have a big problem in massachusetts year. we have a very high wage state in massachusetts. we have a below average wage state ever else. one of the biggest challenges is to move the prosperity is to not to make the boston region better, of course you would love to do that, but the real problem is how to get the rest of the state that does not really participating engaged. any state economic strategy coming you cannot just look at the capital city. you have to understand how the state's success is built up into these multiple geographic areas. there are a few comments we can talk about later. what i am been talking about, i hope the impression about was to build strategy for your state and the competitiveness that you would have to deal with a fair number of things.

there is no silver bullet. you have to deal with a lot of issues. many things matter. the roads matter, schools, regulations. lots of things matter. when you have a problem like that, you need a strategy. it is the list of 55 action steps. most of them are 55 action steps. that is not a strategy. a strategy is where you develop an overarching view of where your state can be unique. how your state can create a unique platform for a particular set of businesses. as you understand the strategy, it starts to give you a sense of priority. one of those things and i really need to do, because these are critical to how my state

will be different, is because strategy's about being different. also, that type of thinking should tell you which weaknesses that you really have to deal with. every state needs a strategy rego every state needs a strategy that can allow themselves to find their own distinctive role in the american economy and the world economy. i am confident that everyone of you can develop a strategy. all of you have access. it is a question of doing the thinking to think about it that way. how should you be competing with each other? barbara question, is it not? we are all sitting around this table in trying to build competitive economies. yet, we're competing. at the level of individual businesses deciding where to

locate. one of the problems is that we have not been competing the right way. we have been falling into the trap which is sought -- which are cozier some competition. one state wins, the other loses. we have been using the wrong tools to compete. this talks about how we need to change the nature of competition in america. we have to focus even more on getting our existing companies to invest more in our states. we will have much more success if we doing your job of existing with our companies rather than going out looking for new ones. it is the existing companies that are really going to drive success. we have to stop competing for every plant.

our state has this position, these strikes, and let's focus on reinforcing their strength. we have to be more strategic about the way that we compete. if we could lead to specialize and get better at what we're good at then we will see everyone living a much more rapidly. offering general tax breaks does not work. all it does is take money from the state and give it to businesses in a way that is not very productive. if we're going to spend subsidies, we need to do not assets that will stay in our state. we can support training,

infrastructure, help build the institutions. those kinds of state investments are going to lead to a long-term return on investment. just competing for tax breaks will make this neutralize each other. we have to think about how we support and how we've had businesses come in and not just doing it. many states come i find, offer subsidies to offset the high cost of doing business in their state. what you're going to do is fundamentally lower the cost of doing business. do not hunt. tackle the real problems rather than try use subsidies to offset our neutralize them. that principle is ineffective over and over again. many states are in free-for-all. every city, region, subregion, county, is out there struggling. the states generally successful are the state's that can get some appropriate efficiency and collaboration.

understand that is not a zero sum game. the issue. looking for those investments that it is circumstantial and everyone should not be going after everything. if we're going to attract investments, we have to engage the private sector. of the best efforts i have never seen around the world are those where the government in the private sector do it together. where you can get business leaders in a particular field to help and work with you to the record the next in the next one, it will be much more effective. i promise you. we also understand that the process of economic development has fundamentally changed. it used to be government driven.

today, it is a collaborative process and involves engaging companies, universities, trade groups, and all types of other institutions in the process. the you have that five of collaborative process going on in your state. i do find a way of engaging these and other actors around a fact-based agenda? as this time when you are having to take all these really tough actions that is important in achieving the ultimate success. let me make a few final remark said that if we have time, we will take the questions. what we have to understand is that the goal of the economic shredded you for your state is to enhance competitiveness i hear too many governors say their goal is to create jobs. you cannot do that. the only way to do that is to

enhance competitiveness. we have to get the cart before the horse. is about building competitive this and then that will create jobs. two, as we go about doing that, productivity and innovation must become the guiding principles. everything we do, every policy that we said, every executive order, you need to be thinking, is this moving the ball on productivity? will this make us a more productive state taxes is moving the ball on innovation? will this allow for more innovation? if the answer is yes, usually the thing to do. number three, sometimes the five governors get it into their head that to do competitive finishes that they need lots and lots of new money. the answer is you do not. this is really about using existing resources better.

there is often plenty of money being spent on economic development. do not think that this is capital intensive stuff. bayh they give we could just make our infrastructure investments more effective that we could get a huge impact even if we did not have more money, even if we had less money. they give competitiveness as setting the rules, policies, collaboration, strategic agenda. it is not about taking out your checkbook in deriding a big check. as i said, to do this welcome you have to mobilize the private sector. you have to get them on your team. they can do a lot of this themselves. if you could just get them energized and if you to give them a feeling like you are all in it together. i'm confident many of you are doing so, but i cannot

emphasize enough from the world. finally, i want to say that coming out of the bruising political campaign, in which many of you have been engaged recently, on what to say that improving competitiveness and economic strategy is not partisan. it is about building the prosperity of everyone. the benefits of economic strategy are going to be even greatest for the middle and lower middle income brackets that it will be for those who are at the top. we have to turn this issue into one of getting results, not ideology. there is no ideology here. in the competitiveness, there is the iron law of productivity. it is just a fact. we have to be able to convince all of our colleagues the matter would discussion we have

all these other issues to think of it that way. that comes from being clear about what we need about competitiveness and taking the collaborative approach to the process. hopefully -- will take a look and this will provide you with some specific advice about your state. this is meant to start the discussion and not concluded. we would be thrilled not to take some questions and have dialogue with you in your economic development directors over the coming years. i will say this to conclude. i hope things get better in washgton. i hope our federal government is more successful in tackling some of the issues it has to tackle in terms of economic strategy. i'll tell you that what is really going to determine the

success of america in restoring competitiveness is actually what all of you do. the real greatness of america from an economic point of view is the decentralization. every state, and many cities, take responsibility to drive competitiveness themselves. i hope washington will help, but i have great hope that the skipper people can be those who will turn around the competitiveness of this country. thank you very much. [applause] >> we do have time for questions. can we begin? gov. herbert? >> thank you, dr. porter. i think the states are the laboratories of democracy and we can lead to this economic recovery. i am fascinated to hear the discussion about how this is

not about ideology and how this works. there are certainly differences among the economists in the country to stimulate their not to stimulate. how do we get past the ideology because there were certainly in -- >> may i have your attention please? may i have your attention please? we have an emergency report in the building. please leave the building in the nearest stairway. do not use the elevator. may i have your attention please? may i have your attention please? >> there has been a fire emergency reported in the building. please the the building in the nearest exit. >> do we need to do it? >> we need to go. [sirens]

if you did come back to your seats, we will reconvene. please take your seats so we can resume.

>> ladies and gentlemen, if you could please take your seats again, we will resume our conversation with dr. porter. this is losing her voice, and maybe her patientce. >> should we continue, governor? >> this is much more like my harvard business school class than such an august meeting. let's move quietly, and we will continue the discussion in the

time we have. governor herbert, your question about partisanship. i think there are many macroeconomic issues like the stimulus or not that there is a lot of debate on. i think when you get down to the level of competitiveness, there is quite a wide consensus on many of these issues. the big partisan issue that i encounter over and over again is if people think that competitiveness means lower wages, that it's very partisan. but of course, competitiveness is not about lower wages. if you have lower wages, that means you are not competitive. competitiveness is about higher wages. if we can get everybody to understand it is about creating productivity so we can support higher wages, then a lot of the partisan concerns tend to get less vigorous.

i think you can communicate to your citizens that my job is to create conditions here so we can all get paid more, but we cannot get paid more unless we turn that, unless we can be more productive and have better skills and have a more efficient infrastructure. hopefully that can be a less partisan discussion that some of these broad issues of stimulus or not stimulus, should taxes be this high or that high. those issues get very partisan. a lot of the fundamentals can be agreed upon, certainly within the business community. i would not go into this thinking it has to be partisan. i know there are other governors here who have had these experiences. >> dr. porter, you were describing the importance of not having resources leave the state, and the competition that often exists between states

going and offering significant financial incentives to get a corporation to build a plant or open an office in their state. is it feasible to consider if the governors all agreed that no state would offer financial incentives for existing jobs, that would only try to fuel new jobs or new offices. no would tried i try to frame the discussion as what kind of competing across states, keeping the total the same? i call that zero sum her. what kind of competition is a healthy competition? that build strength. in this particular area, i would suggest a distinction between general tax breaks, you just get lower tax breaks and incentives

that are tied to the company making investments in training in the state, in infrastructure in the state. if we could get the competition and incentive game to be about investing in state assets rather than just giving tax breaks, i think that would be a very great step forward. maybe that is something many states could agree on, because ultimately plants that come to your state just because of lower taxes will be what economists call footlose. so you want to attract investment to your state, because you offer assets. because you have a cluster in that area, because you have trained people in that area. and that is the way we want to compete, because that makes us all better and more productive.

i hope you can lead us in that direction. >> in oregon and washington, almost half of the competition is in health centers. we have medical devices that are extremely expensive that benefit individuals but have no impact of population health. we're now spending a bit of our gdp on that industry. can you talk a little bit about the apparent contradiction? >> absolutely. health care delivery is a local industry, not a traded industry. that is part of their problem. if health care delivery in your state had to really compete with

health care delivery centers around the world, they would probably be a lot more affected. it is a local industry, and it is almost a local monopoly, that is people go to the hospital and they really do not choose where to go. and i have done an enormous amount of work on health care delivery and how to move away from the mess we're in, which has a lot to do, i think, with the finding of value as a goal, starting to measure health outcomes, starting to reduce the incredible -- incredible implementation of services we have in every state. every community hospital offers every service. and the governors that would be interested, i would be happy to send you easy to read, not to dense material about some of the critical steps to drive

productivity in health-care delivery. i think we're starting to get consensus on some of the key principles. i am very encouraged today. i think there has been the wake up call in our health care delivery system, and there is a lot more flexibility to actually change, but i think every governor needs to be making sure that your medicaid program is leading restructuring, not just pumping in more money. if we bump in more patients and more money and do not change the way we do it, we are in deep trouble. >> governor ran paul. >> it seems like years ago whenever we saw state-by-state comparisons of personal income, you would see relative cost of living statistics state-by- state. why is it that i feel like i

never see those statistics anymore? >> well, you know, you should not be comparing your wages to your cost of living to really understand your true prosperity. in if you earn the high income have to pay a lot for everything you need to buy, somehow the income produces less. when we compare countries, that is pretty easy to do. we adjust it for what the dollar will buy or yen will buy. in the state area we do not see those comparisons. when you are trying to improve the standard of living in your state, driving up the average wage is all smedley will matter. you also have to make sure you are controlling the cost of living the best you can. if you have a high cost of living, that will for you in competing for talent. this is an issue gov. patrick

and i and many others have been talking about for a long time. we have a tremendous amount of talent. that is likely getting better now for unfortunate reasons. i think the cost of living is another agenda i did not emphasize, but in the overall equation, it is a piece of the pie. thank you, governor. >> thank you. i thought it was a great presentation. you said a state is best off when they have neighbors. i was wondering if you could give a couple of specifics about how states can work together in a regional area when they of different policies and different industries and the like? >> one of the things that we found was if you are in the

pharmaceuticals and your neighboring region, which may be in the state next door is also strong in pharmaceuticals, it turns out that both of you are disproportionately stronger than if you'd just had one region in that area and not the neighbors. , and that is because the economic choices do not respect state boundaries. they are more focused on where the people are, where the gut -- where the geography is. you often see clusters and other economic activity spill across state borders. all of you have examples of that in your state. that says if you are in delaware, you cannot think of delaware as the economy. delaware is connected south and into the philadelphia region,

and when you are thinking strategically about how to drive to lower for work, you have to start thinking about how to make it easier and avoid any distortions or barriers or a silly policy differences that would somehow hurt the ability to tralee and freight across the region. -- to truly integrate across the region. certainly having a good transportation and logistical connections is key. trying to harmonize taxes and things like that so we do not have these artificial things that would distort the economically most productive thing to do. that would be the way i would think about it. >> one last question. please. >> thank you for the presentation. i think all of us around the table sure that same goal of

wanting to create jobs, and that is what most of us ran on or are trying to do. my question is, my frustration as a governor, and i bet we all share this is when i go talk to my job creators and say as governor what can i do to help you grow jobs, their answer is i have jobs, i just cannot find the work force that is trained to do those jobs. that cost money. what we're trying to do is look at early heard -- early childhood education. it children ready to learn across the spectrum since education is one of the places where governors can close the gap between the jobs of are out there and the lack of folks to

do the jobs, how do we do that if we do not spend more resources? >> you raise an excellent point. i certainly do not want any of us to oversimplify this challenge. i would make a couple of responses. absolutely the talent and skill issue is at some level fundamentalists. as we think about productivity in supporting high wages, the only way we will be successful at that is to raise the skill level. the americans with very high education are just striving the americans do not have a high school degree are struggling. it is all about skill. it is all about education. ultimately that is a long-term agenda. now the question is what do we do as governors to try to move

the needle on that? i would say first of all that all of you are probably spending money on training already today. every state has training programs. you can spend that money all lot better. you can get those programs much more tied to your clusters, private sector needs. if you think about how to reorganize, some states move faster than others. if you have more money to spend on training, so much the better. ultimately there is a lot you can do just by doing it more effectively. i would tell you that the private sector will spend more money on training also. the private sector is willing to step off on this, because they understand it is lacking skilled people. companies do not want to train in house. they would love to have well- trained people they can just hire.

they will often contribute. in the area of public education. the logistics' -- system sticks statistics i have seen show that we spent quite a bit on education. in massachusetts we had a commission a few years back and we had all of the school districts. there was an estimate of $1 billion we were wasting because we have the school districts and they were doing overhead functions and doing redundant and repetitive and so forth. i do not want to make this simple. if we have more resources we want to deploy them and spend them, but i find so much opportunity to deal with human resources issues much more objectively than we are now if we are willing to take on some of the system design and structural issues that we have

in other areas like health care. we have a moment where maybe some of these issues around fragmentation in school districts and duplication, maybe we can take some of these issues on right now. so what i would encourage you to do not be paralyzed by your budget. realize there is a lot you can do to spend the money you have available better, and drink -- think structurally. think about innovation in terms of tackling some of these things. very good question. i know there will be an extensive discussion of education issues later in the program, so i shied away from them given the limited time, but governor, your best part question. [applause]

>> thank you, dr. porter. not only has he done a wonderful presentation here today, but he has volunteered to give us his presentation, which we will get out to each of you, that there may be ways in which we can continue the collaborative work with him with our commerce department agency head and in other ways. i cannot tell you how valuable >> the winter meeting concludes monday in washington d.c. with microsoft chairman bill gates. he talks about the bill and linda gates foundation efforts to improve education and education is imperative to remain competitive in a global economy. live coverage begins at 2:30

p.m. eastern and c-span3. as the nation's governors meet in washington, use the c-span video library to learn more about the state chief executives. see the inaugurals of new governors and here state of the state addresses all free online anytime. wisconsin's governor scott walker was not in washington for the national governors association meeting but he did take part on the conversation about medicaid by phone. protests are still taking part that would eliminate collective bargaining rights. some protesters gathered outside the venue for the national governors association meeting and they heard remarks from the vermont governor. here's a look.

[crowd singing "solidarity forever"] crowd: for the union makes us strong!

[cheers and applause] the know, i just want to say this. you are the backbone of america.

it is not the hard-working middle class that got us in this mess. it is the greed on wall street that. but the big banks better too big to fail and now they want to take it out of your haunches and we will not let it happen in vermont. [cheers and applause] now, listen. this is america. but i think america reasonableness, thoughtful leaders working together to grow jobs and grow the economy to make this a better opportunity for our children. this is what i suggested to governor walker and others. in vermont, we known bobby get more with maple syrup than we do with vinegar. -- we know we get more with maple syrup. [laughter] you never munchies is better than wisconsin cheese, right?

-- you know vermont cheese is better, right? together, we rely upon you, labor, the ability to collectively bargain which is a basic human right in a democracy. [applause] we are here to say keep on keeping on and thank you. [applause] theet's hear it for governor of vermont. [cheers and applause] >> the governor, thank you again for coming by. >> today on c-span parks and "road to the white house," mike debt -- mike huckabee about his current book. he shared thoughts on president obama, social and fiscal

issues, and a possible run in the 2012. to the-span's "road white house" at 6:30 p.m. eastern. >> our system of government is breaking down. the system of checks and balances we have in our system are not operating properly. >> winslow wheeler heads the reform project at the center for defense information and has written two just published essays in "the pentagon labyrinth." >> they have three essential key powers, the power to go to war, the power of the purse, and the power to investigate. the first two hours, to go to war and the purse, are meaningless if congress does not exercise the power to investigate. it is not doing that. >> to the rest of the interview tonight on c-span's "q&a."

>> you are watching c-span bringing you politics and public affairs every morning. is "washington journal," our live calling the program connecting with elected officials, policymakers, and journalists. watch live coverage of the u.s. house on weekdays. also, supreme court or arguments. on the weekends, you can see our signature interview programs. on saturdays, "the communicator's." on sunday, "newsmakers," and "q&a." you can see our programming any time on line on c-span.org. c-span -- washington your way. created by america's public cable companies. >> the house and senate return monday for the presidents' day break. on tuesday, the house will take up a temporary two weeks spending proposal that will cut

$400 billion from the budget. current federal spending ends friday. an agreement must be reached to avoid a shutdown. on the house agenda, a surface transportation reauthorization and a small business tax provision related to the new health care law. coverage begins at 2:00 p.m. eastern. after a ceremonial greeting for the farewell address, a bill on overhauling the patent system and if you judicial nominations for district court seats in georgia. live said coverage beginning at 2:00 p.m. eastern on c-span -- live senate coverage beginning at 2:00 pe >> joining us on "newsmakers" this morning is congressman chris van hollen. thank you for being with us. we have a budget reporter from "the hill" newspaper. what are the chances that the

government will shut down this week? >> i am cautiously optimistic that the government will not shut down. the cooler heads on the republican side have prevailed. they have decided not to go for an immediate $61 billion in cuts. that does not mean we will not be back here in three weeks. with respect to the cuts they have put on the table, some of them find common ground with the white house and congressional democrats, i am concerned about the cuts to education programs. education programs.