p.m., and then close to 5:00 p.m., he will participate in what is being called a shared responsibility, shared prosperity town hall hosted by facebook to discuss his ideas for bringing down the debt. thank you for joining us on "washington journal." will be back tomorrow at 7:00 a.m. eastern time. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> and on this wednesday morning, here's what we have coming up for you on c-span today. up next, former defense secretary donald rumsfeld will talk about his decisionmaking after the 9/11 attacks and the u.s. response on the war on

terrorism. then deputy treasury secretary neal wolin will talk about the financial regulation law signed by president obama almost a year ago. and after that, f.c.c. chair julius genachowski about issues facing his agency. and president obama will hold another town hall on the debt. he will be speaking at facebook headquarters in palo alto, california. that is at 4:45 eastern on c-span. >> this weekend on "book tv" on creep2. janette recalls paul and julia child during the cold war. >> and edward lengel. and also sarah talks about the

arrival of new england missionaries in hawaii. find more at booktv.org. sign up for book tv alert. >> last month, former secretary defense secretary donald rumsfeld talked about his new book, "known and unknown: a memoir," focused on his decisionmaking during the years he ran the pentagon including the 9/11 attacks and the u.s. strategy for the war on terrorism. this is just under two hours. >> good afternoon and welcome to hudson institute. for today's book forum on the publication of former secretary of defense donald rumsfeld's "known and unknown: a memoir." i'm ken weinstein, president and c.e.o. of hudson institute, and i'm delighted you could be with us here today. i'd also like to welcome our viewers on c-span's "book tv,"

as well as our distinguished panel of experts. secretary rumsfeld is well-known around these parts. he's been a friend of hudson institute for more than four decades. he's known our founder quite well and was and has been the recipient of our james h. doolittle award for contributions of america's national security. it's an honor to welcome you back to hudson, sir. this year, hudson institute celebrates a half century of forward-looking an lytic policy research. -- analytic policy research. hudson institute was founded in 1961 because they saw a need for a more publicly engaged think tank. they developed an organization that would think creatively about how to achieve a better future while avoiding what they termed unthinkable threats, and they would draw on the creativity of scholars to help shape public debate on debates

of the day. our research has stood the test of our time and our world transformed by the collapse of the soviet union, the rise of china and the advent of radicalism within islam. the core of our work is independent policy research. our willingness to examine critical and complex issues from different perspectives. to better understand the future, which is our mission, it is essential to get a better understanding of the past, especially the recent past. even though we know that the past will never be perfectly understood and the questions raised by the study of the past will never be totally settled. we are proud of hudson's first half century of forging ideas that promote security, prosperity and freedom, and we look forward to hudson's next 50 years. during this anniversary year, we're hosting extensive program of seminars and celebrations. today's event is one of these and we're delighted you could be part of these events. today, our discussion examines

some of the major decisions related to the u.s. reaction to the 9/11 terror attacks and does so through the lens of former secretary rumsfeld' remarkable account of these events. secretary rumsfeld's book, "known and un9/11" is a "new york times" bestseller and is available at the end of the event for the price of $20, a reduced price. forgive us, mr. secretary. but i urge -- it is an absolutely gripping and fascinating read and i urge all of you to purchase the book, whether you're here or you do so online. and now it is my distinct pleasure to turn it over to hudson senior fellow, douglas feith, the author of a critically acclaimed memoir "war and decision" that is also available in the book, that for $10. but this is a paperback. [laughter] and doug has the honor of animating today's discussion.

doug. >> thank you, ken. [applause] i would also like to welcome all of you here. in particular, welcome my fellow panelists. to my left is general peter pace, a marine. the former chairman of the joint chiefs of staff. he retired in 2007. before becoming chairman he served for four years as vice chairman of the joint chiefs. he's now businessman and continues to advise the defense department as a member of the defense policy board and is active in charitable work on behalf of america's wounded warriors. and then to his left is jamie mcintyre who was for 16 years until 2008 cnn's senior pentagon correspondent. he was in the building on

september 11, 2001, and he's now a news consultant, a blogger and teaches at the university of maryland. to his left is scooter lewis, who -- scooter libby, who is my colleague at the hudson institute, where he serves as senior vice president. he worked as chief of staff for vice president dick cheney and was a regular attendee of the national security council and principal's committee meetings. a subject of mr. rumsfeld book. mr. rumsfeld is quite literally the person who needs no introduction so i will not give him one. if you want to know about his extensive background in government, there's no better way to do it than to read his book and i would urge everybody to do that.

. >> the full price book. [laughter] >> and by the way, i'd like to make the observation that secretary rumsfeld is donating all of his revenues from the book to charity. after the panelists offer some opening thoughts for a few minutes' each, i'll ask secretary rumsfeld to respond and get a conversation going among us here on the podium and then we'll take questions from our audience. if you want to pose a question we left cards on everybody's chair. please write your question down and pass it forward and we'll get to as many of the questions as we can. now, i'd like to get the panel discussion going with a few comments. first, regarding the substance and tone of the book, secretary rumsfeld has written an important book. it's full of revealing stories and historically significant

information. it's been selling impressively, as ken weinstein pointed out, it's been on the bestseller's list of "the new york times" since it came out something like seven weeks ago. the book contradicts a number of popular misconceptions about the war on terrorism, the iraq war and other subjects. it deals with a number of matters that were very hot controversies. state department versus defense department views of afghanistan and centcom's partnership with the afghan northern alliance, the strategy in tora bora, the rational for the light footprint approach, the failures of the multilateral approach in building up afghanistan after the overthrow of the taliban, disagreements about when and how to use nato. regarding iraq, it explains how decisions were made to go to war, how u.s. troop levels were

set, how policy officials used intelligence regarding iraqi weapons of mass destruction, how planning was done for the post-saddam period, how key elements of that was undone in the field. the book devotes quite a bit of attention to detainee matters and reveals how secretary rumsfeld was reluctant for the pentagon to take on the detainee mission, how he twice offered to resign over the abu ghraib scandal and that he now regrets that he did not insist on president bush's accepting his resignation. i'd like to say a quick word of some commentators made that the book is full of blame shifting and finger-pointing. i don't think that a fair-minded reader would characterize the book that way. its tone is analytical. it's not harsh or acrimtory. some critics have contributed

to mr. rumsfeld of every problem that arose during the bush administration. now he gets condemned for blame shifting when he said that some of the accusations were ungrounded and critics can get you coming and going. now, second matter, secretary rumsfeld's relations with his generals. the book shows that there were times when the secretary challenged and contradicted his generals and there were times when he deferred to them. when a secretary presses his generals and questions their work, as mr. rumsfeld did when he reviewed did version after version of general frank's war plans for afghanistan and iraq, he leaves himself vulnerable to the charge that he is micromanaging and interfering in professional military judgments. but when the secretary defers to his generals in the field, as mr. rumsfeld did for years

during the iraq war, before the surge when the war wasn't going well, he leaves himself vulnerable to the charge that he's failing in his chain of command responsibilities. i'd like to ask secretary rumsfeld to elaborate when he wanted to challenge and when he defered. >> do i answer now? >> in time. >> the short answer is imperfectly. >> third, the role of the cabinet officials. just as there are issues when the secretary of defense schad challenge or defer generals, the question the book raises is when a cabinet officer should challenge or defer to a president. and it's clear that mr. rumsfeld viewed the duties of the cabinet official differently from the way colin powell did and i'd like to ask you, mr. secretary, to elaborate on this and how you see the role of a cabinet official in dealing with difficult and controversial

issues when he thinks the president may be ill-informed or wrong in his judgment. fourth and last, i'd like to ask secretary rumsfeld to comment on current affairs. there's too much happening in the world to avoid at least one look at current affairs. drawing on his experience as secretary of defense, president obama has launched a u.s.-led military action in libya. he preempted what he feared was going to be a major humanitarian disaster there. and you, secretary rumsfeld, helped develop various ideas and principles for u.s. military action after 9/11 regarding u.s. leadership, coalition building, definition of the military mission, u.s. freedom of action, role of u.n., etc. i'd like you to comment on how you think president obama is handling libya. is he respecting or violating the principles that you helped develop for the bush administration?

and i hope that is sufficiently provocative for starters. and now i'd like to ask general pace to give a few of his comments about the matters dealt with in the secretary's book. >> doug, thanks very much. it's a great pleasure to be here with you today. first of all, because i have great respect for the folks that's on this platform with me. it's absolutely true that in many, many quiet ways secretary rumsfeld has continued to support the troops and their families and the proceeds from this book is just another example and why i'm proud to be sitting here next to him on this occasion. i won't speak to the book precisely. i'll share with you some things if i had known at the time i would make different recommendations. i think if we are going to move forward and learn from those mistakes we have to know what

those mistakes are. in afghanistan, for example, when the war first began in afghanistan, we needed about 20,000 reservists. and after the attacks on 9/11 we had literally hundreds of thousands of reservists who were volunteering to serve the country. so rather than call up reserve units we elected to take volunteers and that made absolute sense at the time. we didn't have iraq in our heads. we had afghanistan in our heads. we had a number of about 20,000 and we had hundreds of thousands who were volunteering. in retrospect, that recommendation to take volunteers was not a good one. the reason being when we enter iraq we needed significantly more reservists. and out of fairness we

determined that those would serve already would not serve a second tour until everyone had served a first tour. again, makes good sense. but the result of that was that the a unit that was to be deployed might have had 20%, 30% of its folks already deployed. so they stayed home and we had to go to another unit to fill in those spaces. over time two units replacing one game four units replacing one, became eight units replacing one. and it all goes back to the original premise that we would take volunteer reservists in afghanistan. and i was certainly one of the voices that was supportive of that. in retrospect, not a good idea. next, in afghanistan, there was a great deal of discussion amongst the u.s., the afghan government and our nato allies

as to the size of coalition size at the time -- not nato size at the time but coalition size at the time. what was the proper size for the afghan army? and as i recall general war dock, administer of defense, was asking us to blan army of about 400,000. collectively, all the coalition looked at that and said, in a country within an economy that was $6 billion, a g.d.p. of $6 billion, $2 billion of which was drug money, did it make sense to strap them with the responsibility a 400,000 army that they could not afford? so collectively, and i certainly agreed, the number that was determined was about 70,000, was a good number for them to have as an army that they could maintain going forward.

well, fast forward to the problems that led to the request for more u.s. troops. in the math, it's fairly simple. to have 10,000 u.s. troops on active duty, it cost taxpayers about $1 billion a year. to send 30,000 troops as a surge to afghanistan, you have to have about $3 billion in your inventory. to replace them every other year you need to have $6 billion worth of troops in your inventory. to replace them one year over and two years back, which is a preferred, you need $9 billion worth of troops in your inventory. and after four you start to use them. it will cost you x billion dollars a month. it was probably around 2006 -- i don't have my exact timeline in my head -- when it became obvious that we were going to need more troops, that the math no longer made sense. we went to the secretary and to

my knowledge he went to the president and recommended that we in fact change and increase the size of the afghan army. because in the long run if it cost us -- and i'll make these numbers up $2 billion a year to supplement the afghan government so they could have 400,000 troops on their roll, at the end of the day we would have the right country's troops doing work inside of afghanistan and the cost of u.s. taxpayers, for sure, would be a whole lot less. but at the time going back to the situation on the ground and the understanding of the afghan government's ability to fund their own military, 70,000 troops seemed to make sense even though 400,000 makes a whole lot more sense now. next, some folks wonder, why is it that when we did do the

surge in afghanistan, why would you expect a different outcome than we had since october of 2001? and to understand that, you need to go back to around march of 2003 when we would enter iraq. at the time there was very little activity in afghanistan. some but not a lot. and the military assessment was -- and i was part of it -- that we could go into iraq, but if we needed more troops someplace else in the world we would not be able to do the rotation of forces that we wanted to do. it was certainly discussed amongst all the leadership, but at the time it appeared that we could enter iraq, do what we needed to do there and still have a rotation of forces. as afghanistan started to bubble again and while iraq was

more of -- more difficult than we thought it would be, we ended up with a basic decision of either leaving the troops who are in place there for as long as it took or maintaining our all-volunteer force and having rotation of forces. when the decision was made to maintain rotation of forces, then we would, in military terms is an economy of force mission in afghanistan. think of germany and japan in world war ii. germany was a primary theater. japan was the economy of force theater until we won in europe so we could switch resources, shift resources to the pacific. that's what happened in iraq and afghanistan. we gave enough troops to maintain -- maintained enough troops in iraq until we were able to shift forces over to afghanistan. so it wasn't until 2008 that we

were able to start flexing up the number of troops we needed in afghanistan based on the threat that was there. so there is a reason to believe and have expectation that from 2008 forward that you could have different experience on the ground in afghanistan than we had before because we were able to allocate the right amount of resources to that theater. in iraq, going into iraq i believed the intelligence as did everyone i know that when we crossed the line of departure out of kuwait into iraq that whole divisions, 14,000 to 16,000 troops of iraqi soldiers would surrender and become part of the liberation force. makes sense to somebody that's lived in freedom all his life.

makes sense that we liberators would be there flag waving. and, of course, they would be loyal to their new government. turns out that they did not surrender in mass. nor did they fight. they disintegrated. they went home. which leads to another assumption that proved to be false. in military planning an assumption is something that if it is wrong your plan fails. there's been a lot of discussion about phase four in iraq and a discussion about there was no planning of phase four. phase four is what do you do after you win, how do you maintain security? it's not that we didn't plan phase four, but one of the basic assumptions for phase four is not only would there be the u.s. troops on the ground and our coalition partners but that fundamentally the

400,000-man iraqi army would be intact, loyal to the new government. they weren't. they disintegrated. they went home. so the brilliant stratenalic surprise that tommy franks accomplished by -- stradgic surprise that tommy franks accomplished by not putting 400,000 troops on the perimeter, not bombing for 45 days but rather going with 150,000 and bombing at the same time, getting him to baghdad in three weeks, that brilliant tactical/strategic opportunity on the ground was then followed by a string of troops who are on call but not in country and a lack of iraqi security forces to provide security in more places than we could. lastly, with regard to w.m.d., i don't know anybody at the

senior level, certainly in the u.s. military, who did not believe, as i did, that saddam hussein had weapons of mass destruction, at least chemical weapons, which he already used on his own people and on his neighbors in iraq. we believed it so firmly that we ensured that our troops were well train and properly quimmed before we put them into combat. and we fully expected that there was a line someplace short of baghdad where when we crossed it saddam would hit us with chemicals. that assumption was wrong. i was relieved that he did not attack our troops with chemical weapons. like everybody else over time, i was chagrined that we found no weapons of mass destruction. but each of these cases -- and i thought about this a lot --

it may or may not give you a comfort but the good news and the bad news is the same which is that if you gave me the exact same intelligence, you gave me the exact same data in each one of these cases i'd give you the exact same recommendation. and these were not knee jerk reactions. these were the results of tommy franks coming to d.c. and briefing 30, 40, 50 times with the secretary, deputy secretary, dick meyers, who was chairman, going to the white house many, many times. these decisions were made at the very careful, deliberative dialogue pushing back and forth. we need to acknowledge where we were wrong, but we also have to remember in historical context is what we knew at the time. and without pointing fingers at each other, ensure that whatever it was that caused us to have the wrong intelligence,

whatever caused us to have the wrong analysis, that we understand that part and learn that lesson and teach it in our schools of youngsters who are coming up now who will be the next chairman and next vice chairman, have a better context or broader context in which to make their own analysis. thanks. >> thank you. jamie. >> ok. [applause] thank you. i'm jamie mcintyre. you know, if any of you have kids that watched "sesame streets" you hear one of these things are not like the other, i did not actually serve in the bush administration. although i'm sure some of my critics when i was covering the pentagon might accused me of that. the -- the other day i was reading -- maybe you saw this comic on sunday, dunsbury.

he did a piece on facebook in which the character in the comic strip is reflecting on her facebook page and realizing it's gotten completely out of hand and she says an over occur ated version of my life in which i'm accomplished, happy, attractive and even my faults are endearing. when i read that i said, yeah, that is facebook. and then i said, there's rumsfeld book of actually -- [laughter] because even his faults are endearing in this book. i really loved this book because as a journalist i'm really big on sort of trying to understand, you know, what's going on. one of the things you are a journalist -- journalism is a first rough draft of history and invariablely wrong and incomplete. as you're there trying to construct that part of history you're always wishing you need to know what you don't have access to. you have this illusion of if you could simply get behind the closed doors into those

meetings, if you could hear the secretary, if you could witness this stuff firsthand that these guys get to see all the time then you'd have clarity and then you read a book like secretary rumsfeld's and realize, no, if you were there you still wouldn't know what was going on. [laughter] it's just not always that clear at the time. one of the things that the news media doesn't do very well, it doesn't do nuance. we just don't do nuance well. that's actually reflected in the title of the book, "known and unknown," because secretary rumsfeld explained that concept to us at the pentagon briefing one day. to me it made perfectly sense. it's sort of self-evident, the idea that there are things that we know and things we don't know and things we don't know that we don't know. and he explains in the first part of the book the origin of that. and then i was really flabbergasted to notice that over time various reporters and commentators would portray that as some sort of, i don't know, some misstatement or

malacropism. i said, don't we get it, this is a very straightforward recitation of the problem that you face making decisions when you have incomplete information. so i really applaud the effort of the book. i have to say it's very impressive the documentation. even though it does seem to have a lot -- i will go out on a limb here -- it has a pro-rumsfeld slant to it. [laughter] we can debate that later. >> why don't you just give them the hook? >> it's very -- it's very impressive. the other thing i want to say is, i also commend it because i feel like donald rumsfeld is the anti-dan snyder. you know dan snyder is the very wealthy and powerful owner of the washington redskins. he thought he was being treated unfairly and unfavorably in the

press. his response was to file a suit, a lawsuit against a very small publication which i in my opinion was ill-advisesed and some of unbecoming. donald rumsfeld has marshalled his facts together, put together all the documentation, laid out his case in a good fashion. we will argue parts of it today . it's a very impressive work and i think it really adds to our understanding -- it certainly adds to my understanding what happened during the time i was there and trying to figure it out. thank you. >> thank you. let me just say, anybody who has a question and wants to write down only the card, you can raise it and our colleague whose hand is up in the back, he will see you raising a card and come and retrieve it from you and pass it forward. scooter, please. >> thank you.

thank you, doug. it's nice to be here. i particularly enjoy the opportunity to watch your staff throw questions at you, sir. it seems a rare opportunity. i think doug showed a little bit entuseyasm. >> there's a tomorrow. -- i think doug showed a little bit enthusiasm. >> there's a tomorrow. >> and it's good to be here with the bush 43 pentagon crowd and their groupies. i say unexpected pleasure because the person that should be here is my former boss, vice president cheney. as many of you here may know, secretary rumsfeld gave vice president cheney his first job in the government, his first opportunity, and it was an extraordinary pleasure to watch two of these brilliant men working together with each other in difficult times. they remain friends till this

day but there's not to say there was a little bit of rivalry between them every now and then. so when i was visiting with vice president cheney not long ago i happened to mention to him -- you may know vice president cheney is working on his own book at this point. so i happen to mention to him, you know, don's book is on the bestseller's list. it's 1,500 pages. well, he got to work right after that. >> a lot of that 815 is the index. >> pete was talking about some intelligence issues and there was covered in "known and unknown" there was a passage

about the morning intelligence briefing. i would say that vice president cheney also took these morning intelligence briefings except he took them twice each morning. i believe, sir, you took your intelligence briefing once, is that correct? >> uh-huh. >> so he would take it once -- the vice president would take the intelligence briefing once with the president at 7:00 a.m. but he would also take it at 6:00 a.m. before he met with the president so that he would be well familiar with the content of the meeting, of what was in the briefing before he sat down with the president. now, i would usual go over to his house before the 6:00 a.m. briefing. this all worked fine except the vice president did it even when he was out of time. so when he was in jackson hole, wyoming, for example, as you might guess, which is two hours behind, the president's briefing was at 5:00 a.m. and the vice president's briefing was at 4:00 a.m. and i would have to get over to his house before 4:00 a.m. now, again, that's not so bad

under normal circumstances but i don't know how many of you have been in wyoming in winter. but it tended to be minus 40 degrees, windy, snowy. and one particular year i think we had eight feet of snow in 10 days. so i would grab my 15-pound briefcase and since the roads weren't plowed at 3:00 a.m. with eight feet of snow and there was a golf course in between where i was and he was i would march out across the golf course waiting through this bottomless snow trying to get to his house. one of these mornings i got my briefcase, i got the minus 40 degrees, it's 3:00 a.m. on a dark golf course. as i'm headed out to see my boss. as i'm just about to clear the last set of trees at the edge of this golf course about, oh,

20 yards from his back door, i suddenly realized that the terror threat is at orange. we've been receiving intelligence about threats to white house personnel and the secret service may not think it's so amusing this guy is behind his house sort of within hand grenade distance. we are -- we all have badges for the secret service not to shoot us but it was dark. i had three layers of clothing over my badge and also i had no -- there was no light. it was perfectly pitch black. i had no flashlight with me. you know, as me say, you go to work with the staff that you have. behalf laugh -- [laughter] >> good point. >> so there i am with my 15-pound briefcase which probably in the dark looks like a satchel charged to the secret

service. i am completely hooded. my parka happens to be black. there are no lights and i'm 20 feet from the vice president's house. i realize two things. first, the secret service guys are really good shot. second, the shots will likely wake the neighbors. so i'll be dead and a failure. now, i don't mind being dead. it's wartime. but i don't want to say that i didn't do good staff work. so i decided that the only thing to do wading through the snow with my hooded black satchel and 10-pound briefcase that i would sing. not so loud that i would alarm the secret service and not to -- i would sing the theme song for the rapper eminem. i don't know what you think mrs. cheney thinks of eminem. i finally came up to the secret

service agent and it happens by bad luck to be a friend of mine who i'd taken a few nights before drinking too many shots of tequila at the cowboy bar, and i said to him -- i tried to pull my dignity together and said, why didn't you shoot me? part of his job and he said, you know, do you think a terrorist is stupid enough to be out here on a night like this? so i finally make it into the vice president's house. i'm covered in snow. i'm freezing from minus 40 degrees. i'm horse trying to sing. my hands are shaking because i almost got shot and the vice president walked by. and he takes a look at me and he can see that my job satisfaction is suboptimal. and he says, you don't know

what it was like working for rumsfeld. [laughter] i don't believe it. there's not a truer story in that book. there are several interesting subteams in "known and unknown" and i was going to raise several of them but i don't think there's time for maybe more than 1 1/3 but let me take a crack at that. one of the themes or subthemes is the importance of strategic thinking. the book describes ronald reagan as, "strong, long range with strategic sense so essential to successful leadership."

the book describes president nixon as a strategic thinker, often looking two to three steps ahead in a crisis. by contrast, the book describes as a dangerous misjudgment the "post-cold warhol day from strategic thought that characterized much of the 1990's." and the book contrasts this notably with the strategic thinking of one of our main competitors, a rising china. the book says, and i'll quote, "unlike many western policymakers, the chinese make a practice of thinking several moves ahead while they look to take advantage." the book notes that the chinese to this day live by the writings of a fifth century b.c. writer, zhu, who was a long range strategic thinker and it quotes from him. it says, "be extremely

mysterious, sun zhu writes, even to the point of soundlessness." by the way, mr. secretary, when it comes to being extremely mysterious, do you really think the chinese have a lot to teach vice president cheney? as part of the kind of strategic thinking we need, the book talks about the importance of avoiding mirror imaging, that is how we our enemy sees a problem, not how we see it. as pete highlighted, the related problem, a related theme in the book is the problem with intelligence. as another strategic element of strategic thinking, the book notes that surprise is inevitable. there's a fabulous quote from september 10, if i recall, of 2001, from the vice president.

and it says that we need to consider our vulnerabilities with imagination. it quotes, -- it quotes fredrick the great who asked his generals, "what designs would i'd be forming if i were the enemy?" of course, i should point out, that that is mirror imaging, mr. secretary. and frankly, i was a little disappointed in you letting fredrick the great say that. that was before he worked for you. i think, as you would say, the question fredrick the great should have asked was, who has studied how this enemy thinks and asks that man what the enemy might plan. next, as the book notes, we tend to treat the unfamiliar as the improbable. the results can ruin your day.

there's a passage that i like very much. "the period covered by this book was one of great on security to those who lived through it. not only was the future clouded, a common enough situation, but the present was equally clouded. we groped after interpretation of events, sometimes reverse vines of actions based on earlier vunesd hesitated long before grasping what now seems obvious. we had more than the usual difficulty discerning the shape of events." that's not don rumsfeld in 2011. it is don atchis writing about the 1940's, a period that people today thinks was much less complex and a period when we had a theory of containment, a strategy of containment which in fact leading figures at the time had wildly different interpretations.

as you emphasize the importance of clearer strategic thinking i should also quote this passage to be judged by your readers. "terrorism is a form of warfare and must be treated as such. simply standing in a defensive position absorbing blows is not enough. terrorism must be deterred." that's not don rumsfeld in 2011. that's don rumsfeld in 1984. a fictional vision of internal terror in 1984 was inspired by a real-world threat. so was rumsfeld's version in 1984. in october, 1977, "time" magazine cover was title "the war on terrorism." in 1979 a "time" cover was entitle "islam: the militant rerival." in your book you note the

importance of precision, in thought and terminology to achieve sound, strategic thinking. you note your view that we should define the enemy in our current trevails as "islamic." i hope you'll have a chance to discuss it. so one theme is the importance of clearer strategic thinking and the difficulty that has posed for america. a second related theme tuffs on the all too common imperfections of our interagency process. you cite interdepartmental squabbles between the n.s.c., state and defense as being common in your period but that includes from the nixon administration. you note both interagency and intradepartmental problems. mr. secretary, your observations in this realm are,

as you note, sadly not new. you could well have cited sources even before your era. preeminent cold war historian lewis gaddis said of the kennedy administration, kennedy's strategy broke down because it did nothing to prevent the subordination of strategic interests to those of the organization's implementing the strategy. large bureaucracies all too often develop their own institutional momentum, making them impervious either to instructions from above or to feedback from below. legendary scholar huntington said they are supposed to resist innovation. and that same era, dean atchison, writing more of the truman period, quotes towns and

hoops, the historian, our difficulty is that a nation of short-term practicing matists, accustomed to dealing with the future only if it becomes the present, we find it hard to regard future trends as serious realities, yet failure to achieve this new habit of mind is likely to prove bad. and kissinger wrote, most foreign policies that history has marked highly in whatever country have been originated by leaders who are opposed by the experts. i hope you have a chance to comment, mr. secretary, on inter and intradepartmental problems in a context of a fluid world. there are my themes. i have too little time to go on. time is short. the star awaits. and i want to congratulate you, mr. secretary, on your memoir and on writing a history of the bush administration that i

think in years to come many will see as the second best book on the topic. [laughter] >> well, now, my goodness gracious. i look out there and i see people who were in the administration, many of whom could give the answers to the questions that these folks are -- have posed. every bit as well as i. ken, thank you for your hospitality. ladies and gentlemen, i'm pleased to be here with this group of panelists, and i now go to work with the panel i have. [laughter] such as it is. i'm told i have, what, 10 or 12 minutes, or something, if you -- >> 20, if you want them. >> and you can interrupt, is that how it works?

the process of the book i debated whether i should take a year to write a book basically from memory but i had such a rich archive, having lived a third of our country's history, i decided to take four years, digit ties a lot of my papers and create a website that has over 3,500 documents on it. must be 10 or 20,000 pages of paper that have been put there so that when someone reads the book they're able to see a paragraph i've quoted from a primary source document often and go to the end note and then go straight to the website and read the entire memo. and not just the one paragraph that i put there. so that we'll rather than rewriting history we'll want to write history and try to correct what jamie calls the first draft of history in a way

that will be helpful to serious people who are interested in learning and reading the original documents from the website and the approach of people who were actually there as opposed to people who were talking to people who were there. probably mostly two or three layers down. so i took four years and have been enjoying completing it and having a chance to answer questions about it. the questions that doug had, it seems to me, are interesting ones. one involved the defering to generals or not defering to generals, as the case may be. i think pete pace would be probably better to answer that than i. there is a picture of the book of me shining general pace's

shoes. so i hope someone looks at that. there's been a lot of talk about rumsfeld coming into the pentagon and having some theory about technology or modernization or transformation of something. it just wasn't the case. i was minding my own business in illinois, happy and had no idea of coming back into government. governor bush gave a speech at the citadel talking about what he thought about the important things that needed to be done to bring the department of defense into the 21st century and into the information age. that was the blueprint for what he wanted. and when he asked me to consider coming into the government again after being out for 20, 25 years, that was what was on his mind. he was interested in having the department of defense engage in a process of transforming itself to fit the challenges of the 21st century which he saw as being notably different from

the prior period. that was the challenge. that's what we set about to do. and once you do that, basically you begin by say you have to engage people and things are going to have to change one way or another. you sit down and work with these people and change is hard. people in the military are proud. they've developed a doctrine that they were taught and believe in and been implementing in many years of their lives and when a president comes in and wants to make adjustments to what is comfortable, what is known, what is reasonably certain, what has been practiced, that which has been exercised and they trained under, that's uncomfortable. and so the challenge, the basic entry of president george w. bush to the presidency was in fact something that would

inevitably have caused people to be uncomfortable and not totally comfortable with a new president that they didn't know and with the kinds of changes he was urging. the -- general pace talked about the situation in afghanistan and the people. i should say one other thing about the generals. i mean, pete, you should answer this. i was in meetings very comfortable having people answer questions and i like to ask questions and i like to learn. i must say, i do confess, if the questions were -- the answers were not good, i had trouble hiding it. is that fair? >> that's fair. >> is it an understatement? >> no. it is absolutely true.

that if you arrived at a meeting with the secretary of defense and you had not done your home work, you were not going to have a good day. and that's shame on the generals who didn't do their home work. i will not take much of the secretary's microphone time but i will tell you, of those folks who are out there, each and every one of those was either working on rumor because they were not in the room or they had their butts chewed for good reason because they hadn't done their home work. >> the afghan army, pete has described accurately, there was concern they wouldn't be able to afford it. he's absolutely correct when he points out that we could with a relatively modest amount of money help them support it with cost per person that is vastly less than what it costs the

united states to do that. one thing that hasn't been brought up in connection of iraq and afghanistan is i -- first of all, i did write a paper in march of 2001 that's on the website talking about guidelines for using military force, for the united states to use military force and i sent it to the national security participants and to the president because i -- this is well before september 11. i thought it was important that we think about that and have some understanding. and i hope people will take a look at it because somewhere buried in there is a comment that i think that we in the united states have to have a healthy respect for the things we can't do as well as for the things we can do. and i think we do have to have a degree of modesty about our ability to nation build. i think the countries have different cultures. they have different histories. they have different tribal arrangements. they have different neighbors. and times vary and it is not

possible for the united states, i don't think, so quote, build nations. i think people build nations. we can help create an environment that's hospitable for them to do that but i think it is -- it is only realistic to face up to that fact that ultimately they're going to have to do it. now, there's some middle ground, obviously, between hands off and hands on, but the reality is americans have the tendency to -- if a ditch is to be dug and there's a bunch of people standing around, our inclination is for us to dig it and dig a good one. no question about it. if the goal is to dig five million ditches we ought not to be digging ditches. we ought to be teaching people how to dig ditches. we ought to have a tolerance level that the ditch is not as good as we might not do it. might not be as fast as we might do it.

the afghanistan situation, i've had the impression that the discussion about it was in the current administration that the government took their eye off afghanistan. and i just don't think that's the case. i mean, the reality is we went in with limited forces. the accomplishment that general frank's planned which was -- general franks planned which was close relationships with the c.i.a. and the department of defense, our special forces, they went in and did a superb job. they killed and captured a lot of al qaeda. they managed to move the taliban out of kabul and then out of most of the country. and the period of the level of violence during the period after that was very modest. it was low. and now to be sure the taliban are determined. they want it back and they are going to try to get it back. they went into pakistan and

they went -- ran silent and deep and prepared themselves and came back over a period of time. at some point. but during the period of 2003-2004, the big iraq people, when people were all concerned about their eye off afghanistan, afghanistan was in good shape. they drafted a constitution. they set about their business. refugees came back by 800,000, a million refugees came back into that country. and you drove down the street and you'd see all kinds of economic activity. so that is a misrepresentation of history, as i thought it. at some point, i don't think when it was, it was 2008 -- probably doug or i got concerned. -- i don't think it was, it was 2005, probably doug or i got concerned. the taliban are regrouping and we began to see a level of violence increased. and we then set about, as pete says, increasing the afghan

army and taking a series of steps. but in the last analysis, i personally believe that afghanistan's going to evolve in a way that fits afghanistan and fits its particular stage of development and it's not going to be the idea that we have a temp late that works else -- template that works elsewhere is a misunderstanding. we didn't even have this template ourselves. think of the bumpy road our country went through. my goodness, we had slaves into the 1,600's, we had a ghastly civil war, women didn't vote until the 1900's. we didn't arrive in 2011 like this. and those countries aren't going to ariff where they're going to end up. they're going to have to work their way like we did and other countries did. it's not a smooth path from authoritarian systems or drought or civil war or 10 or 12 years occupation by the

soviet union. it's not an easy path from there to where i think they're going and admittedly it bombay. weapons of mass destruction -- i agree with karl rove. the biggest mistake they said is that bush lied and people died. that is a disgraceful allegation. there's no question that the united states men and women in the military to put on chemical protective suits as they were moving north and iraq, they did not do it for the fun of it. they did because they were concerned for it every leader in the neighboring countries said be where when you get closer to baghdad. he will face chemical weapons. to not rebut that and allow to

happen undermined the bush administration. you can be absolutely certain that every word that the president said he believed and every word that vice-president cheney said, every word that colin powell said -- here is a man who had more experience with intelligence matters than anyone in the government including george tenet. he spent a lot of time preparing his remarks to the united nations. he worked at his house and in the office and he believed every word he said. the idea that it was a lie was just playing inexcusably irresponsible. i made a few comments about the press. one of the stores in the book i discuss this story from my

early first executive position as the director of the office of economic opportunity. an article was written that was totally inaccurate. i invited the person in and let him see what was going on and he saw it was totally inaccurate and he said he was sorry and left and never uttered another word about it to corrected. the paper did not either. it was a wonderful experience for me because i learned early that there was another myth about general shinsecki that i mentioned in the book. it has been printed thousands of times. jamie went out and found out the facts and wrote a story and said it is almost tipton stone that this happens. it did not. it is totally inaccurate, the mythology about general shinsecki.

an amusing article was written correcting the facts. scooter brought up something and i will wind up with this. world war i and world war two had a finite beginning and a finite and bigger. the cold war did not. it came along. it lasted decades. i worried about language, the idea of calling the war on terror have a war because it bothered me that -- it left the impression it could be won by a bullet. it cannot. it left the impression that it was the department of defense's responsibility and not the rest of the government and not the private sector. that is not the case. it is much more like the cold war where there was a competition of ideas between communism and its expansionist activities and people who believed in free political

institutions and free economic institutions. this, too, is a competition of ideas, this competition we have with radical islamists. to prevail over time -- think of the cold war -- it took the administration of both political parties in our country and it took administration's an hour allied countries a persistence over a long, long period and it was an impressive thing that was accomplished. i submit that the difficulties we face today with radical islamists is of a kind and it will take a long time and that it will not be one with bullets. there's another memo on the website and i cannot remember the year. it leaked in the press within a week and i only senate to three people.

i said here is our policy and we have to pursue it and it is important that we protect the american people, but i don't know that i have a metric i can tell how we are doing. i don't know if we are capturing or killing terrorists as fast as they are able to recruit them and train them and finance them and organize them and send them out to kill innocent men, women, and children. i still to this day don't know that we have any metrics like that. there is one metric. people have done a lot of fuss about president george w. bush and the structure he put in place including indefinite detention and military commissions which has been a long part of our history and guantanamo bay, a prison that has been maligned and the people who served down there have been criticized. i have -- i would submit it is undoubtedly one of the finest presence on the face of the

earth. it is exceedingly well-run. i asked a journalist the other day -- she was interviewing me and i said give me a sense of how many people we probably water boarded down that guantanamo and she said tens. >the answer is zero. there was never anyone water boarded at guantanamo. in any event, here we are. it is almost april, 2011. we could have a terrorist attack tomorrow. they can attack anytime, anyplace using any technique and it is not possible to defend against terrorist attacks in every location at every moment of the day or night against every conceivable technique. the short answer is that we haven't had a successful attack in the united states of america for close to 10 years. that is, in my view, a credit to

president bush and the structure that was put in place. it is not simply a defense of structure. the success, i think, is rooted in the fact that the decision was made that you cannot defend everywhere all the time there for you must go out and put pressure on them and make everything they do harder and that has been done very well. it is harder for them to raise money. it is harder for them to travel. it is harder for them to talk and the telephone. it is harder for them to do everything they do. i give us a good grade their. i would give us a low-grade on competing in the competition of ideas. we have not done well on that. wasboy's head demonstration reluctant to talk about islamists -- the bush administration was reluctant to talk about islamists because they did not win -- want to be

perceived that they were against religious people who are not radical. there is a nervousness about it and people did not want to be accused of being against their religion. i would give us a high grade in terms of helping to protect the american people, i would give us a relatively low-grade in terms of communicating and competing in that competition of ideas. unless we do it and do it very, very well, it seems to me, we will not know how well we are doing and we may not be doing well enough. there was talk about the interagency process. i listened to the people talk about it in jamie's business. if i were in his business, i would do to but they personalize it. they want to make it so that

this person is against that person. if you think back in recent memory, and because centre had trouble with bill rodgers in the press. he had trouble with jim schlesinger. rodzinski had trouble with cy vance. george shultz had difficulties with cap weinberger. it is a pattern. it is and personality. people have different views. there should be different views. that is healthy and that is for the president to listen to those views and make a judgment. it seems to me -- i just got off the phone with george shultz before i came here who is a long-term friend and he said he had written an opera on this subject that he hopes will be printed sen. -- an op ed on the subject video to be printed soon -- at the end of world war two, we were at an

inflection point between the end of the war and the beginning of the cold war. an enormous number of institutions were fashioned during the critical. period. you ended up with the un and nato and the imf and the world bank. we ended up with the cia and the department of defense and all these institutions were created that started working during the time from the end of world war two until the beginning of this century. we are at another in flexion point at the end of the cold war and we have not done much to modify these institutions and they don't work as well in the information age going forward. forward one of recommendations i made on the website, it is rumsfeld.com,

if i haven't mentioned it. i sent a memo i think to the president on this subject where a group of us in the pentagon talk about this and said we should get a hoover commission. they got people from both political parties and they thought about these things in a serious way. they can now with a set of proposals. we need that today. we need to think through these things as to how these institutions, departments, often run by, not run, influenced in a significant way by congressional committees and subcommittees that are very turf conscious. than the state department, the department of the fans, the cia popoff and as peter rodman once wrote, they need to band so you can be able to pull those

threats for a needle head. that is of the president can make rational decisions and there is no clash. there have to be ways we can do that. i am not smart enough to know what they are. i know that the information age is a terribly difficult thing for our government to manage, to handle. we are not organized that way. for the information age. half the people here don't know what a tweet is. maybe 1/3. all of us have to adjust and adapt and it is a much more -- it is some more faster moving world today. those thoughts are something we will have to come to grips with. doug thought about them and other people at the table have. i will stop there. [applause] >> thank you very much.

the point that general pace made about how many of the assumptions on which the war plants and post-war plans for iraq were based that proved to be faulted is an important point . there was a particular point he highlighted that we thought we would have a rocky security forces that would be available to us to maintain order after saddam's ouster, scooter, in particular, when we were briefed by the cia on the iraqi police remaining intact and the cia made the argument that the iraqi police were viewed as a professional force. you might change the leadership, you would not have to change the people throughout the country. they were well regarded throughout the country and would remain in position.

i remember scooter making the point that in a police take the police would be viewed as professional. that was the cia position and that was an important factor. a military commands have to get their key assumption from the official source of the assumptions which is the intelligence community. we have had several people raise questions about the way our intelligence community is organized. several questions have made the point that there was a major reorganization in the bush administration of the intelligence community after the 9/11 commission report. several people would like to know what the panel's evaluation

is of our intelligence community now verses what it was before 9/11? are we better organized? are we setup to handle the current era? what is your general sense of where we stand on intelligence organization? i would ask this to anybody who wants to jump in. >> i would begin by saying that they've got a very tough job. i was secretary in the 1970's during the cold war and we were looking at the soviet union and we made our intelligence community -- the intelligence community made judgments that were not accurate in a number of instances. you were able to look at it year after year after year, the same people, developing the skills, getting the language confidence. and yet, -- you can't make --

you may remember the miss judgment as to the percentage of gdp that the soviet union was spending. the agency was convinced it was a relatively small number and harry rohan and others concluded it was a relatively higher percentage, closer to what adolf hitler was spending at the beginning of world war two. it turned out they were right as to what was being produced what was different was the size of the economy. the soviet economy was much smaller therefore the percentage was much higher. the importance was that it showed a certain sense of purpose and determination. if you are willing to deny your consumer sector, that is a big deal. in the reagan era when the cold

war was won, that critical question as to how could the economy of the soviet union survive what they're spending was not a trivial. it turned out the agency was wrong. i give them a lot of credit. we have had wonderful intelligence people trying to do it right. it is very, very hard. we are dealing with closed societies, rogue regimes, non- governed areas. these are not as nation states but we are dealing with networks and it is an area we have not -- we had a big dip in intelligence investment in the 1990's. it takes a long time to develop the kind of internal confidence in an organization like that where you can get the language skills and get the development

done. it is easy to criticize. it is important to recognize the difficulty of it. we have to expect to be surprised and should not be surprised when we are surprised. given the lethality of weapons which is vastly different from the 1970's, the difference is enormous, our margin for error is not what it was. let there be no doubt. >> i would like to bring the same question in a slightly different way. i enjoyed your book because it challenges and effectively reduce conventional wisdom about things in the past. one item of conventional wisdom applied to the pre-war intelligence and the run-up to the war in iraq is that the press failed in its job to ask the really difficult questions.

the same criticism applies to policy makers who did not adequately question the intelligence at the time. i wonder what your opinion is about the press specifically and the administration, was it a matter if you ask the right questions and you're more skeptical, you would have gotten a different actor or was it the case that these things were not knowable at the time? >> can i jump in on the previous question first? i would be real has it and to lay a lot of blame at the feet of some very, very dedicated intelligence analysts who are trying to do their best job. i told you that i had recommendations based on things that turned out not to be true. i don't fault the intelligence agencies for that. if you take one example -- are

the intelligence agencies were getting input from folks on the ground, iraqi and other intelligence services, and they were doing their best shot to synthesize that information. just like those of us in the military who learned our lessons, so does the intelligence community. if you are a receiver of intelligence, you need to listen to what is being told. it is like listening to legal recommendations. whether you listen to a lawyer or an intel officer, you have a responsibility to apply your own judgment. we should not excoriate our intelligence community with giving their best judgments. if we want their best judgment,

we have to understand they will be wrong sometimes. if we beat them up, they will start going further into their shell because they don't want to be wrong. what about the intel structure? we have set up a director of national intelligence who sits on top of the national intel community accept he or she has a zero authority to direct anyone in the intel community and has no budget authority. if we believe that you want to have somebody over the whole process, given the authority and give them the budget. if you believe that you don't want that, fine. right now, what we have is an

organizational chart that looks like there is somebody in charge of everybody when they are not. thank you. >> i'd like to comment on intel structure. i used to be in the pharmaceutical business in research and development. you don't want one single control r &d. you want people thinking and doing different things and coming up with ideas and a competition of ideas with multiple sources of information. the idea that would be helpful for the u.s. to have a structure where there was a singer intel person over every single thing, budgets, personnel, i think that would be a perfectly terrible idea. the military would end up recreating bear on intel capabilities because they cannot function unless they have intelligence access to military intelligence.

there are multiple types of intelligence, to be sure. there is strategic and economic intelligence. the department of defense absolutely needs an intelligence mechanism and so does the department of state. i know my relationship with george tenet and john negroponti and the relationships at the senior levels. it was superb. i would not have thought of appointing someone to a personal position in the pentagon that related to intelligence without having a long discussion with george tenet as to what type of person we would need. he participated in all those decisions and the same thing with budgets.

the idea that the -- the commerce be paid -- the aid -- the congress be paid like there is a serious problem because of 9/11 and we must fix it. out comes the dni in the middle of a war. it seems to me that the people who served in that have done a very good job of not breaking the system even though there were people there who wanted to break the system. these are people in congress were anxious to have a change. they wanted one person in charge and i think that would be a very bad idea. the way it has been handled has been wise and prudent. >> to be clear, my question was not about and criticism of the imperfection of the intelligence the weather there was an appropriate degree of skepticism by the

administration and by the press at the time. >> go to the website and read the parade a horribles that i wrote. we talked about all the things that go bad. we thought we may not find weapons of mass destruction. it was right there and sent to the nsc members and the president. we thought of those things. i was asked why we didn't tell people. i said it was a wonderful idea. let's tell the enemy every conceivable thing we might have a problem with so they can go about doing it . no, that's not the kind of thing you tell the press or talk about publicly. there is a page after page of things that duggan other people in the government thought about and we talked about and that was circulated and people were worried about.

>> do you think the press fell down on this job? >> oh, goodness, we haven't got time for that. [laughter] no, jamie. >> i don't mean me personally. i did a terrific job. [laughter] i mean the media in general. >> we naturally focused on this discussion -- in this discussion on the bush administration. one of the things in the secretary's book that is interesting is the discussion of his career going back to when he was in the navy and his first run before the age of 34 congress and all of his various jobs before he became secretary of defense for the first time in the mid-1970's. one job he had was u.s.

ambassador to nato. we have had a question, which i think helps tie together york early history, your time as secretary of defense and the bush administration and current affairs with libya and all that is going on now -- what is your evaluation of nato? what has become a major? of nato? how has a transition from the cold war alliance to what it became when you were secretary of defense in the bush administration and now, how you see it functioning as president obama is calling on it to act in libya? what is your general evaluation? you'll have thoughts on the subject. >> i think nato is struggling

just like the other institutions are struggling. they have not quite evolved or adapted or adjusted to fit the 21st century. if you look down from outer space on earth, there is a finite number of countries that have our values and tab free political and economic systems and most of them are in nato. there are many others like australia, new zealand japan and the like. these countries are important. most of the problems we face our problems we cannot do by ourselves. we cannot deal with the proliferation of weapons of mass destruction, a single nation or piracy or the drug problem or slave trade. there are any number of things that require cola. shuns coalitions. having these countries together

in nato is potentially very useful. when the united states provides a strong leadership and given the country's time to adjust and think about it and determine the extent to which they may want to participate in a coalition to do something, then nato has functioned quite well. to the extent we have been in a hurry, there have been problems. i have been struck by all this talk about coalitions with respect to libya. if you go back to the global war on terror, president bush and colin powell put together a coalition of like 90 countries. in afghanistan, there were 69 countries. in iraq, there were 45 countries. president bush was labeled unilateral. they said we needed help and we needed people but we needed people to agree on the mission.

the problem we have seen recently is the confusion over the mission. if you are sitting in libya and you are an ambassador or a government employee or in the army of, you are a colonel or a private or you're in the neighborhood and they are looking -- the rebels are looking for cooperation and what intelligence or assistance and one housing and you don't know to this day whether gaddafi will go, imagine. we are there, it seems to me -- people are like magnetic particles. they point where things are going to happen. is that likely to change? where are they pointing? they don't know what's going to happen. they are all over belote. the lot.

the thing that worries me that about north africa is the critical element is iran and syria and the damage they are doing in afghanistan, the damage they are doing in iraq, the potential -- the potential in lebanon and a boarding house -- and promoting hezbollah and the rest of iran with nuclear weapons. the other major factor is egypt and its size and saudi arabia and the gulf countries. what we do in libya -- what we do anywhere is seen elsewhere in the world. people make judgments over it, how we behave. that will alter their behavior. what we do and libya, given the visibility of it, will be taken into account in the areas that are politically important. the gulf and egypt and that part of the world and iran and syria

are important. i worry that we are not taking those things into account and i would say they are the main feature in that part of the world. >> i would like to ask general pace -- if president obama asked you, based on your experience, forethoughts as he is looking to nato to play a substantial role in libya, water the thought you would offer him? >> i will not add to that question and i will tell you why. to be an adviser to the president of united states and an adviser to the secretary of defense, you must have absolute confidence and trust in an individual. you cannot worry as the president when you picture chairman if fed chairman is a

closet republican or a closet democrat. willie ready book? will the things i say to him in private someday be published? for me to speak for or against something that president obama is doing is wrong. i will give my counsel in private. i have to the secretary of defense. the person to answer that question is the current chairman of the joint chiefs of staff, admiral mullen. i think officers to serve -- who had the privilege of serving in the higher ranks of u.s. military do damage to the relationship between elected officials of our governments and those who serve in the u.s. military when they stepped outside of their private advisory role. it is inappropriate.

i did not name -- i did not need my predecessors advising me. michael mullen does not need me. i think it is ill-advised for senior military folk to do damage to the current serving force by speaking out of turn. having said that, i would like to take two seconds to talk about the nato question that was asked before. i would like to take it from a purely military function. the non-nato coalition that was before going into afghanistan. the non-nato coalition that was put together to go into iraq required the leadership and you make control and capabilities of the u.s. military.

the long standing nato coalition requires thevo unique relationship of the u.s. military. nato, as an institution, acts as it does but the military function, whether it is a coalition of non-nato or nato coalition, will be dependent on the leadership and capacity of the u.s. military. >> not just the military leadership but the political leadership in nato requires u.s. involvement and direction. it is just the reality of that institution. >> you say we're turning the mission over from lost to us? us? to

>> yes. [laughter] but not in an insignificant way. from a pure military execution standpoint, i meant exactly what i said. the authorities are very different. in the coalition of non-nato countries is one thing which may include nato countries but the coalition which is nato which has stood the world and could stay for many decades is a unique institution. po should noto-poo that fact -- we should not poo-poo those facts. >> one of the things about nato, the partnership for peace program has been a terrific thing. non-nato countries have been

engaged in begun to develop relationships with nato nations militaries. military to military relationships are current -- critically important. they began to get engaged and understand our values and civilian control and how the military functions and become much more professional. there are other parts of the world and i mentioned some of those countries where i would like to see us develop a relationship, for example, with singapore, japan, south korea, new zealand. not formal, not coming into nato, but a closer relationship because those are countries that if you're going to deal with a problem of poor preparation of weapons of mass destruction, you have to have lots of countries engaged and have some linkage with nato of some sort. that makes sense.

the united states has demonstrated it can do significant things but major things do not fit in there satchel. >> you just highlighted a topic that was a major concern of yours and your secretary and did not get as much attention in our panel today. they focus on the united states as the specific power was something you talked about a lot. one of the major projects that you launch and highlighted in your book and that we have received two or three questions about is the realignment of the american defense posture all round the world. i believe this was the first time in history that anybody

actually said we will look at the way u.s. forces are deployed, postured, ready to operate around the entire world all a once in a single exercise. how much of that, in your sense -- what is your evaluation looking back on that process? is that going forward? do you think you succeeded in shaping the defense posture? some of the key elements of what you worked on were extremely controversial at the time and people were waiting for your departure to roll them back. where do you think it stands? >> that is the understatement of the afternoon. when i arrived, i looked at the world and we have forces where they were left over from the

cold war. there were in some countries where the contras did not want them. it was not hospitable for our troops. if you have a volunteer force, you better have them in places they are hospitable. they were in places where the countries had developed an ownership interest over them and decided those forces were for them. our forces work, for themperiod, and we could not use them elsewhere. in some instances they said you cannot move the matter our country unless the parliament approves that. another country said you better move them now before our parliament gets involved. we were spending $236 million per year, as i recall, that's close enough for government work [laughter]

in iceland to have our airplanes be sure that soviet bombers were not harassing people in that part of the world. there was no soviet union. there had not been a soviet union for years and years. we did not need to spend $236 million to have those aircraft. there were going out and doing search and rescue for fishermen from iceland. i have nothing against fishermen from iceland. we still have people in sinai from the middle east war that looked across the water to see what was happening. i started moving and the opposition was horrendous. it took me four years to get them out of iceland. [laughter] at $236 million per year. think about it. everyone was against it. they don't want to rock the boat. there were frankly a couple countries that didn't want us to

use the forces in iraq. they are there to protect them, so they thought. they were reducing their military. it was tough on there was a lot of resistance from the state department. with our allies and friends around the world, do we make progress? you bet, we made progress. was a pain-free? no, there was some pain along the way. >> one of the questions relates to the comments that you made earlier, secretary rumsfeld, about dealing with the war on terrorism not just as a metal --

matter of capture and kill a also as part of a battle of ideas. how can we can't of winning a war of ideas when there are no warriors of ideas in the u.s. government? is there an agency of the u.s. government that has the responsibility to deal with the ideological challenge is relating to terrorism? >> not no, but to the extent that anyone in the government does it, they are landed on with both feet. in the 1960's when john f. kennedy was president, there is a film may usia about the kennedys in india as a way of promoting america's overseas. the movie was played overseas in india and it was a darned good movie.

the congress found out what was going on and they looked at it and said it was taxpayers' money being used to develop a film that is highly complementary to the kennedys and it is played in india and other places but it is also played in the united states. the world is the world. you can't have something for one audience and not expected to be every audience. people in congress got very nervous about using taxpayer money for that purpose. general casey, as i recall, found that in iraqi needed cooperation of the people. he needed iraq to get intelligence. that's how we can deal with the problem of an insurgency. we decided that the press in iraq was publishing every bad thing we were doing some civilian gets killed or someone is wounded or a bomb that's a civilian location.

that is highly publicized. the fact that the military was putting generators and schools and hospitals and helping people, none of that was getting reported. casey decided to hire some people to make sure the stories could be britain and the stories would wind up in the iraqi press. what a terrible thing to do, printing the truth and paying somebody to print the truth then put it in the newspaper? that had to stop immediately. congress got excited about it. it stopped and it was over and we were right back to square one. it is a very complicated thing using taxpayers' money to do something that deals with information even though it is honest and accurate. we all know the reality. the al qaeda folks have media committees. that sounds amazing.

they have committees on media. demands the media and they do a good job. they are serious about it. they're disciplined about it. a light goes around the world three or four times before the truth, maybe mark twain said it, even before you put your boots on. i write about it in the book. i talk about the mythology of koran being flushed down the toilet at guantanamo and you have riots in several cities and people wind up dead. newsweek magazine said later that they got the story wrong. people who were sorry were dead. never happened. that is a problem. we don't do it well. i was asked him what kind of grade i would give to america about dealing with issues about

this and i did was sayd-, including me. >> to wrap up, one of the people you had dealings with over your long career was the founder of the hudson institute, a k kahn.aherman are there any reflections on him that you would like to share with the stacus? i would like to thank our panelists, general pace, and jamie mcintyre, and scooter libby and it is great that hudson has the opportunity to host an event like this. k i thanken weinstein for his leadership here. any words to close? >> i think that put a picture a

herman talking to gerald ford in the book. he was a friend of mine from the 1960's when i was in congress. we would end up on panels of the the american assembly in new york or we were involved in the u.s.-japan relations together. everywhere he would go, he had a sparkling wine and wonderfully volcanic intellect. that would stir the pot. he would go to new york and said the value on the side of the hudson river is best and the value on realistic on the other side is that. you need a great p bigontevecchio to connect them. he goes to japan with me and starts musing about the possibility that the japanese will have nuclear weapons at some point. he thought was an anomaly for a major country not to have the ability to defend itself. that caused quite a stir. [laughter]

i just barely -- he was with hudson when it was on the hudson back in the old days. i adored the man. he was a delight. he was as stimulating -- i think one of his books will called"the year 2000." it is already 2011. i think you're of the 1960's or the0's in 1967, a he wrote" year to a"thousand and speculated about the world. it was fun to be with a person with that wonderful brain and thought one of my daughters once asked what i should do. i said work for someone brilliant light k hermanahn. it doesn't matter what you do, be around him. he likes -- likes attract and

people will sparkle run herman kahn and it will be a wonderful thing. the last time i saw him, we were doing a panel and it was at a hotel here in town. i had not seen him for some time. he weighed a lot and had gotten very, very heavy. i remember looking at him and saying to him in friendship that he was performing a disservice to the country. anyone with the intellect he had and the contributions he has made to carry around that much weight was not right. he could not do it. his heart couldn't do it. it was not long thereafter that he left us. he was quite a man and a good friend. i want to thank him and thank you, doug, for your hospitality. i hope the questions you were asking in the latter portion came from the audience because i did not see any hands go up. i guess they're all on paper. thank you.

>> thank you and thank everybody on the panel. thank you all. [applause] at the pentagon, they would tell us that the essence of donald rumsfeld was so complex that it did not lend itself to a bumper sticker. after today, i think i have come up with a bumper sticker that should "donald rumsfeld, he got us out of iceland's pierre, [laughter] ." [laughter] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

[general chatter] [room noise] [general conversation] >> in 40 minutes or so, we will bring you live remarks from the fcc chair julia's jan schakowsky, talking about major issues facing the agency. the u.s. house passed a

resolution earlier this year disapproving the fcc december 2010 ruling on neutrality. the u.s. senate has yet to consider the measure but we will hear about that and more ad in the event hosted by the economic club of washington. that will be live at two o'clock 30 eastern here on c-span. a little bit later this afternoon, president obama will hold another town hall meeting on the u.s. debt and federal budget deficit. he will be speaking at facebook headquarters in palo alto, california. you can see the comments live today at 4:45 eastern on c-span. yesterday, the deputy treasury secretary talked about efforts to implement a financial regulations meant that signed into law by president on a one year ago. he took questions from the audience at this event "-- goes to by the pew charitable just event.

we are proud to work on public policy and providing information to the public. >> we draw on our founding father, joseph pew, who created the foundation and now it is called the grant-making public charity. he said decades ago to tell the truth and trust people. we are here to get updated on the truth. we are hoping to trust the people. the work consists of analysis and research but also, in certain areas, to advocate for public policy change. we work on a number of significant issues that include what charles taylor will tell you is how we brought about our special guest. we are setting the believes that

by telling the truth and trusting the people that we can create a bipartisan collaboration and did she public policy for the public good. thank you for being here and we have a wonderful audience. there is a lot of interest and i would like to introduce charles taylor who will in turn introduce our very special guest. >> thank you. i am the director of the financial policy reform group at pew. we have been working for the past two years bringing together a non-partisan task force that develop recommendations for reform. and then advocating for the passage of legislation and now supporting implementation of dodd-frank. in that spirit, we are delighted to have today neil wallen, the

deputy secretary of the treasury to talk to us about dodd-frank nine months after it has been passed into law. neil is a former president and chief operating officer of the hartford. he was general counsel in the u.s. treasury in an earlier incarnation. i don't think i need to say anything else giving your position and your prominence. we are delighted to have the deputy secretary here to speak with us today. over to you. [applause] >> good morning, everyone. thank you, tamara and pew for hosting me and charles for that introduction. some serious work has been done here on topics of public policy. last summer, the present signed

into law a comprehensive set of reforms to the financial system. as implementation proceeds, critics of the dodd-frank act have engaged in a broad set of attacks against law and its implementation. i will respond today to those criticisms. first, let's take a step back. although our economy and financial markets have made important progress on the path towards recovery, we cannot forget why we enacted this legislation. in the fall of 2008, we witnessed a financial panic of a scale and severity not seen in decades. the crisis was brought about by a fundamental failure in our special system. the failures were many and they work very. in the years leading up to the crisis, firms took on risks they did not fully understand and use legislative loopholes to operate some businesses without oversight, transparency, or restraints. profits and compensation were

often tied to short-term gains without proper consideration of long-term consequences. across the country, many americans took on more debt than they could afford and many firms encouraged them to do just that. in washington, regulators did not make full use of the authority they had to protect consumers and limit excess of risk. policy makers were too slow to fix a broken system. the crisis erased trillions of dollars of wealth, put americans out of work across the country, and shook the foundations of our entire economy. the crisis expos the fundamental flaws in our financial system. in the aftermath, the president was determined to reform that system. there was no alternative to reform. not only our economy but also the lives and livelihoods of tens of millions of american families were devastated by the crisis. it was manifestly clear that the

financial system that led us to the edge of the abyss was broken and need to be fixed. the system we had favored short- term gains for individual firms over the stability and growth of the economy as a whole. the system we had was weak and susceptible to crisis. the system we have left taxpayers to save in times of trouble. we had no choice but to build a better, stronger, system. that is why we proposed, congress passed, and the president signed into law a sweeping set of reforms to do just that. the dodd-frank act creates a comprehensive and robust regulatory framework. the statute creates a structure for the government to monitor and respond to systemic risk. it makes clear that no firm will be considered too big to fail. requires regulators to

it provides for the comprehensive regulation of the derivatives market for the first time. and the statute establishes a single agency dedicated to protecting consumers. for the past nine months, regulators have been hard work in blunting these reforms contained in legislation. yet, today, even as millions of americans are recovering from the crisis, some on wall street, k street, and capitol hill seek to slow down, rolled back, or even repeal these crucial reforms. some complain about the pace of reform. some say that there is a lack of coordination by the regulators. some argue the transparency in the derivatives markets will harm the quality or that margin requirements will unnecessarily tie up capital. some complain that our reforms

will unfairly disadvantage u.s. firms as they compete globally. some say the new consumer agency will stifle consumer choice and innovation, that it will interfere with existing regulators or that is not accountable to anyone. and some say that we cannot afford to pay for reform. i want to address these criticisms one by one. first, the pace of reform -- after the legislation was signed last summer, many in washington and in the financial-services industry said that the legislation lacked details and that the uncertainty of the shape of final regulations made difficult for businesses to plan for the future. they called for clarity and they wanted it passed. we said that regulators would move quickly, but carefully, to implement the legislation. we said that we would seek public input. we said it was critical to get the details right.

recently, some of these very same critics, those who demanded clarity as quick as possible, are saying that we're moving too quickly. in a suggest that too many details are coming too fast. they say that regulators are not setting aside sufficient time to study the issues and make the right decisions. and that businesses will not have time to adjust to the new regulations. our response remains the same. regulators have been and are moving quickly, but carefully, to implement the legislation. we continue to seek public input. of course, it remains critical to get the details right. although there may be reasonable debate about the substance of the legislation implementation work, there's no question that regulators have been implementing the statute in a careful, considered way and serious manner. the second criticism is that implementation of the law is

uncoordinated. our regulatory system is bill, the independent regulators and given the importance of the legislation, independent regulators will have different views on complicated issues. working through differences is an important part of getting the substance right. at the same time, it forces regulators more than ever before to work together to close gaps in regulation and to prevent breakdowns in coordination. this is a central change brought about by the law. beyond joint rules of consultation required on a specific rule making is, we have been and will continue to work together to solve the issues across the agency, to help the pieces of the reform work together in a cohesive way. the oversight council has demanded to corvette across agencies and joint

accountability for the strength of the -- to coordinate across it and cheese and a joint accountability for the strength of the reforms. as a chair and of the group, treasury will continue to make it a priority to make sure that the work is a priority. regulation of the over-the- counter derivatives markets is a critical element of the dodd- frank act. it would add transparency and capital reserves and derivatives can allow interest to build and lead counterparties without sufficient offers to sustain a loss. critics argue that, by requiring

standardized contracts to be traded on open and transparent markets, we will harm liquidity. this position ignores the history and the basic structure of our financial system. the equities market, where stocks are traded publicly and price information is readily available is one of the most liquid markets in the world. because of, not in spite of, transparency, this is so. transparency will tighten spreads, reduce costs, and increase understanding of risks for market participants. transparent structure like this may not improve the bottom line of certain market participants. but it promotes sufficient markets, capital formation, and growth in the broader economy while reducing the risk and potential cost of another destabilizing financial crisis. critics also argue that margin requirements for derivatives type capital unnecessarily, diverting it away from

investments that promote economic growth. requiring the largest participants and dealers in derivatives market to hold capital and margin is critical to improving the resilience of the financial system. the margin requirements for financial entities are, like derivatives themselves, a risk- management tool. they serve as a bulwark against losses affecting the system and contribute to crisis. commercial end users who are simply a joint operating risk, however, pose a very different level of risk to the system than financial end users and the largest participants in the swaps market, in particular because of a interconnected many of users of swaps. they recognize the use of groote's contracts by contractors and users. the statute does not allow

capricornus to be imposed on commercial and users of derivatives -- does not allow capital margins to be imposed on commercial end users of derivatives. fourth, but critics say that, unless we achieve harmonize policies across borders, we should hold off or go slow on moving forward with the legislation, lest there be a level playing field internationally. they argue that our reforms are too strong or different, u.s. firms will not able to compete on a global scale. i disagree. we have already enacted comprehensive legislation and others are now putting their legal and regulatory frameworks in place. we are working hard at the international level to make sure that others put in place similar frameworks on the key issues where international consistency

is essential, liquidity, leverage, and capital. it is true that the devil lies in the details and that different jurisdictions may have problems and disagreements that arise. we work every day with our foreign counterparts, especially in europe, through our financial markets and real tory dialogue. as we -- and regulatory dialogue. but we must not fail to implement our reforms at home. ultimately, if we fell to do what is necessary to reform and protect our -- if we fail to do what is necessary to reform to protect our system, we endanger our resilience. critics say simply, if our financial system is different from our partners, u.s. firms will not be allowed to compete.

it is not a credible argument because our systems have never been identical and they never will be. a great deal of the criticism is focused on enhanced capital requirements. more and higher-quality capital, especially at the biggest and most interconnected financial institutions, is essential to providing better buffers against shock. indeed, the international community has recognized that the lack of such buffers was a core problem in the crisis we just experienced. implementation and work are critical to ensuring that firms are better insulated from stress. we believe, of course, that it is important to strike the right balance. we needed capital regime that strengthens firms so they can withstand stress and one that allows u.s. firms to compete effectively on a global basis. details about capital requirements and other aspects of financial regulation will always very among sovereign

nations. what is important, what we have made good progress on, and what we're committed to its closing regulatory gaps, ending opportunities for geographic arbitraged, and preventing a global race to the bottom. fifth, critics suggest that the consumer protection bureau will fight for consumer choice and innovation or interfere with the role of existing regulators. they also claim that the agency is not accountable. rather than limiting choice, it will be essential to creating real choice for consumers. the system we had before allowed lenders to hide the true cost of financial products in hidden fees and interest rate changes. consumers often did not get the information they needed to understand the loans they were taking a or the credit card agreement they were signing. that is not choice. real choice is about having the information to make the right decisions.

the cpb job is to deter deceptive and abusive practices, promote clear disclosure, and help consumers get the information they need. with that information, consumers will have real choice. there will be able to understand what products and services are best for them and to make fully informed financial decisions. and as consumers begin to make more informed financial decisions, it will raise the bar for the products and services offered to them. more empower consumers will motivate the financial sector to offer their rafik -- better options, rather than stifling information. it will become allies. the mission, helping consumers get good information and cracking down on abusive practices, in no way interferes with the role of provincial regulators. we had an agency that had too

many who did not focus on consumer protection. that did not work. the existence of the cfpb allows regulators to work on their core tasks. it allows the cfpb to work on its own several times, to make sure that consumer products are available in a fair, transparent, and competitive way. and the agency will be accountable in executing that test. it was traded because, in the old system, no one was truly accountable for consumer protection. now, a single consumer agency answers to congress and the american people. the legislation includes several provisions to ensure the agency's accountability. it must submit an all reports to congress. the director must testify multiple times each year on the

agency's budget and activities. and the gao audits their expenditures annually. it is of the to the oversight of the inspector general's of treasury and the federal reserve. most importers alike, there is direct oversight of the judges wrote rulemaking -- of the ages making.s will -- of the agency's rule making. we cannot afford -- and some said that regulatory reform is too costly. we say that the costliest system deval is one that is prone to collapse. in the absence -- we say that the costliest system of all is one that is prone to collapse. our system descended into a crisis that had tremendous cost to businesses, to the economy,

and to the american people. if we had not moved to reform the system, we would find ourselves still exposed to a cycle of collapses and prices, with potentially devastating repercussions for the nation. but we did reform andthe system and we need to make sure that they have the resources they need to implement the law. the strategy of some critics, to defund enforcement or implementation, is part of a larger strategy to undermine the statute and weaken the comprehensive reforms it puts in place. we cannot afford to let that happen. we cannot afford it because the price of reform is a small when compared to the cost of crisis. we must invest now in building a strong, stable system. there is no responsible alternative. if we do not invest in reform now, we will run the an acceptable risk that we will pay dearly later in jobs, in lost well, in foreclosed homes, and

in the soundest and security of our entire economy. the cannot allow that. we all remember the devastation of the financial crisis. we all know that the gaps and inconsistencies in our regulatory system allowed it to occur. we are now a engaged in the hard work of fixing that system. we are doing so carefully. we're focused on getting the details right. there will, of course, continue to be disagreements and opposition as we move forward. there will be critics and naysayers. but those who are charged with implementing reform have not forgotten why we needed reform. we needed reform because, ultimately, a fragile system benefits no one. we needed reform because we cannot afford another crisis. we needed reform so that all americans can share in prosperity. that prosperity requires a new system, a balanced system, a system that is stronger and more robust, but one that also

promotes an ovation, fosters growth, and creates jobs. a system that channels capital effectively to businesses and to consumers. for much of the last century, our financial system was the envy of the world. our system contain a balance between strong protections and dynamic innovative financial markets. eventually, we lost that balance and our system became unstable and fell into crisis. we cannot let that happen again. that is why we enacted dodd- frank, to restore the system and make it the most strong and dynamic and productive. to achieve that goal, we must go forward with implementing this law. we're doing so quickly, carefully, and responsibly. we will continue to do so in the face of these criticisms and we will continue to oppose efforts to slow down, we can, or repeal

these essential reforms. thank you very much. [applause] i am happy to take questions. please. >> [inaudible] that might slow down progress? >> the cr does provide funding to those agencies as the president requested and we think is critical. going forward is the work of those agencies and others and make sure that they have adequate funding. it is to do the important work in implementing the statute, in doing the follow-up work of supervision and enforcement, to make sure that we can make good on the promise of having this new system and to do so in a thorough way.

the cr increases that funding. we want to make sure that the very agencies that are interested to put this into a fight and doing this work on an ongoing basis continue to have the right resources to accomplish those goals. >> jeff olstein admitted that a sock had no intention of publishing until the final rule making, which denied the public an opportunity to actually comment on the role. a thing several lawmakers commented that they cared did the legislation. i was wondering how you thought that practice comports with claims of and fsock's

transparency. >> i'm so glad that you asked that question. the fsoc has already put out a proposal asking the public to comment, both on the process and on the substance. they put out a proposal asking the public to comment. we have a number of public sessions. the fsoc has continued to declare they want the public input on this and they will continue to find ways, going forward, to get public input. as you know, as they have made clear, firms will have an opportunity to present their views and the circumstance in which they're being considered for designation. if i could just finish -- thank you. i would say that the fsoc has been more transparent than any

regulatory body i can think of. it has already asked multiple times for public comment on these items. it has already said it will seek additional comment and made clear that anyone who is or may be affected by its activity will have an opportunity to make its views heard. in all these different ways, the fsoc has been open about what is doing, exceeding clear that it is interested in input from everyone that has input to give. i suspect that it will continue to find new ways, as the process move forward, to do just that. >> first of all, is the administration ready to make changes in the structur cfpb to get republican votes to approve a director? what happens if a director is not approved on july 21?

>> as to the first question, the statute lays out that funding sources for the cfpb, that it is important to do what the statute provides. percival, elizabeth warren has done a fantastic job -- first of all, elizabeth warren has done a fantastic job in starting up the cfpb, reaching out to the academic community and to the help to find out what the plans are and how people should understand its focus on making sure that there is real and true disclosure for consumers and a set of rules around that. as the president said, he is keen to making a nomination for that position. i expect he will do so sooner than later.

>> do you suggest that the crisis may have been averted by dodd-frank. but does not the risk versus and how -- but does not the rest persist? >> the statute puts into place where the structure of our financial system and the supervision of our survey showefinancial system is bettern where it has been in a long time. gaps were dressed, the capacity for the government to consider abreact to systemic risk, making sure that financial firms have more substantial set of rules. it is, of course, ruled that there is important implementation work on going. as i said, i think the world has

criticized us both for going too fast and too slow. we would like to move quickly. the statute law is out a set of deadlines for various pieces of the implementation work. but we will do so carefully with the priority being on making sure we get it right. we are in a much stronger, much safer place than we have ever been before with respect to resolution authority and making it clear that no firm is too big to fail. but there are, of course, additional details that regulators will be providing as they continue the implementation work. they have done an awful lot in nine months since it was enacted. there will continue on that path until -- they will continue on that path until the various pieces are completed. there's no question, the enactment of july 21 on last year, we have put ourselves in a stronger and safer place with respect to our financial system

than we have been in a long time. and we will get stronger every day of implementation as we go forward. >> going back to the specific question impaired there was a hearing on capitol hill in which there was a question f foror fsc to go back. are you delaying that implementation? >> it provided an unprecedented level for the opportunity to engage on these issues. the fsoc will continue to find ways for the public to comment on this process. at the end of the day, firms to are in question on this issue will have, apart from all the

other opportunities to comment, an opportunity to come to fsoc and have their concerns you. aboutn you're talking finding new ways for the public to comment, does that mean that the final rule could be open for public comment? >> i am not here to make any announcements about exactly what fsoc's rule making will be. that is for them to decide. it has 15 members. it will continue to figure out its path forward. but i am saying that it has been remarkably currents

parent, a remarkably open to public -- remarkably transparent, remarkably open to public comments. firms that have views or members of the public who have views, others who have views should feel free to submit those views. i suspect that fsoc will continue to find ways to engage with individual firms and the broader public so that they can express their views about the process and the substance. >> and given the concerns about the economy, how was the treasury thinking about the net cumulative effect of the tuner and 50 rules, and under -- a

fact of the two hundred 50 rules -- effect of the 250 rules coming under dodd-frank. >> the essence of that kind of structure, before -- this is what i wanted to go back in my talk about the history. what happened in 2008-2009 was enormously costly, vastly more costly than almost anything else we could imagine. it was overwhelmingly more costly than implementing the various pieces of dodd-frank. it will put us in the position of having a financial system that is more capable of responding to stress, less susceptible to shock and the kind of dysfunction that we saw, and we know that, when we do not have that kind of strong

financial system, when we do not have those kinds of predictions, when we do not have those offers, the cost to the whole -- those buffers, the cost to the whole system is in danger. a lot do not exist anymore. the cost was too expensive. >> what i think the real potential benefits of fsoc is the collection of data and analysis. i know that the office of financial research is there. they have a lot of authority. to have any sense of timing of naming a director for that

group? >> i should start by saying that it is hard at work. it has begun to do what you need to do when you create a new restitution, creating a structure and personnel systems and i.t. and so forth. it has also begun the important work of reaching out to the business community, to the academic community, to the regulatory community, and to counterparts internationally to make sure that its work is well coordinated, that it takes advantage of people's incites. we are focused on getting a very strong director. the president will have to make a nomination. we have been working through identifying candidates. i hope that the president will make the nomination, again, sooner than later. but we want to make sure that we get a very strong director. i think it is important that the word of the ofr is continuing.

soon, it will have a director. [coughs] >> humvee statute gave the sec -- >> the act gave the sec the opportunity to weigh in on regulation. they are calling on the sec to slow down on rulemaking until more economic analysis has been made. is this important for the administration? are you pushing the sec to move forward with that rulemaking?

>> i will not inject myself into the sec rulemaking. but i do think that the basic -- >> just a few moments left in this event. we will leave it here and go to the economic club of washington to hear remarks of julia jankowski and some of the issues that the agency is facing, including net neutrality which the house overturned earlier this month. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> in the business sector, he has been involved in nic interactive and became the head of business operations. he has been a venture capital investor and had his own incubator fund operating out of washington, d.c. to help nurture small and young digital-related companies. he is also somebody who has had

a distinguished education background. at harvard law school, he was senior editor of law review at the same time that president barack obama was president of law review. he became chairman in 2009 and was nominated by president obama in 2009. since then, he has done a very outstanding job as chairman. i have a number of questions related to which he has done as chairman. but i would like to ask you a couple of personal questions. you have worked for a lot of smart people, people with me be very high iq is. you work for chuck schumer, barry diller, justice souter, justice brennan. you work for barack obama. who was the smartest of those people? [laughter]

>> i have three kids. and no favorites. [laughter] >> ok, they were all smart. i do share some attributes that i have noticed over time. relentless curiosity, a real energy for interactive exchanges on issues that they are dealing with, a core belief that the best ideas and dancers come out of the marketplace, and a willingness to take great ideas wherever they come from. those are some of the attributes that i have found. >> when you first met barack obama, you were a harvard law student. i imagine you played basketball with him. was he that good a basketball player?

when did you get a sense that he would go into politics? >> i think it is known that he has a terrific jump shot. he is less known as a basketball player. he can go to was left as well as his right. [laughter] [applause] >> as president as well, right? >> people ask me whether i knew back then that he would become president. i think he knows that the right answer is, of course, i do. i knew how incredibly talented he was and is. extraordinary leadership abilities and a real commitment to making a positive difference for the country. i did not know whether he would do that in government service or the private sector or the non-

profit. but i knew that he would make a real contribution. when he was elected president, i gathered he considered to be chairman of the sec. -- of the fcc. >> i really enjoyed what i was doing in the private sector. . liked my life alloa lot it was one of those things that i learned as a kid that, if you got that question, you would not say no to it. people from business backgrounds, from lots of different disciplines come into government. the fcc is a very exciting place because it is about our future, the communications

technologies that the f c c is engaged with is such a platform for our global competitiveness, job creation, productivity. i think it is as an exciting place to be in government as anyplace else. >> typically, you have three democrats, a few republicans, and two on the other side. i gather that you're not allowed to -- you cannot have more than two members talking privately. it is hard to get decisions worked out in events. you do everything in public. >> talking one-on-one with the commissioners is valuable. there have been proposals for reform to changing that. that is fine. it is interesting. people think that everything we do at the fcc is on a party-line

basis and nothing could be further from the truth. 95% of our decisions have four or five commissioners supporting them. i do not think there should be surprising. it is something that i worked hard for every day. this is an area where harnessing communications technology to compete economy incompletand globally is important. >> the comcast, nbc, universal deal, that took about a year to resolve. did you have any idea that that would be approved? was that not inevitable? when you get a large acquisition like that, it is it hard to say no to the two business parties involved? >> i made it a policy not to talk in detail about merger review. i think it is important -- the

agency has a very important responsibility when it comes to merger review, together with the justice department or the federal trade commission. it is very important that we not prejudge transactions and follow an honest and fair process and meet our such a jury duty. >> so you do not want to give us a hint on at&t. [laughter] let me ask you about mergers. i know you can comment specifically. something that you have tried to do is speed up the information process, get it to flow to people more rapidly, but we're still getting decisions like this rather slowly. is there any way to speed up the process so that anyone who wants to merge will know in less than a year-and-a-half whether they can do the merger or not? >> we have been doing that.

i will give you one example. historically, in many, many cases, there was a gap that could be very long between the time between doj or ftc ruled on a transaction or the state governments would have to do it and the fcc. and we brought that gap way down. it is the kind of thing that can legitimately dradrive a company crazy and end up with inconsistent decisions. so we worked very hard to make the process more efficient and we have. >> there are three democrats are now on the commission, two republicans. the fact that you're a democrat, does that mean that the president of the united states or white house staff can call you and say "this is what we think on things"? >> no.

>> let me ask you about not neutrality. that is a buzzword for a while. can you explain in simple language what net neutrality is? >> a term that we use is open internet, which i think is a more descriptive term. net neutrality, fundamentally, is the right and ability for people to send and receive lawful content online. whether you're a person with a point of view and you want to put it on the internet for the audience to receive, whether you are an entrepreneur, a small company or a large company, knowing that you can innovate, put something on the internet, have the market decide whether it wins or loses -- that is fundamentally what open internet

is about. someone said to me last night at a satyr that everything else is commentary. -- at a sader that everything else is commentary. >> i think that conservatives and the liberals have said that they do not like to propose rules. is that a surprise? >> we have adopted rules that -- you know, when i became chairman, we inherited a real mess around this topic. there was uncertainty and confusion. there was a war going on among companies in the economy. preserving the fundamental free- market, opened her-- open character to the internet, i thought was reported. we put in a firmer that makes

sense and tackle the whole lot of issues that are in -- we put in a framework that makes sense and tackled the whole lot of issues that are important. >> it has smaller font. [laughter] >> i cannot read it anymore. it was supported by stakeholders from throughout the system. investors, larger technology companies, as well as former and current ifc. i am very proud of the work that the staff of the fcc did. we have moved forward to issues around mobile future and spector

made universal service for broadband, obstacles to deploying broadband infrastructure. >> let's talk about spectrum for a minute. not long ago, i was walking up much repeat to and i got a cell phone call. -- walking up machupichu and i got a cell phone call. it was perfect. but i was driving down the street -- [laughter] >> the first issue involves whether we have enough spectrum to meet the growing demand in mobile. some people live their lives around spectrum band airwaves and some people are new to it. spectrum is the oxygen of the global communication. if you are using a smartphone or

tablet or those machine devices that are coming out, they all use spectrum. in the innovation and growth in this area, it has been just incredible. just in the last couple of years, it is on a trajectory that is just amazing. three years ago, the app store did not exist. since then, multiple applications have been down loaded. the app economy, tens of thousands of companies that are creating applications, they did not exist. it is now a $38 billion industry with tens of thousands of companies and hundreds of thousands -- >> all using more spectrum. >> yes. giving us to the growing gap between demand and supply.

let me give you some underlying numbers. the smartphone is that people use as compared to the old feature phones place a demand on spectrum capacity that is almost 25 times feature phone. a tablet places a demand on spectrum capacity that is almost 145 times. the amount of spectrum we have coming on line to meet this demand is essentially flat. it is potentially a real problem for our mobile broadband economy. and we have to find a way on how to free up more spectrum for mobile broadband. >> driving south of the white house and other parts of washington, the cell phone breaks up. the connection. is this a spectrum problem or a

lack of power problem? >> it is two things coming together. in some cases, it will be congestion. we all experienced how feels to be in a very congested area. you cannot get a connection. you have dropped calls. >> you do not. i assume you have a special fcc phone. >> something we have a special warehouse of spectrum. we do not. the other piece that contributes to it is the there is infrastructure required for transmitting the wireless signal from one place to another. there are parts of the country where it takes much too long. it is much too expensive. and it is also contributed slowing it down. how do we free up more spectrum for mobile broadband? had we reduce barriers to broadband infrastructure rollout? these are complicated

challenges. >> one of your proposals relates to some of the television broadcasters giving up their spectrum, in effect auctioning it back. >> yes. we have had a major innovation in spectrum policy. maybe the most significant was moving in allocation of spectrum comparative lotteries to option. it led to incredible innovation the incredible amounts of private investment. it has worked. we auctioned off all of the easy pickings on the spectrum chart. now we are left with figuring out how do we reallocate spectrum that was assigned before auctions came into effect?

we proposed expanding the options will so that it applies -- the auction tool so that it applies coming into an auction. we run a two-sided auction or the supply of spectrum would come in from those who voluntarily contribute their spectrum to the auction in exchange for a share of the range. i have no doubt that we would free up a significant amount of over-the-air broadband. it has changed a lot in the past 20 years to 30 years. 100% of my broadcast tv watching was tender house.

there were a lot of stations. if we could run this kind of auction, we could have a vibrant and healthier and stronger broadcasting industry and free of significant amount of spectrum for broadband, raising billions of dollars for deficit reduction. even more important than that, generating an economic value for the country that economists predict is 10 times the magnitude. two weeks ago, 112 economists, leading economists, nobel prize winners, economist who worked both on the democratic and republican administrations, economists from the fcc sayinsig a letter saying that we need to do this for the country. we have industries representing

the people in the room who were involved in this two thousand companies are offering $1 trillion in revenue. this is something where we ought to be able to move forward together to make sure this basic invisible infrastructure is not an obstacle to the kind of growth and job creation -- >> you think this will happen. >> i hope it will. >> back to my cellphone again -- [laughter] when can i expect to drive around manhattan and not have cellphone calls dropped? >> if we do not do something like this, the situation will get worse and not better over time. you had people like you are using your data-hungry high- speed devices more and more. that is great. it is generating investment and creating jobs and making sure that the innovation around this area happens right here in the

u.s.. i hope everyone continues to use these devices and continue to have this wonderful virtuous circle of innovation. >> what do you use? do you have a cell phone? a blackberry? and i pad? >> i have tried over time to use all of the above. something that i have been thinking about in connection with the fcc, it is important for the staff of the fcc to have hands-on exposure to cutting edge technology. it is not that easy. not everyone can have multiple devices. if you are a government employee, you can afford all the vices. we are going to set up a technology experience center. it will be a library for candie's devices so that we can make sure that the staff of the fcc has firsthand experience with the kinds of devices that

they are working on. >> when you use a cellphone, do you put it up to your ear? are you worried about cancer? >> when i am driving? [laughter] distracted driving is an incredibly serious issue. my hat's off to re la hoya, the transportation secretary, for being -- my hat's off to ray lahood, the transportation secretary, for being in the forefront of this. i do have a 19-year-old. this is very serious. >> but you're not worried about the help the effects of using a cell phone. >> no. for years, the fcc has set based on research and health studies that the health

agencies do. i am not worried. >> right now, you have a proposal that, when someone wants to call 911, they call them. but you have a proposal or you can tax them. >> yes. >> why would that be better? >> first of all, i do not think that people realize that you cannot text 911. we saw this at virginia tech and that terrible tragedy a few years ago and some students tried to text 91. there's no one on the other side of that text. , you cannot matter o send a photograph from your smartphone 2911. you cannot send a video. if you are outside of a burning building and you can send an affirmation to a firefighter or you see a robbery, most things like that, you cannot do. this world has moved so quickly. this has gone from something where three years ago they say

you cannot text 9112 world where it troubled more and more people, and it should, so, like a lot of problems, it is not a simple problem to serve. making sure that our first responders, having mobile broadband safety network, which they do not, these were identified in the 9/11 commission report. even in this economic climate and a deficit climate, they all cost money. but this is an area where we have to make the commitment, find the most efficient way possible to make sure that our first responders have the tools they need. >> you're doing something about this now in your proposal? >> we are doing a few things on 911. we're working with other agencies here. one of the obstacles to having what people call e-911 is having

a set of standards were it will be a significant efficiency driver, cost-producer. we are working to accelerate those standards. we're working on another thing that people do not realize that the location accuracy of a wired 911 call is close to 100%. the location accuracy of a wireless 911 is much lower. in some cases, it is really problematic. if you are in a skyscraper, we often we will not know what floor you're in. if you are in a rural area, they could not know where you are within a mile. it is important to incentivize innovative ideas for these things. there is a lot of work that we

need to continue to work to get our public safety infrastructure into the 21st century. >> what about other countries? other countries seem to have mobile devices that are more advanced than ours. they have a spectrum that is less of a problem than here. what are you try to do to make us more competitive to larger and emerging markets, china, brazil, and india. why are there technology's more advanced than ours? or maybe they're not. >> our spectrum agenda is a high priority for us for this reason. other steps that we can take to liberalize the rules in spectrum used to get more from mobile broadband, working on getting secondary markets in spectrum going -- there is a whole series of ideas. the reason it is so important is that, around the world, it is not our little secret of that mobil is the future.

countries around the world understand that there is economic growth. there is job creation. there is innovation in the future of mobile. many see it as possibilities to technology.'ve talke my counterpart in other countries, i see real focus on the mobile future. it is one of the reasons we spend so much time on the incentive optiauctions. the cost of delay is very high, not only in consumer frustration and a break in investment in the united states, but because we're playing with fire. we're playing with the fire that we could see the great american- based innovation companies that right now are doing so much in the space decided that the opportunities for developing and rolling out new products is somewhere else.

a company called applied materials, a very important american technology company in silicon valley, decided a little less than a year ago to move its chief technology officer and its cto operations from silicon valley to beijing. my question is how many times does that have to happen before we declare a real crisis? to me, the single biggest risk on something like that is not taking advantage of the incredible momentum we have on wireless. we have this wonderful market- based solution called incentive optioauction. >> people are buying things on their mobile device now. do you think there should be a tax on internet purchases? >> we do not deal with internet tax issues at the fcc.

>> your personal view. [laughter] >> anything that discourages innovation and private investment in this space, we have to really look at it before we make any decisions. >> if there are payment methods when you buy, is that something that the sec will regulate -- that the fcc will regulate? >> we do not have any open proceedings on that. the premise of your question is one that i agree with. this area payments is a tremendous economic innovation opportunity. it fits into a bucket where there are a number of agencies that are like people filling the elephant. in government, we have an obligation to coordinate and make sure that, to the extent