[applause] that is better, isn't it? >> but you are much better at this stuff than me. >> i want to say thank-you to you folks around the country, some around the world, watching this town hall. the main reason that we wanted to do this, first of all, more and more people are getting their information from different media on line.

historically, part of what makes for a healthy democracy, what is a make sure that not only am i speaking to you but you're also speaking back and we're in the conversation. we're in the dialogue. i love doing town hall meetings. this format and this company i think is an ideal means for us to carry on this conversation. as mark mentioned, obviously we're having a very serious debate right now about the future direction of our country. we are living through as tumultuous time as certainly i've seen in my lifetime. knittedly my lifetime is a lot longer than most of yours so far. this is a pretty young crowd.

but we're seeing domestically a whole series of challenges starting with the worst recession we've had since the great depression. we're just now coming out of it. we've got all sorts of disruptions, technological disruptions that are taking place. most of which hold the promise of making our lives a lot better but also mean that there are a lot of adjustments that people are having to make throughout the economy. we still have a very high unemployment rate that is starting to come down. but there are an awful lot of people who are being challenged people who are being challenged out there day in and day out wondering whether they can pay the bills or keep their home. internationally we're seeing the changes we haven't seen in a generation. we've got certain challenges we've got certain challenges like energy and climate change that no one nation can solve. but we're going to have to

solve together. and we don't yet have all the institutions that are in place in order to do that. but what makes me incredibly optimistic and that's why being here at facebook is so exciting for me is that at every juncture in our history, whenever we've faced challenges like this, whether it's been the shift from an agricultural age to an industrial age or whether it was facing the challenges of the cold war or trying to figure out how we make this country more fair and more inclusive. at every juncture we've always been able to adapt. we've been able to change and been able to get ahead of the curve. and that's true today as well. and you guys are at the cutting edge of what's happening. and so i'm going to be interested in talking to all of you about why this debate that

we're having around debt and our deficits is so important. because it's going to help determine whether we can invest in our future and basic infrastructure and innovation to compete in the 21st century and still preserve a safety net for the most vulnerable among us. but i'm also going to want to share ideas with you about how we can make our democracy work better and our politics work better. because i don't think there's a problem out there that we can't solve if we decide that we're going to solve it together. and for that, i'm grateful for the opportunity to speak to you and instead of just giving a lot of long speeches i want to make sure that we have time for as many questions as possible and mark i'm sure you have the first one. >> let's start off with the conversation about the debt. so i understand that yesterday morning, you had a town hall in virginia where you talked about your framework not only for resolving the short-term budget issues but the longer-term

debt. >> right. >> you spent some time talking about tax reform and some cost cutting but you also spent a lot of time talking about things that you didn't think that we could cut. and education, infrastructure, and clean energy. so my question to kind of start off is what specifically do you think we should do and what specifically do you think we can cut in order to make this all add up? >> let me first of all, mark, share with you the nature of the problem. because i think a lot of folks understand that it's a problem. but aren't sure how it came about. in 2000, at the end of the clinton administration, we not only had a balanced budget but we had a surplus. and that was in part because of some tough decisions that had some tough decisions that had been made by president clinton, republican congresses, democratic congresses, and president george h.w. bush. and what they had said was let's make sure that we're

spending wisely on the things that matter, let's spend less on things that don't matter. and let's make sure that we're living within our means. that we're taking in enough that we're taking in enough revenue to pay for some of these basic obligations. what happened then was we went through 10 years where we forgot what had created the surplus in the first place. so we had a massive tax cut that wasn't offset by cuts in spending. we had two wars that weren't paid for. and this was the first time in history where we had gone to war and not asked for additional sacrifice from american citizens. we had a huge prescription drug plan that wasn't paid for. and so by the time i started off as we already had about a trillion dollar annual deficit, and we had massive accumulated debt, with interest payments to

boot. then you have this huge recession. and so what happens is less revenue is coming in because companies' sales are lower and individuals are making less money. at the same time, there's more need out there. so we're having to help states and helping local governments. and that's a lot of what the recovery was about was us making sure that the economy didn't tilt over into a depression by making sure teachers weren't laid off and firefighters weren't laid off and road construction and so forth. that was expensive and in a added a trillion dollars worth of debt. and now what we've got is a situation not only do we have this accumulated debt, but the baby boomers are just now starting to retire. and what's scary is not only that the baby boomers are retiring at a greater rate, which means they're making greater demands on social security, but primarily medicare and medicaid, but health care costs go up a lot faster than inflation.

and older populations use more health care costs. you put that all together, and we have an unsustainable we have an unsustainable situation. how do we bring down the debt in the shot term and bring down the debt in the long term? in the short term democrats and rebs -- and republicans agree we have to reduce the debt by $4 trillion over the next 10 years. and that sounds like a lot of money. it is. but it's doable. if we do it in a balanced way. what i proposed was that about $2 trillion over 10 to 12 years is reduction in spending. government waste, just like every other major institution does. and so there are things that we do that we can afford not to do. now, there are some things that

i would like to do or fun to do but we can't afford them right now. so we've made cuts in every area. a good example is pentagon spending where congress oftentimes stuffs weapons systems in the pentagon budget that the pentagon itself says we don't need. but special interests and extentcies help to bloat the pentagon budget. so we think we can do about another $400 billion. so we have to look at spending both on nonsecurity issues as well as defense spending. and then what we've said is take another trillion of that, that we raise through a reform in the tax system that allows people like me and frankly you, mark, for paying a little more in taxes. [laughter] >> i'm cool with that. >> i know you're ok with that.

keep in mind what we're talking about is going back to the rates that existed when bill clinton was president. now, a lot of you were -- [laughter] i'm trying to say this delicately, still in diapers at that time. but for those of you who will recall, the economy was booming. and wealthy people were getting wealthier. there wasn't a problem at that time if we go back to those rates alone that by itself would do a lot in terms of us reducing our overall spending. and if we can get a trillion dollars on the revenue side, $2 trillion in cutting spending, we can still make investments in basic research. we can still invest in something we call arpa-e which

is like darpa but focused on energy and what are the next breakthrough technologies that can help us reduce our releans on fossil fuels. we can still make investments in education. so we've already expanded the pell grant program so that more young people can go to college. we're investing more in stem education, math and science and technology education. we can still make those investments. we can still rebuild our roads and our bridges and invest in high speed rail and invest in the next generation of broadband and wireless. and make sure everybody has access to the internet. we can do all those things while still bringing down the deficit medium term. there's one last component of this. and this is a long answer but i wanted to make sure everybody had the basic foundations for it. even if we get this $4 trillion, we do still have a

long-term problem with medicare and medicaid. because health care costs, the inflation goes up so much faster than wages and salaries. and this is where there's another big philosophical debate with the republicans. because what i've said is the best way for us to change it is to build on the health reform that we had last year and start getting a better bang for our health care dollar. we waste so much on health care. we spend about 20% more than any other country on earth and we have worse outcomes because we end up having multiple tests when we could just do one test and have it shared among physicians on facebook, for example. we could focus on the chronically ill. 20% of the patients account for 80% of the costs. so doing something simple like reimbursing hospitals and doctors for reducing the

readmissions rate and managing somebody with a chronic illness like diabetes so that they're taking their meds on a regular basis so that they don't come to the emergency room, that saves huge amounts of money. so that's what health care reform was about last year or a year and a half ago. and what we want to do is build on that and continue to improve the system. what the republicans right now are saying is number one, they can't agree to any increases in taxes which means we would have to cut out of that $4 trillion all of it would come from education, transportation, areas that i think are critical for our long-term future. so, for example, they propose 70% cuts in clean energy. well, i don't know how we free ourselves in dependence on foreign oil and anybody who is paying gas prices knows that there's an economic component to this as well as an environmental component to it. if we're not investing in the

basic research and technology that allows solar, wind and others to thrive and develop. at the same time, what they've said is let's make medicare into a voucher program so that retirees instead of knowing that they're always going to have health care they're going to get a voucher that's -- that covers part of the cost and whatever health care inflation comes up is all going to be on them. and if the health insurance companies don't sell you a policy that covers your illnesses you're out of luck. i think it is very important for us to have a basic social safety net for families with kids with disabilities, for seniors, for folks who are nursing -- in nursing homes and important for us to invest in our basic research. we can do all those things, but we're only going to be able to do it by taking a balanced approach and that's what this big debate is about -- all about right now. all right? >> all right.

sorry. don't mean to cut off the applause. >> no, no, no. [applause] >> very thorough answer. >> no. they were stunned by the length of that answer. [laughter] but it's complicated stuff. >> so the next question is someone watching facebook live. from williamsburg, virginia, writes in and asks, the housing crisis will not go away. the mortgage financing for new home buyers with low to moderate income is becoming very difficult. as president, what can you do to relax the policies that are disqualifying qualified home buyers from owning their first home? how can you assure the low to moderate home buyers that they will have the opportunity to own their first home? >> well, it's a good question. and i'll be honest with you. this is probably the biggest drag on the economy right now that we have. along with -- the frustrations people have about gas prices,

what we've really seen is the housing market which was a bubble had greatly overinflated in all regions of the country. and i know i probably don't get a lot of sympathy about that here because can i only imagine what rents and mortgages you guys are paying. it is a real drag in all sorts of ways. people, first of all, they feel poor even if they still have a home or they've already purchased a home. because for a lot of folks, their mortgage is now what's called under water. the mortgage is more than the home is worth. and so if you feel like your most important asset is now worth less than your debt, that's going to constrain how you spend. people who want to move have a great deal of trouble selling. and people who want to buy as you pointed out are seeing terms a lot more restrictive. so we've put in place a bunch

of programs to try to see if we can speed along the process of reaching a new equilibrium. for example, what we did was we went to the mortgage lender and said why don't you renegotiate with your mortgage -- with the person with the mortgage, renegotiate the terms of their mortgage so that their principal is a little bit lower and they can afford the payments and that way homes don't get foreclosed on. there are fewer homes on the market. and that will raise prices. and in a will be good for everybody. -- and that will be good for everybody. and we've seen some significant progress on that front. the challenge as your questioner points out a lot of people who bought a first home when credit was easy now are finding that credit is tough. and we've got to strike a balance, frankly, there's some folks who are probably better

off renting. and what we don't want to do is return to a situation where people are putting no money down and they've got very easy payment terms at the front end. and then it turns out five years from now, because they got adjustable rate mortgage that they couldn't afford it and they lose their home. and i think the regulators are trying to get that balance right. there are certain communities with high foreclosure rates where what we're trying to do is can we help state and local governments take over some of these homes and convert them and provide favorable terms to first-time home buyers. but frankly, i think we've got to understand that the days where it was really easy to buy a house without any money down is probably over. and what we -- what i'm really concerned about is making sure that the housing market overall recovers enough that it's not such a huge drag on the economy because if it isn't, then

people will have more confidence, they'll spend more, more people will get hired, and overall the economy will improve. but i recognize for a lot of folks who want to be first-time home buyers, it's still touch out there. it's getting better in certain areas. but in some places, particularly where there was a big housing bubble, it's not. >> so i think the next question is from a facebook employee in the room today. so lauren hale has a question. lauren, where are you from? >> hi. over here. >> hey, lauren. >> hi, mr. president. thank you so much for joining us today. i am originally from detroit, michigan. and now i'm out here working at facebook. so my question for you, kind of builds on some of the things you were just talking about. at the beginning of your-term you spent a lot of time talking about job creation and the road to economic recovery and one of the ways to do that would be to substantially increase federal investments in varyius areas as a way to fill the void left from consumer spending.

since then we've seen the conversation shift from that of job creation and economic recovery to that of spending cuts and the deficit. so i would love to know your thoughts on how you're going to balance these two going forward or even potentially shift the conversation back. >> well, you're exactly right that when i first came into office, our number one job was preventing us from getting into another great depression. and that was what the recovery act was all about. so we helped states make sure that they could minimize some of the layoffs and some of the difficult budget choices that they faced. we made sure that we had infrastructure spending all around the country. and in fact, we made the biggest investment in infrastructure since dwight eisenhower built the interstate highway system. we made the largest investment in history in clean energy research. and it's really paying off.

for example, when i came into office, we had about 2% of the advance battery manufacturing here in america. and as everybody here knows, what's really holding us back from my goal of a million electric vehicles on the road, is that battery technology is still tough. it's clunky. it's heavy. it's expensive. and if we can make significant improvements in battery technology, then i think the opportunities for electric vehicles, alternative vehicles, that are much cheaper, our opportunities are limitless. so those were all investments that we made in the first two years. now, the economy is now growing. it's not growing quite as fast as we would like because after a financial crisis typically, there's a bigger drag on the economy for a longer period of

time. but it is growing and over the last year and a half, we've seen almost two million jobs created in the private sector. because this recession came at a time when we were already deeply in debt and made the deeply in debt and made the debt worse, if we don't have a serious plan to tackle the debt and the deficit, that could actually end up being a bigger drag on the economy than anything else. if the markets start feeling that we're not serious about the problem. and if you start seeing investors feel uncertain about the future, then they could pull back right at the time when the economy is taking off. so you're right that it's tricky. and folks around here are used to the hills in san francisco and if you've driven -- i don't know if they still have clutch cars around here. anybody ever driven a clutch car? you got to sort of tap -- well,

that's sort of what we faced in terms of the economy, right? we've got to hit the accelerator and make sure that we don't gun it and we can't let the car slip backward. so what we're trying to do then is put together a debt and deficit plan that doesn't slash spending so drastically that we can't still make investments in education, that we can't still make investments in infrastructure. all of which would help the economy grow. in december, we passed a targeted tax cut for business investment as well as the payroll tax that has a stimulus effect, that helps to grow the economy. we can do those things and still grow the economy while having a plan in place to reduce the deficit first by 2015 and nen over the long term. -- and then over the long term. so we can do both but it requires the balanced approach

i was talking about. if all we're doing is spending cuts, and we're not discriminating about it, and we're using a machete instead of a scalpel and cutting out things that create jobs, then the deficit could actually get worse because we could slip back into another recession. and obviously for folks in detroit, where you're from, they know that our investments can make a difference. because we essentially save the u.s. auto industry and we now have three auto companies here in america that are all turning a profit, g.m. just announced that it's hiring back all of the workers that it was planning to lay off. and we did so by the way at the same time as we were able to increase fuel efficiency standards on cars for the first time in 30 years. so it can be done. but it takes a balanced approach. [applause] >> so we have a question from >> so we have a question from the university of florida where -- in february, you launched

this initiative at whitewhite house.gov, 100 youth rounledtables around the country and a bunch are taking place watching this facebook live. so participating in one of those roundtables and they wanted to ask you this. mr. president, in your deficit reduction speech last week, you spoke of the need to not only reduce government spending but to also increase federal revenue. in light of our nation's budget challenges, will your administration consider revisiting policies such as the dream act which the congressional budget office estimates will reduce the deficit by $1.4 billion and increase the government revenue by $2.3 billion over the next 10 years? >> let me not talk about the dream act but about immigration policy generally. and i want to thank cheryl sandberg, actually participated in a discussion we had yesterday bringing together business leaders and government

officials and faith leaders, a broad cross-section of americans together to talk about how do we finally fix an immigration system that's fundamentally broken. for those of you who aren't familiar, the dream act is -- deals with a particular portion of the population, kids who were brought here when they were young by their parents. their parents might have come here illegally. the kids didn't do anything. they were just doing what kids do which is follow their parents. they've grown up as americans. they went to school with us or with our kids. they think of themselves as americans. but many of them still don't have a legal status. and so what we've said is especially for these young people who are our neighbors,

our friends, our children's friends, if they are of good character and going to school or joining our military, they want to be part of the american family. why wouldn't we want to embrace them? why wouldn't we want to make sure that -- [applause] why wouldn't we want to make sure that they're contributing to our future? so that's the dream act. but that's just a small part of a broader challenge that we have. immigration in this country has always been complicated. you know, the truth of the matter is that we are both a nation of immigrants and a nation of laws. sometimes the laws haven't been fair. sometimes the laws have been restrictive to certain ethnic groups. there have been quotas. sometimes our immigration

policies have been arbitrary and have been determined by whether industry at a particular time was willing to bring in workers on the cheap. but what's undeniable is america is a nation of immigrants. that's our history and that's what makes us stronger. because we've got ambitious people from all around the world who come here because they've got a new idea. and they want to create the next big thing. or they just want a better future for their kids and their family. and that dynamism is part of what's propelled our progress and kept us young. now, i think most americans understand that and most americans agree with that. at the same time, i think most americans feel there should be an orderly process to do it. people shouldn't just be coming here and cutting in front of the line essentially and staying without having gone

through the proper channels. so what we've said is let's fix the whole system. first of all, let's make the legal immigration system more fair than it is. and more efficient than it is. and that includes by the way something i know that is of great concern here in silicon valley, if we've got smart people who want to come here and start businesses, and are ph.d.'s in math and science and computer science and why don't we want them to stay? why would we want to send them someplace else? [applause] those are potential job creators. those are job generators. i think about somebody like an andy grove of intel.

you know, we want more andy groves here in the united states. we don't want them starting companies. we don't want them starting intel in china or starting it in france. we want them starting it here. so there's a lot that we can do for making sure that high skilled immigrants who come here, study, we've paid for their college degrees. we've given them scholarships. we've given them this training. let's make sure that if they want to reinvest and make their future here in america, that they can. so that's point number one. but point number two is you also have a lot of unskilled workers who are now here who are living in the shadows. they're contributing to our economy in all sorts of ways. they're working in the agricultural sector. they are in restaurants, in communities all across the country. looking after children.

and helping to build america. but they're scared. and they feel as if they're locked out of their surroundings. and what i've said is they did break the law. they came here. they have to take responsibility for that. they should pay a fine. they should learn english. they should go to the back of the line so that they don't automatically get citizenship. but there should be a pathway for them to get legalized in our society so that they don't fear for themselves or their families so families aren't separated. at the same time, let's make sure we got a secure border so that folks aren't wandering through the desert to get here. let's make the legal immigration system more efficient and more effective so there aren't huge backlogs. this is all part of what we call comprehensive immigration reform. and there's no reason why we

shouldn't be able to achieve a system that is fair, is equitable, is an economic engine for america, that helps the people who are already here get aconsulterated and our laws don't get broken and we're true to our traditions. as i mentioned to cheryl yesterday, i can't solve this problem by myself. nancy pelosi is a big champion of this. the democratic caucus in the house i think is prepared for a majority of them, are prepared to advance comprehensive immigration reform. but we're going to have to have bipartisan support in order to make it happen. and all of you have to make sure that your voices are heard saying this is a priority, this is something important. because if politicians don't hear from you, then it probably won't happen. i can't do it by myself. we're going to have to change the laws in congress.

but i'm confident we can make it happen. [applause] >> the next one is from a facebook employee, leo abraham. leo, where are you from? >> hey, leo. >> hi. >> hey. >> i'm originally from san jose, california. my question is the 2012 budget plan proposed by paul ryan has been praised by many in the media as bold or brave. do you see this as a time that calls for boldness and do you think that the plan you outlined last week demonstrates sufficient boldness or is this just a media creation? >> no, it's a great question. here's what i would say. the republican budget that was put forward i would say is

fairly radical. i wouldn't call it particularly courageous. i do think mr. ryan is sincere. i think he's a patriot. i think he wants to solve a real problem which is our long-term deficit. but i think that what he and the other republicans in the house of representatives also want to do is change our social compact in a pretty fundamental way. their basic view is that no matter how successful i am, no matter how much i've taken from this country, i wasn't born wealthy. i was raised by a single mom and my grandparents. i went to college on scholarships. there was a time when my mom was trying to get her ph.d. where for a short time she had to take food stamps.

my grandparents relied on medicare and social security to help supplement their income when they got old. so their notion is despite the fact that i've benefited from all these investments. my grandfather benefited from the g.i. bill after he fought in world war ii. that somehow i now have no obligation to people who are less fortunate than me. and i have no real obligation to future generations to make investments so that they have a better future. so what his budget proposal does is not only hold income tax flat. he actually wants to further reduce taxes for the wealthy, further reduce taxes for corporations, not pay for those , and in order to make his

numbers work, cut 70% out of our clean energy budget, cut 25% out of our education budget, cut transportation budgets by a third. i guess you could call that bold. i would call it shortsighted. [applause] and then as i said, there's a fundamental difference between how the republicans and i think about medicare and medicaid and our health care system. their basic theory is that if we just turn medicare into a voucher program, and turn medicaid into block grant programs, then now you a medicare recipient will go out and you'll shop for the best insurance that you've got, that you can find. and that you're going to

control costs because you're going to say the insurance company, this is all i can afford. that will control costs. except if you get sick and the policy that you bought doesn't cover what you've got. then either you're going to mortgage your house or go to the emergency room in which case i who do have insurance are going to have to pay for it indirectly. because the hospital is going to have uncompensated care. so they don't really want to make the health care system more efficient and cheaper. what they want to do is to push the costs of health care inflation on to you. and then you'll be on your own trying to figure out in the marketplace how to make health care cheaper. the problem is you're just one person. now, you work at facebook, it's a big enough company. facebook can probably negotiate with insurance companies and providers to give you a pretty good deal. but if you're a startup

company, if you're an entrepreneur out there, in the back of your garage, good luck trying to get insurance on your own. you can't do it. if you're somebody who's older and has a pre-existing condition, insurance companies won't take you. so what we've said is let's make sure instead of just pushing the costs off onto people who individually are not going to have any negotiating power or ability to change how providers operate or how hospitals or doctors operate, how insurance companies operate, let's make sure that we have a system both for medicare, but also for people who currently don't have health insurance, where they can be part of a big pool. they can negotiate for changes in how the health care system works so that it's more efficient. so that it's more effective. so that you get better care, so that we have fewer infection rates, for example, in

hospitals, so there are fewer readmission rates, so that we're caring for the chronically ill more effectively. so that there are fewer unnecessary tests. that's how you save money. the government will save money, but you'll also save money. so we think that's a better way of doing it. now, what they'll say is, well, you know what? that will never work because it's government imposed and it's bureaucracy and it's government takeover and death panels and -- you know, i still don't entirely understand the whole death panel concept. but they're saying some remote bureaucrat will be deciding your health care for you. all we're saying is if we've got health care experts, doctors, and nurses, and consumers, who are helping to design how medicare works, more intelligently, then we don't have to radically change medicare. so yes, i think it's fair to

say that their vision is radical. no, i don't think it's particularly courageous. because the last point i'll make is this -- nothing is easier than solving a problem on the backs of people who are poor, for people who are powerless and don't have lobbyists and don't have clout. i don't think that's particularly courageous. particularly courageous. [applause] >> all right. the next one is from the web. we've got a question from kwame simmons from orlando, florida and he asks i strongly believe that education is the greatest equalizer. with so many problems plaguing our current system, is it possible to examine a complete overhaul of the system so that it zretches the needs of modern students? and before you jump in, i want to say as someone who spent a bunch of time researching education and cares about this, i think the race to the top stuff that you guys have done

is one of the most underappreciated and most important things that your administration has done. >> i appreciate that. [applause] this is an area where i think you've seen the parties actually come together. and there are some good bipartisan work being done. it used to be that the argument around education always revolved around the left saying we just need more money. and the right saying we should just blow up the system. because public schools aren't doing a good job. and what we're now seeing is people recognizing we need both money and reform. it's not an either/or proposition. it's a both/and proposition. so what mark just mentioned, something called race to the

top, pretty simple concept. most federal dollars are allocated through a formula. if you've got a certain number of poor kids, or you've got certain number of disabled kids in your school district, there's a formula and you get a certain amount of money. and every state and every school district gets that money according to the formula. what we did is we took about 1% of the total spending on education. and we said to get this 1%, show us that you're reforming the system. it's like a competition model. and so every state, every school district, could apply. and you had to show us that you had a good plan to retrain teachers and recruit and do good professional development so we have the best teachers possible. you had to have accountability. you had to show us that you were actually making progress in the schools and measuring

through data the improvements that were being made. that you were reaching into the schools that were hardest to reach. because there are about 2,000 schools around the country that account for the majority of dropouts. they're like dropout factories. show us a plan to go into those schools and really make a big difference. and what's happened is that over 40 states in the process of competing for this extra money, ended up initiating probably the most meaningful reforms that we've seen in a generation. and so it's made a huge difference even those states that didn't end up winning the competition still made changes that are improtching the potential for good outcomes in the schools. that's the kind of creative approach that you see some democrats and some republicans embrace. and our hope is we can build on that. a couple of things that we know work.

the most important thing to a good education is making sure we have a good teacher. in front of that classroom. and so providing more support for teachers, recruiting the best and brightest into teaching, making sure that they're compensated but also making sure that they're performing. that's hugely important. the other thing is good data. so that there's a constant feedback. not just a bunch of standardized tests that go into a drawer or people may game in order -- not to get penalized. that's what happened under no child left behind but instead real good data that you can present to the teacher while they're still teaching, that child and say this child is falling behind in math. here's some ways to do it. to improve their performance. so we're starting to see real progress on the ground. and i'm optimistic that we can actually, before the 2012 election, potentially have a federal education law that will

embody some of the best information that we have about how to initiate good school reform. now, last point i'll make on this. government alone can't do it. one of the things every time i come to silicon valley that i'm inspired by, but i'm also frustrated by, is how many smart people are here, but also frustrated that i always hear stories about how we can't find enough engineers. we can't find enough computer programmers. you know what? that means our education system's not working the way it should. and that's got to start early. and that's why we're emphasizing math and science. that's why we're emphasizing teaching girls math and science. [applause] that's why we're emphasizing -- making sure that black and hispanic kids are getting math and science. [applause] we've got -- we've got to do

such a better job when it comes to stem education and that's one of the reasons by the way that we had our first science fair at the white house in a very long time. just because we want to start making science cool. i want -- i want everybody to feel the same way that they did -- i want people to feel the same way about the next big energy breakthrough or the next big internet breakthrough, i want people to feel the same way they felt about the moon launch. that that's how we're going to stay competitive for the future. and that's why these investments in education are so important. but as i said, government alone can't do it. there's got to be a shift in american culture where once again, we buckle down and we say this stuff's important. and that's why, mark, the work you're doing in newark, for example, the work that folks like the gates foundation are

doing, and philanthropic and best practices in education and especially around math and science training are going to be so important. we've got to lift our game up when it comes to technology and math and science. that's hopefully one of the most important legacies that i can have as president of the united states. united states. [applause] >> the next one is from another facebook employee. james mitchell. so james mitchell, where are you from? >> here's james back here. >> hi, mr. president. >> hey, james. >> i'm james mitchell. born in chicago and raised here in cupertino, california. i have another question about the debt and health care. >> go ahead. >> so the biggest threat we have fiscally is the rise in health care costs. unfortunately, a lot of the solutions we hear to medicare and medicaid don't involve

actually slowing down the rise in health care costs. and instead they involve shifting costs to beneficiaries and states. so my question is, can you talk a bit more about what provisions in the affordable health care act are designed to slow down the rise of health care costs? and what policies you'd like to see enacted in the future to continue to slow down the rise of health care costs? >> let me give you a couple of examples. because you're exactly right in how you described it. i don't want to just shift the health care costs onto the american people. i want to reduce health care costs. let's take the example of health i.t. we're in silicon valley. so we can talk about i.t. stuff. i'll try to sound like i know what i'm talking about. [laughter] the health care system is one. few aspects of our -- is one of the few aspects of our sot where a lot of stuff -- of our society where a lot of stuff is still done on paper.

last time you guys went to a doctor's office or maybe your dentist's office, how many people still had to fill out a form on a clipboard. right? and the reason for that is because a large chunk of our providers' system is not automated. so what end up happening is you may go to your primary care physician. he worked -- does some basic tests. he sees something of concern. he refers you to a specialist. you go to the specialist. he'll do another test. you're getting charged or your insurance company is getting charged for both of those tests. as opposed to the test that was taken by your primary care physician being emailed to the

specialist. or better yet, if it turns out that there may be three or four specialists involved, because it's a difficult diagnosis, this is all hypothetical, you look very healthy. [laughter] but let's say there were a bunch of specialists. what would be ideal would be if you get all the specialists together with the primary care physician the first time you're seen so that you aren't paying for multiple visits and multiple tests. that's not how it works right now. now, part of it is technology. so what we did in the affordable care act, building on what we did in the recovery act, is try to provide incentives to providers to start getting intergreated, automated systems. and it's tough because the individual doctor may say to him or herself, i don't want to put the initial capital outlay that's expensive even though it may make my system more efficient later on.

so providing some incentives, some help, for the front end investments, for our community hospital for an individual provider so that we can slowly get this system more effective, that's priority number one. we know it can be done by the way. surprisingly enough, the health care system that is -- does the best job on this of anybody is actually the veterans administration, the v.a. health care system. because it's a fully integrated system. everybody is working for the v.a. all the doctors, all the hospitals, all the providers. so they've been able to achieve huge cost savings just because everybody is on a single system. it's also how we reimburse doctors and how we reimburse hospitals. so right now, what happens is when you have taken those two tests, if you're old enough to qualify for medicare, well, each doctor sends their bill to

medicare and medicare pays both bills. and let's say that youened up getting an -- say that you end up getting an operation. they'll send the bill for that. so medicare pays that. let's say they didn't do a very good job or you got sick in the hospital. hospital. and you are readmitted. and you have to be treated again and they have to do the operation all over again. medicare then gets billed for the second operation. i mean, imagine if that's how it worked at -- when you bought a car. so you go, you buy your car, a week later the car doesn't work. you go back to the dealer and they charged you to fix the bad job that they did in the first place. well, that's what medicare does. all the time. so we don't provide incentives for performance. we just provide -- we just pay for the number of qualified

items that were procedures that were performed or tests that were performed by the provider. so what we want to do is start changing how folks are reimbursed. let's take a hospital. we want to give -- this is like race to the top what mark was talking about in education. we want to be able to say to a hospital, if you do a really good job reducing infection rates in the hospital, which kill tens of thousands of people across america every year, and are a huge cost for readmission rates, and we know that hospitals can drastically reduce those reinfection rates just by simple protocols of how employees are washing their hands and how they're moving from room to room and so forth. there are hospitals who have done it. if we can say to a hospital, you'll get a bonus for that. medicare will reimburse you for instituting these simple procedures. that sachs the whole system

money. -- that saves the whole system money. and that's what we tried to do in the affordable care act. is start institutionalizing these new systems. but it takes time. because we've got a private sector system. it's not like the v.a. a bunch of individual doctors and individual hospitals. spread out all across the country with private insurers. so it's not something that we can do overnight. our hope is that over the next five years, we're able to see significant savings through these mechanisms. and that will save everybody. not just people who are in medicare and medicaid. it will save everybody money including folks here at facebook. because i'm sure that you guys provide health insurance. and i suspect if you look at your health insurance bills they don't make you happy. ok? >> we have time for only one more question. >> all right. [applause] >> the question from terry atwater from houston, texas. if you had to do anything

differently during your first four years, what would it be? >> well, it's only been 2 1/2 so i'm sure i'll make more mistakes in the next year and a mistakes in the next year and a half. you know, there are all sorts of day-to-day issues where i say to myself, oh, i didn't say that right or i didn't explain this clearly enough. or maybe if i had sequenced this plan first as opposed to that one and maybe it would have gotten done quicker. health care obviously was a huge battle. and if it hadn't been for nancy pelosi and her leadership in the house, and the great work that --

[applause] ann eshu and others, we wouldn't have gotten it done if it hadn't been for great work in congress. but i do think that it was so complicated that at a certain point, people just started saying, oh, this is typical washington bickering. and i've asked myself sometimes, is there a way that we could have gotten it done more quickly and in a way that the american people wouldn't have been so frustrated by? i'm not sure i could have. because there's a reason why it hadn't gotten done in 100 years. it's hard to fix a system as big as health care and as complicated as our health care system. i can tell you that -- i think

the best way to answer the question is what do i feel i still have to get done? where i still feel a huge sense of urgency. i've talked about a couple of things. getting our deficits and debt under control in a balanced way. it needs to happen while i'm president. i don't want to leave it to the next president. immigration. something i mentioned. we have not gotten done. it's something i care deeply about. it's the right thing for the country. i want to get that done while i'm president. energy. we haven't talked a lot about energy today. but first of all, $4 a gallon gas really hurts a lot of people around this country. it's not because they're wasteful. but if you're driving 50 miles to work and that's the only job you can find, and you can't afford some hybrid so you're

stuck with the old beater that you're driving around to get eight miles a gallon, these gas prices are killing you right now. and so this is the reason why i've said that it is so important for us to invest in new approaches to energy. we've got to have a long-term plan. it means investing in things like solar and wind. investing in biofuels. investing in clean car technology. it means convert being the federal fleet -- converting the federal fleet 100% to fuel efficient vehicles because we're a huge market maker obviously, turns out that hiche got a lot of cars -- that i've got a lot of cars as president. [laughter]

if we're out there purchasing electric cars and hybrids and that can help boost demand and drive down prices. continuing to increase fuel efficiency standards on cars. increasing oil production. but in an intelligent way. those are all hugely important -- and we can pay for it. let me say this. we lose -- the treasury loses $4 billion a year on subsidies to oil companies. now, think about this. the top five oil companies have made somewhere between $75 billion and $125 billion every year for the last five years. nobody is doing better than exxon. nobody is doing better than shell or these other companies. they are doing great.

they are making money hand over fist. well, maybe facebook is doing a little better. [laughter] but you get the idea. they're doing really well. they don't need special tax breaks that cost us $4 billion and so what we've said is why can't we eliminate the tax breaks for the oil companies who are doing great and invest that in new energy sources that can help us save the planet? >> when it comes to energy, when it comes to immigration, when it comes to getting our dumpsters under control in a balanced and smart way, when it comes to investing in math and science education and reinvesting in our infrastructure, we've just got a lot more work to do. my closing comments would be that i hope everybody here, that

you do not get frustrated and cynical about our democracy. it is frustrating. lord knows it is frustrating. [laughter] and i know that some of you who might have been involved in the campaign or have been energized in 2008, if you are frustrated that it did not get done fast enough and it seems like everybody is bickering all the time. just remember, we have been here a couple of times before and we have always come out ascendant. we have always come out on top because we still have the best universities in the world, the most productive workers in the world, and this is still the most dynamic, entrepreneurial culture in the world. if we come together, we can solve all of these problems. but i cannot solve all these problems by myself. the only way that it happens is

if all of you still get involved, still getting gauge. it has not been that long since election day and we have still got a lot done. we have still been able to get this economy recovering. we have still been able to get health care passed. we have still been able to invest in clean energy and we have still been able to overturn don't ask, don't tell. [applause] we still have been able to get two women on the supreme court. rather than be discouraged, i hope everybody is willing to double down and work even harder. regardless of your political affiliation, if you do not give us a show of if you do not give up the system to push, it is not join tooten done. especially young people here. but if you are behind it with

the same imagination and energy that you put into facebook into the political process, i guarantee you, there's nothing that we cannot solve. thank you. [applause] >> i want to thank you again. it is such an honor to have you here. >> we had a great time. >> and has a small token of our appreciation, in case for some reason you want to dress like me -- >> nice, nice. [cheers] [applause] this is a high fashion statement right here. this is beautiful. thank you very much, everybody. i appreciate you. [cheers and applause]

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>> facebook users asking president obama about the country's finances, health care, deficit. we want you to weigh in now. it was president obama effective in telling them about his reduction plan? the numbers are on the screen. our first call is from houston, a republican. hi, kevin. kevin, are you there? >> yes, i am. >> what is your comment? >> i think we are seeing the same for the past three years. i do not think anything has changed as far as what he is trying to sell, health care or anything else.

>> you are a republican. do you prefer congressman ryan's plan? would you like about his plan? >> not really. there are good few points about it, but i think we need somebody, no matter who the republicans put into office -- and i could be canned for saying this, but i liked sarah palin in lots of ways, but i think they need someone with business sense solving these business problems. i do not think obama basically has the leadership at all. he never has, in my opinion. i think we need a change for america. >> another call from texas. is it her luncheon? -- harligen? >> i would like to talk about the tax issues in the united

states of america. >> you are on the air. feel free to go ahead. >> i am a huge supporter of the fear tax bill, which is h.r. 3516. it is the only thing that can get america out of this rut that we are in, the side electing a president that acts like a president. we need a fair tax where it is based on the consumption tax, not on what people earn for a living. it is what they buy on the retail level. it eliminates corporate route -- corporate tax rates and allows a person to keep their entire paycheck if he or she chooses. it is based strictly on consumption. >> the next caller is from jeff, independent. >> hello, i just watched the president and it seems like every time we have a town meeting, no one throws him a tough question. they are scared of him.

>> what is the question you would ask the president? >> they asked and the question what he has done in the last two years to bring change. he is one question right here. and before you can fix health care, like he says he can practice, we still have an immigration problem with health care because these people still can go into the hospital, the emergency room and we will be charged for that. it does not take a genius to figure this out. he had the votes. he had the votes to pass this and he did not pass it. if he were to pass at first, immigration, then everybody would have gone along with health care. this guy -- i am a small business. i have been in business 30 years. i am in my 50's. i own a lot of property. what i do now, my business has

gone from 100% profit to 60%. do you know what i am doing now? i am not hiring i started laying off people two years ago. i will not hire in the future. >> our next call is from antonio, a democrat. what do you think of what the president has been saying about reducing the deficit? >> toomey, all of these people are mad at the president. i do not know why. he cannot do nothing without the congress talking about it, you know? do you hear me? >> i do hear you. about the deficit, reuters is reporting that the international monetary fund's chief economist says the u.s. lacks a credible plan to cut its deficit in the medium term, saying that there are reasons to be worried. our next call is from indianapolis, bob.

bob, go ahead, you are on the air. >> this is george. i do not think there was anything wrong with his speech. it was pretty good, but there were some things -- there are some things that i would like to say. a lot of rich people make money and it is ridiculous. i cannot even explain it because it is so hard just to make money, just to pay your rent. >> i want to remind callers to turn down your television set so we can hear you very clearly. the next caller is from tyler in tennessee. what do you have to say? plan, the whole cutting the deficit and with the budget deadline so close, i see it as a ploy more less to cut different programs that both parties are proposing. really, we should be creating a

greater gdp. our gdp has been decreasing over the past 10 years in the wake of other countries white -- rising. if we cannot produce, no matter how many cuts we make, if we produce more we can catch up. >> what would you suggest the country produced? >> the country can produce, but other countries can produce more and cheaper. unless we create greater tariffs for that, the domestic product cannot defeat those world prices. >> next up, j. calling from detroit on the democrats line -- calling from detroit on the democrats line. >> i will echo with the other person said before, these countries need terrace. the company that is one in to move offshore, just think that when you bring your stuff back quarterly. that will keep them -- make the

decision to keep their companies in the u.s. and we can have a domestic product in the u.s. and the president did good on answering questions, but the world and americans want instant success. they keep forgetting that we were in two wars and unpaid for, a lot of tax cuts and paid for, and we still want -- the republicans still want to give tax cuts that are on paid for. -- unpaid for. >> the next call is spartanburg, south carolina. how do you want to cut the deficit, walter? but to cut the deficit, we have to do as the gentleman -- >> to cut the deficit, we have to do at the john and said before, stop cutting taxes on the wealthiest in america. they can afford it and everything. the movement that the

republicans are going through is just not working. it did not worst -- work during the bush years and it is not working now. i am a staunch democrat. i absolutely believe in the health care bill the president passed. i just wish it would have gone further. we could have gotten the public option. we could have gotten the gross domestic product down a%. until we get a health care bill in the u.s., we will not send out a product that is cheaper than other countries. i stand behind president 100%. >> we just heard walter said that he would like to raise taxes on the wealthy to cover the deficit. tom from paradise, california, what do you think? >> i think we need to open our eyes to new enterprise and to agricultural crops. i believe that we need to seriously reconsider canada's as a medicine and as a fiber crop

nabis as a medicine and a fiber crop and we can increase our gdp with it. >> have you been paying attention to the democratic and republican proposals on capitol hill? >> yes, i have. >> what do you think of congressman ryan's proposal? >> i think congressman ryan is trying to make it so that there is even less affordable health care available to the poorest people in the country. for instance, i know somebody who has hiv from a blood transfusion and they cannot get health insurance because of their precondition. >> veronica from south carolina, hello? >> yes? >> you are on the air. go ahead. >> just to piggyback on the job monday for me about the health care, i used to healtworked in

health care and i know personally how they determine who gets health care and how much is going to cost from state to state. the president's proposal -- our health care sounds way more fair than corporate health care. >> what specifically do you like about it? >> well, like he said, when individuals who do not help health care insurance go to the emergency -- do not have health care insurance go to the emergency room, that money is put on the backs of those of us who work. and the people who do have jobs, depending on the type of job that you have, you may not even be able to afford to go to the hospital. you go to one doctor. you get referred to a specialist. even if a person who has health care, they might not be able to afford the insurance they have. >> victor, an independent, calling from iowa. what do you have to say?

>> well, i am more appreciative of what he has not said in the sense that you really have to read between the lines. i have been pushing for a plan to actually save social security and lower the minimum -- by a minimum of at least a quarter of a percentage point for health care. i am taking from the president in the state of the union speech in which he says we need to reinvest in america. i will lay it out for you quickly. the numbers are pure and simple. we already have enough money to make this plan work and to create jobs. here is how you do it. you have $2.5 trillion sitting in a social security fund. this is going to make people wince right away. you take $5 billion of the $2.5 trillion. you hire 13 economists, nonpartisan, that are employed

. you get 13 of them and their sole job is to buy low and sell high. cnbc states that nonverbal goods are the market -- is the market to be in currently and that is going to be the high return yielding 1.5% to 6% return on your investment. you take $500 billion and you invested in 1000 companies, $100 million each. it's a return of 1.5% on 500 billion is $15 billion per quarter. you return it at 3% and you get $30 billion coming in every quarter. you still have people like you and i paying on the front door. you have investment working for people. that money is basically just

sitting there. we need to put that money to work, like any other corporation would do. >> thank you, victor. james from allentown, pa., republican. >> i have a statement about the debt and deficit. my question is, why has the president waited until the last second until we reached our debt ceiling to even address this issue? he has not even pass a budget with a preoccupation of other .lants an estimated $5 trillion or $6 trillion since he came into office and is just now becoming an issue? i totally agree with paul ryan -- not that i totally agree with paul ryan's plan. there are some issues there, but at least there was ever to see something accomplished. >> i want to remind viewers that tonight we will see president obama at a town hall event here

at facebook headquarters at silicon valley at 10:40 p.m. eastern time on c-span2. you can also see that at c- span.org. a call from lakeland, florida. valerie. >> my name is valerie and i would just like to point out that when president obama became president, we were already going downhill. there was one gentleman that spoke of not having a business person. most business people that i know that would have been going through the same thing would have basically just cut their bottom people and they would have been out of a job. president obama was trying to help everyone by not letting the economy go under. i applaud him for that. also, there was mention of some type of program that he started with education, which i guess a lot of people have not heard

about. i hope that they continued to spread that throughout the different states to improve the quality of the people and the children that are going to school. >> our next call from gabriel, rockford, illinois. gabriel, are you there? >> yes. >> go ahead. >> i want to put out strong encouragement to the american people. let's stand together. president barack obama is doing the best he can do. i am proud of what he is doing. in order for him to get the rest done, we all need to come together. i am tired of the bickering and the fighting going back and forth. we have problems that need to be solved. we all know what the problems are. let's stop bashing one another's head. let's stand as true americans side by side and get the job

done. i know we need things for the infrastructure. we have bridges that are unstable. we have things going on in our country that need to get done. we know we need bridges. we know we need roads. start your own company. go to college. get that degree. start your business. >> gabriel, have you been paying attention to the plans offered by congress and president obama? >> yes, i have. >> which plan to you think will work? or what do you think needs to be done? >> i think the president obama is planning for health care. it took a bit of time to get through, but thanks to nancy pelosi and the incredible team that they have, they got it done. as far as everything that has happened in this country -- you know, i mean, i support president obama 100%.

i understand that the republicans differ, but they have to take a look at the time line in history and what has happened as far as the recession. if this thing did not happen overnight. >> are for cutting you off. we need to move on. eric, a republican from philadelphia. are you there, eric? >> what? ? go ahead. what is your comment. -- >> go ahead. what is your comment? >> i think we need to be doing to lower the deficit two major things. we need to start taxing cheat, because they are like a 13.5 billion -- taxing g.e. because they are a light $13.5 billion company and we need to lower taxes on the middle class. >> from naples, fla., stuart, a democrat. >> hello, this is the word from

naples. i want to wish obama the best of luck in what he is doing, but what he has to do immediately is released some of the oil reserves that we have to lower the price of gas. the economy, of course, is in a funk right now. we just need to look at the average person. i am in line at the supermarket and i see families that cannot even afford to pay for the food. of course, the food is starting to get out of it -- the cost of food is starting to get out of hand. it is like a domino effect. i just think there ought to be some things to make the general public feels secure. bush gave a $600 check out to people to try to stimulate the economy. i believe obama should spend checks -- send checks of at least $1,000 to the public. when they sent those checks out for clunkers, people ran to buy

cars. when you give money to the banks, it does not trickle-down to the public. i went in for a small business loan and they said, what are you talking about? this is a woman with a badge that said she had been with the bank 12 years. that money never got to the public. you want to do it right, you write a check. do not have a middleman handle the money. send it directly to the american people. no matter what amount you choose, that is the way it should be done. when people have that money in their hands, they will feel good. they will go out, buy food, pay for their bills, paid for the gas in their cars. let's do for america. but we spend money overseas to rebuild these countries. i have never, ever seen a spreadsheet of where that money goes. in the new york -- of where that money goes in the "new york times" or the "wall street journal. -- "wall street journal." >> thank you for calling in.

i want to remind you that president obama will have his facebook comment at 10:40 p.m. eastern time on c-span2. he has another town hall scheduled in reno, nev. tomorrow talking about his deficit reduction plan. he expects to cut the deficit by $4 trillion over the next 12 years. his plan would eliminate bush- era tax cuts for higher income and reduce spending costs and cut non discretionary -- non- security discretionary spending. you can see those on c-span and act c-span.org. tomorrow morning we will hear more about cutting the deficit and reducing the debt. our guest is alice rivlin. you can join the conversation tomorrow morning at 9:15 a.m. eastern time on "washington journal" right here on c-span. today, the fcc chairman julius

genachowski sat down to talk about issues before the fcc. topics included more spectrum for mobile devices, the proposed at&t and anti- -- and t-mobile merger. and of course, net neutrality. this is about 40 minutes. >> can i have your attention please? we are about to start. thank you. we are very pleased today to have as our special guest, julius genachowski, the chairman of the sec. he has had -- the fcc. he has had a distinguished career. in the government world he has served as a law clerk in the judiciary branch for a number of prominent justices. he also worked on capitol hill for chuck schumer and worked on the iran-contra investigation as well as part of the joint

investigation committee. in the business sector, he has been involved as a senior business executives at iac interactive and was there for nine years starting as general counsel and in the end, became the head of business operations. he is also a capital investor and had his own incubator fund operating out of washington d.c. to help nurture a lot of small and young digitally-related companies. he graduated magna cum laude from columbia and a magna cum laude from harvard. at harvard law school he was senior of the -- senior editor of the law review at the same time the president obama was there. he was nominated by president obama in march of 2009 and became confirmed in june of 2009 and since that time, i think, has done a very outstanding job

as the chairman of the fcc. before i get into that, i would like to ask you a couple of personal questions. you have worked for a lot of smart people, some people with very high iq. you worked for chuck schumer, barry diller, justice souter, justice brennan, 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 that rules and policies are required, that they are smart and be efficient and coordinated and helping global payment takeoff. this is another example where, if we do not get it right, we will see the leading innovators in mobile payments developed in other countries. >> right now, you have a lot of proceedings in front of the fcc. you want to be as technologically efficient as possible. why do you not say no more paper filings and that everything has to be electronic?

>> it is a question we wrestled with last year. we put together a strategic plan for the country on broadband, put it on line, made it interactive, and ran the process online for input. we did print books -- a couple of hundred pages. how many was it? 267 pages. people ask, it is a broad band plan. why are you printing it? the answer is that the percentage of americans that are on line is much lower than in needs to be. colic the broadband adoption rate -- 67%. one-third of americans are not online. 67% compares to 90% in singapore and south korea. we need to pursue a set of strategies to increase broadband adoption in the u.s., but the

thing that we realized, as your question pointed out, once we move to full e-government, it will save a tremendous amount of money for taxpayers and ron government more efficiently. the problem is, until we do that, the government has to run two infrastructures. until the government serves all of its citizens, and until we get all citizens online, we have to do paper and electronic. it is crazy. it is why taking real measures has a double payoff. >> 20% to not have access to broadband at all. >> a little less. >> what percentage? >> it is under 10%. 25 million people live in areas there have no broadband infrastructure at all. >> what are you doing about that? >> all of these topics that under the heading universal

service. we did a good job in the 20th- century doing universal service for telephone service. the problem is, our universal service programs are still telephone programs. they have also become inefficient, wasteful, and they're not allocating funds very wisely. this is a core recommendation of the broadband plan, as long -- along with incentive options and other spectrum issues. we need to transform this $9 billion a year fund for universal service into one that is efficiently focused on the next generation of infrastructure that is using market-based mechanisms to disburse funds. it is efficient, fiscally responsible, accountable, and i think we will get there. predecessors have tried, and i understand why it is so hard. it is complicating and challenging.

schematically, why these issues are so challenging and what i think we are wrestling with a high level -- many of the people here probably read a book called "innovators dilemma." it analyzes why market-leading companies -- reading companies can sometimes succeed and sometimes fail when faced with destructive technologies and competitors. it is a good framework for thinking about where we are when it comes to technology. we are the market leaders. we do the great job. like some of the market leading companies of the trouble adjusting, the reason they have trouble adjusting is they are not operating on a blank slate. they have to make transfers -- transitions from legacy his infrastructure, older policies

and processes, and this is what we have to do in number of areas. spectrum, universal service -- we have to recognize that we have real issues. it is actually coming out of a series of positives for the u.s., whether it is but broadcasting -- so many successes have made this harder. that is a good thing, but also a challenge. the same thing with universal service. if we do not tackle these in the way that the great companies tackle their disruptive competitors and technologies, the risk we face as a country is we will end up what the companies that do not make the turn and compete in a new era. >> why should the government not do the same? the fcc was set up in 1934, five members. why not have one administrator, and met him or her decide the policies without going through votes.

>> i will tell you one thing that is interesting historically. it is an accident, but it gives us a competitive advantage if we get our job right. in most competitive countries there are multiple agencies that do with the fcc does. there is an agency that does wired communications. if there's one that does wireless, another for international and satellite. thanks to the accident of history and herbert hoover, we have had from the beginning what are around the world they call a converged agency. for many years you would wonder why these things were put together, but now it makes a lot of sense. all of these different means of communication are basically different mechanisms for transmitting digital bits. it should give the u.s. advantage am looking holistic lead at policies that relate to each other. there are global competitors that want to move to a

converged agency. one of the things we focus on is taking advantage of this competitive advantage, making sure we are adopting rules and policies that make sense across multiple platforms. >> you think this is more efficient than other countries? >> i think a converged agency makes sense absolutely. >> traditionally, i would guess fcc commissioners would say it is competitive, not competitive, the pro-technology, or not, but do you weigh in what the impact is another country's from the globe? >> absolutely. we cannot disentangle what happens with our economy from what happens in the global economy. 25 years ago, when congress authorized the fcc to conduct auctions, at that point there was a delay. there should not have been, but there was pure the cost of the

delay was much lower than now. back then, countries for not waking up every day and saying we want to take the lead in innovation and have identified spectrum mobile as an opportunity. today, the fact is that all of the major economies around the world, as i said before, they understand the. which can now look at our own economy, what we need to do to make sure the u.s. takes advantage without paying attention to global competitors. >> since we started selling spectrum, the u.s. government has brought in $50 billion. how much more money is there to be broad index is in another 50 billion, or is that too high? >> -- broadband -- brought in yet another $50 billion, or is

that too high? >> it is something we should move forward on and do as a bipartisan, strategic issue. >> do you think you have to be a lawyer to be the chairman of the fcc? >> no. it gets at another thing that i try to focus on in running the agency. there are very few issues that we work on where you would want only lawyers to work on them. i am a lawyer. i was trained as a lawyer. i've nothing against lawyers. the best work that is done by the agency his work that is multi-disciplinary -- where we get in a room and talk about an issue. it will sound like a joke, but i do not mean it this way. a lawyer, an economist, an engineer, people with real world investing experience, or people with experience in education or health care -- this is the most fun i have. we get people from multiple backgrounds together and have been tense, vibrant discussions

about what the right thing is for the country. this is where i learned from the people you mentioned at the beginning -- encouraging those kinds of conversations and the intense back-and-forth, but also respect for multiple disciplines. it is important that the fcc has all of them represented. >> are you influence by grass- roots letters? are you in france by members of congress when they sent letters? -- influence by members of congress when they send letters? how you treat the letters? the members of congress lobby you? >> we spend a lot time talking to members of congress. it is very important on issues like broadband, which is sold important to our economy. public safety, spectrum -- the fcc has a real obligation to be a resource to congress, the administration, and it is incredibly important. we run open processes.

we are required. we pay all lot of attention to the input we get from all stakeholders. when i tell the scene is, again, this is where i started. great ideas can come from anywhere. bad ideas can come from anywhere. let's make sure we know what we are trying to accomplish, what the shortest distance is to get there, in the sensitive about the different perspectives that we have coming in. >> the white house does not call up and say what their position is on net neutrality and other things? >> we are an independent agency. we do what we believe is the right thing for the country, and almost everybody you could mention, we have agreed and this with them. >> there was a story where a former chairman of the fcc was doing something under the reagan administration that president reagan did not like, or some of his advisers did not, so they

brought in all of the movie studio heads who did not like the proposed regulation, and all were in the oval office. the president says if i could've gotten a meeting with you if -- when i was an actor, i would not have to go into the political world against the fcc chairman was not in that meeting. -- world. i guess the fcc chairman was not in that meeting. you cannot have that kind of situation now? now the you know that it is -- what it is like to be the chairman of the fcc, knowing very thing you know, would to a taken the job again? [laughter] >> yes. the issues that we have talked about, they're very, very important for the country. they're both interesting, exciting, and if we get the right, they will really matter to the economy and ordinary americans. they're things like digital text books that we did not talk

about triplex digital text books -- the idea is that -- talk about. >> digital text books, is that going to happen or not? >> i think it will happen. anything we can do to accelerate it will be a good thing. it is not just about heading off shoulder problems for young people. it is that technology here can be a real opportunity equalizer for students all over the country, and a force multiplier for teachers. when you think about the power of these devices to help on an individualized basis students wherever they are, learn geometry fester, science, math, all of these subjects -- i think the opportunities are immense. we should be the first country in the world to move from paper

textbooks to digital text books, and i think we should lead the world in innovation. i think we of the chance to do it, but there are obstacles to overcome. >> there have been some rumors you would take another position in this administration. are you planning to stay as chairman of the fcc for the foreseeable future? >> i am very focused on what i'm doing every day. the agenda, the things i have described to you, i will keep waking up every day working on that, and i enjoyed. >> we have some time for some questions from the audience. raise your hand. i think there should be a microphone. you can identify yourself if you are not afraid to do so. no lobbying bill. questions? there is one right here. >> thank you i am with -- thank you. i'm with bank of america, mr. chairman. as we all know, our computer and

communications instructor nationally is under constant threat of cyber attacks. just about one year ago, the fcc issued a notice of inquiry about the possibility of developing a cyber security standards and certification for communications service providers. what'd you learn through the process, and what is the status? >> i am glad you mentioned that. the security of our broadband and structure is vital for our economy, from large possesses to small. people need to be able to trust their information is secure and protected. debris will points in response -- 1 -- two point in response -- one is there are agencies that have some expertise and resolute -- relevance to the solution. it is important in this area,

as was the other one, the government as a whole act in a smart, coordinated, efficient way. that is why a cyber security advisor was appointed in the white house. it was the right thing to do. the inter-agency task efforts to tackle this our on going, very important, and they're not easy. there are some steps that we could take. i'll give you one example. there is an incredible opportunity in small businesses going on line, taking advantage of the opportunities the internet, wired-to-wireless allows to expand market, and lower-cost its. -- costs. broadband adoption around small businesses is not as high as it should be to fully take advantage of these opportunities, and we looked to why that is. there are number of different

reasons, but part of it is concerned about the infrastructure. next month, we will launch an initiative together with other agencies and companies in the private sector to increase the level of education, knowledge, and awareness among small businesses of the basic steps that could be taken to protect themselves. there are a lot of things i suspect many people in this room take for granted. did not click on a link in an e- mail from people that you do not know. is not common knowledge, but it should be. we will launch an initiative to focus on small business and security. as we continue to work on the note that you mentioned, and is a part of the process to make sure the country gets this record >> other questions? -- gets this right. >> other questions? identify yourself. >> mr. chairman, i am which j.p.

morgan. with the low usage of internet technology in the united states relative to appear countries, how much is driven by the cost of the individual consumer? >> we figure in our work that there were several different contributing reasons. in some cases, they are independent, and in some cases they relate to each other. affordability is a reason. for some people, it is the dominant reason. we also found that relevance was an issue. there are some people that do not appreciate the value of been online. if there are steps we could take to accelerate that. digital literacy is an issue. there are some people that do not have the skills to be online. there are steps we could take to address digital illiteracy. trust is the fourth step.

we need to work on all of these. here is something that people -- well people, should know this. the cost of digital exclusion is much higher than it used to be, and it is getting higher. i will give you one example. think about jobs. it used to be if you were looking for a job, you would get the newspaper, a look at the help wanted ads, and if you saw something, you would call up, and maybe schedule an appointment or an interview, where you would fax over an application or a rise in may. we know that is not our works anymore. overwhelmingly, the job postings are moving online. in fact, more than three- quarters of fortune 500 companies do all of their job postings on line. if you are not online today, you cannot even find the job. i also talked to a lot of people on the other side that say that

we need to create a lot more jobs in this country, obviously, but there are also jobs that do exist that require basic digital scales, and some employers are having trouble finding people with basic digital skills to fill jobs that are available. in both respects, the cost of digital exclusion is much higher than it used to be. it is why it is such an imperative to bring up these numbers. >> speaking of new technology, president obama recently said that he found that the telephone system in the white house was kind of antiquated and he was surprised compared to what he expected. have you been asked for any advice of how to improve the telephone system there? >> unfortunately, the fcc is not in that business spread across the board, i would say this -- >> are you happy with your phone service at the fcc? >> we've taken a number of steps over the last year to take -- to

make better and more efficient use of communications technology. it is really important, not only to lower the cost of government, because we could lower the cost by using cloud computing smartly, and other new technologies. we could generate more efficiency. to come back to the adoption point, there is the double bottom line that by accelerating the move to e-government and generating the use of new technologies across government, it will help increase our adoption rate because it is often the people that most interact with government that are the ones that are, the least. thinking creatively about bringing these things together, we can get the government to operate more efficiently and do it in a way that brings more people online. it is like incentive options, if i could -- auctions, if i could

plug them again. we need to do some of these things, and we are doing a lot. there are terrific examples in the space where we could do things that have wins on multiple levels -- for our economy, education, raising revenue, and a boring costs. >> we have time for one more question -- lowering costs. >> we a time for one more question. anyone else? i will ask the last question then my question is today, when somebody wants to influence the fcc, an average citizen, what is the best way? write a letter, send an e-mail, come to washington? how can an average citizen actually effect with the fcc does? >> for people that live outside of washington, online is the best way. we have made it very easy for people outside of washington,

whether you are an ordinary citizen, a teacher, a small- business person, an engineer, an economist and a large company, someone at the university, and you did not have to hire a lawyer to present your facts, data, and ideas, but to do it directly online. we changed our rules so that online submissions count as a part of the record, which imposes an obligation on us to take into account as we make a decision. i would encourage everyone to go to the fcc.gov. where are in the process of relaunch in our site to make it more helpful to stakeholders in terms of providing information and also getting input. so, that is the way to do it, but for people that do not have on-line access, we will look at other information that comes in as well. >> all right. thank you, chairman, and on behalf of the economic club of

washington, i want to thank you for an inch in conversation. i will give you a gift. it is a little map of the district of columbia. i hope you are allowed to take a gift. >> i am not sure. josh? [laughter] >> thank you. >> thank you. thank you all. thank you. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> president obama says his deficit reduction plan would cut the deficit by $4 trillion of the next 12 years. there reduce health care spending costs and cut non security discretionary

spending. you can read the plan for deficit reduction on. . coming up tomorrow morning, we will hear more about the proposal to cut the federal deficit . tomorrow morning at 9:15, on "washington journal." >> here are some of the programs featured on c-span this holiday weekend. three former secretaries of state talk about american diplomacy. including a lawyer -- on easter sunday, president ford at son of stephen spitz about public officials handling of ethical issues. former nbc news anger tom brokaw and vice-president joe biden on bob dole.

on monday, political strategist on same-sex marriage in america. >> i give you the ipod nano. >> t comment on the world as he sees it. examined apple and americans' love of technology. >> all of my monologues come out of my obsession. >> find out more about his obsession sunday night. it is one of our cigna --

signature interview programs available online at c-span.org. cam petitiontudent asked students to consider washington, d.c., through their lens. >> my grandfather who has been in the car business for years and 2 ounces grated% out in a small town, he gives so much to the community and he is such a strong and generous man. to see and be in this position, where he had a fear for the security of this family, was an eye opener. it was not until the day three bankruptcy affected my family that i realized what a big role the government can play. in my play >> this is our auto company and we have been here 15 years.

all those brands were affected from the bailouts because of those particular companies. it was the perfect storm. you have companies like chrysler and gm, their cost structure from 50 years ago has been totally outdated and it was not conducive for this type of environment. >> the pain of being phelps -- being felts is not the fault of our workers. they labored tirelessly and want to see their companies exceeded. not the fault of all the families and communities that supported manufacturing plants throughout the generation. it is a failure of leadership from washington to detroit. >> gm union wages or about 25%

higher than the imports. >> gas mileage was a lot -- was another thing that we would hear a lot about. >> that is what the american car market wanted until gas got to be a real problem. >> news of the bankruptcy hurt the dealership because people were scared to go buy products from the big three. >> traffic slows, as you can understand why. people do not know if they want to spend $25,000 of the company is not going to make it. 3 million jobs would have been in unemployment had these two companies gone bankrupt. this affects main street, at this is not a wall street deal. i am in a town of 8500, there were about 3200 chrysler and

dodge dealers in business at the time that would have gone out. i said, imagine if you would have driven by here. we have been here 15 years. this lot is emptied. >> we have consistently about 50 employees would $2 million periled. it would have affected the whole town. >> i was so preoccupied with what was going to happen to my family, i did not realize how it would affect the entire community on a bigger scale. >> a lot of deep -- even the larger market, they give a lot of money locally. >> we are very much involved with the college. we double the size of the facilities out there twice in the last 10 years. we are also involved with the chamber of commerce and our industrial foundation and trying

to help make it a better place to live and to bring jobs. >> i talked to my grandparents and family about how the bankruptcy affected people on the retail level. i went to know exactly how the government intervened. >> in the fault of -- fall of 2008, chrysler, ford, general motors approached the government to get temporary assistance from the government in order to avoid bankruptcy. congress had a significant decision that had to make. do you bailout these companies? do you potentially save the economy by doing so? the potential for other losses of jobs, congress has to authorize any money.

it was the united states congress and the house and the senate that both passed measures that approved the funding. >> although not entirely, there was democrats in both the house and the senate. of their republican opposition's. the critical breakthrough was when the house passed a measure for temporary funding in december of 2008. the bush administration gave a temporary loan to the industry, about $17 billion. in july of 2009, the formalize the total amount to about $80 billion. >> the federal government/general motors and chrysler with emergency loans

that prevents at the end of last year. only on the condition that they would develop plans to restructure. in keeping with that agreement, each company has submitted a plan for restructuring. >> the auto task force convened to decide what the best way to reorganize these companies, to see if they could be viable in the future. >> the issue here was you had president obama removing the ceo of general motors. >> the bailout was so controversial because of the nation is uncomfortable with the government intervening in our lives and to interfere with private business. >> the role of government and its actions relating to the economy has always been controversial. just how much government involvement should there be in the economy? >> government is by the people, for the people. government is the people.

they take our taxes and try to use it in a way that will help the people. >> even though i believe in a limited government, this was a decision that probably had to be made in favor of the auto industry. >> if all of us are doing our part, this restructuring will mark a new beginning for a great american industry. >> the bankruptcy shifted my world view. i went from not even caring about what the government did to i need to pay attention. this could save my family or leave my family and financial ruin. luckily, the federal government came and intervened and helped

save a lot of jobs. >> go to studentcam.org to watch the remaining videos. >> of the about the month of april, we will feature the top winners of the competition. 1500 middle and high school students submitted documentaries on washington, d.c., through my lens. what's the winning videos each morning on c-span. during the program, meet the students that created them. stream all the winning videos at studentcam.org. >> today marks the one-year anniversary of the oil spill in the gulf. a look at the impact of the spill on louisiana and the future of offshore drilling. from today's "washington journal," this is 25 minutes.

john fleming is a loo republican from louisiana. let me again with an editorial. they write this -- what do you think, congressman? guest: there is no question that

the bp spill was an absolute disaster. it showed a lot of complacency on the part of bp. you are right, the response plan was totally inadequate, partly because there have been tens of thousands of wells drilled over the years, and because nothing serious had ever gone wrong. there was no experience. how do you handle a deep water, high-pressure spill? and the solutions hado be invented right there on the spot going forward. the government did its part in worsening the disaster. the m.m.a. thought was responsible for the oversight, minerals management service,

they actually had non-cents a cool things such as a what to do with -- non-sensicle things like what to do with walruses when there are no walruses and the gulf of mexico. having said that, a lot of new technologies have been developed in response to that. the other thing is there are many other rigs out there that have been drilling. they have done just fine and done a good job. right after this spill began, the president brought0 scientific experts together and said what should we do? each and every one of them said we he a lot to do, but we should not put a moratiuon drilling.

despite that, the president did it slapped a moratorium on the deep water drilling and shallow water. the secretary follow through with that. we asked that those be lifted, and there were lawsuits, and in fact the secretary was found in contempt of court for continuing the moratoriums. finally, slowly but surely a few permits have been issued. i think we are up to nine at this point. even the government through its issuing of permits is acknowledging it is ok to drill again, but we still need to follow through on analyzing what went wrong, what was aore problem that led to the disaster, and what can we do in the future? in the meantime, we are seeing tens of thousands of jobs that have been killed off and rigs that have now left and gone to

brazil, nigeria and egypt, and taken jobs with them. in the case of brazil, our government is giving brazil money to help them with their offshore drilling. what will eventually happen is we will buy back from brazil oil that is being drilled off their shores under more relaxed rules and regulations than we have. they have our jobs and we will pay them for oil but should be drilled off of our shore. we really have a lot to do to get the gulf of mexico bacup in terms of drilling. finally, i will add that our oil production now has dropped from 1.7 million barrels per day in the gulf of mexico down to 1.5 million barrels in dropping quickly. it will drop another 250,000 barrels per day in the coming year. even if we started issuing permits at the same rate we have in the past, it will continue

downward for a period of time before it returns. host: john fleming is our guest this morning. we are splitting up the phone line to louisiana residents and all others. let's go to sn, a resident in panama city. caller: i love c-span. i watch it all the time. i realized something that when they gave out all of the money from bp, everybody went down and they filled up the paper and were getting about 5000 per piece. they signed off on having any lawsuits toward bp. i told a friend of mine did you put any mon back to paying your taxes? he more or less d not.

the end of the tax period has come. in the newspaper we have over 1000 people that went to the department of justice for fraud. i figured that bp will probably assault these people in trying to get their money back because ey waited until after the tax line so that they would get their money. i think it was like 54,000 different claims. they will sift through them and they will get their money back. guest: well, i am not absolutely sure of the calller's point, but i will say that we had a field hearing in louisiana earlier this week, the committee of natural resources, and we heard testimony from folks who come from the oil and gas industry, those who come from the fishing industry, and one thing that

really rained true is that while mr. feinberg, who is responsible for analyzing the damages in compensating businesses and individuals for the damage, that employees are getting paid for let's say restaurants and so forth that are now up and operating. the actual see food businesses seem to be in many cases put on hold. in one cases -- in one case, a shrimp company has applied 10 times and not received a response. they are told that the paperwork is los. we understand that of $20 billion that was set aside for compensation, only 2.5 billion has been spent so far, and there seems to be a certain level of chaos.

we are going to be asking mr. feinberg to come back and speak to us on this issue and to really delve into and perhaps hold his feet to the fire as to why claims are not being processed in a timely way. host: the numbers seem to vary. bob lovely of bp rights today that they have paid out 5 billion -- bob dudley of bp today that they have paid out 5 billion. in guest: any way you divided, it is only a fraction of the 20 billion. we are now only a year down the road in companies are telling me they're having to go to credit lines to stay up, hoping some way they will be compensated. we met with mr. feinberg early on and what he said itould be his approach, he is also the

person who took care of the 9/11 people affected from the disaster that happened there and is well respected for having done a good job, but what we're hearing is that first he would write checks to get people through, maybe $25,000 at a time, even if their claim had very little documentation. then he would come back around and require more documentation for a final settlement. what we're hearing is some people have received no funds hatsoever.te i think it is uneven. we need to get to the bottom of this. this is not bp. this is mr. feinberg, who is paid by bp but accountable to those who have been injured in this. i think we still have issues of

competency we need to deal with. there are over 3000 employees apparently, and that is a big operation. we need to get to the bottom of this. we need to be sure that businesses get timely payments, because if you are not making money in business, then you are losing your assets of the business may never return. >> there was a piece last week in "the washington post." they reported this -- shouldhere be an investigation into companies and individuals who received a large payout without documentation or proper reason to get the money? guest: absolutely.

i do not think that anyone has committed -- that has committed fraud or abuse should be rewarded. i think they should be prosecuted. benow there wewill always companies and people that will ta advantage of the situation, and tt is the reason why the innocent are hurt in this, because you have to be careful and analyze evething that comes through. there are many pple with legitimate claims that do not get reimbursement in a timely way as they should. this is just another example, what you are pointing out. i do not know about corruption and insider dealing. i am from the northern part of louisiana, so i am not on the ground where a lot of this is happening. so i do not have personal knowledge of these things. and on the other hand, i know human nature and i know these things happen when you have a

disaster. host: that is a tweet from one viewers. talk about your district a little bit. was it impacted in direct from this situation? guest: not at all. he is quite right. my district is the largest deposit of natural gas in north america, and in fact, the fourth largest in the world. our problem is jusopposite. we have such plentiful product that we cannot move it fast enough, and therefore the prices are low, and it is very difficult for companies to profitablyring it out of the ground. for us we feel that because natural gas is such a clean hydrocarbon and has so many

applications for the future that we need to transition to private vehicles that operate on natural gas. we need to have natural gas pumps spread ross the country. if you were to fill your car today with natural gas, it would be about $1.80 per gallon. you can see how cost-effective thats. that would take the pressure off of gasoline costs. ours is just the reverse. our problem is the prices are too low and becomes unprofitable to bring it out of the ground. back to the original question, i served on natural resources. offshore drilling is part of ou jurisdiction, so i have been involved in this from the very beginning. we have had a number of hearings. while i do not live on the shoreline or coast line, i have been very closely involved with this, also with my colleague and friend, congressman landry who

does live in that area. we have had a number of hearings. it is interesting that a lot of these hearings have to do with trying toet permitting to speed up. we're going to keep having hearings as long we can get permits out of them. host: we are happy to have john fleming as our guest this morning. what will be talking to a democrat from florida -- we will be talking to a democrat from florida. in caller: llo, c-span, and hello america. before this catastrophe happened, i was investigating all war -- a war between the oil industry in the fishing industry. as soon as that explosion happened, i called the department of homeland security and saidhis was purposely done.

the magic plan is to turn the mexico into a dead zone. the strategically positioned under water rising to spew the oil all over the gulf so what types of the fishing industry and the tourist industry. guest: actually, that is nonsense. this was a terrible accident. 11 individuals, part of louisiana family died on that. many others were injured. it is certainly a stain on our memory. you know what is interesting is even though there was millis of gallons of oil spilled, it had very little impact on the fishing industry directly. what has happene is it has created a perception that there is tainted product, when in fact

we are processing plenty of oysters, plenty of shrimp, and most of the coast line did not see oil spill at all. the safest seafood you will find today is off the shore of louisiana. that is one of the things we're asking help with is to help get the word out. we want to ask them to help us advertise that very fact, because there is no seood product that is tested any more than that off the shore of louisiana. my message to folks is come on down, because we have some of the biggest juiciest shrimp you confined. it is delicious and absolutely safe and clean. to louisiana. ng caller: i am a first-time calller, long time you weviewer.

a couple of quick points. first of all, this disaster would never have occurred if we put in place the regulation that we see in norway, sweden, and some of the other countries. sendly, we are hearing a lot of misinformation in terms of the overall context. thousands of leases are held up in the gulf of mexico by the oil companies, and they are not drilling on them, and they want to tie up even more leases. this is a way to help control the market. the most disturbing thing was the vote you took a couple of weeks ago. since 1996, we have received a zero royalties from most of the deepwater drilling that was set up to originally encouraged a deepwater drilling. with oil prices where they are, my question to you is why did you think the residents of louisiana and the rest of the country do not deserve to have

royalties paid by these international companies when they are drilling and our deep water? -- in our deep water? guest: i am a little confused by the question. he is suggesting that somehow i did not feel that revenues or taxes should be paid to louisiana as a result of drilling. i have never said that, nor believe that. there is severance taxes, and of course there are jurisdictional issues. some states, their jurisdiction those 3 miles offshore, some 12 miles. a lot of those things are determined in state government. i am part of the federal government. i believe louisiana should get its fair share of severance taxes from the drling. i forget what the first part of his queion was. and host: he was talking about

companies tying up leases and not using them. guest: that is a common statement that is made. at i remind people is when a company leases lands offshore or on the ground itself, it has to lease it in certain size parcells, and then it goes in and does testing and so forth. they go to that part of the leased property where the optimal opportunities are to get oil or gas or whatever product they are looking for, so you have to throw out a wide net in order to find what you are looking for. obviously, even though there me hundreds of thousands of acres that a least, it would make no sense to randomly drilled throughout those areas. you have to go where the oil is. you are always going to have leasing that goes far beyond what the drilling is.

that is just the nature. we do not have a perfect size to know where the oil is. remember, the leased land is being paid for. someone is in in revenue from that. in many cases the state. we see this on dry land also. the truth is, until we perfect exactly how we find oil that is as much as 2 miles below the surface, we have to throw out a wider net. that is why more land is leased than what we drove on. than what we drill on. host: let's go to philadelphia. you are up. caller: i want to make four statements. one is the misconception by so many callers that believe we have to ill more in order to lower the price of gas, when in

fact the middle east is stating that because demand is so low that they will cut back on supply. that is my first point. my second point is, isn't there some way that our country could drill for the oil and develop a better blowout preventer? host: we will have to leave it there. let's give the congressman to respond. -- get the congressman to respond. guest: the price of oil is a supply and demand issue. whether we are drilling more here or in other countries, the more that goes on the market, the lower thprice. the cartel's try to manipulate that so their profit margins are as high as they can be. you cannot blame them for doing that. onway to break the back of the cartel's is to be less dependent on foreign oil.

we have dropped from 30% dependency to 60% on foreign oil. today if you add coal, natural gas, and oil together, the unitedtates has more product than any other country in the world by far, incding saudi arabia, so we have plenty here, but we put handcuffs on ourselves to keep from exploiting those natural resources. host: heres a tweet the ones to get your thoughts on whether or not it is fun to energy and resources and development to move off of fossil fuels as quickly as possible? guest: i think it makes see to do that. i and my republican colleagues believe and all above strategy. we believe if wind it makes sense economically, let's do wind. the problem is the technologies

are dancing in the areas of hydrocarbons. it is also fuels -- fossil fuels where it is cheaper. -- the problem is the inhnologies are at advanciadvag the areas of hydrocarbons. what we're finding is there are many people that want to push the price of gasoline up word and subsidize alternatives in order to even things out, but that makes no sense. we think the marketpla should determine the winners and losers, but at the same time we should use the advancing technologies to make hydrocbons as clean as possible, and we have done that to a tremendous degree. host: denham springs, uisiana. byron. caller thank you.

congressman, you are not being truthful with the peoplef the united states. first, you can check with the department of labor, there was no massive loss of oif jobs ineh he oil fields. one of thewere first to go on fox news and the man $20 billion from bp. you said that was communistic or something like that. guest: well, i would have to disagree with the calller. we have lost several big rigs, and the jobs go with them. there are several companies that are sold for companies that provide the riggings, the piping, transportation back-and-

forth. one in particular, and i cannot give you the name, is already filing for bankruptcy. jobs have left the state, and it is the level to tens of thousands, and we're losing more every day. and i do not know howo respond to on washington journal tomorrow, we will hear more about proposals that affect the federal deficit. our guest is alice rivlin, former congressional budget office director and a member of the debt commission. during the conversation, tomorrow morning at 9:15 eastern on washington journal here on c- span. in just a few