either to prosecute or to decline prosecution. all i can tell you is that we are looking at these cases seriously, we're going to pursue them aggressively. and as soon as we can make a determination and share that with the american people, we will. >> so then there is, just to conclude, general holder -- we should know, the members of this committee and the american people, should know that your justice department is vigorously investigating these claims and under an array of statutes, the possibility for criminal prosecution against individuals in connection with the mortgage foreclosure crisis is real and we should look forward to the potential of those cases being brought. >> i don't want to overpromise, but the possibility that those cases could be brought, yes, that is certainly the case. we are in the process of looking at a whole variety of these matters, and it is possible that criminal prosecutions will result. civil actions might result.

we're going to try to take whatever enforcement action we can to try to hold people responsible where that is appropriate. >> thank you. i yield back. >> thank you. the gentleman from utah, mr. chaffetz is recognized. >> i'd like to go to operation fast and furious. in the last few weeks is when you had heard this, you said. the president made statements to this in a report on union i vision back on march 22nd. were you aware of this operation before the president or after the president made those comments? >> my guess would be probably before the president. >> who briefed the president about this? he obviously knew something about it. he made a statement about it. who briefed the president? >> i don't know. >> who would typically -- who would do that, if not the attorney general? who would brief the president on this? >> well, we have a white house contacts policy so that the justice department interacts with the white house counsel's office. i don't know what goes on within

the white house. >> are you familiar with the president's comments, then, on march 22nd? he said, quote, there may be situation here in which a serious mistake was made. if that's the case, then we'll find out and we will hold somebody accountable. would you agree or not agree with that comment? >> i would agree. >> would you agree that there were some serious mistakes maid in this situation? >> i don't know. that's one of the things we're investigating. what i've asked the inspector general to look at. >> it's been reported that at the death of brian terry, one of our border patrol agtsents, tha railroad guns from the operation found at that scene. is that in dispute? >> i don't know that to be factually accurate the i don't know. i've heard that, asked the inspector general to look into it. >> is there a scenario if those guns were found at that scene? is there a possible scenario that mistakes weren't made and yet we have guns at the scene of the death of one of our border patrol agents? >> i think that's right. with if those facts are

accurate, mistakese i fact made. >> this program was improved by the justice department my understanding is in january of 2010. i guess i'm struggling to understand why an operation as big and large and important as this has not come to your attention for more than a year after it was originally authorized. can you help me understand that? >> well, you've got to understand it's something that is big, you've described as big, in comparison to all the other things that are going on in the department, at any one given time, might not seem quite as large. i have, as i said, 114,000, 115,000, the atf, dea, a whole variety of things we've talked about here today. >> i guess my concern here is, here's an operation where we're knowingly allowing more than 1500 guns to go across the border, maybe with good intention, but obviously with consequence that is unparall unparalleled. i'm just not aware of us on a

regular basis allowing and knowingly allowing guns to be put in the hands of bad guys and now we've got -- i just don't understand why that doesn't come to your attention. also, my understanding is that they are receiving task force money and these types of programs a task force must be approved at high levels, including the level of deputy attorney general. who did know about this? who did authorize this? and when did they authorize it? >> again, that is part of what the inspector general will be looking at, who exactly was involved, what the level of knowledge was, who should be held accountable, if in fact there were mistakes that were made. that's what the evinspector general will be looking at. >> is it your intention to not comply with our subpoena because the inspector general is doing that? or do you believe -- that is, are you precluded from complying with the subpoena because the ig is looking into it or can you do both simultaneously? >> we can do both

simultaneously. what i've asked with regard to the subpoenas that we try to minimize the impact on the ongoing cases. it's not the inspector general report. we've tried to come up with ways we'll make information available to the committee in a timely fashion and not harm those ongoing investigations. >> the atf office involved in this was evidently the phoenix office. are there any other atf offices that you're aware of that may have been involved or engaged in this? >> involved in? >> the operation gun runner and fast and furious. or was it just the phoenix office? >> i don't know. >> let me move to a different issue, if i could, in my short time here. i just recently went down to the border with mexico. i think one of the statistics that the border patrol puts out is that they only have 15%, 15%, operational control. what do we need to do to secure the border? because i was shocked and surprised. i went for hours in places right along the border where there's

nothing more than a barbed wire fence cut in many places and never even saw an agent. we're pouring a lot of resources into it, but what in your opinion do we actually have to do to secure the border? because it's not happening. >> the situation along the border is better now than it probably ever has been, which isn't to say -- >> but how do you come to that conclusion? >> you base it on the number of people who are stopped, the amount of drugs we recover, the amount of guns -- >> so if that stat goes up, the number of apprehensions goes up, is it better or if the number of apprehensions goes down, is it better? >> well, it depends on a whole bunch of things. certainly a function of the number of people trying to get in, it also is a function of how effective our enforcement efforts are, which is not to say there aren't issues, still problems along the border. i think we have to do all that we can to secure our border. and i think that one of the ways in which we do that is to really look comprehensively at this whole immigration question. >> no doubt. i think we have to fix legal

immigration, do a lot of other things. but the statistic of apprehensi apprehensions, if it goes up, are we doing a better job of securing the border, or if apprehensions go down? >> like i said, it's a difficult one to answer. >> i know. that's why i asked you. >> you can say that, if we are apprehending more people, that means we're stopping more people. on the other hand, if we're getting fewer people, it's entirely possible our enforcement efforts are working and fewer people are trying to get in. it's a difficult question to answer. >> i at some point would love to know the answer to that question, mr. chairman. thank you, i appreciate it. >> thank you, mr. chaffetz. the gentleman from mr. puerto rico is recognized. >> greetings, mr. holder. in the brief time that i have, i want to address the problem of drug-related crime in puerto rico. through the first three months of this year, 301 homicides were committed in puerto rico. a 35% increase over the same period last year.

and this is unacceptably high for 3.8 million people. you might say, you know, why am i raising this local issue? well, the fact of the matter is that, unfortunately, puerto rico has long been a transshipment point for drugs coming into the u.s. mainland. so this is tied to the u.s. as a whole. when i look at the federal government's efforts to combat drug-related violence in puerto rico, i'm troubled that key doj offices on the island have vacancy rates between 17% and 57%. from speaking with you and others at the department, i understand that apparently you're having difficulty recruiting agents for places like puerto rico, high-crime localities or h high-cost-localities. i wonder how you're making ziegs

decisions. when you make assignments through the different organizations, fbi, atf, are you considering homicide rates, for example, the levels of violence, issues such as recruitment difficulties? are you giving any incentives to your agents to locate in places like puerto rico? or it could be miami or it could be in places like puerto rico, miami, l.a., different places maybe, detroit, places facing high crime, new orleans. how are you doing this? >> we try to employ resources in places they are most needed. the concerns you raise are legitimate ones, not only because puerto rico is a trans shipment point but the people that live in puerto rico are american citizens and deserving of the protection of their government. we try to come up with ways in which we get investigators agents into puerto rico by coming up with incentives, tdys,

temporary duty, putting people there -- if people don't want to relocate put them there for 90 days, 180 days to try to keep the numbers up. we are doing the best we can trying to get resources to the places they are much needed. you and i have talked about that issue. i'm very concerned about the homicide rate in puerto rico, drugs in that part of the country, on the island. >> one other thing, in looking at this issue, i got statistics from all the different agencies within your department but for the fbi. would you assist in providing me this is the number of positions you've authorized and available and the numbers vacant. i just want to compare and i believe i should have that information. >> i'll get you that information. >> thank you very much.

i yield back the balance of my time. >> the gentleman from south carolina is recognized. >> thank you, mr. chairman. attorney general holder, if you would, i would be indebted if you would like ausa and federal enforcement officers knows how grateful i am for their service and how much i appreciate it. they do a fantastic job. i'm sure it would mean more to them to hear it from you than it would for me. if you would let them know that, i'll be grateful. >> thank you, and i will do that. >> what i hope to do with the remainder of my time is have a constitutional conversation not political conversation. you do not believe the interstate commerce clause doesn't allow us -- you're not making a states right argument. you're making an argument based on the three tiers of constitutional scrutiny, right?

>> typically marriage is defined as something that has been a state issue as opposed to the federal government. >> it is but there's thousands of instances where congress has to define what the family is to be instructive with other statutes. you're not challenging congress has the authority to define marriage. >> well, i think we may be quibbling here, not to define marriage but how to define how marriage people are treated. i think i would agree in that regard? >> and would you agree with me that the rational basis test is the appropriate test to be used with respect to the marrying of family members. that's the appropriate test, right? rational basis. you're not arguing on a heightened level of scrutiny on whether cousins can marry each other. >> i wouldn't argue that. i don't know if there's law on that. off the top of my head, i don't

know if you'd need heightened scrutiny in that regard. >> age restrictions. we wouldn't need heightened scrutiny with age descriptions. >> there's a four-part test i have here. i don't think you'd have heightened scrutiny as well. >> don't need intermediate or heightened scrutiny with respect to polygamy, right? >> i would think that. >> since two courts of appeals have upheld a rational basis test for sexual orientation. that's two that have upheld the rational basis, one applied a heightened level of scrutiny. my question is why would you single out the one court of appeals that has applied a higher level of scrutiny, ignoring the two that applied a rational basis test. that strikes me as a political calculation and not a constitutional calculation. >> not a political calculation. i think what we had to do was look at -- the court of appeals make decisions that sometimes

the department of justice will disagree with to the extent that court of appeals have taken different views of what the appropriate level of scrutiny is. we think those courts of appeals are wrong. the supreme court will ultimately have to decide against this issue. i want to assure you and everybody else that the decision we made with regard to doma did not have a political determination to it. it was a legal determination. >> i want to believe you. i really do. i mean that earnestly. but when i was in ausa, there was a court of appeals that said law enforcement officers didn't have to read miranda warnings anymore. it was an unusual opinion and one we didn't follow. it was one court of appeals that ruled that way. heaven knows the night court of appeals is presumptively wrong. we don't change our course of conduct -- i said that, not you. when the ninth circuit court of appeals comes up with something crazy, we don't change our course of action. it is difficult to explain why it's not a political calculation

or decision when two courts of appeals post lawrence have said rational basis test is the one that applies and only one that argued for a heightened level of scrutiny. it's tough to see how that's not political. >> i think one example. i might be wrong on this one but my memory serves me correctly, when it came to the dickerson case, the fourth circuit indicated that that statute that was patched that overruled miranda, the supreme court said that statute wasn't that constitutional. the justice department argued against that statute saying it was unconstitutional before the supreme court. you have the justice department arguing in the supreme court against the statute passed by congress and also taking on a federal court of appeals. there's history to these kinds of actions that we took with regard to doma it's unusual,

rare but happens. >> supreme court never applied a heightened level of scrutiny, only one court suggests there's a heightened level of scrutiny and one does not. can i have 30 seconds to have a question? >> without objection. >> thank you, mr. chairman. we'll continue this conversation hopefully at some other point. you said that there were tactical reasons to try terrorists in civilian court rather than military tribunals. you would agree the evidentiary rules are more relaxed in military tribunals than civil court? >> there are certain rules -- the difference is not as great as some people think. certainly with regard to hearsay, you can get more hearsay in military commission than article 3 courts. >> jury qualification and selection is certainly

different. >> yeah, different systems there. >> right. so to the extent you can, what tactical decisions made you believe that it was better to try these defendants in civilian court than in military court? you used the word tactical. as a prosecutor i'm thinking more likely to get a conversation. >> you would be right when it comes to tactical and how i viewed that. what i don't want to do, with all due respect, because you've asked questions in good faith, i don't think i can answer that question out of concern that what i might say could have a negative impact on the case that is pending now in military commissions, tactical reasons, tactical concerns that i saw were i to reveal might give to the defense, an opportunity to raise issues that otherwise might not exist. >> fair enough. thank you, mr. chairman.

>> thank you mr. gowdy. >> i do wan to say i thank you about what you said about the assistance there and i will share with them the good thoughts. >> thank you very much. >> mr. johnson recognized for his questions. >> thank you, mr. chairman. mr. attorney general, i welcome you here today. as head of the justice department you are responsible for among other things enforcing federal criminal laws, defending the united states against civil actions, and also protecting our national security. now at a time when your department has been adversely impacted by the ravenous budget cutting, i was puzzled by one of my colleagues on the other side questioning you about the allocation of your precious resources to the issue of adult hard core pornography.

and i was -- i really would like to know what is adult hard core pornography. but because my time is limited, i will forego that question. but mr. attorney general over the last couple of years, you have successfully prosecuted many terrorists cases. in fact, under your leadership the justice department has successfully prosecuted more terrorists than any other two-year period in history. the recent military operation, which led to the death of osama bin laden is a testament as to how this administration handles national security in a disciplined fashion using all the tools at its disposal that

are available in an effort to protect the american people. i must take this opportunity to recognize the great -- the fabulous success of the mission which was carried out by the cia and joint special operations command that resulted in the apprehension of osama bin laden over the weekend. and i know that your department is just as effective when it comes to prosecuting terrorists, and i deeply regret the fact that your decision to prosecute khalid sheikh mohammed, the

mastermind of 9/11, your decision to prosecute him in the criminal courts of this country, i regret that congress -- politicians in congress usurped your ability to exercise the discretion that you have with respect to where to try that gentleman, because he'll be tried in a secret military tribunal, many of the things about the case that have not been publicly revealed the not be revealed so the american people will be left without the information which i think would generate true closure for them in this matter. i appreciate all that you've done at justice to protect all

americans at home and abroad, and i applaud the justice department's commitment to transparency. under your leadership, the department has processed a record number of freedom of information act requests and you've testified before this committee numerous times and your dedication to state and local law enforcement by supporting the cops program certainly does not go unnoticed especially in this tight economy. now, general holder, i sent you a letter on march 28th this year requesting information pertaining to three federal intelligence contractors, who collectively refer to themselves. are you familiar with my letter? >> i can't say that i am.

>> in that letter, i express concern that the three firms might have broken the law by conspiring to harm american citizens using illegal techniques such as hacking, planting malware, blackmail and fraud. nineteen of my colleagues in the house of representatives echoed those serious concerns in a letter sent to house committee chairs earlier in march, and i also requested copies of all department of justice contracts with those firms within 10 days. i have great concerns that the law may have been broken and i understand there are many demands on your time and that your staff is busy, but will you commit to look into that matter? >> yeah. we will. -of- great staff, many of whom are behind me and they are

undoubtedly making notes about -- i hope they are. >> i hope they are also. >> they are writing. they are writing. >> i'd appreciate you all getting back to me. when additional information arises, i will definitely send it to you on that case. with that i would yield back. thank you. >> thank you, mr. johnson. the gentleman from iowa mr. king recognized for his questions. >> thank you, mr. chairman. thank you attorney general holder. it's always a challenge when the secretary-general of the united states has to testify before the judiciary. i have a series of statements to examine, perhaps not the depth some of the other have. i recall your testimony here roughly a year ago. we had a discussion and exchange about arizona's sb 1070 law. at that time i had asked you if there was a provision in the constitution that you believe it

had violated or if there was federal preemption it had violated or controlling case law it had perhaps crossed the line on. at that point you weren't prepared to respond to that. i don't ask you to do that today but make the point that subsequent to that, justice filed a lawsuit against arizona. and in reading that, i come across this seemed to be something i hadn't encountered before, careful balance that makes the case that congress has established a careful balance between the various and sometimes competing immigration laws and this job of justice in the other departments to maintain that careful balance just to put that in summary. >> i'm sorry, what kind of balance? >> a careful, careful balance. i've been involved in a lot of immigration debates, and i don't know anyone ald they introduced legislation on immigration that was designed to achieve or enhance a careful balance, so i

just ask if that -- i'll call it illegal theory, careful balance theory, does that exist anywhere else in law that you know of? >> the positions that we have tape in that lawsuit have been upheld by both the district court and court of appeals, theories we have brought, theories we have used, which i think are mainstream theories, said by two courts now that we are in the right. >> your honor -- this is the micro phone. it's not attorney frank's fault. the careful balance theory, however, regardless of the two courts ruling and we're on the way to the supreme court, i presume, do you know that careful balance theory exists anywhere else in law? >> to the extent that we have used particular theories or particular phrases, i'm sure the lawyers that filed those briefs did so carefully, did so with regard to --

>> okay, attorney general, let the record show i think it's a unique theory myself. i'd be interested if there's any other place you could direct my reference. it seems to me that's the one that's convenient for this case. if it's anywhere i'd like to know the answer to that. let me move on. i didn't ask the question whether you'd read 10 b 70. we have another piece of information passed by one of states hb 116, utah's legislation that i will contend for the sake of simplified vernacular creates utah as an exemplary state. have you read that? >> i have read the utah law. >> have you made a determination whether to bring suit against utah? >> i have not. i think in a prior question what we typically do is try to interact with the state and try to work our way through any disagreements we might have without bringing suit. the statute doesn't go into

effect until 2013. we are prepared to bring suit if necessary but that is a decision we would make in about a year or so. >> let me just then make the point that if arizona is preempted, then utah establishing a sanctuary state certainly is preempted, what that point between us today. move on also, you've reviewed since your last testimony before the committee, the sworn testimony of christian adams and chris coats before the civil rights commission when they had made the point the justice department has a racial component to the equation of whether they will enforce discrimination if it disadvantages a minority, do you review that testimony and accept it as truthful their sworn testimony? >> i've not reviewed the testimony but their characterization is totally inaccurate? >> i just ask for your own benefit, have you looked into

the department and evaluated -- done a further investigation, though? you disagree with that. have you done an extra investigation within your party to satisfy yourself. was that your judgment a year ago and your same judgment today? >> if you look at the insertions they have made, seems to me they are inconsistent with the findings the office of professional responsibility made looking at the plaque panthers matter, made the determination that politics, race, did not play a part both in the filing of the case or in the decision how the case was disposed of, which seems to me is inconsistent with what they are claiming. >> mr. attorney general, i point out i believe thomas perez was less than truthful with the committee when testified they achieved the highest penalty under the law. just ask consent for an additional minute. >> with that objection the gentleman is recognized for an additional 30 seconds. >> thank you, mr. chairman. i also wanted to bring up the

issue of bigford farms. can you cite for this committee the authorization you had or may believe you had to open up negotiations for a second round. >> the attorney general has the -- >> would you cite the farm bill exclusively on pigford 2. >> i'm not sure i understand your question. >> i can understand why. so i'd ask did you negotiate with john boyd on settlement for pigford 2. >> did i? >> yes, or did anyone from your office authorized by you do so. >> i'm not sure i know who mr. boyd is. >> that's instructive to me and i won't push my time limits any further. appreciate it.

>> the gentlewoman is recognized. >> thank you, mr. chairman. thank you for being here. two nights ago president obama announced osama bin laden had been killed. as persons around the country rejoiced, president obama also reminded us on that day no matter where we came from, what race we came from, what god we prayed for, we were unitied in the american family. the hatred in the muslim american community and those thought to be muslim. the committee held hearings that targeted the muslim community. considering the importance intelligence played in finding osama bin laden, how could an antagonistic relationship between the american muslim community and law enforcement hurt our efforts to combat any home grown terrorist threat and what have you been doing to engage the community and maintain their trust?

>> i think that's a good question. if there were an antagonistic relationship between law enforcement and those communities, that would have a negative impact on our ability to protect the american people. what we have seen is a pretty consistent level of cooperation and provision of information from the muslimed kmuntd in the united states. the department of justice has been leading the way in order to dispel myths, make sure there's open lines of communication, make sure our aim is to protect all americans, muslim americans as well as everyone else. to the extent there's inappropriate actions against the community, our law enforcement has tried to step in and take action. >> let me ask you about the

guidance the doj has. even ten years after 9/11 there's profiling against south asian and muslim kpluncommuniti. the u.s. attorneys office investigated violence threats, vandalism, arson against muslim in the united states between march 11, 2007. in 2003 the doj issued guidance for racial profiling. given that it's counter-productive policies that prohibit it are certainly admirable. however, there needs to be much more strength on this kind of guidance. and the guidance doesn't profile -- doesn't ban profiling on the basis of religion or national origin and lacks a

meaningful enforcement mechanism what is the progress of the review you're doing right now involving this guidance? where is it? >> i would say first as a general matter, use of profiling techniques is not gemelli good law enforcement -- is not generally good law enforcement. we have under review the policy that was initiated back i believe in 2003. that review is under way. my hope will be i have recommendations from the group that is looking at that policy. >> and i certainly would urge that you do look at the issues of religion and national origin as well as the enforcement mechanisms. let me also say that the doj has engaged in much needed outreach and i acknowledge that. there certainly is a need to better institutionalize better

ad hoc initiatives. would the doj consider initiatives to combat 9/11 discriminatory backlash by designating a special council for post 9/11 discrimination? >> that's an interesting idea. i think that, you know, we have laws that our civil rights division traditionally enforces. it handles those kinds of issues. we have a community relations service as well in the justice department that can contribute in this regard. i think we have the tools that we need and certainly have the dedication of the people who are career employees and hole be there after i leave as attorney general, who i think will remain dedicated to the enforcement of those regulations and those laws. >> i hope you might consider that. my last question has to do with hate crime statistics. the hate crime statistics act mandates collection of data on

hate crimes but lumps together those acts anti-muslim or anti-arab, hence, those acts that are actually committed against are not distinguished. formally tracking those by arabs, hindus, sikh. >> the greater amount of granularity we have with regard to who are the victims of these kinds of acts, the more effective we can be in our law enforcement efforts. your suggestion is a good one. that's something we can consider and work with you in trying to determine whether that is something we can appropriately do. >> thank you and i yield back. >> thank you. before i recognize the gentleman from arizona mr. quayle for his question, let me say two have been called and we'll need to stand in recess and go vote and

return mr. attorney general if that's all right with you. there are still several members who would like to ask questions. gentleman from arizona. >> thank you, mr. chairman, and mr. holder. i want clarification what you talked about with mr. king. the reason there wasn't any action on the utah case based on the fact it's not impblmented to 2013 and you still do see possible supremacy clause violations within that law? >> i think there's certainly issues we see now. our hope would be now between now and 2013 we can work our way through concerns without bringing a lawsuit. but if we have to, we will. >> working through legislature, passing a different law, making amendments to that law? >> that way interpretations that the attorney general might take -- there are a number of ways we might work our way through it. >> changing gears, i read i think it was last month "the wall street journal" reported doj and ftc resorted to coin

flips, sometimes trades and bargains determining which agency would have jurisdiction, which would cost time and expenses. doj antitrust division and congress have conducted investigations into online search engines and online advertising markets. as this area of our economy continues to grow, how do you plan on dividing the work between the agencies while preserving institutional knowledge and consistency. >> a very good question, something we're trying to work our way through. the ftc and justice department have generally been in a good place dividing up responsibility for any trust enforcement. there have, however, been instances where we've not been on the same page. i think we need to get together to work together. that's what we're trying to do to figure out what the rules of the road will be so we don't end

up with coin flips or other ways to decide these matters. >> they are working together to get guidance on who will oversee those matters? what roll do you think the antitrust division has in helping maintain an online marketplace that rewards without necessarily for closing new competition and preventing ideas from reaching consumers? >> i think the antitrust division, it's an interesting way you phrase it. it's right. we generally -- antitrust generally seen as trying to stop mergers, consolidations. but i think the affect, collateral impact of that word is to make sure things are kept open, things are kept free. that's especially important when one looks at cyber issues, internet, where innovation happens so rapidly, consolidation, intel is not necessarily a good thing. we are constantly looking in

that sphere for things that might in exhibit the growth, development. internet. >> in those investigations, have you seen any active and actual bottlenecks or gatekeepers keeping content from consumers? have you seen any actual evidence of that or are we starting to get down to conjecture and it's going to the possibility of the gatekeepers rather than actual factual evidence pointing to that? >> i'm not sure i'm capable of answering that. we can get you something in writing from the folks at the antitrust division who would be able to tell you more and more complete and contemporary way what concerns they have in that regard. i'm not aware of any but i wouldn't want to -- just because i'm not doesn't mean there aren't things in the antitrust division responsive to your question. >> you don't know anything but you could give me information if there is any. thank you. i yield back. >> we'll stand in recess 20

minutes and be back then. >> thank you. >> today, the president and ceo of the american petroleum institute on "the communicators -- "newsmakers." >> the message that congress needs to send to the marketplace right now is that help is under way. these decisions should have been made years ago. the administration has done everything to the lake, the fan, and discourage the development of american natural gas. those signals have been taken into account in the marketplace. but are saying that it appears the policy of the united states

is being factored into the price. one of the great things that we can do now is send the signal to the marketplace that we are serious about reducing american energy by americans, four americans -- producing american energy by americans, for americans. >> today, 6:00 p.m., on c-span. it is also available online apple caller: ♪apps c-span.org. >> tonight on q&a, dick couch, former navy seal. following his 1967 graduation, he worked as a navy seal. he now serves as special operations adviser to the naval command. tonight, on c-span. >> during a trip to new york

city last week, president obama visited firefighters at the pride of the town fire house in manhattan. the lost 15 on 9/11, more than any other in new york city. [applause] [unintelligible]

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mayor giuliani, who obviously performed heroic [unintelligible] i wanted to come here to thank you. this is an extraordinary sacrifice. [unintelligible] cannot bring back the friends that we lost. i know that each and every one

of you not only grieves for them, but have dealt with the families, the children. [unintelligible] message around the world and here at home that everything we ever forget, [unintelligible] our commitment is to making sure that justice is done. transcending politics. transcended party. it did not matter who was in charge. we were going to make sure that the perpetrators [unintelligible] i hope it is some comfort, the

sacrifice still remains in place. [unintelligible] highwater mark for the courage of new york firefighters. it does not get as much attention. every time that you are saving lives, it is part of what makes this country great. so, i want to thank you from the bottom of my heart and on behalf

of the american people for the sacrifices that you make every single day. i want to let you know that you are always going to have a president and administration that has your back. god bless you. god bless the united states of america. all right? thank you. [unintelligible] [applause]

[unintelligible] >> president obama also participated in a brief laying ceremony, paying respect for the victims of the september 11 terrorist attacks. after that, he met with police officers in lower manhattan, where he was joined by a former mayor. rudy giuliani. this is about 20 minutes. apa@a@apop

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>> i am not here to make a long speech. i am here to shake your hands and say how proud i am of all of you. obviously, we had an important day on sunday. the reason was important was because it sent a signal around the world that we have never forgotten the extraordinary sacrifices that were made on september 11th. we have never forgotten the tragedy, we have never forgotten the loss of life, we have never forgotten the courage shown by the nypd, by the firefighters and first responders, my

understanding is all of you were there that day. i know that you will never forget and i know it is hard to fill holes that occur as a consequence of losing those who have worked with for so long. hopefully what this weekend does is that it says we keep them in our hearts and we have not forgotten. we did what we said we were going to do and america, even in the midst of tragedy can come together across the years, across politics, across politics and across administration's to make sure we get the job done. since that time, i know all lot of you have comforted loved ones

of those who were lost. you have probably looked at kids who have grown up without parents and a lot of you continue to do extraordinary courageous acts. without a lot of fanfare. what we did on sunday is directly connected to what we do every single day. i speak for military teams and intelligence teams that help -- we know the current -- we did courage and sacrifice the show and you are part of the team that helped us achieve our goal and also help us keep the faith every single day. i could not be more grateful to you and i hope you know the country will continue to stand behind you going forward

because there are still going to be threats out there and that they will call on your courageous actions to remain vigilant but you will have the country behind you. god bless you. [applause] i very much appreciate the fact that mayor giuliani is here. obviously we remember his leadership and courage on that day as well. it is a testimony that we may have our differences politically in ordinary times, but when it comes to keeping this country safe, we are first and foremost americans. thank you. thank you.

we appreciate it. thank you. [applause] we need to do to shots? why don't i get this crew over here? [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> thank you.

>> tonight on "q &a" -- he became part of the team after graduation and now tax as an adviser to the u.s. special operations command. that's at 8:00 eastern, here on c-span. >> this weekend, the former utah governor and former ambassador to china, jon huntsman, delivers the commencement address at the university of south carolina. it is the first southern state to hold a primary. that's tonight on "c-span's wrote to the white house." >> you can access our programming anytime with the c- span iphone radio application. you can listen to our signature interview programs each week. it is all available from the

clock. >> next, a discussion on the killing of osama bin laden and u.s.-pakistan relations. former house intelligence ranking member called for the u.s. to end aid to pakistan. he said the killing of the al qaeda leader will force others in the region to rethink their stance toward the u.s.. this is hosted by the american enterprise institute and is one hour and 25 minutes. >> this is a debate that started slowly in the aftermath of the news on sunday that osama bin

laden had been killed and it has snowballed since them with all of of public policy discussion in washington about the future of our relationship with pakistan, the reliability of our partnership with pakistan, the importance of our intelligence sharing with that country, the importance of the war we're fighting in afghanistan and unfortunately, the emphasis on unimportance of the war we're fighting with afghanistan. i've seen all too many suggestions that now that bin laden is dead, the war on terrorism is over. were it only so. we have an outstanding panel appear to talk about these questions and anything else you would like to bring up. going in the order today, we have the former chairman of the house permanent select committee

on intelligence, pete hoekstra. he is a visiting distinguished fellow at the heritage foundation. next to him, the director of the southwestern center and that expert on pakistan military affairs. next to him is are senior experts here on india issues and rights on all issues relating to south asia. next to me is the director of our critical threats project. as some of you are aware, but it is new enough that i continue to announce it, we do our panel's in a slightly different style than in years past. we do it in what i call "meet the press style. we will go back and forth with a

question and answer session before we open up to the floor. i will star with pete. thank you for being here. one of the things i mentioned in my opening is that we now see very strong reaction in washington and in islamabad to our decision to go in unilaterally and take out a osama bin laden. all lot of applause over here but not so much in pakistan. i wonder how is it you think we should be reacting to this and how you assess the continued cooperation we have with pakistan, especially from your perspective as a former senior official dealing with intelligence matters.

>> i was in london and i woke up and my blackberry was full of messages. i said something happened, so i was a little bit behind, but once you started peeling back the layers and started seeing the upper here and in pakistan, it like what is news? who did not know were strongly believe that bin laden would be in pakistan? i firmly believe that eventually we would get him. we are persistent and we kept getting better and i figured someday we would get the gem of the information that would enable us to move forward or he would make a mistake. finding him in pakistan was not a surprise. the allegations that the military may have some sympathizers and supporters for him within their midst was not a surprise. we have known and suspected

that in the intelligence community for years. we knew it. that there might be american entries into pakistan that would test their sovereignty is not new. what's the big deal? we all knew this and many see what's going on on capitol hill and i think what happened on capitol hill did not surprise me. it was a wonderful opportunity for some people to make political statements, but in the long run, we will maintain the kind of tenuous relationship we have had with pakistan for an extended time. we need pakistan, they need us. we have our internal political issues we need to deal with, they have their internal political issues they have to deal with. how many times have we seen them

protesting publicly, sending other signals behind closed doors? this one has a higher level of a visibility because of the events surrounding bin laden, but i think we need at this relationship to continue a strong effort in the war on al qaeda and what we are doing in afghanistan. >> you may see this as a " casablanca" moment -- shocked, shocked to see something going on in pakistan. but anyone who has paid attention sees that most of the senior arrests did take place in pakistan. but they took place in cooperation with pakistan officials. you are right, to play devil's advocate, i think this is a part

of the debate going on, this is a osama bin laden. apparently -- i reject the term mentioned, because it would have me redefine everything i know about real-estate. he was living in this place for some years and the notion that nobody in pakistan do, that the most wanted terrorist was living there seems to be a little troubling. >> that is why i believe there are people within the isi who knew that he was there. the question we may try to get an answer to but i don't know if we will find out is how far highet up in the hierarchy that went. i don't know if the leadership in the government, military or service had access to this information and they were withholding it from us. they have cooperated on some

missions with us but on other missions, the have thoroughly undercut our efforts where we identified a target, we shared information and planning with them for thursday and it so happened on wednesday, everybody laughed. when we got there on thursday, there was nobody there. we have known weakness and fragility of this relationship for the last nine or 10 years. there is nothing new for people here who have been looking and studying this relationship. the only question is in this particular incident, let the visibility of bin laden, do we believe it was significantly higher? i don't believe that. >> let me push you on one last question -- as a former member

of congress and someone close to many on capitol hill, reactions to this -- demands to cut off all assistance to pakistan. you characterize them to me as an overreaction. what should people be doing? >> it is an overreaction. for those who propose breaking off relations and cutting off foreign aid, the response built -- the response becomes what is the alternative strategy in regards to pakistan? that is the same thing we're facing and people on capitol hill -- we cannot overreact. it is the same thing we see on the arabian peninsula. our political strategy is in tatters when it comes to how we're going to confront radical

jihadists. the last thing is to argue for dramatic changes with pakistan. we have enough to worry about rather than adding to the list. >> i want to talk about some of their reactions in pakistan. there has been a real change and -- during the bush administration, we saw all lot of cooperation and we saw the arrest taking place at a high level and saw the isi going in, making arrests. for good or for ill -- i think that's a debatable question, we have seen many more drum strikes. we have seen targetted strikes inside pakistan much to the displeasure or growing displeasure of some in pakistan.

i wonder if that is part of the problem with the reaction? how do you see the picture looking from islamabad? >> i would agree with the congressman that you cannot put an end to this relationship unless you have a plan b. as you know, often in this u.s. government, if you have a plan b, you have planned a. >> but we often don't have a plan 8 either. >> that you have to have a plan c. there is no simple solution. is an onion that you have to keep peeling. i think -- i take a historical view to this. having looked at this relationship over its lifetime, this is something that was

identified in the '50s when they said why are we giving this money to pakistan when all they are doing is building containment against the kashmir border when we want them to fight against iraq and iran? many of this was on the other side. both sides are to implicit in this hoax. there were complaints of pakistan being duplicitous and complaints about the u.s. being fickle, not giving them the tools they needed. that will continue, but i see this particular event as offering a supreme opportunity to change the relationship for the better and for pakistan to begin their change by having a serious, and respective

analysis on exactly what is there national strategic interest, what is the regional imperative, reducing austerity within india and put the relationship with the united states on an honest footing. particularly between intelligence agencies. there has to be some actions that will work for them while assuring the united states that we are all in -- by at we are all on the same page. we are referring to a clear-cut policy that would and ambiguity of their relationship with the militants inside pakistan as well as people like the afghan taliban. i think the current military

posture would have to move much more ground forces against the northern border and that would perhaps as weight -- perhaps persuade hakani to join talks with kabul and that would be critical to pakistan moving on that front and start rebuilding this relationship. as to the question of complicity or protection, i don't think -- if you have complicity, it would involve people at the lower level only. the reason for that is a $25 million award is a lot of money. the chance of that leaking out at somebody cashing that check is great. if we find the evidence and it comes out, i think it will be

much more than at the lower level. at the moment, i think you have to wait for that evidence to come out before we make that pronouncement. >> do you think that evidence will come out? >> depending on what they have captured from the site, perhaps i think another opportunity is to create a team that works with the cia and create a radius and look in the other towns to see where else there are similar habitations. you can see where the other leaders are. it would make sense to be within career distance so you are not relying on very long troubled

and create a virtual meetings without using the internet. if you want to prove your bonafides, this is where you can work together and try to get this done. >> all of these things that you are laying out seem eminently sensible. i think these suggestions have been made for years about our relationship, yet we have persistent problems. i'm a huge believer in democracy and civil governments, but nonetheless, i wonder how much democratic governance is going to be in pakistan, much as it is here. you are answering to the

clamoring some of a public. you ought to be reelected whether it is the president, prime minister or chief of army staff. they seem to be pushing in the wrong direction and so i wonder how they reconcile this? >> i'm not a politician, therefore i can say this. it would make sense for me to look at self-interest. there will be an election within the next few years and they should act on their interest and it is in pakistan's interest to enter a state of hostility whether it's afghanistan or india. certainly to end the state of hostility with the united states, which is likely to be the case if the situation deteriorates. i do not think we can muddle through on this one. there will be forces inside here

and pakistan that bill not allow you to continue on the old path. that said, i'm very disappointed that an opportunity was lost yet again by the civilian government in pakistan to take charge of decision making, policy-making, to create a national discussion on what to do next. the prime minister who is the head of government took off for paris a day or two after this event and that is where he is. that is not the way you run policy and take back what has been ceded to the military for a long time. the military needs civilians to work with them and their needs to be a single policy emerging out of pakistan and not bill policies emerging out of islamabad. that causes confusion and

creates much more confusion that pakistan can live with. >> i think you are absolutely right. there is a good and even better pakistan that can be built from this. one of the phrases you used was the myth of the moderate pakistan. talk about the challenges that you see and what you have been writing about. >> i see this a little differently. i think this is a bigger opportunity. those of us who follow pakistan closely, for some of us as just another terrorist. for others it's a completely different situation. that is extremely significant because for the first time in many years, we have something

understood on the streets for many years at something understood on the street in pakistan. in january of this year, the governor of punjab was assassinated. this is a member of the establishment. he was assassinated because he had shown sympathy to a woman who was in jail under the anti blasphemy law. she was sentenced to death and the governor saw us as a grave injustice and said as much. he was assassinated by one of his own bodyguards as a result. what played out afterwards is what is interesting. about 500 people showed up for the funeral. the president was a close friend and could not show his face. there were 30,000 people on the state -- who showed up chanting

in support of the murder. that gives you an example of what is showing up. if you look at favorability ratings, al qaeda had a higher favorability rating than the u.s. last year. i do not want to exaggerate what the polls mean, you can interpret them in many ways, but we have to seriously ask ourselves what are the larger dynamics going on in pakistan society? will digby the moderate, liberal society at some of the questions that will feed into the debate about pakistan's democracy. >> this is not an -- we have a lot at stake here.

we recognize that we have a stake in the future of pakistan. while directed at the military and some direction, it also directed toward the population and pakistan. there is a broad strategic recognition that we have a stake in the future of pakistan and we cannot afford to sit by and say that is the desk officers responsibility. what is the road forward if those are the elements of society that we see? >> it would be to piggyback on what was just said -- to piggyback on the establishment and rethink what kind of state pakistan will be. there has been no ability to capture the top two people. if this is a moment that it concentrates minds, this can be turned into a moment and we can

get deeper cooperation from the military establishment. you want the army to become a lot more like other armies. it has legitimate security concerns and those are concerned that the u.s. should support, but it should not support the legitimate project, which is the jihadist proxy, which is the military side. we should recognize there are many in pakistan who are fighting this fight. there are many who are bravely writing or speaking not television -- writing or speaking on television against radical islam. >> you bring me to a natural segue, how do we reassure pakistan that we are serious

about helping them move forward and abandoned some of their concepts about death in afghanistan and the proxy's that have been a crutch for them for many years while at the same time answering the president's campaign and electoral pledge to get us out of afghanistan? we are already seeing whisperings of internal pressures, that the drawdown should be bigger and maybe it's true they want us out. maybe others want to see a commitment that we have staying power. how we reconcile all of that? >> the death of osama bin laden has absolutely nothing to do with what kind of forces are required in afghanistan and what their mission should be. we did not send troops into

afghanistan in 2001 and order to get osama bin laden. we sent troops into afghanistan and order to rid the country of al qaeda and in order to defeat the taliban which had been supporting al qaeda and to create an afghan state that would be able to maintain itself independently and not allow the terrorists to return. those are the objectives president obama stated again in his december 2009 address at west point. they are the correct and objectives that should be pursued from the standpoint of afghanistan. none of that is affected by the death of bin laden. al qaeda is not destroyed by the death of bin laden. there are very few organizations destroyed by the death of a single leader. al qaeda has weathered the death of many senior leaders. at the interesting things will follow from the movement but the

note -- the notion that we have defeated al qaeda and we can therefore pull out of afghanistan, there are some neat logical non sequiturs in there that it is completely untenable. on the question of pakistan, if we pull back for a minute and say why do we care about pakistan? we care about pakistan because of pakistan. for too long, we have been having a discussion about pakistan and and how can help us and lay afghanistan, which is not the way we should approach pakistan's policy. they probably have the densest concentration of militant islamists in the world. it is a dangerous co. -- dangerous country, a poor country but there is potential. it has been under military

control defacto which has been the stabilizing. ultimately, -- has been destabilizing. in my view, there are three fundamental things that have to happen in pakistan in order for anything to change. the hardest one and the last one is that the ruling elite, military and civilian, will have to come to a consensus on the need to accept what will be a long, unpleasant and bloody struggle to eliminate islamist organizations that have permeated the society in pakistan. the ruling elite will first have to come to a consensus that all islamist groups are threat and they cannot be parsed, which is

what's the policy in pakistan has been hitherto. the key to that is something -- the leadership has to come to the realizations that the attempt to use militant islamist proxies' will fail because that has been a relatively successful, and in a very minimally defined cents, up successful since the beginning of the soviet invasion, even before that. as long as the elements of support militant islamist groups believe these kinds of proxies' are effective tools, bay will not relinquish them and you will not have a consensus about the need to move to these other steps.

of those three things, the united states has the ability to effect the last one directly. we can and i believe we are on the road to defeating the principle is lost proxies' in afghanistan. we have done tremendous damage to the group in hell bond province and -- in inh helmand and kandahar. i believe that we part of the changing of the calculus. the next step will have to be defeating the the hakani network which will be harder in some respects and easier and others. it will take some effort and it

will take some very hard fighting. if we do not do that, if we do not complete that task of defeating that proxy, i believe it will be sufficient to validate that the strategy of supporting proxies' is successful. especially because the problem is the proxy that is actually most dangerous is neither the taliban nor thehakani network, but lashkar e taiba. that will be the last to go. if we lose the fight before then and we do not defeat the proxy's, the prospects for persuading pakistan to go after that approaches zero.

we need to be in afghanistan for a variety of reasons, even more importantly, we have to be there if we have hope of setting conditions for success over the long term. >> i would like to offer you all the opportunity to react to each other. the real question to my mind, coming back just to the united states is the plana/plan b staying power. i think there is another question that i want to throw to all of you and you can volunteer or not -- we are not good with nuanced policy. we are not good in using the

scalpel at extracting from others the good that we need and excising the bat. we are about things like the pressler amendment that said don't do at. please stop, you did it, you stopped and -- i worked in government and i think that summarized the policy and that was it. i think the lesson pakistan learned from that and many other episodes is we better make up our own game because no matter what you say now, you're just going to turn around at a later point and say you don't really matter, goodbye. how we react to each other and the challenge to us -- the >> since we're not good at using a scalpel, we should and this is a great moment to use a

sledgehammer. to the extent we did get cooperation from pakistan, the moment is really there when they gave up their support for the taliban when richard armitage ridge called and said he wanted to get pakistan back into the stone age. you don't always get a chance to use the sledge hammer and i don't think that is the exact language that should be used, but i think international a media attention -- international media attention is such that we have the opportunity to ask them to do bigger things than we could have ever asked a week or two ago. process is important, but you

have to scour the towns within 50 miles and the concrete things are going after ayman al- zawahiri, but they're captured in similar circumstances, the fallout, some of which are already extremely negative, will be difficult for any politician to deal with, so let them understand the gravity of this with concrete demands. >> i think i know where you are coming from. to base one's analysis on a piece of fiction, which is the musharraf memoir, especially about this episode which never happened. -- >> you are ruining everything for us. >> i talked to the people

involved on all sides and also to the co-commanders and this is not the argument he presented. the arguments he presented was a friend had called from the new york and said the americans will bomb you to the stone age. he conflated this conversation with the isi chief. one should rely on fact, not fiction to make policy. even then, the cooperation with the united states was less than perfect. fromeryone can't attest to the bush administration, i'm sure the congressman can attest to that. i also want to correct one assistant application -- which is pakistan seeks strategic death in afghanistan. this died -- when this was

handed over to my late brother. this was his concept -- if they invaded pakistan and took the territory, they would use that and continue the fight. if india invaded pakistan, why would they want to do anything else and why would they even chase pakistan into afghanistan? this is a defunct policy and has been given life by american analysts and journalists. every time i talk about pakistan and afghanistan, this phrase keeps popping up. to be extent that the national defense university in washington brought it up and said let me redefine this phrase for him, strategic debt in afghanistan is a stable process so that

pakistan does not have to worry about that border. that is something that needs to be reinforced. the processes i was talking about and only come across if u.s. and pakistan come together and say what are the objectives we can't agree? once we agree on those, you can go to the smaller processes -- what are the ways you are convinced you are honest about dealing with us? and for the u.s. to do the same thing. the u.s. could play a huge role in allaying pakistan's concerns in removing some of the paranoia about india and india's role in afghanistan. india can play a role in that regard also and there is more than to be done at the regional level than is now being done.

>> i am glad to hear that clarification. one of the reasons so many cling to it and i used the expression yesterday -- it provides a framework to understand why it is pakistan would wish to support the groups that it supports. it is not just kashmir-directed. if it were, your argue but would be the proverbial slam dunk. -- your argument would be the proverbial slam dunk. all of these extremist groups -- it's almost hard to fathom accept when viewed through that understanding of thinking about control of other territory. help understand that for a moment. >> i will be brief on this -- having talked to enough people inside pakistan and within up

military establishment, there is debate going on with this issue. i do not think it is a monolithic view that pakistan needs surrogates, but they are looking at from a posture and prism. -- from a poshtoon prism. hakani has never ruled afghanistan and no one would allow them to gain that power. i think you have to be realistic. i am not sure we have seen the last position on this and i would hope there is some active introspection going on now in light of what happened recently to take a fresher approach to the relationship with afghanistan. since we know there have been

meetings with president kaezai and there will be other meetings karzai, and there'll be other meetings. i don't think there is anybody looking for a new taliban government. that would be horrendous for pakistan. >> i agree with much of what was just said, but for my friends in pakistan -- this is not directed at him, but the leadership swanks allot because they have many postions in pakistan. i do not believe they understand all of them in afghanistan. that is to misunderstand the context in which they have been functioning last several decades. in particular, pakistan is a

federated state in which most of the poshtoon population has lived under unique circumstances. in afghanistan, have never live that way and that's not the relationship to the central state and not the way they see the problem. i think a fair amount of the communication difficulty we have when you strip away differing interests is that pakistanis tend to be contemptuous of the notion we can understand anything about afghanistan and their comprehension of it yet they bring to that understanding a great degree of category mistake by imagining these are all the same people. >> i want to build off the fact that what happened over the weekend is in some ways a defining moment and it creates

an opportunity. but you have to look at this within context of what happened over the weekend and will happen in the next six months. what happened over the weekend sent a very powerful message that america is learning how to better fight this war on terrorism and that we are competent, that we can now be more confident and perhaps we can be feared. i'm sure our friends who are allied with us woke up on monday morning and said this is why we are allied with the americans. they have the ability to learn and improve. for the people sitting on the fence, they may be getting good at this and maybe now is the time to make a decision to get closer. for our allies, i'm sure most of the people at in al qaeda will call on monday morning and said what are we going to do today to make sure we are still alive at the end of the day based on a treasure trove of them formation

we may have gotten out of that compound? it provides that kind of opportunity to redefine the u.s.'s image in terms of competence and confidence as we move forward, which then we can build off of what is going to happen. that is why this talk of an accelerated withdrawal of troops from afghanistan scarcity. we should not be pulling out. we can further enhance the image we built over the weekend by what we do this summer in afghanistan to show we are persistent, competent and confident we are going to be successful and put the resources in so we will be feared and respected because of our capabilities. this is the opportunity this presents for us to redefine our perception. sitting on the committee for eight or nine years, it was a cancer every time the community

would come in and you had to ask the question of if the director was in or tell us about the search for bin laden. for seven or eight years, it was like if we don't know, if we have to make a guess, he is in this part of pakistan. now we know and we acted on it. the military acted competently and we were successful. take that and build on that this summer. that gives us the opportunity to redefine who we are. >> of want to ask a question that is a little bit out of our scope, but i cannot resist because i want to know what you will say. it's all about what i am interested in. we got the bottom glitches important in many ways and less important in others. there is little debate about

that reality, but the way we got him -- persistent intelligence, following the tracks, information about the courier from ksm. we have not picked up a high- value target in many years and we don't have an interrogation program going on. what does this mean for the next guy? >> i don't want to take anything away and from the president, but what about next time? >> next time is going to be harder. i give the president a tremendous amount of credit because i do believe he gave the direction to leon panetta that is maintaining a high priority -- i want to maine which it maintained a high priority on capturing and killing bin laden. i believe he gave that direction to leon panetta and he made that

very clear that it was still a priority. the bottom of what he has done is, he has given the intelligence community fewer tools to be able to do their job against bin laden or against other high-value targets. it is a combination of not being able to use enhanced in derogation begin interrogation techniques or any interrogation strategy at all. the other thing that is out there that has been written about today and it crossed my mind is, i hope the president and eric holder moved back from the threat to prosecute the cia folks who may be -- who were involved in that process. congress, justice, they did what the elected american government wanted them to do. as long as these people are still under the threat of

prosecution, you still have a lot of folks within the community who are risk averse to taking the kind of chances that will give us the kind of information and intelligence that we need to be successful in the future. the president gave the right direction, but he is pulling away the tools that enable them to do their job effectively and reducing the tools they have at their disposal. >> i does want to comment on this. i think high-value targets and interrogation -- you get the guy, he spills the beans, and then you act on that information. i would explain the success in capturing bin laden as a cumulative knowledge that has been collected by the u.s. and the experience and training in knowing the country, knowing the people, working with locals, and a network that has clearly been established inside pakistan that

has worked fairly independently from all appearances of the pakistani intelligence services, which is why when the raymond davis case became such a huge issue, i think interrogation are capturing and other high-value target will help. it is really the nuts and bolts, the bread and butter intelligence work that really matters. and the analysis of that information, because it is not just the technology, it is the people behind the technology that matters. we are seeing improvements. >> i would agree with that 100%. it was just good, hard work. i drove in from dulles airport on monday. i was doing a radio interview and i was telling the guy exactly what you just said. the success on sunday was the result of a lot of hard work by people that started eight or nine years ago. i got done, and the cab driver

said, i am one of those guys. he said i was in the afghan region in 2003 and 2004, working for the u.s. government. doingt know if he was translation or whatever, but he served his time serving our country, and he said thank you. but it is amazing. he knows some of these guys, probably. now he is back driving a cab in the u.s., but seven or eight years ago, he said i feel part of the ownership for what happened on sunday. >> remarkable. i want to open up the floor to questions. we have not changed the rules. identify yourself, raise your hand, i will call on you. be brief and succinct.

>> frank fletcher. there are any number of people who speak and write, saying bin laden was a symbol and he was an inspiration. i paraphrase the general last week that he was the inspiration and a symbol, but he was more than that, that he was still capable with his circle of engaging in operational planning. that does not take away from the fact that there are franchisees and affiliates and the principle of decentralization, there are people that could act affiliated with al qaeda without his direction. what does that say if this is true about al qaeda's organizational ability and the importance of it with al- zawahiri and others?

>> my initial answer is always unsatisfactory. the short answer is we will not know until we see. we are going to see probably some kind of power play, although i suspect zawahiri will take over. he is in many respects a better rhwetorician than bin laden, but he is not an inspirational figure and he does not have the credentials in the same way. you may see struggles within the top leadership, but i think we will have to see how that plays out in terms of operational capability. we have killed something like 10 al qaeda operational directors of the past several years, and it does have an effect on the organization, but nine or 10

have stepped up and the operations have continued. i would also refer you to the historical example of 2006 in iraq when we killed the founder of al qaeda in iraq, and not only was he the inspiration for the ideologue but he was the operational commander for it. his role was very important. his replacement turned out to be a much more effective operator, and to be pursuing a strategy similar to what is our kelly had been pursuing -- i think we need to be very cautious in imagining that because even if you were operationally it relevant, if you remove them, there for the operation would degrade. almost early in the short term, but these organizations tend to be very resilient.

the points that were made were incredibly important not only with regard to intelligence. it is why we have to stop looking for the exit right now and looking for, now we have the excuse to declare victory and leave. these are extremely tough, in trench, resilient organizations that regenerate leadership. that are designed to do that, and they have been at it for a long time. al qaeda central is the epitome of that. we are not done with these guys by any stretch of the imagination, even though it was a very good hit and it is very satisfying. >> over the last number of years we have become much more concerned about the franchise operations. if there is any retaliation in the short term from this event, i think it will come out of al qaeda in the arabian peninsula.

they will not be as significantly affected by bin laden's death. >> if i could just add to that, i think you are looking for a branch figure -- a brand figure to replace osama bin laden, in this age of globalization, it is a long fight and we have to be prepared to take the message of islam back into the islamic world and to use it islam to fight it at the community level, at the provincial level, and at the national level. it means to help people understand that what is being conveyed in the name of islam by these groups in the heartland of

pakistan is not islam. it does not fit in with the teachings of the chiron or the profit, but there is another way of looking at religion and using it to improve their lives. that brings me to the final point. unless we support good governance in these countries, all is lost. if we continue to work with autocratic regimes and technocrats and look the other way because they are serving our purposes, we have defeated the whole enterprise. >> i just want to piggyback on that for a moment. if you look real-world over the last 30 or 35 years at the iranian revolution and regimes that have actively propagated this idea of islam which is at odds with most people, the three that come to mind or pakistan,

saudi arabia, and iran. the larger significance of getting that reorientation you just spoke about outside of pakistan's borders is precisely that, this perversion of islam. >> but there is a difference. i want you to correct me if i am wrong. iran and saudi arabia are doing this as a matter of, not national identity, this is a national, political agenda that is wrapped up with religion that has a lot to do with the identity of the state. in pakistan, it seems to be much less integral and more having to do with a sense of exercising a

variety of strategic options. am i wrong about that? >> i would say yes. at a personal level, you have this question that goes back to the foundation of pakistan. there are basically two competing ideas. you have one idea which we can call that is just a homeland for muslims and islam does not have to be shot for every aspect of the state. there is the idea -- also the idea that if that is all you wanted, why do you need a new country? this has been going on for a long time, at least since the 1970's.

one side has said it is not enough to just be a homeland for muslims. we need to have this turbocharged islamic idea. that has been gaining ground. it is a contest, and that deeper ideological question of who m i -- who am i exists. >> with apologies to the audience, because we would really like to hear your questions, it is very interesting for me as someone who came from pakistan that the part of pakistan that had the greatest population, which is now bangladesh, has actually reversed direction and has actively and correctly, in my view, separating religion from the state. they reversed various other things that happened in pakistan

that they inherited, including the order of precedence, which establishes rank order and has put the civilians were higher than the military. perhaps the lesson pakistan needs to learn it from their cousins of thousand miles to the east. >> i think it is important to make a sharp distinction between iran and saudi arabia on the one hand and pakistan and the other. granted the debate that goes on in pakistan and the argument that it is fundamentally about islam, i would submit that although you belong to a particular school, the debate is broader than the question of which particular school of islam should be running the show. in iran and saudi arabia, that is not the case. the iranian regime is based on the principle of a very

specific islamist, heretical etiology -- ideology that serves as justice for the current regime. there is no parallel to that in saudi arabia. you have a commitment to two particular interpretations of islam, and both of them are heretical in the long view of mainstream islam. i think the debate in pakistan is more open than that. pakistanis could have a debate about the role of islam in the definition of a state and how it functions that is broader than simply which version of a heretical, violent misinterpretation of the koran

and how deep you want to pursue it. >> will come back to this question of how the u.s. is helpful on islam, because i cannot leave it hanging in there. >> i want to ask a two-part question. the first is, from some distance, meaning weeks, months, which factor will have had the greatest negative influence on al qaeda, the air of spring or the assassination of bin laden -- the arab spring or the assassination of bin laden? second, if you were given a poison dart and you had an opportunity to aim it at one of three people, mullah omar,

zawahri, or haqqani, how would you use your poison dart, and what would have the greatest impact on this long this struggle that reminds us we are in? >> can i have three dark? -- three darts? >> i would not use it against haqqani because killing a single leader in that movement would be satisfying but of limited impact. i am torn between whether to use it on moloch omar or zawahri. i do not know what direction

zawahri will take. mullah omar has shown himself an effective operator as well as an effective inspirational figure, but that would not end the insurgency, either. if we are doing targeted killings, that is what i would do. that having been said, i am not looking for poisoned darts. none of those are going to bring us to success in this endeavor. it will take the kind of long struggle we were talking about. if the arab spring moves in the direction that we all hope that it will, that direction of work represented governments, more inclusive governments in the middle east, and the general beginning of the end of arab despots, then that will have been a far more significant blow to al qaeda over the long term than the killing of bin laden.

>> many people are asking questions that bin laden should have been brought to justice in 2001, but still it came as a shock to millions of people whose lives were affected, including in india. i have been saying this for the last 10 years to the white house state department and everywhere, that osama bin laden was living and real-life and protected by the military. >> what is the question? >> what i am asking is, they

cannot say he was not in pakistan, which i said all along. so where do we go from here? can we trust pakistan in the future, because many more terrorists are still there. at least three of them who were blamed on the attacks in mumbai. >> is there anything you can add to that quickly? >> we know the strengths and weaknesses of the relationship with pakistan. i think we continue and try to do everything we can. a couple of these guys have outlined as to how we improve and strengthen the relationship. you do not cut off the relationship with pakistan.

ner.et's try that back corke >> killing an individual does not kill the idea. i think we have to kill the idea. that is why the era but spring is very important. that is why we have to reject that is why the arab spring is -- that is why the arab spring is very important. 60 million of the population are used. they are connected to the world and they have very high expectations -- 60 million of the population are youth. killing is not the solution. the solution is to provide opportunities to people so that

they can then take over and run their own lives the way they want to. >> that is one of the reasons that has been so heartbreaking to see so many people who should know better suggest that now the president has proven himself and he can afford not to step up on libya and syria. that is just such a strategic mistake, and i don't think that proving himself will last. >> thank you very much for a wonderful discussion. i am not a policy analyst, i am an academic. like lots of other people, i have been watching the developments. the discussions about what we should do here and what pakistan

should do, i have been trying to collaborated with something else. what is happening in the vernacular news on talk shows in pakistan. i found that to be a very interesting and educational experience in the last four days. it began with just a denial that night, saying where is the evidence, what are all these things the president is saying? the second day, there was a sinking in, and then the discourse changed to, why are we not taking credit for this operation? what is fascinating is to see that the discourse is changing every day. today there is a very strong sense of real appropriation, of trying to get a sense of identity about where we go.

it is very important what is going on there in terms of self reflection. >> thank you very much, ma'am. >> a moderator told me in the elevator i was going to the 12th for and there was a very good moderator for that conference. >> thank you for saying that on c-span. [laughter] >> i am enjoying this kinda the way i enjoy watching espn during playoffs. people take a present event and dissected, and what does it all mean? a famous futurist once said that those of us who are deafened by

the present cannot hear the future. i would like to throw out three short words for you, and i would like to hear your comment on them. food, water, opium, and 150 million people with nuclear weapons to work going to run out of food and water and are increasingly influenced by opium. >> i could not agree with you more. i testified on the hill to days ago and set until and unless you change the economic and political landscape in the case of pakistan, your not going to be able to make any change appear in the future. you cannot create the possibility of change, which means aggressing project addressing the question of food, energy, water, and these are

huge issues. these are the difficult issues that danny referred to. we are always looking for the short term, silver bullet solution, or can we throw money at the problem? i am quoting my friend referred loss of birds, the beatles, -- my favorite philosophers, the beatles, "money cannot buy you love." >> talking about what is needed to develop good governors in pakistan, we are talking about what needs to be done to help pakistan address those problems you have raised. the question is, why are they having those problems? you have very bad governance.

you have a government making very bad decisions on behalf of its people, people unable to voice their own concerns and have them heard, and corruption and various other things that harm the body politic. what we are talking about is trying to get at some of the things that have made pakistani governments so bad, which includes this very debate about islamism and the role of islam in the state which has served as sort of a blind and then excuse for not talking about how the state should actually be governed. i agree with you about the need to look for the long term, but another philosopher said it cannot make it to the long term if you don't get there from here, either. .> i don't know that song [laughter]

>> we talked about the demographics, the arab spring, the future of islamism. when we put this together, the death of bin laden hopefully becomes the catalyst for us not to talk about the death of bin laden but to talk about these larger issues. we have all used the term opportunity. this is an opportunity for us to hopefully raise the debate and discussion with pakistan about how we move forward and the kind of relationship that we have. you edit three other things that are very much part of that whole discussion, food and water and all these things are part of the dynamic that so often get lost. everyone used to be driven by a

quarter results. now we are all watching tv and saying what happened to the price of gold or silver in the last two hours? we are getting instant feedback, which draws us away from the long term, which is really what we should be talking about. >> i am just an observer right now. about 10 days before the events of last weekend, i think it was the wall street journal article that shocked me in its brazenness. the singer -- senior pakistani official in a very public appeal to gaza to drop the allegiance with the united states and join pakistan in pursuing strategic access with china. my question to the panel is, given the events of last weekend, do you think is more or

less likely that such a statement could be made today? >> no one is stepping up here. >> i would be happy to respond to that. apparently, that was ascribed to the pakistani prime minister in his meeting with the president of afghanistan. i've since learned it was not he who made that statement, but a senior foreign office official who raised the possibility. it was not put as darkly as it was reported. i don't think it makes sense to have an either/or approach. china has an important role in the region and is committed economically to afghanistan and has a very long relationship with pakistan. indeed, and has a much stronger economic relation with india,

which one should applaud. $65 million worth of trade a year. for anyone to ignore china would be a mistake, but i don't think it is a question of either/or. >> i just want to say that china-pakistan relations, it is the need to look at public opinion polls in pakistan, you find that despite all the american approval ratings, for china is 84%. china is seen as a rock solid, reliable partner. it is not as though the prime minister or the president said that at a press conference. it is something that was

reported as having been said in a private meeting. >> i have a two-part question about the use in pakistan. -- about the youth in pakistan. many believe that 9/11 was a drama. many still believe osama bin laden is death is also a drama. after the corps commander meeting, the general issued a statement saying that such an operation in pakistan borders is not going to be tolerated in the future. where are going? do we see any cooperation in the future?

>> the first part is about the conspiracy theories. i think the photograph should have been released. i don't think would have convinced the most die-hard conspiracy theorist. these are people who genuinely believe that 9/11 was an inside job by the americans. there is no convincing them. but there are shades of conspiracy theorist and it may have helped convince some of the people in the middle. i think the photographs are going to come out anyway and i think they had been released by the u.s., the u.s. would have been shaving the discourse. if they are released by julian assange, the impact will be much more negative. i think that was a mistake.

>> i was surprised by the statement, but if you recall, there was a similar statement issued on march 17 after the drone attack that reportedly killed 41 people. that said more or less the same thing. this conveys a message to a domestic audience much more than to the u.s.. the fact that this was just a statement and there was no action, there is no shutting down of the pipeline in kabul of supplies to the afghan war nor cancellation of the strategic dialogue that is still scheduled a little later this spring is a good sign.

it means they have got it at of their system and perhaps now there were be some serious attempt in trying to find a way to begin the dialogue with the united states again. i do want to go back to the question about the role of the media. the vernacular media, particularly in pakistan and to some extent in india is competing for space. pakistan now has over 60 channels that are clamoring for a very narrow band of audience. each one tries to outdo the others. it is like you have msnbc and fox and you multiply that by 10. that is exactly what pakistan and to some extent india has. they are constantly trying to drum up the public in one way or the other. you do not find the considered

analysis that should be there to help people understand. this is part of the process of maturing, and perhaps they will get over it. >> my first reaction to the statements coming out is, what is new? how many times have we gone through that where we have done something, make a harsh statement and nothing changes. how long can the pakistani government get away with saying no more, we are not going to tolerate it? how many times have they said that? >> i can respond to that. this is not a government statement. the issue in pakistan is the dysfunctional policy.

with the prime mr. having left the country, all you are left with is the responsibility that has fallen to the military to respond. there is not a single voice. >> pakistan should not be looked upon as a week or dependent state. >> this is going to have to be the last question. >> i was in the u.s. government for a long time and now i am in the private sector. we have been here about 90 minutes talking about the future of u.s. relations with pakistan. it seems to me one of the issues that has not been mentioned are the much crosses -- madrassas.

it strikes me as a serious impediment to fundamental change in the u.s. relationship with pakistan. >> it is a very interesting thing and you bring up a very good point. there is a zeitgeist in many of these policy discussions. we talk about the pernicious influence of the saudis, and it has kind of gone by the wayside, which is a shame. let me see what our panel has to say. >> when pakistan gained independence in 1947, it had 137 madrassas, and at last count it had 130,000. most of these are not problematic in any way.

about 15% of them are a problem. the problem is the government education that is nonreligious. it is the normal government school curriculum. what does that teach about pakistani history? what does it teach them about non muslims, particularly indians? has it been allowed to percolate all the way down to the school books, and what will the impact be when these young people who had their minds shaved by a completely different curriculum coming-of-age. it is anybody's guess. >> madrassas have been talked

about and they did grow exponentially during the jihad against the soviets because there was a region -- a reason to create them in the border region, but most of them are not problematic. the problem truly is the education system. pakistan did have a new policy in 2006 for changing the curriculum. the good news is, it is only now starting to happen and has now been privatized. private companies will now be able to compete to produce the textbooks. and my trip to pakistan in march, i brought back with me english textbooks for class 1, 5, and tin, and i have been going through those. it is quite interesting to see what they teach and what they do not teach. what they do not teach is the history of pakistan in the sub continental context. it is always looking to the

west. i think that will need to change so pakistanis do not get a very narrow view of their place in the region where they belong. >> the other side of the challenge is, we are completely unwilling to make comments about this on a policy level because it is culturally insensitive. that is a big challenge as well. that is another larger issue. we said the next big challenge is the al qaeda and the arabian peninsula. on may 17 we will have an event here on yemen. fred is going to be running at. we have written an enormous amount on this topic this week.

i am going to leave people out, but there is a lot to read and a lot to see. i would refer you to cover web site and our facebook page, and of course, everybody's twitter account. let me thank our outstanding panelist and our terrific audience. thank you very much for being here today. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> coming up, several programs on the federal deficit, starting with a brief remarks from vice- president joe biden. after that, alan simpson and

erskine bowles. later, treasury secretary tim geithner. >> there is a saying in the military, amateurs do it over and over until they get it right. professionals do it over and over until they cannot get it wrong. >> the platoon leader of sealed teen mom in vietnam is today the author of 14 books. he will discuss the training of today's navy seals on "q&a". it is one of our many signature interview programs available online at c-span.org to >> this weekend, former utah governor john huntsman delivers the commencement address at the university of south carolina. south carolina is the first southern state to hold a presidential primary. watch tonight on c-span "road to

the white house." >> i get to go in the front door today.

>> i will just make a brief statement here at the top. i was really pleased and they've all these guys showed up. we know we have two looming concerns. one is the debt limit. the fact of the matter is, we have to make sure we address the larger looming issue of the long-term debt. we have to make some real progress. we are all in agreement we have to deal with both these issues. this is an opening meeting and today we have a chance to talk

with our colleagues. we are going to lay down -- make sure each of us understands where the other guy is coming from, why we think the plan we put forward makes the most sense, and then we are going to get to work. i am optimistic, but then again i was in congress for 36 years, and i have always been optimistic. thank you all very much for coming in, anquan we will be talking to you later -- and we will be talking to you later. >> it was a good meeting, and we are going to meet again on tuesday. everyone has agreed there is a joint press release we are putting out, acknowledging we made progress. we are meeting again tuesday and getting the process under way. thank you.

>> more now on the federal deficit with remarks from former national debt commission co- chairman alan simpson and erskine bowles. the investment company institute hosted this hour-long event. [applause] >> thank you, i assume the applause was for the gentleman on my left and my right. we will address the u.s.

deficit, which i think it's safe to say is a crucial issue before us. the implications of decisions we hope will be made over the next few months are sure to affect each of us. i might even say i hope that will affect us profoundly, because there are some profound decisions that need to be made. paul will introduce our distinguished guests, and i think you are in for both an informative and enjoyable session. >> thank you very much. [applause] we are particularly excited to hear from these two gentlemen today because the issues they have tackled both wisely and courageously will have perhaps the greatest impact on the american economy and financial markets of any issues that we face today. and president obama signed the executive orca creating the national commission on fiscal responsibility and reform, he said alan simpson and erskine

bowles rotating on their impossible. -- are taking on the impossible. much to the discomfort of everyone else in the nation's capital, they did come up with answers and they backed those answers with what will be needed from all sides to put the nation back on a stable financial course. alan simpson spent nearly two decades in the u.s. senate representing wyoming. he earned a reputation for common sense and blunt talk. in 2006, he said his fellow republicans had rocks forebrains because they refused to work with democrats. the numbers man on the team is erskine bowles. he is a bit more soft-spoken, a southerner, not a westerner, but equally dedicated to public service. the national commission was his first -- third go at solving

fiscal problems. he helped shepherd the 1997 the goshen that led -- negotiations that led to our last balanced budget. he tackled severe economic challenges for the university system. we put some slides up on that screen to illustrate the seriousness of the problem that the national commission address. let me make it clear that none of the forecast included in the slides includes the commission's recommendations. it shows the path of the federal deficit under three different scenarios. the top line, with the least red ink, is the baseline that the correct -- that the congressional budget office uses. according to that line, 10 years from now, the annual deficit will be only $763 billion. that is the rosy scenario. the other two lines are actually

more realistic. they show what happens if we extend the 2003 tax rates and keep discretionary spending at a constant share of the economy. annual deficits will continue to grow for the next decade with those. what does this mean for the national debt? the bar on the left is the actual debt for 2010. $9 trillion. the next bar shows the debt held by the public under the congressional budget office baseline. under that path, the debt will double. we will accumulate more debt in the next decade than we did in the first to under 21 years of the republic. that is the most rosy scenario -- in the first 221 years of the republic. the debt will exceed the size of the economy. let's get straight to the heart of the matter.

mr. bowles, you have described the deficit-cutting plan as $3 in spending cuts for every $1 in tax hikes. can you give us the broad outlines of the commission plan? >> i will be happy to. thank you for having us here. these charts are great. if you go back to the previous chart and you look at those -- the enormity of the problem we face, the commission's plan takes the deficit down to around $279 billion. we have cut the deficit in half by 2015 and we cut it to about three-quarters in 2020. we take the deficit to gdp ratio down, we cut that in half and

take it down to 2.3% in 2015 and 1.2% in 2020. if you go to the next slide, we take the debt down to around $16 million as opposed to $26 billion and take it down to around 65% of gdp and get it to blow 60% by 2023. would first part of working on this, we truly felt we doing this for zero or 15 grandkids. i have nine and he has six. the more we got into it, we realized we were doing it not to our grandkids, but first of all for our kids. we finally realized we are doing it for us and for you all. i think we face the most visible fiscal crisis in the

history of this country. i think it is as clear as the nose on my face that the fiscal path we are on is simply not sustainable, and when i am asked to describe the situation we face, to meet it is always like a cancer that is truly going to destroy this country from within. let me just give you one example of the arithmetic of how compelling the problem is today. you look back at last year's budget, you can see that one harder% of the revenue in this country was consumed -- 100% of the revenue was consumed by mandatory spending and the interest on the debt. that means every single dollar we spent in this country last year on education, infrastructure, high value-added research, on these two wars, on national security, homeland

security, every dollar was borrowed, and half of it was borrowed from foreign countries. that is a formula for failure. if we take the do nothing, either one of those last two theories and just do nothing over the next decade, we will be paying over a trillion dollars a year in annual interest costs. that is a trillion dollars a cannot go to build roads and schools. to make matters worse, is going to some foreign country to build their roads and their schools and their businesses. as we looked at it, it was easy to see that this is not a simple problem. this is not a problem that we can grow our way out of. you could have double-digit growth over the next to nine decades and not solve this problem. it is not a problem we can tax our way out of.

raising taxes does not do a darn thing to change the demographics of the country or to affect the fact that health care is growing at a faster rate than gdp. if you want to try to do it with taxes, you'd have to raise the highest marginal rate to 7%, the core rate to 80%, and capital rates and dividends to 50%. how many businesses in america are are going to start with that kind of tax structure? 0. we cannot solely cut our way out of it. all these guys on television say we will cut our way out of this, but let's not do anything about medicaid, medicare, our social security. we cannot cut defense, and of course we have to pay interest on the debt. it used their all that, you have to cut everything else by 7

upper since i could that is not realistic. we are our track -- by 75%. that is not realistic. what we did is cut the budget by about $4 trillion. $1 come from revenue and $3 comes from cutting spending. that results in the deficit reduction that we put forward. we had six basic principles, which we will get into today. we did not want to do anything that would really hurt this very fragile economic recovery. we will get our spending levels back to 2008, but not until next

year. we wanted to make sure we stay safe and secure, so that the cuts we did to defense or reasonable. admiral mullen has said that our greatest national security problem is not the terrorist, is this debt, because it will consume all of our resources. we tried to make sure we invested in education and infrastructure, but we did it in a fiscally responsible manner. fifth, we reform the tax code and simplified the code and brought down rates, and used the proceeds to reduce the deficit. lastly, what we tried to do is make sure that we really did cut spending and we cut it not in just a few places, but we cut spending in the tax code, defense, nondefense, entitlement programs, wherever we could,

because the problem is that right. >> you have said that the commission's plan slaughter's all the sacred cows in the field. what was the thinking behind that? >> first, let me thank you, and let me say what a delight it is to have this amiable companion through this joyous activity. [laughter] it has just been a thrill, and some of my e-mail is just so exciting you can hardly believe it. phone calls to my home are just monitored now. let me just say when we sat down and visited with the president before we took this on, the two of us that everything is on the table, including your new healthcare. >> he said that is fair.

but it took us three months to establish stability in the commission. the first few weeks were, who is the biggest spending president in the history of the united states before this one? answered -- george w. bush. he never be towed a single spending bill until it came to stem cell research. that will not finally we said, we have a great idea. we will do a two person report, just the two of us. we will not do mush. there are too many conditions that do that. we vowed we did not. as we toughen our position, we got more people on board. that is an interesting thing. we but not touch this or that? we had him. when we did come and you will

notice -- we had to. when we did, and you'll notice, it is not about cutting social security. i am tired of that. it is not about the cap of the commission. most people are to gear than -- kookier than peaches and oranges. "do nothing" is the recommendation of day aarp. in the year to thousand 37, even get a check for 22% last -- in the year 2037. erskine and i go all of the country and we say to spend more than you earn, you lose your buck. if you borrow .41, you have to be stupid.

the government is stupid because you cannot borrow .41 for every $1 you spend. how many contractors do you fund? "well, it's a range between 1 and 10 million." >> a very narrow range. >> don't they jip you, change their names, and come back? a lot of them do. they have tried for 10 years to audit the department of de fense and they say they are "un-auditable." here's one thing. don't throw anything. i'm a veteran, 2 years active,

6 reserve. if i had stayed a few more years, i would be a retiree. there are 2.2 million with ei their own healthcare, tricare, which is no part of the v.a. that takes care of their dependence and the premium is $470 a year, no copay. try to touch it? you are cremated. the american legion, the vfw, they will kill you. at some point, for heaven's sake, this is what we have to deal with.

why should not be means tested? many of those retirees were never in combat. it is not about combat veteran military retirees, but people that are in the national guard for 15-20 years. use a motion, guilt, fear, or racism to kill off every sensible prospect of doing something in this country. here we go. now we will go for social security, the cat food commission, breaking bedpans in nursing homes. it is unbelievable. tried to stop me. [laughter] it is unbelievable. try to stop me, i will. [laughter] is a bunch of fakery going on, and it is hard to watch for us. >> one of the great concerns that many americans have is that more and more of our debt is

held outside of the united states by foreigners, which means that our nation is in debt it to countries whose interests are not always going to coincide with ours. this show where holdings of u.s. treasurys are concentrated. china, hong kong, taiwan, $12.5 billion. how much does it worry you that our growing debt is moving overseas? >> it worries me a lot, and i am sure it worries all of you all. t's take china -- they own something between $1.30 trillion and $1.50 trillion of our dead. -- debt. they are in the process of diversifying their currencies. can you imagine -- don't think about if the dates sell our

securities -- if they sell our securities. what if they just stop buying? what would happen to interest rates in the country? how would you like to have the future of your country in somebody else's hand, a country that, by the way, is quickly moving from having an export- driven economy to having a consumption economy, a country that just by its nature, will have fewer demands for the u.s. dollar, a country that is not spending time buying our currency by buying hard assets with our currency -- but buying hard assets with our currenc i am very worried. a very big problem that we have to face up to quickly. >> what erskine said a few weeks

ago, we have at 8 treaty with taiwan to protect them against china. we will protect taiwan and to do that, we will borrow money from china to do that [laughter] >> we will defend them, we just have to borrow money from them to do it. crazy. >> the overwhelming question from everyone at this juncture is that washington do anything without experiencing eight fisc train wreck? shortly after your commission was announced, alan greenspan offered his view. "i think that type of budget agreement put together by alan simpson and basketba -- and erskine bowles -- the only question is will it be before and after the bond market crisis?" in a lot of people here know

about the bond market and don't like to put that together with "crisis." >> i was honored to spend 18 of my years in the u.s. senate, with bob dole,-the leader, and robert byrd on the other side -- magnificent leader, and robert byrd on the other side. i learned that we never really respond when you are in congress. we react. we react when the hammer is down. it is always the most distasteful thing you don't want to touch, so you wait and you put it off and you hold hearings and you go back and you calm your constituents. this game is pretty well over, because it is all different. is not 10 years ago. we do notave the overhang and globally. we are not ireland, we are not greece, where not a trickle or spain or italy -- we are not portugal or spain or italy, but

people know about that and have heard about that. the debt limit extension will be the true moment of truth because are many people who are going to insist that they will not vote for that under any circumstances unless you cut spending. if you come out with the fact that you cut foreign aid, earmarks, nancy pelosi's aircraft, the czars, whoever they are, and congressional pensions, we are going to get their. that may classify -- may pacify their constituents, but the bond market people will say, "we thought you had the guts to go after it medicaid and social security and the defense budget, and you didn't." when the bond market guys come up, they don't have any thoughts

about compassion. it is not your uncle henry trying to get an extension on the mortgage. it is hammer time. >> what i worry about is, first of all, thinking we will get something done because of the debt ceiling crisis, and we can talk about if you would like what will come out of these cuent negotiations. i think we of got congressman ryan out there with the plan that is real, that is serious, just like paul ryan, honest and straightforward. if you spend any time with paul, you would describe him as an honest and straightforward and sincere guy. the president has a plan out there now that takes about $2.50 trillion out of the budget, it takes $4 trillion of the 12 years budget. it really is, if you look at it on a comparable basis, only

$2.50 trillion. our hope is that this gang of six, six brave senators, will be able to get together hopefully next weekend and put together a plastic that is basically our plan with legislative language and improves upon it. if they do, i hope you give them great support. i think the risk we run is if nothing does happen. you all -- i have spent a good portion of my life in the markets. you know as well as i do it that when the market lose confidence, boy, it does happen and it does happen quickly. let's say we don't do anything out between -- we don't do anythingetween now and the election, people say, let's just wait until the election -- there

is some risk, i cannot tell you how big it is, but with social security, medicaid, we cannot do anything there, republicans sayinge cannot do anything on the revenue side, i will protect this and that, people site wait a minute, they are really not by to address this problem, and then you could see something quickly. i do think the debt ceiling presents us an opportunity to do something and do something -- take a substantial step forward. i think congressman ryan and others are right that we are not going to solve the whole problem beeen now and then, what we can take a big step forward. >> president obama said that the commission of you that w structured in a way to rise above partisan concerns. bipartisan supermajority, 18 commissioners, to te for the plan yacht described here. -- plan you have described here.

the president and congress have put out with plan for deficit- reduction. president obama, told dollars trillion in savings, congressman ryan, $4.40 trillion over 10 years. the budget is usually constructed in a 10-year when no, -- window, the kind that congressman ryan's plan operates in. that is the convention, respected onll sides. how seriously can we take the president's's if eastridge is it if hesident's plan stretches out to 12 years to keep his target? are these for governing or for the campaign? >> we think it was a mistake. there is another joyful part of this -- erskine is called a fake

democrat. i have been called "a republican toady covering obama's fanny so he can destroy the republican party." another joyous appellation. [laughter] what the hell were we talking -- [laughter] defense, theouch president didn't really touch defense. that was sad. both erskine and i told the president that it would and better not to invite ryan, because he took hammer blows. a president should have waited

to announce for reelection after the extension, because now everything he does is tainted until after the election. you cannot get up and talk about getting there, and by partisanship, and joe biden will help, and he will do a great job, and that will be great -- if you cannot do that, go on the .tump, and rip ryan there is a 24/7 news cycle. he went out to detroit and just blasted. then, ryan does that, and they do, and they try to nail john boehner and eric cantor. it is a poisoned well. when the president did give his speech, paul ryan left immediately, and james borrowing got up, got out, and tried to talk to h.

paul ryan said you poisoned the well the well was not poisoned. we were working through stuff. now, you have this joe biden, god bless the joke, and a gang of six, because now there are -- joe, and the gang of six, because now there are seven people that do not care about doing anything on both parties. >> let me contrast these two plans. the ryan plan is basically what paul ryan is it is a serious, straightforward, honest plan. as allen said, he made two pretty big decisions, decided not to cut differencing -- defense spending, in fact increasing defense, d also simplified the code, and got rid of attack expenditures, which

are about $1.1 billion. he used all of that money to duce rates. the commission used about 10% of the proceeds of the elimination of tax expenditures to reduce the deficit. having made those two decisions, and wanted to get $4 trillion in deficit this auctions, it forced into the -- deductions, it forced him to cut non-defense spending and other mandatory spending more than we did, and in my opinion, it places a disproportionate burden on the truly disadvantaged. he also, on health care, made to the legal pretty big decisions. on medicaid, he decided to block grant medicaid to the states under the belief that you will give more governor's flexibility, they will be able to operate it more it

efficiently and effectively, cover the same number of people at a much lowerost, and he says about $750 billion by doing that. on medicare, he did what a lot of your company's head-on -- he turned it from a defined benefit plan, to a defined contribution plan, and he did that for all people less than 54 years old. that, principally, is what his plan does, and how he gets to $4 trillion in savings. the presidt came out with a budget in february, and i think it is fair to say that budget was not taken very seriously by anyone. subsequently, he has come up with a budget framework which allen was referring to a couple of weeks ago, and that is basically compared to congressman ryan's budget, more like an outline. the best part is he did say the words four trillion.

that is a substantial step forward. it is, however, over 12 years, and back-end loaded, so when you compare it to the ryan plan and the commission's plan, it is probably more like 2.5 trillion. in fairness, it does not really stabilize the bat, and the debt as a percentage of gdp gets up to around 77%, and never gets to primary balance, which is a deficit-to-gdp ratio of around 3%. but, he kind of contracts that by putting in a fail-safe provision which says if the debt does not stabilise and is not on a downward path as a percentage of gdp by 2014, then he will put in an automatic, across-the- board cuts that will take the

deficit down to two 0.8% of gdp. however, in those cuts, he excludes all of the income support programs that are in mandatory spending, food stamps, workers' compensation, ssi, medicare, medicaid, and social security. from my viewpoint, as we look at what could come out of these budget negotiations, i like having a fail-safe provision with a trigger that makes across-the-board cuts, but i would like to see those cuts ratchet down over time there as an example, you might start at two 0.8% in 2015, and then work your way down to 1.5% by 2020. i would want to have a trigger that forced tho cuts to include all spending, both in the tax code and even the

entitlements. the democrats would not want to cut entitlement spending. republicans would not want to cut tax expenditures. we would be able to use the money to reduce the debt. by forcing them both, you would have them use a scalpel rather than an axe. >> after the president clinton's speech, after both parties have committed to budget the president's speech, both parties committed to the budget. standard and poor's released a rating. this is what you have to say. "if anything, they understate the extent of the problem. we are a lot further along than we were one year ago, but what we need now is action.

if s&p understated the rest, what you see happening to the cost of our debt? >> if we do nothing, i think it is catastrophe. i think we face the biggest, most predictable economic crisis in history. i think it will make the crisis we just went through, which not many of us predicted, it will make it look like child's play. if you think about what happens in a crisis like this, when inrest rates rise dramatically and quickly, what happens to inflation, what happens to businesses and the cost of capital, and the availability of capital as they get crowded out the markets, as we have the government having trillion dollars deficits as far as the eye can see -- i think it could be unspeakable. that is why i think we need to step up to this problem. we need to put politics aside. we need to pull together, rather

than a part, and do what the gang of six is doing -- senator kent conrad, tom coburn, michael, senator dorgan, -- chael crapo, senator dorgan, and, help me out. >> you have warner. >> those six guys to come together and do what is right for our country. we could solve this problem today, and america could compete with any country in the world because our balance sheet problems are not nearly what the problems are in other countries as they face a people that do not have the right to vote, or do not have democracy. but, our problems with our financial structure are so deep that if we do not face up to them, we will see this problem, and see it really, really quickly. >> one of the reasons we were delighted to have you join us

today is that it appears part of the difficulty has to do with the myths that surround this area. it is clear that the seriousness of our budget situation has not registered with many americans. i had the opportunity to meet with senate budget committee chairman kent conrad, and he emphasized that to make in our discussion, and here is a statent that he made in april of 2011, just last month "the only thing that enjoys majority support among the american people in terms of spending cuts is to cut foreign aid. foreign aid is less than 1% of the federal budget. when you are borrowing 40 cents of every dollar you spend, you're not going to solve the problem cutting foreign aid." i think i would put waste and fraud in that same category. the budget, as you have already

discussed, is brought was split between mandatory spending -- medicare, medicaid, social security, interest on the debt, and discretionary spending. how much of what you have in mind in your plan depends on cuts in disctionary spending, and what impact would that have on americans quality of life? >> i think it is 12%. when you chop around in the discretionary budget, and do not forget the biggest part is defense. it is $700 billion. it is huge. kent conrad is a warrior, and an amazing man. but, when he has been doing his work, he has been doing this for 20 years, let me just say that the greatest myth of all is social security -- that somebody stole 2.5 trillion dollars.

cheap, corrupt politicians stole the reserves for social security. the greatest myths this -- hang on tight, i went to the aarp and set a fine line, stop me -- social security is not a retirement program. it was never intended as a retirement program. it was set up in 1937 and 1938 to set up -- to take care of people in distress. it was to give them 43% of the replacement rate in their wage since -- wages. life expectancy was 63, and that is why they set retirement at 65. the beginning of the ponzi scheme. and never had anything to do with disability insurance. was not added to it. that will be broken eight years. disability insurance is being used and over use right now to

be broke, and guess whwill take care of that? the fed. it was never intended to take care of children in college up to 22. we never built for that to read what i was a freshman in the iversity in 1950, 16 people were taking into the rich were paying into the system, and one taken out today, 3.1 are paying into the system, -- taking out. 3.1 people are paying into the system today. we changed the price cost index. the law said that if inflation was 0, the ca would be zero, so what happens? inflation is low, and they do not get a cola, and the cry is like the whale of a title to -- whale of a coyote.

what did you do with people when you talk of a life expectancy today is 78.1, n 63, and we say we are going to raise the retirement age to 68? it is 66 now. if you cannot raise the retirement age to 68 by the year 2015, there is no hope. if you cannot get yourself organized to figure out how to ta your social security in the year 2015 at 68 -- here is the key. the loss of social security is so clear that the schedule benefits cannot be paid, and that is a clear word, they will give only the payable by the d. now, that may sound like garbage, but that is a real gut- rancher, because that is the one that will hit in 2037. last may, there was less cong

in than going out. so, you get to this point, and you'll get payable benefits, and not scheduled benefits, and you can sue, moan, and shrieks, and it will not do you a lack of good. that is to feed to me. we went to the aarp, and said we think you ought to help. there are 38 million people bond together by a love of airline discounts. [laughter] >> and insurance discounts, and their magazine has picked up. it is a thriller sex over 50 is a thriller, and now they're into sex over 60. thr ads are about how to get something. they don't have to pay for,

medicare will. read the aarp magazine. it is a marketing instrument. are these people patriots or marketers? that is a harsh statement, and i intend it to be. they have not helped one bit. they say we have two modest things to suggest, we say what are they, and we are still waiting. they hammer as daily in their magazine. anay, that as a myth. social security is what you say -- is the most noble experiment in the world's history, and it is the most thing you pay into with your income, but for heaven's sake, if we cannot get these modest things, change the bend point, big time language nobody uerstands, but it does mean we had the guys who have the most, we hit the more, progressively, which is what everybody asks for.

the greatest, distressing is you have not seen anything yet. they have to talk about social security, or anything is a fake right now. when that happens, the savagery and the disgust that will reign over your head about what we are doing to the poorest segment of society when we said the lowest 20%, we will give them 125% of poverty pavement, and we will give the seniors more thathey get, they will get a 5% over 80. we have done everything we can in our proposal, and final we say if you cannot read and .rite, forget our web site if you cannot believe -- undersnd what we did to make this program solvent, and have to believe the people that make

money. 30 million people paying $12 dues, how much do think you have a role in around at the aarp? they are 1.5% of all mailings in the united states carry one. -- states. 1.5%. [laughter] >> mother never told me. you could have saved me. >> [laughter] >> you anticipated one of my questions. i wanted to do the discretionary spending. >> well, that is right. you do that. i got that off my chest >> and you did a darn good job of it, by the way. [laughter] >> we cut the discretionary budget by $1.70 trillion over the next 10 years. we cut it proportionately

between the defense and non- defense. the good thing is when people ask us specifically, what would you cut, we can't tell used which we could tell you exactly what we would cut, dollar for dollar. we also put a fire wall in between defense and nondefense, so a future congress could not go in and te all the cuts out of the defense or non-defense. as i said earlier, we tried to get our spending back to 2008 levels, by 2013. i think the republicans are right, you can get it back there quicker, but i think you run the chance of disrupting what i believe is a very fragile economic recory. we cut health care by about $500 billion. we cut other mandatory spending

by about $250 billion. we cut social security to get it to 75-year solvency. >> obviously, the biggest driver in this whole situation of the deficit is mandatory spending, and as president obama pointed out in his april 13 speech on our current course, by the year 2035, health-care social security and interest on debt will conse every dollar we are paying in taxes. the fastest growing item on that list is health care what medicare being the largest component. both plans tackle medicare, but they do it in fferent ways brian would turn medicare into premium support -- ways. representative brian would turn it into premium support. he believes that it will rain in the cost and inflation.

the president's council on big savings from slowing the growth of medicare, but was going to rely on a board of exports. your commission called for a long-term global budget that limits growth and federal health spending to the growth rate of the economy plus 1%. it does contemplate a premier support plan, but only has one option. this is the thorniest part of the debate. how confident are you that any of these approaches will bring health-care spending under control? >> i am positive we have to bring health care spending under control, because it is the big enchilada. it is the biggest fiscal crisis challenge we face. if you look at medicare, medicaid, and the chip's program, it is about 6% of gdp right now, and will be 10% before you know it. that does not count words that

most people do not even understand -- the to a $76 billn it will take to do the "dot fix." what the democrats have tried to do is they have this new affordable health care act which they believe the pilot programs will slo the rate of spending to gdp + 1%. alan simpson and i did not by that, neither did the commission members who voted for that plan, so that is why we put in the other $500 billion of cuts, a specified to specific cuts, some to medicare, medicaid, and other health-care programs. our hope was those cuts would slow the rate of health care spending to gdp + 1%, but we had our doubts. therefore,e put in this global cap that would contain the rate.

we said you will have to take on some enforcement mechanisms that will be tough to swallow. you will have to do such things as probably move the medicare eligibility ageo match social security. you will have to look at block granting and medicaid, lookit premium support plan ke alice rivlin and paul ryan recommended that you will have to look at a robust option, or a single player plant. all of those have to be on the table with these other steps do not work. we did try to do some things that would test whether or not some of the things that paul ryan is recommending what works. as an example, in our plan, we test market giving the governor's allow more flexibility in 10 states over the next decade -- the governors of lot more flexibility in 10 states to see if it would bring down the cost of health care while still covering the

disaantaged. we also decided to test a pre and support plan to see if it would work with that group of people before we took it t the market as a whole. as paul said, paul ryan keeps all of the cuts in the affordable health care plan, but goes to block grants in medicaid, and a premium support plan in 10 years from now for people 55 and other. the president's feeling was instead of making additional cuts, he cut about $300 billion of additional spending out of medicare and medicaid, and that he said he is when you have is enforcement mechanism as an independent payment advisory board, a group of eerts that will make recommendations as to how we bring down the cost of

health care, and congress can either except it, or not accepted. if they do not accepted, then the secretary of health and human services would come up with something. if she cannot, then there recommendation goes into effect. we wil have to do something like this, because it you do not, health care will literally consume every single dollar of revenue that is being generated in the country today. >> we could not even wrap our arms around it. it is on automatic pilot. you can not put anything in there that makes the congress do something in 10 years or five because we will not do it. i say we. we ner did. the dock fix was never done and it never got de because they are pretty tough. these things never happen. now, you have another thing that should not be mentioned, but you have to, with the supreme court

decision, you have an on limited glut of money comin into campaigns, and it will be just hang on tight. there will be anonymo eds. there will be no limits how we got to the- limits. how we got to the subject of a corporation being the same as a citizen under the first amendment, that just opened the treasury doors, not the treasury, the unions, businesses, you will have to get on board. this is a monstrous thing. there is a way to do something about health care honestly, and i will tell you what it is. do not say anything. i will not grant. you reduce money to the providers. there is less money for the physicians. he began to afuence test the patience. you make the patients pay more in copiague, and get hospitals to keep one set of books instead of two.

you get medicaid to quit working over the governor's to see how much they can get, and there you go. that is a start. do you think any of that will ever start? forget it. >> i would add my personal opinion. the current system does not make any sense. we spend twice as much as any developed, but -- country as any -- on a per-capita basis and gdp. on outcomes, we rank 30th. we have the greatest technology, and the gatest innovations, but nobody is able to take advantage of it, and we have these 50 million people out there that do not have health care insurance. it see to me there are some basic things we have to do.

we have to get all of these people in the game. we need to get health care insurance for everybody. if they get healthcare -- they get health care, but they just get in the emergency room, where the cost is five or 10 times the amount of the doctor's office, and do you know who pays for it? you do. you pay for and higher taxes and higher premiums on your own insurance policies. i would like to see everybody have a medical home, and access to a primary-care physician. today, that is impossible because we do not have enough primary-care physicians, because we do not pay them off, so we need more primary care physicians, mourners practitioners, -- more nurse practitioners. in my opinion, we have to make sure that everybody who gets health care has some skin in the game. on insurance, i would say we

have to make sure that all of these people, all of the drug companies, are going to have to make a sacrifice. the drug companies are going to have to allow medicare to compete with the drug companies. today, the va, as alan was talking about earlier, actually pays 40% less than medicare does, which means you are paying an excess amount. in addition, i think all people are going to have to make greater use of generic drugs we will have to have malpractice reform, so doctors no longer practice defensive medicine, the way they do today. i think we will have to switch from paying on a fee-for-service basis, to pay down and t come basis.

lastly, we have to do something about this end of life scenario, where most of the money is spent on health care. so, we have some big problems to address. [applause] >> somebody in the commission said anytime you go to the doctor, regardless of who you are, you ought to slap $5 on the table, and let them know that you're getting the best health care in the world for $5 per bag disappeared quickly, because that is evil. that is less than a movie ticket. everybody would have skin in the game. there is no skin in the game won a third party payor is paying, and a beautiful woman in wyoming at 90, had a heart attack, she lasted 10 days. video for the best care on earth, and -- they gave her the best care on earth, and 10 days later, it was $350,000.

add that up, and we are not wanted to care a pre-existing conditions. we assume there will be in tough these are not cruel things. this is reality. this is where it is headed. this is totally on automatic pilot. >> we need to address the medigap so everyone has skin in the game. my state of north carolina plays this silly game with a tax what they charge providers. then providers will be allowed to charge more to the state for medicaid. by the way, since it is the federal government that has to match it, it will cost you about $50 billion over a three-

year period. it would make a lot of sense for the taxpayer to get rid of the gains. >> if i did move this along to the subject of taxes. that is an extraordinarily important point, too. obviously, one of the biggest issues -- i just went to see if we can take a quick comparison between the two. can we get the slide? here we go. president obama increases revenues $1 and in taxes for $3 in spending cuts. and you see the rhineland plan cuts taxes $2.3 trillion, repeal health care tax reform for the top-rated 1%. president obama accordingly says he will raise taxes. house republicans say they will

cut taxes, which seems to be digging deep budget hole deeper before they start to fill it. the president calls for $1 in new taxes for every $3 in spending cuts. how do you get there? >> 8 is easy. -- it is easy. forget the bush tax cuts. what we have is the most archaic, ai-competitive -- you could not dream up a worse tax code than we have in this country to complete in a global marketplace where capital is fluid across borders. what we do is broaden the base, simplify the code, and eliminates or greatly reduce these tax expenditures. it is $1.1 trillion in the tax

code. everyone in congress is bragging about getting rid of $16 billion worth of earmarks, when there is $1.1 trillion in the tax code. we use 90% of the money to reduce rates and 10% to reduce the deficit. what does that mean? we could set rates at 8% of 2 $70,000, 14% up to $210,000, and the maximum marginal rate of 23% above $210,000. he could also take the corporate rate to 26%, and we can put in a territorial plan that will regulate all those trillions of dollars and capture those he's back to this country -- fees back to this country.

i think that is the kind of plan that truly make sense. it is broadening the base. it is lowering rates. it generates about $100 billion of new revenue we will see each and every year to reduce the deficit. >> i think we were stunned when we found $100 billion in the tax code which has had no oversight whatsoever. there is no oversight. they did find in there. they were on their way in. they all have something to do with something tt had a very powerful force in the lawmaking institution to inject that into the tax code. ckwood used to speak of it. the amenity. it is a stunner. nk them all.

you can get rid of some things. if you want it, paid for it. quit making promises you cannot keep. >> we would keep the earned income tax credit, the child tax credit, we change the mortgage interest deduction to 12% credit in gives you a 12% credit on charitab contributions. if you do that -- because all of this things cost money -- the example we came up with, you take the same break points and rates up to 12% of 2 $70,000, 22% of 2 $210,000 and have a maximum rate of 28%, and still get the corporate rate down to 26%. again, all of it costs money. someone has to pay for it. as you look at adding that each of these tax expenditures, someone has to pay for it. it is just spending, but

spending in the tax code. >> i wish we had more time. i am sure everyone has benefited enormously from the point of view you describe in the informatioabout these things you have imparted. we thank you very much for your leadship. the last slide is of a quotation from winston churchill to the effect of "the americans will always do the right thing, after they have exhausted all other alternatives." i will let you respond to that. >> i will be more nuanced. when we see each other, we know we have done america a great service and achieved tremendous success, because we have effectively pissed off everybody

in america. [laughter] [applause] it's true. >> somebody asked me the other day, if everything is so bad, why are interest rates higher today? i said, because we were looking at the horse in the glue factory. >> i was a governor. i like that one. >> i am convinced we will do the right thing because we have to. we have no other choice. if we do the right thing and get our fiscal house in order, then this country can compete with any country on the globe. if we do not, we are going to be a second-rate power before you know it. let's do the right thing. let's put some presse on our congressmen and senators to step up and put politics aside and pulled together instead of pull apart and it lets address these hard fiscal problems and make good choices. thank u.

>> thank you very much >> [le] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> the coverage continues on the u.s. economy and treasury secretary timothy geithner into the by paul stevens, president and ceo of the investment company institute. this is almost one hour. [applause]

>> good afternoon to your wallet and welcome to this year's general membership meeting. let me thank greg johnson an ad for their messages that were delivered at the outset of our conference and for their of leadership. once again, we are pleased to start the meeting with a policy forum and a really cannot think of a better guest to help us grasped the policy changes that we face as investors, an industry, and as a nation. timothy geithner was sworn in as secretary of the treasury in the first week of the obama administration. even before his appointment, he was a deeply involved in the critical economic issues with the federal reserve bank of new york where he had a leading role in addressing the financial crisis. mr. secretary, you've had a historic tenure at the fed. you may miss it had been less historic and less consequential at times, but you have spent

much of your career in public service, a graduate of the johns hopkins and you began your government working in the treasury in 1988 and have worked through three administrations and has served at the imf as its director of the policy and secretary geithner has a separate -- distinctly international background as well having studied japanese and chinese, lived in east africa, india, thailand, china, and japan. it is an honor and pleasure indeed to have you with us. one the things i had done before this session was to invite members of our board to submit questions. the one thing they would like to ask you. some of these will reflect their concerns and thinking. i am sure the first question is literally on everyone's mind. in the first seven quarters of the recovery, growth has

averaged 2.8% annually, but i am sure you would agree the unemployment rate remains far too high. how does the administration shares between stimulus policies to generate a strong recovery and the need to address unacceptably high annual deficits on the other? >> an excellent question and a good place to start. thank you, paul, for giving me a chance to come talk to this group about the challenges that we face. i want to particularly nice of you and mary to have me and here again. thestep back for a second, o three big financial challenges are these -- how to make sure we are growing as rapid as we can in the near term as we get people back to work and to make

sure we have better fundamentals for stronger growth in the future and that is enormously important, and probably it still dominates every other concern or objective facing the country. we have to take the steps to bring their fiscal balance, our fiscal deficits back towards being balanced. that is very important. we are now at the point where i think it is the right time, and the necessary time, to try to build a bipartisan consensus on fiscal reforms that will come again, get our debt on a path where it falls as a share of the economy. it is very important we do that. confidence in a recovery over

time, our ability to make sure things that are important to growth like education, innovation, infrastructure, the capacity to meet national security commitments, our ability to make sure we can meet the obligations we have made to our seniors, the disabled, the pork, to be able to this things to live within our means -- the disabled, the poor to be able to do the things and live within our means. with very high deficits which are the consequence of the crisis but also a bunch of dresses made in the preceding decade. it is very important that we take this opportunity right now to try and lock in some reforms on the fiscal side going forward. if we do that, we will have more flexibility to do what we want

to leave the near term. our industry manages about $6 trillion in fixed-income securities on behalf of 7 million investors. for many of these investors, this is a key variable. immediately after the crisis, many people feared deflation, and more recently as you know, we have seen higher prices for energy and food, rising higher prices and increased consumer inflation. all of those developments have prompted concerns about inflation. how do you weigh the various upside and downside risks to the general level of the crisis in the economy. >> an excellent question. we have a tradition in the united states which racketeers of the treasury and presidents to not talk about monetary

, andy and the fed's job they will achieve this as they have, their job is to make sure that they preserve confidence and that inflation will been low and stable over time. if you look at the world today, we are in very different places and emerging powers that are tricky and many others growing very rapidly. that is the early stage of what i think will be a you see them tightening policy to mitigate risk and it's necessary to do that if growth is going to continue. then you see parts of the major

economies and parts of japan and europe in particular that are growing very slowly. a very different balance of risk and inflation. we are sort of in the middle. we're go out -- we are growing rapidly than -- more rapidly than japan and parts of europe because we are a more resilient economy. but we still have very high unemployment. the increase in gas prices you're seeing are putting pressure on working family ought -- working families in the united states but it is not translating into higher rates of inflation or expectations because the economy is digging out of this deep hole caused by the recession. the focus of background -- the focus of policy is still going to be on how to make sure we

have in place a sustainable expansion but that requires it to be a viable. the fed is going to have to do its job on inflation, which it will and congress and the executive branch need to put in place things that restore the balance and fiscal position. >> when i asked the board to suggest questions for this discussion, nearly every member wanted your views on the nation's fiscal challenges, the deficit, debt and i'm sure that does not surprise you. president obama laid out a framework to reduce the deficit over the next couple of years. can you tell us how that plan addresses the problems we face? >> our fiscal position is unsustainable, not just over the next five or 10 years, but in the decades beyond as more

americans retire because americans are living longer and because it is more expensive to live longer, the cost of health care and retirement security rise substantially. we have an unsustainable fiscal position and it's important we put into place reforms that bring more balance to our commitments and resources. what that president propose is we take a balanced and comprehensive approach. we proposed specific targets for savings across all the functions of government, from medicare to medicaid to other targeted programs of support and defense. parts of the government we call discretionary. what we proposed is a level of savings across all those

functions of government. they propose we work with commerce -- with congress on a comprehensive tax reform plan that would help contribute to this burden of bringing down the deficits over time. that is close in concept to whet was proposed at the end of last year. is very similar to what is being discussed by bart -- by a bipartisan group to miss that. they share a common feature which is to do this in a way which is sensible and does not damage the future growth and judged as fair to people. you need take a comprehensive mix to savings and revenues. people have a different approach to what is balanced. in the president's proposal, it is roughly $3 of spending cuts for every dollar of revenue to tax reform. two of those $3 are spending cuts and a dollar is reduced

interest payments over deficits, but that is the kind of balance that you need. the hard thing is not deciding how much you have to go, but if you look at what the house republicans have passed and what the president has proposed, everybody has recognized is certain magnitude of rejection, you have to do to restore sustainability. the challenge is to do it in a way that does not weaken our capacity to grow or does not jeopardize retirement security or access to health care for people who really need it, that preserves our capacity to invest in education. those are the things that are important to protect. the challenge is not a challenge of math or accounting, it is designing a strategy with the rights composition with spending

savings and tax reforms that do not hurt future growth prospects. >> there is a lot at stake here in the president's plan is welcome indeed, but when you look at budget projections, you see spending ranging between 22% and 27% of domestic product, well above the historical average. taxes have been less than 18% of gdp. that is a huge gulf between those two. there remains deep concerns that we find the political will to bridge the gulf. it is noted that standard and poor's issued a warning about america's inability to address its fiscal problems after the president and plan by congress and ryan suggested how they would approach the problems. here is my question -- what words might you have for the 90

million people invested in mutual funds to reassure them our political system can get this problem under control before there is a train wreck? >> the fair thing to say as you will want to see what people do. the test of leadership and the test of politics is whether you can successfully build a coalition large enough to be able to legislate reforms that restores stability in a way that does not undermine our capacity to grow. this is a very hard place to read from a distance. even close up, it is hard. we are at a moment where the country is deeply divided about lots of things with the rule of government. lots of things make important, particularly the damage caused

by the crisis. it makes it -- makes it important that the leaders have to come together now to begin the process of restoring it. if you listen closely to what the republican leadership is saying to what the various bipartisan commission members are suggesting, you can take more confidence in what we agree on and there is more convergence. everybody is talking about four trillion dollars in deficit reduction. everyone is saying the minimum test of credibility is to it down to a level lot -- where the debt burden is falling. that is the basic objective. if you look at the proposals out there, the president's proposal on spending, for example, what

he is proposing is close to what the commission suggested. there is a set of clear and explicit targets -- the president said it was a that fail-safe enforcement mechanism. that framework is complemented by agreement on spending, savings and where we can identify that. we want to lock in tax reform, but the important thing for people to recognize is we cannot let the deep divisions between the parties on exactly what to do on taxes or how to make sure it is sustainable because we're going to disagree on those things. we cannot -- what you want to do

for confidence and credibility is to take off the table the risk that political disagreement on the things like tax reform and what shape it will take will force us to live with unsustainable deficits. you have to take that off the table. with specific spending reforms and tax reforms, if we can do them, you lock the political leadership into something that will demonstrate with more confidence and the american people that we will live with the army again. the challenge is to try to do that even though we're not going to resolve in the next two months these deep, fundamental positions on tax reform or how

to do the next wave of health- care reforms beyond the health- care act. >> we actually have them here for the conference so we will have an opportunity to explore those commission recommendations in detail. >> they did an excellent job of defining a credible, balanced, tough plan for solving these basic problems. i think they have changed the debate fundamentally. if you listen beneath the political predicate -- the political rhetoric, you see the president of the united states, house republican leadership that passed the budget, embracing the imperative of starting this process now and locking into a set of targets a pale safe spending cap with an

enforcement trigger as much as we can agree on that. >> one of the things is that you have to slaughter all of these sacred cows -- >> i do not have his talent for rhetoric. >> he says he is the color and erskine bowles is the number. we manage about 400 trillion dollars of investment -- of halftments, that's about of the investment in that area. making sure these retirement plans are successful as hugely important to our nation, obviously. one key factor is tax incentives provided for contributions and earnings. lately, as you indicated, as tax reform proposals are discussed,

it will include tax incentives or what some would call tax expenditures. these incentives that we have are just one in a long list of tax provisions. if you were to rank various tax expenditures, how much priority would you place on preserving tax incentives for retirement savings? >> excellent question. a lot of things in the tax code we call spending through the tax code or expenditures are things that are very important to how we grow in the future. that is why i like to emphasize this thing about fiscal discipline and the budget wars is not about accounting, is about designing a strategy that preserves incentive for future

growth. one of the things that determine how well economies function over time is how attractive it is to invest in a country, expanded the business, and you need to be able to finance investment through savings. we have not really begun to explore what makes of provisions we can support, but you want to keep reminding people that you have to focus on incentives for savings and capital investment. this was a crisis caused in part because the world finance a huge increase in borrowing, through borrowing, a huge expense and investment in things that did not have much of return. for a economies to function well, i have to make sure the united states is going to do a better job of allocating, which

we like to be higher of course, you guys are at the center of those basic judgments and i agree with -- we are making a lot of progress and we have to make sure the basic shape of the american economy has a better balance of savings for individuals. if you look at where we have come before the crisis, we had- saving rates for a long time. now there are between 5% and 6% which is a pretty good change. we would obviously like to build on that. >> let me shift basis for just a second. we first got to know you back in the clinton administration monday spearheaded treasury's successful effort to persuade

japan to open its asset management market to u.s. firms. that was the first of many trade agreements that enabled many of the firms to develop a global business. let me say thank you on behalf of our industry for your leadership on those issues. but second, how has the trade agenda for treasury changed? are you more focused on currency reform and dismantling subsidies? >> i said this yesterday that the chinese are coming for another brown -- other round of strategic and economic dialogue. we're trying to let them open up more opportunities to american producers, goods and servicers, to make more progress and on the

financial side, that means opening up the market for financial services, financial products, have more depth in their corporate bond and equity markets and raise the return to favors. generally, we try to look at a broad set of reforms to enhance our economic interests. that is to make sure we export more and american firms have a larger share of those products and markets and the financial system as a whole is working in favor of that objective, not against it. i would emphasize that our big challenges trying to make sure

the u.s. command system emerges stronger from this crisis and not weaker. we are already aggressive in how we respond to a core of the financial system, as much more higher quality equity, a much stronger position than before the crisis. we really tried to wash out and put out of their military the weakest part of the system so that what is left is stronger. it is important for the economy going forward for businesses across the country that we added system akin to a better job of allocating investment and i think we have a good chance because we were so far ahead of putting the u.s. finance system -- that was necessary for making

sure u.s. institutions can be a big part of financial growth and deepening in the most populous parts of the world. you need a strong foundation if we're going to benefit from that growth and you can be very good at negotiating trade agreements like that but if u.s. firms are not strong enough to take advantage, they don't do enough for you. our focus is to make sure we get this economy moving again make a much stronger in the future and we have a stronger financial system that will once again be the model not just for innovation and efficiency but more resilience and stability. >> the crisis we have been through have led some to question fundamental assumptions. i know better than to ask you about the dollar because like any good treasury secretary, you have an answer to that question

and you will stick with that. so let me ask a different one. [laughter] china, brazil, russia are increasingly talking about developing an alternative to the dollar for at the currency. how serious is that talk over the next decade what are the prospects of the euro or some other currency assuming a status equal to the dollar? what would that mean for our country? >> i don't think there's any realistic prospect of substantial change in the global monetary system in the next decade or two. over the longer-term, as these economies get stronger, if they open up their financial systems other currencies are flexible, if they integrate more fully, it is possible you'd see a more significant shift, but not until you see this changes happen.

take china, for example. just don't think that's going to come rapidly. the important thing for people to understand about this is that ultimately what matters most is our capacity to earn the confidence in the world that this is a good place to invest your resources and the balance of safety and liquidity in return will be higher here than in many of the alternative places you could put your money. particularly because of the damage to confidence caused by this crisis, that we work hard to do a better job of earning that confidence, rebuilding it where we need to, that is about growth fundamentals and the basic integrity and strengthen their financial system and getting ahead of these fiscal problems. if we do as we have always done in the past, if we are able to

get this political system to do a better job in those areas, we will be able to continue to earn the confidence you see in u.s. financial markets today. >> let me talk a little bit about dodd/frank. you are the -- one more opportunity to excel, i think. [laughter] >> there is a role in life, if you're given responsibility for something, you want to be given authority for something. the way many committees work -- i should not say this -- keep going with your question. [laughter]

one question you are facing is how to use this power to designate non-bank firms, washington's favorite parlor game is speculating about that. the fdic chair recently said this designation should be used very broadly to ensure any institution posing systemic risk is covered. federal reserve officials, including one governor said the designations should be used narrowly. just so you know where we stand, we believe the public debate has over emphasize the designation process. there are many products and services where risks might -- risks lie bfi by primary a week regulators and would offer money market funds as an example. i know this is an ongoing rulemaking and that limits your

ability to reply, but can you share any thoughts about how and when does a basin's opposite used broadly or narrowly -- designations should be used broadly or narrowly? >> if you look at how we got into this mess, i think the central vulnerability that was revealed by this crisis was that we ran a system where we applied a set of quite imperfect constraints on beverage, funding on banks, that left a large parallel system with a great diversity of other types of institutions that were essentially a engaged in the business of banking without any meaningful constraints on leverage. the reason our crisis was so severe was because we had this parallel financial system where

there were essentially banks, and i don't mean investment managers, i mean banks, who are very leveraged with a huge amount of funding risks, and when liquidity turned, that system came crashing down and put overwhelming pressure on the financial system. the central imperative in financial reform is to make sure we have the authority not just to get those shock absorbers in the system better absorbing future risk, more conservative, but to make sure we're able to apply those two institutions engaged in a fundamentally similar activities. broad narrow the debate captures a choice we're trying to make. the choice we want to make is to go back to this diagnosis -- we want to make sure where you have institutions that play the same kind of critical role in the

financial institutions are supposed to the same risk of funding liquidity that as leverage to play into the system and his failure or risk of failure would be substantial and terms of the collateral damage it would cause. we want to make sure those institutions are subject to reasonable constraints on leverage trade that is important to do because if you don't do that, we will recreate the basic vulnerability a part of this system and we are not prepared to do that. the debate should not be about brought a verses narrow. it should be about making sure where institutions have that same unique and inherent risk that comes with what you call bank loan security transmission, borrowing short say you can invest longer-term on a size that matters with a connection to the patent system and funding

markets so critical, you want to make sure those are subject to a sensibly design constraints on leverage. we have already by virtue of the things that happened in the last two years, substantially expanded the scope of those constraints. what we used to call investment banks, we will regulate for leverage as banks. that means we have already taken the most important step to make sure we could limit the future systemic vulnerability in this case. we're going to try to provide as much clarity to the framework as quickly as we can move ahead to go through this designation as early as we can. but realistically, until we define precisely and explained the institutions that need to have these constraints on deleverage, you are going to be

somewhat uncertain. but i would not cast it as broad vs. narrow. it should be cast as how do you make sure where the system needs limits on leverage and risk that we have a chance to apply them. you are right to say there are lots of different things you have to do to protect the system. you don't what all the burden of stability or systemic risk to just apply in this one leverage because there is a whole range of other things we're doing that we can do to make the system safer. we will try to take that innovate -- that integrative approach. >> it's not a big bang, but an ongoing process. >> it's not something that you can walk in and never change because the markets will adapt. one way they will adapt is if you set the framework here, you will see just at the edge of

that framework, institutions designed to arbitrage or take advantage of those constraints. we had a system where you could be a bank one day and then decide you're going to flip your charter and the thrift because the regulation was lighter and constraint was weaker. a bunch of risk migrated to that weaker system of regulation. that's not a responsible way to run a financial system. for institutions to have this unique risk, it is fundamentally what you might call a bank by any definition that we are able to apply those conditions. that is important to the basic integrity of the financial system. i gave you long, complicated answer the was designed not to answer a question in detail.

>> i did not notice that. [laughter] >> of what you to understand what is guiding this reform and the vulnerability we're trying to address. >> i would like to follow that up with a question about money market funds. our members manage about 650 money-market funds with assets currently totaling about $2.7 trillion. these funds hold almost 40% of the outstanding commercial paper, about 10% of short-term treasury debt, obviously the financial events in the fall of 2008 exposed weaknesses in that money markets generally, certainly the vulnerability in money-market funds. as a result, our industry has recommended specific ways to address those.

we have continued to work hard on ways to make these funds even more resilience in the worst market circumstance. our focus has been on steps that would address the remaining risks while preserving characteristics that make money market funds so important and valuable to the economy and investors. making these funds stronger raises a very difficult set of policy challenges. but after all the experience and and put, we continue to be puzzled that there are voices out there that seemed to be advocating ideas that would and mart -- and money-market funds as we know them. for example, requiring them to be banks and short. how can we preserve the benefits money-market funds bring to investors and the economy while improving the management of the risk in the very worst market conditions? >> use of that very well and framed the choice well. all i can say is mary schapiro

and her colleagues are doing a careful and thoughtful job about how to figure out how to bring more resilience into that system without depriving the economy the broader sense -- a broader benefits those funds provide. it is ok to have a concern about something. it's one thing to have an objective for how to make a better. but until you can look at the specific consequence of how the mckee proposal better, you cannot be confident on how to make a proposal better. these are really complicated things to do and we want to get them right and bring clarity as quickly as we can to dispel uncertainty as we shape these rules. but we are not going to rush agreement where we are not confident we have a good balance

and one of the strengths of our system as we do run a pretty transparent process. we lay out proposals for comment and let people comment on those proposals and that reflects the recognition here. we are better than any place in the world in making sure that people make policy understand at a very specific level what the impact on markets are going to be so we can reduce the risk that you get the wrong balance of benefits. she is working through this and doing a pretty good job of listening carefully to people in the market but also colleagues on the council and i cannot remember a time frame we hope to get more clarity but we will do that is up as we get something sensible. >> of what he to know that your team at treasury has been excellent in terms of our opportunity to brief them and express our point of view with

them as well. >> we are not going to make everybody happy in these things but we do try to listen carefully and thank you for what he said. these are very talented people and they have a lot of challenges and a lot of people have a lot of the dice on how to do those things. there is trying to figure out what the best thing for the country is. >> i should extend that to your colleagues at the fed. >> very well. >> one of the things the working group raised in this context were concerned that if you apply the wrong restrictions on money-market funds, it can drive investors out of the sec- regulated vehicles and into products and funds that face far less regulation. some of those might be things beyond the reach of u.s. regulators. we share those concerns especially with regard to proposals that would bar regulated u.s. money-market funds from using the stable $1

value per-share or that would impose regulations. how does that concern shake your -- shaped your thinking on this subject? >> there are too difficult challenges face in getting this right. one is that the risk moves again to institutions that may not exist today that can get around that particular constraint initially. the other is that the move outside the united states. both of those risks are problematic. some people think it doesn't matter if this stuff moves outside the united states because they think if it is risky, why should it be here, but that is a short-sighted approach because in many ways, this crisis was a global financial crisis and much more severe for us because before the crisis, you saw a lot of risk

move outside the united states to institutions where regulatory requirements for more permissive. that is partly why use of a crisis spread and contagion was so acute. it is a very important to us that we set these new checks and balances in the way that does not just shift the risk some morals. that requires -- the think about how you get capital requirements right, it's a similar problem elsewhere. you want to get them conservative enough that our banking system can absorb shock likely this went through without having to get to congress, treasury or the fed to get exceptional assistance. you don't need to go beyond that. if you do go beyond that, you magnify the risk that stuff moves to other institutions or

outside the united states. that will leave us not better off as a country. we are trying to bring all of these choices about regulation, the balance that leaves us safer, stronger and more resilient as a system because the failures of this crisis were incredibly damaging in the collateral damage caused to prudent institutions. you want to get that balance right, but not at the expense of what would ultimately be a weaker or much less efficient system. >> it is hard to think about this, but in 2006 or before august of 2007, the burning question in financial regulation is how to ensure the u.s. retained its preeminent role as a global financial center. obviously, the financial crisis supplanted those concerns. but as we look at developments

like the potential development -- the potential merger of the new york stock exchange with the issue bourse -- with a deutsche borse, how important is it for the u.s. to retain its leading edge over the markets? how has it strengthen or weaken our position in that regard? if we are losing ground, what needs to be done to retain or regain our leadership? >> its very important to u.s. establishes -- reestablished is or rebuilds the strongest financial system in the world. very important for our economy and important for the world. we are not going to do that unless we make sure we fix what is broken and had a profit -- have a tougher, smarter, more modern set of checks and balances of risk.

the strength of our system was for a long time we had the highest standards for disclosure, the best enforcement deterrents against fraud, abuse and manipulation. and a better balance, good shock absorbers and requirements for the type of innovation and efficiency we need to be confident savings will go where they are used best. we had that balance and we lost it because a bunch of decisions made in washington and across the financial community are time, we have to regain that, but we are not going to have a strong enough system unless we get the balance going better afford. if we do it poorly, if we overdo it, if we are careful and smart in how we do it, we will lose it but i think it is very important we put our financial system in a

position where we can be a big part of the future growth the american economy needs. a big part of the gross american economy needs is going to come from making sure we can play and participate in the parts of the world growing most rapidly. remember these basic facts -- you live in this world -- we are about one-fifth of global gdp. one says. where 5% of the world's population. the growth is going to be strongest in those emerging market economies and a lot of the hope in u.s. future growth rests on demonstrating the can have a strong foundation to participate in that growth. that requires making sure we have a stronger financial system. i'm confident we're going to come out of this stronger because we were much more aggressive much earlier in recapitalizing our system and restructuring it, laying out a basic set of reforms so we could

lead the world to a better balance of oversight of checks and balances. we have to deliver the reforms that meet that challenge but we are in a good position because we moved so aggressively. it is worth noting that the basic lesson of the financial crises, if you look at the overall costs of the direct financial intervention we undertook and shaped and designed from the federal reserve to fannie and freddie, through tarp, we are going to deliver an exceptionally positive result for the american taxpayer and the financial system. hundreds and hundreds of billions of dollars better than anybody expected in part because we decided on a strategy to allow for a lot of restructuring early and try to maximize the chance to pull private capital and recapitalize the financial system. because we were so aggressive, we turn things earlier than other countries.

much of the crisis is years behind us and by moving quickly to do that, we have a better chance of making sure the terms come out in ways that are better they're good for us, good for our institutions and play to our strengths. a good lesson in crisis is early forces batter, even if it is painful. it was deeply politically difficult to do and, as you know, a lot of political capital was spent and was very costly to that. but we are in a stronger position today because we got onto the next thing and make sure we put in place a bipartisan from work for restoring fiscal balance and fiscal stability and we need to start that with a set of triggers and force savings on a downward path -- that's eight

manageable challenge for that united states and is fundamentally a political challenge. we have to do it carefully but we cannot put it off. >> you have been very generous with your time. let me ask one final question. you have had a pretty extraordinary career, becoming a member of the president's senior cabinet while you are still in your '40's. >> the president is in his 40's also. >> fair enough, but i am not interviewing him. [laughter] i would be happy to do that at another general membership meeting. when you were in school, he had a strong sense of the future, concentrating on east asian studies, japan and china, which are a focus for us today. you're also the father of two children who will be going out into the workplace. what advice would you give to young people today about equipping themselves to deal with the future of their than investing in mutual funds?

[laughter] >> my parents gave me a great gift as a child. i lived around the world and had a great chance to get a feel for the rest of the world and look at the united states through the eyes of other countries. that experience led me to want to work for my country to help make sure i could contribute to making sure we are doing a better job, things governments have to do. it is a remarkably rewarding experience and i will not try to shape -- will not try to affect what choices they make. but i think the country would be stronger if we can be successful in attracting people to come spend part of their life in public services. the economic challenges we face in the country depends on what i'm getting better understanding of economics and finance so you can get better policy outcomes from your government and that

depends on getting politicians willing to make tougher choices and also people in these jobs who are talented and willing to give part of their life. it's good for the country to get people to do this and i hope we can do that. word about the world. make sure you try to understand the basics of economics and finance because it is critical to everything. and at some point, try to work for your country for some time because it is an incredibly rewarding thing to do. part of getting better choices out of washington depends on getting talented people to come to these jobs. >> thank you, mr. secretary for the talent you have brought to the service of our country. thank you very much. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> this weekend: former utah governor and former ambassador to china, jon huntsman, delivers the commencement address at the university of south carolina. south carolina is the first southern state to hold a presidential primary. watch tonight on the "road to the white house." >> there was a saying in the military -- "of the amateurs do it over and over until we get right, the professionals do it over and over until the cannot get wrong." >> he was a platoon leader of seal team won a during vietnam and is the author today of 14 books. he will discuss the life and trading of today's navy seals. you can download a podcast of the program, one of our many signature interview programs available online. >> next, nevada senator, john

ensign's farewell remarks on the floor. he announced last month he would resign. this is about 10 minutes. difficult speech. this will be my farewell speech to the united states senate. serving as nevada's 24th united states senator has truly been the greatest professional privilege of my life. growing up with a single mom and very humble surroundings, i simply never imagined that one day i would end up as a member of such an august body as this. unfortunately the experiences that extend from the more than 10 years of my senate service cannot be summed up in one single speech. i owe a humble thank you to many people who helped to get me here and served me effectively. from campaign volunteers, staff, donors, to some of the best people i have ever worked with,

my senate staff. i cannot thank you enough for the honor of the past many years. each of you has helped me to achieve more than any individual talents alone could have accomplished. when i look back over my time here and in the united states house of representatives, i'm very proud of the many accomplishment that's we, together, that we have been able to achieve. i would like to take a moment to mention just a few. the beauty of the state of nevada has been greatly enhanced and protected for the enjoyment for future generations because of the public lands management act and several other important lands bill. because of these lands bills, nevada has been able to keep over $3 billion that has been raised from land sales in southern nevada. this money that did not have to come out of the united states treasury. in the past, balimland was

exchanged for sensitive land around the state. as a result of the lands bill that we worked on,e were able to insad auction this b.l.m. land, raising far more money for the stat of nevada than the land exchanges ever were able to do. this land revenue has been used to purchase sensitive land to protect it for future generationsings but also to construct 100 beautiful parks and trails in southern nevada. i cannot tell you how proud i am when i drive around las vegas and i see these family enjoying these beautiful areas. this has made the great quality of life that much better. additionally for northern nevada, my love for lake tahoe has been evident throughout the ars. iorked hard to ensure that the beauty of those waters an surroundings are just as beautiful decades from now as they are today.

in our lands bills helped to achieve this goal. through this legislation hundreds of millions of dollars have been devoted to preserve its echosystem and important fuel reduction projects around our state to help prevent catastrophic wildfires that so threaten the future of our state and its breathtaking landscape. additionally, i have been a passionate add row cat for education reform. our lands bills have directed millions and millions of dollars to nevad schools as an endowment that our state will reap the benefits from for many years yet to come. i want to thank senators reid and bryant for their cooperation in drafting these great pieces of legislations that our states benefit from so greatly. i want to thank the folks on my staff, especially john lopez who worked so hard to turn these pieces of legislation into law. speaking of legislation that beme law, i would also like to

highlight another aomplishment of which i'm so proud. as the only bipartisan provision in the so-called obamacare bill, senator tom carper and i worked against some powerful interest groups to get the healthy behaviors act added to the health reform bill. our provision was modeled after efforts safeway in the private sector to both improve health care quality and to reduce the costs of health care. essentially our provision rewards people in the form of lower health care premiums for making healthy choices such as quitting smoking. if we, as americans, continue to eat too much, exercise too little, and to smoke, it really doesn't matter what kind of health care reform we enact in this country. costs will continue to escalate. i hope that this provision will

highlight t individual contribution that we canll make to reduce our health care costs, and certainly this legislation would not have become law if it were not for thepectacular job that michellepence from my office did. as i mentioned earlier, i simply cannot list the number of things or the number of people on my staff who have helped me with legislation. we have accomplished a lot. i wish i could do it in just one speech, but it's not possible. i could speak at length about my fight for lower taxes and individual freedoms, protection of constitutional rights, the dignity of our service men and women, education reform and so much more, but there is not enough time. and i hope that my voting record and legislative rord here in the united states senate will continue to speak for me longer -- long after i have left this chamber. i would like to speak, though, about a few observations that i have made through the crse of my time here. when i first ran for office back

in 1994, i was rather naive. i was also very idealistic. i simply wanted to make a difference in this great country. throughout the years, i may have lost my naivete, but i never lost my idealism. i still strongly believe that the united states is the greatest country in the history of the world, and it is worth fighting for and worth protecting. i will leave this place knowing that there are some really outstanding people here who are just as idealistic or maybe more so tn i ever was, and they're willing to take the tough political votes that are necessary to save this country from total bankruptcy. my prayer is that more people will join them in that courage. our children and our grandchildren deserve to have the same country that we enjoy, and it is up to the house, the senate and the white house to stand together with the american people to save the future of the

united states from self-destruction. when i first arrived in the senate, i observed several people who were so caught up in their own self-importance and business that arrogance literally dripped from them. unfounately, they were blind to it, and everyone could see it but them. when one takes a position of leadership, this is a very real danger of getting caught up in the hype surrounding that status. oftentimes, the more power and prestige a person achieves, the more arrogant a person can become. as easy as it was for me to view this in other people, unfortunately, i was blind to how arrogant and self-centered that i had become. i did not recognize that -- that i thought mostly of myself. the worst part about this is i even tried not to become caught up in my own self-importance. unfortunately, the urge to believe in itas stronger than

the power to fight it. this isow dangerous the feeling of power and adulation can be. my caution to all of my colleagues is to surround yourself with people who will be honest with you about how you really are and what you are becoming, and then make them promise to not hold back, no matter how much you may try to prevent them, from telling you the truth. i wish that i had done this sooner, but this is one of the hardest lessons that i've had to learn. i believe that if i had learned this lesson earlier, i would have prevented myself from judging two of my colleagues when i had no place to do so. when i was chairman of the national republican senate committee, i was confronted with the personal issues facing senator larry craig and senator ted stevens. following larry's admission and ted's guilty verdict, i, too, believed in the power of my leadership position and i called

on both of them to resign. i sincerely struggled with these decisions afterward, so much so that i went to each of them a few weeks afterward and admitted what i did was wrong and i asked both of them for forgiveness. each of these men were gracious enough to forgive me, even though publicly i did not show them the same grace. i'm very grateful to both of these men. when i announced my personal failure two years ago, larry craig was one of the first to call and to express his support. i truly cannot tell you what that meant then and what it means to me today. the purpose of me speaking about this is to humbly show that in life, a person understands mercy a lot more when they need it and when it is shown to them. again, this is a hard lesson that i he had to learn, but i hope that i can now show mercy

to people who come into my life who truly need it. as i conclude, i have a few others that i want to thank. my colleague from the state of nevada, senator reid. i ran against senator reid in 1998. he beat me by just a little over 400 votes. afterward, when i -- two years later, when i was fortunate enough to win the election, senator reid and i sat down and we kind of made a pact between us that we were going to get along even though we are of different parti, we were going to put the past behind us a we wereoing to work together for the people of the ste of nevada. a funny thing happened along the way over these last 10-plus years. senator reid and i developed a friendship. two people with opposite voting records,pposite views on major national issues, but we work together on a lot of issues that affected our state frieships formed between our

staffs and a true friendship formed between senator reid and myself, and for that, i want to thank him. to my senate colleagues, i would like to take aoment to apologize for what you have had to go through as a result of my actions. i know that many of you were put in difficult situations because of me, and for that i sincerely apologize. to my wife darlene who has been through so much with me and who has fought through so many struggles, is owed more than could ever repay. i do not deserve a woman like her, but i love her and i'm so grateful that the lord has put her in my life. our children trevor, ciena, michael, have never known anything other than their dad leaving each week to come back to washington, d.c., for my work. all three of them are incredible, and it's been a blessing and a privilege just to be their dad.

i have also been very blessed with a great set of parents who have stood by me through thick and thin, and also the rest of my extended family. i also have wonderful friends who have been there with me and my family through the highs and the lows. and lastly, most importantly, i want to thank god for allowing me to be here. i have been encouraged by some not to mention god because it looks hypocritical because of my own personal failings, but i would argue that i have not mentioned h enough. i'm glad that the lord not only forgives, but he actually likes it when we give him thanks. so, lord, thank you for all that you've done in my life. i hope that i can d better in the future. i hope that i can learn to love you with all ofy heart, soul and stngth and to love others as myself. my colleagues, i bid you farewell. know that you will all be in