there is not benefit for having broken the rules, it is gone to be -- you do not receive some benefit for having broken the rules. maybe i did not say that in the most artful way. if i did not, i certainly will hear it is certainly important. >> i am curious. repatriation, there has been a huge lobbying push in the last several months. are you willing to say with any certainty that that repatriation bill is not going to come

through your committee? that you are not going to sign off on a one-time repatriation go? >> i have been here long enough to not say with certainty that something is not going to happen. can you blame people for lobbying on this issue? there is well over $1 trillion stranded overseas. if it does not come here, at its invested their and it may never come back. i like to do this in the context of a fundamental tax reform. i hope that we do not have the same problem in five to seven years. >> but as a one-time bill, and it is not part of tax reform, can you do it? >> we did repatriation a few years ago.

here we are back again with the same problem. i think it is important to change more than just one time. although would be helpful. it is something i think it is a very important to do. >> mr. chairman, the economy is growing at half the rate most people thought it would be at this stage. you noted it was a good time to raise revenues and taxes, it would not serve the environment. i am wondering whether you think that ought to affect the pace of spending cuts or conversely you think we're learning that keynesian economics does not work anymore. >> one of the problems with our debt is that it is one of% of

our economy. we had testimony from outside economists to said in 600 years, every time it gets to that level, in impacts your economy's ability to grow. they estimate 1% came off of growth. there is a direct line to debt. that is why it is so essential that we have spending reductions. the treasury department just issued a report, and our debt is reaching 100% of our economy by years earlier than the estimated. it is not that we are there but the pace that we have gotten there and the pace that our debt dramatically increases after that, the trajectory, if you will. it is also a critical part. we have to begin to bring that back as we pull out.

the private side then grows. >> with the extension of the payroll tax holiday, they are trying to get more diffuse into the economy. is that a bad idea? >> i am not in favor of that. again, i think piecemeal tax reform policy without a broader view is not the approach we ought to take. we need a more overarching approach to our tax policy. >> ares question implies that we could have contractionary fiscal policy in a weak economy. that make the economy weaker. >> and we have contractionary economic policy because of our dead. this is from independent experts in front of the debt commission. this is well documented.

this is not just me saying this. that is also hurting i economy -- our economy. our debt has become so much a part of our economic picture. this is not the 1990's in terms of our debt. the gdp ratio gives us a different prospect. >> you have a 50 cfo's here. i believe that all of them what is good for their companies and what is good for the united states. would you tell people in the business community they ought to do right now about the fiscal and tax issue that would make it more likely that next year for the year after, we are in a better place? >> we need a comprehensive approach to our tax code. we need some certainty. this idea that provisions expire every year or two is not

acceptable. many to have a business tax that is competitive. all fully that would mean to a territorial system in their mind and that they communicate that. there is a very strong voice there. it is sometimes hard to realize how strong the voices, but it is always about jobs. how do we find a way to have the private economy grows so that jobs can be created credit mark what is the best solution there? getting that information to us or any member of congress is very helpful. i think that can really create -- clear away some of the confusion on what the best approaches. >> we promise the congressman he could go a 1:30 p.m., and i keep my promises. we appreciate very much. thank you. [applause] >> now we will hear from georgia

republican saxby chambliss and virginia democratic senator mark warner, members of a bipartisan group of senators looking to craft a long-term deficit reduction plan. they are interviewed by gerard baker of the "wall street journal." ♪ >> ladies and gentlemen, welcome gerald baker, saxby chambliss, and mark warner. [applause] >> thank you very much, ladies and gentlemen. we had here to of the members of all was originally called the gang of six. the unfortunate because of an accident, is now down to the

gang of five. >> we are a basketball team now. >> if it continues, you become a gang of four. and we know what happened to the original gang of four in china. they have been too important figures in this discussion going on about measures to improve the u.s. fiscal position in the medium-term and long-term. key members of this gang of six. as we get closer to this imposed -- the debt ceiling, which is august 2, the day by which something has to be raised, we heard this morning from secretary geithner, he talked about the discussions under the auspices of vice president biden. he expressed concern pretty extreme confidence in the likelihood that we will have a decision to raise the debt

ceiling by well in advance of the august 2 date. senator warner, do you share that optimism? >> it depends on what you call ideal. the challenge will be, and saxby and i have been working on this four year, and senator coburn, a very valuable member of this group, we were getting at this very naughty problem. my biggest concern right now is that in an effort to avoid a debt crisis which you would know better than most, no matter what your business line would be in terms of an interest right flight that would ensue, it would be devastating. we have run out of bullets. my concern is that we might have what appears to be a top line #

that has some meat to it, but does not take on the issue around passeriform or entitlement reform. while that might get us over the of the second hurdle, by huge concern is that might also take the air out of addressing this problem, which we have always thought if we are not in the neighborhood north of $4 trillion of debt reduction over the next 10 years, then we have not taken on this problem. >> senator chambliss, there is some kind of deal with the general global number, but then it is not clear whether or not it is deliverable, especially in terms of expenditure cuts they're called for in vague terms. are you concerned like senator warner that we may have a deal in outline, but the devil will

be in the details and we may be coming back and of all trying to figure out what this deal really means? >> we have been working on this four year between ourselves and then in an expanded group that narrowed itself down to the six of us who began six months ago talking about this in great detail. what concerns me about bumping up against the all the so that deadline for whatever the date may turn out to be with the debt ceiling, you do not have the time even if you started today to try to get entitlement reform or any kind of tax reform, which if you're talking about revenues coming to have to talk about it in terms of major tax reform, not increasing taxes -- trying to get all of that down between now and august 2nd, where we have been in a serious and detailed discussions that we have had, would be very

difficult to do. every day goes by, and makes it that much harder. this is probably a key week for the pipe in grid. -- and the biden group. they are forced on the short term. we're focused more on the long term. even after you raise the debt ceiling, we will still owe $14 trillion. that is the real issue that we see out there that is looming that we have got to solve. the debt ceiling itself hopefully will get worked out. but it is short-term. >> senator warner, for the democrats, and this is where the republicans fear is coming, the big issue is going to be any willingness to agree to significant entitlement reform, by which women entitlements cuts. we've seen the issue of

medicare. when paul ryan came out with his budget, that was heavily attacked by democrats, and indeed was playing a significant role in that upstate new york election. democrats seem eager to use the threat of medicare cuts that bash republicans around the head as a result of that paul ryan budget. are you confident that any deal that can be reached before august that is going to have meaningful entitlement reform that will actually be credible and believable and will not be used by democrats to attack republicans to program the over the cliff? >> i will answer below me step back for one moment. the irrefutable facts are we are spending at an all-time high, it cannot be sustained.

we're collecting revenues are roughly 14.5%, not nearly enough to fund that, and it does not take a world-class cfo of the -- to know that that is not sustainable. anyone who says that this can be solved on one side of the ledger alone, i think, either does not understand the accounting 101 or does not understand the extent of our difficult choices. i think you have seen from some of my colleagues on the democratic side, who have seen the success on the republicans signed at drawing bright lines, and thou shalt not, but it revenues for example. a host of others in the frame of

not raising taxes, generating more revenues, they deserve an enormous amount of credit. there are large number of democrats as well to realize that the math with an aging population -- is not the democratic republican fault, the numbers are irrefutable. i apologize to senator chambliss about the lines, the average life expectancy back then was the mid 50's. it was not a bad bet. 17 workers for every one retiree in 1950. that is not anyone's fault other than a medical profession for letting us all live longer. these are commitments that have to be kept but there has to be

reform if we are going to get our country's balance sheet back. >> you think your democratic colleagues, and that it be fair you'd be characterized as being on a more centrist side of the democratic party, but your colleagues to go i have been called other things, i assure you. >> with the be willing to accept medicare significant -- significant medicare cuts? >> any deal that would satisfy either all the democrats for all the republicans will not get 60 votes and the senate. -- in the senate. i will let saxo be respond, but one that -- i like to engage with the business community, but unfortunately, they're very

active in this debate. >> how happily referee that engagement if anyone wants to take the center of on a very by me ask you, senator chambliss, a similar question. his numbers are so large that no one believes that this is going to be achievable by one side alone. if that deal was involved with some sort of tax reform that includes significant revenue increases, and we just had dave camp, but he made some interesting concessions but said pretty clearly that it cannot include revenue increases. if a deal is done within the biden that includes revenue increases, can that be whole -- sold to the republicans? >> i hope what he said is that we could have revenue increases without tax increases. that is a key.

if any taxes are truly raised in the paris sense, and the answer to your question is no, that is not one to sell. it will not sell on the senate side nor on the house side. but what we have had to look at, and we use the dead commission report as our foundation. they said you have to approach it from three standpoints. we have to cut spending, and we're spending way too much money from discretionaries standpoint. you cannot eliminate defense spending. that has to be a part of the mix. and secondly, you have to look at entitlement reform. that is the old willie sutton story about robbing banks. entitlements is where the money is. our commission is looking at some non-entitlement mandatory spending, but for them to get reforms done on the entitlement side, it will be very difficult to do. and then thirdly, if you have to look revenues we have this

template 5% gap that we have to start closing. and there is only one way to do it. the figure out how to get our revenues of our we get our revenues of a bite enticing the folks in this room to get some of that $2.5 trillion off of your balance sheet and invest in your company and spread out that tax base by putting people back to work and creating the new jobs that all of you wanted to. we do it by energizing the economy, whether taxes or through allowing you to bring some of your money back from offshore. and whether we do it by eliminating all tax expenditures, look at what tax expenditures to main a lot to you, and will allow you to create jobs and maybe put some of those back into the mix. i think it is all the above. there is no silver bullet here. it has to be all of the above.

when it comes to look at a balance sheets and try to figure out what it takes to get your company back on track, what we have had to do is it that sweet spot of reducing spending and increasing revenues in the right way to get our country back on track. i think that we can do it in a way that does not raise taxes. we know if you have read the commission report, and i hope that you all have, but when you eliminate all personal expenditures, for example, the commission recommended three different tax brackets. the lower 8%, the high of 29%, with three brackets. according to the irs, and not according to anybody on the hill, the irs says that 70% of tax dollars in america filed the short form. if you are not dependent on deductions and we eliminate all

of those expenditures and lower those rates, that automatically tells you that 70% of taxpayers are going to in all likelihood been paying less in taxes. in 1986 when we had the reagan tax package that was along this similar line of thinking, with a number of people paying less in taxes. some paid more in taxes. that is always the case. but is is that type of energizing the economy that we think needs to be done to get tax revenues of and at the same time get tax rates down. we talk about doing it on the corporate side, too, and we would be happy to get in the more specifics on that. >> but on the republican side, use of midterm election dominated by the t party movement which was adamant about cutting the size of government, cutting spending, and it seems to be equally adamant about opposing revenue.

he make the distinction between revenue increases and tax increases. but any net increase in revenues does seem to be regarded as something that would be unacceptable to a lot of newly elected members of the house. in the presidential primary on the republican side, is that something of the republican party can actually unite around? >> it is not rocket science to look at that 14.5% part of gdp we are taking down in revenues and realize you have to do something about that you're you can either raise taxes, and that is not going to happen, or you energize the economy. we have to figure out the right kind of policy that is going to do that and have the right mix that is attractive to republicans. again, mark was exactly right. if we satisfy all republicans, we're going to get 47 votes. that is going to be about it.

everybody, and i emphasize this, everybody, whether corporate level or personal level, is going have to sacrifice if we're going to make this work. and it will be painful. i was in london back at the end of march and i saw the riots going on in london over the cameron policies. they had to make hard and tough decisions. we're going have to make hard and tough decisions. you come to washington to have the opportunity to make a difference for this is one time members of the house and senate will really have the opportunity to make a difference. or is going to be tough. they're going to be difficult, and i hope people, the right frame of mind and not just to be my way or no way. >> you mentioned the importance of the corporate tax changes we're going to have to say. people and businesses generally want government to get out of the way and let the private sector create the jobs.

you say that we have to cut some of these tax breaks that you get, r&d, or some of those other things, and is the old story about do not tax me, attacks that other fellow under the tree. you have a significant record to station from the business community here. is this the message that you have got for them? you're going have to get used to some of these tax credits, losing them. >> my answer is yes. we have a gold. we have a plan that is not finished. it is not perfect. it takes $4.5 trillion off the debt in the next 10 years. mrs. to a sustainable basis. -- if it moves us to a sustainable basis.

it reflects that on the corporate side, we need to lower rates. i find that i'm not throwing stones but i'd do sometimes get some companies saying, our corporate rates are the highest in the world. paying set 35%. if you're paying that, you're probably not doing a good job. the effective rate is quite laower. we looked on a corporate site is more revenue-neutral. i could discourage some times when i hear some of my friends saying, we need net revenue reductions on the business side. and that. other countries to less and they

point to other countries. i get so frustrated when they said they will invested elsewhere. never do i hear, and we are so enamored with this third world country that we're going to move our corporate headquarters there as well. >> but on the corporate tax side, as senator chambliss is talk about, the importance of raising revenues. on the corporate tax rate, it would aim for revenue neutrality? it would be on the individual side that there would be higher. >> we have to do some things on the corporate side to start the engine up again. that is why the date commission felt like being revenue-neutral

on the corporate side will help to do that and we fully believe that, too. >> let me just add on to that. usually we have a slide show that comes with our pitch. >> we can get it. >> i'm sure it is available on- line. >> and it is important for you as cfo's, if you look at our tax mix, the share of corporate revenues as a percentage of our overall revenue mix has declined by about half of the last 30 years. while we do have the highest rates in name on any kind of actual revenue as a percentage of total revenue, there has been a substantial decline. >> questions from the floor. i know that your team to engage in some of these specific corporate issues. we had some questions during the day, specific concerns about some specific corporate tax

issues. if you could identify yourself. >> [inaudible] >> judy brown. i'm inspired to hear that the two of you are doing this great work to try to make some changes. is obvious that we need to change the direction we're on right now. glidepath is not the right one. it all comes down the politics at the end of the debris you ever receptive audience in this room because we understand the intricacies you're facing and we understand we need to make change to our country overall. but how do you pitch this to the average constituent? by now corporate america is being vilified for you start talking about lowering the corporate rate, i'm not sure the average constituent understands that. in order to convince the rest of the members that this is the right at the beyond, that they should vote in favor of change, what you suggest we do to help

that process along other than to lobby the members? how we of change the minds of your constituents? >> the corporate world is not the most favored state in the united states right now. but people understand jobs. you have to talk in terms of that because it is real and meaningful. i'm sure that if we went around this room and got into your respective companies. talk about lowering tax rates, what would be the immediate impact, and you talk about reinvesting money. you cannot get into the weeds with our constituents back home. as much as we like to. be careful not say things that will create a 30-i can add as we move in the next year. it is a dangerous time for that. but when you talk about jobs and putting people back to work, people get that. and then you talk about how you're going to do it -- that is

the way i've been approaching it and that is pretty effective. >> i think the notion of tax reform, for example, one of the key issues of repatriation. if there was an informal understanding that we will repatriate some of these dollars, then we would tie that in a less weight to some things like job creation. reviews most of our traditional bullets and we do not have a lot left. you are our last, best hope in terms of making that investment. and many of you are global companies, but you mostly originated here in america and we need you to step up to the country. great long-term for both you and the country.

i think there is more confidence in the business community that we're going to get through this debt limit and other things that perhaps is warranted. if we pretend an extent, using the greek approach, nothing could be more devastating to any one of their bottom lines than more uncertainty progress thing we can do is to give a level of certainty. we have to put an ironclad plan in place. and tom coburn in particular was great at forcing us to wrestle with this, how to make sure that if we do tax reform, that we actually put spending restrictions it cannot be violated tomorrow?

that is nitty gritty process stuff where everyone else's eyes would glaze over, but it is important to give you and the marketplace the focus that there is a commitment. but we desperately need you all to be in this game, to force our respective in theological perspectives, to get not a short-term deal, but put in place a longer-term deal. that is so important. >> great to hear you say that now. but the rhetoric coming out of washington of the last couple years about business has not been very favorable. in some respects, it has been the antagonism from this administration car represented by your party. what is the risk that in an election year that the democrats will seek to continue to exploit to the anti-business sentiment out there at the same time your turn to cut a deal this is that

business is really important? >> nothing comes without risk. but let's also in knowledge the last acknowledge -- let's also in knowledge that when they houses burning down, we have to take extraordinary actions. i would praise president bush on part in president obama on the stimulus is doing necessary actions. the obscene things dramatically improved. they have not seen them, -- they have seen things dramatically improved. some tea party people are as bad as some as the democrats, but let's not say why we cannot do these things. let's see if we can get to a solution.

it is a lot harder from our republican colleagues at this moment in history, and they need that support to get us through. >> time for one more question, if anyone has a question. anybody? let me as you, there is a sense that washington is broken, that this is a system where people live from around the world and see this deficit, they said the debate, the cigarette lead -- they see gridlock, and saw what happened with the budget negotiations. is this a moment where washington can demonstrate to the american people and to the rest of the world that actually the system can work and we can make it work? this is an opportunity to show that the u.s. does actually know how it gets a house in order. as winston churchill said, the united states can be counted on

to do the right thing, but only after exhausting all other options. >> we still think that we're going to put this puppy to bed with a deal that is good for america. we are not there yet but we continue to work on an. their statement about the system is broken, most americans think that it is. it is correct when you think about the fact we've said all along that we need to do with this calendar year. if we get into next year and you get into the iowa caucuses and the new hampshire primary and so forth and so on, it just makes it harder and harder from a political standpoint. it would give back to their corners and i am not going to support that if you vote for me. you get an opportunity for the senate to work and designed in a way that it was designed to work. and we're hopeful that we will make it work and that we can be an example of the way we need to

work going forward. no more critical issue, and my 17 years in public service, then this issue and there will not be a more critical issue, in respect of how long i am around here. >> every other issue pales if we do not get this thing right. we are not a parliamentary system. the whole notion of checks and balances forces common ground and they should be celebrated, not criticize. you know better than we, if we touched on this for two years, do we have the runway to get to the middle of 2013 before we even start a process? maybe we do, but why would we roll the dice on the american and world economy? literally the livelihood of countless numbers of americans. it is not self-correcting do we have to have growth, but the greatest thing we could do for growth in the american people

showed that we could do what we were hired to do. you cannot be bystanders on this. this cannot just be about the next quarter's shareholder report. >> they have crossed party lines to be with us here today. please join me in thanking them very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> on tomorrow morning's "washington journal," continue our discussion on the federal deficit and debt ceiling negotiations. jim himes and john campbell will join us. then david wasserman on the implications of redistricting on 2012. up next on c-span, the senate

foreign relations committee picks up the nomination of dan paterson to be the next u.s. ambassador to egypt. then the white house announces new warning labels for cigarettes. later, jon huntsman announces that he is running for the republican presidential nomination. nominee fordent's u.s. ambassador to egypt said that the administration's first priority in that country is ensuring free and fair elections. anne patterson previously served as u.s. ambassador to pakistan. she testified before the senate foreign relations committee for just over an hour. the committee is chaired by senator john kerry, there on your screen, who recently returned from egypt.

>> we are here this morning to consider the ambassadorial nominations to five important countries. we will abide the hearing in to two panels, beginning with anne patterson, the choice to represent the united states in egypt. egypt has historically been the region's most important in to better of ideas -- incubator of ideas. it is at the forefront of the new of merit -- arab awakening.

how egypt manages its transition to democracy and how it restructures its economy will affect not only the country's 80 million citizens, but that millions of others throughout the region. i said a number of times in various speeches and other public fora, the fact that egypt represents 25% of the world arab population, and that it is not as torn apart by sectarian divisions and some other countries in the region, and also has had a strong civic society, always been a place where even underneath the mubarak regime, there was this current of civic engagement and discussion.

all those things country significantly the last contribute significant -- all those things contribute significantly to each of's going forward. this cannot be understated. it is very important that this process go forward as effectively as possible. anne patterson is one of our nation's finest public servants, and i've had the privilege with working hurt -- i had the privilege of working with their very closely when she served as ambassador to pakistan. many late-night meetings with various hot issues on the table. i watched her calm, professional approach to those challenges on

many different occasions. i am greatly encouraged that the president has nominated someone of her caliber to the critical assignment of ambassador to egypt at this obviously critical moment. egypt does face significant challenges, besides building a political order. i was there about a month and a half ago, i guess. i held a town meeting and was quite struck by the diversity of the people who came to it. young women in traditional covered garbage, some in much more modern -- traditional covered garb, some and much more modern dress, men and modern cities. some bearded, some not. all with a sense of the possibilities of this moment and of the future, all wanting to

express their citizenship and to be able to enjoy their rights and freedoms. this is an exciting moment but a very challenging one. when i was there, there was 2% occupancy in the hotel we were and. i think that was true of almost every hotel in the city. there's been an enormous retrenchment with respect to one of the main sources of revenue and currency in the country. there is little time to organize political parties before this fall's election. those elections need to be fair and carefully monitored or we may see a return to our tahrir square unless there is a positive progress. certainly the lack of up there and accountable election would because for such an event. the egyptian government needs to become more transparent and responsive to its citizens

needs. questions remain about the role of religious parties in religious -- in politics. egypt is also wrestling with considerable economic hardships 34% -- considerable economic hardships. 40% live below the poverty line. one person mentioned how many business people are simply not returning or have left, some for fear of retribution. that affects the flow of capital. food and oil prices are up. foreign investors have yet to sense the confidence necessary to come back and desperate the government has significantly depleted its reserves of hard currency. there is news on the of died -- upside.

the imf and the united states and other countries are starting to ride. the egyptian economy actually does not -- actually appears to be stabilizing. a return to higher gdp growth is possible in the near term. certainly in the next year or two. but the policies that have been put in place need to benefit all egyptians. as egypt changes, our approach to aid must change also. promoting economic recovery is not enough. international assistance also needs to address the socio- economic conditions, expand its political space, and promote transparency, legitimacy, and accountability. to that end, the obama administration is providing funds to spur economic growth and this is what political transitions. i've introduce legislation with senators mccain, lieberman, and luger that would promote of

entrepreneurship. i've been working with senator mccain and others to develop a creative public/private partnership that would encourage u.s. corporations and others to invest in egypt. in fact, this weekend, senator mccain and i will travel to egypt together with jeff immelt and other chief executives, and we will meet with other egyptians to develop this initiative. i appreciate ambassador patterson's help which as been significant leading up to this initiative, and the sooner we can get her on the ground to help implement, the better. obviously we need to be realistic. consolidating egypt's democratic advances and addressing its economic woes will probably take a generation or so.

but recent polls found that nearly 90% of the egyptians think their country is headed in the right direction. during my visit in march, as i mentioned, the spirit of ordinary egyptians that i met in tahrir square and other places was really contagious. i hope that spirit can propel them through what may be turbulent, difficult times ahead. ambassador patterson, a lot like to raise one last issue with you before i recognize senator lugar. nearly two years ago, a massachusetts constituent of mine who i believe is somewhere at this hearing had his sons of deducted from the united states, from massachusetts, to egypt. abducted by their mother. even though he had full legal custody of those children, even

though our courts had already ruled and they were abducted with false visas and passports entering the country under false pretenses. he has not even been able to see his children, ambassador. he has had a couple of visitation prior to tahrir square. after tahrir square, p.s.i. seen them. and i raise this at any number of levels with the egyptians. it is no small fact that the last conversation i had with president mubarak, relatively lengthy, and it was almost exclusively on this topic. and i raised with him the legalities, the inhumanity, the unfairness of what has happened. the father would be separated from his children and the country would not care enough to allow the father to be a part of those children's lives.

i think all of us can understand the frustrations that colin and his family are feeling. my hope is that way you can do to emphasize the importance of this in a new egypt, hopefully the attitudes that thecolin to be stiffed, literally, time and again, and not treated, and those kids deprived of a father can achieve of higher order of priority. this morning we welcome a second panel of nominees. and i do not mean in any way to diminish the importance of any of their countries in the time that we of spent on egypt. each of them are going to be representing areas that are of enormous consequence to the united states where we have critical relationships. michael corbin, nominated to serve at the united arab

emirates, critical to also relationships that we have, some which will have an impact on egypt and some on our strategic presence in the region. matthew tueller, nominated to kuwait, a key player in our relationships and our strategic interests in other countries in the region. susan ziadeh, nominated to qatar, and the and there was here recently. we had the meetings with them the woods-and the -- and the emir was here recently appeared we may be stopping in catarrh sunday night with senator mccain to discuss some prospects. and then can if fairfax, nominated to kazakhstan. all extremely qualified nominees and we congratulate and welcome each of you here today. senator lugar. >> man had your permission to

yield briefly to senator corker? >> absolutely. >> i am here at of total respect for the nominee and just to thank her for her commitment to public service. i do not know by foreign servants who i respect more than the nominee for this position. i welcome her and look forward to her doing great work in egypt as he has and so many other countries. and now i will go do something else. >> mr. chairman, i join you and welcoming embassador patterson. america was moved by the jazzmen revolution. we celebrated the calls for greater political participation, for the protection of basic human rights, and the more inclusive and economy. we are heartened at protests in

tunisia, having an impact in some parts of the middle east. it is also clear that decisive improvement and governance in the middle east will not be simple or automatic. the past few months have demonstrated that the countries of the region are all on very different paths and time lines. we cannot over-generalized about what is occurring in middle eastern societies, or expect changing attitudes to solve american national security problems in the region. we should recognize that this is a genuine opportunity in the long run for the advancement of democratic values. it broadens prosperity accompanied by short-term risks and dangers uncertainties. we are witnessing civil war in libya. ongoing suppression of popular people in syria. in yemen, we have seen highly fractured society that appears

to lack national institutions for a common identity arawn which to coalesce. and bahrain, we've seen sectarian tensions and violence against peaceful protesters. the challenge for our nominees is to protect and advance american interest in the midst of this rapidly changing in diverse landscape. it is essential that we redouble our efforts to engage in the middle east. we must be created in using the full scope of american power and influence to support a more peaceful future for the region. this is important to our own fundamental national security, the global economy, and the security of our close ally, israel. recognizing the diversity of the region does not mean shying away from promoting real reform and more inclusive government, even at that process looks different in egypt than a dozen the united arab emirates, for example.

which encourage more representative and tolerant governance throughout the region. we should honor those in the region who are speaking out in defense of values that we hold dear. i believe that a key part of this process must be the encouragement of more transparent and inclusive economies that are more securely tied to the global markets. we need to build more meaningful trade and investment relationships in the region. our nominees could also leverage the leadership of american universities, cultural institutions, and civil societies to generate deeper and more sustainable linkages. the protests started in tunisia, but it seems clear that the test of the process will be in egypt. we have shared interest with the people of egypt to build a more secure and prosperous future. this will not be a short process. i believe americans expected to

for relationship with this and future egyptian governments. what was born in tahrir square, we respected and we want to see it flourish be on the top levels of government. it cannot be hijacked by extremist groups that would undermine the fundamental civil liberties at the heart of the revolution. it could threaten the united states and allies interests in the region during in addition, during this moment of turmoil, the desire for more inclusive government must not be manipulated by those seeking to deflect attention from their own failures, including the regimes in that are run and syria. i appreciate the commitment of our nominees and their willingness to take on this very difficult assignments for our country. we welcome you again, ambassador patterson, and asked for your testimony at this point. >> [inaudible]

>> thank you very much, members of the committee. thank you for the honor of appearing before you today. i wish to thank the president for nominating me as ambassador to egypt and the confidence he and the secretary have shown in me. with your permission, could i introduce my family? >> that would be very nice. >> my husband david, retired from the foreign service. our step daughter jessica, on her way to afghanistan. and my son, anders, about to be commissioned in the marines. my other two daughters are unfortunately not here today. if confirmed, i look forward to meeting -- serving with some many dedicated people over the years. as been the highlight of my career. should be confirmed, i'm under no illusions about the responsibilities and challenges of serving as ambassador to

egypt, which is not the epicenter of enormous changes in the arab world. people everywhere were inspired by the events in tahrir square and the egyptians desire for freedom and democracy. but we must remember that transitions to democracy are difficult and long, if that there will be reverses and surprises along the way, and that the egyptians will find their own unique path. when thinking about egypt, we should be heartened by what is taking place in latin america and europe over the past 40 years. in latin america, the path to prosperity and democracy has hardly been a straight one, this hemisphere now has democratic governments in most countries and a degree of economic prosperity on a manageable 40 years ago. the arab world will be no different. if confirmed, i'll be firmly committed to backing egypt's democratic transition which will reinforce much-needed respect for human rights of all the

support the united states government can muster. let me outline a strategy that the administration has developed and which if confirmed, i will pursue in cairo for the first priority is to encourage and support to the egyptians said desired the election process which is free and fair. polling suggests that many egyptians will have the first opportunity in their lifetime to vote in a free election. enthusiasm is understandably high. as we do in hundreds of other countries, the u.s. will support non-government and civil society organizations who wish to enhance their organization skills and play a more prominent role in public life peer these groups are always the essential ingredient in a successful political system. the strengthening democratic process should lead to respect for human rights and citizens, since newly empowered citizens will demand appeared we welcome the commitment of the enduring government to repeal the emergency law appeared were

concerned about arbitrary arrest, overly rapid and not transparent trials, and attacks on religious groups. the particularly disgusting abuses against women have taken place at we have called on the authority to prosecute those citizens. it is clear that the need for job was just a strong motivator for demonstrators in tahrir square as the desire for freedom and justice. egypt has to generate over 750,000 jobs a year to put its young people into the labor force. they are often not well-prepared with skills needed for a modern economy. if they have high expectations. in fact of the international and republican institute has come out with all that indicates that egyptians overwhelming believe that next year there will be better off economically. the current economic trends are headed in the other direction. most egyptians are barely making ends meet.

has played a key role in the economy. but investors are sitting on the sidelines. a key part of our strategy, both bilaterally and working with the international community will be to strengthen egypt private- sector so that it can generate jobs brought in the benefits of .conomic growth, increase all americans should be proud of what u.s. assistance has achieved in egypt for the past 30 years. now we are focusing on progress directly linked with private- sector growth and sustainable jobs. as the president said in his knee 19 speech, we're leading the effort in the international committee to provide short-term stabilization for egypt economy.

egypt is discussing a program with the imf and the world bank and other international lenders who will provide the resources that egypt needs. we are seeking legislation that will allow us to forgive $1 billion of egypt's debt and ask you to invest the local currency equivalent in an activity we mutually select. if overseas private investment corporation's working to expand lending to small and medium- sized businesses. you have introduced legislation to authorize an enterprise fund for egypt for private-sector growth. egypt has been a powerful ally for a two-stage solution and a comprehensive middle east peace agreement. egypt has been a valuable partner in fighting terrorism,

reinterpreting iraq into the region and providing assistance to refugees from libya. they will abide by the peace treaty with israel can we take these commitments seriously. the vast majority of egyptians have no interest in regional conflicts and want to move forward on their own democratic paths. our close defense cooperation with egypt serves u.s. interests and promote regional security. let me say that democracies can often be loud and brown shoes, and egypt will not be any different. we will hear many voices that are not for liking and egypt democratic process will be difficult at times because of the newness and fragility of its democratic institutions. if confirmed, i will do everything i can to support the aspirations of the egyptian people during this time of transition. a credible transition in egypt matters to the united states and our allies and it will serve as a model for the rest of the arab

world. in closing, i am particularly grateful for the critical role that members of this committee played in my last post. if confirmed, i know that members of this committee will play a similar role in the months ahead in egypt. thank you very much and i look forward to your questions. >> thank you very much, ambassador. we will have a round with seven minutes for each senator. i will commence the questioning. i will comment how much admiration i have for you in your last assignment and your remarkable career. we appreciate the members of your family for being here. they exemplify likewise the service to our country, the support of your family. let me start by saying that "the the washington post" on june 19 talk about a problem that has been often discussed in this committee as to what role the

united states ought to play in support of the political transition in egypt. it has been suggested, for example, that perhaps the election that has now been scheduled for september should be delayed. this is a point of contention, obviously, in egypt, quite apart from our advice. but the dilemma comes down to the fact that it is taking a while for those who are trying to put together a political party is -- this would include the students who were in tahrir square and in other places in egypt. the muslim brotherhood, which is apparently better organized than most other political movements, may have a dominant role in that election. that would have results that would not exemplified the best in terms of the egyptian

democracy or our relations with the country. in the press, other was in the past two days or three days, a story of a young egyptian who was in tahrir square who was attempting to rally for democracy and you had gone out into the countryside to try to sign of people for a petition, which apparently requires 5000 signatures. he had gone up to 1000 and found it difficult going because the citizens that were there wanted to talk about food and their lack of food. their lack of employment. our political jargon is involved in the jobs issue, not political transition or formation of a political party. he found this to be a foreign part of the conversation. what is your general comments? as you have seen and i think you

will be confirmed in this role -- you will be there during much of this formative period prior to september in which this will be a more hot and heavy discussion, either in terms of delay or how you formulate competitors so that free and fair elections make some difference even after you have counted the votes. if there are no competitors, it is difficult to see what the results might be. >> thank you very much. thank you for the kind words about me and my family. i for one am very heartened that the recent activity of some of our groups like the national democratic institute and the international republican institute and typhus have had in egypt. their job is precisely the one you have suggested,

which is trying to teach politicians who have very little experience in a democratic political system how to do basic things like organize and hold debates and to polling. we have invested quite a few resources, close to $40 million, in these organizations over the past few weeks and they are very active on the ground in egypt. as i mentioned, they have been very well-received. we have also been supporting smaller organizations. through our middle east partnership initiative, we have given out about 35 grants since square,st in tahruiir trying to connect the people's grievances with their political desires. we are not alone in this process. there are other members of the international community who are doing the same.

certainly, with the fragility of institutions, it will be long and hard fought. the timeliness of the elections have been controversial in egypt. i think their voices on many sides of that issue -- i think there are very many voices on many sides of that issue. egyptians are willing to engage with us. >> we have had some difficulties, not just with our assistance on elections, but likewise economic assistance, some in the egyptian government. i would not characterize this more broadly. they have protested the united states interfering, somehow that the sovereignty is being compromised by this. at the same time, it has been noted around usaid headquarters that there are long lines of people trying to avail of

themselves -- avail themselves of the programs they have heard about. as you prepare for this assignment, what is your reading of how our aid is being accepted and to what extent you will be able to monitor id on behalf of taxpayers in the united states who always fear that money that goes to uncooperative governments, sometimes corrupt governments, as a matter of fact, or officials and disappear from our view even as we are attempting to do good. >> yes. on what we call the money to promote democracy, which is about $65 million, there has been -- and the money to promote economic growth -- there has been a very large outpouring from the public and hundreds of people, something like 600 organizations came to the informations session on how to apply to these grants. so there is a lot of interest on

the part of egyptian civil society. let me take this opportunity to say that, by no means, is this an affront to egyptian sovereignty. we do these programs, as you well know, in hundreds of countries in the world and they are almost always well received. they are in support of their own democratic institutions. monitoring is small grant is always problematic. i have already looked into this easte with middle eas partnership initiative regarding our larger aid program, there is some office of the inspector general in cairo. i think that have long established controls and rigorous procedures in effect, but please rest assured that this will be a very high priority for me, to be sure that our money is used for the best value for the taxpayer.

>> that is an important reassurance. >> i would like to recognize senator casey. >> thank you very much. and as -- ambassador paterson, is it to see. >> thank you, sir. >> i can speak for many people in thanking you for taking on yet another difficult assignment. i really cannot say enough about your extraordinary work in pakistan along with your other post over many years. i thought when you appeared before us for your next assignment, it would be kind of an easy one. you would be assigned to the sea of tranquillity. but you have decided to take on another tough assignment. we are grateful because you have been so effective and so capable, but also, in a word, a great patriot. we are eternally grateful for that. i want to thank your family as

well. we often note that families help the public official or the ambassador or whoever else comes before our committee. this is an extraordinary commitment by family. but in this case come individually, they are doing their own public service of one kind or another. we are grateful for that commitment. we will miss you in an islamabad and other places in the country, but we look forward to seeing in egypt. i want to talk with you about the recent approach that egypt broadly -- this is generalizing a bit, but more broadly -- what i would argue is a more confrontational approach to israel, whether it is the opening of of the rafa border

hamas-fata dathe government, and the gas lines to israel. i wanted to get your sons of that just in terms of the approach itself but also in terms of our policy. what are the united states read lines, so to speak, as it relates to how to egypt will approach is relationship with israel. i think it is an issue that not only israelis are concerned about, but we are as well. >> again, thank you for the kind words about my family. but ms. sort of take this in sequence, senator casey. let me first say that egypt is

the center of our policy. they have been at peace with these real and the current government will abide by commitments and agreements with israel. we take them seriously. we do not think it is in egypt interest to promote confrontation with israel in any way. as i mention these specific issues, on the rafa border crossing, that is for people with limited humanitarian goods. there are security incidents of their. the smuggling is a very considerable concern. the security authorities have been working together on this and have been in close contact. the egyptians, with israeli permission, have put additional military forces into the sinai and ordered to address some of these issues. there have been increased law-

and-order issues out there. we understand the police of beginning to return now. on the hamas -fata agreement, egypt was a facilitator. perhaps because of other activities, incidents in the region, it was anxious to come to come to some sort of arrangement with fata. we are not necessarily opposed to reconciliation. we are concerned that if promote regional peace in a two-state solution our understanding is that the reconciliation has slowed at this point because president of loss is very concerned about it -- president is very concerned about their. finally, the gas lines to israel, we know this has been a concern. the gas has started to flow

again. the pipeline was attacked twice in recent months because of lack of law enforcement. but it has started to flow again. there are some pricing disputes that will be addressed between the vendor and the purchaser. yes, these are issues of concern to us. again, nothing is more important to the united states than regional peace and we will do everything we possibly can to pursue it. the government has reiterated at every turn its respect for these peace agreements and we know that, on many of these issues, the israelis and the egyptians are talking directly. >> thank you. i want to ask you about some of the economic relief promises that have been made. egyptian officials emphasized for that kind of relief. as you know, our president

announced $1 billion in relief and $1 billion in u.s.- backed loan guarantees. but there have been calls for conditioning that kind of assistance. i wanted to get your sense. if there is a commitment to somehow conditioning that aid or at least taking their actions into consideration as it relates to our aid, one of the benchmarks we should use if we can simply call them democratic benchmarks or democratic reform benchmarks? how do we approach that as an incoming ambassador? >> yes, thank you. on the debt relief, sir, we will be presenting legislation shortly to the hill that will build on previous legislation for some of the debt relief. on the debt swap, one of our

goals in the region is taking a while to develop. we're trying to find a worthy recipient for the local currency that will be generated by these funds and one that is transformational and addresses some of egypt's underlying problems. the secretary feels very strongly that we should have a transformational project. certainly, the draft legislation that we have considered that build on some of its previous legislation -- i would not say that as conditions, but issues that are in this legislation that are about democracy, about various human rights observations, and, again, we would expect, as we do in all economic agreements, to abide by the agreements of the imf agreement. most state agreements contain quite specific conditions. on health reform or education

reform that are not to owners. but we expect. to be used to promote a reform process. -- but we expect our aid to be used to promote reform process. >> thank you very much. >> thank you senator casey. >> let me join in not only welcoming, but thinking mrs. patterson for your service and think your family for your continued willingness to help our country. this is a critically important position, as my colleagues have pointed out. we all wish you well in representing the united states in this transitional country as well as any part of the world where there's great hope for democracy. we have found that, by arab spring, the desire for human rights and democracy is universal and the united states has been looked upon as a

facilitator to bring that about. your role will be very important in that regard. egypt is obviously critically important country to the u.s. interests. their role in regards to the middle east, as senator case he pointed out, they're important for moving forward with israel and one of the key point is whether they will continue to honor the agreements reached with israel. they are very important in our campaign against extremists. but here's the dilemma we face. some believe that we have to be bolder in my development assistance in egypt. the main trigger for the revolution was basically economic. people were being denied basic economic growth of their country. and they wanted to do better for their families. that will require more attention by the international community to make significant progress in

egypt's economic growth. there are others who believe that we have to make sure that there is accountability on usa could have belonged to both camps. we have -- on usa. i belong to both camps. to me, there is a requirement that a good to nations to support our basic goals with peace with israel and will maintain that relationship with israel, that they will fight this with extremists, but there have been some disturbing trends in egypt. we're not clear as to whether hamas is getting a stronger footing with in that country. we do not know whether there is efforts being made to fund extremist through egypt. we're not exactly clear the trafficking of weapons that may very well be used to attack israel.

and we look to you, as our eyes and ears in egypt, to be able to give us the best advice as we have to sort through these issues. i would like to get your general view as to how you see your role advising us as to how we can move forward with the strategic partnership with egypt using the tools at our disposal to make that more of a reality. >> thank you. first of all, let me say that i wouldn't fairly expect and, frankly, look forward to interaction with members of this committee if i am confirmed as ambassador to egypt. income -- if confirmed, i will also look forward to visits on the ground where you could see for yourself how we are progressing on these issues. let me -- i would very much look

forward to working with members of this committee and keeping you advise. but me say that i think the dilemma you have laid out is a real one and one that we will have to struggle with over the next few months. on the stabilization and have we been bold enough, i think we leadershipd to take a role and encourage burden- sharing where other organizations can come forward with the short-term resources that they need. there's no question that this hughe youithth bulge, with kids coming out of college with no basic skills and declining tourism -- these will all be very difficult issues to maneuver over the next few months. but the imf is working with the government. the world bank is prepared to lend considerable funds.

the european economic bank for reconstruction and development and some of egypt's allies in the gulf that senator kerrey has been working with are prepared to provide short-term stabilization funds. i think that will begin to stabilize in a few months. from our standpoint, we will focus on democracy and governance and private-sector growth. that is where the future is in egypt, i think. this huge bulge could turn into a significant demographic dividend as they have a lot of people in productive jobs. as i mentioned, we will do irving possible through various inspectors general to monitor this aid and be sure that it is usually used. fully used. and the concerns about, some others, there is no evidence

that, as has a closer -- about hamas and some other, there is haveidence that homeamas gone a foothold. there is no inclination within the current government to do anything to undermine these commitments. >> let me just underscore the relationship between israel and egypt. it was very frustrating under administration to condone antisemitic activities, especially in their schools with their textbooks, etc. i would hope that we have learned a lesson that, if there will be lasting stability in the region, that democracy, human

rights, and understanding need to be part of that. that means we should have expectations that the egyptians will facilitate rather than views.iscriminatory-type use >> this issue of textbooks is an issue in various countries. it is one that we work on. it is sort of below the radar in many countries. i was very interested to read some of the conditions on our assistance program in egypt. one of them is to transform these textbooks into something that is more broadly except boat. the anti-semitism, actually, senator, it seems to have increased recently because they have taken the lead off -- taken the lid off.

but it is critically important. this is why the building of democratic institutions is so important so that people have a voice. >> thank you. >> thank you. senator koons. >> i would like to say that i am thrilled to welcome ambassador patterson. your service in an islamabad, i was impressed with your grasp of the nuances and diplomacy over your nearly four decades of service to our nation. you have clearly amassed a note -- amassed a remarkable background. i would like to join other members of the committee in thinking david and just then andrew for your willingness to serve this nation in the past and in the future -- david and jessica and entered for your willingness to serve this nation in the past and in the future. we recognize you as a great federal employee on the senate floor.

i have come to share their respect and admiration for you and your service. if i could, i would like to focus on the recent experience in this, by and your understanding of the difficulties of the rough and tumble of a relatively new democracy. you mentioned in your testimony that, during egypt's transition, you're sure we will hear many voices that are not for liking and that he did democratic process will be difficult at times because of its newness and fragility. i will associate myself with senator casey's expressed concern about israeli-egyptian relationship, the security of the border, the relationship with hamas, the recent incidents of gas in the -- of bombing the gas pipeline, and a history of incitement and challenges there. i appreciate your reassurance to the committee that this is a primary concern for you.

senator casey raised the question about putting conditions on assistance possibly. someone who is charged with overseeing the first-round of assistance to pakistan and who saw how difficult their processes, particularly at times with unwelcome voices in this chamber. i would be interested in your view pin how can we be most affected -- in your view. how can we be most effective? how do we -- we have great confidence in you. how do we retain confidence and the commitments of the egyptian government as it changes to recognizing the camp david accords and being determined to stay on course in terms of respecting israel's right to self-defense and a right to exist and continue to be a constructive force?

a brief and focus question, i know. [laughter] >> on conditioning assistance, yes, certainly, in pakistan, that was a huge issue with the assistance there. but, first o my own view is that conditions are sometimes useful. that focus the attention of the host government on what they need to do. that is why it is very important for government officials to meet with you when they come here and for you to meet with them when you travel abroad to reiterate this. we cannot give out the tax payer money willy-nilly without demanding certain conditions, not the least of which is the

money being used for the purpose for which it was appropriated. on private sector growth, senator, we will have to focus on our aid programs to promote this. again, we should be very proud in the health and education felt particularly for what aid has achieved. but we have a lot less money than we need in egypt. to begin the focus is on something that built the private sector, we have a little program on entrepreneurship which engages young people and promotes angel investing. that is the sort of thing we need to do a lot more of a over the next few years. generally to encourage trade with the u.s. and trade facilitation and other things like that. on retaining confidence in the camp david accords and peace with israel, again, the government so far and our military assistance over the years, really substantial, of

$1.3 billion a year, it has enhanced regional stability irian we have a multi-year program for the military assistance, and it generally speaking, it would be good to have multi-year programs for civilian assistance as well. he gives more certainty -- it gives more certainty to our planning. they will have to see what the new elected government does. we do not have any better answer than that. we will have to see how this involves with an elected government. there is no evidence that people in egypt, no evidence that egyptian government officials or the leading populations do not see peace with israel was in their interest. they want to get on the economic path, and politicians could be elected and will have to focus on the burning economic issues.

certainly in tahrir square, we saw no anti-americanism and no anti-is rarely statements. it was all about egyptian domestic politics. >> each it is played a role in the sedan, sometimes constructing, sometimes not so much. they have received a lot of sudanese refugees. the fastest-f growing populations and have a lot of potential. how can we encourage a constructive role that egypt might play in the future? >> that is a very accurate characterization. we will have to engage with them on all levels. one of the reasons we're having these outreach programs with the nascent political parties is not just to deal with political

party formation but also to discuss, and are in the has been very involve with this, discussing the issues of the day like an sudan, regional engagements, economic reform. we will be talking these issues up over the next few months. >> thank you very much. >> senator udall. >> that you come a german luger. -- thank you, chairman oliver. -- lugar. i would like to thank you for your remarkable service to our country. and thank your family members, each of them serving or have served in key places around the world. we also appreciate that service. ambassador, if you hit on one of the things that is so prevalent

throughout the middle east, the whole issue of jobs. here is a young population and the need to create significant jobs. you've highlighted 750,000 jobs a year, which is a big feet to be able to do. we all know and i think that we feel the lack of jobs creates a fertile ground for violence and for terrorism and things like that. my question goes to -- and you have touched on this a bit in how we are using our money -- but i understand recently the secretary clinton has done reprogramming in terms of the funds available for egypt. she is moving funds from one

category to the other. i was wondering if you could outline for us where we have taken money away from and why we're doing that, and what areas we are targeting? you mentioned angel investors and other concepts like that. it would be helpful to have an idea of where we think, with the scarce resources that we have, would be the best places to invest. you said in a broad general way it is important to invest in good governance and also the development of the private sector. >> let me say that this job creation issue is rather frightening, but they can have been huge upside appeared pakistan had to generate 2 million jobs a year for new

entries into the labor force. in latin america, this became a huge demographic benefit. the're all these people in labor force, fewer children, did not have to support the elderly, so it was a huge impetus for economic growth. i do not see any reason that properly handled, the egyptian economy cannot do the same thing. let me outline more we're doing. the secretary did reprogram funds for a cheap ticket told us she did reprogram funds. -- the secretary did reprogram funds. she took a hundred million dollars out of one pipeline and allocated to democracy and governance.

we're going to put $100 million into essentially job creation, issues like cash for work, not sustainable, but will solve some short-term problems. they have the overseas private investment corporation which has a very sophisticated program for lending. we have our debt swap program, hall aid program will be focused to promote economic reform, and to do such things as work with fincke thanks -- think tanks and others on economic reform, to do job creation, to do trade facilitation. this issue was a very important issue in my other post. to increase trade comenius certain amount of infrastructure. what is the infrastructure that you can build that will most

efficiently promote trade flows? as we go into more trade liberalization with egypt and north africa, this will be important. we're looking at that. that is the sort of thing we're looking at, to promote jobs. >> when you say cash for work, how does that program workers margin we are trying not to do too much of this because it is not sustainable, but it takes young people, mostly young men, off the streets and pays them to do basically manual labor. we try not to do very much of this in our assistance programs, because it is not sustainable. but sometimes it is necessary in some of these countries because it puts cash into people's pockets. >> it shows there's a feeling that we are an emergency situation, but there is serious

unemployment. that creates all the other problems. shifting direction is briefly here, on water usage and increasing concerns about the nile river, and water shortages in the region. many countries are increasingly concerned about egypt's upstream users, the high rate of water usage. what role can the u.s. play and what role will you help the plate to facilitate water conservation so that the region avoids conflicts over the rotor resources? the-water resources? >> we do have projects to promote agricultural efficiency because most of the countries are -- they do not have good water management systems. but on the nile basin

initiative, the department has been active in encouraging the countries to come together, as has the world bank, and work out a settlement among themselves. >> thank you again for your service. >> senator menendez. >> thank you for your long service to our country, ambassador, such a distinguished career. you're going to an exceptionally important assignment at this time in history. i heard between my meetings, i was trying to capture your answers to some of senator kay c.'s questions, but i want to pursue that more. hi want to know your views as it relates to what will we tell each of -- i want to know your

views as it relates to egypt, its adherents to the peace treaty with israel? think there could be the slightest doubt about egypt's adherence to the camp david treaty with israel. i think the egyptian government at all levels has made utterly clear its commitment to that treaty. it is in its interests. >> and yet there are a series of actions that we have seen that are unsettling to some of us who believe that that is a cornerstone of u.s. foreign assistance to egypt. is this adherence including the peace treaty with israel of prerequisite for u.s. assistance? >> let me put it this way, senator. we entirely anticipate that egypt will abide by its

international agreement and the assistance to egypt is of course based on those agreements for many years ago. >> it is in fact -- if we came to a conclusion that we did not believe that egypt is pursuing its international obligations, then we would expect we would not be forthcoming and terms of $1.5 billion that we give each of course margin i do not think that we have any reason to expect that egypt is not going to abide by its commitments with israel. but as i said, i think that this is widely known, the assistance to egypt is essentially a result and tie for many years to the camp david accords. >> the reopening of the crossing closed since 2007 due to concerns about how much as using that bringing weapons and fighters into gaza, some of the

gas disruptions taking place, some of the other actions the with-you're not concerned? >> i did not see that, senator minden this -- menedez. there is a very serious concern about smuggling, of course. the egyptians with israeli concurrence have put additional troops into the sinai to confront this. the gas is flowing again. there were two attacks on the pipeline. a lot on order situation is bad there. there were some pricing disputes but this is an issue that the israelis and egyptians can work out. >> many of us had high hopes for

a transition that is more democratic and increasingly secular. but many of us also have concerns about some of the actions and where we are headed. certainly this senator's support for egypt and a level of support is predicated on a continuing relationship with a major ally of the united states important for national security and our national interest. i hope you understand the third those of us here who are now ready to sign a blank check because of a long-term relationship. we will be expecting our next united states ambassador to make that very clear. >> i do not think anyone expects the congress of the united states to write a blank check on a financial condition. particularly the military assistance, a very significant amount that you have

appropriated over the years, it has been a source for stability in the region. >> financial circumstances certainly create financial assistance, but this financial relationship in terms of whatever continuing assistant united states my produces beyond even the financial circumstances of the country. it is also about whether or not egypt is living up to our expectation for which we're willing to assist it. i think i made my case and i will leave it at that. i want to talk about one other thing. it is something that i am seriously concerned about. how coptic christians are treated inside of egypt, it is totally unacceptable. we have seen an egyptian court have 16 suspects found not guilty.

the two who were convicted, released on bail. i look at the circumstance, i suspend by coptic christians trying to get churches reopen, where group of men attacked the people participating peacefully in the sit-in, using knives, molotov cutoffs, over 78 people wounded. what you see as progress being made by the military council to in sectarian violence and to pigeons? if what the prospects for constitutional changes that would address sectarian violence and ease restrictions on building churches? have a tremendously productive coptic christian community in my state of new jersey. they are very peaceful people and i do not understand this

continuing violence against them. i would hope united states -- the united states makes it clear that attacks on people simply because of the altar they choose to worship at is not acceptable. >> we have made this absolutely clear to the egyptian government on many levels. this has certainly flared up after the unrest in tahrir square. i think that it has gotten worse. i do not think there is any question about that. that said, the military government has reconstructed the church destroyed an attack -- arrested people who attack coptic christians. there was a draft law the other day, and we got mixed reports about the reconstruction of the churches and mosques. may not be satisfactory to the coptic christians. we do not know yet. but we expect this government

and the new egyptian government to observe the freedom of religion, which is in their constitution. and in the universal declaration of human rights, of which egypt is a signatory. that is certainly one of our expectations. >> as the next ambassador, can i rely on you to vigorously raise this question with the egyptian government? >> you certainly can, senator mendez. >> if there no more questions, we think ambassador patterson once again for her testimony. we wish you well. i think the committee will be taking action very soon. >> tomorrow morning the joint economic committee holds a hearing on manufacturing which has shown growth in 2011. it will include movies economists mark zandi.

also on c-span3, the outgoing head of the federal deposit insurance corp. sheila bair testifies about financial industry regulations. she expected to be asked about greece's economy and the stability of the european banking system. live coverage gets underway at 1:30 p.m. eastern. >> mr. president, i thank you very much. i feel deeply honored to be nominated to become the 12th director of the central intelligence agency. >> with the senate confirmation hearings scheduled for this thursday, if learn more about general david petreaus through his nearly 50 appearances online at the c-span video library. with more than 115,000 people and every c-span program since 1987, all searchable and free, is washington your way. >> earlier, how secretary kathleen sebelius and food and drug administration margaret hamburg and as new warning

labels for cigarettes. then the labels include more information on the dangers of tobacco use and show images of the side effects. this is the first time that the fda has changed labels in 25 years. years. >> good afternoon, ladies and gentlemen. thanks for being here. i have with me today two special guests. on my left, the secretary of the department of health and human services, kathleen sebelius. on my right, the commissioner of the food and drugs, margaret hamburg. she's the top official of the food and drug administration. they're going to talk to you this afternoon at the top of the briefing about a new ruling on labels for cigarettes and tobacco products.

what allied to do, as we have done in the past, is have them make a few remarks at the top. they can take questions that you have for them. alice use them after 10 minutes or so, 15 minutes or so. then we can start again and i'll take your questions on other matters. >> we're here to announce a major new step we're taking to reduce the death and disease caused by tobacco use, new graphic warning labels that will go on all cigarette packs and on advertisements for tobacco products. tobacco use is the foremost preventable cause of death in america and costs the u.s. economy about $200 billion annually in medical costs and lost productivity. every day approximately 4000 american kids between the ages of 12 and 18 try their first cigarette. a thousand of those children become daily smokers. for years, we watched in this

country as tobacco rates fell. in 1965, of a 42% of americans smoke. by 2004, it fallen to just under 21%. that is good news. despite the well-known risks, youth and adult smoking rates that had been dropping for decades stalled. so when president obama took office, we decided that these numbers were not changing and our actions had to change. we're committed to taking steps that will help prevent children from smoking. over the last two years, we have gone to work making it harder for tobacco companies to market to kids. we have restricted companies from using terms like "white" and "mild clause " on products and in marketing. we're supporting local programs to help people quit smoking and to stop children and adults from starting. starting. and as part of last year's health care law, we gave americans better access to counseling to help them quit

smoking before they get sick. today we are announcing a measure that will forever change the look and message of cigarette packs and ads. the new graphic warning labels will be the toughest and most effective tobacco health warnings in this country's history, and they tell the truth. they replace the old warning phrase with pictures showing negative health consequences of smoking that are proven to be affected. dr. hamburg will going to more details, but with these warnings, every person who picks up a pack of cigarettes is going to know exactly what risk they are taking. over the last two years, we've made giant strides in our fight against tobacco, and our efforts are paying off. i'm here with a renewed sense of hope and momentum that we can make tobacco death and disease a part of our past and not a continuous part of our future. i like to turn the podium over to our talented and dedicated fda commissioner dr. peggy hamburg.

>> thank you very much, madam secretary. let me say how proud i am a part that fda has played in this comprehensive ambitious initiative championed by secretary sebelius and president obama. we share a vision for a healthier nation free of the dangerous consequences of tobacco. the sad truth is that tobacco is the leading cause of premature preventable death in the united states, as secretary sebelius said, and an enormous source of avoidable disease and disability. the public health consequences are enormous, with an estimated 443,000 americans dying each year, most of whom began smoking before the age of 18. combating this national tragedy must be at the forefront of our public health goals, and that is why congress and the president were committed when they enacted the family smoking prevention and tobacco control act. since then, fda has worked hard

to implement that vision. we have taken important steps such as banning the sale of fruit and candy-flavored cigarettes. they are especially appealing to children and youth. for the first time, we require tobacco companies to tell us exactly what ingredients are actually in their products. last november the fda unveiled the 36 images that would be considered for inclusion on every cigarette pack in the country for graphic health warning labels, and today we are publishing the nine selected. these graphic warning labels represent the first major change to cigarette labels in 25 years. the final nine images were selected based on a number of important criteria. we took into account public comment from approximately 1700 stakeholders, including experts and industry, some of whom submitted scientific research

studies. we also conducted a national study of our own to gauge people's response to graphic cigarette health warning -- a large study ever conducted involving some 18,000 protests offense. we examined how effective the proposed warnings were at communicating the health risks, as well as the warning in terms of its ability to encourage smokers to quit, and if they encouraged non-smokers, particularly kids, from ever wanting to smoke. consider this -- a pack a day smoker will see these labels more than 7000 times a year. kids under the impression that smoking is cool or glamorous will be confronted by a very different reality when they are tempted to pick up a cigarette pack 15 months from now. these powerful images, coupled with a vero which is a valuable cessation resource, 1-800-quick- now, which will be on every

level, will go long way toward a time we can and will make tobacco-related death and disease a part of america's past, not its future, in the words of secretary sebelius. thank you so very very much. >> i will go ahead and call people of questions. april. >> as it relates to these pictures that are very graphic that we have seen -- >> they are. >> to you think that the public will become desensitized at some point, and you will have to step up the photos? they are not feeling the initial thrust that was felt again. >> the law contemplates a sort of users getting used to them, if you will, and gives fda not only the authority but the direction to change them on an ongoing basis. so immediately after launch of the first set of nine, we will begin the studies to make sure that we are keeping people sensitized and we have the

authority to move to a new set of labels. we see this as a continuous -- you're exactly right read any time you have a frozen image, what may seem quite shocking at the beginning, people get used to fairly quickly. >> will they be more graphic in nature? >> i think the plan is, and i am looking to peggy if i give out information -- incorrect ever mentioned, as you will help me with this. but we will continue to test to see if they're making a difference. one of the things done with this 18,000-person survey was looking at different quadrants of population. which are the ads that really hit kids? what appeals to or distresses pregnant women? what do men respond to differently? so we're trying to be very market sensitive, and i think that surveying will go on on a regular basis.

>> i was wondering the reaction was from the tobacco industry to this campaign, this effort? >> we did engage the industry as we were developing the selections for these nine graphic health warning labels. graphic health warning labels. they were part of our public comment period, and of course we've had meetings with them. this will be a dramatic change in what a cigarette package looks like, no doubt about it. these warning labels are very graphic. they're large. actually, the law even specifies that they take up 50 percent of the cigarette package, front and back, with color pictures, a printed health-warning statement, and also the 1-800-quit-now line. so it will change the consumer response to a package of cigarettes. but, frankly, that's what we want. that's what we're striving for. and that's what will make a difference for health. >> and secretary, just back to what i believe you said

earlier, that at one point the cigarette use was going down, that it stalled. why did it stall? did you look at what happened there? >> well, i think we didn't have the law that's now in place that president obama encouraged to be passed and then signed, which was the tobacco regulation law. so we've been able to really ramp up efforts since then. and i think we hadn't made any progress on changes of labels. as dr. hamburg said, it had been 25 years since we had changed labels. a lot of the aggressive work that was done early on had become commonplace. so we really weren't doing much at all to focus on what is now killing about 443,000 americans every year prematurely, the number one cause of preventable death. and certainly for kids, although some states have gotten aggressive, i think at the federal level there really just wasn't a national focus on this. and i think what the president made clear -- and we are

certainly very much engaged in -- is this is now a new national -- renewed national focus on smoking cessation and one that we think can pay off in dividends, in lives and in health care costs. and we know it can, because it's been successful in other parts of the world. >> peter. >> dr. hamburg, which of these images -- specific nine images -- do you think will target teenagers, especially teenage girls who seem to be so attracted to smoking, picking up the habit? >> well, i think that some of the powerful images certainly are a reminder of the health risks. some of the images, like the one of the mouth with the sort of rotting, dirty teeth and the ulcerating lesion on the lip are also reminders that smoking causes disfigurement. and i think that those are very powerful messages for potential teen smokers. and we do hope that each time they pick up that cigarette package, they will deepen their understanding that there are

really serious consequences of that smoking. >> is there anything in this campaign that would try to deter them from picking up the package to begin with? >> well, of course these images will also be part of print advertisements for cigarettes. but i think it's -- when we think about having a real, ongoing, sustained impact on public health and really bringing those smoking levels down, this is a very, very important activity. but it has to be part of a broader, comprehensive set of public health activities. and secretary sebelius has been of course spearheading a national tobacco control strategy that looks at how different components of government, working with partners at the state and local level and with partners in other sectors, can work together to make a difference for public health. >> let me just -- on the teenage thing, i think there are a couple of things also. somebody said when they first saw the warnings, "these are really gross."

and they are. we want kids to understand smoking is gross, not cool, and there's really nothing pretty about having mouth cancer or making your baby sick if you smoke. so some of these are very driven to dispelling the notion that somehow this is cool and makes you cool. the other thing is, though, that we've done a very ramped- up effort already on the second-tier advertising. so it was not okay for cigarette companies to directly advertise to kids, but they were using lots of techniques about logos at concerts, appealing to younger generation with cool mottos, developing products clearly for a teen audience, not for an adult audience. and those are now also being banned. so we're not just looking at the packs, but all sorts of strategies to try and keep

cigarettes away from our children. >> madam secretary, i have a question for you on a different topic. as i'm sure you know, the absence of nationwide data about the lgbt community's health needs and disparities has been a problem. organizations want government assistance to address problems. the government assists on data to back up these requests, but the government won't collect data so the lgbt community remains stymied. it's public knowledge that groups have been advocating with hhs to address the data collection issue -- specific things like including lgbt questions on the national health interview survey and the behavioral risk factor surveillance system. you and the president have been advocates for evidence-based decision-making. what's the holdup here? >> well, actually, it's a great question, and we fully intend to collect lgbt data. the problem is that it's never been collected, and what our folks came back to us with is we have to figure out -- and we're working with providers and advocates right now to actually market-test the questions -- how to ask questions in a way that they

elicit accurate responses, because collecting data that doesn't give an accurate picture is not very helpful in the first place. and there has been so little attempt, either directly to consumers or to parents or to anybody else, to ask questions about lgbt health issues that we don't even know how to ask them. so it is definitely a commitment. we will be adding data questions to the national health surveys. and right now we are looking at developing a slew of questions, market-testing them, coming back and making sure we have the right way to solicit the information that we need. >> secretary, on the cigarettes, if any other product in any other category killed 443,000 people a year, i can't imagine it being allowed to remain on the market. do you see a day when cigarette smoking would ever be illegal? >> you know, i think that's up to the lawmakers to decide. this is clearly, as you know, if you looked at the history of

passing the tobacco control act, it was a tortuous path. it took a number of years, a number of fits and starts. there are people in our office who have been working on this for 20 years. so to say that this step was not a major hurdle to go over underplays i think the efforts of the past. and i think we will continue to collect the data and look at the information. i think the more people understand the health risks, hopefully we will be in a situation where not smoking will be the by far not only preferable norm, but there will be a lot of consumer pressure, which there already is. i mean, people are now insisting that they don't want to live in housing projects where there are smokers. they don't want to be in open spaces -- knowing a lot more about secondhand smoke, that it isn't just the smoker, it's people affected. so i think there's a growing awareness that this is very dangerous, and that tobacco is unique.

>> but the surgeon general -- a former surgeon general wanted -- foresaw a smokeless united states, and that's never going to happen, is it? >> i really can't tell you. i think we're making some great strides. i think the lawmakers have to take a look at the data and take a look at what they're willing to do. i think the -- if you had ever told me that more than half the states in the country would have passed smoke-free laws, and that the majority of cities have passed them; that we would be taking these kinds of steps against advertising and rebranding our cigarette packs, i would have said that's probably not going to happen anytime soon. but i think people are becoming very aware of the unique power of nicotine, the addictive quality, and also the fact that, as you say, that $200 billion a year in health costs that we clearly could spend better elsewhere, and the loss of 443,000 lives a year, that's a huge toll to take on a

country. >> yes, sir. and then we'll do one more, chip. >> thank you, jay. madam secretary and dr. hamburg, i wanted to segue over to the proposed warnings and retooling of the recipes in cereals and desserts that have come out, that have been written primarily by dr. hamburg's office, as well as the federal trade commission and the center for disease controls. many in the food industry say this is a case of change the recipe or else. and do you see it that way? and will these eventually be enforced? these are the restrictions, of course, on cereal and other things. things. alsoell, i'll let peggy comment on this, because dr. hamburg's office has a particular set of these issues. there is a lot of effort

underway in the area of nutrition and certainly aimed at the obesity epidemic that is affecting one out of every three children and adults in this country. so whether it's the "let's move" initiative, which is doing a lot of work voluntarily to get companies to begin to look at both sodium and sugar content and trans-fat; or conversations going on in the industry itself to look at reformatting their products; or walmart who is now saying that as a major purchaser, they only want suppliers who meet certain standards; or the cdc, which is at looking at sodium; and the fda, which is convening conversations around nutrition qualities; the reformatting of the new food plate that was announced by the department of

agriculture and getting rid of the pyramid and looking at what healthy eating is. i think this is some space that is going to continue to have a robust conversation, because, again, it has a lot to do with underlying health costs and overall health of our nation. peggy can talk a little bit about the fda's involvement in this area. >> and these are just suggestions now? >> yes. >> they're not enforced at all? >> and what you're referring to is a request actually from congress, several years ago i think, to the ftc, to look at issues of food advertising to children, knowing that of course how we eat, what we eat, does really matter for health. the ftc put together a working group that included the fda and other components of government to look at some of the issues, and voluntary recommendations to industry have been put forward for further discussion. and it's an important

discussion to have, because we need to work with industry to be able to provide consumers -- parents and children, all of us -- with the best possible information about nutrition and health so that we can all make good choices in terms of promoting and protecting health. >> so you're not saying, as the grocery manufacturers do, this is a case of make these changes or else? >> these are voluntary recommendations. and we work closely in many domains with the grocery manufacturers of america and other industry representatives, because how food is formulated -- whether it's sodium, sugar, fat -- really does matter for issues like obesity and heart disease and diabetes and other things. the food industry recognizes that there are ways that they can improve and make more attractive the food products that they're developing.

we certainly have a vested interest in that as a public health agency, and we want to work with them on that. >> last one. chip. >> following up on that question, really there are some horrendously unhealthy foods out there. and people who oppose this kind of regulation say the next step is to put pictures, graphic images of clogged arteries and fat-encrusted hearts on really bad food. is that the direction you would go in a perfect world? >> well, again, i think tobacco is unique. it is a product that is the number one cause of preventable death. we know that there are strategies that can be very effective, because they've been in place. we also know that we've been stalled in this country. so i think this effort about tobacco regulation, efforts around tobacco cessation, has been decades-old and is something that is a unique situation. having said that, i do think that there are going to be ongoing discussions -- as you look at the underlying health

care costs, where we spend 75 cents of every health care dollar treating chronic disease -- what are the areas, if you want to lower health costs and have a healthier country, that you can focus on? certainly, tobacco and obesity become two of the major underlying causes. so the work around obesity and healthier, more nutritious eating, more exercise will continue to be i think an ongoing focus. >> no graphic images on our food in the future? >> just lots of celery stalks and broccoli. >> thank you, secretary sebelius, commissioner hamburg. i appreciate it. thank you all. >> former u.s. ambassador to china officially announced he is running for president. his kickoff speech is next on c- span. negotiations continued today on

a deficit-cutting deal that would include legislation to raise the nation's debt limit. we will get an update from treasury secretary timothy geithner air shortly. we'll also hear from congressman dave camp. >> the supreme court is now available as a standard, enhanced e-book. 11 original c-span interviews with current and retired justices. this new edition includes an interview with the newest supreme court justice, elena kagan, if you can watch multimedia clips from all the justices. available now or ever e-books are sold. >> jon huntsman formerly launched his campaign in new jersey liberties state park using the statue of liberty as a backdrop. he served as u.s. ambassador to china for the obama administration up until april.

before that, he was governor of utah. [applause] >> thank you, thank you. thank you. i am jon huntsman and i am humbled the. . i have been a governor of the great state of utah. i have been a businessman. i have been a diplomat. i am the husband of the love of my life, the greatest human being i have ever known, mary kay, for 28 years. [applause] i am the father of seven terrific kids. i am the son of greek parents who are here with me today celebrating -- i am the son of great parents who are here with me today celebting a birthday. i am from the american west

where the view of america is limitless. = = lots of blue sky. i have lived overseas for tons -- four times with a view of america from 10,000 miles away. it is a picture of liberty, opportunity, and justice. people secure in their rights and in love with their liberty, people who have done more good for more people than any other nation on earth. today, i am a candidate for the office of president of the united states of america. [applause] thank you, thank you. my kids cannot believe i jt said that. [laughter] i am asking for the greatest

privilege and american can best on a fellow citizen and you are entitled to know the reasons why. today, americans are expericing, through no fault of their own, something that is totally alien to them, a sense that the deck is stacked against them by force is totally beyond their control. no matter how hard they work, save, and plan, the opportunities are not there for them that were present for previous generations perhaps saddest of all, we have lost faith in ourselves. for the first time in history, we are passing down to the next generation a country that is less powerful, less compassionate, less competitive, and less confident than the one we got.

this, ladies and gentlemen, is totally unacceptable and it is totally american. [applause] -- it is totally un-american. it need not, must not, will not be our permanent condition. we will not be the first american generation that let down the next generation. we have the power. we have the means. we have the character to astonish thegain by better country, this inexhaustible land of promise and opportunity. we have everything and nation could ever hope for. we have our freedom. law, theule bloof longest surviving constitution, and their personal belief in

personal responsibility. we have freedom of speech, religion, and press. we produce 1/4 of the world's gdp and we are the most productive society on earth. we have the finest colleges and universities and the most skilled, powerful, and selfless armeforces. [applause] thank you. we have character. we have character that made a new world from a well-, a character that made the desert bloom and the city's rise to the heavens, character that made the world safer, freer, and more prosperous. what we now need is leadership that trust in our strength. we need leadership that does not promise washington has all the

solutions to our problems but rather looks to local solutions from our cities, towns, and states. leadership that knows we need morehan hope. leadership that knows we need answers. [applause] we must make hard decisions that are necessary to avert disaster. if we don't, in less than a decade, every dollar of federal revenue will go to covering the cost of medicare, social security, and interest payments on our debt. meanwhile, we will sink deeper into debt for everything else from national security to disaster relief. our country will fall behind the productivity of other countries. our influence in the world will

weigh in. our security will grow ever more precarious than the 21st century will then be known as the end of the american century. we cannot accept this and we want. [applause] we won't. [applause] here is the challenge -- we must proceed at a time of weak economic growth and a very high unemployment. we desperately need jobs and the opportunities they carry. must play to our strengths and gi the most innovative society on earth the tools they need to succeed. we must make broad and bold changes to our tax code and regulatory policies, seized lost opportunity of energy independence, and a stamp -- and reestablish what it means to be a teacher in society.

we must reignite the powerful job-creating engine of our economy, the industry, innovation, trail blazing genius of americans and their enterprises and restore confidence in our people. we can and will own the future. [applause] we did many of these things immigrates did you tell en i was governor. we cut taxes. balance our budget, we worked very hard to maintain our aaa bond rating status which few states can comwhen the economic crisis hit, we were prepared. by many accounts, we became the best state in america for business. we also were named the best managed state in america. [applause]

we proved that government does not have to choose between fiscal responsibility and economic growth. i learned something very important as governor. for most american families, there is nothing more important than a job. [appuse] internationally, we will lead the world in a way that speaks to pre-eminence and let us not forget that we are a nation at war. this came home to me as i spoke to the vfw convention recently in the state of new hampshire. i was joined by my good friend john chevalier, a marine. we looked at the greatest generation, all of whom were there in their output to and ribbons that had earned during a

time of conflict. i saw in their eyes stories about which you could make great movies and i saw america's greatest generation. they lived through the depression. they lived through world war two and beyond and they delivered to this country in ways that protect and preserve our liberty and freedom. i am here to tell you that we have another of america's greatest generations coming up. they are ready to rebuild america just like earlier generations. [applause] we are at war, ladies and gentleman, and we must manage the end of these conflicts without repeating past mistakes that made our engagement laundered and our sacrifices greater than they should have been. it is not that we wish to disengage from the world.

don't get me wrong, but rather that we believe the best long- term national-security strategy is rebuilding our core here at home. [applause] let me say something about civility. for the sake of the younger generation, it concerns me that civility, humanity, and respect are sometimes lost in our interactions as americans. our political debates today are corrosive and not reflective of the belief that alanket has bounced back in his days that we are a great country because we are a good country. you know what i mean when i say that. we will conduct this campaign on the high road. i don't think you need to run

down someone's reputati in order to run for the office of president. of course we will have our disagreements. that is what campaigns are all about. i want you to know that i respect my fellow republican candidates and the respect the president of the united states. he and i have a difference of opinion on how to help the country we both love. the question each of us wants the voters to answer is who will be the better president, not who ishe better american. [applause] behind me is our most famous symbol of the promise of amera. president reagan launched the 1980 general election campaign from this very spot. it was a time of trouble, wary,

and difficulty and he assured us that we could make america great again and through his leadership, he did. today, i stand in his shadow as well as the shadow of this magnificent monument to our liberty. for 125 years, three tramps and hardships of all kinds, her lamp has been a beacon reflecting america's highest aspirations and values, america's promises have been kept. each generation in their turn has worked very hard to keep her lit. now it is our turn. our challenges are many and they are urgent but our problems are no bigger than our opportunities and they are not insurmountable for a people who have always used our freedom to

make the future better than the past. we are a resourceful, ingenious, determined, problem solving people. we don't settle for less than our character and talent will achieve. we choose our destiny as. a as we always have and we always will. this is that moment. we're not just choosing new leaders, we are choosing whether we are to be yterday's story or tomorrow's. everything is at stake. this is the hour when we choose our future. i am jon huntsman and i am running for president of united states. thank you all. [applause] thank you, thank you. thank you. thank you.

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> following this announcement, jon huntsman traveled to new hampshire which holds the nation's first primary. later this week, he will campaign in south carolina and florida. florida. >> c-span has launched a new website for politics and the

2012 presidential race. with bio information on the candidates, twitter feeds and facebook updates and links to c- span media partners. visit us at c- span.org/campaign2012. next, treasury secretary timothy geithner talks about debt ceiling negotiations and the u.s. and global economy. he spoke to a reporter of "the wall street journal" for 35 minutes. >> he is the second treasury secretary to be a graduate of dartmouth college. commencement exercises have begun at dartmouth and you think they could invited an alumnus such as you to be the speaker.

instead, invited conan o'brien to speak. >> did he go to dartmouth? >> no. you're going up on friday to conduct a seminar. i thought i would tell you what conan obrien said, " dartmouth was a different place backbend. i made a trip of boston on a mule. after asking the blacksmith for directions, i came to this campus. i stayed with a family of for traders in white river junction. it snowed heavily during my visit and i was trapped there for four months. i was forced to eat the mule who had been forced to eat the for traderss-- the fur traders.." congratulations for surviving new hampshire.

i thought i would start you by reading to you to things that were said from the stage last night. and get you to respond to them for starters. 'the most important thing government can do to promote innovation is to get its own house in order." the second,"it was unimaginable a few weekyears ago the u.s. would be talking about default on its debt." will we spend the rest of the summer worrying about default on that? >> things are going to happen this summer. one is that we will avoid a default crisis. no doubt about that. it is unthinkable. that people would contemplate that as a viable strategy for the country. is not going to happen. and we are going to have a bipartisan, comprehensive, long- term debt reduction framework. the question is -- is what is

going to be the shape of that framework. what we are trying to do is negotiate something that will be good short-term and long-term for the economy. what that means is that we will have a framework that restores and gravity to our long-term fiscal position, locked it in over time. does not do it so that we add pressures on growth in the near term. we want to do it in a way that creates a room for the government to do things only governments can do, to help improve incentives for investments and making sure we are investing in education and infrastructure. we want an agreement that is good for growth in the short term and long run. i think we have a good chance of doing that. in the room, these negotiations, despite the political moment, there is a very pragmatic, a very realistic, very constructive spirit. we hope that results in the kind needed.eomises

>> you are describing a two-tier outcome -- down payment now. >> we do not see a realistic path to solving this at once and the next few weeks. we are trying to do a framework for there is a substantial down payment and spending reforms that locked in deficit reduction over a 10-year period of time. then a framework of constraints. we call it a debt fail-safe or targets and triggers that will force the remaining deficit reduction to happen soon enough so we do not fall behind the curve. we're looking at what we call it to where our debt burden is falling as a share of gdp over the next three-five years. whatever we do not do in a down payment, we will have to do in the next five years. if congress cannot act --

>> will the package includes additional revenues or entitlements savings? >> for it to work for the economy, you need to have a balanced framework. if you try to do this -- we need about $5 trillion in deficit reduction over 10 years -- to try to do that only on spending cuts in parts of the budget would be irresponsible and not achievable politically. you cannot pass a budget. you need a balanced plan that has a tax reform as well as some near-term spending savings and long-term entitlement reform. again, i think if you look at the structure of our budget and what is driving the long-term deficit, you could -- the scale of challenges we need in terms of creating investments for long-term growth -- you cannot

do it through spending reductions concentrated on parts of the government. it depends on the government doing things only government can do. the target is five trillion dollars over 10 years. if all sides agree. some very important things happened over the last six months in this town. hard to appreciate from a distance. you have republicans in the house, the president of the united states, a bipartisan deficit-reduction plan all agreeing on a broad target for deficit reduction in net aretght area of $5 trillion. once you have both sides of the aisle committing to that is an objective, it is all about the composition of the changes. if you look back to 1995-1996,

the last time we had substantial bipartisan deficit-reduction plans, the most important change when you had both sides, republicans and a democrat president saying we need a balanced budget. with that basic change, we have a chance of doing something useful. again, what matters is we have the deal that locks in some long-term savings, but is going to be good for the economy in the short term and long run. >> you sets the deadline for this, august 2. >> it is imposed by reality. we borrow 40 cents for every $1 we spend now. and congress has to raise the debt limit before we run out of that room. and i think there is broad acceptance by the leadership of that constraint. i think it is very helpful to have that senator mcconnell and majority leader in the house all saying they want to get this done.

i think they recognize the damage it would cause the country to take it too close to the eds. >> how close are we to getting this done? >> we are meeting everyday the remainder of this week. and we are making a lot of progress in fleshing out the payment whichwn is broader framework of constraints, debt cap, enforcement mechanism. and we are getting closer, but we need to make some progress this week to get everybody more confidence that there is a framework has the votes. ultimately what matters is how to get the votes. >> in a perverse way -- [no audio] >> i suppose perversely, the good news is that there are countries that have worse

problems to deal with. greece comes to mind. this may be d-day and d-week in greece to determine whether or the immediate crisis could be averted. will something happened today renewwill allow the eut to payments on a loan package? >> i think there will be -- this is your problem to solve. -- europe's problem to solve. we are actively involved in helping them to get to a sensible place. i spoke to the prime minister of greece over the weekend. we had two g-7 calls. i spent a lot of time on the phone with the principles of europe on this issue. ultimately, they have to find a solution that works for the politics of europe now. let me say a couple things about what is important as they managed through this. i think it would be very helpful with a euoprrope speak

more unified voice. it's hard for investors to understand what strategy is when you have so many people talking. a simple role of crisis management is you want to have a simple, clear, unified, declared a strategy. that would be helpful. the second thing i would say is that they have a very substantial financial arsenal, fire wall, they have laid out. and we want to make sure -- they want to make sure that is available to be deployed to do the kinds of things they need to do to make the process work. to make sure that banks can be recapitalized. no economy can function without a banking system that they are able to fund and to make sure the country are undergoing these reforms have a financial backstop they need. greece, ireland, portugal and spain are undertaking incredibly

difficult, very ambitious reform plans to fix the fiscal mess they created it, to make sure they strengthened and restructure their financial systems. and figure out a way to grow. but those things are going to take years, not months. and they are not going to work unless there is a broader financial backstop behind them. absolutely, they have the ability to avoid a short-term crisis, but there is a still a feeling towards a more comprehensive strategy. >> and what voice should be that single voice explaining europe's position to the world? >> who should it be? they have to make that choice. they have to agree on a strategy and have clarity in communicating that to the market so people understand what the basic trend is. >> what was the american message in those g7 phone calls? >> the same thing i said today.

you want to make sure the broader financial arsenal they constructed last summer, after watching europe starting to burn, you want to make sure that arsenal is available to be deployed, to do the things necessary for them to get out of this. that means, where necessary, there is capital available to recapitalized banks. they're undergoing stress tests to assess what does capital needs are. they want to make sure they can be filled of the market will not fill them. and that there is up broader financial backstop available for countries undergoing reforms. >> isn't somebody going to have to take a hair cut? is it going to be banks are german taxpayers? >> good question. no easy answer to that question. ultimately, again for these things to work, you have to set reforms in place that people can

look at and say, if the government sticks to that path at the end of that time there will be enough growth and resources to meet commitments over time. that is something you can only turn confidence with overtime. again, people will look at what can the political systems of those countries deliver and is there a scale of resources behind them to make sure they can reinforce the process for a transitional period while they are trying to get their act together. >> is there a long-term path for greece emergin? g? i can see the short-term crisis management. it seems like they are in a hole they cannot climb out of. >> that is what they're trying to work through, the european leaders this week. they are working through what mix of the ultimate solutions will be helpful. they have to make that choice. i would emphasize that what those governments are committing to and what they have delivered in many ways, they have years

ago. they are very substantial, very difficult, politically very difficult set of economic reforms, but there is no path for them going to those reforms. >> is there a fire wall between greece and spain, italy, ireland, or is the contagion danger the rest of this summer very high right now? >> i think it is very important that the basic financial arsenal is available and deployed. i think one of the most important things that happened over the last six months or so is that spain has been able to earn more credibility with its own people and the broader investment community by putting in place a said of reforms -- a set of reforms that distinguish it from other parts of europe. you need a broader financial

backstop that people view as credible, that clean commitment to make sure the government and the banks can fund as the countries go through these reforms. >> do you think the euro survives this moment in the crisis in its current form? >> i do. there is no reason why europe cannot manage these issues within the basic framework. they are absolutely worried about how to make sure they have a set of policies for coordinating budget policy with a stronger set of disciplines. the absence of those are one reason why they are in this mess. they would like to fix that. and they have been spending the last year trying to build the architecture of a broader fiscal framework to provide that, but there is no reason why they cannot preserve the basic elements of monetary union. >> let me bring you closer to home and ask you about a topic

of particular interest to this audience, which is tax reform, corporate tax reform. it has been interesting as an observer of washington over the last year to see what has been a consensus emerging of the corporate tax rate, the tax system is probably not sustainable in the long run. it needs to be addressed. you have said that yourself a lot. how close are we, and by what path does this country get to genuine corporate tax reform? >> let me start by saying i completely agree that the current tax system of the united states is not something we should be living with for any longer. you all live in this world. we have a very bad combination of high tax rates, very broad based and there are tax expenditures. creates a lot of distortions, huge diversions in the effective tax rates across parts of the business community. it is a politically driven tax system that fails the basic test of letting the markets allocate

investment. we should change it. it has built this uncertainty around having about which tax preferences get extended. you want a tax system that can lower that rate, do so in a revenue neutral way, and create more certainty and conditions that make the u.s. and more practical place to invest. that is something absolutely within our capacity to do as a country. it should not be inherently a partisan endeavor. there should be a lot of common ground on both sides. the basic test is how to make it more likely that american companies ban foreign companies are investing in creating things in the united states. now, it is a difficult thing to do, and there is the question about what will be feasible in the near term. we have been spending a lot of time putting together a broader framework that meets that basic

test. but we decided we had to wait to deploy that, to begin at the conversation until it withdrew the budget conversations we're having right now. that requires all the oxygen this town has at the moment. we get that done, we will have an opportunity to begin a corporate tax reform. >> in the negotiations on the deficit deal that would give you past the debt ceiling, the one vice president biden is running, this is not on the table? >> no. we are not doing detailed redesign of the corporate tax system in those discussions. we are trying to think about how to set up a longer-term, balanced fiscal arrangement. our expectation is that once we get this broader deficit reduction agreement done, then we can move to link a foundation for comprehensive corporate tax reform. it should be possible to do. there are a lot of people that

say you have to wait for individual and do them together. i do not agree with that. you could decide to do it that way, but the risk for the american business community is that that will consign to years of unnecessary delay, because ultimately, we are probably going to have to do broader based tax reform. but that process as it did under president reagan will take years. it would be good for the economy, for this economy at this time, not just to put in place a long-term fiscal deal, but the findings we can do nearterm to strengthen -- corporate tax reform is one of those things. infrastructure financing is another one. growing exports bypassing trade agreement is another. there is no reason why we cannot do these things. >> you get the deficit deal done, it is august. august, september. just over a year of the

presidential election. you are basically in campaign season. can you do corporate tax reform in the air campaign environment? by this fall, and that is what this town will be entered >> we are the united states of america. we have a lot of challenges. if we decide nothing is possible until we resolve all of our fundamental disagreements on the political front, we will be a weaker country going for. these are not difficult things in comparison to what we have been through. the president came in, righted the ship, presented a second great depression. i think these things on corporate tax reform, trade agreements, are not nearly as difficult. we should be able to do those and make progress. >> let me ask about three

details. if you had a blank sheet of paper and he could do corporate tax reform, what would you do about rate, repatriation, and territoriality? >> i will deprive it of detail at the moment, just because we do not want to jeopardize the potential for progress on this. my view is again, moving, ultimately somebody, i think it will beat us that will lay out a proposal. it will lay out a proposal with options. people can look at that and how we balance those things and decided they have a better idea for getting votes. the right test should be what is going to strengthen incentives for investments in the united states, so that we are improving the chances that more of the huge growth of demand we will see from emerging markets in the next several decades are met by people that are building things in the united states. that is what education matters

and infrastructure matters so much. other incentives the government can create for innovation matters so much. corporate tax reform is part of that. >> this process is going to be kicked off by you. >> maybe. we have not made that judgment. what we want to do is figure out an approach that maximizes the chance for legislating something. so we will choose the tactics based on the way the playing field looks, once we get to fiscal negotiations. >> you have an idea, it is on the shelf ready to go? >> we have a good, sensible package with some good options for people to take a look at. there are trade-offs. people should look at the trade- offs. >> i will give you one last chance to make real news before i turn it over to the audience. you want to go ahead and endorse lagarde as director

general of the imf? >> the we have two very credible candidates for this position. we want to have the succession resolved quickly. i am very, but we will have somebody who will not just come with experience, technical experience and credibility, but able to command broad support across membership, not just among the major economies, but among the emerging economies as well. we want to get it done and quickly. >> i think you all should have a .rack at the secretary prepa >> larry minor. >> you are ineligibile. ble. >> how much of the challenge of crafting a long run solution to our budget is not about the numbers, but about broader policies, defunding apa, defunding health care, and

rolling back policy, for example, that democrats have promoted and achieved over the last two decades? how important is the riders on the budget proposals as opposed to the numbers? >> i think it is very likely we will do this thing into stages over the next few months. those questions you referred to, which go to how policy issues result in the budget process, the present composition of a bunch of other changes in the discretionary budget, i think those things are probably result in the classic preparations process later this fall. in the room where we are negotiating the broader framework, we do not have the time or ability to get into that level of detail, and we should not try. we will have the two-step that. you're right that there are big things that divide both parties now. that is not going to change in the next several weeks. our challenge is to figure out a

way to lock in some reforms that allow us to make a substantial down payment on fiscal consolidation overtime. again, in a growth-friendly way. and set up an enforcement mechanism that forces us to confront the broader things before we fall too far behind the curve. >> can i jump in? to follow up on what you said, you are describing a situation in the budget talks which is foreign to those of us to abandon washington. you are describing a constructive, -- >> for and to everyone. >> a non-accusatory environment -- foreign to everyone. >> in that room, you'll get people focused on the overwhelming, pragmatic imperative of how to get the votes and legislate a comprehensive, long-term fiscal consolidation program that

allows us to go back to living within our means, recognizing we are not going to be able to agree in the next few weeks about ultimately what we're going to have to tdo to make our internal programs sustainable. and we will not we resolved and the next few weeks the precise shape of tax reform. not feasible. our job is to figure out how we can do enough to make sure we can get people more confident that this country will be able to live within our means over time. again, this is a very important problem for the country long term. people are saying the right things about recognizing the imperative. the deficit reduction we have to engage in. it is all about the composition. the composition will determine, not just the composition of how much is phased in, but the

composition of changes on tax reform and it will determine whether we have a deal that is good for growth long-term debt and good for the short-term challenges of trying to make sure we dig out of this crisis definitively. >> other questions? >someone right here. identify yourself. >> what you think the role is for immigration reform and fixing the deficit challenges you are describing? >> well, i think i would just say that as a secretary of the treasury that one of the great strengths of this country, past and future, that we remain up compelling place for people to come and build a business, not just go to graduate school but stay afterwards and build the business. and i think it is very important