florida we had a high-speed rail perceived as a public- private partnership. president obama said that he would dedicate so much of his infrastructure transportation money to build a high-speed rail. the governor rejected it. it was absurd. the company that should be applying for this project said they had done their homework on this. that they had built these in other countries. they know that they can make money. orlando is a huge worldwide attraction. tampa is a major hub. we can make this work. he did not do his homework or analyze. governor scott did not do his due diligence at all. he killed 25,000 jobs. host: we have to leave it there.

we are running out of jobs. guest: and resting point. a multinational corporation, it is the model. we have companies downsizing that are doing the same thing. talking about the failure of a private public partnership to come to fruition, there was no partnership because there was no sign on the dotted line. you cannot hold the business community responsible because of the decision from the state government. they had their reasons for doing so. it points out a couple of things. there are projects out there that would benefit in terms of the creation of jobs. the more that we can do to facilitate those projects by working together to make the process easier, the better off we are and the quicker we will get the economy moving in the

right direction. these things have to be structured and funded properly. host: martin regalia, thank you very much, sir. guest: thank you. host: we will continue our series looking at the american work force tomorrow. thank you for watching on this wednesday morning. as we say good-bye, i'll look at the dow jones industrial average. down, 312 points. we will see you tomorrow. ♪ [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> president obama has meetings at the white house with secretary clinton and secretary

geithner. his spokesman has is briefing coming up today at 12:30. we will have that live for you. live at 2:30. major general john allen said u.s. and afghan forces over the weekend killed the taliban and surgeons responsible for downing the u.s. helicopter. today we will bring you a conversation of the use of unmanned drones for airstrikes with officials participating. that is live at 4:00 p.m. eastern on c-span. >> republican candidates are gathering in iowa for some

grass-roots politics. on thursday, we will interview the candidates and take phone calls about politics. on saturday, we will go to ames. road to the white house in iowa, this week on c-span. >> next, a simulated destruction of the global oil supply. this is part of the national summit on energy security. it's just over 2 1/2 hours. í

>> could morning. -- good morning. i am a founding member -- on behalf of all of us, i welcome you to today's national summit on energy security. before i introduce the man who'll tell you about oil shock wave, i wanted to say a few words about energy security and the role of this summit. during today's session, the intent to examine how america's

supply of energy is dangerously vulnerable and why urgent action is required to remedy this totally unacceptable state of affairs. let me explain. the entire u.s. transportation system is totally dependent on justice one fuel source -- that is oil. currently, there is no alternative. any disruption in the supply of oil will cripple our transportation system and create total chaos in our society. we import 50% of the oil we need. most of this oil comes from regions of the world which are

unstable and usually hot style to the best interest of the united states -- and our house styare hostile. in addition to security concerns, we have spent $300 billion a year to purchase this oil from people who are not friendly to the united states. this is a huge, huge transfer that has been going on for many, many years. the amount and price of this imported oil is not set by free markets. as you all know, it is set by foreign governments who actually owned 90% of the oil reserves.

therefore, it is not difficult to conclude that this total dependence on imported oil is a clear and present danger to the national security and economic stability of the united states. dependence on oil distorts american foreign policy, forcing us to compromise on our values. oil dependence empowers for government to impose on reasonable prices. $4 a gallon for gas, some american families are forced to spend more on fuel than they do on food. for several years, the leaders in this room have attempted to

bring attention to the importance of energy security. this summit is an excellent opportunity to draw attention to the threats caused by our dependence on oil and to provide a forum to discuss solutions needed to solve our energy dependence once and for all. we have been talking about it for more than 40 years. we definitely do have alternatives. but we need to take the future into our own hands and act now. i hope this summit will spark action to truly reduce our dangerous dependence on imported oil. without further delay, i would like to thank you again for attending the national summit on energy security, and i would like to thank safe and the

coalition for organizing this very important event. to introduce now is the president and chief executive officer of safe, mr. robbie diamond. [applause] >> thank you very much. thank you for coming. this is a profound security challenge for the united states. when we first did oil shock wave, the price was pushing $60 a barrel. our first news clip in 2005 asked if we were pushing the psychological threshold of $60 a barrel. unfortunately, we have seen $60 a barrel is the good old days.

we have seen $147 for oil in 2008. when you look at the implications with the rising instability and constrained production, as well as increasing demand, the situation just appears bleaker. it is much easier to raise the scenario now than one first did this in 2005. but there is good news. some great technological advances, whether the profound find natural gas in the united states, fuel economy standards that were implemented by the bush and obama administrations, as well as the new electric vehicles on the road, i think there is some hope. the problem is time. all the things we must do it as

a country take decades and billions of dollars and we do not have that time. so we have oil shock wave. people will be under time constraints. the president will want answers and he will want them now. information will be difficult to come by in a crisis, which is not very different than many of these meetings. the scenarios, the members of the cabinet's do not know the simulation before it will happen. they are walking into a situation as you are. nobody knows what the breaking news of the day will be. they are unscripted. these are all new scenarios that we've put together based on world events.

we're not predicting the future but pointing out something that might happen. finally, i would say that i want to point out that simulation is of experts. we were people who come off with some ideas for how oil come off the market. " we have talked to national security experts. we have shared that with people who have traded oil and the market, and finally he will speak with economists that run through models that come with the profound in for me -- implications to the gdp, and other types of in the chemical -- indicators. we are just the circuit master's in the middle of bringing experts to bring this together. with that, i want to say thank you to the teen, and chris williams productions did a wonderful job. also stan who has been running

shockwave for several years now. finally, i will introduce you to the shock wave cabinet. thank you very much. ♪

>> welcome back. the assault by attackers has left the facility power generation utilities badly damaged and in flames. details of the attack are still emerging. i witnesses reported seeing helicopters heading into the facility just before a series of explosions rocked the compound. the whole attack took as little as 10 or 15 minutes. oil markets reacted to the news with a surge in prices. the single greatest jump in history.

officials considered suspending trading. markets in new york opened under normal conditions this morning. we have standing by in london our financial correspondent. what can you tell us? >> moments of real panic, in particular, the oil markets. this attack takes things up to a high level. >> expand on that and give us a sense of context. how does this fit into the world oil market? >> keep in mind that total world oil demand recently hit 90 million barrels a day for the first time in history. saudi arabia is a key oil producer.

this is the main processing plant for arabian light crude oil. at the time of this attack, it was processing 6 million barrels of oil a day. under normal circumstances, there is such a cushion. most of it exists within saudi arabia. they're typically the world's offer. this attack has rattled markets badly for that reason. could be closed. >> thank you. we have with us now a correspondent in jordan who has more news on the situation in saudi arabia. what are you hearing?

>> there is shock and disbelief. this was considered to be one of the most secure oil facilities. this has shaken everyone here. this was a very sophisticated and well thought out attack against the heart of the world's oil production system. at least one of the plant's three gas turbine generators has been dbadly damaged. one piece of good news is that the infrastructure at the heart of the plant is believed to be undamaged.

but restoring the plant to full capacity will take some time. perhaps a week or more. >> has anyone claimed responsibility for the attack? >> not as of yet. speculation that the attack was related to recent turmoil in the middle east's -- the government of the gulf states have been highly aggressive in their crackdowns of dissidents and extremist groups, in some cases resorting to violence. some observers here believe the attack could be designed to weaken the saudi monarchy. the specter of sophisticated terrorist groups is at the forefront of concern and a reason that leaders continue to open for the overthrow of the government. there are other possibilities.

some observers have noted the potential for black -- blowback. for now, it is all speculation. >> thank you. we'll be right back with more coverage of this attack on the world's largest oil processing plant as reports continue to come in. please stay with us. this is simon marks reporting for gnn. s >> this is obviously a serious blow. given the difficulty with our economy, the impact on our

economic recovery could be dramatic. the president needs to be out there and he he wants to be out there. he needs to be saying some things that will calm the oil markets. there will be a press conference in about an hour. he will want some concrete recommendations as to what he should say. he has some specific questions we will get to and try to move through this fairly quickly. i want to turn to the deputy national security adviser to give us an update. what do we know? >> thank you. i direct your attention to the power point behind you. we cannot understand the importance -- they are responsible for 7 million barrels of crude a day. the united states in 2010 produce seven and a half million

barrels. this is a serious situation. we are gathering information. in terms of spare capacity, which is used by the cartel to keep in reserve and manage prices, rising oil demand has eroded that along with the libyan unrest. the attack has significantly and in a negatively fashion alter the capacity for 2012. the plant will need to be shut down completely, perhaps a week or more. the estimates are up to two weeks. after that, we assume even a loss of something like two million barrels of oil a day, which would eliminate the saudi

spare capacity. they are generally responsible for the spare capacity in the market. with global demand pass a 90 million barrels, there is very little spare capacity outside saudi arabia. the outlook for the supply- demand balance is grim. we are projecting shortages through march. any further incidents could lead to serious shortfalls. there are commercial stocks available and to some degree, there will offset the shortages in asia. working with iea to call stocks, public stocks into use. the iea cannot correct fuel

anywhere, but there would be an effort made possibly calling on the u.s. to release some of our stocks and divert iraqi oil to deal with the asian market. that is what we know today, sir. thank you very much. >> the president thinks he needs to address three particular issues at this press conference. he thinks they will come up. given the limitations and disruptions of supply, what about the strategic petroleum reserve? is this something we should do? what is the criteria? that is one thing he wants to know. we do not know whether this is the first of a coordinated series of attacks to go after the oil infrastructure and put the world of global economy in

the toilet, if you will. do we have options for enhancing security at those areas? and thirdly, what are our policy options for impacting the price of crude oil in the short term? we can see the price of oil is headed to the roof. what can we do to reassure the markets and the consumers? those are things the president thinks we need to address. let's start with the strategic petroleum reserve. let me turn to the secretary of energy to kickoff the discussion. give us some background on the petroleum reserve, the criteria of when we abused it and what our options at this point. >> in terms of the overall situation, this has been around for some 30 years, prompted

after the oil embargoes of the 1970's. it is a robust supply of crude oil. we have about 700 million barrels stored. we have designed it in such a way that there is instant access to it. we can produce up to 4 million barrels a day and sustain that for a point of time. the industry takes that oil into the refinery system so they know how to mix the blends. if there is a declared emergency, it is designed for emergency conditions in which there are feared shortages in which we are trying to make up those shortages. another option at the present's

determination -- at the president's determination is to settle the market's. we should not think about using the strategic petroleum preserved as a price offset. there are other sources of oil. we set a dangerous trend in the oil markets. the temptation is always there. at this point, i recommend we do not access the strategic petroleum reserve from a pricing standpoint. if we think there is a near-term or ongoing risk or shortage, then we have some flexibility. it takes about two weeks to keep it in once we make that decision itabout six weektwo weeks to kk in.

we do not have a shortage facing us tomorrow. we have robust inventories in this country. we have a flow of oil into the country on its way. we're not facing an immediate supply crisis tomorrow or next week. we should keep that in mind. >> if something needs to be done, is this something we have to do on our own? are there private sector is available? how big a pool do we have to draw from? >> we should include the iea. they exist to coordinate on a global basis so there is some kind of an override in how people think and respond and react. we should be in touch with the iea. we should do that instantly,

before the president speaks. most of the major companies, state-owned as was the international majors, do have their own supply on hand. most of them would have anywhere from 30 day supply, which could be part of the overall stock that we have on hand. >> are you fleischer -- ari fleisher. the secretary has made clear this is something we do not use to absorb price. the american people have to understand that. people will ask the president and seek the price of oil is going through the roof, how should the president frame this for the american people?

>> i think we have a huge problem on our hands. we released oil for libya. how could we not doing for saudi arabia? the president will say, why aren't you doing it when you did it previously? i'm worried about the direction we're going in. pressure is building. needs tohe president's be -- i think the president needs to be working the phones right now. i am worried about the timing of this news conference. we do not have time. the secretary of energy needs to be working the phones. i would not to a news conference. i would recommend that the president makes a statement. the press would hone in on

questions we don't have the answers to. we need to calm markets. taking questions from the press would create a lack of answers. we should push back the timing. >> the ticker on the press -- it is out there that the president is going to meet with the press. let me just -- let me push back on that for a moment. maybe no questions. if we differ it -- if we difer it, it looks like we are not on top of the crisis. >> if you run late, you run late. i do not worry about that.

from the present cost point of view, he needs to show reassurance -- from the hesident's point of view, needs to show reassurance. >> sounds like the voice of experience. next is the economic adviser. let's go to the merits of the case. >> i think that there is something to be said for just being up front with the american people. when the press is being briefed by the white house staff, it is worth pointing out that in the case of the intervention to address libya, there was a $5 drop in the price per barrel. it was temporary. it came right back. all we succeeded in doing was

giving a bath to a couple of a speculator is. it had no impact on oil prices. there may be something to be said for keeping the opportunity in conjunction with the iea to surprise the market from time to time so that you have less of a speculative push up. the reassurance that is needed would, as much from the defense establishment. is there anything we can do to make sure this does not get worse? if you can have the process can be cleared by march, then you are arguing about the near-term problem. there is virtually nothing that can happen in the near term other than people reacting to price pressure and conserve thing.

that will happen. the broader question, and i'm looking at the secretary of is the risk of knocking us back into a recession. are there things we should be proposing? even after this is resolved, we will still have energy shortage issues going forward just by the normal course of economic growth in asia, in the united states, and the world. >> let me ask you to respond to susan's comments. how concerned are you about this impact on the economy, and what are some things we can do outside? >> we have a weak economy at this point. the key to is to avoid this will shock and going back into what 197's type stagflation --

1970's. that has to be avoided at all costs. the way to do that, steve, is that we want to do everything we can to recognize this as an international problem. wish to get the g7 finance ministers together to coordinate growth-oriented policies so that we do not jochoke with these rising prices. people will be spending less. we want to make sure no one racks in an inappropriate way -- we want to make sure no one reacts in an inappropriate way. we do not want the bank to start raising rates. we want to coordinate this. i would have ready -- we want to

see what the impact is. i would have ready some stamina policies to ask congress to lower payroll taxes for employers and employees. i wld berepared to stand the major budget cutting and tax increasing initiatives we have been talking aut. i would not enact those now but have theready. on the inflation side, there is no reason to think we will go back into it 197's problem -- 1970's problem. with the globalization, there is great downward pressure. weave a weak economy here, a weakening economy in china and europe. i don't think that this problem

is necessarily going to spread as it did in the 1970's throughout the economy. >> linney asked about the dollar -- let me ask you about the dollar. >> with all the talk about our growing debt, we have seen in times of crisis that there is a flight to the dollar and a flight to u.s. assets when there is a crisis. there is not a lot of other places to go. i don't think this will cause a run on the dog. we'll probably see yields stay low or -- i do not think this will cause a run on the dollar. keep interest rates near zero and have that kind of

coordinated policy among the g-7 countries. >> i want to come back to them. if we just say now was not the time and the goal is to reassure the markets, it seems to me it unleashes it. is there something we can do to show that a release is a backstop? >> i think you almost have to consider your question one and two together. we have to have some judgment as to whether this is the first in a series of attacks or not. interesting to hear from the director of national intelligence at this stage. i'm sure this will be an evolving picture. in the meanwhile, we don't know at the moment. the president public has to say he does not know that this is part of a series of coordinated

attacks. we have some good arrangements with saudi arabia to help them protect those facilities. i think we should do something soon and quite visibly to beef up that assistance effort, to reassure the saudis and the markets that we will do everything we can to protect those facilities against future attacks. those are the two things i would suggest. >> let me go to that. what do we know -- is this the first in a series? >> let me say that the attack just happened this morning. we are still very early in the crisis. i can assure you that we're all hands on deck trying to get to

the bottom of this. the initial readout that we do have from our experts is that the attack does feature all the hallmarks of an al qaeda operation. there are several aspects that to leave a substantial uncertainty. i think the secretary of state is right. the president needs to be careful in assigning any responsibility for this attack. i do think based on our initial findings that in addition to sending a boost of confidence and a sense that we're on top of this, our allies will need that as well. the president will need to have that in mind in any statement that he makes. the attack was well planned and financed. the helicopter pilots appear to

have a proper protocol and access codes for entering. assistance from the facility cannot be ruled out at this stage. how the year -- how their recruits vet their people. they have made progress in stamping out al qaeda. vernment in yemen has allowed hawkeye that in the arabian peninsula to once again forced their in 2011. u.s.-led anti-terrorist efforts have stalled because of the lack of the strong partner inasanaa. some elements of the military have been in open defiance of the government.

western intelligence agencies have detected increased chatter among extremists in to those 11. the focus of intercepts has believed to be attacks in u.s. and europe. we have also been monitoring would sides -- web sites, and last month we had a posting from the leader of al qaeda in the arabian peninsula, specifically threatening to target will and economic infrastructure in saudi arabia, specifically. it is not clear where the helicopters were sourced from, but access to such equipment opens the possibility of state support in the region. having discussed al qaeda as a possible perpetrator of the attack, i do not -- we do not

have anything strong on this yet, but the issue of iran can never be: -- ruled out. the attention in the region surrounding the uprising in bahrain and the crackdown has raised the temperature between the iranians and the saudis, shiite-sunni tensions, and while thes hiites are a majority, only 10%, they're almost all concentrated in the saudi arabian eastern provinces, where all the oil is for sure is located, and we do not have to go too far back in history, the saudis were implicated in an attack on americans at cobar x in saudi arabia.

we are continuing to work very hard. we will come back to you when we have anything more credible. >> secretary of defense, do we have an assessment of where the vulnerable points are in terms of the oil supply, whether it is saudi or elsewhere, and do we have -- and the chairman make comment on this -- the existing contingency plan of assistance we can provide to the saudis and other key countries as a hedge against this is the first of a wave of attacks, or someone decides to take advantage of this opportunity to hit the wall for in for chartres again? >> -- to hit the oil infrastructure again? >> this is only a onetime attack and we are taking measures in connection with the rest of the world to toughen up the

defenses. if you look at that top-10 question -- countries from which the oil comes from, russia, united states, saudi arabia, canada, mexico, iraq, and kuwait. although we did not have a formal international system that says everybody goes oil defcon ii, we should be in touch with all those countries to ensure that all of us are taking individual measures we need to protect our critical if archer, and each country knows what it's critical infrastructure is. then if the united states is filling it with those countries who may be more limited in their ability to help themselves, and in that territory, i would say saudi arabia, where we have the potential arrangements with and uae, iraq, and kuwait, who

together could use some assistance. the other aspect, once the oil gets in a tanker, a has to get to the country that consumes it, and that is the area in which the united states has the greater capacity. their other countries who can help us to ensure passage through straits, said there cannot be a successful attack at those points. my advice would be that the president tell us, and we have already started some of the actions, to ensure that the world oil supply is safer today than it was the day before yesterday, when this attack took place, and that will require a lot of work through embassies come out with military relationships, and then i would turn to the chairman the overall this position of our kurdish forces and how we might have to

move them to fill some of the gaps, and especially to make sure that the oil tankers are safe for a while here until we sort this thing out. >> i agree with the secretary. from a this positional standpoint, there are battle groups in the regionone right outside the straits of hormuz. we have requested the secretary to put another battle group that could move into that region. we have forces there present, and we are in contact with them. we have been advised to prepare a disposition where we can go to the gcc states for a request of activity in there. we have contacted the omanis to

ask for use of the bases there and contacted others that asked for permission for diego are syria -- garcia. i will go back to the secretary's point and say thetwo is our concern, and that is, is their right to be a fall of on this activity? i would like to interject that from a military perspective, it has economic issues. alternately, if we did get into some escalated situation, we would meet that fuel for assurance. i think a statement that the sp ro is ready. force weis we are in good shape.

>> there seems to be an emerging consensus that while the president ought to talk about the spro, our only strategic petroleum reserve, but what is available internationally, and indicate that it is available for an interruption of supply. at this point, so there is a bit of a backstop in the market of our ability to help assure supply, but your recommendation at this point would not to be invoked a spro release at this time. is that the consensus? >> one of the problems with repeated use is the more you use it the less value it has in terms of the price impact. frankly, using it the libyan situation, where it was crisis oriented rather than emergency oriented, already devalued it, and using at it again, unless a

true emergency would further devalue it when we needed it. i lived through the second oil shock when i was president carter's chief executive adviser, and one of the things i want to make sure the president does not do this time which we mistakenly did before was to policies which will aggravate the problem. for example, trying to artificially reimpose gasoline price controls or have odd-even days to try to restrict driving. those will only aggravate the problem, create more panic in the market, so let's learn lessons and not make the situation worse. >> i have been watching fox news. the stock market is down 700 points already this morning. west texas features are up 15%

already, and as we were watching markets earlier in the summer, these are going to translate into the pot over night. we are looking at $6 a gallon gasoline when people go to their pop tomorrow. the president is going to get killed over this. i am understand that libya did not work when we released from the spro, there are other issues the get to the reassurance of the public that i worry about the most said the president is in the strongest position to address this. if he does not take any action, we're looking at economic conditions today, we are right to cut the legs out from under the president tomorrow in terms of him being able to reassure the people. there is one other elephant i need to raise. it is outside my lane, but i did hear the report didamaan isn't the issue whether iran was

involved in the attack. we have to be careful here because if there is any evidence iran was involved, now deals with an act of war. another reason the president should not take questions because he will be asked by the press to rule out iran, and we did not want to raise that to this presidential level yet. i am worried about that issue with iran, but i think it has to be an action on the spro. >> if we cannot do spro, did not want to do spro, there is tension between shown there is action on top of this, and we did not know whether this the first of the series. we need to leave a little bit because we may need to go back to get a second time. is there something else we can do in the short run? the third question, the things we can put in place now to

relieve this vulnerability over the longer term? point.ri's what can we do t? >> ari's point is it cannot buy something with nothing. even we did not have all the information, the president is going to have to lay a set of activities. it seems to me he can explain why not going into the strategic reserve now makes sense without taking it off the table. you do not want to take it off the table. a needs to be out there as an option. there are other things like that that he could allude to in addition to laying out what he is going to do to secure to the extent possible the market so you do not get further destruction. if this is a problem we believe by march we will have gone

through, people, when gas at the pump goes up to $5.50, that is going to have a significant impact. if people know that here is what is happening between now and then so as to bring it down again without imposing artificial -- did not want to impose anything artificial -- there's nothing you could do in the near impact. market prices will have an impact, so that will have an impact. the question is, can he talk about the near-term and use this the start leveraging mid term and longer term so we did not end up in this race again? i think it is worth started to talk about, what are the things we can and should be doing? i do not know about refining

capacity and having a discussion with oil companies -- there is some things like that that he could talk about, but longer term, we need to be talking about things like suspending regulations related to canadian oil stands, the pipeline from canada -- why should canada be talking about shipping it to a show when they could be shipping it here? regulations having to do with nuclear, having to do with permitting natural gas, having to do with offshore drilling -- the president can talk about these things and hear our options, and he will speak to the country again in a week when we have had a chance to look at what kind of impact we can have. in the long term, reassured of the market and show we are thinking about it, we have a lot of options on the table, but near term, not a whole lot you

can do. >> the news says the global spare capacity says with this incident be down to 2 million barrels a day. is that a real figure? is there something we should be doing to go to opec members, but not opec members? remember the majority of production comes from non opec members, to see if we can generate more spare capacity, because that is a good signal to the market if we

self-made because of people's fears. we looked at it in the short- term and the medium-term and i long term basis. the most powerful message we have is that the united states of america has more oil than any other country in the world that we know of. more than saudi arabia. we've been holding ourselves back from producing that oil. this is a key stimulation to convince members of congress that it is time to get off the dime and put the message of let's produced more domestic product to meet the needs and to create american jobs, and all the powerful signals. this does not happen overnight. we used to promote -- we to produce 10 million barrels in this country. -- we used to produce 10 million

barrels in this country. i think we have to equip its him with a 10-year time horizon. what about the immediate future? i think it is time to engage the oil companies to get them involved and to get the messages out there about how they see the future prospects, starting with the message that there is no shortage. we have to keep coming back to that. that is the strongest near term message that we have. we move on from that. we do not know how much damage has been done. there is such a brain trust in the region and such a set of skills that knowing how the redundancy of these facilities in the original design are set up, once we do a damage assessment, we can perhaps put some of powerful messages about

how long it will take back -- help it will take to get back to normal production. unless there is something new we did not learn this morning, this should not be a long-term shutdown of this facility because of the redundancy built into the refiners from the get go. ombine those, no shortage, we have over the long term more oil than we will ever need, it is a matter of releasing our domestic capacity to go make it possible, i fear avoid the temptation of topping off your tanks, i think we can send messages of assurance that put people in a much better place than they are today. >> with all due respect, there is not a shortage to the extent that supply and demand will always balance out at some

price, but longer term, there is a shortage to the extent that prices are going to get going up. this is a quick look at what we're in for in the next 10 years and no increase in u.s. production of oil in the next five years is going to stop that. china is growing at 9.5% a year, and developing crow countries will grow at 7% and change. even developed countries at 1% or 2%. seems to me that at minimum, yes, in the near term, maybe we can staunch this. president ought to be making a point that yes we are doing with this in the near term, talking to the companies, but we are going to not let ourselves be in

this position five years, 10 years from now, as an inevitable and church rector of price increases. -- as an inevitable series of price increases. >> longer term we need alternatives to oil. we need to diversify our energy supply. >> we need to mention this cable from our ambassador who just met with the saudi oil minister and the president and ceo of saudi aramco, it is not too different from what we have heard before, but they now have a specific estimate it will take about 10 days to replace the damaged equipment and the plant

will be reopened within 10 days. and then, they figure until they fully repair facility, processing capacity will be about 5 million barrels a day as opposed to the normal capacity of 7 million barrels a day. finally, interesting point here, they say they are not asking for any further assistance at this time and that they see this as a strictly internal matter, which says to me to the extent that we offer any kind of assistance, we got to be careful to do it discreetly. >> i agree with everything that has been said about short and medium term, including suspending regulations for domestic drilling. we are not addressing the international aspect. oil is a global commodity, and we have to coordinate what we do with our key partners.

on the production side, to send a positive signal to the market, we should be closely coordinating with key energy producers, canada, russia, brazil, have them send signals they are prepared to use all their capacity, they are prepared to accelerate their near-term production, to coordinate the energy side but also the economic side so we have a coordinated message on keeping growth-oriented policies on the fiscal side, and solve this problem ourselves. in fact only about 10% of saudi oil actually comes to the united states. the vast majority goes to asia. we need to look the president needs to get on the phone with some of the key leaders to make sure we have a

message to the oil markets from key producers who may be willing to say they will try to wrap up whatever capacity they may have. >> that will be a job for you, secretary. i agree that we need to get on the phone. we also need to get time on the plate. but the american people figure out that it is a global market, that is not going to work politically. he will have a real problem with that trip we have to find a way to get full -- we have to find a way to get china into play. i want to do this now. i am a little worried about starting to move the forces. if there is something really to be done in terms of enhancing security and saudi arabia, we will probably have to do it discreetly. we have to show we are on top of the problem but not produce panic which will make it worse.

let me turn to the two of you. what will you do, and what would you recommend to the president? should he talking about it at all? and is there anything we want him to announce either to show we are being prepared to head off another attack were basically to show solidarity in the region and allies in the region that we are with them in this crisis point. what would you recommend to them? >> i think the actual actions should be as we discussed -- with countries we now have the facilities so we know what they are doing here we have offered any assistance that we can. i think we need to have enough forces available both of aden, that we can react quickly and there.

as the chairman said, we have a considerable amount in the area. without making it a major deal, i think one thing that will not help the president with the press conference but i think it is very important -- an attack with helicopters and paramilitary tactics was not done by a couple of guys in a jeep or on the internet. there had to be a place for this team was gathered or practice where it took off from. we should put a little group together with representatives from state and the defense department and the intelligence agency to examine the two possibilities.

even if this thing was planned and conducted out of yemen, or it was done out of i ran. i think we ought to put two groups together to look at what our security responses it should be in those two different cases. i am sure we will find out who these people are, where they came from. we need to be ready with a range of options not only military, but also diplomatic. certainly, economic to deal with stopping activity from continuing. that is in the staging area that was in the country that clout or updated it to happen. in the meantime, i will let the chairman check the details. i think it ought to be prudent movements that are not a rush to call in troops from liberty

and put them on planes or get ships on the way that our three months early from their deployment dates. they are proven from where we know it reassurances are required accurate >> let me ask deputy national security adviser to stand up. really start a 24/7 operation. so that we can try to get a head of this. i think we are running out of time. i will try to summarize briefly what i think is the message of this group. anything else people want to put on the table before i do so? anything else he needs to hear? >> i do think we need a balanced international and domestic prices. i do nothing which it announced removing troops. i think some international reassurance that in a subtle way -- probably the secretary can do this.

we are aware of the vulnerability is that this has caused. i do not know how we do this critic should be obvious. we need both the domestic musses that was articulated and a good strong international alert to this issue. >> right. i have something in from my station chief in the emergency cable. there was renewed turbulence in iran after the attack this morning. a group of men were arrested. all members are iran muslim majority. protestors have returned to the streets in very large numbers. attacks on suny shopkeepers. iran reporting that one officer

was killed and several wounded. this is a developing situation. let me stress again, our continuing concern is about the situation in saudi arabia and in the eastern province. there is a possibility of instability. our state department has been on the ground. they have security under control. that is almost a sign they don't. i do think we need to be worried and keep a watchful eye. i think the heart of the president's messages and what you just read. i think the heart of the president -- >> this is the processing capacity at that refinery. >> so until it has been fully prepared, it will be 5 million barrels per day compared to the normal capacity of 7 million barrels.

>> my point here is that the most calming message the president can get is an attack took place, and damage was done, but it did not affect the majority of saudi production. give the facts and give the numbers. what we have is if you're in the marketplace. if the president can speak, pass the information, call markets. yet to me is the most reassuring thing a president can say. >> if this is to believe that they can replace the damaged equipment and the pass will be opened in 12 days. >> i have already sent a message that we bought an extra half hour news conference, we will have an opportunity to get this to the president. let me just summarize what i think where we are. in terms of town, we want a realistic assessment of where we

are in the nature of this crisis. he has to be candid in in terms of fact. i think john is to started the core of this message. it is at this point something that has a discrete limit to it, something 10 days or so. things are being done to restore capacity. hopefully, that is a calming message that will cut the possibility for panning. and then he has to talk about some concerns. we do not know who is responsible. we should avoid putting a blight on al qaeda but recognize it as possibly them. this might be a first of a series. therefore, the message of reassurance in terms of the security standpoint that we

stand with countries in the region. we are taking steps within to enhance their ability and to protect other infrastructure. we stand ready to offer that help. i think the things we have talked about operational lead and making sure we have adequate forces, he does not talk about it. but he sends a strong message of reassurance internationally before our allies. i think he must also talk about a warning for others but to try to explore this information. but there it is al qaeda or the explorers or other actors of the market like chavez. this is not a time to try to gang up on the international economic system in think a little warning might be helpful. i think we decided that we do not suggest he make a release at

this point. he should talk about the availability of our reserve and international reserves and correct it -- private sector reserves. we will be coordinating with them so that if there is a supply shortage, we can move and promptly. that should also help to reassure the markets i think internationally, we need them to be reaching out to companies with the same messages. we need to build in the message that the secretary of the treasury said. we need to keep an eye on global growth. this is not a time to respond by raising interest rates. we need a coordinated pro-growth policies, artillery if this is the first of a series. finally, i think as we talked about short, medium, and long, this powerful message the secretary talked about in the medium term, this is what we

will do in the short run. in the medium term, we have to get oil out of the ground. a lot of this or that we control. we have to make the message of a comprehensive energy policy so to can get off of the course of dependence on oral. that is where we are. we will get the messages to him. it is your call, but i think this is particularly important enough that we ought to keep getting ready for an actual speech on this subject. i think the press conference will not be enough to establish the president's leadership. >> sound okay? >> one thing i would say, and i say it has to be done in a measured way, it does offer a way to fold this thing in to remind the american people about the war we happened in. we just passed the 11 anniversary of september 11 without heightening the alarm to

munster to fold into the larger context of the challenge we face going forward that continues to exist. the death of an london -- the death of osama bin laden did not remember what happened to president -- it is too early. let us collect facts. >> we should also encourage whether it is api or some of the majors to send a message of insurance out there. >> we will look to you to take the lead on that. i will go to the president and passes for the press conference. he needs to hear directly from you on what your views are. we will get the deputy committees to get it.

they will develop this on a real-time basis. thank you very much. they are jointly cutting their production of oil by 15%, totaling 800,000 barrels per day. the meeting had been expected to result in several opec members bringing additional capacity on

line to cover the temporary loss of production capacity in saudi arabia following last month's attack on and oil processing facility. today's unexpected move will most certainly cause further disruption in world economy already reeling from sharply rising fuel prices. oil prices which started today at over $170 a barrel are expected to rise dramatically, with many experts predicting prices over $200 a barrel in a matter of hours as this news hit oil markets. standing by is our correspondent. what can you tell us about this? >> this action by iran and venezuela was announced a press conference following another rancorous meeting here at opec world headquarters. you'll recall the june 8th meeting was expected to yield an increase in production but produced no increase in quotas.

venezuela refuse to pump additional oil. the meeting broke up after a heated exchange between the saudi arabian oil minister and representatives from iran and venezuela. >> can you tell us what the issues are here? i assume this has something to do with events in cochrane and elsewhere in the gulf. >> it is more complicated than that. all opec companies -- all opec countries have been asked to recognizes and everyone pause long term interest to produce the maximum possible rate while the plant is operating at reduced capacity. the representative from iran said its time for the world's of oil-producing company -- countries to recognize their responsibility to protect the millions of people suffering of the hands of western oppression. libya, algeria, and venezuela agreed and the iranian representatives lashed out against the united states, accusing the government of

aggressive action toward naval vessels in the persian gulf at manipulating markets through the release of strategic oil stocks the summer. >> so they're using their oil supplies as a weapon. >> that is what some analysts are saying. iran has been deeply critical of saudi arabia's military support of cochrane. -- support of bob raid. the violent compensation's between the government had protesters has moved to a level of intensity with forces taking fire from demonstrators. to make the situation worse, a u.s. navy destroyer was involved in an extremely tense incident in the persian gulf with ships suspected of smuggling into bahrain. >> but does that mean? >> that they have the ability to

hold oil consuming customers hostage until they get what they want. they said it would not restore normal production until all foreign security forces until exited bahrain. unless they want to return to recession and economic turmoil combination encouraged saudi arabia to let the people in bahrain express their opinion. any further violence and must be avoided and all foreign governments must leave immediately. >> can you stand by for a moment? i want to turn to our correspondent reporting from the new york stock exchange. they say they want to hold the economy hostage until we do what they want. what kind of effect can this have on major oil consuming economies? >> the conference and about 10 minutes ago and the price has

gone up to $197 a barrel. no one here knows how high it will go, but people here are more than worried. if the market continues, concludes that the u.s. economy, which everyone agrees is already on the verge of falling into deep recession is in fact going into a deep recession, no one really knows how bad the situation can get. >> so this economic weapon is very powerful and they can inflict real pain on the economy and a lobbying carnation? >> exactly. but keep in mind what we see here is the confluence of different forces. without the attack, iran and venezuela would not have this much power. given the lack of spare capacity in the market and the already precarious nature of the recovery, major oil consuming co. -- consuming countries like the united states are facing a

devastating outlook. from the perspective of iran and venezuela, this is sure to be a moneymaker. >> how the mean? >> the prices are sure to eclipsed the value of any production these countries take offline. they will make more money while selling less. >> it certainly looks like we are in for a difficult situation in the coming weeks and months. stay with us for more coverage of this developing story. get >> thank you for meeting on short notice. i think the president's press conference was fairly successful in getting through the first hurdle of this. as we spoke in our last meeting, the former ability of the world

economy coupled with the tight world supplies and lack of spare capacity is a problem. it plays into the hands of oil suppliers like venezue and iran who use that leverage over the world economy to pursue other objectives. that looks like what we have got today. john, you can let us know whether this is iranian conspired or not. iran is now through their announcement of the cutbacks of production. the price of peace is to back out of their rain and let iran take it over. the saudi reaction -- the saudi reaction to that. we are creeping power depds

on petroleum and the countries that do it are either unstable or hostile to our interests. that is the process we are seeing played out. the president has to give an address and the talk a little about that. his guidance to me is that he needs to clarify the significance of the event, he wants to add some policy things from us. he wants to show his way to the american people on how we will get to this challenge. let me start again by turning to the debt piddle -- deputy national surity adviser. dave, where are we at this point? >> just to reemphasize, prior to the announcement, gears were really grinding. we had essentially no spare capacity.

it will cause actual shortages. now we have supply and demand imbalance is movinthrough the rest of this winter into spring. cold weather is forecast in north america. we have the keating pressure. this is a serious problem which will essentially lead to significant demand destruction going forward. at this stage, the idea of government stopped and a drawdown is important. s why t show prices will peak at $200 per barrel. it will not come down below $150 til april. i should point out in previous

discussion last month, we talked about china. this does not include chinese stocks. estimates are that the chinese have 100 million barrels in their stocks. this only represents drawdowns from i e a, member countries. any see has done some analysis that shows the 2012 economic outlook is grim and. we will be slipping into a sharp recession. baseline assumption of 3.5% growth in 2012 now down to 1.7%. the basic assumption of 8% unemployment up to nearly 10%. an inflation rate in 2012 as opposed to the 4.5.

the economy recovers somewhat in 2013, pary due to the fact that world prices dropped. primarily command -- sere relocation. pretty bleak picture. that is all i have. >> the president asked us to look at 3 inches. wants to know about the impact of the crisis, what do we say about what men as well and i run are doing. specifically, what a we doing about the rain? given to the blackmail, or let them critter the economy. second, economic impacts. what will it do to our economy? what can he say to the american people that he is doing about it? what can we do about it?

finally, looking a little bit forward, and what did he say to the american people that we are doing to get our country out of this situation and get leverage back in our hands rather than being in everybody else. let us talk about foreign policy impacts. t me talk about you and ask or the saudis are on this and what is your thinking about what we should do andhat the president should say about -- >> i have -- as far as saudi arabia is concerned, too thought occurred to me. first, we have to continue to bear in mind that they are the largest supplier to the international markets. we do not want to do anything that would alienate them. i think what ever we do in terms

of our dialogue with them on the subject, i think it should not be public. it has to be quiet. we have to see if there is some way out of this under the impasse with respect to the situation. i would above all placed a goal of avoiding some kind of a public breach with saudi arabia. for policy and political reasons and because of their critical position as the major supplier of oil to the international market. notwithstanding the withdrawal of this saudi production by the venezuelans. we have an analysis in our embassy caught all of the iranian situation well. it shows that he faces a very bad domestic situation at home. he met will be trying to fabricate this crisis to enhances on political standing

in a country with a culture. is this something that can perhaps be through some strategy waited out in some kind of a way? >> what is the intelligence tell us about whether this crisis and iran is manufactured by the i iranians. he is there any way we can use that evidence to you hear what the iranians on the defensive? >> there is no question when at at least in the latest reiteration, the shiite unrest was that really triggered. is that a coincidence? i do not know. it began happening on the same day. here it is not to say that there is not legitimate nicolas --koz

there is no doubt that the iran hands specifically to -- there special forces operation that they are actively fuelling some of the unrest. we had them dead to rights on the smuggling of weapons to the militants. it is important enough that this does comin a context in which iran is engaged in a much broader his campaign against united states interests and assets in the region. pat is on weapons smuggling and particular. for several years we had them dead to rights on weapons into iraq, specifically these weapons as well as the

projectiles that are killing american forces. that has only been as we withdraw the drawdown of u.s. forces. by the end of 2011, we also earlier this year -- british forces intercepted a ship of rockets moving from iran into afghanistan. they are actively working with clear syrian counterparts to crush unrest in syria and preserve the hacking. iran continues to deliver weapons and missiles capable of hitting israel to hezbollah in lebanon. we have the irgc now operating on all cylinders, this economic component is their declaration of war against the united states. and that is jt the latest

sign we have that the iranians are pursuing comprehensive strategy to weaken the united states and the middle east and damage our economy. they for a long time with u.s. sancons that have been significantly amplified since 2010. have said that they do have capabilities of striking back against the united states in the west and imposing economic pain on us. and i think our judgment is that's what we're seeing come to pass as part of the very strategy in which iran sees itself as engaged in very much of a -- almost an existential struggle with enited states. >> i want to ask this question and throw it open, what's our leverage on iran? right now leverage in iran that will make them reconsider t strategy they're playing in about a raun -- in bahrain to make them rethink their effort to put a gun at the head of the

international community? so i want to talk about leverage on iran, what do we have? let me start- i want to start actually, john, with you on the diplomatic side, but then i want to go on the economic side, and then i want to get, mr. secretary, at the end what we have in terms of the military. let's run through, if we can, what leverage do we have on iran to make them reconsider their policy? and i put on the table both leverage from the outside but al what we might be able to do to encourage dissent within iran to preoccupy this regime. so secretary of state, let me start withou. >> first of all o on the side of positive leverage, we have precious little because we've been in an embargo situation with iran economically for decades now, so there's not much on that side of the leverage, at least of our own.

there certainly are economic relationships between allies of ours and iran that we might be able to influence in some way and there are even economic lations with competitors of ours, if you will, such as china, which we might in some way be able to lerage. i think the area where we have exerted leverage and could perhaps consider ratcheting it up in some way is in the area of sanctions against their economy which we know both financial and commercial, which we know have started to have some affect and maybe there are ways we could look at to increase those. and then of course we have the implicit threat of some kind of more coercive efforts, the potential use of force in certain types of situations which we've always been very careful about indicating, but we've also been careful not to remove it entirely.

off the table. so that's something that's also there. >> let's see if we can add to that list. secretary of the treasury, and then the economic advor schwab, lease. >> the secretary department through my steward levy, has been very effective in supplementing the fourth round of u.n. sanction which is were aimed at the nuclear program of iran with u.s. and european sanctions and that is in fact been aimed in part at iranian imports of gasoline. they import about 40% of the gasoline needs. and what i think we can do here on the economic side is ramp up both u.s. and european sanctions on that imported oil. for example, aof may of 2011, iranian imports of gasoline had been cut almos 50%. we can now go to the chinese who have been frankly

back-filling some of that and say, look, this iranian cut and venezuelan cut hurts you as much indeed perhaps more than it hurts us, because you're increasingly relying on iran for your oil and gas. therefore, youhould join us with a very stern message to them and a willingness to support a ban on all imported oil and refined product. even with all their huge reserves, their refinery capacities are limited. they do have to import, as i've indicated, a substantial amount of gasoline, so this would be a logical next step. frankly, in the short term, this could spike the crisis even more but we have to take that risk if in fact we're certain that iran is behind this attack. but in addition to send them a signal that they can't simply take hundreds of thousands of barrels off the market. this is for me reliving a bad

reality show because in the late 1970's when i was working in the carter white house, we had a five million barrel per day reduction in the production of iranian oil from the world market. it caused 120% increase in 12 months between february of 1979 and's february -- in oil prices. we've got to be able to send the market a signal we're not going to allow this aga. again, i think china is key. china has a lot of leverage here and they'll be hurt as much as we. >> let me turn to sue for a minute and then i want to hear from the secretary of defense. >> i agree absolutely with the secretary of state, secretary of treasury in terms of using leverage but we should also talk about venezuela and having colombia, argentina, peru, chile, and in particular brazil putting pressure on venezuela at this point. i think we can use the g-20 to,

at minimum, do no harm. if you look at the makeup of the g-20, we have a number of major producers including the u.s. and including saudi arabia, including canada, mexico, russia, and having countries pledge not to launch policies in terms of export bands, saying we're going to step up in terms of production that we are going to allow market forces to, at minimum, market forces to reduce consumption, the do no hm plus using the leverage we have. >> let me pick up something from the secretary of state, don't we want to internationalize this problem? this is not a standoff between iran and the united states. venezuela is the united states. this is two oil suppliers threatening the entire world economy and the bad guy in this

is clearly the ringleader is iran. and is there a role, john, of taking this to the g0, something you mentioned last time, as a way of both consuming countries can all get together? it's a way of putting pressure on china which we talked about needs to be done, going to the security council, having a gsks-20 meeting. let's try to internationalize this thing. this is a threat to the whole global economy and iran is the villain and we ought to be focusing pressure on iran and those that are thrown into it. isn't that the thematic we should be doing on this? >> yes. no sanction can be effective if it's only the u.s. >> right. >> and as i mentioned in our first meeting, having first the g-7 finance minister so we get the major industrial democracies to make sure, steve, that we take coordinated stimulus action and second, broadening very it quickly to

the g-20, both to the economic impact but also with respect to iran so that we have a forum, as sue mentioned, where we can deal with the venezuela problem, because venezuela, even if we get china to help on the imported gasoline, venezuela could also back-fill the needs and we have to make sure they don't. we have to internationalize it. >> mr. secretary, let me quickly hear from the secretary of defense, the last piece of this. is there some military leverage we have? can we put pressure on iran kind of the old-fashioned way? what kind of options do we have? >> the military hammer we've had hanging over iran for several years has to do with their nuclear program, and we have never taken off the table the option of taking military action to prevent iran from attaining a nuclear weapons capable -- capability now.

last time i looked at the evidence from the intelligence community, the situation was stl ambiguous. iran had all the components of a nuclear weapons capability, but it still kept the situation ambiguous, whether it had it or not. but i certainly think that the elements are there to reroute -- or to flash that stiletto, should we choose to. but as far as militar actions more related to the crisis at hand, i think there are two things we should consider, we're in the midst of a drawdown of our forces, both from iraq, which lies to the west of iran and from afghanistan which lies to the east. i would recommend that we have the chairman take a look at those deployments and determine if we want to continue with the previous plan which was premised on a quite different

iran from the iran we seem to be facing today. so i certainly think that the adjustments, our redeployments out of those two countries we share a border with iran are something we should look at and those could be used for pressure. >> let me ask this, let's ask you and the chairman to look at that, slow down drawdowns, whether there's some additional deployments we want to make in terms of signaling to iran this may not be a free run, and let me ask the d.c.i. to look with c.i.a. and d.o.d. about whether there's some covert options, things we shld look at to cause some disruptions that will raise some questions in the iranians' minds. let's take a look at that. let's move, if you will, to the broader challenge. we talked a little bit about what we want to try to do diplomatically to try to rally the world to save the global economy but that's what's at

risk here. what else should the president say to help us get through this economic crisis and ease the impact of the american people. mr. secretar >> i think there are some, again, powerful messages for the president. in some respects, iran and venezuela announcing that they're cutting back production is actually a fait accompli of whathe sanctions have done to iran. iran is cutting back production because they don't have the capability of maintaining production. i think we should equip the president with the message that sanctions are working. we've known for a long time that iran's ability to keep their production going depends upon international help, international equipment, supplies, particularly higher technology capability. and they don't have it. they're running out. so they are in decline.

we've known hugo chavez and pen avesa has been in decline for some time. the incompetence that now overwhelms penavesa and is amazing they've sustained production as much as they have thanks to the large ventures we ha in venezuela. it shouldn't to a large supply. these folks have been mismanaging their oil fields for a long time in venezuela and show the incompetence of venezuela is the problem here and pull a rug out from mr. chavez with respect to ahmadinejad with respect to the fact the sanctions are working and pull the rug out from him as well, put a point to we're taking big actions and tape and bailing wire is not holding it together. >> could this be the end of opec? >> i think they've done serious damage to themselves within opec where the more rational producers, like saudi arabia, like nigeria and some others

who really see oil as value -creating for their nation rather than a political weapon, yeah. i think this could -- whether it's the end or whether it's a serious dent in their ability, they could always change government in venezuela or iran and come back in and be part of the mainstream. but i also think going back to our earlier discussion, we equip the president with some powerful domestic messages and i think we keep reiterating those powerful domestic -- for example, as everyone knows, i've taken issue with the secretary of interior's decision with respect to the gulf of mexico. it's time to put the gulf of mexico back to work. i mean, we're not doing what we could be doing to help ourselves in regards to the gulf of mexico. in addition, an overall program was just announced yesterday to bring the various departments together to try to ease the regulatory burden on individual companies and how they're operating by coordinating federal efforts. let's accelerate that.

let's look for enablers in terms of domestic production because every enabler is the creation of american jobs. and in terms of the economic impact, if we could portray a massive job creation scheme through domestic production of our own resources, that's a very positive message. i think, ao, we have to come to grips with, and is this the right time, to sit with some of the major n.g.o.'s who take issue with the hydrocarbon production that we have in this country and see if there isn't some w to help the n.g.o.'s understand that their resistance to the reality that we are in an oil age, it's not in the past, help us hel ourselves, and if we want an alternative future, we can move to an alternative future faster by not going into economic recession by prohibiting the production of hydrocarbons.

i want to get to this messaging issue but i understand there's some breaking news just coming in. let's turn to the screen. they're going to put it up here in the situation room. ♪ >> welcome back to gnn where we are covering breaking u.s. financial news at this hour, at least one of the three credit ratings agencies is expressing concern about the sustainability of the u.s. debt position today amid what is perhaps the most severe oil shock in modern history, fierce of a deep recession and sharp worsening of the u.s. deb to g.d.p. ratio are undermining confidence in america's ability to meet its obligations. this month's spike in oil prices has sent u.s. equity indices tumbling by more than 10% over the past year and led to expectations regarding u.s.

economic growth in the fourth quarter of 2011 and the first quarter of 2012. a recent gnn poll earlier this week found broad sentiment among economists the u.s. is headed for another recessionary period. the united states triple-a credit rating was the focus of attention earlier this year while legislators debated raising the u.s. debt ceiling. rating agencies put a negative outlook on the u.s. long-term debt and some pronent instors made widely noted moves to reduce their exposures to u.s. treasuries. we go now to our financial correspondent adam dell who joins us from new york. adam, what can you tell us? >> i can report now that two of the three credit rating agencies hav issued public statements today warning tt the current trajectory of the u.s. economy is cause for concern from their per secretive. >> what -- perspective. >> what promised this -- what prompted this move from the rating agencies?

>> it's a look at the u.s. economy as we're headed towards what looks like a deep recession before we've gotten back to r feet from the last recession. it's also about risk posed. and consumer spending is expected to fall sharply and next as gasoline prices eat into household budgets. u. businesses will suffer as well, shipping and logistics companies, airlines, and some of the automakers, just some of the industries that respond to a spike like this. >> as the industries suffer and the economy ticks back towards recession, unemployment will rise and federal tax receipts will decline. at the same time credit rating agencies fear spending son safety nets like unemployment insurance and food will rise again. based on this the agencies cited a worsening debt to g.d.p. issue as their core concern. >> the natural question is, does this mean the u.s. is headed towards aowngrade? the united states has been rated triple-a for as long as there have been ratings, hasn't it? >> i think we can now expect the rating agencies to engage

with the federal government and ask for some sort of serious plan for moving forward. the previous financial meltdown and recession, the u.s. essentially doubled and not all was directly related to the recession but agencies will like lie want assances to enter another period of exploding federal debt. the key question facing the united states will be given the known budgetary obligations, can the united states achieve the great rates required to pay down the debt, particularly if it means so vulnerable the debilitating energy shock we have. and the other industrialized nations have more intensive economies than the united states. france ranks below triple-a and requires a 1/3 less energy to the u.s. single unit of g.d.p. >> before before you go, give us the consequences of a downgrade, however likely or unlikely that may be? >> if the u.s. were downgraded it could create a vicious cycle. many investors in u.s.

treasuries like pension funds, money market funds, endowments and insurance companies are required to hold a certain percentage of their assets in triple-a rated securities. a downgrade would thus automatically trig area sell-off. no is sure how much debt will be affected by that but analysts on wall street are working overtime to try and find out. >> tnks for that reporting. so to summarize where things stand at the moment, oil is now trading above $190 per barrel, rating agencies voicing concern over u.s. debt on a sharply reduced outlook for economic growth and tre seems to be little the policymakers can do to unwind the problem in the short term. the president will address t nation from the oval offi tonight. u'll see it here live on gnn. ♪ >> well, we've gone from a bad dream to a nightmare.

we've got a debt and long-term spending problem that's confronting the country that we can get out of only if we can get the economy growing and revenues up. and yet our economy getting -- getting our economy going and revenues up depends on an oil market that is now being taken hostage by iran and venezuela. so we've got to give some guidance. i think the bar went up. what the president needs to do tonight, i'd like us to address three things. one, we need a plan to absorb the short-term impact on this. secondly, we'll need a plan to address the downgrade issues and finally, we need a plan on energy. to avoid the repetition. seems to me that's what the president needs to talk about. and it seems to me the president's job got a lot harder. what is your initial reaion? what are your thoughts to how

he should try to frame this? >> well, with all respect to the conversation we were just having, we're going pas the presidt's grave yard. this is unsustainable. the president is about to lose his re-election. we're heading into an election year. look at the trend, since november and the attack on saudi arabia, oil has been above $140 a gallon, $185 now. it costs people $100 to fill up their mid size vehicles, more than $100 to fill up their s.u.v.'s and we're heading into a recession and even with that reception, the perception of it is bad enough. this is how bad michelle balkman is beating the president in all the polls. newt gingrich, newt gingrich -- >> is that a surprise? >> newt gingrich is even with the president in all the polls. e.j. dione wrote a column that says not only does the president sound like jimmy carter, he's increasingl looking like jimmy carter. none of what we're talking

about is going to solve the real-life problem the president has. we need to think much bigr, change the subject and present something brand-new to america so the president is seen as leading our way out of this to big things, not traditional leverages that we may have. i think the solution is to go back to what happened for america in 1940, 1941 before we entered thworld war when we were seen as the armament of democracy and we started to get the world ready to solve a problem. we need to do that now with energy and become the armament of energy. and i think therare only two ways for the president to go. they are polar opposites and we need to make the remmendation to the president for which one of these huge courses of action to take. and we need to announce we're going to open up america and take tracts of land that were previously totally closed, anwr, offshore oil, domestic oil and open them up to make america the armament of energy.

we're going 100% opposite direction and make america green once and for all and go in the direction of wind to solaand the other things that are now increasingly economicly possible because of high oil prices. anything else is just lost in the margins of history and we need to put the president on track for something so big the country gets excited behind the new mission he's established. i meant that about the reference to 1940 and 1941. this is a chance to do something big in advance of something globally catastrophic where america leads the world out of it. and i think those are thenly two courses to take. >> you put them as alternatives. let me ask the secretary of energy, are they alternatives or can they be complementry? >> they're both ends. we have a short and medium term which only can be met with more hydrocarbons. with all the cars we have, nobody is rushing out to buy batteries tomorrow because cars aren't available. so we have to make room for the next 10 or 15 years, healthy supplies of domestic

hydrocarbon energy and the whole pathway for the green economy. those can happen simultaneously. we've only been twittering with the green economy because the efforts have been so small. we can paint a much bigger picture of what that looks like but we shouldn't do it at the expense, not a decade and a half or even two decades of the hydrocarbon reality we face. you can't fly airplanes on wind power. it doesn't happen. you can't move trucks across the highway with all the goods that you carry with biofuels. it's just not there yet. so we have to rely on the historic. there's a lot of what i said a few minutes ago about creating this whole jobs agenda and enables thousand go after domestic production and can list out year by year by year exactly how much capital the oil industry or the other industry with gas producers are

going to spend. it's not blions, it's in the trillions that we could open up for this country. and those are big jobs, high-paying jobs. it's commercial for big oil here. "a reality that we have just been hiding and not talki about literally for decades, and let's reopen that up. >> let me ask the group. in our area it's a problem, but yeah, how did we let this happen? how does the president ask the question, you know, we've known we were dependent on oil for 20 years, everybody has talked about energy independence. how come we're at this point? why haven't we done more? >> i think that the situation here is that the reality is really less grim than the perception but the way this thing is wired together, something like a less than 1% withholding of oil by

two countries that are using against the united states can have far more influence on the economy and stock market and all of those things. and we have allowed ourselves to be worked slowly into a very delicate position with this international oil market largely controlled by countries who are at bt neutral towards the united states, at worst end antagonistic and it's delicate that one quiver here can shake the whole thing. so we've got two real choices here. we can become less dependent on that system by decreasing the oil intensity of the country. and i think the reason we got here was we allowed the oil intensity to increase while sort of holding the geopolitical structure together well enough so it didn't really hurt. but i think $200 a barrel really hurts. and we've got to make some structur changes to not allow that geopolitically fragile

system hurt us and to look at the basics, which i think we can control in terms of supply and demand. >> secretary of the treasury. >> i want to focus on the economic impacts because i've just been given a report the dollar is connuing to fall and hedge funds are selling a dollarhort and that we've been asked to meet with moody's immediately. now, the fact is it this persists for any length of time, we are in the potential of my being the first secretary of the treasury since alexander hamilton to have to announce a downgrade of the dollar a and if the president is the first president, more importantly, to preside exactly over the political impacts that are mentioned. but economically, a downgrade or even the reat of a downgrade will inevitably lead to higher long-term interest rates. and you can do all the efforts you want with ben bernanke and the fed to go back to

purchasing more bonds. it's very difficult to effect long-term interest rates which are market-driven. so we have the real risk, steve, of going into a double-digit recession now. we need to do, therefore, the following and it's a very careful balance. first we need a short-term stimulus by a payroll tax, holiday or a substantial reduction in employer and employee payroll taxes. second, we've had these continuing impasses on the debt limit. we just went through this over the summer and only put a band-aid on it. you know, winston churchill said the american people always do the right thing after they've exhausted all alternatives. we've now exhausted all alternatives. this could be the shock that gets us to a deficit reduction package. now, mind you, it needs to be a long-term one in impact. if we were to do that immediately now, it would send a terrifically positive signal

to the market that finally this crisis brought us to a genuine deficit reduction, long-term package dealing with our structural deficits, putting entitlements and tax revenues on the table. and third,and the third is the s part. china, which has always been hoping that their own currency could be an internional reserve currency, and that oil is trading dollars that the dollar tanks, they, and the rest of the world economy will suffer. we need to get the g20 to put out strong statements of support for the dollar backed up by administration action dealing with the deficit so that we do not let this iranian situation, which is only a blip in the amount of oil but has major

psychological impact, we need to send a message from our international partners that they have confidence in the dollar and our capacity toandle the structural deficit. we need to demonstrate quickly. i would have the president in his speech tonight say he is going to ask congressional leaders to come to the oval office tomorrow morng and reach a deal on the deficit. maybe this spread it will shock us io the action we should have been taking over the summer. >> to balance this a little bit, i agree that these are long-term solutions that need to be started today. no doubt about it. " concerns me is the -- what concerns me the -- if that is

disrupted in some way, all of the gains would go for naught. the concern for me is the fifth fleet headquarters is in bahrain. we need to see where that is going toe operating from. the idea that iran could make us leave would be important but not operational lee. -- operationally. i feel like the sanctions have the been ineffective. the next step would be an embargo or blockade. those are acts of war. i am not suggesting we do that " we need to prepare ourselves for alternatives. the threat from iranian small boats has been there before. it i still there. i am worried about a maneuver that would escalate this in an

unforeseen ways. we need to start thinking behind the scenes with our allies in the middle east for alternatives. to the speech tonight, we are short on a time. i want to focus on the energy possible. stuart has outlined things well. if the president is going to outline an energy plan, to get us out of the vulnerability we are in, i want to have some comment on what that starting with sue and then john. >> i think would be worth the president pointing out thewo things -- we have met the enemy and he is us. we are the largest consumer of oil in the world, one-quarter of the global -- comes to the united states. that is twice what the chinese

consumers. most of that, 70%, is for transportation. let's start with those data points. we can start backing into solutions. one of the things worth pointing out is that one of the reasons saudi arabia has calibrated its capacity so that you did not see this kind of price hike. they did not want to see the world going to recession but also did not want market forces and market prices to stimulate the kind of innovation away from hydrocarbon, away fm oil that we now have the chance of generating. i agree with the secretary of energy on the expanding domestic production side it but i think one, expand. second, to the extent that the prices at the pump, i am not

sure what that is. i do know that between gasoline prices and heating oil prices, the average household income has gone down by a $137 billion. we need to be in a situation where there is a motivation. the price at the pump will contribute to this. motivation to buy fuel efficient vehicles that are suained. producers and consumers will need to knowhis is not just a temporary aberration. the prices will stay high. we need to develop alternative sources of energy, whether that his nuclear, natural gas. we have a lot of natural gas in this country. we have seen that in terms of

prices. how can we translate that into more energy self-sufficiency? >> in 1974, the oil shock gave impetus to the creation of the iea and the whole idea of stockpiling. against future shocks of this kind. i am wondering whether opec has run out its string. what we would not want to take them on in a diplomatic confrontation, maybe there is a way of getting the saudis and other friendly oil producers t sit down with us in a different context like a meeting of the key consumer and producing nations where we could include russia and north america,

canada as well as the oecd countries. it seems to me that architecture of our energy diplomacy, find some new formulation where we would be able to create a somewhat friendlier atmosphere to the major economic interests we are trying to pursue. >> a part of that effort has to recognize that oil is traded in dollars. i think we need to have the ben bernke organized a central bank support for the dollar so that it is not plunge and hurt everyone. this has been done before. it can be done.

showed the hedge funds that they cannot sell our dollars short. that has to be an economic and energy policy. >> in terms of how we consider going about this, there is a consensus in the intelgence community that we are in for a protracted situation in the middle east. 2011 is not going to go away anytime soon. and yet, all of our mainstream energy forecasts all depend on substantial production growth from the middle east, from saudi arabia, iraq and other states to make -- meet future oil demand. whatever strategy we put together, we have to take into accot the restraints that are going to exist on any short-term increase in the production capacity globally.

>> and what i think we have heard tonight and the guys " run by the president. i want to start where we already started. we have to do something bold. the president has a real challenge and an opportunity to become a great president. something brand new for america but alsohe president leading the world out of the economic crisis, providingeadership out of the energy crisis. 3, we need energy. as part of that leadership we need to sketch out a comprehensive plan. on the economic peaciece, the dollar.

we have to get the central bank to lead an effort to defend the dollar. the president has to avoid a double-dip recession. some of stimulus measures, you want to put people to work. you have to reduce the cost of labor to give them an incentive. of course, this is an opportunity to say wneed to get a deficit-reduction. call for a meeting to try to get our hands around the deficit-reduction. third, we talked about ternationalizing this problem. calling for international groups to come together, the g7, g20 kind of approach. that showed of the crisis we

face is mobilized in the international community including countries like china and putting pressure on iran and venezuela and those people in the international system. -- putting the international system at risk. the president needs to put out a comprehensive energy plan that is molded bond what we have seen in the past. opening up the domestic markets. getting hydrocarbons out o the ground a into the market, decreasing the intensity of our dependence and other matters. on the transportation sector and in which is where the oil consumion is, moving toward electricity which allows us to power cars from a variety of sources. petroleum is only 1% of what we use in terms of the generating electricity.

it diversifies to other sources and non petroleum -- we have to do all of those in a b way. part of the international is moving beyond opec. opec is no longer for stabilizing the economy. it is a vehicle for assaulting the economy. we need to move beyond opec. the president needs to call for a different se of approaches to dealing with the economy. it is a challenge for the president but it is an opportunity for the president to lead the country and world to a better place. that is the message we take to the president. comments? suggestions? >> i would add one other thing to your excellent summary. when the suit was -- when sue was in her other position, she

negotiated three free-trade agreements. it would send a signal that our political system is not dysfunctional. that is what it has been showing during this debt limit problem. if we could use this crisis to get that done and put in the payroll tax cut and the long- term deficit reduction package, it would send an axle and message. when there is a crisis america rises to it. this is a time when congress needs to do that. that would be another element that adds to the package. >> amen. >> the president has to be clear with the american people that while he is going to provide this leadership on a national and globalasis, this is a problem that has fested too long. we are behind the mall. it is going to take a long time to keep these things moving. it will be a rough times for america and the world until it gets down. not a great message but that is

where we are. i will take that to the president. thank you very much. >> on time and on message. [laughte >> thank you very much everybody. well done. [applause] i am the voice of doom. it is no doubt comforting to know that when the warning occurs everybody on television will have a british accent. [laughter] this is the point at which we allow this terrific team to come out of character and abandoned the roles that they are played over the last couple of hours and talkbout the experience of securing out this sand -- stimulation -- simulation. we're doing this at such an

extraordinary time in washington with the debt crisis been discussed hour by hour at the white house and on capitol hill. stuart, do you leave this thinking differentlybout those conversations and about how, the extent to which the united states is flirting with grave danger? >> yes, it is something that i have realized. but the simulation emphasizes that this may have some impact on the the talks that are going on now. this is a short-term palliative. successive presidents have talked about energy independence and energy security. here we are back at it again in 2011. it gives me a sense of urgency. the key is whether it is urgency

for the congress, the administration to come together now to avert a problem before we get a downgrade which will send the economy into a tremendous spiral. we talked about a seconds double dip. it could be a secon great recession. >> we will be opening this up for questions and a few minutes. feel free to think about what questions you would like to ask. i was struck by the fact that when you ended part one of the stimulation -- simulation and you listed the ideas you're going to take to the president, the last thing on the list was developing a comprehensive energy policy. isn't the lesson is that this has to rise up the list and that it cannot wait for the fictional events to occur before policymakers actually grant but? >> i think that is the takeaway. this is a time to be bold. it is true that the country

faces enormous challenges. but enormous challenges tend to make great presidents. what i would say to president obama and all of those poor trying to run for president is, this is a time for boldness. we are locked in too small things. we're not talking about major leadership. the american people are looking for it. that is what they want to see. i agree with you. we are late on this. we have known this was a problem for 20 years on the energy side. wealk about energy and the -- energy independence. each year if it's worse and worse. >> you were playing the role of the counselor to the president. you were raising the political

issues that the president had to face. to what extent do those concerns and constraints mitigate against the possibility of a comprehensive strategy? >> especially with a divided government, it mitigates it tremendously. there are severe handicaps. if the president decides to open up america and have a rebellion in his political base because of the democrats will say let's go cream. how quickly is it is achievable? republicans [unintelligible] the same thing with the debt limit. these are the handicaps' we have. in the end, after exhausting evything, we do the right thing. churchill was right. that is an open question.

it handicaps' both parties. governing from the center is the hardest thing to do in washingt, d.c. >> sometimes there are two ways to get a consensus. it is to boil it down to the lowest common nominators. -- common denominator. but sometimes it is good to go big. this time it is go both. that way you may be able to nerate a consensus and enthusiasm. >> i wanted to ask you about the issue of [unintelligible] ari and others were making the point out, how could y not be prepared for the fictional crisis that was rolling out in the saudi arabia. in a sense, if it were better designed for dealing with lower

level global relations rather than seismic issues, what is thtake away from that? >> having been at this for a while, i think this approach should be a life insurance policy only. it is only in case of death. anytime you start manipulating it for other purposes, you dilute it. then it becomes like a faucet. turn it on, turn it off. that is not what it is therefore. i think that takes discipline. bold is important. courageous is also important in terms of the decisions that ed to be made. from where i sit in the country, the most courageous decision would be a those made without regard to reelection but rather what is right for the country in terms of resolving these big issues.

last political tactics and more the substance of what is courageous. the country has to do with these issues. >> can that happen in this town? >> probably if the crisis is big enough. i think we are on the right track. [laughter] the crisis came and the talk came. it creates an opportunity. so the question for us is can we anticipate this and make those kinds of decisions before a crisis arises. i am not brimming with optimism on that score. >> what strikes me inthis simulation is the inability of our national security instruments to solve this

problem in a satisfactory way. our armed forces, a powerful as they are, cannot get this particular problem. our diplomacy, skillful as it may be, it drives me back to doing the things we can control in our own country in terms of our own energy resources and conserving every barrel that we do news and then looki at becoming less dependent. we have been using some tools to do this. we have spent huge amounts of money. we have a served. the problem lies with them. it is something we need to do at home.

we can do that. we do not control opec or iran. we do not control saudi arabia. we control the things we can do in this country. i think we need to look inward to solve this. >> i presume you would agree with that. we have met the enemy and he is us. >> you have to wonder if we cannot get beyond no-brainers like the debt limit or the free trade agreement, how can we come to grips with this in the absence of a crisis? there is nothing that -- once the crisis has started, we are in deep, deep trouble. how do you generate -- we talked about courage. we need to talk about leadership, leadership, leadership. there are some things that are important enough to risk losing

your job. whether you are elected or appointed, i think being hont with the american people about these issues, the american people can take the real story. it is going to require a longer- term solutions. we were scared so much of what had been going on -- spared so much of what had been going on. the congreshad passed a stopgap measures. we did not talk about subsidies. some of the mistakes that were made in the 1970's were mentioned. but we were largely spirit. -- spared.

so a lot of us need to step up. >> the crisis -- you need a crisis to motivate you. you have options before you get in the crisis and you have options after. but in the crisis, your options are few wis. one of the tricks about crisis is to be able to articulate a sustned agenda that people can buy into and they can be executed over the long term. but when you're in the crisis, you are precooked. key iss point, the education of the public. everybody is for deficit reduction. but when you put the component parts on the table, we're going

to have to have limits on social security, discretionary spending, on the taxes, the fact is we cannot afford the structure we have built in the today's tax limits. we have to come to terms with that. it takes a bold politician and it takes the public to believe that in which they do not believe. they have this theoretical sense if we just make a few cuts here and there we can solve it. the same with energy. a sustained honest dialogue to explain where we are is difficult to do before the crisis. when there is a crisis, perhaps it is sier. can we take these actions to avert a crisis? in a democracy like ours, so open, it is very difficult. it takes a high level of education of the public. >> a quick footnote, which did

not talk about the private sector. we talked a lile bit about ngo's. we should be talking about what can the private sector be doing? i happen to set on the fed -- serve on the fedex board. fred is walking the walk. he is doing. to the extent that we can see a consensus to build a long-term lan in conjunction with ngo's and have that as a force multiplier, that would be a tremendous benefit. >> let's open it up to questions. we have a couple of microphones out there. back there and there. anyone from the floor with a question or comment over and what you have witnessed over the

past few hours. we have someone right over there. a gentleman over there. >> i'm with the association for the study of oil. i would like to follow-up on your conversation with a dual strategy of being more bold and aggressive about a green future. it seems politically and economically essential to have a strong economy. we should link the two. i would like to hear about a grand bargain where we open up the gulf of mexico and tired those resources to investments in accelerated strategy, the practical details of what that would look like, what would be acceable to a different sides of the equation. >> you made the point about

and aing out to the ngo's talking about a future with hydrocarbon. i think with a profit in leadership, that bargain is, where companies produce oil. let's open it up and at the same time, part of the deal is, let's change the royalty rates. l's change the royalty scheme. the industry does not want to hear that. the best deal in the world is producing oil in the united statesf america. regimes elsewhere are fall -- far less lucrative to the oil companies. let's change the royalty rate and a change production and let's use of those and royalties for the next generation of energy, the new technology. the so-called green energy. that deal could be struck. i think getting the ngo's on

we're going to find methods that are going to pay for the green energy sector. all of the sudden you have democratic forces coming together in coalition rather than in opposition. that may be a dream too far but i think it possibility. >> we are in a situation now. challenge -- chad is number one in the production of solar panels. a lee the family in new england is opposed because of aesthetics, putting a wind farm in the bay. there is always a checkmate in our system, and perhaps it takes a crisis to allow people to say

we have got to put aside these kind of narrow parochial views and let it all hang out, regular production, alt manager, nuclear, all this test be done, but it requires the people to be sacrificing and be willing to allow these things when there are some risks to be taken. >> i want to get your take on the simulation. >> this notion that we have known about this problem forever, we have not discussed the huge economic impact onhe united states, a greater way in which we're held hostage, but the national security impact of this. i mean we have sat around that table and especially aft 9/11, and what came out of that region of the world, and to some extent or other are hamstrung

about what we can do. there are restraints on u.s. national security flexibility and the policies we can bring their on the middle east because of this link back to oil, the opec, and the kind of stranglehold it has on the glob market, the commodity that is truly the central to our way of life. owing that, as long as we have known that -- one is just talk about how incredibly urgent this problem is and how little we have done about that. >> one more question from the floor. a gentleman from back there. >> what is most striking about this event today is when we did our first shock wave, 2005,

2006, the conclusions were strikingly similar -- big ideas, big plans, we got to do this, we're sitting on our hands -- basically we had no options and crisis was not an option, just as it is here. that is not dealing with the immediate needs of our present. oil prices were probly $25 or katrina, and cap, pre- we came up with speculation all at $100 a barrel and we talk about what it would do to our economy, and this recession was not about oil prices. it wasomething much bigger. since then with oil prices much higher we have had unprecedented economic growth, but our deficit has grown up to three times, perhaps. what we ought to be reflecting on is where we have come from,

where we are, and are we really going to do somethinwhen it becomes a problem, because you cannot have $200 a barrel oil. i said that aa provocative thought, an observation of putting that into context. >> having worked on a presidential campaign, the thing that will stir action is that price of the gas at the pump. that is what creates pressure on politicians. i cannot conceive -- where i lived it costs $4.50 a gallon to fill up on premium. suspect we are close to the point where the consumer is at a rebellion stage, and that is the event that forces action, and it

comes from the individual, and politicians respond. we are close. >> one more question. >> thank you. this has been a fascinating morning. one issue that did not come up that i kept thinking about is somebody is making a tremendous amount of money off of this shock wave that is happening, and is there any thought around whether that is the global oil industry or financial companies? is there some role we need to be thinking about, his funds, people who are speculating, that amplifies is a supply crisis, but noas urgent, opposed to when you look at the impact on wall street. i am curious if the secretary of the treasury thems. schwab has

any thoughts on that. >> in the 1970's, when we deregulated the price of oil, would put a windfall tax. take all that money, and put it in the payroll tax reduction or the deficit reduction, or some part into alternative energy. not on a permanent basis, just to deal with this extraordinary saturation where you will have a lot of companies, not because they want it, but because the market will put that in. another thing sue and i were discussing is the have one of the gasoline price, some based so you do not get what fluctuation. this crisis may end, we would go back to $2.50 gallon.

if you had a base under will price, and we got throug this in two ministrations where we had our heads handed to us if we did it -- 100% of it, you put a base on, it sounds like a signal of the market that they cano out and buy energy efficiency. there are some thoughts of how to deal with the extraordinary is attrition. >> i would say most sadly in this scenario, most of the economic benefits are going to russia, of venezuela, iran, saudi arabia, they are going to producers. yes, tre is some spinoff, but by and large, it is not a speculator is so much as the producer and they get that premium and they get that rent.

that sue isspoint making," dealing in the short term to deliver live market signals so we do not forget after two years that we ought to be develing a hybrid vehicle. >> when you are going to open up america, it is very expensive, and it requires an enormous investment. we should think about windfall profits. a lot of this windfall profits the to go into investment. secondly, someone was mentioned last night, 90% -- i think this is right -- 90% of the oil reserves are controlled by state-owned oil companies that are controlled wholly largely by countries. and those companies are not

investing, which is why production is going down in so many places in the world. one of the challenges is we have got to invest, we have got to get those countries, those oil producers, to invest in more oil globally, not just out of the and i did states. it is one of the azing facts in terms of opec production, since opec was created in the 1970's, if you look at their capacity, it has flatland at 30 million barrels a day, and that is when you see historically a tremendous loss of price stability in the price of oil. >> we rail about multinational oil companies. we need to encourage the saudis and other major or producers to open talks private multinational

investment to help them. it is in their interest to do it, to bring in the new technologies, and to bring in the exxons and shells to help them increase their production. >> we are out of time. i want to thank stuart eizenstat, eric fleisher, stephen hadley, john hannah, john-master, john negropont susan schwab, and charles wal. susan schwab, and charles wal.

>> taking you live next to the white house where the briefing should get under way shortly. it is possible that some questions about the selections to congress' joint committee could be raised here this morning, john boehner, speaker of the house, announced his selections to the committee. on the senate side, minority leader mitch mcconnell has named senators kyle of arizona, toomey of pennsylvania, and one who was head of the office of management and budget during the bush administration. just waiting to fill that out with the final three democrats to be selected from the house. just to let you know, also, we have created a special list of

those members on our twitter site. if you go to the list that you can choose from. among those -- the brand new list we have created on the members that have been selected for this joint committee on deficit reduction. speaker banner in making his selections today said in a statement, "our debt and deficits are a threat to our economy, and america cannot achieve long-term job growth until we take action to address this crisis." we have also linked leader mcconnell's statement on our website. yesterday, harry reid announced his selections. that is patty murray, max baucus, and john kerry. the committee to begin meetings when the house and senate return in the first week of august.

again, waiting for the briefing to get under way live here at the white house. >> can i ask you to -- i brought my wrong book. cannot bring classified documents in here. good afternoon, ladies and gentlemen.

we for one second. jamie is going to get my book, but why don't we start. i do not have any announcements to make at the top. >> on syria, president obama thinks the assad should step down. should we expect president obama to address that this week? >> i can tell you a few things about the situation in syria. i think we have made clear that we believe, the president believes that syria would be better off without president assad. the international community is increasingly speaking with one voice on syria. through his own actions, he is

insuring that he and his regime will be left in the past and that the courageous syrian people who have demonstrated peacefully in the streets will determine its future. we have said that syria would be a better place without assad and that he has lost legitimacy. the most important thing we can do now is to ensure that our actions back up our words. the democratic transition would be better for syria, the region, and the world, and we intend to help the syrian people achieve the dignity and freedom they have demanded and for which to many people have denied. we have called on the regime to halt its campaign, pull forces back, and to respect and act upon the clear demands of the syrian people for a peaceful and democratic transition. we will keep up the pressure. we will work and coordinate with our international partners, and i think it has been noted by all of you that that pressure is increasing every day.

>> [inaudible] >> i will simply point out that we have been very clear about our position on the actions that president assad has taken against his own people, the fact we believe syria would be better off without him. we have taken action through sanctions, and we will continue to increase the pressure through a variety of means, working with our international partners to do so. any future announcements or things that the president might say i will lead to that time. >> on the domestic issue, the president has called for congress to take the commission selection process seriously. now that we know the members, i was wondering what the president's reaction is, particularly the republican members. >> i think every member of congress who is elected and sent to washington is elected to

represent his or her constituents has a responsibility to act seriously when asked to deal with such a serious issue, and the president expects that the appointed members of this committee will do so, both republicans and democrats. i think the speaker of the house's statement expressed the sentiment that we share, which is that we need to take action collectively to come together. democrats and republicans. to further reduce our deficits and debt our long-term debt under control. we strongly believe that the way to do that is to take a balanced approach, and we are not alone. the american people overwhelmingly support the balanced approach that the president supports. republicans and democrats together support the balanced approach that the president supports, and i would think that when we are looking at the things that have created the

deficits and debt that we have, it is instructive to remember that we have to look in every area. for those who are in progress in the last decade who voted for massive, historical large tax cuts that were not paid for and have contributed mightily to the debt we have now, who voted and put two wars on the credit card without paying for them -- who voted, for example, to extend the medicare prescription drug benefit that was on paid for and has added massively to our deficits and debt -- i think that knowing that, having participated in, there should be an acknowledgement that we need to look broadly at all ways to reduce our deficits and debt. >> [inaudible] >> we believe that the committee needs to -- the president believes the committee needs to take its work seriously and

that it has been mandated by a law passed by congress to do that and to act by -- before thanksgiving and to come together around a series of proposals that can get bipartisan support, get through congress in a fast-track way to ensure that we have additional deficit reductions. >> [inaudible] media personnel were not allowed to cover that directly, not allowed to see what the president sought. can you explain why the white house put out a picture of the president in very presidential mode and the free press is not allowed to know what that is about? >> there are a lot of reasons why the press was not allowed to cover the dignified transfer of the remains of those servicemen who perished in afghanistan, and i think you know them. it has to do with normally the families would have to give

permission, in this case, because of the state of the remains, the policy was that the press would not be allowed. the reason why we were able to release the photo was carefully done so that none of the transfer cases that contain remains were in the picture. it is also the case that because of the units that were involved, there were members of classified units whose identities cannot be revealed publicly, who were in the ceremony. they cannot be shown in photograph. we were able to put those restrictions and control so the photograph for release does not cause any of those problems and we could not, for a variety of reasons, bring in the press. >> the u.s. and global stock

markets have taken another serious hit today. this time, it has been tied to the french bank's exposure to european debt problems. has the president spoken to or will he be speaking to president sarkozy or other european leaders to get some reassurance that they have got this in hand? >> the president has, as you know, spoken in recent days with a number of european leaders. chancellor merkel, president sarkozy, prime minister berlusconi. he has also this morning spoken with prime minister cameron and is in regular consultation with european leaders on these matters. secretary geithner is in regular consultation with his counterparts in europe. we obviously are monitoring these events very closely. we continue to believe that the european capacity to deal with this problem -- that the

europeans have the capacity to deal with this problem and encourage them to take action to deal with it. >> the conversation this morning with the prime minister -- [inaudible] a numberre there were of topics, but i'm sure that this was one of them. >> [inaudible] >> again, i do not have a further read out on that. we might have won later today. >> a particularly gloomy picture was painted yesterday, that growth was weaker than expected and would stay that way. the white house economists agree the white house economists agree with the assessment? >> broadly speaking, we recognize that the economy has slowed down, that the growth has not been where outside economists as well as inside believed it would be at this stage this year. there have been a variety of

reasons, contributors, head winds that have caused that to happen, and we are experiencing some of those now that have to do with your first question. we also continue to believe, as we believe outside analysts continue to believe, that the economy will keep growing, and we need to do what we can to insure that it does and ensure that it creates jobs. this president will not rest until he is confident that every american who wants a job can find a job. there is no greater focus of his work, of this administration's work, then the economy. >> does the administration agree with the assessment? >> i do not think we put out our own analysis or forecast for growth going forward since the last time it was done. obviously, there have been some events that would be taken into

account if the new forecasts were put together, so i do not have a forecast for you. >> [inaudible] they have been very critical of president obama with his handling of poverty and joblessness, particularly in the most destitute communities. specifically, tavis smiley called -- said the president have forgotten about the poor. he was called a black mascot of wall street. what is the president's view of the criticism? >> i would say that this president, again, is focused on the economy every day and is focused on those who are struggling in this economy. every economic measure that he has proposed and every one that

has become law because of his leadership has been geared towards helping those folks who are in the greatest distress because of the great recession we were in and those who are struggling as we emerge from it. his focus on the most abominable communities was evident when he negotiated with congressional leaders late last year on the tax cut extension deal by insisting that in addition to the payroll tax cuts, that he insisted be in a so that every american family -- working american family would have on average an extra $1,000 this year. he is the -- insisted on an extension of the earned income tax credit, an extension of the child tax credit, which disproportionately help those in need. it is why he insisted on the recent debt ceiling bill that

pell grant funding be protected, because those who deserve and qualified for quality higher education but are struggling to be able to pay for it because of their economic circumstances need the assistance that those programs supplied. this president is very focused on every american who is suffering during these turbulent economic times, and the policies that he has espoused and pushed the take into account very seriously those who are most affected. >> peter king. the congressman is calling for an investigation based on a report saying that sony pictures movie anchors doing the great m