representatives are from a congresswoman on the restore the american dream act, and put america to work act. both focus on direct job creation. the first plan would hire students to work in the national park and hire students into teachers, put teachers in classrooms, hire cops and firefighters, employs 650,000 americans to do maintenance on schools that are in disrepair. she estimates it would create 2.2 million jobs. it would cost 17 billion over two years. -- two under $17 billion over two years. -- $210 billion over two

years. host: ditches say where she was going to get the money? -- did she say where she was going to get the money? guest: anything short-term and temporary should be just with finance. we have eliminated federal borrowing through 2012. if you can get around the debt ceiling, subliminally increasing the debt ceiling -- offsetting a something over 10 years is not that difficult. you could do half a trillion dollars. the priority is much more in creating jobs. there is no evidence that investors are worried about the united states' ability to repay. they are willing to take losses

on any other investment -- the inflation protection treasury rates have been negative for most of this year. the concern is the weak economy. host: that get back to the phones, greensboro, n.c., on the line for democrats. caller: thanks for taking my call. i'm very concerned that our legislative leaders do not know the difference between plants and job creation. i agree that it has to be direct. the public must see people they

know and people in their families having some type of job. the public could be asked to subsidize construction. people that have would share. i appreciate you letting me have this call. guest: i think the caller is absolutely right. we have to think about many prongs, the continuation of unemployment insurance. my strategy for job creation is first, do no harm. did not cut government spending in the near term. second, massive infrastructure investment. you could put a lot of people back to work in the construction and manufacturing industries. repairing infrastructure cost

more in the future. third, resolve the state budget crisis. there is a $97 billion shortfall with what the states receive in revenue and this fiscal year. you can close two-thirds of that -- i think a more targeted tax relief would help. and you just cannot do a hiring tax credit. we did one, $13 billion, and it was way too small. it is about aggregate demand. you need a multi pronged approach. host: cleveland, ohio, on our line for business owners. caller: i am enjoying hearing some of the comments that people are making.

i would like to contribute to this problem has been going on with manufacturing, the loss of our economy, the banks manipulating the markets since the 1960's. there has been a down spiro until at absent -- down a spiral until it exploded in recent years. the banks but broke out with mortgages. and they are able to charge you different fees. in most cases, the branches were branching out -- the banks from branching out but the money was finally back to the banks. with the real estate the manipulation with the real- estate is the same trickle-down effect.

carrying the mortgages -- now they are increasing these fees and are pursuing other individuals under the fannie mae and freddie mac contract and get them to refinance and manipulate that money where the mortgage brokers are walking away with $12,000 or more. host: what kind of business do you own and what kind of hiring you have been able to do for the last few years? caller: before real estate, i was seeking out different business potentials i could get into. i did a thorough research. the manufacturing industry --

host: we are going to leave it there and move on to pittsburgh. caller: thanks for being on and discussing these problems that we have. a want to mention two things. that president obama would have taken an fdr approach as far as handling everything from day one. i realize that watching c-span from 2006 all the way through, i have seen destruction from the republican end, where they were obstructing left and right anything that had it to do with benefiting plans for employment

for workers over here. the costly work shipping employment overseas. i believe originally obama wanted to have a $3 trillion deal to get america back to work. in addition to that, -- host: we will leave it there. indra, your thoughts? -- andrew, your thoughts? guest: a huge grab -- gap between gdp and actual output.

when the stimulus money really kicked in, we saw the economy turn around. every private sector forecaster severely underestimated the severity of the downturn. we just discovered at the end of july, that the growth coming out of it has been much weaker. policy decisions have been based on faulty data that understated the problem. the growth in the first half of the year has been one-third of the rate to keep the unemployment rate from rising. on the second point, the caller is right. this is not a new problem. we salting month extensions of emergency unemployment benefits.

-- we saw two months extensions of emergency unemployment benefits. we have seen a chronic republican opposition to common- sense measures to keep the economy stronger and help those that lost a job find a new job. host: earlier there was discussion about the federal reserve in the times this morning. they have an op-ed rights the fed must fix on a fresh target.

time for another stimulus? guest: absolutely. it helped immensely. host: how big? guest: 800? 2100 -- 6 then do, we did $160 billion for unemployment insurance. we spend close to $1 trillion on stimulus, but not nearly enough. it is time for another very large stimulus. if it did not prove to be enough [inaudible]

host: how much more do we need it? guest: we face a gap of what we could be producing if industrial capacity was up. $315 billion of smart stimulus. host: any chance the president could a cell that on capitol hill? guest: it seems unlikely. this would be in addition to extending unemployment insurance and the payroll tax. you could reverse -- reduce unemployment one. million. by philip -- one. million jobs. -- about one million jobs.

host: we have a few more minutes with andrew fieldhouse. from tennessee, on our line from republicans, welcome. caller: i am going to put this fellow and president obama in a box. president bush had a surplus when he came into office. i will take that. january of 10,007, we were billions of dollars in debt. that is the year -- january 2007, we were billions of dollars in debt. that is when the democrats took over. [unintelligible] in july, the president said we

did not have enough money to pay our bills in august is 3 angus $6 billion. he could live -- $306 billion. he couldn't put is failed stimulus plan money -- he could have used his failed stimulus plan money to pay for some of that. [unintelligible] the democrat say they have plenty of money. they have plenty of money in i'll use. -- iou's. host: assess his numbers. guest: president clinton -- when the obama came into office, he inherited over $1 trillion from

president bush. regarding the death, we had $800 billion -- regarding the deatbte had a hundred billion dollars. the accumulation of debt is not the worst thing that can happen to the united states. allowing the economy to fall back in recession is the worst you can do. the stimulus was remarkably successful. no private forecaster will tell you that it failed. cutting spending, reduce aggregate demand, which causes a job losses. host: have someone

the dallasorrom airport in rights of this. -- and writes this. guest: i think there are things the president can do by executive order. get fannie mae and freddie mac to refinance mortgages across the country at low interest rates. refinancing would be immensely helpful if you lock individuals into a 4.5% interest rate. that would help boost consumption and you would reduce the amount of debt over hanging in this country. doing some things by executive order would help the crisis. in terms of stimulating demand from infrastructure, a unit congressional authority and money. host: western ohio on our line

for democrats. co-head. -- go ahead. no? let us move on to our line for democrats. caller: i am so disgusted with people who think the president is not doing a kid up into trying. -- is not doing a good job and trying. he did tax cuts for the republicans. they said they were the wrong kinds of tax cuts. in may, not this year, but in august we had the biggest disaster of all time down in the gulf. that is what he gets for going along with republicans and their

drill, drill, drill. then they want to stop unemployment benefits. when they voted, they all voted for it. if they could have gotten away with it, we would have lost all of our benefits. host: she talks about tax cuts, right tax cuts and wrong tax cuts. assess the guest: myrim. guest: the gop is cutting the tax rate to 25%, the lowest it has been in this country. you are getting the government if you cut the levels below what we had in 1960, it is a deliberate attempt to affect medicare and medicaid. it does not have to do with job

creation. there is not a strong argument that we are over-taxed. i do not think you will see robust long-term economic growth. you will not see an improvement near term by cutting taxes. the economy has a huge supply of labor that would love to work. the problem is demand. i do not think it is a credible solution. maybe some targeted tax rebate. anything to an individual income tax rate is a way to hedge funds self inc.. it does not create jobs. corporate welfare. ho

>> watched more videos of the candidates, and track the latest contributions from c-span goes the website. facebook updates from the campaigns, canada bios, and the latest polling data. --cdndidates bios. all from cspan.org/candidates2012. >> a panel of recommendations for the federal program, and held the politics will play in next year's elections. we hear from former bush administration and gerald bernstein.

this form hosted by the 60 + association is one hour. to all of you seniors watching and listening on tv or radio, i believe you will benefit from today oppose the program. and for use in to be seniors, and for younger generations, our grandchildren and our great- grandchildren. i believe you are in for a treat. before you tune in to the most distinguished panel i believe we have ever assembled, let me make a couple of observations. i say this as i enter my 50th year in washington, coming in as

a young reporter working in this very building, the national press club. social security was 76 years old sunday, august 14. pass on that day in 1935 by congress and signed into law by president roosevelt. for its first 25 years or so, the system experienced few growing pains. it was a healthy financial benefits for retirees. after leaving its teen years and aging into its 40's and '50's and beyond, social security began showing some wear and tear. who among us does not at age 76, or in my case 75? i believe almost everybody believes in some form social security reform is needed. social security has served seniors a very well. has kept millions of our most of formal out of poverty.

my favorite singer depended on her check, and her sister, my aunt would have celebrated her 99th birthday august 14. her son, my cousin, former kentucky center turned 76 this week. they're surviving sister lives down in florida, she celebrates her 84th. i do not want to leave out pat boone who is 77. he is still singing at concerts'. seniors have paid their dues. what the system needs reforming, seniors are entitled to solutions -- not political pot shots. after all, a system that started as a 2% tax has grown to on as much -- from $60 annually, that is $5 a

month. yes, i did the calculation on a computer. to be sure, i also did the math as an old-fashioned reporter. $5 a month is now as much as $13,000 annually. that is a whopping $1,100 in change a month. why is it on a gold mine for seniors? two reasons, actually three. lower rates of birth meaning fewer pang in. number two, living longer. yes, we are. as one observer put it rather and delicately i thought, senior is no longer conveniently died at the actual age of 65. former congressman now living 90 living in indiana elegantly stated he has been statistically

dead for 25 years. that puts a pretty big financial strain on the system. in fact, the first recipient of the monthly check is a perfect example why the system is in some financial straits. she paid in less than $25 before retiring. instead of conveniently dying at age 65, this retired schoolteacher lived to 100. for her investment of $25, she was paid nearly $23,000 from social security. that is a whopping 92,000% return on her investment. incidentally, a cleveland, ohio man actually retired the day after the system became law. he paid in one nickel. he got one shot back for 17 cents. that was a 333% return on his investment. no. 3 and finally, little

interest to the social security trust fund. is bulging with trillions of dollars, surpluses that have been paid in by current and future seniors. one of washington's dirty little secret, the fund is broke. the trust fund is the favored cash cow of surprise surprise, congress. i'd like to quote democrats and republicans alike. i would say right now, two former senators held a press conference a few years ago. they said, "if private businesses did what we do here in congress, stealing from this trust fund, it would be locked up for embezzlement." that is probably correct. there are solutions and the lower offer by and all manner of experts. they will offer street for practical solutions.

unfortunately, social security solutions off and then run into a political boss on capitol hill. nowadays, standard, rigid operating procedure in washington. perhaps, we will need a pledge that seniors will no longer be used as political pawns on capitol hill so reform can be accomplished. now, to our distinguished panel. jerry bernstein is a senior fellow on policy priorities from 2009 until 2011. dr. bernstein has served as chief economist to joe biden. he was also executive director of the task force for the middle class, and a member of the economic team for president obama. prior to joining the obama administration, he was a senior economist at the economic policy institute. during the administration of president clinton, it was the

deputy chief economist at the department of labour. he is the author and co-author of numerous books for academic and popular audiences. he was published extensively in numerous of venues. he is also a commentator for cnbc and msnbc, and he posed a popular economic blog. dr. bernstein holds a ph.d. from columbia university. i give you jerry bernstein. [applause] >> thank you very much. it is great to be here and to talk about one of my favorite topics. thank you for the introduction. i always like to find myself in his company. he is one of my favorite economist around town. the story are like to tell about done it is that when he was the director of the congressional budget office, he annoyed

everybody equally. that is very important in this town. i give him a lot of credit. let me start with a set of principles in fact, i think of my talk today in three brief parts. principal, fax, and fixes. first of all, on principles. these are the set of principles, ideas that guide my thinking and i hope yours as well on social security. retirement security has to be a goal of a civilized society in an advanced economy. that is the case in every advanced economy. two -- a guaranteed pension is essential to meeting that goal. private plans that depend on stock market returns can complement a basic guarantee, but they are simply not compatible with the goal of retirement security.

3, private employers are providing ever few were defined benefit plans. if you think about the three legs of retirement security, pension, savings, social security, my thinking -- and i will argue with a few points jim made in the introduction -- despite some points you often hear, i would argue that social security is the strongest leg. not because it is so strong that it does not need fixes, it does. because the other two have weakened significantly. here are a set of facts that guide my diagnosis of the problem and ergo the prescriptions to help fix and maintain this varble 76-year-old. average benefits are not overly generous. right now the average benefit is about $1,200 a month, around

$14,000 a year, but those benefits are very important to people and i think this is commonly misunderstood. you just can't repeat these kinds of facts, maybe the folks in this room, certainly on this panel, know these facts, but the importance of benefits, even at their not so generous levels, can't be overestimated. for more than half of elderly beneficiaries, social security provides the majority of their income. for a quarter it provides nearly all, about 90% of their income. and of course as you'd guess given the spending down of your savings and your diminished probability of working, as you get older, as you become the older elderly, dependence on social security increases with age. so among those aged 80 or older social security provides the majority of family income for about 2/3 of the beneficiaries

and nearly all of the income for about 1/3. if you were to take social security out of the picture, poverty rates among elderly would jump, it's a huge poverty reduction program. now, let me move on to some of the budgetary points. so my first point is that these benefits are critically important so when i get to six's i'm going to emphasize, i'm not one of these don't put everything on the table people, i'm not saying benefits are outside of the target, i'm just saying that when we think about achieving sustainability in social security, we need to be mindful of the importance of those benefits to the beneficiaries. now let's talk about the budgetary challenge. when you hear folks talk about how entitlement spending is unsustainable, which you hear a lot these days, make sure they're not including social

security. it's absolutely true that entitlement spending is expected according to crob's estimates to -- c.b.o.'s estimates to increase of about 10% to g.d.p. today to about 65% in 10 years. but only -- 16% in 10 years. now only 1%, that's not nothing but it certainly should be split out from the pressure on spending coming from the health care side. that's where the real pressure is and if you look at the projections over time you'll see that in fact social security not only goes from about 4% of g.d.p. to around 6% by about 2035, it kind of stays at that 6% while the health care entitlements continue to grow based on both demographic pressures but more so cost pressures. health care costs.

so, that said, along with this entitlement pressure, you often hear, we can't afford it. we simply can't afford to fix the social security shortfall. let me put it this way, the 75-year shortfall according to the actuary's most recent report, amounts to about .8% of g.d.p. ok? so according to the most recent report, .8% of g.d.p., that's the long-term short fall over the 75-year actuarial horizon. that's just about equal to the revenues that you would achieve from the exploration of the high end bush tax cuts, -- expiration of the high end bush tax cuts. so when people argue that we can't afford social security, yet somehow we can afford those high end tax cuts, i think that's a hypocritical and destructive argument. how is it that every advanced economy in the world, every other advanced economy in the

world, can afford this but we can't? what's so different about us? yes, we have demographic pressures, but in fact if you look at the countries of europe, their demographic pressures are even more challenging than ours. yet we're an international lag art. 30 out of 42 countries, if you look at replacement rates, of median income across the o.e. -- oecd, the oecd average for the replacement of preretirement median income is about 60%, ours -- our social security replacement is about 40% by that metric. but isn't social security going broke? ok, so the trust fund exhausts in 2036. i think this has been a terrible misinformation campaign. just some of the worst misinformation i've seen. it is absolutely the case that full benefits can be paid through 2036 at which point the

trust fund is exhausted which makes it sound like the benefits go to zero but they don't. of course payments still are coming into the system and social security at that point would be able to pay 75% of scheduled benefits. now, this, again, is widely known perhaps to people in this room, but i guarantee you most people think out there when they hear trust fund exhausted, that's all she wrote. but we shouldn't let that happen. we shouldn't let that happen. that 75%, i'm not saying that that's an acceptable outcome, i think we should take steps to close the shortfall and i think those steps should be a combination of tax increases and benefit cuts because guess what? those are the only two options. and you can dress it up any way you like but at the end of the day that's what you're talking about. you might have gotten from my part of the discussion on how important benefits are to social security recipients, what large share they are to the average retiree, that i would rank benefit cuts as considerably

less desirable than revenue increases to sustain the program. but i don't take them off the table. so here are some ideas. as jim correctly pointed out, there is a long menu, in fact the act wears who do a very good job at this -- actuaries who do a very good job at this have 30 different options could you have here. i'm just going to name a few that are most commonly discussed in the debate. the first that i think is essential is to gradually increase the maximum amount of earnings on which workers and their employees -- employers pay social security taxes, you heard jim mention that, it's around 107,000 now until it covers once again 90% of earnings. i think that's around 83%, 84% right now in terms of how much earnings are covered but historically it's covered 90% of earnings but because earnings inequality has grown so quickly, there's so much concentration of high level of earnings at the top of the scale, the share above that threshold, the share of earnings tpwhoove threshold

has increased to about, as i said, about 16% instead of traditional more 10%. so get up there and you can close -- you could close, oh, maybe 40, 50 basis points of something like a 2 percentage point payroll gap. switch to the chain consumer price index, as it's so commonly discussed these days, i probably don't have to describe it to this audience but it's basically a more accurate measure of prices so switching to that is on almost everyone's list including i believe the president brought that to the table. that's a benefit cut. let's be very clear. i mean, sometimes newspaper reports kind of get that wrong. it's a technical fix. no, it is a benefit cut relative to promised payable benefits but i think it's a good idea. now you kind of get into some of the ones that are a little more tricky and controversial. trimming benefits to reflect rising life expectancy, raising retirement age or longevity

indexes which i think is a mysterious way to say raising the retirement age so people don't know what you're talking about, that is obviously -- to many people it's a very compelling idea and you heard jim's very correct assessment of how we're all living longer and while that may be an accounting problem for social security, i happen to think it's a pretty good thing. but be aware of one thing and this is why i would put this quite low down on my list of fixes. the life expectancy, we only have these data for men, retiring at age 65 has risen six years in the top half of the income scale but only one year in the bottom half. in other words, increased longevity has more and more become a function of income and men of lesser income are not living all that much longer than they did a generation ago. so raising the eligibility age is actually not a slam dunk,

when you hear these statements made about how we're all living longer, in fact we're not all living longer. those in the top half are living long around those in the bottom half are living a little bit longer. i am going to get out of the way because i really want to hear what doug has to say. but there are other ideas, i'd just like to leave -- and we can talk more about those in q&a if you'd like. i'd just like to add one idea on the table, a fix that i haven't heard discussed enough and i bring it up because i think doug might like it so i'm interested in your response. this comes right out of the budget plan. you know, employer health care benefits, the health care benefits that employees pay, provide for their employees are untaxed. those benefits are untaxed. in this debt reduction plan they

came up with an idea that i think is interesting and has some appeal. economists like doug and i, and i think i can say doug in here because we've complained about this from our various perches from a while, tend to worry about the extend to which this employer tax exclusion on health benefits distorts the system in lots of different ways and now it's a very large tax expenditure. if you could apply the payroll tax to the value of employer-sponsored health insurance benefit, maybe phase it in, they phase it in over 10 years, that could really take some of the pressure off of social security. if in fact, according to their analysis it reduces almost half of the 75-year gap that the actuaries estimate. so the idea would be that the growth of these fringe benefits, because of the increasing health care costs, the growth of

employer-fringed benefits has put pressure on costs in the health care system and it's eroded the social security tax base because remember wages are taxed, nonwage benefits are not. so this takes the payroll tax and applies it to some of those nonwage benefits and a gradual way. look, a sure applause line, i used to write speeches for politicians, a sure applause line among politicians is america's the greatest country in the world. and that's as it should be. patriotism runs strong in our veins and mine and yours as well, i'm sure. but what do we really mean by this? what is it that makes us such a great country? in my view it's no exaggeration to say that it's ideas like social security, ideas that tie us together, ideas that by their nature provide security and respect to those who raised us and those who spent their lives helping to build our future. so those are the ideas that i think would help to fix and maintain this program well into

the future. thank you. [applause] >> thank you very much, dr. bernstein. you know, let me make a comment on the high, low income seniors. clearly low income seniors suffer more during this heat wave that we're having. why? because of the high cost of electricity. they can't afford to turn on their air conditioning. and that's a shame. more people die of heat waves than they do in freezing weather. another observation, the social security trust fund, please explain that to me, i still can't understand it, that trust fund, i was coming across the bridge the other day, coming into town, i was talking on my cell phone and my driver, a senior citizen, said, mr. martin, i'm drawing social security now, i don't understand what all the hull about a lew is about about us not getting our social security checks during this debt ceiling debate and

then he surprised me further, he said, after all, we've got a social security trust fund sitting there that we've paid into, he said, i've paid into all my life, you have,, too i said, true, and i was pretty encouraged by that. i said, do you understand how much is in that trust fund? he said, yeah, over $2 trillion, maybe $3 trillion. i said, well, there's not really anything in there. i know it's stacked by the full faith and credit of our government, that's kind of scary now in this period of downgrading. but the fact is he almost raver ran off the bridge. he looked back at me and said, what, there's no money in it? that's a sad commentary but that's the trust fund. i call it a bust fund. there is no trust, there is no fund. now, i'm going to turn to dr. douglas who has a distinguished record as an economic, a powell advisor and a -- academic, a policy advisor and a political

strategist. during 2001 and 2002 he was chief economist for president george w. bush's council of economic advisors. from 2003 to 2005 doug directed the nonpartisan congressional budget office which provides budgetary and policy analysis to congress. during 2007 and 2008 he was director of domestic and economic policy for the john mccain presidential campaign. the doctor has held positions in several washington-based think tanks including the peter peterson institute for international economics and the chair in international economics at the council of foreign relations. he's also been a visiting fellow at the american enterprise institute and the heritage foundation. he received his ph.d. from princeton, he began his career at columbia university in 1985 doesn't look that old but i guess he is. he moved on to syracuse university from 1990 to 2001.

at syracuse he was trustee professor of economics at the maxwell school. he was chairman of the department of economics. the doctor serves on the boards of the tax foundation, national economists club and the committee for a responsible federal budget. the floor is yours, sir. [applause] >> well, thank you. happy birthday to social security. hope i make it to 76. >> i also have three parts to my remarks. anyone who talks about the system at this point in time has to document the problems that are out there and spend a little time on that. then i want to, for the purposes of framing the debate, talk a little bit about what i think are the five crucial decisions that one has to make in thinking about the future of social security and once you go through that list you'll know where you stand in terms of reforms and i'll close with some thoughts

about the way i think the united states should go. but let me just start with the problems. the top problem that you hear so much about is the financial condition of social security. and there are many different numbers, there are a ga zillion different metrics and it is absolutely, positively easy to get completely baffled by what is going on. so the simplest way to think about this is that revenues in the system are about 5% of g.d.p. as far as the eye can see. that's line number one. and line number two, which is benefits that have to come out, used to be about 4.5%, we used to run surpluses, but the surpluses are gone, benefits are now above the revenue coming in and they're going to rise to about 6.5% of g.d.p. so the problem is that benefits are here and revenues are here as far as the eye can see. now, you can add that up for 75 years or you can do buzz lightyear math and add it up to infinity and beyond and get all kinds of different numbers but the policy problem's very simple. we have promised benefits that exceed the revenues for the

system as far as the eye can see and that has to be addressed somehow. i'll come back to that but i think there are problems that get lost inside that have that are also equally as important. the first is that there are very different problems in the retirement part of the system which is about 82% of the spending, and the disability part of social security which is about 17%. and often disability gets lost in this discussion. i'm not a disability insurance expert, won't pretend to be one, but anyone talking about social security reform has to remember this isn't one thing and that the reforms have to be done in conjunction with another another, we have to get that right in doing a reform. second thing to remember is that social security is a powerful government policy and as a result has powerful incentives for the functioning of the economy. it affects how much we save, it affects how much we work and how long we work and we ought to think about the economic incentives that we are presenting people with when we do social security reform and not just count the dollars in

and the dollars out for purposes of doing the financial accounting. and it troubles me sometimes when we forget that this is such an important part of our economy. third thing that i think jared mentioned but i want to emphasize is that most people who look at the system end up coming to the conclusion that the minimum benefit is too low. so that when you're doing reforms in the face of financial difficulties, step one is to make them worse and actually over time raise the minimum benefit and then figure out how you're going to make the rest of it add up because i think there is a universal agreement that this part of the system has to be addressed. and then lastly i think the key problems are really the problems of uncertainty in the political process and as jim put it, yes, we're not here to talk politics but the fact that we don't fix social security, the fact that we now have workers uncertain about the nature of the deal they're going to have on social security when they retire, is a

disservice to everyone. and that uncertainty is bad economics, it's bad policy and it ought to be resolved as quickly as possible and indeed every year that we delay in fixing the system we make things harder and so we should address the -- address the fact that the failure to reform social security and put it on a solid and sustainable footing is bad policy in and of itself. what you need to do to fix it is go through the list and decide where you're going to be. step number one is how much are you going to do on the tax side and how much are you going to do on the benefit side? and there are lots of ways to disguys are those things but you have to make a decision about where you come down on that. that is the most politically charged of the decisions that a congress will ultimately have to make in reforming social security. step two, which is different but equally charged, is whether you want to continue the practice of funding social security on a pay as you go basis, where current workers pay the benefits of current retirees or do you want to move to a system that

prefunds where each individual pays for their own social security in retirement. if you make a decision about that, you dictate a lot of your ability to handle the financial problems of social security. the problem again is, on a pay as you go basis, the revenues coming in are not enough to comfort benefits moving out, if you move to a prefunded system, that problem hasn't gone away. now you have two things you have to pay for, current retirees and your own retirement and you have to figure out how to solve that problem. third decision you have to make, how progressive do you want the system to be? just how much in the way of benefits and taxes do you want to assign to each part of the income distribution and the system is currently progressive in its overall nature but could you make it even more progressivive, you could, for example, not make it a universal program by not providing benefits to very high income individuals, that will make for a very contentious political debate but that's the nature of a decision you have to make and where you come down with that.

fourth one is what kind of incentives you want to present, with work longer, retirement ages, things like that. probably no real political heat there because it's hard to get the political class excited about the things that jared and i spent our younger years mastering but it is an important part of it. and then lastly, how are you going to handle the transition from what we have now to any reform system? to what extent will you exempt those currently retired, most people would conclude absolutely, you can't change that deal. how about those near retirement? well, the sort of standard operating procedure in social security proposals for the past decade, they've been to exempt those near to retirement and that's been defined as 55 or older. that i think is a very important decision when you make that because it absolutely increases the urgency of doing social security reform quicker and quicker because in the end the

fundamental problem is the demogreaf. it's the retirement of the baby boom generation. i am the trailing edge of the baby boom generation. i'm 53 years old. so if you grandfather in someone 55 or older, you have two years or you'll grandfather the baby boom which means you've grandfathered the problem. my bumper sticker for social security reform has been get doug and i think that this increases the urgency that we see action and see action quickly. so where do i come down on solutions? well, i'm going to agree with some that jared mentioned and offer some others. first of all, i agree with always run government programs with accurate measures of inflation, so i endorse the c.p.i., every american should become familiar with that term. i would favor slimming benefits in a highly progressive way. certainly you could change the benefit formula to have a lower replacement rate for high

lifetime earners, you can do the proposal by a mixture of wage and price indexing, the initial benefit in retirement, i'm pretty much indiven about how do you it but i think that having a universal program that is less generous to the affluent is absolutely a sense of the way to go. i at least would raise the normal retirement age but would retain the same early retirement age and worry a lot about the line between the program and the retirement program as do you this because i think jared's observations on longevity are matched by things we know about the correlations between health and wealth and the strong positive association, you want to make sure you have this well calibrated income distribution. i'd raise the minimum benefit. i think you have to do that. and i at least would add on a

private investment account with an additional payroll tax, an add-on account, not using the existing payroll social security structure, because we don't have adequate retirement savings either on the personal side or in the employer retirement system and we need to find different ways to give people both access to the higher on average rate of return equities with the acknowledgment that there's risk there, we've all seen that, but also to just expand the base of the retirement security. now, things not on that list you'll notice are raising the payroll tax rate or raising the cap and here's why. one possible reason is i'm a crazy reagan republican. i thought i'd preempt that. we in fact do face in my view an incredibly threatening fiscal outlook. every one of our social safety net programs, social security is

running red ink, medicare runs $280 billion of red ink a year, medicaid is essentially being paid for on our children now, entirely debt financed. these programs are a disservice to their beneficiaries we cannot rely them to be there, they often don't serve their constituencies well, medicaid is by no idea a good health program, and we're going to have to reform all of these in some deep and fundamental ways and we simply cannot tax our way out of these problems. there is no projection that i've ever seen that you could say this is a problem that we could tax our way out of we might need to race taxes in dealing with the problem but i think the boles simpson commission provided an important lesson there where you -- bowls simpson commission provided an important lesson there. i take that lesson seriously and so i avoid going there on social security payroll tax and i also

am painfully aware that the place where we're most likely to need more revenue to cover our spending problem is going to be in medicare and medicaid, health programs in general. if you got that risk, i don't think you start out by solving social security, i think you reserve that for the place where it's most likely to raise its head. so i would do this on the benefit side and there are many claims out there that show you can add this up and make it work. in closing let me talk a little bit about jared's idea on the plan, exposing the employer-sponsored health insurance to tax. i hope there are no trained economists who argue that it's a good idea to have an open-ended tax subsidy to any activity that is more generous to the rich than to the poor. and that's exactly where what our current tax treatment employer-sponsored health insurance is. so it is in the eyes of most analysts bad health policy, it is certainly bad tax policy and one certainly ought to, as part of the tax reform i mentioned

earlier, absolutely change that tax treatment. and find different ways, if you want to subsidize health insurance, to target that subsidy more effectively across the income distribution and to make people more cost conscious at the margins. i think that's very important. it included the payroll tax net reform, paul ryan included the payroll tax in his proposed reform so this is not new and certainly in the spirit of putting everything on the table i certainly think that should be on the list. my guess is though when you finally collect $1 of taxes off employer-sponsor health insurance it's going to go out the federal door and you health care label before it goes out under social security. but i again want to thank everyone for the chance to be here today. it is always a pleasure to listen to jared and then disagree with him and i look forward to the discussion. [applause] >> i want to thank everybody and thank or panelists and i want to ask jared bernstein if he'd care to respond to that.

then we're going to entertain any questions that you may have from the audience. we have a microphone that will be passed around so we want to you state your name and to direct your question to one of the panelists but first dr. bernstein probably wants to respond. >> just very briefly, i thought doug framed things well and set them up -- set us up for a good q&a. there are two points that doug made that, one i want to clarify, one i want to very strenuously disagree with with deep respect for my buddy. the first is, doug distinguished -- made a very important distinguishing comment about the difference between means testing benefits, means testing social security benefits as a way to make the system actuarialy whole. as one of the contributors. and changing the benefit formula at the high end of the way we

calculate these things so that people who had very high earnings throughout their life would have lower social security benefits than they would under the current plan. those are two different approaches and substantively and i think in terms of actually their effectiveness are quite different as well and i very much would oppose means testing and again if we're going to go to a benefit -- if we're going to get some of our savings from cutting benefits i thought the second part of that was a much better way there are administrative complexities, bad incentives regarding older people's marginal tax rates, but mostly, the problem is, and it gets to my point about how benefits, even though they are not that generous, mean so much to even middle income seniors. a means test that raises enough revenue would have to go way down into the scale. you would have to start taking

in come away from middle-class beneficiaries at i don't they do what to do that. the thing i strongly disagree with -- you can correct me if i'm wrong, i think doug said he wants to get 100% of the revenues to fix social security from the benefit side. if that is your position, i think it is unfair and very much misguided in a spirit of what i was talking about. >> would you care to respond? >> i agree on the first one and that's what i said, i believe it is feasible, if you look at lots of different options, it's not hard to begin the reforms that meet that test. the second reason, it is the strategy we are going to have to face as a country on dealing with an overwhelming deficit problem.

there's a big difference between looking at social security in isolation, have to fix social security as opposed to for the economy affixing social security and many other things which we will have to fix. >> i am the former chief of staff at the house aging committee. i worked in the clinton white house and i enjoy doing op-ed on this subject and i have been on a radio show with you. i'm always very impressed with your work on television. i'm distressed when i come to a panel like this and think it's going to be objective and it is as much to to one as i have ever heard a panel be. a couple points of want to make. the trust fund, questioning whether it is real money when my former bosses, to bone meal and that ronald reagan had the deal

in '83, they knew they were creating a system that seniors would pay in and it would go to saving social security, right through what is now, which is 2037, and that would have to be tweaked after that. there was no debate. that was the deal was struck. to say there is no trust fund. when you go to the trust fund right now on social security's website, it is there and graft year by year. there have been 11 years starting in 1963 where the trust fund actually was tapped to pay that particular year's deficiency. this is not a new thing, that through 2037, there would be years the trust fund has to absorb. it is like telling your bank that you could use my money for other things, we don't care, but that argument does not hold. that is the seniors' money, and its solid. it's not a matter of dollars and

cents, it's a matter of the kind of country we are and what our priorities are. social security and medicare are not just dollars in, dollars out. they stopped hospitalization, food stamps, so what is the cost to america view downgrade these program to let taxpayers will have to pay for the recovery of that half of senior citizens you say are saved from poverty, the 90% -- one other point i need to raise for a question. private accounts -- boy would i want -- why would i not want a private account if when bill clinton was president the stock market was at 14,000 and it's now at 11,000. that is real food of seniors table if you have privatization of any kind. as white people like nancy pelosi and others say do no harm. to go that route is an outrage to seniors, stealing so you can give tax breaks to the oil

companies and all that. >> die respond to your question? -- can i respond to your question? >> before we go there, i would like to respond to your question. i used to interview the center when he -- the senator when he was still in the house of representatives. i love culpeper. he helped some a seniors out of poverty, including my mother who worked into her 80s. she depended on her social security check, quite frankly. we could go on all day about privatization and the stock market going up and down, over a 44-year history of the market, i challenge you to tell me it has not grown during the 44 years. that is the life cycle of the average working man and woman.

the fact is i would like to have douglas respond. >> i think we both want to respond. thank you. great point. i particularly want to get back -- i disagree with jim as strongly as you do on his point that those bonds are meaningless. it essentially, you say you're going to default and we just went through a time of saying we're going to default and it extremely destructive rhetoric. on the stock market, i totally agree with your points about privatization. the problem with the stock market and private accounts is that it introduces a timing dimension into social security that doesn't exist when you have a guaranteed benefit. if you happen to retire in a down market, you are screwed. what is interesting is that canada has, invests part of

their trust fund in equities. the center for american progress, which has good liberal street credit, is suggesting a plan to help solve social security topos financial problems by investing 25% of its trust fund in equities. you maintain a guaranteed benefit like they do in canada, but you track the growth in equities. if you think of the shortfall in terms of the payroll tax gap, that would close about 40% of that gap. >> first and foremost, on the trust fund, there is a longstanding dispute about just how much they do when they passed the 83 reforms. shortly after they were passed, there were revisions that showed the surpluses and deficits were not what they bought during the discussion. i will leave that to the

historians. there remains a dispute. second, in terms of a trust fund, the sad fact is, if you take a bond out of the trust fund and walked out of the treasury and sat want to redeem it, the treasury can redeem it in one of three ways. it can either give you another bond or is going to have to go borrow some money or cut spending or raise taxes. the bond in and of itself does not carry the value. it's the sprawl -- the power of the treasury and the power of the congress. >> [crosstalk] >> i will respond for myself. third, my proposal was not privatizing social security. it is keeping the same defined benefit plans and adding on an

additional savings. that's very different. we do know something about how these various accounts have performed. they do not have to be all equities. you can get ahold of treasuries if you want. we did in fact, in the united states, allow the railroad retirement fund to invest in equities. managers have done at and if you compare the performance of the retirement fund, which includes some fairly choppy financial years, let's leave it that, it far exceeds investment in treasurys even what went -- even with what went on in 2008. i would like to see this debated on the merits because we have in fact retirement problems. last, i would not disagree that this is about values. ultimately, but it's our policy and our policies reflect our values and i certainly believe

there's a good case to be made on the value of benefits to the poor and taxes to the rich, and i addressed why i came down where i did. the one thing that has not been addressed enough is everyone is quick to say they're unhappy their taxes went up for their program that cut. but if we don't do some of those things, we're going to ask our children to do one or both in the midst of a damaged economy, which is fundamentally unfair, almost immoral. let's not forget those constituents who are yet unborn and very important. >> back there. >> i am nervous. excuse me. my name is judy lear. just like the king. i'm the national chair of gray panthers.

we, too, are celebrating a birthday and i have a press release of social security, 76 years. we are doing it with a media watch campaign to know the facts about social security. to fight truth decay, to make sure some of the things you are saying, people understand it is not true. such as the fact that the trust fund is going to go broke. it will not go broke. i want to advocate for raising taxes. >> your question to all the panelists? >> i want to know why, right now it is that approximately $108,000. even if they raised it to $250,000, think about how much

more money. you are economists and you would be able to tell us how much more. how much more could be and if you raise it all the way to 4.2%, it just dropped down to, how much more would go into the system? >> thank you. >> and jared is looking at the number you want. it's an older number. it is important to distinguish two different things. one is raising the taxable maximum and continuing the tradition of having benefits awarded of all earnings, if you do that, you may raise the tax revenue but since you're going to give out more benefits in the

future, you don't solve these problems by doing that. the alternative is just raise taxes, don't award additional benefits on those earnings which are now being taxed. that changes the character of social security and many people are uncomfortable with that idea, that you break the link between the tax base and benefit base and break a key feature of the system. i am not wild about raising taxes because number one, we've got lots of financial problems that i don't think this is the one that will drive us as much as some of the others. second, it strikes me that we need a reform, not just a flat increase. that is the place i would rather go. >> the increase to apply the payroll tax to a higher level of income strikes me as absolutely part of the reform plan. >> to provide benefits as well?

>> yes. if you took it up to 90%, including providing benefits, you would close 40% of the outstanding gap over 75 years. that ain't nothing and there is a menu here. at the cpi, that gets you to a little bit under 50% -- bubble the under 50% of the gas -- all little bit under 50% of the gap. but i want to focus on your point which is in direct contrast to doug's view. we should not close any of the gap through taxes, we should close all to the benefit cut side. there is a great op-ed in today's "new york times" by warren buffett which talks about

just -- he calls it cobbling millionaires. not only how much income has accumulated at the top of the scale, but how the taxes as millionaires and billionaires are paying have declined. he talks about paying a 17% effective tax rate on his income, which i calculated to be $40 million. that is his taxable income. i'm sure he has other things going on. he says everyone knows office pays between 20% and 30%. the reason why you are applying this payroll tax to such a considerably smaller share of the income scale is because of this concentration of earnings. it is very important to tap some of that, correct some of the imbalance, especially when it is distributed through a progressive program as efficient as social security.

>> let me respond briefly. >> just so all the cards are on the table, american told to be true to things which are contradictory. they believed rich people don't pay taxes, but we should get more money by taxing the rich. someone is going to have to figure out how to resolve this contradiction in my view. the answer is to figure out how you want to tax the rich, which is to say have real tax reform that makes it impossible through financial manipulation to legally avoid taxes, which is a big chunk of what is going on. i would be all for that. how you tax rich people, not just taxing them that matters. a lot of the discussion as highly misplaced. the second issue is fairness. social security is fundamentally redistribute story. -- redistribute tory.

morere going to on net pay than they get out. i've always baffled by the asymmetry in the discussion. it's about the net in opec -- the net impact of the programs for people of different lifetime earnings. fairness is in the eye of the beholder. there will never be a scientific education of these disputes, but it strikes me that if you look broadly at entitlement programs, and for many in social security, they have paid far less than they took out. that is been the history of the program. it will continue some, but not much in the future. certainly in medicare and medicaid, the largest tax they pay and is the payroll tax and they pay far less than they get back in benefits. that means for those paying income tax, which is only 50% of americans and 5% of americans' basic the% of the tax they pay

-- these people is payroll tax our necks -- are net winners. high-income americans pay for it and they are providing all of the basic government our founders are envisioning. detail the defense, infrastructure, research, and it strikes me as quite odd when a tiny minority is providing all the government to say it's unfair that not provide more. i don't understand it. >> that's not the case for payroll taxes. >> but they are getting out more than they pay in. >> let me intervene and comment on the social security trust fund. i don't care what you tell me. it's broke. the fact is, it's like -- a journalist once said it putting $50 a year pay check in on friday into a shoe box under your bed for daughter's college

education 18 years from now. but on wednesday, you borrow 50 back and put in an i/o you. as doug has pointed out, you either have to cut benefits, raise taxes, or scary as the ball in today's economy, borrow the money. -- scariest of all in today's economy, bar the money. maybe we could borrow from china. our time is up. i want to thank you for coming. you want to thank our tv and radio audience. you want more information about 60 +, visit our web site. we have over 7 million seniors we rely on for keeping abreast of events that affect them. i would be remiss if i did not think the 60 + staffers here today.

[reading names] and our newly installed president, who is out of town recruiting citizens to our banner. i see that our time is up. thank you most sincerely for yours. give our panel another round of applause. [applause] i have to add this -- while someone says it is at 2 to one a conservative, it is 322 because we got three questions from the liberal side. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> next, british prime minister david cameron speaks to his constituency of all whitney on the government's response to the riots. he focuses on rebuilding the broken society and addresses parenting styles, punishment for

juvenile criminals and improving the education system. he wants politicians about shying away from moral and social issues like behavior and welfare. younger members of the audience asked question about blaming the youth and single-parent and poor families. this is 35 minutes. thank you very much. a warm welcome to you here today. it is related to see you. we are really glad that on such a beautiful sunday morning that you have made the time to come here, especially to our young people who all received a phone call this morning to make sure you were awake and on time. thank you for turning out. it is my great pleasure and privilege to ask you to welcome

the prime minister, the right hon. david cameron. [applause] >> thank you. thank you very much. it's great to be back in base 33. i concede hasn't gotten any cooler since i left my speech here. but it's great to be here and great of you to come. i believe it's time for our country to take stock. last week, we saw some of the most sickening acts on our streets. i will never forget talking to morris reeves, whose family had run the reeves furniture store for generations. this was an 80-year-old man who had seen the business he loved that his family had built up for generations simply destroyed and burned to the ground. 100 years of hard work burned to the ground in just a few hours. but last week, we did not just see the worst of the british people. we saw the best of them. the ones who called themselves

the riot grumblers headed down and started the cleanup. the people who linked arms to stand and defend their homes and businesses. the policemen and women and officers who worked long, hard ships, sleeping in corridors and going out again to put their lives on the line for the rest of us. everywhere i've been as last week, manchester, birmingham, people of every background, color and religion, have shared the same moral outrage and hurt for our country. because this is britain. this is a great country of good people. those thugs we saw last week did not represent us and they don't represent the young people in our country either and they will not drag us down. but now the fires have been put out and the smoke has cleared. the question hangs in the air, why? how could this happen in our streets and in our country? we mustn't oversimplify. there are different things going

on in different parts of the country. some of the anger was directed at the police. there'll was some organized crime, a calculated attack on the forces of law and order. but what we know for sure is that in large parts of the country, this was just pure criminality. as we begin the necessary processes of inquiry and investigation, of listening and learning, let's be clear -- these rights were not about race. the perpetrators and victims were white, black, and asian. these were not about government cuts. they were directed at high street stores, not at parliament. these rights were not about poverty. that would insult the millions of people who, whenever the hardship, would never dream of making others suffer like this. this was about behavior -- people showing indifference to right and wrong, people with a twisted moral code, people complete absence of self restraint. as soon as i use words like

behavior and moral, people will say what gives politicians the right to lecture us? we're not perfect. our marriages and relationships break down and we get things wrong. but politicians shying away from speaking the truth about behavior, morality, this is actually helping to cause the social problems we see around us. we have been too unwilling for too long to talk about what is right and what is wrong. we have too often avoided saying what needs to be said about everything from marriage to welfare to common courtesy. sometimes the reasons are notable. we don't want to insult our people. sometimes their ideological reasons. we don't feel it's the job of the state to pass judgment on people's behavior or engineer personal morality. sometimes, there are just human reasons. we are not perfect beings and we don't want to look like hypocrites. you cannot say marriage and commitment are good things for

fear of alienating single mothers. you don't deal with properly with children who come -- you fail at school because you are worried about stigmatizing them. you worry about talking about those who never worked and never want to work in case your child was not getting it was being middle-class or being out of touch. in this risk free ground of moral atrocity, there are no bad choices, just different lifestyles. people are not the architect of their own problems, they're the victims of circumstances. live and let live becomes do what you please. last week has shown is that this world a trout become this relativism is not going to cut it anymore. one of the biggest lessons as we have to talk honestly about behavior and that act because bad behavior has luckily r.i. down people's doorsteps and we cannot shy away from the truth anymore. this must be a wake-up call for our country. social problems that have been festering for decades have

exploded in our face. just as people wanted criminals robustly confront a better streets so they want to see these social problems taken on and defeated. we must fight back against the attitudes and assumptions that have brought parts of our society to this shocking state. we know what has gone wrong. the question is do we have the determination to put it right? do we have the determination to confront the slow-motion moral collapse that has taken place in parts of our country? irresponsibility, selfishness, behaving as if your choices have no consequences, children without fathers, schools without discipline, reward without effort. crime without punishment, rights without responsibilities, communities without control. some of the worst aspects of human nature tolerated, indulge, sometimes even incentivized by state and its agencies that have

been part become literally demoralized. do we have the determination to confront this and turn around? i have a very strong sense that the responsible majority of people in this country not only have that determination, but they're crying out for their government to act on it. i can assure you i will not be found wanting. in my first act as leader of this party, i signal my personal priority to mend our broken society. that passion today is stronger than ever. yes cali have an economic crisis to deal with and a terrible mess we inherited, and we're not out of the woods yet, not by a long way. but i repeat today as i have on many occasions, that the reason i'm in politics is to build a bigger and stronger society. stronger families, strong communities, a stronger society. that is what i came into politics to do and shocking events of last weekend renewed in me that drive. i can announce today that over

the next few weeks, i and ministers from across the coalition government will review every aspect of our work to amend our broken society on schools, welfare, families, parenting, addiction, communities, a cultural-legal bureaucratic problems of our society to, from the twisting and misrepresenting of human rights that have undermined personal responsibility to the obsession with health and safety that has in many ways eroded people pause willingness to react with common sense. government is taught not to change behavior, but it is wrong to think the states a bystander because behavior does not happen in a vacuum. they are influenced by the services government provides and how they're delivered and perhaps above all by the kinds of behavior encouraged and rewarded. yes, the broken society is back at the top of my political agenda. first and foremost, we need a

security fight back. we need to reclaim our streets from the thugs who did not just bring out of nowhere last week, but have been making people lives a misery for years. there have been questions in people's minds about my approach to law and order. nothing in this job is more important to me than keeping people safe. it is obvious to me that to do that, we have to be tough, we have to be robust, we have to score a clear line between right and wrong through the heart of this country at every street in every community. that struck -- that starts with a stronger police presence, pounding the beach, deterring crime, ready to crack down at the first trouble. this government will always have enough police officers to scale up deployments the way we saw last week. to those who say this means we need to abandon our plans to make savings in the police budget, you are missing the point. the point is what matters in this fight back is the amount of time the police can spend on our streets. for years, we had please

suffocated by bureaucracy, officers spending time stuck behind a desk, filling in forms. this will not be held by keeping things as they have been. as the home secretary will explain tomorrow, it will be changed by fixing the way police work, scrapping paperwork that holds them back, get it now on the streets where people can see them. reforms mean that people are going to answer directly to the people. if you want more tough, no- nonsense policing, make sure the police spend more time confronting people in your neighborhoods, less time meeting targets by stopping motorists, if you want the police patrolling or seats instead of -- patrolling our streets and set of sitting behind desks, it is the answer. they will provide direct accountability so you can get what you want when it comes to policing. the point of our police reforms as not to save money, not to change things, but to fight crime. already, we're giving backing to

message -- we are giving police officers the power to remove face covering from riders and more power to confiscate offenders property. over the coming months, you will see much more. but it's time for something else -- a concerted all out war on gangs and gang culture. this is not some side issue. it is a major criminal disease infecting streets and states across our country. stamping out these gangs should be a new national priority. last week, i set up a cross- government program to look at every aspect of this problem. the last front in this fight is a proper punishment. on the radio last week, they interviewed one of the young men looting in manchester. he said this -- he said and going to carry on until i get caught. this will be my first arrest, he said. the prisons were already overflowing, so he could live with that. what we have to show to him and

everyone else is that the party is over. i know when politicians talk about tough sentencing, people all their eyes. we saw the criminal justice system deal with an unprecedented challenge and the court sat through the night and dispensed swift and firm justice. we saw the system on the side of the law-abiding majority. confidence in the system is still too low. believe me, i understand that anger with the level of crime in the country today and i am determined we sorted out and restore people's faith that of someone hurts our society, if they break the rules, then society will punish them for it. but we need more than that. we need a social fight back with big changes right to our society. let me start with families. the question people ask over and over past week was where are the parents? why are they keeping rioting kids indoors? tragedy, that was followed by

judges implementing, why don't parents turn up when their children are in court? join the dots and you have a clear idea why some of these young people were behaving so badly. either there was no one at home, they didn't much care, or they have lost control. families matter. i don't doubt many of the rioters last week had no father at home. that has come from one of the neighborhoods where it standard for children to have a mother and dad, looking to the streets for a father figure, filled up with rage and anger. if you want to have any hope of ending are broken society, family and parenting is where we have to start. i have been saying this for years, since before i was prime minister, since before i was leader of the conservative party, so from here on, i want a family test applied to all domestic policy. if it hurts families, if it undermines commitment, if it tramples of the values that keep

people together, or if it stops families from being together, that we should not do it. more than that, we've got to get out there and make a positive difference to the way families work, the way people bring up their children. we frankly have to be less sensitive to the charge that this is about interfering or nanny. we're working on ways to help improve parenting. i want that were accelerated, expanded and implemented as quickly as possible. we'd more urgent action on the family's some people call problem or others called trouble. the ones everyone in the neighborhood knows and often avoids. last december, i asked pam harrison to develop a plan to get these families on track. asbecame clear to me that's, can so often happen, those plans were held back by bureaucracy. before the riots happened, i ask for an explanation. now that the riots happened, i will make sure we clear away the red tape and put rocket boosters

under the program. i have a clear ambition that within the lifetime of this parliament, we will turn around a lives of the 120,000 most troubled families in this country. the next part of the social fight back is what happens in our schools. we need an education system that reinforces the message that if you do the wrong thing, you'll be disciplined. but he worked hard and play by the rules, you will succeed. this is not a distant dream. it's already happening in schools all over. they expect high standards and don't make excuses for failure to work hard. they foster pride through strict uniform and behavior policies. they provide an alternative to street culture by showing that anyone can get up and get on of the apply themselves. kids from hammersmith to pack the are going to top universities thanks to schools like this. we need many more of them which is why we are creating more academies and why the people behind the success stories are

opening free schools inside the state center and why we placed a turnaround on the 200 weakest schools and at 200 weakest primaries in the next years. with the failures so deep, we cannot just say here are the plans, we believe in them, so let's sit back while they take effect. i want us to push further and faster. are we doing enough to insure great new schools are being set up in the poorest areas to help children that need them most? why are we putting up the complete scandal schools being allowed to fail year after year? if young people have left school without being able to read or write, why shouldn't that school be held more accountable? just as we want schools to be proud of, we want everyone to feel proud of their community. we need a sense of social responsibility a part of every community. the truth is that for too long, the big, boxy, bureaucratic state has helped drain the responsibility away. it has usurp local leadership

with its aimless whitehall dictates and has frustrated organizers with will and regulations. it has denied local people and real say about what goes on where they live. is it any wonder people don't feel they have a stake in their community. we are taking steps to change it, trading organizers to work in the most deprived neighborhoods. we want to encourage social interaction and give people a chance to improve the committee where they live. changing the planning rules and giving people the rights to take over local assets. i want to ask, are these changes big enough to foster the sense of belonging that we want to see? that is what we will be looking at. one of the biggest parts is fixing the welfare system. for years, we had a system that encourages the worst in people, and cites laziness and excuses' bad behavior and discourages

hard work. above all, it drains responsibility away from people. we talked about moral hazard and the financial system when banks act recklessly because the state will bail them out. this is moral hazard and our welfare system -- people think they can be irresponsible because the state will bail about. we are addressing this through a reform bill going through parliament. i'm not satisfied we are doing what we can. for those of work and receiving benefits, speeding up those who can get work in to work. work is at the heart of a responsible society. getting more young people into jobs or up and running their own businesses is a critical part of how we strengthen responsibility in our society. our work program is the first step with local authorities, charities, enterprises all working together to provide and foster the best help for people who want to get a job.

this leaves no one behind. it includes people, i've seen as myself, who have been on welfare for years now getting the chance to work. as we consider these questions of attitude and behavior, the signals government funds, the incentives it behaves -- let me be clear in this country, we are proud to stand up for human rights at home and abroad. what is alien to our tradition and exerting a corrosive proof on reality is the twisting misrepresenting of human rights in a way that undermines personal responsibility. we are attacking this problem for both sides. we're working to develop their way through by creating our own british bill of rights and we will be creating a current chairmanship to seek agreement for important changes to the european could budge on human- rights. but all this is frustratingly slow.

the truth is, the interpretation of human rights legislation has exerted a chilling effect on public sector organizations, leading them to act in ways that fly in the face of common sense, defend -- often are some of right and wrong and under my responsibility. it's the same with help and safety, where regulations are often twisted out of all recognition and to a culture where health and safety are regularly trotted out to have regulations that damage our social fabric. i get. this stuff matters. as we review the work we are doing on the broken society, judging whether it is ambitious enough, i want to make it clear there will be no holds barred and that will include the human- rights and health and safety cultures. many people have long thought that the answer to solve these questions of social behavior is to bring back national service. in many ways, i agree with that sentiment and that's why we are introducing something similar --

national citizens' service. it is a program that captures the spirit of service. it takes 16-year-old from different backgrounds and gets them to work together. they work in their communities, coaching younger children to play football or visiting old people hospital. it shows that doing good can feel good. the real thrill us from building things up, not tearing them down. t work, discipline, duty, decency. these words may sound old- fashioned, but it's part of the solution to this modern problem of alienated, angry young people. restoring those values is what it's all about. i passionately believe in this idea. it is something we have been developing for years before i became prime minister. thousands of teenagers are taking part and the plan is for 30,000 to take part next year. i say this -- it should become a

great national effort. let's make the service available for all 16 year-old as a rite of passage. we can do it if we work together. in the months ahead, i will be putting renewed effort into making it happen. today, i have talked all lot about what the government is going to do. but let me be clear that this social fight back is not a job for a government audit of own. government does not run the businesses that create jobs and turn lives around. government does not make the videogames or produced a music or magazine that tells young people what is important in their lives. government cannot be on every street and every state, instilling values that matter. this is a problem with deep roots in our society and it's a job for all of our society to fix it. in the highest offices and most plush boardrooms, the most influential jobs, we need to think about the example we are setting. world decline and bad behavior

is not limited to a few of the poorest parts of our society. in the banking crisis, and the phone hacking scandal, we have seen some of the worst cases of greed, irresponsibility, and entitlement. the restoration has to cut across our country. whatever the arguments, we all belong to the same society and we all have a state -- real- estate and making it better. there is no them and us. there is only us. we are all in this together and we must mend our broken society together. thank you very much for coming, and thank you for listening. [applause] >> we have some time for questions if anyone wants to kick off.

>> thank you very much. your welfare secretary has talked about state -- has talked about two specific things. knocking on doors everyday and taking benefits away from those convicted in the riots. do you agree with those ideas where we see them put into place? you make a very big pledge in a speech to turn around a lives of every one of 120 of the most troubled families, before the general election. how can you hope to achieve that and how will we know if you have achieved it or failed? >> let me take the second question first. if you look back on the ground and the figures, there are about 120,000 a very troubled families and our country. they cost a huge amount of money and they are the ones getting visits from social services, the police, probation

-- they are in touch with many organizations of the states, but what we find is no one -- no one is working on those families were working with them to turn around. some councils have done some excellent work of actually getting people into those homes and trying to turn the families around by solving the underlying problems in those families. we should be doing those things on all 120,000 families. we must not be put off by the allegations that this is a nanny state or we are interfering. these families cause huge troubles for the rest of society but they also caused huge problems for themselves. we should not just accept it will have the odd intervention here and get right step in with your sleeves rolled up and we can help to turn some of the ground. ian duncan smith has my full support. i asked him to sit with the home secretary on this task force on

gangs because before he came back into the front line in politics, he spent a lot of time with the social justice commission looking at how we get to grips with family breakdown and societal breakdown and gangs specifically. it is very important we bring expertise from around the country and around world on how best to deal with gang culture. is a growing problem in our country. it has been getting worse and worse. some parts of the country have dealt with that threat combined approach. quite a tough police action against gangs, but also working with all the organizations in society to divert people away from gangs. i want to learn the lessons and bring this to good effect. i think there'll be some very good work on that. >> prime minister, could you tell me how much of a constraint the lower social

spending will be in conducting the social fight back? when looking to the united states, what do you say to those who fear it may import u.s.- style problems of the the more overcrowded prisons and more representation from ethnic minority communities? >> on the first question, i think the idea that the way you solve problems is just throwing money at them, to open a taxpayer check but wider, we have proved that is not the case. if these riots were really about money, we would be having a debate today about money and how to spend it here or there to make a difference. they were not about money. they were about behavior and moral breakdown and people out proper boundaries. of course some of these things cost money. but a lot of it is about doing things differently. we have some excellently funded police forces and i'm convinced we can get more by freeing people up from the back offices

and getting off the street. we don't actually have much money to spend right now. so you are looking at non-money solutions to problems. but many of these problems are not money problems in the first place. there are moral and behavior problems. as far as important advice from overseas, we should recognize different countries have done different things. some have succeeded and some have failed. you should always be prepared to look from the world and see where is good examples of practice and can we learn from it? if you look at the united states, they have a huge challenges of crime and terrible situations with gangs, but they have been dealing with these problems for longer. when you look at the inspirational police chiefs in the u.s., it is right to learn from them and listen to them and see what they have to offer. that is exactly what we're going to do and i don't think anyone should be worried about it.

>> my question is do the young people have any questions? they're here presumably to know what they think about -- >> that is a good question. i was taking the people their hands up first, so let's have the lady here. >> you said about families -- [inaudible] >> the point about families is that is one of the settings in which we could try to address people's problems. every family has massive challenges dealing with each other's behavior. believe me, we had some at breakfast time with my family today. but it's the first line of defense for trying to get people to behave better and understand that your behavior has

consequences. lots of people did not have a supportive family and is important we have other ways of helping people, which is why school needs to be better dealing with behavior. if you are not getting what you need at home, you have another setting with adults working here with you to talk about behavior. of course families -- lots of people don't have the supporting and loving family we want everyone to have and that's why we need other steps as well. it is not good enough for politicians to just say we will let them get on with it and we will talk about the other things we do in parliament, foreign affairs and defense or whatever. we have to get involved because of the wise to meet people will fall through the nets in our society.

>> the more families are undermined and troubled, the more they can act troubled. so that the more self-esteem is running slightly good, the war effort they can become good. >> we are trying to do with these interventions into families is not break them up and criticize them. what you are trying to do is get in there and work out the problems are. and the harrison, one of the things she says is that in some families, you find there is no tradition of sitting around and eating together and talking about problems. everything is on the go, and front of the television, and you never talked about the problems and difficulties in the family. part of it is giving the chance to get people to live their life in a different way to solve problems and deal with them. you cannot expect the hard- pressed the social worker with masses of problems about

children that might be needing -- might need to be taken into care, it is difficult for them to have the time to really spend with a family and work out how to deal with things better. how you deal with your problems together? we find a lot of these prop -- a lot of these families have massive contact with the state. that the social worker and child -- lots of contact but no one actually spending time trying to help rearrange things so that they can deal with problems. this is old fashioned work that social workers used to do when there was less bureaucracy. they could spend more time with the family. we have got to do that and that's why i have been very inspired where people are really spending time with the family. in every family and community, there are brilliant things

happening and it is about finding those things and about applying that to what works elsewhere. it has to be done if we're going to deal with these problems. >> you were talking about going to top schools, but how can you go to the top schools if you can't afford going to the top schools? >> the problem is far along time, we have not had an of schools in the sector. just because it is a poor neighborhood in a poor community, it should not have a great school. we're lucky here, we have some very good schools here. they could be better, but we have good schools. some inner-city schools have no -- some inner cities have no good schools. that's what this is about, getting sponsors into the schools and putting more money into the schools, putting great teachers in charge.

the preschool programs as of yet a great idea for running a new school, you should be allowed to set up in the state sector and if you can attract the people's, you get the money. what i have seen as leader of the opposition and prime minister is schools in inner- city areas actually get better results than some of the school's right here in a relatively wealthy west oxfordshire. it just needs rocket boosters to make sure we get those good schools and to every part of our country. it should not depend on being able to go private, there should be good education within the state sector that is as good as education in the private sector. we need a lot more of it. >> [inaudible]

>> that is a very fair question and it was discussed in the house of commons. my response is to say that one of first started, there were not enough police on the streets quickly enough and the police tactics initially did not work. i said that because that is what police officers told me. i think that is right, but where i think we have to be fair to the police is they are doing an impossibly difficult job. they are suddenly confronting a mob and they do not know exactly what that mob is doing. is it a political protest? is it a riot? is it criminality? it is easy for everyone to say it's obvious what you have to

do. for the police, they are on the frontline, having to adapt and change tactics as it's happening. that is what they did, and they did it successfully with the political support and backing of the government. but the lessons to learn and i'm determined that we're going to learn them through reviews, and quarries, and the rest. but we have to be careful not to be unfair to the police to do a very good job on our behalf. it cannot be said often enough that officers on the front line, and i have met many, they showed extraordinary bravery. we ask them every day to go on the front line and put themselves between us and problems and to risk their lives. lessons have to be learned and it did not get right as soon as it should have done. the police understand that and lessons will be learned in exactly the way you suggest.

thank you very much, all, for coming. thank you to base 33. it's good to be with you. if you did not have the chance, maybe we have more questions downstairs and i will try to answer as many as i can. thank you very much, indeed. [applause] >> president obama said today -- >> track the latest campaign contributions with c-span's website for campaign 2012. easy to use, it helps you navigate the political

landscape with twitter feed and facebook updates, campaign biographies and links to c-span media partners in the early primary and caucus states. >> ladies and gentlemen, -- bill and >> president obama today, said the debt and deficit problems are manageable and the u.s. doesn't have a financial crisis, but a political crisis. president obama began his bus tour today through the midwest states. speaking on u.s. jobs and the economy. president obama is in iowa today for another town hall meeting. from cannon falls, minn., this is one hour. ,7 c1

>> hello, minnesota. what a spectacular setting. grill going. it is wonderful to see all of you here today. thank you for showing up. what an incredible setting. feel free to have a seat, we're going to be your for a while. a couple the introductions. the outstanding governor of minnesota is in the house. two of the finest senators in

the country are here. from your congressional delegation. we have the secretary of the department of agriculture. i am very pleased to be out of washington. [applause] it is great to be here. i am going to say a few things at the top. what i want to do is open it up to questions. i want to hear from you guys. that is the reason we are on

this bus tour. obviously, america has gone through extraordinary challenges. we have gone through the worst recession since the great depression. dating all the way back to 2007 and 2008. here is the interesting thing. if you ask people around the world, people would still tell you that america has the best universities, the best scientists, we have so much going for us. they would gladly trade places with us. [applause] around the world, people still understand the extraordinary power and he -- and the extraordinary hope that america represents. there is nothing wrong with

america that cannot be fixed. what is broken is our politics. [applause] think about it. over the last six months, we have had a string of bad luck. there are some things cannot control. you had an arab spring in the middle east. it drove up gas prices, the tougher the economy, a lot of uncertainty. then you had the situation in europe. that washes up on our shores. you had a tsunami in japan. that broke supply chains and created difficulties for the economy all across the globe. there were a bunch of things taking place over the last six months that were not within our control. here is the thing, the question

is how do we handle these challenges? do we rise to the occasion? do we pull together? do we make smart decisions? what has been happening over the last six months and a little bit longer than that is that we have a political culture that does not seem willing to make the tough choices to move america forward. we have a willingness to play partisan games and to engage and brinkmanship that not only costs us in terms of the economy now, but is going to place the burden on future generations. the question is, can we break out of that pattern? can we break out of that pattern? we just went through the battle with the debt ceiling. an entirely self-inflicted

wound. it was not something that was necessary, we had put forward a plan that would have stabilized our debt and deficit for years to come. because we have a politics in which some folks in congress, not the folks who are here, but some in congress would rather see their opponents lose event america when -- win, we created more uncertainty to an economy that was already weak. we cannot have patience with that kind of behavior anymore. i know you are frustrated. i am frustrated, too. we have got to focus on growing this economy, putting people back to work, and making sure that the american dream is there

for the next generation. [applause] another way of putting this is, we expect our political representatives to show the same level of responsibility that all of your show. i do not know most of you. i can guess about you are working hard, you are managing your budgets, you are putting something away for your kids' college education, maybe for your retirement. you are at a local church, working at a food pantry or doing something to help out your community, coaching little league. you are following through on your responsibilities and that is true all across the country. people are doing the right thing. if you can do the right thing, so can washington.

[applause] if we do that, there is not a problem that we face that we cannot solve. think about it. our biggest challenge right now is putting people to work. the biggest challenge is getting the economy growing as rapidly as it needs to grow. it has been growing, we have been able to reverse the recession, we have added over 2 million jobs in the private sector over the last 17 months. [applause] but we are not growing as fast as we need to drive down the unemployment rate. here are some things that we can do right now. i have been talking about it now for months. we could renew the payroll tax cuts that we gave you in december to put $1,000 in the

pockets of the typical family so that you get more money to spend to meet your obligations. it means businesses have more customers. it means they might hire a few more folks. all we need to do is renew it. it is already in place. that is going to help businesses make decisions to hire people and open up and make investments. that is something that we could do right now. congress can do that right now. [applause] congress, right now, can start putting folks back to work rebuilding america. one of the biggest things that caused this recession was the housing bubble. and all those subprime loans that were going on. you'll think came crashing down. -- the whole thing has been -- the whole thing came crashing down. no one has been hit harder than

construction workers. at a time when interest rates are low and contractors are begging for work, construction workers are lining up to find jobs, let's rebuild america. we could be rebuilding roads and bridges and schools all across america right now. [applause] it could put hundreds of thousands of folks to work right now. there is a bill sitting in congress right now that would set up at the structure bank to get that moving, attracting private sector dollars, not just public dollars. congress needs to move. right now, we have our veterans coming home from iraq and afghanistan. we have taken their place among the greatest generations. i need these young people. -- i meet these young people. 23, 24 years old.

they are in charge of platoons, making life or death decisions, tens of millions of equipment. they come home and they cannot find work. let's put them back to work and use their skills to get this country moving again. congress could do that right now. trade deals, they have not always been good for america. there have been times when we have not gotten a fair deal, or trade deals. but we put together a package that is going to allow us to start selling some frods -- fords to korea. we want some made in america staff in other countries. that is something that congress could do right now.

capt. to reform. it is something that a lot of folks -- patent reform. if we could reform how that system works, we could have gone to print your is creating businesses like google and microsoft right now. all across the country. we have to make this investment. there is no shortage of ideas to put people to work right now. what is needed is action on the part of congress. a willingness to but the partisan games aside and say, we're going to do what is right for the country. not what is going to score some political points in the next election. [applause] we also need to do this anyway -- in a way that allows government to live within its means.

everybody here, you make responsible choices. about what you can afford and what he cannot afford. america needs to do the exact same thing. there are some programs that we should start but -- there are some programs that do not work and we should stop finding them. -- funding them. solving our debt and deficit problem simply requires all of us to share in a little bit of sacrifice, to be willing to do a little bit more to get this country back on track. that is not too much to ask. what we need to do is cut about $4 trillion over the next 10 years. that sounds like a big number. it is a big number. if we were able to cut about $2

trillion in spending, if folks who could most afford its were willing to eliminate some of the loopholes that they take advantage of and the tax code, and do a little bit more, and if we were willing to take on some of the long-term cost that we have on health care. if we do those things, we could solve this problem tomorrow. i put a deal before the speaker of the house, john boehner, that would have solved this problem. he walked away because his belief was, we cannot ask anyone -- in order to close our deficit. warren buffett had an op-ed that you wrote today. we have to stop coddling and

billionaires' like me. that is what warren buffett said. he pointed out he pays a lower tax rates than anybody in his office, including a secretary. he figured out that his tax bill, he paid about 17%. most of his wealth comes from capital gains. you do not get those tax breaks. you are paying more than that. i may be wrong, but i think you are a little less wealthy than warren buffett. that is just a guess. the point is, if we're willing to do something in a balanced way, making some tough choices in terms of spending cuts, the ratings and revenues for folks to have done very well even in a tough economy, we could get control of our debt and deficit

and we could invest in things like education and basic research and infrastructure. [applause] it is not that complicated. it does require everybody being willing to make some compromises. i was in michigan the other day. i do not know about how things work in your house, but in my house, if i said, we have to cut back. you stoppedto have shopping completely. you cannot buy shoes, dresses. i am going to keep my golf clubs. that would not go over so well. some things -- somehow

compromise has become a dirty word. that has to change. that has to stop. with the market's going up and down last week, and this downgrade, some folks worried that we might be slipping back into a recession, i want all of you to understand. there is nothing that we are facing that we cannot solve would some spirit of america first. we're going to choose country over party, the next generation

of the next election. if we're willing to do that, i have absolutely no doubt that we can get this economy going again. weekend -- small businesses can start growing again. but i'm going to need your help to make happen. you are going to have to send a message to washington that it is time for the games to stop. it is time to put country first. [applause] it is time for the games to stop. some folks are asking me, why don't you call congress back? i said, i do not think it is going to make people encouraged if we have congress come back and all they're doing is arguing again. what they need to do is go back to their districts, talk to ordinary folks, find out how

frustrated they are, and hopefully, when they get back in september, they will have any latitude. -- how a new attitude. i want everybody to understand that i am here to enlist you in a fight. we're fighting for the future of our country. that is a fight that we're going to win. that is a promise that i make. thank you very much, everybody. [applause] thank you. all right, everybody had a seat. here is how we're going to do it. i am just going to call on folks and we're going to go girl-boy- girl-boy. picture it is fair. i have a couple -- make sure

that it is fair. right here, go ahead. introduce yourself. >> president obama, i want to say, as a young voter, thank you for helping me believe that it will be good someday. >> is going to be good. >> my question is, how are you going to use renewable energy to create jobs in the future? >> this is a great question. the former governor of iowa knows a little bit about agriculture. when i put tom in as the head of the department of agriculture, one of the first things we talked about was, how can we fulness ofhe resources l

rural communities across the country? we have put billions of dollars into energy research and help move in a direction of greater reliance on fuels that are home grown. let me give you a couple of examples. one is biofuels. a lot of folks are familiar with corn based ethanol. the fact of the matter is, the technology is moving where we need to start taking advantage of a whole range of biofuels. using refuse, using stuff that we do not use for food to create energy. we are seeing incredible progress on that front. it is key to make sure that we continue to make research and that we use the incredible purchasing power of the federal

government to end -- to encourage it. we're working with the department of defense to start saying, let's run some of these -- the department of defense uses a lot of fuel. can we get trucks and jeeps and fighter jets running on alternative fuels? that it's important for national security and it could provide an incredible boost to communities all across minnesota, all across the country. the other thing that we have to do is look at things like wind power and solar power. the next generation of electric vehicles. you'll recall when i came into office, they were talking about the liquidation of general motors and chrysler. a lot of folks said, you cannot help them. it is a waste of the government money to help them. what i said was, we cannot

afford to lose up to a million jobs in this country and we cannot afford to lose leadership in terms of building an auto industry that we used to own. we turned around those odd companies. they are now making a profit for the first time in decades. they are gaining market share for the first time in years. help you, you to have to change your ways. you cannot just make money on suvs and trucks. as gas prices keep on going up, you have to understand the market. people are going to be saving money. what we have now seen is an investment in electric vehicles. we put investment in something called advanced battery manufacturing because those

electric cars, how well they run it depends on how good the batteries are. how long they can run before they get recharged. we only had 2% of the advanced battery manufacturing market when i came into office. we are on track now to have 30, 40, 50% of that market. we are making batteries here in the united states of america that go into electric cars made here in the united states of america. it creates jobs and it creates energy independence. it also improves our environment. that is the kind of approach that we have to take using the private sector, understanding that the private sector is going to be creating jobs. the government can be an effective partner in the process. nowhere is that more true in -- than in rural america. >> mr. president, i am gary

evans. i run a broad band company. i have a couple of messages that you -- but i hope that you'll take back your colleagues in d.c. we are making the investments in this country. help the job creators do what it takes. secondly, it was already apparent as the debts debate went on that the mood in america had shifted again to skepticism. i am hoping that you and your colleagues to do -- will do everything possible to make certain that confidence is restored to the country and that we have a bright future. i think broadband is a key and i

appreciate what you did for a during the stimulus package. thank you. >> thank you. [applause] we were talking earlier about rural america. a disadvantage is that it is a little more spread out. the population density is not as great. as a consequence, we have seen all these investments in wireless, a broad band, all these new technologies. a lot of times rural is left out. when we came into office, one of the big investments recently begun to make was in broadband technologies of the weekend connect -- so that we can connect every town in america.

what that means is if there is a small business in canon falls, you do not have to confine your market. you can start selling in rochester, new york, paris. there are incredible opportunities in terms of business growth and requires a connection to all of these markets. the days are gone work in the business is going to succeed just by selling right where they are located. that is why we make such a big investment in this. i am pleased to see that it is working. in terms of those things folks' confidence, -- of boosting the folks' confidence, i think it would fill, and if they felt like their leaders were working together.

that is my belief. i also think they are looking for some practical common sense. i know it is not election season yet. the debates the other party candidate for having the other day, when they were asked to reduce our deficit, are dead, would you be willing to take a deal where -- our debt, would be willing to take a deal where there was $5 of spending cuts for every $1 of increased revenues? he would take? everybody said know. how about 10 to 1? none of you would take it. none of them would take it. think about that. that is not common sense. ronald reagan, george h. w.

bush, bill clinton, all of them understood that you have to take a balanced approach to solving our deficit and debt problems. the same way a family would. if the eu had to cut down on your budget, you would not stop funding the college fund for your kids. you would not say, sorry, johnny, things are tight. -- keeping to keep bond on taking our annual vacation and i'm going to buy a new car, but you are not going to college. that is not how you balance your budget. the american people are expecting that same kind of common sense reflected. if it was there, i guarantee you confidence would go up. i speak to ceo of companies all across america. we are willing to do a little

bit more when it comes to our personal taxes. they know they have done very well. the single most important thing we want is making sure that middle-class families and small businesses are successful because if they are successful, we will be successful. that is what we're waiting for. that can be achieved, but it is going to require all of us working together. it was next? -- cote is next? -- who is next? >> thank you. welcome, president obama. my husband and son and his wife are dairy farmers. for years, we have never had very much money, but we have been creating wealth for this

country. i would just like to say that with your rural committee, i just want you to keep that in mind. we always create wealth for this country. >> you bet. one thing that i think is worth noting, up from the department of agriculture, we have provided $5 billion in assistance in terms of loans, to small and medium-sized farmers all across the country. that creates a lot of jobs. one of our great strength as a country is agriculture. one of the pledges that i made and i came into office was, we're going to double our exports.

a big component of fact is that agricultural exports. so far, we have seen exports rise to over $100 billion. it creates -- that means over 800,000 jobs all across america. the fact of the matter is that an lot of family farmers are still struggling. one of the things that we will be talking about during the store -- this tour, how we can make sure we can get more capital to small farmers, how we can help young farmers who want to go into farming be able to buy land, how we can make sure they are able to market their products effectively because right now, if you are not somatoform, you get squeezed.

there are a lot of things that we can be doing to help the farm economy. if you help entire states, and that is good for the country as a whole. thank you for what you do. >> thank you, president obama for coming to the great state of minnesota. my name is will morrison. i live in rochester, minnesota. i do not think we should solve the debt crisis on the backs of the middle class and the poor. they do not have special interests. they do not have lobbyists.

if we are serious about this data, we need to ask the millionaires and billionaires to give up their tax breaks. >> i completely agree with you. >> i want to say thank you so much for a great job that you were doing. i support you 100%. you got my vote in 2008 and i will vote for you in 2012. good luck. >> thank you. i do want to say one thing. when i came into office, we had $1 trillion in deficit already. the debt is the accumulation of the annual deficits year after year. we had a balanced budget in 2000. we then launched two wars that we did not pay for.

we put on the credit card. we added a prescription drug plan for seniors which was important to do, but we did not pay for it. we had tax cuts in 2001 and 2003 that were not paid for. that added a huge amount of debt. with the recession, that added more debt. you get less tax revenue, and you are sending more money out. because of things like unemployment insurance, helping farm state afloat, making sure that we were putting spokes to work. the debt problem israel and the deficit problem is real. it is a manageable problem. if you do not believe me, think about it.

even after the downgrade, the next day, when the stock markets were going haywire, what did they invest in? they invested in treasuries. the market said, america is still one of our best bets. they are betting on us. that is why you have to recognize that this is not a financial crisis. although it could turn into one if we do not do anything about it. this is a political crisis. this is manageable. i do not want to lie to you. that does not mean that we do not have to make some tough choices. in this? deal, we cut about $1 trillion spending over 10 years. we protected programs for student loans. we protected programs of 400

kids. we predict -- for a hungry kids. we protected health care for seniors. we protected people who were the most vulnerable and need the most help court -- from government. that solves about one-fourth of the problem. we have more work to do. i want everybody to pay attention to this as the debate unfolds. the key is not to cut more out of programs for poor folks seniors, the key is to get a long-term plan for fiscal stability. in the short term, we should make more investment that would put people to work and get the economy moving. if you combine those two things,

we can solve this problem and grow the economy at the same time. the one area where we are going to have to take a look at how we can improve the system, is our health care program, medicare and medicaid. my grandmother, even though she worked hard for whole life, had a decent income most for life, she was usually reliant on medicare and for life. i know what medicare means to seniors. what is also true is our health care costs have been skyrocketing and more seniors are joining up because the population is getting older. part of what i recommended when we were in these negotiations, although we did not get a commitment from the other side, is to say, cavalryman--- cavalryman and to reduce the overall cost of medicare so that

it strengthens the for future generations? books on the other side are proposing to turn medicare into a voucher program. instead of fixing the system, they would completely overhaul it. you would get about -- a voucher that says, you are a lot to get x amount on health care. if your health care costs keep going about that, you are out of luck. under their plan, the average senior would pay about $6,000 more a year for their medicare. i think that is a bad idea. i think there are better ways for us to manage the medicare problem than to put a burden on seniors. one example is if i were paying my fair share of taxes, we do not have to put that kind of

burden on seniors. we do not have to. i do not want a tax break that requires 33 seniors or 40 seniors to pay thousands of dollars more on their health care. i do not need it. it is not the right thing to do. all right. >> welcome to minnesota. >> thank you. >> mr. president, i am recovering from lung cancer. i tried to get social security disability and they turned me down. we can talk about social security a little bit. >> social security, here is my commitment. i do not know about the other folks. social security will not only

be there for you, but it will also be there for the next generation and generation after that. it is one of the most important social insurance programs that we have. by the way, you pay into social security. they called it an entitlement, but it is not an entitlement, you are paying for it. it has been taken out of your paycheck. it is true that as the population gets older, there is going to be more and more pressure on the social security system. the social security system is not the cause of our deb our deficit. do not let folks opel you by saying that in order to get a handle on our debt, we have to slash social security. there are some modest adjustments that can be made that will make it solvent for 75 years. that is about as long as you can

think ahead as a country. the way to do it is similar to the way that ronald reagan picked social security back in 1983. they said ok, we will make some modest adjustments that are phased in over a very long period of time. if we do that, and all the money goes back into social security, there is no reason why social security will not be there for future generations. again, this is an example of where everybody gets so dug-in on their positions. i have to say, in fairness, i have commented on the other side not always been flexible, there are some times when democrats are not as flexible as they need to be. i get frustrated when i hear folks say you cannot make any changes to any government

programs. that cannot be right. most companies, every year, they are thinking, what can we do better? are there some changes that we can make in order to have the operation go a little smoother? the government to have to do the same thing. that does not mean we have to make radical changes that dismantle what is the most important social insurance program that we have. the problem is not the program. the problem is our politics. you'll hear a lot of folks, by the way, say that government is broken. government and politics are two different things. government is our troops were fighting on our behalf in afghanistan and iraq. that is government. governments are all those fema folks who are helping people out. that is government.

the government is social security. government our teachers and classrooms. government is our firefighters and our police officers and the folks to keep our water clean. when you go to a national park, that is government. do not be confused. as frustrated as you are about politics, do not buy into this notion that somehow government is what is holding us back. too much government is not responsive to the needs of people and is not customer friendly, that is a problem. if you stand in line at some government office and nobody seems to be paying any attention to you, that needs to be fixed.

if somebody is trying to regulate a small business and they are not paying attention to the realities of the small business, that is a problem. to not buy into this notion that somehow, the government does not do us any good. the government is what protect us. government is what sent a man to the moon. it is what invested in the research and development that creates innovation all across the country. all right. right back there. yes, sir. >> thank you. welcome to canon falls. we're pleased to have you here. the government is a lot of things. if we look around us and we see

that we are ranked by school buses, that is where i am headed. we can not improve the economy unless we improve its foundation. education is that the foundation of this economy. i would like to know what it is that your administration is planning on doing to bolster education in the face of state cuts, federal cuts, 45 students to a classroom and so forth. >> but me tell you what we did when i came into office. the recovery act, about a third of it, with support to states to prevent layoffs of teachers and firefighters and police officers. thanks to the work that amy and al did, even after the first round of the recovery act, we

gave states some additional assistance to prevent layoffs of teachers. at a certain point, the money ran out. states are still going through a tough time. i personally believe that one of the most effective ways that we can help the economy is making sure that we're not seeing more teacher layoffs. i am going to be working with congress and state governments all across the country to prevent that from happening because you are exactly right. we cannot shortchange investments in the future. no investment is more important than education. the challenge we have an education is not just money. we've also got to make it work better. that is why we have put more

money into education and we will look for high standards and reform of the state levels. what we have tried to do is collaborate with governors and say, instead of no child left behind, label schools failures but does not give them help, what we think you should do is we will work with you to come up -- what are the things that work? how do we help train young teachers more effectively? how do we make sure that there is good data so that instead of just teaching to the test, teachers are able to get results from a test to use to improve teaching in the classroom? [applause] the steps we take, including something called a race to the top that create competition, if you were doing a really good job

and you are coming up with innovative ideas, we will give you extra money to implement those ideas. we're starting to see improvement across the country. the problem is, if the improvement is undermined because teachers are getting laid off and kids are going to school four days a week instead of five, or suddenly things like music and arts and physical education, which used to to any experience, suddenly that stuff is going away, that is undermining the reforms that we are making. my arguments to every governor and every local school district is, figured out what you can do without, but do not shortchange education. the most important thing and education are teachers. we have to give them support. we should be paying them more than they're getting paid. if we are doing that, we will be a pretty good shape.

[applause] all right. right there in the sunglasses. >> [inaudible] i want to say that i am excited that you are here. is there something we can do about the rising cost of prescription drugs? if you cannot legalize marijuana, why can we just legalize medical marijuana? >> a lot of states are making decisions about medical marijuana. as a controlled substance, is it being prescribed by a doctor as opposed -- well. [laughter]

i will leave it at bats. -- that. with respect to prescription drugs, the program that is now part of medicare, it has been very helpful. the cost had been going up and up and up, part of the affordable care act, also known as obama-care. by the way, i have no problem with folks saying obama cares. i do care. [applause] if the other side wants to be the folks who do not care, that is fine with me. i do care about families who have been struggling because of crushing health care costs. i met a young man here -- as a consequence of the reform, he

has a blood disorder, if it were not for the health care reform act, his family would of been tapped out. he would not have the hope that he needs. -- help that he needs. the same thing is true on prescription drugs. what we did as part of the affordable care act, we will give a $250 rebates to every senior that is using a plan to help lower their costs a little bit. what we have done is your starting to close what is called the doughnut hole. the original prescription drug plan was structured, you would get some coverage of to a certain point. once you spend a few thousand dollars, suddenly, it's just one way. you were on your own, out of

pocket, until you got on the other side were you had spent many more thousands of dollars. then you would get a prescription drug plan again. that does not make any sense. as part of the affordable care act, we would be closing that whole. we are making it cheaper for generics to get on the market. overall, the health care act should be lowering prices for prescription drugs over the next few years. it is getting phased in, so did not take into effect right away. you should start seeing some relief if your family need prescription drugs. that was part of the affordable care act. the gentleman in a yellow shirt, right here. >> hello, mr. president. i want to echo the sentiments of

those two of spoken before me. thinking you for all of your efforts and all the things that you have tried to do during one of the most difficult situations faced by any president in the face of unreasonable obstruction and opposition. thank you. [applause] i would like to follow up on health care reform. as the two days ago, we now have a splits in the 11th circuit courts of appeal were this is heading for the u.s. supreme court regardless of how it rules. i do not have a lot of confidence in the u.s. supreme court with its conservative wing. concern is that they will drive this toward striking down the individual responsibility mandate, which i understand it be so critical to making the system work.

what do we do? is this a giant step back if that happens? i know i am talking about things that have not happened yet. in terms of contingency planning, you must be thinking about this. >> first of all, i think it is important for everybody to understand that the portable care act will have philippe taken effect -- that the affordable care act will not have fully taken effect until 2013. there are a lot of different components. i just mention prescription drugs. helping seniors be able to afford prescription drugs. you have a law that says folks can stay on their parents' health insurance up until they're 26 years old. a lot of young people, especially if they do not have a job, they have some security. all of the patient rights that

were in the bill, all those things are going to be there. no lifetime caps and no fine print, all that stuff is going to be in place. what we are doing is each state is setting up an exchange where duke town -- you can pool with your friends who do not have health insurance. now you have a big purchasing unit. just like a big company does. you can negotiate with the insurance companies and gets a better deal. how many people have tried to buy health insurance on their own? you know what happens, right? they will charge you an arm and leg because their attitude is, you are not part of a big enough

pool where we can spread the risk across. we're setting up these exchanges. were the individual responsibility mandate comes in, it has to do with the part of the law that says an insurance company cannot reject it because you have a pre-existing condition. i think that is the right thing to do. here is the problem. if an insurance company has to take you, has to ensure you, even if you are sick, but you don't have an individual mandate, what would everybody do? they would wait until they get sick and then you would buy health insurance. right? it is like your car insurance. if you could buy -- if the companies had to give you insurance, you would wait until you had an accident.

state farm, i would like to buy some car insurance, please. that is why the individual mandate is important. everybody here at some point or another is going to need medical care. you cannot be a free rider on everybody else. you cannot not have health insurance and then go to the emergency room and each of us, and you have done the responsible thing, suddenly we now have to pay a premium for you. that is not fair. if you can afford it, you should get help insurance, just like to get car insurance. this should not be controversial, but it has become controversial. partly because people's view that -- let me just say this. you have a governor who is running for president right now it instituted the exact same thing in massachusetts.

this is to be a republican idea, by the way. the whole idea of the individual mandates. it is like they got amis up. -- and the job -- amnesia. that is a little puzzling. one court has said, the majority of courts have said individual mandates are fine. medical care is different from everything else. there is nothing wrong with saying to people who cannot afford to get health care -- who can afford to get health insurance, you need to buy health insurance like to do car insurance. if he can afford it, you should buy it. that is what the majority of the accords have said. there have been to appeals -- two appeals.

if the supreme court follows existing precedent, it should be upheld without a problem. if the supreme court does not follow existing precedent, we will have to manage that what happens. i just want to make everybody understands that there are a lot of components to the health care laws that are good for you, even if you do not have insurance. it is true that we help 30 million people get insurance. it was also the strongest patients' bill of rights that it's ever been passed to make sure that if you do have health insurance, insurance companies do not jerk you around. that is going to stay in place. that is the right thing to do. all right, i have time for one more question. i am going to ask this on a i am going to ask this on a right here