even the boldest effort, paul ryan, does not get into a balanced budget in the short run. 46 to hisom obama of' 39. >> what i find so bring about great britain, there are people writing that have never held a job. ever. you look at 45% black unemployment in this country, you should be worried as a country. a bear, only works when the americans are working. citizens require people take care of themselves. they are very fundamental questions you have to rethink their. i think you will never get to a

balanced budget if you try to get inside washington. >> coming up on c-span, leon panetta and hillary clinton talk about u.s. foreign policy. and the thinking institution hope the discussion about how domestic politics holds a standing around the world. then nicolas sarkozy addresses the european debt crisis. >> they also discussed the state department's on foreign policy in countries such as iraq and a somali. this is just over one hour.

>> please, let us give a warm welcome to these great leaders. [applause]

>> good morning everybody. good morning to both of you. it is a great privilege to be here with the secretary of state and secretary of defense. some of what perhaps we can talk

about here today, we will incorporate your questions into this conversation, will be if america is it when the colossus. are these wars when the ball? how do these two departments work together? i want to thank the national defense university for your gracious welcome today. welcome to both of you. >> thank you frank for doing this. >> thank you, fred. let us start with the budget amendment. it is your idea of a good time. the world has watched with bated breath as to whether we were going to default. whether american troops were not going to get their paychecks which is an incredible thing. as you face the prospect of budget cuts and the reality of this, secretary panetta go first.

what is at stake here for foreign policy? i think this is about the national security of the country. you know, our national security is our military power, our defense department, but it is also our diplomatic power in the state department. both of us are concerned that as we go through these budget tests that we are going to go through, the country recognizes how important it is that we maintain our national security and we remain strong. we recognize we are in a resource limitation here and we have to deal with those challenges. i do not think you have to choose between national security and fiscal responsibility. i want the country to know that we can get this done. we have to do it in a way that protects our national defense. >> yard or to have $350 billion

or so. >> that is right. >> if the trigger takes place and there is an inability in the congress to decide where to go from here, there could be 500 billion more. then what? >> with the numbers we are dealing with now, the president and bob gates before me basically decided the parameters -- we are in that ballpark. if they go beyond that, if they do the -- if they do sequester this massive cut across the board which would double the amount of cuts we are having, that would have devastating effects on our national defense and on the state department. more importantly, when we think about national security, i think we also have to think about domestic discretionary budget as

well. education plays a role. other elements of the discretionary budget in terms of quality of life in this country played a role in terms of our national security. more importantly, and they made the point for my own budget experience, if you are serious about dealing with budget deficits, you cannot keep going back to the discretionary part of the budget. >> would be the most damaging part -- i will come to you any moment, secretary clint. what would be the most damaging part if you had to face hundreds of billions of more above the 350? >> very simply, it would result in hollowing out the force. it would terribly weak in our ability to respond to threats in the world. more importantly, it would break faith with troops and their families. a volunteer army is absolutely essential to our defense. any kind of cut like that would

undercut our ability to put together the kind of strong national defense we have today. >> secretary clinton, you have a harder case to make it in the skepticism about foreign aid, where america is spending its money appeared >> i know it is a harder case because i think there is a lot of misunderstanding and rejection of work that is done by the state department. we comprise 1 percent of the discretionary budget. what we have done over the last two and a half years is long overdue. basically, we said that we are a national security team. we are all on the american team. by that, we have civilians who are in the field with our military forces in areas of conflict. we have civilians who are in the field on their own and other

dangerous settings without boots on the ground. but we are trying to enhance the coronation to achieve our national security objectives. one of the goals that secretary gates and now secretary panetta and i have is to make the case as to what national security in the 21st century actually is. it is the strongest military slither in the world that has to be given the tools to do the jobs we send it out to do. it is our diplomatic corps which is out there trying to deal with difficult situations to the benefit of national security. it is our development experts who put another face on american power who are trying to deliver as we speak a bit to 12 million people in the horn of africa who are facing famine and starvation. some measure because of the

house and bob which makes our challenge even more difficult. i want to go back to something leon said. between the two of us we have many years -- probably more than either of us care to admit, experience in dealing with a lot of these issues. leon as the chair of the budget committee, as the director and chief of staff and the '90s was part of a process that got us to a balanced budget. this is not ancient history. we are not talking about something so far back we cannot remember it. tough decisions were made in the 1990's to, yes, cut spending, yes, deal with some entitlement issues, and, yes, increase revenue. >> raise taxes. >> yes, absolutely. so that we had the kind of approach that got us on a trajectory had we stayed on it where we would not be facing a lot of these issues.

i will end where you started. i know how difficult this was for our country domestically over the past month. it is always hard seeing the in the sausage being made. i happen to be in hong kong a couple of weeks ago. i said confidently we are going to resolve this. we are not going to default. we will make some kind of political compromise. i have to tell you, it does cast a pall over our ability to object the kind of security interests that are in america's interests. this is not a doubt the defense department or the state to permit or usaid, this is the united states of america. we need to have a responsible conversation a about how we are going to prepare ourselves for the future. there are a lot of issues that

are not in the headlines but are in the trend lines. we are reasserting our presence in the pacific. that means all elements of our national security team have to be present. we cannot be abruptly pulling back or pulling out when we know we face long-term challenges about how we are going to cope with what the rise of china means. we have so many issues that leon and i deal with every day that are not going to be getting screaming headline coverage but which we know looking over the horizon are going to defect to the economic, our well-being of the country, and the security of citizens. >> a couple of things that we will go to the audience. talk about how bonds. there was one that really directs and on the budget. some of the choices and big changes that may be in store. that is a report on cbs yesterday that the pentagon is

considering the a very substantial revamp of the retirement program for those in the military. 401k is, ending the eligibility after 20 years and making a normal retirement age. is that the kind of depth of change that is out there? >> the report came as a result of an advisory group that was asked by my predecessor to look at the retirement issue. they have put together some thoughts. they are supposed to issue a more complete report over the last part of this month. no decisions have been made. if you are going to do something like this, you have to think about grandfathering to it protect the benefits that are

there. >> we would not affect the people in this room? >> right. but at the same time -- [applause] casino what they say about notoriety -- >> i know my audience. >> you have to do that. you have to protect the benefits that are there. the same time my view when i was on the budget committee and the , you have to look at everything. cannot approach a deficit that we are dealing with an think you can only look at the margins. you have to look at everything. >> secretary clinton, on the budget and then to the audience. you and your predecessor talk a lot -- a data's predecessor, talked a lot about the budget and how development is cheaper than war. we have that talk at george washington university.

what you say to secretary panetta about your budget and your needs and your needs and your lobbying for more terms of what he has got and what you need to accomplish? >> obviously, the dot budget far outweighs the combined budget of the state department u.s. aid 12 to one. we understand that. we also know we are going to have to put everything on the table. we are going to a very difficult budget process. >> that includes development which you hope to grow. >> it includes everything. i am not saying we should be exempt in education or health care at home should bear all of the costs. i am saying that as we look at everything that is on the table, we have to try to do a reasonable analysis of what our real needs and interests are. it is easy in a political climate, which i know something

about as leon does, to say a, oh well. if you go to the foreign public and say what is the easiest thing to cut in the budget, it is always foreign aid. how much the think that represents in the budget, and people always say 50% or 20%. they say what should it represent? they say 10%. we understand that we have a case to make. it is a case that we have been making. there is a new way of looking at it which bob gates and i and it now leon are working on. the military has always had in the defense budget something called overseas contingency operations which go to the kind of conflicts and investments that have to be made in places like afghanistan and iraq. for the first time, we have congress accepting that we need what is called an ". we have a lot of costs that will

be going down over time because they are not a part of the base. we are getting stronger about explaining what we are going to do and what it will cost to do it. the bottom line is, we want national security to be looked at holistic play. we want people to understand that a lot of what we are going to have to be doing in the future is not sending our young men or women and heart was the way but avoid that in the first place. "what is your view of her budget? >> it is absolutely essential to grow our security. >> would need to be cut? >> we all know we are going to have to be able to exercise some fiscal restraint as we go through budgets. the bottom line is, what i hope the congress does not do -- what i hope this committee does not do his to walk away from their responsibility to look at the entire federal budget.

the entire federal budget now -- annual budget is close to 4 $12 billion. it is also been cut one trillion dollars by virtue of this deal that was made. we are already taking a one trillion dollar hit over the next 10 years. two thirds of that budget has not been touched. two thirds of the federal budget has not been touched. if you want to deal with the deficit, you have to do with mandatory spending programs. you have to deal with revenues. every budget summit i have been a part of going back to ronald reagan, it was a balanced package that dealt with revenues. it was true for ronald reagan, george bush, bill clinton, and it has to be true today. >> us take our first question. anybody have a question on the budget? >> i emma an army officer and a

study -- student. welcome to both of you. i spent five years of the last 10 in the middle east and afghanistan. one of the things that concerns me as we see the budget tsunami approaching as problems of the teaching of foreign language and culture, a problem that has been persistent. how will we deal with that as we lose the hundreds of millions of dollars to throw at contacting solutions that will we look at ways or the state in department of defense cancer energize ways to teach? is that sort of restructuring the way we approach these missions that are sensitive going on? >> well, i certainly think you have to look at creative ways to be able to deal with it. i am a believer in foreign- language training. i think this country has not devoted enough resources really to foreign language training. we have looked at the three ours, reading writing and

arithmetic, but we have not looked at the reality of the world we are dealing with here when i was the arctic -- cia director, i did not think he could be a good analyst or operations die without knowing languages. i believe that for the defense department, and i think for the state department there is a recognition that you need to have language in order to be able to relate to the world that we live in. my goal would be to be as we go to the budget and as we develop , we are creative and not undermined the kind of teaching and that language training that i think is essential to our ability to not only protect our security but frankly to be a nation that is well educated. >> i certainly say amen to that. i think your suggestion that we look for ways we can better coordinate our language and culture education programs is a very good one. i have begun to do that in the state department, usaid because

they have different platforms. they have different i.t. platforms, construction platforms. when i came in, i did not think it was the most sensible way is for us to train our development experts and our diplomats. i think we are going to have to be more creative. we have the admiral who leads the team, and the ambassador from the state department who is the no. 2. that is what we have to get in our minds is more likely to beat the pattern of cooperation both before deployment, whether as a military or civilian personnel, and then after deployment because we cannot afford to do it anyway. secondly, i think it gives us a better result. you may have seen the article over the washington post over the weekend.

because of his facility, the military really looked to him. he was able to communicate not just any formalistic way but informally, colo clearly, a way that captured the attention and eventually the cooperation of the lot of the afghans. that is what we need across the board. any way we can, work together. it will save us money and began to put together is called national security team. >> let us move around the world. let us start with afghanistan. terrible, costly wheat last week. there are a lot of americans who say with this law, is it worth it? are we prevailing? should we stay? what is your response to that? how do you view what is happening in afghanistan and the trajectory? >> you know, it was tragic what

happened the last week. we lost 4500 and afghanistan. we have lost many more. we have seen a lot more wounded. there are a lot of men and women who have put their lives on the line. we cannot forget the mission. the mission as the president said is we have to disrupt, dismantle, and it defeat al qaeda and make sure it never again find a safe haven in afghanistan from which to launch attacks to this country. i think we have made good progress on that. i just spoke with general allen and this morning. we are making good progress in terms of security.

we are continuing to build the afghan army and police. they are right on target in terms of the numbers we needed to develop. we are working in the right direction. we are going through a transition period there are others that have to do. we have to make sure the afghan government is ready to secure that country in the long run. i really do believe if we stick with this mission, we can achieve the goals we are after. that is to create a stable afghanistan who can make sure we'd never again establish a safe haven. >> what is the conversation the two of you had about the reliability and the stability of the scars i government? >> --karzai government.

>> we have a transition we are following. it is based on, frankly, the decision that president obama made taking office that we had lost momentum to the ted -- the taliban. the situation we found it was not very promising. he did order additional troops. i ordered and unfulfilled in the more than tripling of civilians on the ground from 322 more than 1125. we put in a lot of effort to try to stabilize and then reverse what we saw as a deteriorating situation. we both believe that we are at a place where we can begin the transition and it do so in a responsible way. part of that transition is supporting afghan

reconciliation. we have said that for a very long time. i give a comprehensive speech about that approach. ambassador park grossman who is leading our efforts to build a diplomatic framework for this kind of effort is proceeding very vigorously. we know there has to be a political resolution along side the military gains and sacrifice that we have put in. >> can be with the afghan regime that you are working with? >> yes. what do you trust president car's side? >> yes. i deal with leaders all over the world who have their own

political dynamics that they are trying to cope with that are not always ones that we experience or we think are necessarily the most important. they get to call the shots. they are the ones coming out of their culture. they are trying to implement democracy often in places where that is a foreign concept. it can be a difficult and challenging partnership. no doubt about it. there is certainly a commitment on the karzai government to this transition process. when we adopted this process that will go through 2014 at the nato lisbon summit, it was in concert with the karzai government making the same commitment. we are also discussing what kind of ongoing partnership

diplomatic development, military that we will have with afghanistan. president cars i made an important statement this last week. he is not seeking a third term. and that is a strong signal there has to be an active dynamic political process to choose his successful -- successor. i dealt with president karzai now for nearly 12 years. i dealt with him as a center. i have dealt with him as a secretary of state. you have to listen to him. all too often, we come in with preconceptions about how things are supposed to be. he says over and over again, i do not like this. i am not sure about this. it the private contractor issue. that went on for a long time because we did not get what his concerns were.

it is not all a one-sided critique. there has to be a recognition that we have a dialogue and a partnership and we both have to work on it. >> question from the floor. >> we have mentioned a lot about iraq and afghanistan. one that comes to mind is our partners are also critical with what is going on with our efforts there. what are your thoughts on how we continue to enhance the relationship is especially with the difficulties recently? >> at me start by saying that we consider our relationship with pakistan to be of paramount importance. we think it is very much in america's interests. we think it is in the long term interests pakistan for us to

work through what are very difficult problems in that relationship. this is not anything new. we have had a challenging relationship with pakistan going back decades. we have been kind of deeply involved with pakistan as we were during the 1980's with the support for the old charlie wilson swore issue. if you remember the end, the soviet union is defeated and charlie wilson and others are saying let us build schools, let us support pakistan. our political decision was, we are exhausted. we are done. we accomplished our mission. let us get out of here. i think the pakistani is have a viewpoint that has to be shown some respect. are you going to be with us or not? you come in and you go out -- >> arkansas the partner or

adversary? courts that are partners, but they do not always see the world we see the world and they do not always cooperate on what we think -- i will be very blunt about this -- is in their interests. it is not like we are coming to pakistan and encouraging them to do things that will be bad for pakistan, but they do not often follow our logic as we make cases to them. it takes a lot of dialogue. >> let us talk about pakistan for a minute. there was a story that pakistan was our allies, handed over parts of the helicopter or get access to it to the chinese. is that true? is that what an allied does? >> as the secretary said, this is a complicated relationship. >> is that a yes? >> i have to protect my old hat [laughter] >> is not a know, though.

>> i am not going to comment. it does relate to classified intelligence. >> are you concerned it? >> we are concerned. the relationships that pakistan has, what makes in this complicated is they have relationships with the icon is. there are going across the border and attacking our forces in afghanistan. there is a relationship with l e t. this is a group that goes into india and threatens attacks there. in addition to that, they do not provide the says. there are bonds and the grimes to try to work it through. yes, there is no choice but to maintain a relationship with pakistan. why? because we are fighting a war

there. because we are fighting afghanistan -- and are fighting al qaeda there. they do represent an enforcement force in that region. we have to be concerned about what happens on with those nuclear weapons. for all of those reasons, we have to maintain a relationship with pakistan. it is complicated. it will be ups and downs. we have spent countless hours talking to their leaders. >> let me ask the two of you to take this into a conversation that you might have in the privacy of several other people. this war you talk about is largely conducted with the don't. they are resented and complement -- complicate your efforts on the diplomatic front. how do you balance that?

is your best asset also not your worst nightmare? >> know. let me take you back to conversations that are not maybe so current by relevant. shortly after i became secretary of state, we were quite concerned to be the pakistani taliban basically taking advantage of what has been an effort by the government to try to create some kind of peace agreement with the pakistani gump -- taliban and say to them, you stay we will not bother you. i was very blunt with them saying that you cannot make deals with terrorists. the very people you think you can predict or control are at

the day he their predictable or controllable. i was very pleased when they moved in the and cleaned out what had been a pakistani taliban strongholds. they began to take some troops off of their border with india to put more resources into the fight. as leon said, we have some other targets that we discover -- that would discuss with them. it has been a relatively short period of time, to end a half years, when they begin to reoriented themselves military against what is an internal threat to them. we aren't saying this because we think it will undermine the control that the pakistani government is able to exercise.

we have conversations like this all of the time. i do think there are certain attitudes or beliefs that the pakistan and have been are rooted in their own experience. i think there is a debate going on inside afghanistan trying to deal with what is an increasing internal threat. >> let me just add to that. the reason we aren't there is we are protecting our national security. we are defending our country. al qaeda attacked his country on the 9/11. the leadership of al qaeda was there. we are going after those who continue to attack this country. the operations we have conducted there have been very

effective at under buying the kinds of attacks from happening. those terrorists that are there are also a threat to pakistani national security as well. the attack pakistan is. they go into is lombok and attack people there. it is in their interests to go after these terrorists as well. they cannot pick and choose among the terrorists. >> what is left of the al qaeda network? >> the al qaeda network has been seriously weekend. there are still there. we still have to keep the pressure on. those who are suggesting that this is a good time to pull back is wrong. this is where we put the pressure on. >> will they ever be defeated, or was donald once field right

and this is just a long war? >> we can go after the key leadership of al qaeda and i think has largely letted this effort. we have weekend at them, we took out been -- osama bin laden. there are additional leaders we can go after. by a weakening their leadership, we'll undermine al qaeda's ability to put together the universal she hopped have tried to put together to conduct attacks on this country. the answer to your question is we have made serious inroads in weakening al qaeda. there is more to be done. i think we are on the path to

begin seriously weakening al qaeda. >> let us talk about iraq for a moment trade u.s. ace -- a terrible string of attacks. hundreds injured, 90s -- 90 died at questions the afghan's ability to govern their own people. what do you read into about this wave of violence? >> what i see happening is there continues to be a terrorist capacity inside iraq. i do not know what time it left -- we do believe it could be al qaeda and iraq trying to assert itself. >> sunni extremists. >> at the same time, we go there are shiite extremists who have also been conducting attacks,

not quite to the extent of always saw yesterday, but attacks that have killed americans and killed the rockies. i am of the two minds about this. i deplore the loss of life and the ability of these terrorists continue to operate inside iraq. i also know that until recently, the trajectory of violence had been going in the right direction. we saw that and were feeling they were headed in the right direction. the iraqis themselves have more capacity than they did have, but they have to exercise it. we spend a lot of time pushing our friends in the iraqi government to name ministers so

they can be better organized to deal with what are the -- what is the ongoing threats. we are in discussions with them now. they do want to be sure they have sufficient intelligence and reconnaissance capacity. they want to be sure they can defend themselves internally and externally. that is a conversation that our commander is having. >> is it worth it, and should we stay? >> the bottom line is that we are going to maintain a long- term relationship with iraq to ensure they remained stable. >> militarily? that is a discussion we will have with him. but the bottom line is, whether it is diplomatic or military, we

have a long-term relationship with iraq. we have invested a lot of blood in that country. regardless of whether you agree or disagree how we got into it, the bottom line is we now have their it lot of sacrifice established a regular tivoli -- a relatively stable company. it is in a very important region of the world at a time where there is a lot of other tomorrow going on. it is very important for us to make sure we get this right trade >> i just want to add what leon said. the president made a commitment that we would be withdrawing our forces from iraq. he would follow the timetable set in the bush administration, which is for our troops to be

out at the end of this year. that is a period. that is the end of the commitment. there is a discussion the iraqis are having internally about what we would do following that. i do not want there to be any confusion about that. our combat mission in iraq and at the end of this year. our support and training mission if there is one -- >> of these attacks demonstrate that the situation is still precarious. if they were to ask for an ongoing military presence, it might well be more than just training. there is combat -- >> we do not believe that the hierarchy's have that on their list of tasks. >> what they want to do is be able to confront counter- terrorism in their own country.

we have given them help. we have given them assistance in that effort. obviously, that is something as a country they are going to have to confront. their main goal is to get the kind of training that will allow them to improve their defense capabilities. >> anybody have a question on iraq? do we have a microphone? >> i was in cpa in 2003. i wanted to ask you, do you see it in the national security interests to have all of the troops leave by the end of the year in terms of the middle east, the afghanistan, iraq, i understand what secretary clinton said that we are leaving. even to have troops there training afterwards, the you not

think it sends a strong signal that we are not interested in basis and we will leave if we do not have a training mission there as well? >> what the president has said, we are leaving by the end of the year. our combat mission is over. the discussion now is what kind of assistance can we continue to provide with regards to training and other systems that are provided. do this with other countries. i think this is what i would call a normal relationship with iraq if we could establish that kind of approach for the future. >> that is why i wanted to be very clear. the combat mission is over. our troops are leaving. they are in the process of literally packing up. that is what we agreed to. i agree with you that that is very much in america policy interests to keep that commitment.

what leon is also sank is important. if a country comes to us with what we would view as a normal diplomatic relationship and says mike troops need training. they are not yet what they need to be. i need continuing help on collecting intelligence, learning how to do it for counter terrorism purposes, i think it would be irresponsible of us not to listen to what they are requesting. indeed, the iraqis have not made a formal request, but we believe they are discussing internally. we do that and kuwait, we do that and uae, we do that in saudi arabia. it would be a little bit unusual for us to say, no, we will not respond to a responsible request. what is, we do not know yet. that is the next stage. >> i think the bottom line is

very interesting and something the country will respond to. if there is a responsible request as you put it, a military relationship of some form going forward, not unlike these other countries in the region in europe and much of the world will be part of the military diplomatic landscape. >> for the record, this is going to be a process of negotiation. there is going to be discussion. the good thing is the i rockies indicated a willingness to have that discussion. we will try to deal with it as to what ultimately turns out, we will have to deal with them. >> a couple other issues in the time remaining, syria. is it time for them to unequivocal state that president passat has to go? should he step down? there has been talk around the administration. is today the day?

>> i am not a fan of arbitrary deadlines. what we see happening in syria is galvanizing international opinion against the regime. that is a far better landscape for us to be operating in than if it were just the united states -- if it were just a few european countries. think about what has happened in the past few weeks. you had the arab league reverse position, you had it turkey desperately trying to use its influence which is considerable within syria to convince them to quit shelling its own people and withdraw its troops from the city, return them to a barracks, mr. '84 and minister made it clear that they are not following through on that. i happen to think where we are

is where we need to be where it is a growing international chorus of condemnation. the united states has been instrumental in orchestrating that. we hope we will be joined by other countries to have far bigger stakes economically. >> i get all of that. but you get that your critics are saying that leading means getting out in front, that you condemn heinous acts of -- >> we have condemned it and we will continue to condemn it. >> i have to say i am a big believer of results over rhetoric. i think we are putting together a very careful set of actions and statements that will make our views very clear and to have other voices particularly from the region as part of that is the essential for there to be any impact within syria.

it is not news that the united states is not a friend of syria. that is not news to anybody. i think it is important we send an ambassador out there. representing the best of all use of our country. i think we have done what we needed to do to establish the credibility and, frankly, the universality that might make a difference. >> so we find these very interesting developments in libya where we hear of another defection potentially from the senior ranks of the gaddafi government. we also hear that the rebel forces may be having some serious internal pressures, tensions, and it disputes themselves. what is your read on the military campaign in the libya

and whether the gaddafi regime is closer to being hit driven out. >> the indication is that, yes, there are concerns about the opposition. we have had concerns about the opposition for a period now. the opposition is moving now. they are moving to the west. they are moving in that direction. the opposition in the east is moving to bring death and moving toward it tripoli as well. -- moving toward it tripoli as well. 's forces are weakening. i think considering how difficult the situation has been. the fact is the combination of nato forces there, the

combination of with the international pressure, the work of the arab league has all been helpful in moving us in the right direction. >> we are moving into our final moments of the conversation. i would like to take one final question. this gentleman here. >> randy crabtree. my question is, are the messages we are sending really sending a message that the united states is ready to underwrite stability in the world of the cannot afford it? >> a do not think so great i see it somewhat differently. it is a message that the united states stands for our values, our interests, and our security, but we have a very clear you that others need to be

taking the same steps to enforce a universal set of the values and interests. i view this somewhat differently than i know perhaps some of the commentary has evidence. if you look at libya, this is a case for strategic patience. it is easy to get impatient. i think when you realize that this started in march, there was no opposition. there were no institutions. there was no address really for trying to figure out how to help people who were attempting to cast off this brutal dictatorship of 42 years. the distance they have traveled in this relatively short period of time, the fact that for the first time we have a nato

alliance taking action. you have nato countries running strike actions. you have nato countries who are supporting with advisers the opposition. this is exactly the kind of world that i want to see where it is not the united states and everybody standing on the sidelines while we bear the cost and sacrifice while our men and women laid down their lives, where we are finally saying that we are by all measurements the strongest leader in the world. we are leading. part of leading is you make sure you get other people on the field. that is what i think we are doing. it is not going to be any news if the united states says hassad needs to go. what if turkey say this ad? if other people say it there is

no way they can ignore it. --do not have anything extr i think this is strong -- smart power. it is not just brute force or unilateralism, it is being smart enough to say we want a bunch of people singing out of the same hymn book. we want them singing a song about universal freedom, human rights, democracy, everything we have stood for over 235 years. that is what i am looking for us to achieve. >> i want to ask you about what other place. i want to ask you about the kind of coordinated assistance that you to gigantic department's -- >> he is gigantic. >> some might look at your department and say gigantic as well. what you see is where you stand

-- i am talking about somalia. gut wrenching famine, images and suffering as brought to america and a global homes every night. some people might say this can and should be a model for how these departments respond. how much is humanitarian. we talk about that? >> that is a very good example of the close coordination between the two departments in dealing with a crisis in that area. the reality is it is very difficult situation in somalia. you have also bought which is a real threat to that area. you have literally thousands upon thousands who are starving right now as well. what we have been doing -- we have been working very closely

with the state department, with diplomatic sources who are there to try to make sure that we are providing whatever assistance we can provide to help in that region. we are working, we are doing that on a daily basis. we have made clear that any additional assistance we are prepared to provide. >> i would just add a few points. the united states was the principal founder of something called fusenet. when we began seeing signs of a fan on, it gave us the chance to be able to get our equipment and our food into these areas quickly. we are talking about 12 million people and in the horn of

africa and areas twice the size of texas. ethiopia, kenya have been responding very generously given their own and situation. we have made her why progress. last time, it affected about 12 million people in ethiopia. now it is down about 5 million. we are trending in the right direction. the united states has spent $580 million in helping these people who are starving, and particularly trying to help women and children who are at the most at risk. the united states has supported the african union mission in somalia -- and we have been making progress and driving back. other places are working with the transitional government.

unfortunately, they are still posing a very real threat to -- an obstacle in south central somalia into getting food in that area. we are making progress. i say all that because if you look just at the horn of africa, you can see the complexity of what we are dealing with. to try to sort out what is the defense role, the diplomatic role the development role, how do we work with the un. how do we work with governments. what i have said it, frank, stability in somalia is in their interest and beyond, and yet the united states is not going to put the boots on the ground. you remember what happened with what started as a humanitarian mission that morphed into a military mission, that was unfortunately resulting in the loss of american lives. we are going to empower africans

themselves, provide all kinds of support to them, and enable them to stand up for themselves. this is the kind of multilayered approach that we are taking in a lot of complex situations now. >> we are virtually out of time. i know each of you would like to pull your thoughts together. the appearance of the tw is a commentary of itself. secretary clinton to watch two american diplomats and those serving in its>> these are chal. we have just seen that through this discussion alone. we are involved in two wars. we are involved in a nato mission in libya. we continue to be in a war on terrorism. we are fighting a concern about

increasing cyber attacks here. we have rising powers. nations like china, india, brazil, and not to mention russia, that we have to continue to look at in terms of their role in terms of providing stability for the world. we are facing resorts' constrictions, budget constrictions. i do not think we have to choose between national security and budget responsibility. we are a nation that has a special role in the world. a special role because of our military power, diplomatic power, and because of our values and our freedoms. the key thing that goes to the heart of our strengths is the willingness of men and women to put their lives on the line to defend this country. we need to learn a lesson that the leadership of this country needs to be inspired by the

sacrifices being made by men and women on the front lines and to exercise the kind of leadership to ensure that this country remains free and strong. >> both leon and i carry that responsibility very seriously. we understand what this country means. we are beneficiaries of the generation that came before. that gave up their freedom and gave us the opportunities we have been able to enjoy. i want to see that continue. i am very proud to be the secretary of state during the united states of america during a period that is quite challenging. there is no guidebook written for it. looking back at history, i have tried to take some lessons from other points where these challenges often presented themselves. one of my favorite predecessors is george marshall, who held

position and my position. president truman and george marshall and looked around the world. do you know what is in america's long-term interest? rebuilding our enemies. building economies. what did they do? they said to people like my father who spent five years in the navy, we know what you want to do is to go home, make some money, having normal life, we are going to tax you to continue to rebuild places like germany. it was a hard sell. it did not happen automatically. truman, marshall, and others went across the country making that case. we invested $13 billion in four years.

we helped to make the world stable and safe and open for all of the postwar decades. in the middle east and north africa that i am not sure we are going to be able to meet. we do not have the resources to invest in the new democracies in egypt and tunisia to help the transition and to see what happens in syria and other places. the rising power as we hope our peaceful and successful. we have got to be competitive. we cannot just hope. we have to work and make a strong case for the continuing leadership of the united states. it is my hope that as we deal with these very real and pressing budget problems, we do not know the cost of everything and the value of nothing.

budget documents are valued statements. who we are as a people, what investments we are making in the future. if we will continue to project american power is up for grabs. we will make the best case weekend that american power is a power for the good. it has helped liberate hundreds of millions of people around the world. it has helped to enhance the opportunities for people and to give young girls and boys a chance to live up to their own god-given potential. we need to make sure we continue to do that. you will continue to hearleon and i make that case. i hope that it will find a ready audience in the congress as these negotiations resume. >> i hope a receptive and

listening audience from the public. they need to understand what is at stake and have the opportunity to ask the tough questions and get answers from you and others. this is of immense importance at to us in the country. thank you to you and to the men and women in uniform serving the country here and around the world. and most importantly to secretary panetta and secretary clinton. thank you for a fascinating and insightful conversation today. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> the brookings institution hosted a discussion examining the effect of political discourse on foreign policy and for our standing abroad. the vice-president and director of foreign policy moderated this 90-minute discussion. >> welcome to brookings.

i am the director of the foreign policy program here. it is very good to see you all here. we thought that the topic of today's conversation was so compelling that it should not wait for labor day. we are here to talk about the foreign policy consequences of domestic political dysfunction in the united states. a subject that has been highlighted by the crisis over raising the debt ceiling and the impact that appears to have had on brand america abroad. a grant that had already suffered some considerable tarnishing -- brand that had

already suffered some considerable tarnishing during the bush era. something that president obama to and hands are standing abroad, but it seems to have only gotten worse. we brought together some experts from brookings to talk about what is happening domestically and how that is impacting america's ability to promote and protect its interests abroad. let me introduce the panelists we have today. mann, who iscome, tom the senior fellow in government studies here -- studies here at brookings. he is an expert in all things and how to fix them about

congress. his most recent book called the broken branch, how congress is failing america and how to get it back on track. to my right is fiona hill. she is the director of pericenter on the the u.s. and europe. she is an expert on russian affairs. she is the author of the "siberian curse: how the communists left the russians out in the cold." next to fiona is bob kagan, who is also a senior fellow on the u.s. and europe. he is an expert on u.s. foreign policy. bob is the author of another --

a number of best-selling and profound books. about u.s.- european relations. american foreign policy called "dangerous nation" america's place in the nation from its gone to the 21st century. many of you will know him as a columnist for the washington "" and contributor to the "weekly standard." he is a director of our center on china. he is an expert on china. he serves as a senior director for asia on the national security council in the clinton administration and has written a

huge number of books on chinese politics and economics including, -- i am looking for your last book. "the china challenge, not" which is about how to do business in china or not to do business in china. he is the director of our latin america initiative. before joining brookings, he minister of transportation and minister of economic development. he has published several books and academic papers in his period as a think tank researcher. he has taught economics and in various places including the

university of california at berkeley. i wanted to start with tom mann. have you analyze for us the nature of the dysfunction and whether you see this as somehow getting fixed any time soon. >> i can only smile. i am afraid i am going to start this session off without my normal burst of optimism. you mentioned the broken branch. we are working on a sequel. it is called, "it is even worse than it looks." the signs of this function are all around us. most immediately was the dreadful experience charles krug

hammer has seen as a sign -- krauthammer sees as a sign that the american system is working and everybody else sees that it is a true embarrassment. it is a matter of great seriousness and potential damage. utterly unnecessary. i am talking about the hostage taking of the debt ceiling increase that was planned a year earlier. used in a way that it has never been before. it was hoped to force a set of changes, but in a en thed, produced -- in the end, produced a paltry payoff that left onlookers sickened by the result

that was left. you put that together with sluggish growth, high unemployment, projected increase in the debt to gdp ratio and no action on any of these matters is likely to occur before the 2012 election and it is not clear how things will get themselves resolved afterward. the s&p downgrade was part of this. the global rush to treasurys reminded us that s&p is likely to suffer a greater downgrade them the u.s. underlying these specific things are two widespread views about the craziness afoot in

america. the first test to do with the contemporary republican party. its ideological extremism and sense to deny reality whether it is the efficacy of the financial stabilization and stimulus, the futility of the tax pledge, the nonexistence of climate change, this occurring among prominent leaders and members of the party in congress and among all but one of their presidential aspirant. that sends a message around the globe that america is in trouble. it has fallen off track.

something is amiss. it is not just a temporary episode of conservative populism. one of our major political parties the long dirt maintains an adult status, one in which they can wrestle responsibly over legitimate differences with the opposition and have something come from it. coming out of all of this, there is the developing perception of the weakness of our president in the face of all of these difficulties. people see him in his futile search for a negotiating partner and his failing to produce on the post partisan politics and see him maneuvered

into a misplaced emphasis on deficits and debt at a time when the economy is floundering and there is little sign of the growth and jobs, that combined with serious action on deficits allow us to regain their footing and some traction. all of those contribute to the perception of dysfunction. if you see what is coming in the next few months in the time before the election, the only solace that you take is that we are not going to have quite the crisis that was contrived around the debt ceiling. it is past the election. we will return to that in 2013. there is basically an agreement

on the budget for the coming yearso. me -- year. some minor adjustments have to be made. there is no effort to shut down the government over this. it is possible that we will not be put through the melodrama of the past month. having said that, the odds of the super committee, released a joint committee of congress, at 12 members, equals numbers of democrats and republicans, all viewed as reliable players by their respective leaders, it would not matter if they were all wild independence. they are operating under a set of impose political rules. the most important of which is no increase tax revenues.

most likely, nothing will come out of this. we will fall back on the triggers. those do not go into effect until after the election. there is still time to ward them off. the safest bet is that nothing will happen. that will contribute to the sense that we cannot function as a democracy. as you were saying, we are in full campaign mode. the media is so relieved to get away from the debt ceiling story. really hard to make it interesting. now they have all iowa straw perry and michele bachmann, what more do you want? barack obama is on the campaign trail for the better part of this week.

frankly, i see that as a plus. this kong gristis fated to get absolutely nothing of positive consequence done as a result of the objectives of the people in a position to drive it. god knows we need some clarity from the electorate. we will see a lines drawn in a way that we have not in a very long time. it is partly as a consequence of the rightward move of the center of the republican party. it is partly where the energy lies. even president obama has lost patience for making nice by

bipartisanship in doing what he thinks that responsible washington people should do. will any clear signal from the electorate emerge? it is mushy, it is complex, it is one of the challenges that the politicians and all of us have, to make that clear. what we have the public sent to washington is basically ungovernable. that has everything to do with the party system and the asymmetrical nature of the polarization that exists right now. i do not see any prospects for a dramatic transformational

leadership opportunity breaking us out of all of this. i think we are going to have disappointingly slow growth for a long time as we squeeze the leverage out of the private and public. that will put enormous pressures on those who are in charge and continue to make our politics dysfunctional. if republic wants to see something else, if they want to see it some real clarity, if they do not like the blocking and so on, they will empower a single party and they will lend some support that will produce

some parliamentary-like institutions that will allow the out party to govern. >> uplifting. >> i warned you. >> now we will go to mauricio for something even more uplifting. the way this fits into global economic development. we had some very gloomy news coming out of europe about growth in germany and france. he alluded to the idea that growth could solve a lot of these problems. what are the prospects for economic growth from where we are today? >> they are limited. we are talking about leadership here. leadership requires a strong

economy. that is not an economy where recessions do not happen. a strong economy is a economy beckham overcome recessions. countercyclical policy is the to be credible. they have to have certain characteristics like not incurring huge debts that are no t sustainable. the debts functionality we are talking about is the ability to conduct these policies that will stabilize the u.s. economy and provide a long-term plan for fiscal sustainability. it is the ability to provide that plan that is causing these to go into the wall of the economy. i would say that to restore the

leadership, to make sure that the u.s. economy is a strong economy, we need to provide that type of plan. whether the political system is able to do it, that is the question. what is happening in the world economy? if the u.s. political system is not working, things are worse in europe. the levels of debt are even higher. the sacrifices that are necessary are much greater. it is going to take a long time before we see fiscal sustainability. facing that reality, the reality of the advanced world that are highly leveraged, there is a group of emerging countries that

has much lower public that -- debt, that is representing a much higher share of growth. >> who are we talking about? >> we are talking about asia, latin america. you hear words like the irresponsible policies of the u.s. or phrases talking about the parasite and economies of the world like prime minister putin put it recently. this is creating an environment where countries are looking for an agenda filling up the of vacuum and the space left by the a advanced economies. the world is losing a key

engine. we are now flying with just one engine, which is china. i do not think that works. i do not think that is good news for the world economy as a whole. this is why the world is looking at washington with concerns. it is not just about the u.s. economy. it is about the world economy at large. >> 2009, president obama and other world leaders came together in the g20. they put together a stimulus to jolt the world out of the tailspin that resulted from the crisis of 2008. what results for the g20 are now being used to overcome some of

these problems? >> we are talking about a second stimulus package in the united states that goes nowhere, especially with that concerns. countries in the emerging world, especially china and brazil, have the capacity to fuel their economies with fiscal policies like they did in 2009 and 2010. the levels of public that are still low. they can expand government expenditures without causing concerns like we do in the u.s. concerns about the downgrading of the treasury's or how the markets respond to an increase in the fiscal deficit. limited in its capacity to steer the entire global economy in the direction of growth.

that would be unreasonable to expect. fiscal policies in brazil, china, india, russia, the economies of the world have to get back on track. >> i just wanted to talk about europe. clearly, this is a crisis that does not just affect america, but affects the west more generally because of what is happening in europe. give us your assessment of how things are going. >> the point you just made about the figures coming in about growth stalling in germany and france, it has increased concerns of the european front. a week ago, we might have been singling out germany as another major driver in the world economy. germany still has that prospect.

their fundamentals are pretty sound. she mentioned the debt levels being pretty high in europe. if you look at the euro zone as a whole, the debt levels are not square. what the europeans are worried about is not what you cup pointed out here. it is the contrarian affect from the united states. if the u.s. loses its aaa rating, what about france, what about germany? we have seen contagion spilling over. the spanish are extraordinarily concerned about this. they were already on the brink of having the market's response to some structural problems in the spanish economy. there seem to be double standards in europe. the crisis this time around was made in the united states. the united states is being downgraded because of its

political disfunction. it is the united states that seems to have it the largest debts. of the same time of the downgrade, where the markets go to is the united states. the commentary that we have seen, some of the u.s. analysts have said that it is not so bad. look at what we are competing, dysfunctional europe and equally dysfunctional japan. we are doing a good job of tarnishing ourselves. not just the united states. the fears in europe is that this spirit europe is not counting the united states out. there is talk relate question in europe about the value and importance of u.s. leadership. they are concerned about populism in the united states. they have their own problems with populism. the riots in london. the massive debate that they

have had in the united kingdom and what went wrong. we have seen plenty on the streets of athens. even in israel we have protests on the fringes of the european space. people protesting austerity measures. populist parties have made a lot of traction in politics. we have elections in france coming up in 2012. the main competitor for presidents are cozy is not the socialist that we thought. a new brand of populist politician in france. we have elections in germany in 2013. angela merkel tries to keep it together. a great question about how politics in germany are going to go. this function seems to be breaking out all over. that is what dysfunction does.

we have some serious issues that need to be addressed on all fronts. how does one stem it and prevent the contagion effect. >> stop talking. >> is this function -- dysfunction going to spread to try that? can we rely on china to be the engine to pull us all out of this? chinese and people throughout asia, i consider the u.s. to be by far the most powerful, dynamic country in the world. it is not like everybody has written off the u.s. by any means. we played a huge roll up there

and we garner a lot of respect. having said that, we are known as being a country that does not have a a very good record at avoiding a huge errors in what we do domestically. what we do have it is emerging from those corrections and been even stronger. the genius in our system is in recovery. are we losing our bounce back capability? as our political system become so dysfunctional that we can no longer reach accommodations and pragmatic compromises that allow us to move the enormous resources we have throughout society and capture the future? that is a very big question there. the last couple of weeks have

added an explanation -- exclamation point to that question. it was handled monumentally badly and the outcome does not bode well for the future. this has tarnished the u.s. model for democracy. china says that you need a more cohesive state to do with the problems that confront us. i think the chinese have it wrong. it is hard to argue over the basis of the last couple of weeks. look at us, that is how you should manage things. the u.s. is also seen in the region that in the past could always be counted on to be the go to country. we think globally and we have an unparalleled resources. in the future, we are going to have to be a country that is short of cash.

we do not have the capability up whether it is a global stimulus plan. we will not be there to be the leader. we will encourage others to put up t is a very different kind of perception of the u.s. role in the future. it really worried me that we would almost certainly end up withthat has as drawing nearly f of the savings that are mandated out of our broadly defined security system. if that is implemented, that will force serious changes and serious decisions as to what we that we otherwise would have done. we are increasing our security related forces in asia. there is a real is going to be .

countries around the region will be looking at that. there is the issue of how everybody relates to china. as you look around the region, every country in the from chin's economic growth. they all are. china is the largest trade partner of every single country in the region. as of the year 2000, we were. the change has ben extremely significant. what they do not want to have it is the chinese leverage their economic power advantage. countries throughout the region the u.s. to say, protect us from that. balanced the chinese diplomatically and on the we can benefit from the economic growth in china. where they doubt our capacity to step up to the plate on the

dipl side, you will have to hedge more in the direction of china. within china, there are a a a at the u.s. is clearly in decline and will not recover. therefore, it is time for china to press its longstanding positions standing problems with the u.s. whether it is weapon sales to taiwan or whatever it will be. chinese leadership does not believe that. they are saying that they're serious in the short run. they may need us in the long run. we are not short. we will have to hold back and ma commitments. the shadow of the future really haunts asia at this point. the shape of that shadow is shifting.

it is not shifting in the right direction from our perspective. it also assumes that china is do very well. the reality is that that is not certain. if you look at china in the neck stimulus program, it will take a time. they are worried about inflation and asset baubles, all kinds of problems. very substantial levels of potential instability. they are not about to start turning on the money spec it's again. especially when their level of bad debt is very high. i have to find out how deep in the hole of bad debt they are. we are talking trillions of dollars. is a somewhat mixed picture.

i think we are all much better off if china does well. china may not do well. if that happens, all of the problems we talked about are further complicated. 2012 is an utterly extraordinary year in the asia-pacific region. we have an election here. the chinese have their succession in the fall of 2012. for 70% of their top leadership will turn over. tie one has its leadership turned over. hong kong in 2012. south korea later in 2012. russia in 2012. north korea in japan and both have changes. there has not been a year in several generations when all of the top national leaders were focused on domestic politics and the politics of succession as

2012 will be. that is a terrible time to have a lousy economy. >> we can always count on bob to take the long view and the historical view and tell us it is not as bad as we think it is. let me close with something that he wrote in the new " -- "the new york times." the debt crisis has chipped away at the presidency of president obama. the topic of discussion is whether the age of obama is giving way to an age of austerity, one that will inevitably reduce america's influence internationally. >> he is not here.

we are obviously in a serious crisis. i like a good crisis as much as the next person. in an election season. we want to start casting blame. we want to make sure that the other party or the other president is blamed, not only for the domestic prices -- crisis, but tarnishing america's reputation all over the world. it is time to look at what america's influence and power really are. we have to ask ourselves, how much have they declined and how much will they declined in the future? much to your dismay, this is not on the record. >> up least i do not have to change my position. >> the bottom lines are these. the united states continues to provide very important global goods to much of the world including to china. whether it is through its

security role, whether it is the fact that its economy is still the largest in the world and everybody depends on the health of the american economy, there is no other real competitor for the world that united states plays. i do not think anybody in the world thinks that there is. we can get a little bit too caught up in our impression of brand america. as we look back over the past 60 years, we can overstate how wonderful brand america was in the past. i remember 1974. any time between 1964 and the mid 1970's when the american brand was badly tarnished by vietnam, watts riots, assassination, i do not think we are in the ballpark. we do have a certain degree of it dysfunctionality.

i think the world is accustomed to some degree of this. are we able to provide these kinds of public goods that the united states has been providing in the past? in the midst of this dreadful crisis, europe is still looking to the united states to please use its military power in libya. i must say, coming after iraq, coming after george w. bush, coming after the economic debacle, coming after the tarnishing of brand america that the arab league and the united nations were practically begging the united states to use force in libya is astonishing. i think the debt crisis is serious. when tom was saying that there's too much fixation on the debt problem, i want to go up to her

office and bring her down here. i think the debt crisis is the big crisis. that is what the world is paying attention to. they want to know whether the united states can get its debt under control. for me, the question in terms of foreign policy, what is the impact going to be on america's ability to provide the public goods in the security area? if the consequence of our debt crisis is an entirely unnecessary rating of the pentagon coffers at precisely the moment where many people around the world in asia and the middle east and europe is looking for the united states to continue to play its military role, that is when the decline begins. when we begin to cut our capacities, that is when the decline starts. i worry that we're talking ourselves into a decline that

needed occur and we are committing pre-emptive superpower suicide for fear of dying. i hope that as we move through this very political environment, we try to keepur i think the people that think the united states is going to recover from this is right. i do not think it is going to the 2012. it will be in barack obama's second term or somebody else's first term. you go through american history. look at the 1850's, look at the 1930's. the american process sometimes has to go through a tremendous and dysfunctionality before arriving at a solution. >> the triggers are triggered and that could have a dramatic affect on the defense budget. explain what might happen and

whether you think that is likely. >> the second part of the debt ceiling increase agreement was a target for additional savings for the deficit. the first was roughly $900 billion to a trillion over 10 years. the second was $1.20 trillion. if the congress fails to receive from the joint committee and enact, followed by the president's signature, a plan to do that in a rational way, then the backup is a set of automatic reductions. those are divided evenly between

the defense budget and medicare providers. the irony of the last is the grand balanced budget agreement of 1997 that everybody is so proud of how the only cuts on medicare providers. we have been fixing that ever since so that it does not go into effect. there was no savings in spending back in 1997. the other part of it is is that it does not go into effect until 2013. i do not think either party, either president could live with that backup mechanism. i am convinced that something will replace it. there is some give and

flexibility in the face of non- negotiable demands. by the time you get to t +3, churchill reminded us that we figure out what to do. one of the most obvious ways in the short term, i think that deficits and debt are a problem. everything we have done so far is counterproductive to it. what has to happen is for obama not to bargain away his most powerful lever for getting something constructive done, which is the expiration of the bush tax cuts at the end of 2012. that is the one thing that make s the status quo unacceptable to republicans. they are likely to control both

houses of congress. one in and of itself eliminates our immediate problem and allows us to make reasoned judgments about defense spending. there is hope out of this in that sense. only if the actors do not act foolishly. they might in for some changes that might actually deal with the problem. everything else is a rounding error in deficits and debt. we do not want to repeal the affordable care act, we want to build on it so that we can deal responsibly with those health care costs. it is not going to happen in

2012. one of the aspects of america's ability to renew itself is that it renews its political leadership in a dramatic fashion. you are going to have a president obama with a second term mandate able to take more risks than he might have taken in a first term for you will have a new president that will -- has run on some plant that will or will not be enacted. >> in the meantime, the world waits and watches. >> they had done that before. the world had to live through the monica lewinsky crisis. i remember in 1998 that there were all sorts of editorials all over the world. do we do what the united states takes its vacation? clinton was paralyzed and could not seem to do anything.

the republicans were adits throats. does anybody remember what during iran contract? you talk about this function. -- dysfunction. >> it is true that the world can wait. that is true that the world has been used to that. it is true that the superpowers get more degrees of freedom. they are not unlimited. they are changing. in today's world there is more competition for supremacy. >>really, who? brazil, india? >> we are measuring in decades. wake me up.

>> undeniably, the balance of power is shifting. maybe it is taking some time. the notion that the united states is the preeminent superpower is a little hard to maintain in these circumstances. china is emerging with a huge budget surplus. which it is putting into its military among other things. the world is not just watching and waiting. it is acting in ways that we do not have as much ability to or shape. is there not danger in this period where we become preoccupied politically that others seek to fill the vacuum or go their own way in a way that when we finally get around

to it in 2013, that we find ourselves in a situation which is much more difficult for the united states to influence? >> i am in favor of being alarmed about a lot of things. i want to push back on this judgment in two ways. one is from a historical perspective. during the cold war, japan and germany rose to relatively dizzying heights of economic power of the united states was preeminent. i would say the rise of the japanese economy and the german economy dwarfed the rise of the brazilian and indian economy in terms of their impact on american leadership. the rise of japan and germany did not impact negatively. what about china?

there is no question that china the china was before. you look back of the cold war and we cannot have china, we have the soviet union. they were occupying half of europe with massive forces, with a massive nuclear force, with some real global reach. i would venture to say that we are still better off today, even with a rise in china, as a preeminent power, then we were in a thatperiod. these are secular chefs. power has been shifting to asia for a decade. it will continue to shift to some extent on this is concerned crops up. in 1987, paul kennedy wrote a very smart book about america declined and america being overstretched. it was well supported by facts and history. what happened? it was not that american

changed, it was that the soviet union unexpectedly collapsed. it was not that the united states was better than he thought it would be, it was that the soviet union to collapse. is the united states is in terminal decline or that china is going to run up against some challenge that may shear -- seriously shake its system? i think that the child the challenge is probably a greater problem and i think that the chinese do, too. >> do you want to respond to that? >> not really. >> let's talk about one of the more established powers, the russians and how they are viewing this political this function. where bob left us in the ruins of the u.s.s.r.

there is the paul kennedy rise and fall of the great powers and the united states is not immune to this, despite all the evidence to the contrary. this is a narrative we are hearing a lot in the russian context. it is not just the russians, it is everybody else we have been talking about. for the russians, this is a useful narrative. it shows that it can happen to anyone. it is not just saying that we are parasites on the face of the global economy, it also says that the tragedy of the 21st century was the collapse of the soviet union. with the collapse of the united states, everybody else goes up. it is archimedes' principle. we go down and everybody goes up. i do not know if the chinese would buy into this. here we are, 20 years on since the collapse of the soviet union. the mighty united states is in

the same position. overextended militarily, massively in debt, allies in tatters, nato is looking and we are 20 years from the soviet withdrawal from afghanistan. basically what goes around comes around. why is this useful texts as was mentioned, we're not going to elections. this leadership transition in asia, 20% of the chinese party, there's not going to be much of a transition in russia. we have a limited options. even if it is the shifting of the chairs we have the same group people who have been at the head of russian politics.

it is a great deflections away from your own problems of home if you can burn other people for economic issues. the russian economic engine is slowing down. there's a concern they will not be able to withstand a double dip recession. if united states pulls europe down, macros directly to where it hurts the most in terms of the russian economy. it is fueled by oil and gas revenues. in terms of the political dysfunction, this is a great way of deflecting criticism that there are not going to be a leadership transition in russia. the russia house all of these democratic deficits that we are so familiar with. if you want and democracy, look at this dysfunction treat the united states has lost its aaa rating. but somehow it diminishes the

-- president obama's presidency, based on multilateralism. it goes back to the chinese need for a strong hand, more assertive leadership. the place well into the politics in russia right now about the question that if mr. patten does back, we will not want to have a repetition of that. crisis needs strong leadership. this is a helpful leadership and for this particular point. even though it does not help russia economically. it corresponds to the reality in moscow. the chinese are not where the united states stands.

>> can i come back again on china? >> csi but as you do that, does the change of of going to be done in the same way? does that justify the system? but >> that argument over the last 30 years, the first dies was on the soviet union collapsed. they said look at the chaos over there. look at the decline of standards and living. -- in living. if you want to change our system, that is what the system looks like. what we offer is rapid economic growth. more recently, they point to the united states and say, democracy

will not be -- they say they are democratic but multi-party democracy like we have produces chaos. there is not a way to husband resources and get from here to there. so at least until the the -- they become a middle income country, a chinese per capita gdp is still below 100 in the world. they're still a developing come -- country. until they become a middle in, country, we need the capacity to mobilize and focus resources. in order to do things to manage urbanization and the massive changes in society. they point to the u.s. as not a complete-example but democracy does not tell what a dumb.

-- not get a lot done. i know you will correct me if i am mischaracterizing, you presented this in your final remarks as, if the u.s. is going to be up and china down, is china going to trip up or is the u.s. going to recover? there was a comparison to the soviet union. thinking back in terms of the u.s. and soviet union, the free world and soviet bloc, it is fundamentally to miss what is going on right now. been onadvances have the basis of integrating into the global economy, including into our economy. we are in china in a major way. in which you could not have dreamed of with the soviet

union. there is increasing stature has not been based on their military power. their advances has decreased as folks worry about them. why are you going in that direction? totally different from the way the soviet union managed its situation. i would argue in this goes back to the some of the issues raised at the beginning, we have an enormous interest in china's success. their success can bring, and does already bring, enormous benefit and opportunity. i worry about their success. if they succeed and they are able to shape international practice in ways that are illiberal, that works against our interest and most of the folks we care about. what we want is a successful china that fits into a global

system that continues to operate along the principles of the system set up after world war ii. that system is at risk if the u.s. is not powerful enough to support it. if we are not successful ourselves. our ideal outcome is u.s. success and chinese success. that will produce the best overall outcome. dramatic chinese fell year is going to impose costs on all of us. a dramatic u.s. failure leaves open the possibility of a global system increasingly dominated by chinese values. that is not a system i am going to be comfortable in. i think we need to think in terms of that very nymex and not so much in cold war. >> i agree with what you're saying. i was just saying if you were doing a predictive -- your visa

to china is in trouble right now. [laughter] >> before we go to the audience, tell us about the reactions to all of this. >> i already lost the argument. [laughter] honestly i think -- let me put it this way. we think of the debt as the issue. gdp to 80% in the next four years. if we think the u.s. has supremacy, there is no contender, the next one in the marathon is miles behind. we can enjoy the summer and wait

until the bipartisan commission comes in november with a proposal. if shopping comes out of that we will wait until after the elections. i think that sense of complacency is misplaced. it is this place for one reason. the damage is not to empower the contenders. the damage is the u.s. economy. as you said the government is trying to do too many things at the same time. it is trying to reignite economy and invest in infrastructure. it is becoming the provider of goods of last resort. in many cases the only resort. and the level of taxation, i think that is not sustainable. that hurts the consumer, that hearst investor, that hurts the economy as a whole.

the motivation for doing something is not necessarily because of losing supremacy. it is because the economy. by the way, back to brazil, what countries are thinking, let's find ways of mitigating the cost associated with the weakened u.s. economy or the weakened u.s. dollar. let's find a currency. this promote a dialogue with in emerging countries. of's figure out a way offsetting the recession in the u.s. with more stimulus. this is a dialogue that is taking place. it is not about overcoming the u.s. and becoming a leader it is about figuring out ways to handle and the changing

circumstances, changing the role of the u.s. in the global economy. >> good. let's go to your questions. i would ask you to wait for the microphone. identify yourself before you ask the question. who wants to go first? >> adam with a middle east broadcasting. i want to follow on your original question. we are sick or they are sick, one or the other. you talked about the debt discussion being about entitlements but what about for new spending? we spent trillions in the war on terror, iraq, afghanistan.

we find nato operations, troops in asia and libya. we're about to spend the next month looking backwards to that 10 years worth of foreign policy expenses. what do you see happening to those expenses? are they going to have to be cut or is the status quo maintained because most of the money would come from entitlements? though others can speak with more authority than me, my own some expenses will be cut back. the chances of us in gauging engaging without how we come out of it and how we finance it is pretty far fetched. i think out of this could come

in ourealthy adjustment is defense strategy and expenditures. that would be a good thing. the easiest, some are on the non-defense foreign policy side of the budget. i see those being cut back. areas initiated by president bush or we have some leverage to do some constructive things will be cut back harshly. there are whole hosts of irrational cuts that are being made right now because those are the easiest places to achieve it. i think there are real adjustments to be had.

the entire budget will be scrutinized and scrubbed but the bottom line isut deficits and debt, the answer is taxes, health care costs, and growth. everything else ends up rounding their financial well-being. the other pieces they get cut could do real damage. >> do you want to come in on this in terms of added time when you can see in the arab world, it can be important in terms of democratic transitions. isn't there a danger in all of this that our levers of influence are going to be affected?

>> it is hard to measure how much is going to be affected. it is foolish. these are trivial amounts of money. they are the easiest low hanging fruit because they have no constituency. unfortunately i believe the president has not helped the case. when the president said in his recent speech that we need to focus on nation-building at home. beck gives people more license that they would have otherwise had. it is always ahead on the administration in power to make the big case for why these expenditures are necessary. congress is not going to make that argument. the opposition party rarely makes that argument. if the administration cares about these cuts they're going to have to fight for them.

>> thank you. i like his optimism but let me throw up a few other thoughts that might weaken the u.s. role overseas and have you shoot them down. >> it is my job. [laughter] i am up here alone. >> a declining confidence to do the right thing. in the 1950's and 1960's, the public believes, given to the federal government. they will saba. that confidence is no longer there. the likelihood of the u.s. urging the federal government to be active overseas is not what it used to be. our alliances are not what they used to be. nato was really powerful. not there80's, it is now. we solved a lot of problems in the past by throwing resources

out them. massive amounts of money, and delegations, overwhelming other countries with our manpower and people. i do not see as having the resources we had in the past to flow at international problems treated the last one, i am not sure about this, declining interest in international affairs. the focus is domestic. it is jobs. it could be transient. keeps the government to small, make it a texas model. i do not see a public-interest in adventures overseas. my question is, do these four points lead further arguments for and less influential -- less influence abroad? >> the one that is most persuasive is constrained resources. if you have constrained

resources, in a mechanical sense you have less ability to wield influence on the world stage. having spent a lot of time looking back on the cold war, we cannot overstate the degree to which we are able to snap our fingers and get what we want. a lot of money in vietnam over 10 years. by the way, it did real damage to our own economy and the global economy as a result. as far as the public is concerned, i have been hearing, you knew i was going to say this, every five years or less the public has had it with public policy for the last 25 years. the american people are an interesting people. they always say they do not care about foreign policy. they never urged administrations to go off on foreign adventures. it is usually political

leadership or in the white house. it is even people think they're not going to care about but then wind up caring about. i would be happy to wager with anybody in this room -- room that it averages hold, sometime in the next five years the united states will engage in another military action. >> why moderately? >> it is not world war ii. it is not 500,000 troops. your for this a hundred times. forgive me. we have engaged in a significant military action watt -- roughly once every two years. i believe we will be in a post afghanistan delay which will extend that three more years. if you had said to me at the beginning of the obama term that this is all a joke.

if i voted for john mccain, we would invade another arab country. i did vote for john mccain and that is what happened. [laughter] if you said under barack obama we would be engaged in a military intervention, i would have said that was odd. don't underestimate the american people to pay no attention and then support in a tent -- invention intervention they had not given thought to. >> i am from american university. i am a question to ken and bob. china is aiming to increase its army power. why worry about china and? power?

thank you. >> you go ahead. unless you want to say something i can agree with. [laughter] >> as you can tell, bob and i enjoyed agreeing with each other. as i enter stand your question, why is the world worried that china is being strengthened on economy given they do not have aggressive intent? is that right? >> and their acceptance and desire for america to help military power. -- have military power. >> let me speak to the economy. on the chinese side, there are several concerns. one is that china and asserts it has no aggressive intent.

but its plans for development of its own military are non transparent. it has become more transparent over the years but it is by far the least transparent military throughout asia and the rest of of things the military is investing in are quite worry some. when you look at anti-satellite weapons, when you look at the carrier killing missiles, when you look at global surveillance capabilities and i kind of thing, you have echoes beyond taiwan. it goes beyond the area around china. china says it has no global military ambitions but we keep

saying china develop capabilities at a fairly rapid pace that can lay the groundwork for protection well beyond its own periphery. i think that disconnect worries military people who look to china and say we need to understand more what your plans are, what you're thinking about the different regions of the world and how your developments relate to certain goals. you can find a lot of that information on the u.s. military. you can find what we're going to develop and what the limits are. you cannot do that with china. if you look at their white paper, each year it has gotten a little more detailed in the past. it still does not break down the world by region. you know the military thinks in those terms but there's nothing

in their white paper that addresses things on that level of specificity. i think that worries people. finally, the fact that china is not a democratic system. in the united states and around much of the world's that if you have a nondemocratic system, it does not have the kind of constraints that democratic systems are self-imposed by their nature of their decision making. historians may not agree with that but in terms of popular perception there is a worry about systems that are authoritarian debtor getting much more powerful, and developing their militaries, and do not get into detail and explain why they do what they're doing. >> the chinese would say that united states the is not very

constrained according to the statistics. >> historians may argue. i was dealing with, what to me -- why do people worry about what china is doing? >> i want to go to midpoint about nato. this perception that made no -- nato cannot sustain the role it has sustained in the past. >> and do you want me respond to the other half? the >> talk about nato first of all. we made a mistake in believing that nato could be than it was in the cold war. during the cold war was a static force in place. the role of nato during the cold war was the role of a french and

british forces to stay there and not get beaten too quickly by the soviets. when the cold war was over, and i say this with all difficulty for when i go home and talk to my wife, we decided that nato be a global player. we stretched european capabilities and desires beyond where they reasonably could go. when we compare native to the past it is not that they were worse it is that we're asking it is able to do. i think that is -- has created tensions that were unnecessary. should be creating a europe whole and free. it should focus on things around the mediterranean and the middle east and that neighborhood.

to talk about nato is a global power is a mistake. >> i agree with bob now. i think he is right on asking too much of the european allies. of course nato is not just the european allies but the canadians as well who also stepped up to the plate in these operations. i think we have seen in the last few years, special with afghanistan, it is in the non european allies who have had a aspirations. they have stepped up when the u.s. has requested a. perhaps the biggest challenge is germany. one of the biggest debates was between a very famous german who was also a frenchman.

about this point about european security. what came out of that debate and a subsequent commentary is that we forget the united states -- there is still a lot of issues to be worked through. about the use of your -- military force. united states is a part of pride. it is part of the pitcher arctic narrative. that is not the case across europe. there was a tarnishing of the role of the military because of the atrocities of world war ii. dealing with the consequences of this. germany is asking a lot of questions about why don't they step up in terms of security or even with china. where is germany with its economic development at this time of crisis?

germany is still a traumatized country. it is still dealing with the effects of what germany did and what the military did during world war ii. it is still a major element of political debate. you have no consensus about where europe should had apart european space. it is something in the united we have to have a better conception of one we think about our own security and where we're going to go with something like this comes up again. >> nothing succeeds like success. if khaddafi is -- leaves tripoli he may well do, it will be seen as a victory for nato. they do not come back. >> one question here.

>> i'm from the university of maryland public policy school. it has been interesting to listen to this but what i sense is lasting is a discussion of the arabs spring. they have been such big drivers of foreign policy. i do not have any agenda or argument but i would like to hear comments on our dysfunctional political system in the terms of where does that leave us with israel and the developments of the middle east? >> i guess that is for me. [laughter] i was trying to escape the middle east. i think that this function we have been talking about affects our ability to be effective in the context of dramatic changes

that are sweeping across the region. the dysfunction and the debt ceiling that we have been overextended and cannot afford to get involved in another war in the middle east or another intervention. it is the fact that we have really shot are what -- our wad in afghanistan. we are reluctant to take a position that might imply obligations on our part to do something. when it comes not to libya but syria. libya is a sideshow. libya is like loss vegas. -- las vegas. syria will have broader impact.

in particular, the dominance in the region which could suffer a decisive blow if the outside regime -- it may happen anyway. but the fact we are hesitating to come out clearly and forcefully in support of the syrian opposition when we did not hesitate to do it in the case of egypt who have been are staunch allies for 30 years or in the case of libya or we did not have a much interest in the outcome, that is a reflection of the back constraints or preoccupations or the lack of ability to get engaged. it is our right.

the turks are starting to threaten the steps, whatever that means. we do not have the credibility at the moment to move affectively and the russians are not willing to allow u.n. security council action. i think you would take a different posture if we were more assertive. we are getting their " we're getting there very slowly. dying in the process. i think that is a consequence of the overall situation. you also asked about the arab- israeli problem. there we suffer far more from a failed . of the case.

we went about it trying to resume negotiations in the wrong way. now the degree of difficulty was great given the dysfunctional lissome -- dysfunctionalism. we did not help. you come put that down to political constraints but i think it has a lot more to do with the way we went about it. i do not have time to go into the details but i think the failure to achieve negotiations, george bush who did not care had a final status negotiations. but president obama has sworn from day one he was going to this a priority. a into one-half years, he was only able to get one month of

negotiations. that has been going on for the last 15 years. that affects our credibility. if we cannot be seen to be effective in trying to resolve the palestinian problem which is a hot-button issue in the arab world, then we are badly positioned to play an influential role. so our credibility has been tarnished. time butd we're out of i want to thank all of the panelists and the audience for the great discussion. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> we will bring you another event tomorrow when they hosted discussion about the new congressional deficit commission. it has been charged with finding that this reduction over the next 10 years. coverage begins at 1:30 p.m. eastern time on c-span. tonight on c-span, nicolas sarkozy and angela merkel address the european debt crisis. president obama visits to iowa. newt gingrich talks about the federal budget and deficit reduction. >> watch more video of the candidates. see where reporters are saying and track the latest contributions with our website for campaign 2012, easy-to-use it helps you navigate the political landscape with twitter feeds and facebook updates from the campaigns and the latest

polling data plus links to see span's media partners. all at c-span.org. >> every weekend, american history tv on c-span 3. telling the american story. watch interviews about historical events on oral histories. it features some of the best known history writers. revisit key events during the anniversary of the civil war. visit classrooms across the country during lectures in history. go behind the scenes at historic sites on american artifacts. the presidency looks at the legacies of past american presidents. get our complete schedule at c- span.org/history. >> of french president nicolas

sarkozy and angela merkel met tuesday in paris -- paris to discuss the debt crisis. at a news conference, the leaders announced a series of proposals including a requirement of all eurozone countries to establish a balanced budget by mid 2012. this news conference his courtesy of france's 24 and runs 50 minutes. >> we can now cross to the palace here in paris or the french president is talking about the debt crisis. >> it is hard and fast during the last few days to present a number of proposals, a number of the joint proposals. i must say that we have considerable common vision for

the furniture among the last french and germans. we would like to express our determination to defend the the euro to assume the responsibilities in europe that we have in france and germany. and on all of these issues, to have a common view and make joint proposals. in the current situation, there are objective reasons and there are a number of reasons and rumors which have been fueling speculation. we are determined to fight against such rumors and speculation. we share this determination and we are determined to to restore the whole of the eurozone to its

growth path. so we have decided on a number of joint proposals which will be the object of our letter which will be sent tomorrow morning. the first of these proposals consists of setting up a a real governing -- economic government of the eurozone. this government will be made up of heads of government and heads of state. it will meet twice a year and more often if necessary. it will elect a president who will remain in the job for two and a half years. angela merkel and myself proposed that this president should be herman van rumroy.

we want a the eurozone -- we want them to adopt before the summer of 2012 and the golden rule which concerts -- which will have in the constitution the rule whereby the annual finance at it must be subject to the objective of restoring fiscal balance. the fiscal balance is a common sense rule which should reduce the deficit and the debt burden. regarding francis as i have told chancellor merkle, this has been passed by the lower and

upper chamber. we now need a quality -- qualified majority. we will get in touch with all the parties in france to place all parties, in the face of their responsibilities so they know what they have to do to restore fiscal balance. a number of the personalities have already made it known that they favor the adoption of this rule. if a consensus is achieved, i will call for a meeting of the congress in the autumn. if it is not, the french people will have an opportunity to vote on this outcome at the next elections in in 2012. the matter will be those who want to restore a fiscal balance

and those who do not. france and germany, the ministers of finance of these countries will file with the european authority a joint proposal in september for a tax on financial transactions. this will be a priority for us. finally we have decided on franco-german measures. we are aware that we must set an example of convergence with a view to the 50th anniversary of the treaty. we have asked our economy ministers to give proposals that will be submitted at the beginning of 2012 at a meeting

of ministers so that from 2013 onward, the anniversary of the treaty we will be able to have a joint tax based on the same basis and with the same tax rate for the german companies and french companies. in addition, we have decided that at the beginning of each half german and french ministers will exchange their views with a view into assuming and adopting the same assumptions when we draw our finance acts. we will basically agree on our economic assumptions for the annual finance act. those are the main proposals we are submitting which testify to our determination to march together in defense of the

acquired benefits of the european union and to implement across the eurozone measures that will strengthen the competitiveness of our economies. france and germany are assuming their responsibilities in a situation which everybody agrees is very complex. it is very difficult. >> ladies and gentleman, on july 21, we announced that we would submit a number of proposals regarding the strengthening of corporations in the euro area. these proposals will be the object of a letter that is to be addressed to president herman van rompuy as has been mentioned.

we are still facing the consequences of the financial crisis which, by now, has become to some degree a crisis of debt. given the circumstances we cannot lose our competitiveness. france and germany have committed to strengthen the euro witches are common currency. in order to reach that goal, we need to integrate our financial and economic bonds. france and germany have a resolve to rise to that challenge. that is the context in which today's's meeting has taken place. we want to enhance the confidence of the market through our action.

the current crisis has built up over several years. we cannot solve it just by waving a magic wand over night. " we are convinced that through our enhanced corp. we can restore confidence and we are opening up a new stage of a corporation with in the euro area. we share the same growth and stability packs. france and germany together with the european parliament will see to it that the stability packs are acted on. we believe the member states of the euro area must commit to a greater extent and make sure that the fundamental values of the stability packs are respected. that means fiscal balance and but it also means a systematic

reduction of the debt ratios. of 1/20th of the debt per year for those whose debt extends gdp. france and germany have decided to include gold in our respective constitutions. this is what has been referred to as the golden rule. thusly we hope to bear witness to the fact that our actions do not depend on day-to-day events are focused on achieving a common goal. we campaigned for that role to be adopted throughout the eurozone and we will also

encourage our parliament to take commitments to this and so that when parliament presents their annual budget, they can take into account all of the criticisms that can be voiced regarding the drafting of their budget. thirdly, we also want to enhance the competitiveness of our economies. we want to nurture growth to that end. we would like the structure to help nurture their growth as of 2013. those member states that display some weaknesses and vulnerabilities should be supported to a greater extent by the commission.

we believe the commission should be granted additional powers so they're in a better position to support competitiveness and growth. will understand that greece and portugal have not yet spent some of the amounts placed at their disposal. we encourage the commission to make a full use and the at their disposal. we suggest that van rompuy share the new european structures which will meet twice a year and on occasion we will having the opportunity discuss all of the issues at hand. we are where we cannot solve all of the problems overnight but we

are convinced that the action we are undertaking will be decisive for the future of europe. furthermore, france and germany are willing and able to stand as examples and to deepen their cooperation. we also touched upon the introduction of taxation of financial transactions. we are of the opinion that such a tax is needed. we believe that such a tax will also enable greater economic coordination between germany and france. we are soon to celebrate the 50th anniversary of the treaty. this will provide further

opportunity to deepen our cooperation and to harmonize our economic and tax policies. . within the context of the drafting of our respective budgets, we have programmed a number of meetings between french and german financial ministers so that we can make sure our views converge. i cannot subscribe what president sarkozy has said about the golden rule. the fiscal balance rule. that also sets out ambitious goals as does our pensions policy but i believe we must be

ambitious if we want to restore confidence in our economy and in the euro. the euro is the basis of our growth. thank you for the opportunity to speak on that. >> thank you. are there any questions? we will take some questions. >> i am from a german television. chancellor, before this meeting you mentioned the fact that euro bonds would not be placed on the agenda. some members of your government have been discussing these together in berlin. do you believe that eurobonds could contribute to the strengthening of the euro?

>> first of all, let me say that in democracies it is important for all matters to be touched upon and discuss. we cannot silence any given topic. the real question is whether or not we should have recourse is today. what we need to do to overcome the crisis. we all wished to have a magic wand that could solve the crisis overnight. we all hope for one single lever to pull but would not suffice to rely solely on euro bonds. we need to do more to restore confidence. of course we will discuss that

matter and of course we will try to be convincing. i think it is important and fair that all 17 member states of the euro area take further commitment and encouraging their parliaments to take stronger commitments to listen to the door recommendations. i think we are taking a qualitative step forward. france and germany are setting the example. >> the chancellor and i have the same position regarding the eurozone bonds. we may explain it differently. what would they consist of? they would consist of an underwriting the aaa rating of the debt of all the euros on member states. that would mean we would be

underwriting all of the debt without having any control over the expenditure and whenever contributes to that. bonds could well be on the agenda but that he and of european integration, if each member state is free to increase its debt independently and then ask the others, the larger economies to guarantee that there, why would we say to our people? you have some people who could forbid the states that are too indebted to continue to increase their debts. we do not have the democratic power to do that. we do not have the legitimacy to do that. my feeling is that people who favor eurozone bonds are the same proposed the establishment of the single currency without

foreseeing the harmonization of competitiveness and the creation of economic governance. eurozone bonds could mean the result of an integration process. certainly not the prerequisite of integration. this could jeopardize the stability of the most powerful and the strongest economic powers in europe. we run the risk of losing control. we think it would be more productive to set up a european government to establish a competitiveness pact to harmonize our economies. increase growth because growth is the key to everything. the incorporation of the court -- golden rule in the

constitution to reduce deficit and debt and to restore trust and confidence without which there will not be any growth. our response is not ideological. it is practical and objective. it is out of the question for germany and france to underwrite other european countries. have i been clear enough? >> mr. president, do we understand your excluding the expansion of the european financial stability facility? some will people want to expand the facility. there are a lot of advisers and experts and targeting the views of but i would like to remind you we have created a fund worth 500 billion euros.

this is a considerable amount which has not been used to it some people say we should double or triple the european financial stability facility. if we do that, people will say why don't you quadruple it? we want to manage this facility. we are dealing with considerable amounts of money. i do not see that we should encourage global speculation as soon as we set another feeling. the new ceiling will be seen as inadequate. it seems that the european financial stability is sufficiently large. the greater flexibility

regarding the recapitalization of banks for greater market intervention and our commitment to doing what is necessary to defend the euro an agreement with all institutions, it seems that this message should be understood and heard by everybody. the european monetary fund, which we want and expressed a few weeks ago, is the right instrument with the approval of the european central bank to face attempts to speculate against our currency and to the stabilize our currency. >> i believe our message should be the following.

first of all, we are displaying solidarity as we defend our common currency, the europe. on the other hand, we are encouraging member states to be responsible individually. italy for instance has recently launched new austerity measures. very early on, we ourselves proposed a permanent mechanism, and we are about to suggest to the president that that fund also benefit fromacity is, so tt they can better assess the individual situation of the various member states. we a taken a long-term commitment to ensure that --

make sure that all of these countries meet their commitments over the long term. our action must be a long term action, and that is precisely why we have undertaken all the actions that presidents are cozy has just announced. kozy has justsarto' announced. >> a question for you both. if growth is the key to everything, as he has just said, and given the context of

the information that we received regarding economic situation of france and germany for the second half of 2011, are we get here and a recession -- are we to fear a new recession? and if so, will entail further rate cut-german or european measures -- franco-german or european measures? if there is a slump in growth, will be the consequences? generally speaking i would say that this a chelation in germany -- the situation in germany as that we have stringent the

levels by now, as prior to the crisis. there are fluctuations from one- quarter to the next. every possibility for growth in europe must be nurtured. by enhancing our statements, by enhancing our potential for growth on a regular basis, we must also become more independent of the quarterly fluctuations. this has been raised at the g-20 form. i'm not optimistic that even though the trend is not favorable. we will always be hit by events,

but we must take into account the long-term trend, and i believe that 2011 has been a very good year for germany. we have been creating jobs. however we cannot be satisfied with that. we must continue nurturing that growth. >> what has happened with the developed countries which already had high nets before the crisis? -- hide data before the crisis? this is probably the most serious economic crisis for one century to face. to support growth, to fill the gaps in tax revenues due to the crisis, some countries had to increase their deficits and

their dead. we ended up this year with a debt crisis. and this debt crisis has been created -- has created instability which is not good for growth. we can restore confidence by implementing programs that oil make the debt sustainable, reduce expenditures, reduced deficits, and like chancellor merkel, i am confident about the economic prospects of the eurozone and for the world as a whole. as regard to france, in the first half of this year, 2011, or the syndicate -- increased by a 1.4%. next week the prime minister and the minister of the economy and the minister of the budget will be announcing a number of decisions which will make it possible to see france's determination to rise to our

commitments and challenges in terms of deficit reduction. i would like to add as chancellor merkel said, how important has been for friends to reform its retirement pensions -- to reform -- for france to reform its retirement pensions as well as public sector jobs. it goes without saying that this policy will be continued. that is how we will restore confidence. that is how we will restore stability across the world. and that is how we will go back to the path to growth and job creation. >> do you want sanctions to be taken against aids that do not incorporate the golden rule in their constitution or do not comply with it? if so, what kind of sanctions?

>> we are submitting today a number of proposals to bolster confidence and the credibility of the euro area. why are we even talking about a golden rule? why do we suggest that such a golden rule be and corporate dated -- be incorporated into our respective constitution? in our respective countries, we already have the structures and the institutions that would be able to monitor the implementation of such a golden rule. we have all the necessary institutions to do so, and to assess and monitor the implementation of such golden rules. that is why we will incorporate

their role in our respective constitutions by the end of 2012, and this will show how our parliaments will be taking further and very strong commitments. i think we showed this great courage today as we announced it. we are also aware of the fact that all countries in europe are aware of their own responsibilities. however, had everyone in more responsible in the past, perhaps we could have avoided the difficulties that we are facing today. perhaps the fact that the european commission does not have sanctions is the reason why we suggest that sanctions remain at the national level. it is what happened recently in

germany with a lender had to correct the budget. >> i would like to answer the previous question as well. the economies of the 17 member states have two problems. a problem of competitiveness -- we need to invest more in training and research, innovation, and in our universities. to reduce our indebtedness, we must have stronger growth. and there is a second problem we have. eight that that also has a deficit, and this is particularly true in a number of countries, france has had a budget deficit for 35 years. this is not a left/right issue or a government/opposition

issue. do we want to break with their bad habits are not? the golden rule would mean that for now on all financial acts will have to be part of a five- year plan, legislative plan, aimed at restoring fiscal equilibrium. who can be against such a role? if we want to restore stability, if we want the eurozone to move forward and not explode, we need to enhance competitiveness, we need to harmonize our deficit and debt reduction efforts. all member states of the eurozone , if adopted, would have to comply with this rule. this allows me add something else. the euro has allowed us to make a lot of economic progress.

we are stronger together than on our own. but the bureau does not just -- the euro represents fiscal discipline. living together which implies solidarity in difficult periods but also compliance with their roles, and respecting the rules. if the rules were adopted by the 17 member states, which we hope, it would not be a mere option. it would be binding, mandatory. if it were made simply an option, why would some european countries comply with the rules whereas others would not? if those who have not complied with the rules turn to those who have complied with that and ask them to pay the costs of not complying with the rules, that would be unacceptable.

our italian and spanish friends are making great efforts, the governments of france, of italy, and spain have recently made very useful decisions that will bolster the credibility of the eurozone. >> i have a question for both chancellor merkel sarkozy merkel -- and president david shepardson -- sarkozy. what kind of time frame which you consider reasonable for a return to equilibrium? second question regarding the corporate tax which is higher in germany than in france. are we to expect german cooperation to be faced with tax hikes in the future -- corporations to be faced with tax hikes in the future?

>> i believe that german corporations will not face that, our finance ministers will see to that. we have to act on our own proposals and practice what we preach. we have a common currency. we have a unified market. therefore we need to ensure that we act on a number of joint values. in europe we have been discussing the use of harmonized indicators. and i think that as they word we need to -- road we need to walk down now. they are watching us, the markets telling us that if we want to have a kind -- a common currency, then we need harmonization. there is nothing -- that is

nothing easy to achieve. if we are setting down the path of harmonization as demanded by the eurozone, we believe that ultimately our course of action will enable us to improve the situation of our companies. now in terms of calendar, we propose that the date be as early as 2012. >> i agree with chancellor merkel. as regards france and germany, france and germany are two countries whose destiny is and geographical positions have put them side by side. they are the two leading economies in europe. you are our largest supplier and

our largest customer. general the gaulle and another chancellor reconcile our countries. the old people such as helmut schmidt also brought us together. my predecessors and hers created the eurocurrency. chancellor merkel and myself would like to continue the rush apochment between our countries. we cannot possibly accept the status quo. convergence is the key. from our point of view. the vast stable, modern economic the disparities, the gaps and

disparities which are very damaging on both sides of the borders. we want to create a european model based on our joint by use. focusing on corporate taxes. it is not easy. we cannot foresee the result of this, but we have set an ambitious timeline and we want to apply this common corporate income tax rate in 2016. we are also converging in terms of research, science, and we have to focus together on these areas as well. i think it is our duty to focus on the convergence and harmonization in all these different areas. >> i have a question for both. is it possible for france and germany to have made joint

minister of the economy? a common economic minister. >> it is not in the communique that we have drafted. i think we should take a step by step in the right order. what is possible? first of all, a joint analysis, a convergence of views, respecting the identities and specificities of each country. the french and germans are different. we have our qualities and some weaknesses. but together, we are stronger. i have always said that for the french people, if we were to seek this, it should be in a system winds rather than a system that loses. the enormous respect the french have for success of our german friends and their work ethic,

and in history we have often been enemies. it is our responsibility, our historic responsibility to work in favor of this connection. we have nothing to fear from this. on the contrary, we can help our respective identities by coming closer. this is very important for all the markets across the world. in the eyes of the world, the fact that france and germany are speaking the same language, have a joint vision, have a common vision of the future is one of the best contributions we can make to europe as a whole. >> [speaking german]

we have different identities, the french and german identities. it is only enriching to blend those together to a new identity. we were pitted it against each other in the first and second world wars, and we came to the conclusion that we should make sure that it never happened again. we now have common values, common institutions within the european union. we represent millions of citizens and we need to make sure that we defend our common interests in the world around us and in a larger context. it is interesting that when the french president and myself make use of ideas and values

where we have this great wealth of ideas and of values that we can use to build our own joint vision of what you're should be in the context of the globalization. of course we have no guarantees to the future, and no one can present that we would be forever on the path of economic growth and prosperity. says 19 -- since the 19th century, we have generally known periods of growth. we also know that growth has an objective cannot be achieved in isolation. we need to unite if we want to reach our goals. i think we have one further question.

>> this is first for the chancellor and then the president. you recommend a financial policy that will be binding for all. the lisbon treaty contains national sovereignty over economic and financial policy. can the lisbon treaty stand as it is, or should be reformed lisbon treaty be considered? >> the lisbon treaty was the result of lengthy negotiations. when it was finally signed, everyone was exhausted and no one would want to see it

reformed. we should always be skeptical when anyone says that nothing will ever be changed. that is also why i would recommend we create new structures rather than reform the old. i think the european financial committee is one such example. i would not recommend a modification of the lisbon treaty for the time being, but neither can i rule out that nothing in that treaty will be changed in the future. we are not collectively -- now collectively undertaking action which i am sure will be met with success, but i cannot say that the lisbon treaty will be the last treaty that we signed. >> i do not suggest the reform

of the lisbon treaty, however it does not solve the problems of european unity with institutional reforms. now we're being criticized for not reforming the institutions. the lisbon treaty was signed by 27 member states. the complexity of the compromises and decisions that have to be required by the european process is extraordinary. perhaps europe is the most wonderful creation ever invented in favor or at the service of peace by mankind. unlike maddow marco, i am sure that there will be -- like madam merkel, i'm sure that there will be changes.

they will understand that their interests sometimes the verse -- diverges. for now we're talking about the 17 member states of the euro area. and we are talking about greater economic integration of those 17 member states. i am convinced regarding europe that the debates of the past are not those of today spirit the debates of the past opposed those who supported the consideration and those who supported the federation. today we can clearly see that europe with up to 30 member states, very useful candidates knocking on the door from countries that are perfectly european. we are headed more and more for a confederation. who can question the fact that within the euro area where we have a single currency, it is an

obvious for the eurozone member states to move towards greater economic integration? how like to add that the institutions whose reform we propose within the euro area are not covered by the lisbon treaty. this would allow us to make smaller amendments than those were -- that were laid down by the treaty which led to some much debate regarding the lisbon treaty. thank you very much. we will see you at the next summit meeting. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> michael tanner from the brookings institute. david shepardson talks about new fuel economy standards for cars

and trucks. and they look at the fbi budget with david schlendorf of the fbi resource planning office. "washington journal" begins at 7:00 a.m. eastern time on c- span. >> in a city that averages 250 murders a year, a former baltimore homicide detective and an investigative reporter take on the tough questions, why do we kill? it is one of the books we are featuring this weekend on book tv. including a book launch party for armstrong williams and his latest "reawakening virtues." hollen likely allies got together to change the nation's school system. "after words." get the complete schedule at our website where you can watch nearly all of our 9000 programs on line. >> obama up visited

iowa today for the project for an economic summit. he announced a new jobs initiative. it would increase access to capital for rural and small businesses. the president's opening remarks are 15 minutes. >> well, it is wonderful to be back in iowa, and thank you for arranging perfect weather these last couple of days. i have just been having a great time. i want to first of all make just a few acknowledgments. richard avenarius, who is the mayor of peosta, please -- where are you, mr. mayor? well, he was here. give him a round of applause anyway. [applause] this person i know is here, and i want to thank northeast iowa community college for hosting us -- dr. liang wee is here, interim president.

[applause] i've got a number of members of my cabinet who are here. all of them do outstanding work day in, day out. so i couldn't be prouder of them. first of all, this guy you should be a little familiar with because he used to be the governor of this great state -- secretary of agriculture tom vilsack. [applause] secretary of the interior ken salazar. [applause] secretary of transportation ray lahood. [applause] secretary of housing and urban development shaun donovan. [applause] and the small business administrator karen mills. [applause] well, this is an outstanding crowd, and i don't want to stand in the way of a lot of good work that's going to be done, so

i'm going to just make some brief remarks at the top. we've got small business owners here. we have farmers. we have ranchers, public servants, clean energy entrepreneurs and community organizations from all across rural america. and i'm here because i want to hear from you, and my cabinet wants to hear from you. there are two things that i know for sure: america is going to come back from this recession stronger than before. that i'm convinced of. i believe that. [applause] and i'm also convinced that comeback isn't going to be driven by washington. [applause] it's going to be -- it is going to be driven by folks here in iowa. it's going to begin in the classrooms of community colleges like this one. it's going to start on the

ranchlands and farms of the midwest, in the workshops of basement inventors, in the storefronts of small business owners. and that's why i'm here today. obviously we're going through tough times right now; i don't have to tell you that. a lot of folks are looking for work. even if you have a job or a small business or a farm, you're maybe getting by with fewer customers or making do with fewer shifts or less money in tips. and for a lot of families in rural parts of the country, these challenges aren't new. for a long time -- a decade, maybe longer -- you've known what it means to face hardship. but we also know that while times may be tough, our people are tougher. you know how to make it through a hard season. you know how to look out for each other in the face of

drought or tornadoes or disasters, looking out for each other until we reach a brighter day. and that ethic, that kind of honor and self-discipline and integrity -- those are the values that we associate with small towns like this one. those are the values that built america. and while we've taken some hits, this country still has the best workers, the greatest farms, the top scientists and universities, the most successful businesses and entrepreneurs in the world. so as i've been saying over the last couple days, there's nothing wrong with this country; we'll get through this moment of challenge. the only question is if, as a nation, we're going to do what it takes to grow this economy and put people back to work right now, and can we get our politics to match up with the decency of our people. [applause] the question is if we're going to harness the potential to create jobs and opportunities

that exist here in iowa and all across america. we know what's possible if we're willing to fight for our future and to put aside the politics of the short term and try to get something done. already this administration has helped nearly 10,000 rural businesses and 35,000 small and medium-sized farms and ranches to get the financing that they need -- that's already happened. and that means a restaurant owner can bust down a wall and set up some more tables. it means a family farm can buy a new piece of equipment to get more product to market. and that puts people to work today. now, just as the interstate highways knitted the country together 50 years ago, we've also got to do some new things to meet the challenges of the 21st century. we need to expand the reach of broadband, high-speed internet, to 7 million more people and

hundreds of thousands of businesses in rural communities. and by taking that step, it's making it possible for folks to take classes and train for new jobs online. it's helping people sell goods, not just down the street but across the country and around the world. we've invested in clean energy, like advanced biofuels, so that we're moving from an economy that runs on foreign oil to one that runs on homegrown america energy. that's a whole new industry that's taking root here in iowa and across rural america. but the rural economy is still not as strong as it could be. that's why i created a rural council to look for ways to promote jobs and opportunity right now. and this council has come up with a number of proposals, and we're not wasting time in taking up these proposals; we want to put them to work right now. so today, i'm announcing that we're ramping up our efforts to get capital to small businesses

in rural areas. we're doubling the commitment we've already made through key small business lending programs. we're going to make it easier for people in rural areas looking for work to find out about companies that are hiring. we're going to do more to speed the development of next- generation biofuels, and we're going to promote renewable energy and conservation. we're going to help smaller local hospitals in communitiesth need. and those are just some of the things that we're already announcing today. the reason we brought you all together is because i'm looking forward to hearing from you about what else we can do to jumpstart the economy here in rural america. we want to leave no stone unturned when it comes to strengthening this economy. and we're going to be able to do a lot of stuff administratively. all the proposals we're making

today didn't require new laws; it just means that we're doing things smarter, we're eliminating duplication, we're allocating resources to places that we know are really making a difference. but we could do even more if congress is willing to get in the game. there are bipartisan ideas - common-sense ideas - that have traditionally been supported by democrats and republicans that will put more money in your pockets, that will put our people to work, that will allow debt that hangs over our economy. i want to cut the payroll tax again to help families make ends meet. that's meant an extra $1,000 in the pockets of typical american families. that means more customers for your business, more buyers of your products. i want to pass a road construction bill to put tens of thousands of people to work

all across america. we've got young people returning from iraq and afghanistan with incredible skills - 25-year-olds who have led platoons; 26-year-olds handling equipment that costs hundreds of millions of dollars. well, let's connect them to businesses that can use their talents right now. we should pass trade deals that will level the playing field for american companies. and no folks benefit more than rural americans when it comes to our trade. that's the reason that our agricultural sector is doing incredibly well, and that has spillover effects, ripple effects throughout the economy here. but it also benefits manufacturing. we've got folks in america driving kias and hyundais. i want to see folks in korea driving fords and chryslers and chevys. [applause] i want to sell goods all over the world that are stamped with

three words, "made in america." and all of these proposals -- [applause] all of these proposals will make a difference for rural communities. the only thing that is holding us back is our politics. the only thing that's preventing us from passing the bills i just mentioned is the refusal of a faction in congress to put country ahead of party. and that has to stop. our economy cannot afford it. [applause] our economy can't afford it. [applause] so i don't care whether you're a democrat or republican, independent, if you're not registered with any party. i want to enlist your help. i need your help sending a message to congress that it's time to put the politics aside and get something done. the folks here in iowa do the right thing.

i've been traveling through these small towns and talking to folks, sitting down at diners. and you listen to people, they take such pride doing the right thing -- taking care of their families, working hard, saving for the future, living within their means, giving back to their communities. you do your part. you meet your obligations. well, it's time washington acted as responsibly as you do every single day. [applause] it's past time. we've got a lot of work to do, and the only way it will get done is if democrats and republicans put country ahead of party and put the next generation ahead of the next election. and that's what i'm fighting for. that's why i'm out here visiting communities like this one and decorah, and small towns in minnesota and illinois. i'm convinced.

i've seen it. when we come together, there's no stopping this country. there is no stopping it. [applause] we can create opportunities for training and education and good careers in rural america so young people don't feel like they've got to leave their hometowns to find work. class, restore that sense of economic security that's been missing for a lot of people for way too long. we can push through this period of economic hardship and we can get to a better place. that's why we're here together. that's what this forum is all about. so i appreciate all of your participation. i expect great ideas coming out of these breakout sessions. i'm going to join a couple of them. let's get to work. thank you very much. [applause]

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♪ [applause] >> the white house role economic summit held several breakout session led by tom vilsack. and the head of the small business administration, karen help. the present return for the end of assignment and spoke for about 10 minutes -- the president returned for the end and spoke for about 10 minutes. >> thank you. thank you, everybody. thank you so much. please, please, everybody have a seat. i just want to, again, thank my extraordinary secretary of

agriculture tom vilsack for leading this forum. [applause] you don't have a more passionate advocate for farming communities in rural america than tom vilsack. and i will tell you, if you are not fully persuaded that this administration has been all over the rural agenda, spend five minutes with tom vilsack -- and his enthusiasm for the steps that we've been taking just bubbles over. and it's been under his leadership more than anybody's that we've been able to make such a difference. i want to thank all the members of my cabinet who are here today as well. they've done a terrific job participating in some of these breakout sessions. i hits that we've taken over the last two and a half years --

tom is right, i am absolutely confident about our future. and i'm confident because i know that while we face serious challenges -- and there's no sugarcoating that -- there's not a nation on earth that would not want to trade places with us. there's nothing wrong with our country -- although there is some problems with our politics. that's what we need to fix. that's how we're going to unlock the promise of america, and the incredible dynamism and creativity of our people. and having a chance to meet with some of the men and women in this room have only made me feel more confident. i'm excited about the future that you're working towards each and every day. and it ought to remind us of a simple lesson -- it's always a mistake to bet against america. it's always a mistake to bet against the american worker. [applause] it's always a mistake to bet

against the american worker, the american farmer, the american small business owner, the american people. and i know there are naysayers out there. we know that there are some who see hard times and think that we've got to accept less, that our best days are past. we know that there are people who think that for america to get ahead, small towns and rural communities have to be left behind. you hear those sentiments. but we also know that time and again those kinds of skeptics and that kind of pessimism has been proven wrong. you look at the people in this room. look at what you're achieving. i met with a group of small business owners, including a woman named jan heister, who started a small tooling and manufacturing company around twenty years ago. started off with nine people in a very small plant, and with the help of an sba loan, she's got a staff of more than 140 in a 160,000-square-foot factory.

jan's not messing around. this morning i had breakfast with somebody who has not only been interested in wind power because their family got involved in it 77 -- back in 1977, but are now -- have figured out a new technology to help locate where farm -- wind farms would ideally be located and have started a whole new business because they see the incredible potential of clean energy throughout this country. i saw some of these future farmers of america and their young president right over there, and when you hear the enthusiasm -- [applause]

when you hear the enthusiasm and energy that these young people display, and the fact that if they can just get a little bit of a break when it comes to getting started on the front end, get a little bit of help with capital, that they are ready to take american agriculture to the next level -- it gives you confidence, it gives you hope. i joined a session with a group of entrepreneurs and ranchers and farmers and clean energy companies, and we were talking about all the ways in which folks right here in the heartland are pioneering new methods of raising crops and earning more off the land. and we talked about the ways in which farmlands are helping our nation develop new forms of energy -- ranches where cattle graze next to solar panels, farms supplying crops for biofuels. i've got a former state senator here who's helping farms manage manure in creative ways -- in

creative ways. [laughter] so our task as a nation has to be to get behind what you're doing. our task has to be making sure that nothing stands in your way, that we remove any obstacles to your success. that's why we're doing more to connect rural america with broadband, and expanding small business loans, and investing in homegrown american energy. that's why forums like this are important, so that we hear directly from you about what you need and what you're facing. and what's interesting is, in these conversations, one thing you notice -- in washington, you'd think that the only two ways of thinking about our problems is either government is terrible and it has to be basically eliminated, or

government is the answer to every problem. but when you sit in some of these breakout sessions, i hadws independent. what everybody understood was there are times when government can make a huge difference. there are times where that sba office or that usda office can e world. there are some boneheaded things the government is doing that way of thinking about these problems. it's not either/or. it's a recognition that the prime driver of economic growth and jobs is going to be our and our businesses. but you know what, government can help. government can make a difference. so i hope that i can count on you in the days ahead to lend your voice to this fight to strengthen our economy.

i need you to keep your pressure on your elected representatives for things like the payroll tax cuts or road construction funds or the other steps that will help to put our country back to work. that's our great challenge. it has been my central mission for the last two and a half years. it has to be all of our centrald that's what ought to unite us as a country, regardless of party or ideology, because if we can do that -- if we can put country ahead of party -- i know that our future is bright. i know that our best days are ahead of u u u u u u u u unot oe absolute confidence in you, but you're what gives me strength. as i was driving down those little towns in my big bus -- we slowed down, and i'm standing in the front and i'm waving,

i'm seeing little kids with american flags, and grandparents lawn chairs, and folks outside a machine shop, and passing churches and cemeteries and corner stores and farms -- i'm reminded about why i wanted to get into public service in the first place. sometimes there are days in washington that will drivebut gn and meeting all of you, and seeing how hard you're working, how creative you are, how resourceful you are, how determined you are, that just determined to serve you as best i can as president of the united states. so thank you very much, everybody. god bless you.

[applause] ♪ ["stars and stripes forever" playing] federal budget and deficit reduction. leon panetta and hillary clinton talk about u.s. foreign policy. and the brookings institution hosted a discussion about how domestic politics up next u.s. standings in the world. >> watch more video of the candidates appeared see what political reporters are saying. track the latest campaign contributions with our website for campaign 2012. easy to use, it helps you navigate the political landscape with twitter feeds and facebook updates from the campaigns, canada biographies, and the latest polling data. links to c-span media partners

in the early and pretty early primary and caucus states. >> republican presidential candidate newt gingrich criticize the new congressional deficit-reduction committee. speaking at the heritage foundation, a former house speaker put on -- but for his own proposals for cutting the deficit, including selling assets and increasing offshore oil production. this is an hour. >> i am mike gonzales, president of communication. it is a pleasure to have speaker newt gingrich to addresses on the joint select committee on deficit-reduction. it is better known as the super committee. one good thing that came out of the debate we had this summer is that the nation is finally paying attention to that gargantuan deficit and national debt that we have. our view at the heritage

foundation is that it did little to control over spending and vastly increased borrowing. there to make recommendations to reduce the deficit by at least $1.3 trillion. as david addington reuter the time, the committee should take seriously some words. we have shown that this can be done with our plan to cut spending and restore prosperity. use the heat -- you could hear that this cannot be done without raising taxes and getting national defence. our plans as they can. we're very proud of our plan. we have it here for you. we are proud of our sister organization. speaker gingrich with him heritage of work in the past on policy matters is eminently suited to give his views on these pressing issues. he was speaker of the house of

representatives during a time when the nation produce a balanced budget. mr. gingrich served as the 50th speaker from 1995-1999 and representedssional district is a republican member from 1979- 1999. in congress, he co-authored the contract with america. he is the author of 23 books and after leaving congress, he found several organizations to advance conservative and free-market ideas. as always at heritage, we are here to discuss policy, not politics or campaigns. mr. gingrich's speech will be on policy and not politics. this is not a campaign event. we will not entertain questions on what is happening on the campaign trail. these are important issues. the matter is important. we look for to continuing the substantive discussions over the

coming months. speaker gingrich. [applause] >> i want to thank all of you, and to be clear, i include myself in this. it is great to be back at heritage. i've been working with the heritage foundation for a very long time. it is a remarkable institution. i want to commend heritage action for the work that they have done on the deficit. if you look at their range of new ideas and proposals, the number of conference that heritage has sponsored, it is a major force in the city and in the country. it has played a significant role and i hope it will continue to. i was delighted to have this

opportunity to come here and talk about what i think is one of the most important crossroads in american history. just as background for a minute, i want to say some things that are very bold. i like to get across particularly to the washington elite that boldness is sometimes exactly what we need. it is not pie in the sky, it is not fantasy land. i have lived through two cycles of real boulders. in 1979, the economy was collapsing and we ration gasoline every day based on the last number of your license plate. jimmy carter was giving a speech on mollet's as our future. we have high inflation and had the highest inflation since the great depression. ronald reagan came along and was very bold. he was so bold that the city thought he was hopelessly idealistic.

and that it was impossible to work with him. 10 years later, the soviet union disappeared. we have had a seven-year recovery which translated into our current economy, adding 25 million new jobs, $4.5 trillion in new economy. if you will find no one willing to take seriously what reagan did and how he did it. i participated as a junior member of congress and turnaround in 1994, launched an idea which the consultant would approve of and no one in the press corps thought could succeed. we had 10 ideas that we made a contract. we went out and campaign, the largest one-party increase in. the two leading commentators said the highest number of republicans to gain is 26. we gained 54. people said you cannot balance

the budget. within three years time, we had balanced the budget and it people said you can't reform entitlements. we reformed welfare. we did it the right way. we did it out in the open, in public with hearings. the result was the american people concluded we were right. bill clinton vetoed it twice, and the third time he signed it. 92% of the american people favored it, including 88% of the people on welfare. half the democrats voted for it. the house democrats split 101-101. now that required the process of governing. i want to start with what i think the biggest mistake that both the president and the congress are making. something that reagan understood and taught me. you lead washington by leading america. you don't lead america by

leading washington. the entire process of internal legislative shenanigans, whether it was the stimulus package, which no one had read, no one knew and was passed blindly, and then we discovered later on according to our president that the shovel-ready jobs weren't shovel-ready, something which probably would have shown up had they held public hearings. obama care was pass inside secret despite the president's promises of being on c-span, and speaker pelosi said we had to pass the bill to learn what's in it. we had the deal on a bipartisan basis recently. the last part of the debt ceiling deal was cut overnight in order to get the final number of votes. it was passed without meeting any of the standards the house republicans had set. it wasn't online lee days, open for amendment. it was up or down.

small grooms of elites get together, argue with each other in secret, tell us occasional press reports of their version of the argument, at the last minute, present a proposal. we either cut off your rig leg or shoot you in the head. which disco you want. we call that governs. 17% of the country believes we have the consent of the governed. that is a frighteningly low number. i want you to think about that. this is america. our whole model has been the opposite direction. we have had enormous turbulence in our history, but we have had a passionate belief that power resides in the people. we favor a government of the people, by the people, for the people. what you see now on a bipartisan basis in this city is a desertion of lincoln.

government of the insiders, by the insiders, for the insiders. no order to the federal reserve, which spends hundreds of billions of dollars in secret. no understanding of the legislative process, which makes a deal which is extensively going to pro owe extensively going to produce stupid behavior. they have tried to design a fall-back so disgusting that they will coerce a vote out of congress. nobody went up on the mountain, saw a burning bush and was told you have to be truly stupid. they did it voluntarily. they consciously invented -- lincoln was once challenged to a duel very late in the period. lincoln said already, shot guns at three paces. >> all right. the guy who challenged him said

that would be museum suicide. lincoln said yes. i didn't actually want to duel anyway. but lincoln was making a point. if you have a congress that has to invent a suicide mechanism in order to force itself to do something, you have a total break down of the legislative process. and that's what they have done. they have also set up exactly the wrong model. how can you say we are going to cut $500 billion out of defense without knowing what you are cutting, how are defending, who threatens you? if we are wasting $500 billion in defense, find it and cut it out. if we are not wasting $500 billion in defense, how can we cut it? but to say mindlessly i am going to throaten you by threatening all of america, this is a total disaster. it's a disaster in process. it's a disaster in constitutional means. and it's a disaster in solving our major problems, which by the way start with the economy and jobs. they don't start with the

deficit. the deficit in part is a function of the economy. if you have 9% plus unemployment -- and by the way, you have 16% in the u-6 number. if you have that many people on food stamps, on unemployment, on welfare and medicade, not paying taxes, you're not going to get to a balanced budget. when we got to a balanced budget, we got the unemployment rate down to 4.2%, which requires a growth strategy in the reagan tradition. they are asking the wrong questions and then coming up with the wrong answers and then telling us to choose which wrong answer we want. let me start with the core of the critique. this goes back to the declaration of independence. we hold these truths to be self evident. that all men are created equal

and endowed with certain inalienable rights. the only society in history that comes from god to you personally. that is why the current bureaucracy has to be overhauled. it goes on to say that to secure these rights, governments are institute among men, deriving their powers from the consent of the governed. nobody believes that a majority of the american people would have voted for obama care. nobody believes that a majority of the american people would have voted for the stimulus or the debt ceiling. so we are pretty rapidly getting away from the consent of the governed. that whenever any form of government becomes destructive of these ends, it is the right of the people to alter or to

abolish it, and to institute new government, laying its foundation on such principles and organizing its power in some such as to them should seem most likely to affect their safety and happiness. our constitution gives us the right to alter rather than abolish the government. the american people keep trying to exercise the right. in 2006 and 2008 they went in one direction and said not the guys who are in. in 2010 they began going in another direction saying not the guys who are in. but they are not getting the fundamental changes they deserve. i want to talk about the super committee from three levels. the constitutional nature of it, the intellectual problems and the legislative process. constitutionally, i think this is a truly bad idea. the constitution provides for a legislative process. a legislative process should be out in the open. i will give you two sets of numbers to illustrate how bad this idea is. the first is 535-12, and the

other is 117-1. the first is obvious. what is 535-12? anyone want to guess? it is the congress versus the super committee. the 535 house and senate members. the first question you should ask yourself is what are the other 523 going to do? the super committee will go an excuse to do nothing. the lobbyists will focus all their attention on the super committee. that is truly a bad idea. the people back home should say to their members what are you doing? where is my representation? why do these 12 get extraordinary power and the rest of you are basically in the chorus of the opera? secondly, 117-1 is the number of standing committees and

subcommittees. there are 117 already existing. since the 117 aren't doing their jobs, we now have one, which will magically do the job of 1167. so you have 12 members doing the job of 535 and one select super committee doing the job of 117. this is fundamentally wrong as a model. secondly, it is intellectually wrong. the major problem in american government today -- and i know this is a hard thing to cover. but the fact is, the major problem in american government today is intellectual. it is not money or will power. it's knowledge. i have been fascinating in iowa with a group called strong america now, which was founded by mike george. mike george is one of the creators of a management system called lean sic sigma. to some it sounds strange. well, it happens to be the kind of management system that

i.b.m. uses, the kind of management system of the largest supply system in the world, the kind that boeing uses, the kind of management system that motorola pioneered. they recently brought 1,500 jobs back from china for arizona. they are more productive in arizona with higher paid american workers than in china. michael george believes if you apply the concepts to the american government, you would say $500 billion a year. that over 10 years is $5 trillion. over three times the goal of the super committee. do you think the super committee is going to have enough time and energy to learn what this is? do you think the staffs is going to learn what is this? no. they are going to be in an ideological fight, tax increase or not. and yet here sitting on the

table, i.b.m., dell and a group of companies issued a report last year and said if you ran the federal government like a standard high tech company, there is $125 billion sitting on the table. we did a book at the senator for health transformation was stop paying the crook. between medicare and medicade, between $70 billion and $120 billion a year is stolen. with food stamps, there are exrag numbers in the percentage. in a recent report, it was $10 billion a year. if you said to the regular authorizing subcommittees bring in experts who know how to do this and find out how to change the federal government so it moves at the pace of modern crooks -- what you have today is a paper-based bureaucrat from 9:00 to 5:00 versus an

ipad thief. there is no hope of a paper-based bureaucrat keeping up with the thief. and the thief, by the way, stays after 5:00. so you have the dentist in new york state who filed 992 procedures a day and got paid. i.b.m. pays -- i mean american express pays .03% to crooks because they have very sophisticated system. it is virtually real time. new york state medicade is above 10% fraud. as a taxpayer, you are 330 times, that is 33,000%, more likely to pay a crook than you are as an american express card holder. now, an intelligent congress in a city that wanted to be

intelligent, would hold hearings, bring in the experts, figure out how to change the government. first of all, how to play this, the biggest single new idea in running the government since the civil service reform of the 1880's. part of what you do is end up having to fundamentally replace the current civil service laws. you can't have permanent ten ue, improbable to fire, that you can hold your job forever even if you do it and have that kind of company. we visited the boeing plant where they are making the 787 boeing dreamliner. look at the federal government day and look at the huge high rise buildings with people sitting in this massaging paper. the 787 plant, they have four

boeing 747's rebuilt to look like guppies. they fly in entire segments of the 787 dreamliner. they are manufactured in italy, watch taw, kansas, korea and japan. they stream into charleston, where they are assembled. this is the first composite-based commercial airliner, stronger than aluminum, a fascinating design. extraordinary airline sophisticated, being built all across the planet, and so accurate that it fits together. they were showing us what to me was the eye-opener. i had studied under the father of the quality movement, democratting. but we were standpointing looking at a particular work site, and they said this process currently takes 16 days . we want to get it down to six with the same number of

workers. i thought to myself can you imagine going to the federal bureaucracy? for example, our vees application system is a disgrace, it is cumbersome and requires people to hire lawyers. if you want to be law-abiding, it is going to be expensive and time consuming. it is exactly the opposite of good government. can you imagine taking the boeing model and going through the vees application process, eliminating all the waste and red tape and unnecessary functionalities? of course can't. this is a city that says we would like to do better, but we can't, so we are going to have to do less of what we are currently doing, so we have to raise taxes. after all, we can't expect you to change. so we are going to expect you to change and pay the taxes we are going to demand from you.

but you can't expect your government to change. you can't get this type of thinking from 12 people. every subcommittee should be assigned learninging this in the first weeks of soap, bringing in experts, holding public hearings, reviewing everything they supervise. i just got a study from the gulf of mexico that if we simply went back to the preobama permitting system, we would add 230,000 jobs in louisiana and texas. i mean it is that straightforward. we have been trying to build a pipeline from canada to houston to move all and natural gas, much of which will be exported to china, all of it at a profit , and the u.s. government has spent three years stopping the project. the chinese are now talking about paying for the pipeline to go from central canada to vancouver, skipping the united

states totally because we are not worth it. the dodd-frank bill has so much red tape and regulations it is going to kill most of the smaller banks in the u.s. one bank is thinking about pulling all of their banking operations out of the u.s. because we are too hard to deal with now. they don't make enough money to be halfed by bureaucrats. this is going on every day. boeing is the largest labor relations board. if you are trying to create jobs as opposed to going on bus tours, if you were serious, you would have to be for real change. so my first challenge here for the congress is slow down and think through how are you going to learn enough to fundamentally change the government? which doesn't mean a big sweeping bill. it may mean that between now and thanksgiving what we need are 90, 100 or 200 small bills. then you add up the savings

from those bills that you actually could read and understand, and it turns out you can probably -- let's say you only save half the amount that the lean six sigma people think you could save, $2.5 trillion. think about that concept, the super committee. why is it super other than they have aggravated power to 12 people who will spend the next three months fighting? second, the number one challenge is job creation. now, i personally believe you cannot create jobs with class warfare and bureaucratic socialism. it says you get to keep your company. he just can't run it, that the bureaucrats will tell you how to run it. everywhere i go, every level of business, big and small, says the level of aggressive bureaucracy is now a major problem, maybe a bigger problem than taxes. and so if you really were

serious about job creation, you would repeal dodd-frank. you were repeal sarbanes-oxley. you would repeal other things, and create a new food and drug administration. using the new way of designing it would be to know about science in the lab and move it to the marketplace and the patient as rapidly as possible. now that would have two effects. it would dreamentally accelerate health solutions for americans, lower the cost of health care, improve american lives, and it would make america the dominant provider of health services and information and create millions of new jobs that are high value. but that is literally the opposite of the current f.d.a. mindset. you are talking about changing the culture, people getting up in the morning saying how can i get these things to the american people, now how to

stop them. there is a terrific book on polio. if you read it, you will discover that salke discovers his vaccine, gives it to his own family to make sure it is safe. the following year, 1.4 americans are volunteers. and the year after, the whole country is vaccinated. take the current f.d.a. model and lay that over the 1950's, and you realize that he would never have had the money to go through the process. we would still have people in iron lungs and dying of polio. but back then they were able to wave and use common sense, saying how many people die from polio and what is the risk of trying this out? they moved with enormous speed. but then these were the people who fought world war ii. they were used to doing things fast and getting things done. we beat japan in 44 months from pearl harbor to victory over japan. 44 months.

in 44 months, we mobilized, beat nazi germy, fascist germany and japan. it took longer than that to add a runway to the atlanta airport. it is not just taking out waste. it is defining what you are trying to accomplish and maximizing the rate of getting it done. so it actually adds value. so if you were to say what do i save by reforming the food and drug administration? it isn't just internal taxpayer savings. what if you quadruple jobs by making them the top maker in the world. there are also sorts of effects. this is what reagan's emphasis on growth was all about. not just what are you going to score in government, but what are you going to achieve for the whole society? let me suggest a grand package,

if you will, a grand agreement. i'm for more revenue. i'm against tax increases. i am for more revenue by getting more americans back to work, which increases revenues dramatically. i am for more revenue by identifying asserts and developing them and energy. let me take the second and third and combining them for a second. if we had as a goal producing all of our own energy, keeping $400 billion plus at home, the economic side effect of $400 billion that went to the united states, not to saudi arabia, venezuela, iran or iraq, the effect of the world market in lowering prices would be extraordinary. from a national security standpoint, it would be a terrific thing for us if we could have iran getting a lot less money. but from an american economic

standpoint, it would be important. it turns out, for example, if you are drilling offshore or federal land, they pay royalties. so it is a major source of additional revenue. a bipartisan proposal by senators webb and warner, and two democrats. it is a bipartisan concept, that would allow virginia to develop offshore and would give 50% of the royalties to virginia, 37.5% directly to the state government as revenue, and 12.5% to land conservation and infrastructure. you literally could finance the rebuilding of norfolk to handle offshore development by paying for it that way. this is an old american idea, more economic activity and more revenue. i am for more revenue through more economic activity, through more jobs, and through the develop of american energy. remember, in hydrocarbon, coal,

gas and oil, we have more total energy than any other country in the world. much more than saudi arabian russian. we happen to be geologyly very fortunate. we have an anti-energy beurocracy and government. the shale has developed new technology that led to shale gas on a scale nobody thought possible. 10 years ago, they told us we had seven years supply. today they will tell you because of our technological developments, we can use shale gas at 8,000 feet or below, we now probably have a 120-year supply of gas, and we are not talking about building natural gas facilities to ship gas out of the country. this is why you have to think dynamically, not statically.

this is why beurocrat'ses are always wrong because their models are always static. this would be a good place for the president to go visit. in pennsylvania you have 72,000 new jobs since the last quarter of 2009, and the average salary is $73,000. in north dakota where that formation has turned out to be 25 times bigger than expected, 2,500% bigger, they now have 3% unemployment. you would think some people in the city would say 3% unemployment is good. what is the secret? well, it is partly flrg, partly technology. north dakota has a balanced economy. they have worked hard between agriculture, high tech and energy. but they have 3%. last year they had seven tax cuts, not increaseses. it turns out if you cut taxes, it works. when i was speaker, we cut the capital gains tax, largest in history. within four years, we had 75%

more revenue than the higher rate because it led to more people being active and investing. i think literally everybody agrees the current american corporate tax rates reduces the amount of revenue we get. this is just the curve applied in a practical way. if we went to a tax rate, we would actually get mobius out of general electric. we get none today because of 33%, they hire 375 tax layers. it pays them to hire the lawyers to avoid 35% taxes. at 12.5%, they would fire half the lawyers and write a check to the government, and you would see an increase in government revenue. nobody disputes this. it is just this city can't do it. it all gets locked up in politics and ideology. in fact, we all know there is about $1 trillion in profits

sitting offshore that will not come home at 35%. at 12.5%, probably $600 billion of it would come home. if you had a tax holiday, almost all of it would come home. there is a fundamental difference in how you think about doing it. i am for more revenues. part one is energy and putting people to work. somebody shoo-in ven tore everything owned by housing and urban development and ask why. we should privatize getting rid of most of it. you will find out there are huge volumes of property held by the federal government, many of which are debt rating because the federal government is not a very good landlord. but the second wildestxample we, the american people, own 69% of alaska. alaska is twice the size of texas. this means we currently own 1.5

it, s. as governor perry will tell you, texas is a huge state. so if we have 1.5 of them, what if we half of a texas and said that is national parks and wilderness area. that would leave you an area the size of texas you could develop. what would the value of minerals, oil and gas. people believe maybe the largest coal reserves in the united states is in alaska. they said you could use the coal in alaska to use gas fade coal and use it to enhance recovery from the north slope, which would then extend the life of the current pipeline. this all requires creativity. you can't get creativity out of 12 people fighting a political fight. imagine you said to the interior committee in both the house and senate why don't you review all-american properties and decide which ones we could

actually allow people to develop. we own i think something like 9% -- 89% nevada. some of it is military reservations, some of it is scenic. but 89% of a state? surely 35%, 30% or 40% of it could be opened up for development. the chinese have a major effort worldwide to get rare earths, which are very important in manufacturing and are very scarce. we have huge deposits in california which are currently off limits. so i'm for more revenue from using american assets. i'm for more revenue from american energy. and i'm for more more revenue from getting people back to work. if you do those three things, you would damp tax increaseses. let me talk last about the legislative process. i think they have been going at it exactly backwards. i say this as somebody who for four years as speaker of the

house got a fair amount of things passed. when you centralize into grand bargains, you maximize the ideological conflict. one of the most important lessons i ever learned was to try to train people to say yes rather than no because.one of td is a proposal that the house republicans take up the webb- warner bill and pass it. they could do with the first week that they come back, send it to the senate. this bill provides for offshore development of oil and gas offered by two democratic senators, one of them a former governor. it is in form but -- endorsed by tim kaine. endorsed by government donnell.

he could be a model for the country. the house republicans passed a, the president could say that this is a jobs bill, and energy bill, a revenue bill all in one. does he say that a bipartisan bill introduced by two of his democratic members is unworthy of signing? a disease say, let's send it to the president bashar -- or does he say, let's send it to the president. i think you could get a filibuster-breaking 60 votes in the senate. at that point, what does the president do? does he, of his bus tour to veto a bill that will create jobs? i think the house republicans would focus on legislation, not negotiation, and it ought to start every moment by looking at what democrats introduced. if they introduce a good idea,

pass it. because it starts to create -- i propose the 1 point that we adopt the principle that the first three days of the week, you only bring up bills to force people to agree on. there is a way to do that. it is so dramatically different than know, we cannot do that. it also lets you sidestep the tax frame. the lesson 9 learn from grand deals was from reagan, cutting $3 for every $1 of tax revenues, they get that tax increases which were permanent and then you get a spending increase. it did not work. in 1990 we had the same thing. he saw the same thing happened

the other week. these are grand compromise is that do not work. but 1000 small, smart things? it would actually get more done. than trying to lump it into one grand thing. i would feel much more comfortable if the congress set the following goal -- by the beginning of november, we will have passed so many reforms that we will save more than the goal of the debt commission. instead of the super committee and getting $1.5 trillion that they did arrive, near revenue from energy company revenue from assets, new revenue from full employment. dramatic modernization of the system, a dramatic improvement of capabilities to reduce spending. my guess is that you could be in the $3 trillion range by christmas. score over 10 years. but is a very different model.

i am speaking out like this because at as someone who has represented people who are very offended by the super committee, and very threatened by it, and distrusting it equally, and also someone who is legislated a fair amount. i really believe this model will work dramatically better and i think they ought to look seriously at a model of legislating now, do not worry about negotiating, find good things to do, and you'll be very pleased by thanksgiving at how much you have accomplished. if i might, let me toss it open to questions. [applause] >> if anyone would like to ask a question, the floor is open. introduce yourself before you ask a question. we have a microphone in the back. anybody?

we did not scare anyone off -- one back there. >> speaker gingrich, part of your problem is that you are rational and logical. there are probably liberals up in congress who will hear everything you have said today and for all intents and purposes, up with a super-2 per committee, and those in the media that will echo that simply because the liberals in congress came up with that. what culpability does the media play in the gridlock that you have talked about? jettied fairly substantial. they are actors in the drama and they have some impact on how to define and shape the trauma. getting reporters to learn new ideas is at least as difficult as getting politicians to learn new ideas. that is part of the process of free society talking with a separate with c-span here today

and youtube and the internet and twitter, we have a total range of communication. all of the different things that you can do to communicate in the modern era, you have an ability to have a conversation that is remarkable. i come into all of you -- i commend a great study, are remarkable book, "lincoln at cooper union." it was written by press but it iss, remarkable. lincoln believed in rationality. it was given an invitation to come to new york and make his first major speech in the east. he spent months at the springfield law library doing his own research. he goes to new york, he gets a

7200-word speech which takes hours to deliver. it is a different era. people in newspapers would check to make sure that they had it down right. he repeats the speech once in rhode island and once in massachusetts and then goes back home. that is in february 1860, his farewell speech as a spring well the following year. when people try it, and, he says read the speech. when you watch lincoln, remember he is fighting the civil war. he suffered enormous casualties. people were deeply frightened and pessimistic. he is calling on the better angels of their spirits, calling on their minds. he is talking to them. read the gettysburg address is a campaign document. that did not quite right. i like that. good.

i think you're getting it. [laughter] read it that way and there have been a couple of studies out that as a campaign document. think about what he is saying when he says, this is a test to decide whether government of the people and for -- by the people, for the people shall endure. what is he saying? is talking to a nation that were saying, if you quit, you have given up on government by the people. i hope to some limited agreement -- reagan was the same way. on the 25th anniversary and march 2008 of two of his great speeches, evil empire and defense ministers, i've been shaped by a remarkable book called the "education of ronald reagan." the problem you have today at

least in this city and in both parties, people want to lead the country by leaving washington. when you watch reagan, he is educating the american people. this idea that reagan was a shallow, inarticulate person is nonsense. he actually reminds me, he is creating a data base to surround your mind. as a result of which, you see the world differently. it would show the light to the american people so that they can turn up the heat on congress. this up -- the super committee is the exact opposite. we have outdistanced the decision making further and further from the american people. there will now be 12 people and nation of 305 million which is absolutely fundamentally wrong. reagan would say that the answer

is cheerful persistence. eventually they learned. eventually they pick it up. i guarantee the joke in the press corps will next year be the common thing. we're doing a conference call tomorrow and we already have over 500 people signed up to talk about how you would redesign the federal government. these things, they grow, develop. i was there when welfare reform was a really strange ideas and when it was a universal idea. there were developing supply side economics and i was a candidate. i first talked to jack kemp in savannah, ga., an evangelist for supply-side economics. by 1981, it split the democratic party.

ideas can grow and develop. >> the young man right there in the yellow tie. >> he was a mere child when i first came to heritage. >> a very provocative speech. the concentration of the power and individuals will heighten the ideological differences and by extension, high and the chances that it will come to an ideological grid lock. the defense cuts especially, but there is additional cuts on providers of medicare and other cuts to things that other politicians view very favorably. what is the odds that congress does what it does in the past with fixes and patches and continuing resolutions and waive all the consequences if it is to the point? or will they let those cuts go and play?

>> nobody knows what they would do. they are caught in a genuine by now. -- bind now. we are almost at the end of a road where there are fewer and fewer choices. if the congress were to actually waive the bill, the reaction in the markets and our credit would be horrendous. on the one hand, you have people saying -- about the consequences. inaction means -- and this is part of what makes this all absurd. current spending baseline is $45 trillion over the next 10 years. the current projected deficit is $9 trillion over the next 10 years. they are not trying to get to balance. we got to a balanced budget in

three years. they are not trying to get to a balanced budget in 10 years. even the boldest effort, paul ryan, clearly the boldest effort in serious modern times does not get to a balanced budget in the short run. it goes from $46 trillion to his $39 trillion. people are not willing to talk through the underlying contract that we have. what i find so bring about great britain, if you read an analysis of who has been rioting, they have never held a job. ever. elected 45% black teenage unemployment in this country, you should be really worried. people -- america only worse when people are working. -- america only works when people are working. i think you get to a balanced

budget in five years if you -- if the american people never ged budget if you try to do it inside washington. >> thank you for the commons. i am a concerned citizen from virginia. you mentioned that balanced budget. do you have a comment on the balanced budget amendment to the constitution? i would like to see an unbalanced budget in favor of reducing deficits. >> it would lead to a surplus. when we had four consecutive balanced budgets, we paid off billions in debt. you will not balance to $0 but carry into a surplus. we try to get the national debt down to 40% of the gross national product over time, low enough that you could then have

huge reserves of capability if you got into a crisis or a big war. i favor a balanced budget amendment. in 1995 we passed in the house, got a constitutional majority, 293 votes. in the senate we came within one vote of passing it. he gets 66 and you needed 67. we then had a dinner which was genuinely historic, i think, in which all the senior republican leaders and the house and their senior staff sat down for three hours and said, ok, let's get it mathematically. we had to under 93 people who voted for a balanced budget in the house. 66 in the senate. what if we pretend we passed it? we said we could balance the budget in seven years. that was the transition. they said, what if we behave as if it was passed? after three hours, we

unanimously agreed we would go ahead and balance the budget. go back and read the press kit, it caused an amazing up for. the white house said you cannot balance it in seven years. maybe 10 years, and we went after this month after month argument. finally after the government shut down twice, and by the way, we had the but -- shutdown correct. everyone got paid social security and in the military and the air traffic control. you do not have to be insanely stupid and threaten everybody in the country because you are incompetent. you can have various it serious fights and do it in a way that does not the only people irritated or tourist because they did close the washington moment. in that setting, we finally got the president to agree. we work together. it was very top.

clinton and i negotiated 35 days, hammering out different pieces. welfare reform was a huge part of it. he vetoed it twice. people said, he claims credit. he should. the president of united states signed the legislation and you have a right to say that you did it. we both get to have a fair amount of bipartisan credit for getting some things done. i was like to see in december or whenever they have the vote, that they pass the balanced budget amendment. by suspicion is that you will find that they will not. liberal democrats in the senate particularly will not vote for. -- for it. if you have a serious strategy for getting to a balanced budget, it would make it easier to pass the amendment. that is why i'm for having a strategic approach which uses all 117 committees and subcommittees and gets them all moving in the same direction,

toward the dramatic decline in government spending and the dramatic modernization of government. >> i am from cbs. you spoke for a couple of minutes about the importance of republicans in congress passing democratic proposals if they were good. are there any proposals that obama has called on congress to pass, such as the extension of the payroll tax cut, or an infrastructure bank, that you would pass if you were in congress? >> i am looking at three things. i think it is very hard not to keep the payroll tax cuts. in this economy, i do not know what republicans are " to say but i think it's very hard to say no, and end up raising taxes

when americans go to work and make life harder for small businesses. i think that they hold hearings and look at it. but it is a serious challenge to not extended. unemployment compensation, i feel very strongly -- the key to passing welfare reform was that people came to believe that giving people money for doing nothing is bad. it destroys their independence, it destroys their initiative, it is a terrible role model for the children and we now have 99 weeks of giving people money for doing nothing. i would say that any extension of unemployment compensation should have attached to it a 50- state permission to run training programs as a mandatory part. i do not think you won a federal program. say to all 50 states, you may now set up training programs for everyone who is unemployed said that in order to get unemployment compensation in the

future, you have to sign up to get training. by definition, you do not have a marketable skill. unemployment compensation was in a typical economy worries deal worker had six weeks off to subsidize the company while they retool. that does not exist now. if someone is out of work for two years, we have a real problem of education and job skills. if you want to change unemployment compensation into a human capital development fund, and you want to say to people, we will expect you to actually learn things and say to the business community, we want to match you up with training for people who need training. and i'm not talking about massive expansion of school programs for 50 minutes once a week, but serious training programs where people aren't serious things to become employable. that makes sense. it ought to be modified to achieve that.

that is allied with a purse that. on the infrastructure bank, i a totally different proposal. i would combine an american energy plan with a very large infrastructure program and have the new royalties from american energy -- for example, if you develop offshore south carolina, the revenue from that, you have at 12.5% revenue going into both acquiring conversation land and infrastructure, and then you could tragic -- dredge the charleston harbor which needs it. at no tax increase for the american people, you could begin to rebuild the infrastructure. which we do need to do. you go to china and elsewhere, we are rapidly decaying in terms of infrastructure. but i would like to see a grand

coalition that everyone who wants infrastructure and energy comes together to pass a bill which uses the american energy to generate the royalties they pay for american infrastructure at no increased taxes. it would create two jobs, a job and infrastructure development and a job in energy development. >> i am with the heritage foundation. assuming that congress does not waive what the committee comes up with, how likely do you think defense cuts will be? are you concerned about what that means for america? d about defense. we have now undercapitalized and a time when the chinese are developing. we could easily phase catastrophic results over the next 10 years. we are overly focused on the

ability to fight insurgencies. we lacked the drive and energy and the strategic thinking -- i talked to a general, the formal head of the central command, -- the former head of this such a man -- central command. we're not thinking seriously about what is going on here. i think we're entering a period of greater relative weakness than any time since pearl harbor. it does not mean i am for the current pentagon. i helped found the military reform caucus because i said i was a hawk, but a cheap hawk. i am for rethinking some of the troops we have overseas. i do not understand why we are in germany anymore. i spent part of my life there. it was near the german border and there were soviet troops on the other side of the border. if you were to list every place

that we have troops today, and say how many are there because they are there because the inertia keeps them there as opposed to why you are strategically doing it? i will look at that very seriously. if you look at the civilian overhead in the pentagon, i like that very seriously. but if you ran the pentagon go way you run a modern high-tech company, he would have dramatic reduction in scale. we need to rethink the entire process of procurement. the idea it takes an entire generation to build the aircraft, how many did we build in world war ii? five years, 273,000 aircraft. there were not as complicated as modern aircraft, but the relative complexity is not on the scale of costs. every american needs to understand -- if you do not deal

with national-security in a simple way, what threatens us, what the rest -- what is the risk if that threat occurs, how to avoid it -- if you do not start from there and then define your defense system, but as an afterthought of a political negotiation, and you're putting your country at risk of a catastrophic event. that is where we are today. let me just say if i could, i am delighted and i'm very proud of what heritage has done and continues to do. it struck me as a key place to come and make this talk and share these ideas with people. i just hope that you will tell the rest of the team that i'm really grateful for your hospitality and i hope that this continues that heritage tradition of developing new ideas and new approaches and new solutions. >> we are very proud to host you. thank you very much.

[applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> coming up on c-span, defense secretary leon panetta and secretary of state hillary clinton talk about u.s. foreign policy. then the brookings institution hosted a discussion about how domestic politics affects our standing in the were pared later, french president nicolas sarkozy and german chancellor angela merkel and address the u.s. -- the european debt crisis. on tomorrow's "washington

journal," michael tanner on ways to reduce the federal deficit. david shepardson talks about new fuel economy standards for cars and trucks. and a look at the fbi budget with david schlendorf of the fbi resource planning offices. "washington journal" begins at 7:00 a.m. eastern time on c- span. >> defense secretary leon panetta and hillary clinton spoke earlier about the federal budget and how it affects farm policy and national security. also discuss cooperation between the defense and state departments on u.s. policy in countries like iraq and somalia

appeared from the national defense university in washington, this is just over an hour. >> we are indeed extraordinarily privileged and honored to have the inaugural distinguished leader program speakers be our secretaries of defense and state, and their very distinguished francs as of. -- frank sesno. please give a warm welcome to these great leaders. [applause]

[applause] >> good morning, everybody. it is a great pleasure and privilege to be here with the