secretary of state and defense. i cannot think of a more propitious time for this conversation with the world watching this country going to the budget gyrations, i think is the right word, with a world so uneasy and wars ongoing. some of what we can talk about today and we will incorporate your questions into this conversation will be, is america wounded colossus? are these war is winnable? where and how do these two big departments work together? i want to thank national defense university and the admiral for your gracious welcome today. welcome to both of you. >> thank you, frank. thanks for doing this. >> let's start with the budget. your idea of a good time. [laughter] the world has watched with bated breath as to whether we would default, whether american

troops would not get their paychecks, which is an incredible thing. as you face the prospect of budget cuts and the reality of this, secretary panetta, what's at stake for you? >> i think this is about the national security of the country. our national security is our defense power, our, our department, and it is also our diplomatic power, or state department. both of us are concerned that as we go to these budget tests that the country recognize how important it is that we maintain our national security and would be strong. we recognize that we are in our resources limitation and we have

to deal with those challenges. i do not think you have to choose between our national security and fiscal responsibility. and i want the country to know that we can get this done, but we have to do it in a way that protect our national security carrot >> you have agreed to $350 billion. if the trigger takes place, if there is an availability for the congress to decide what to do, it could be $500 billion more, then what? >> with the numbers we are dealing with now, the president and bob gates decided the parameters that we would have to be looking at. we are within the ballpark of what the congress just did. if they go beyond that, if they do the sequester, this massive cut across the board that were double the number of cuts we are

confronting, that would have devastating effects on our national defense. but more importantly, when we think about national security, i think we also have to think about the domestic discretionary budget as well. because education plays a role. other elements of the discretionary budget in terms of the quality of life in this country play a role in terms of our national security. more importantly, and i made the point based upon my budget experience, if you are serious about dealing with budget deficits, you cannot keep going back to the discretionary part of the budget. >> what would be the most damaging part? to the department of defense and to national security if you had to face hundreds of billions of more, above the 350? >> very simply it would result and hauling out the force. force.owoining out the

it would break faith with the troops and their families. a volunteer army is absolutely essential to our national defense. any kind of caught like that would literally undercut our ability to put together a strong national defense. >> secretary clinton, you have a harder case to make given the public skepticism about foreign aid, where america is spending its money. >> i know it is a harder case, because i think there is a lot of misunderstanding and rejection of the work that is done by the state and usaid. aroundrise, if you're off 1% of the discretionary budget, and what we have done over the last two and a half years was long overdue, because basically we said, we are a national-security team.

we are on the american team. by that i mean that we have civilians who are in the field with our military forces in areas of conflict. we as civilians you are in the field on their own, in other very dangerous settings without our military. but we are trying to enhance the accord nation to achieve our national security objective. one of the goals that secretary gates and now secretary panetta and i have is to make a case as to what national-security in the 21st century is. is it the strongest military in the world that has to be given the tools to do the job we send it out to do. it is our diplomatic corps out there on the front lines of trying to deal with very difficult situations to the betterment of america's national interests and security.

it is our development experts who put another face on american power, who are trying to deliver aid to 12 million people in the horn of africa who are facing famine and starvation in some measure because of al shabbad, which makes our challenge or difficult. i want to go back to underscore something leon said. between the two of us, we have many years, probably more than us care to admit -- we care to admit, experience in dealing with a lot of these issues, and leon is the chief of staff in the white house and director of omb, was part of a process that budget.t to a balanced this is not ancient history. the tough decisions were made in the 1990's to, yes, cut spending, deal with entitlements

issues and increase revenues. >> raise taxes. >> yes. absolutely. so that we had the kind of approach that got us on a trajectory, where we would not be facing these issues. i know how difficult this was for our country domestically over the last months. it's always hard seeing the s ausage made. i was in hong kong a few weeks ago and i said, and we we would resolve this, we would not default. we would make a political compromise. but i have to tell you, it does cast a pall over our ability to project the kind of security interests that are in

america's interest. this is not about defense or state or usaid, this is about the united states of america. and we need to have a responsible conversation about how we are going to prepare ourselves for the future. and 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. we are a pacific power. that means all elements of our national security team have to be present. and we cannot be abruptly pulling back or pulling out when we know we face some 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 deed that will not -- every day and that will not receive the headline coverage, but that will affect the economic well-

being of our country and the security of americans. >> talk about the headlines. there was one that bears directly on the budget. and some of the very tough choices and big changes that may be in store. that was a report on cbs yesterday that the pentagon is considering a very substantial retirementf the program for those in the military tur. is that true? is that the kind of change that is out there? >> of that report came as a result of as an advisory group that was asked by my predecessor, bob gates, to look at the retirement issue. and they have put together some thoughts, a more complete record of the latter part of this month. no decisions have been made with regards to that issue. >> is that the kind of thing that you have to -- >> it is the kind of thing you have to consider in terms of

retirement reform, but you have to do it, frank, in a way that does not break faith with our troops and our families. if you are going to do something like this, you have to think very seriously about grandfathering to protect people. >> so it would not affect the people in this room. >> i know my audience. [laughter] you have to protect the benefits that are there. at the same time, you have to look at everything on the table. when i was on the budget committee and director of omb, my view is you have to look at everything. you cannot approach to deficit the size we are dealing with and expect that you're only going to be dealing with it at the margins. >> secretary clinton, back on the budget and then to the audience. you and your predecessor talked

a lot, secretary panetta's predecessor talked about development and how development is cheaper than war. what do you say to secretary panetta about your budget and your needs and your lobbying for more in terms of what he has and what you need to accomplish? >> well, obviously, the dod budget far outweighs the combined budget of the state department and u.s.a.i.d., 10-12 to one. i know that we will 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'm not saying we should be exempt, and education or health

care at home should bear the costs. i am just 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. and it is easy in a political climate, which i know something about as leon does, to say, look. foreign aid. if you got out to the american public and say, what is the easiest thing to cut in the american budget, it is foreign aid. how much do think it represents? people honestly say something like 15-20%. then you say how much should it represent? but they say 10%. we understand we have a case to make, and it is a case we've been making. there is a new way of looking at it. the military has always had in the defense budget something called overseas contingency operations that go to it the

kind of conflicts and investments that have to be made in places like afghanistan and iraq. for the first time, we have now, the congress accepting that we need what is called an oco. we have all lot of costs that will begin to go down over time because they are not a part of our base. we are doing things to try to get smarter about explaining what we do and what it will cost for us to do it. but the bottom line is we want national security to be looked at holistic . and we want people to understand that a lot of what we are. have to be doing in the future is not sending our young men and women into harm's way but trying to avoid that. >> an award, what is your view of her budget? >> it is absolutely essential for our security. >> will need to be cut? >> we all know that we will have to be able to exercise some fiscal restraint as we go

through our budgets. the bottom line is that what i hope the congress does not do and what i hope this committee ay s not do sis to walk awy from their responsibility to look at the entire annual budget. it is close to $4 trillion. in the discretionary side, which is around $1 trillion, it has or had been caught $1 trillion by virtue of the deal that was made in the congress. we are taking a $1 trillion hit in 10 years. 2/3 of that budget has not been touched. if you want to deal with the deficit, you have to do with mandatory spending programs you have to do with revenue. every budget summit i have been a part of, going back to ronald reagan, it was a balance pa ckage. it was true for ronald reagan,

true for george bush, true for bill clinton, and it has to be true today if you are serious about dealing with it. >> the first auden's question. anybody have a question on the budget? the gentleman right here -- the first audience question. foreign officer. welcome to both of you. like many of my peers i have 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 its problems with the teaching of foreign language and culture. it is an incapacity that we have had in the force that persists. how will we do that as we lose the hundreds of millions of dollars to throw a contract in solutions? ever looked at ways that stayed in the department of defense considered china's efforts to teach, working with academia? is that restructuring how we approach these missions that are restructuring? >> i think we have to look at

creative ways to be able to deal with it. i am a believer and foreign- language training. unforeseen, this country has not devoted enough resources to and for language training. we looked at reading, writing, and arithmetic, but we have not looked at the reality of the world that we deal with. when i was cia director, i did not think he could be a good intelligence analysts without knowing languages. and i believe that for the defense department and for the state department. there is a recognition that you need to have language in order to be able to relate to the world we live in. my goal would be as we develop the restraints we have to develop in the budget, that we are creating an not undermining the kind of language training that i think is essential to our ability to be a nation that is well educated.

>> you have similar issues. >> i would say amen to that. i think your suggestions that we look for ways that we can better coordinate our language and culture and education programs is a very good one. i have begun to do that in the state department, u.s.a.i.d., because they had different platforms, different i.t. platforms, different language instruction. when i came in, i do not think it was the most sensible way for our training of development experts and diplomats. but i think we will have to be more creative. ndu is a perfect example. we have the admiral who leads the ndu team and the ambassador from the state department that is the number two. that is what we have to get in our minds is more likely to be the pattern of cooperation, both deployment and afterfore

deployment. we cannot afford to do it any other way. but secondly, i think it gives us a better result. you may see the article in "the washington post" over the weekend about one of the civilian employees in afghanistan. because of his pashtu facility, the military looked to him, because he was able to communicate, not just in the formalistic way, but colloquially, in a way that captured the attention and essentially the cooperation of the afghans. that is what we need across the board. so any way we can work together, it will save us money, but it will begin from the beginning to put together this whole of government national security team. >> favre let's move around the world. let's start with afghanistan. -- let's move from the world. 35 americans lost their lives last week. there are a lot of americans

that say that with this loss, it is this worth it? are we prevailing? and should we stay? what is your response to that? how do you view what is happening in afghanistan and the trajectory? >> it was tragic what happened last week. we lost 4500 in afghanistan. we have lost many more. we have seen a lot more that have been wounded. there are a lot of our men and women that have put our lives -- their lives on the line on the mission that we are involved with their. and we cannot forget the mission. the mission it, as the president said, is that we have to disrupt, dismantle, and defeat al qaeda. and make sure that it never again find a safe haven in afghanistan, from which to launch attacks to this country. i think we made good progress on that. i just talked with general allan this morning. i think we are making very good

progress in terms of security, particularly in the south and southwest. those are difficult areas. we have tried to improve the situation in the east. but overall, the situation is doing much better. we have weakened the taliban. we are continuing to build the afghan army and police they are right on target in terms of the numbers that we need to develop. so we are working in the right direction of. we're going to transition and beginning to transition areas. there are others we have to do. we have to make sure that the afghan government is prepared to help secure the country in the long run. but i really do believe that if we stick with this mission, that we can achieve the goals that we are after, which is to create a stable afghanistan that can make establish ar get of again

safe haven for the telegram. >> what is the conversation that you have about the reliability of the karzai government? stated, a asa leo leon strategy for a transition that we are following. it is based on frankly the decision the president obama made upon taking office that we have lost momentum to the taliban. when he came into office, the situation we found was not very promising. so he did order additional troops. fulfilled thend more a tripling of civilians on 1.025.und to we put in a lot of effort to try to stabilize and reversed the

deteriorating situation. i think we both believe that we are now at a place where we can now begin the transition and do so in a responsible way. part of that transition is supporting afghan reconciliation. we have said that for a very long time. i gave a comprehensive speech about our approach in february at the asia society in new york. ambassador marc grossman who is leading our efforts to build a diplomatic framework for this kind of reconciliation effort is proceeding in very vigorously. because we know that there has to be a political resolution, alongside the military gains and sacrifice that we have put in alongside the sacrifice and suffering of the afghan people. but we want this to be a, as we say often, afghan-lead and

afghan-owned. >> can it be with afghan regime your working with? >> yes. >> do you trust karzai? >> yes. i do with leaders all over the world who have their own political dynamics that they are trying to cope with, which are not always ones that we experience or that we think are necessarily the most important, but they get to call the shots. they are the ones who are 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. there is no doubt about it. but there is certainly a commitment on the part of the karzai government to this transition process. remember, 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. now, we are also discussing what kind of ongoing partnership -- diplomatic, development, a military -- that we will have with afghanistan. president karzai made a very important statement just this past week. he is not seeking a third term, which is a very strong signal that there has to be an active, dynamic political process to choose his successor. so, look, i have dealt with president karzai now for nearly 10 years. i am looking at my old chairman of the senate armed services committee, john warner. i dealt with him as a senator. i have dealt with him as a secretary of state. and you have to listen to him, because all too often, we come in with our preconceptions about how things are supposed to be,

and he says over and over again, you know, i do not like this or i am not sure. take a private contractor issue. that went on for a long time because we did not quite get what his concerns were. so it is not all one-sided critique. there has to be recognition that we have a dialogue and a partnership and that we both have to work at it. >> question on afghanistan from the floor. >> tom nicholson, industrial college of the armed forces. we mentioned a lot about iraq and afghanistan. what comes to mind are our allies and partners and pakistan are critical in what is going on with our efforts there. as a strategic partner, what are your thoughts on how we continue to enhance that relationship, given the difficulties we had recently? >> let 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. it is in the long-term interests of pakistan. for us to work through what are very difficult problems in that relationship, and this is not anything new. we have had a challenging relationship with pakistan going back decades. and we have kind have been deeply involved with pakistan as we were during the 1980's and the support for the moose jaw -- mujahadin and charlie wilson's war. our political decision was that we are exhausted. we are done. we accomplished our mission,

which was to break the back of the soviet union. we are out of that. so i think the pakistanis have a viewpoint that has to be shown some respect. are you with us or not? because you come in and you go up. >> are they a partner or an adversary? >> they are partners, but they did not always see the world the way we do. and they do not always cooperate with us on what we think. i will be blunt. it is not like we are coming to pakistan and encouraging them to do things that will be bad for pakistan, but they often do not follow what our logic is as we make those cases to them. so it takes a lot of dialogue. >> let's talk about pakistan for a minute. there was a story that pakistanis are allies here, handed over parts of the helicopter that went down in the laden's compound.

is that true? >> this is a very complicated relationships. >> is that a yes? [laughter] protect mygot to old hat. >> not a no, though. >> i am not. a comment because it does relate to classified intelligence. we are concerned with the relationships that pakistan has. what makes this complicated is that they have relationships with the akanis. they are going across the border and attacking our forces in afghanistan. is clear there is a relationship there. there is a relationship with l.e.t. this is a group that goes into india and threatens attacks of ththere. visas.o not provide the

and yet, there is no choice but to maintain a relationship with pakistan. why? because we are fighting a war there. because we are fighting al qaeda there, and they do give us some cooperation in that effort, because they do represent an important force in that region, because they do happen to be a nuclear power that has nuclear weapons, and we have to be concerned about what happens with those nuclear weapons. so for all those reasons, we have got to maintain a relationship with pakistan. and -- as i said, it is complicated. there will be ups and downs. the secretary and i have spent countless hours going to pakistan, talking to their leaders, trying to get their cooperation. >> let me ask the two of you to take us into a conversation you might have together that you tas

largely conducted with drones. they are resented and complicate how you balance that? isn't your best asset your worst nightmare? >> no. no. let me take you back to conversations that are not so current but i think that are relevant. shortly after i became secretary of state, we were quiteista taliban basically taking advantage of what has been an effort by the government in pakistan to try to create some kind of peace agreement with the pakistani taliban and to say to them, you stay in swats, and don't bother us. we won't bother you.

i was blunt publicly and privately. you cannot make deals with think that you can predict or control are neither predictable nor control. moved into swat and cleaned out a lot of what had become a pakistani-taliban stronghold. and then began to take some chips off of their border with into the fight fn says, we have some other targets that we discuss with them. relatively's been a short period of time, two and a half years, when they have begun to reorient themselves militarily against an internal

threat to them. we were saying is because we think it will undermine the control that the pakistani government is able to exercise. so we have conversations like this all the time, frank. i do think there are certain attitudes or believes that the pakistanis have which are ownted in outheir experience, the system like we have, but i think there is a debate going on in pakistan about the best way to deal with what is an increasing internal threat. >> let me just add to that. i mean, the reason we are there is we are protecting our national security. we're defending our country. al qaeda, which attacked this

country i 9/11, the leadership of al qaeda was there. so we are going after those that continue to plan to attack this country. they're terrorist. and the operations we have conducted there have been very effective and it undermines their ability to plan those kind of attacks. let me make this point. those terrorists are also a threat to pakistani national security as well. they attack pakistanis. they go into karachi and a slot blot and conduct attacks that killed pakistani -- and in islamabad. interest to go after these terrorists as well. >> what is left of the al qaeda network? >> the al qaeda network has seriously been weakened. we know that, but theyr're still there.

those that are suggesting somehow this is a good time to pullback are wrong. this is a good time to keep putting the pressure on, to make sure that we really do not undermine our ability -- their ability to conduct any kind of attacks on this country. >> will they ever be defeated? or is donald rumsfeld right that this is a long war? >> we can go after the key leadership of al qaeda that i think has led this effort, and we have seriously weakened them. laden. up biout bind by weakening their leadership, we will undermine their ability to ultimately put together that jihad they have tried to put together in order to conduct attacks on this country. >> the answer to your question is that we have made serious inroads in weakening al qaeda.

there are these nodes in yemen and somalia that we have to continue to go after, but i think we are on the path to being seriously weakening at al qaeda as a threat to this country. >> let's talk about iraq and then we will take a question on that topic from the audience. we have seen a terrible string of attacks over the last 24 hours that have claimed nearly 90 lives, hundreds injured, leading to grave concerns about the ability of the iraqi government to look after its own security. what is happening in that country? what do you read from this wave of violence? >> what i see happening is that there continues to be a terrorist capacity inside iraq. at the time i left my office, no

one had claimed credit, but we believe it could very well be al qaeda trying to assert itself. sunni extremists. at the same time we noticed there are shia extremas that have been conducting attacks, not to the extent we saw yesterday, but attacks that have killed americans and killed iraqis. i'm of two minds about thise. . i deplore the looss of life and the ability of these terrorists to continue to operate inside iraq. i know until recently the introductory of violence had been going in the right direction, namely down. we saw that. we were feeling that it is headed in the right direction. the iraqis themselves have more capacity than they did have, but they have got to exercise

it. and we spend a lot of time pushing our friends in the iraqi government to make decisions like many a defense minister and an interior minister so that they can be better -- naming a defense and interior ministers so that they could be better organized to deal with the threat. we are in discussions with them now out, because they do want to be sure they have sufficient intelligence and surveillance and reconnaissance capacity. they want to be sure that they can defend themselves internally and a externally. that is a conversation that our ambassador anre having in baghdad. >> has it been worth it, and should we stay? >> the bottom line is we will maintain a long-term relationship with iraq to insure their remain stable.

>> militarily? discussion we will have with them as to what kind of assistance we will continue to provide. the bottom line is, whether it is diplomatic, military, we have a long-term relationship with iraq. we've invested a lot of lives there, a lot of blood in that country. and regardless of whether you agree or disagree as to how we got into it, the bottom line is that we now have, through a lot of sacrifice, established a relatively stable democracy that is trying to work together to lead that country. it happens to be a country that is in a very important region of the world at the time when there is a lot of other turmoil going on, and it is very important for us to make sure we get this right. >> i just want to attend to what

-- append to what leon said. the president made a commitment that we would withdraw our forces from iraq and that he would follow the timetable that was set in the bush administration, which is for our troops to be out at the end of this year. that is a period. that's the end of that commitment. there is, however, a discussion that the iraqis are having internal way about what we would do following that. so i do not want there to be any confusion about that. our combat mission in iraq ends at the end of this year. our support and training mission, if there is to be such, is what the subject -- >> but don't these attacks to demonstrate that the security situation is still precarious, that if the parliament were to ask for an ongoing military presence, it might be more than

mere training. there is combat occurred >> we do not believe the iraqis have that on their list of asks. >> i think what they want to do is to be able to have -- to confront counter-terrorism within their own country. we have given them hope and training and assistance in that effort. obviously, that is something that as a country they will have to confront, but their main goal right now is to get the kind of training that will allow them to improve their defense capability. >> let's turn to the audience for a question on iraq. in the aisle right here. do we have the microphone. stand and tell us who you are. >> i was in cpa in 2003 and iraq ever since. i want to ask you, don't you see it in the u.s. national

security interest to see all of the troops leave by the end of the year? i understand what secretary clinton had said in terms of we are leaving, but even to have troops training there afterwards, do not think it is sending a strong signal that we will leave if we do not get a training mission there as well? we as the secretary ansaid, are leaving by the end of the year. a combat mission is over. the discussions are what kind of assistance can we provide it with regards to training and other assistance that is provided? we do this with other countries . and i think this would be what i would call a normal relationship with iraq. if we could establish that kind of approach for the future. >> that is why i want to be very clear that a combat mission is

over. our troops are leaving, and they are in the process of literally packing up. that is what we agreed to. i agree we do that that is in america's interest to keep that commitment. but what leon is saying is also important. if a country comes to us with in what we would view as a normal diplomatic relationship and says, my troops be training. they are not what they need to be. i am going to be 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. in, the iraqis have not made a formal request, but we have reason to believe they are discussing it internally. we do that in kuwait and an bahrain and uae and qatar and

saudi arabia. it would be unusual for us to say no, we will not respond to a responsible request. what it is we do not know yet. >> the bottom line is very interesting, and it is something the country will respond to. which is, that if there is a responsible request, a military relationship of some sort foing theg forward, not unlike other countries in the region after other conflicts, will be part of the military-diplomatic landscape. >> just for the record, this is going to be a process of negotiation and there will be discussion. the good thing is that the iraqis indicated olin is to have that discussion. we will have that discussion. as to what ultimately turns out, we will leave it to them. >> a couple of other issues in the time remaining. syria.

is it time for the u.s. to unequivocal state that president assad should step down. ? there is talk that that is forthcoming from the administration. is today the day? >> i am not a big believer in arbitrary deadlines when you are trying to manage difficult situations, and what we see happening is galvanizing international opinion against the assad regime. that is a far better landscape for us to be operating in that if you were just the united states are just a few european countries. just think of what has happened in two weeks. you had the arab league reverse position. you had king abdullah make a strong statement, and the gulf coordinating council. you have turkey desperately trying to use its influence, which is considerable within syria, to convince the assad

regime to quit shelling its own people. yesterday, the foreign minister made it clear that the regime is not following through on that. i happen to think where we are is where we need to be. a growing international chorus of condemnation. the united states has been instrumental in orchestrating that, and we are pushing for stronger sanctions that we hope will be joined by other countries with far bigger stakes economically. >> i get all of that, but your critics are saying leading means being out in front, that you condemn from the white house -- >> we will continue to condemn that. >> tell them to leave occurred >> i have to say, i am a big believer in results over rhetoric. i think what we are doing is putting together a very careful set of actions and statements of

that well may our views clears. to have other voices, practically from the region as part of that is essential for there to be any impact within syria. it's not news that the united states is not a friend of syria's. but it is important that we send an ambassador back there. i am proud of what ambassador ford has done, representing the best values of our country. we have done what we needed to do to establish the credibility and, frankly, the universality of condemnation that may make a difference. >> another place to go to since the world is such a to replace --libya. -- such a cheery place. libya. we hear of another defection

from the senior ranks of the gaddafi government. we hear the rebel forces may be having some serious internal tensions and disputes themselves. what is your read on the military campaign and whether gaddafi is any closer to being driven out. >> i have spoken to our commanders in the last few days. the indication is that yes, there are these concerns about the opposition, but we have had concerns about the opposition for a period now. but the opposition is moving. they are moving in the west towards tripoli, towards the coast line. the opposition in the east is moving to bragha and in the direction of tripoli. the pressure is having an impact.

the regime forces are weekend. -- weakened. i think, considering how difficult the situation has ben, the fact is that the combination of nato forces and what the opposition is doing, the sanctions, the international pressure, the work with the arab league, all of that has been very helpful in moving us in the right direction. i think this sends is that gaddafi's days are numbered. >> i would like to take one last question from the audience, if someone has one. this gentleman right here. >> defense intelligence agency. my question is -- are the messages we are sending in libya sent a message that the u.s. is not prepared to underwrite stability anymore and we cannot afford it?

>> i do not think so. i see it somewhat differently. it's a message that the united states stands for our values, our interests, and our security but we have a clear view that others need to be taking the same steps to enforce a universal set of values and interests. somewhatew this differently than i know some of the perhaps commentary has evidenced. if you look at libya, this is a case for strategic patients. it is easy to get impatient, and but i think that when you realize this started in march. there was no opposition. there were no institutions. there was a nothing -- no address even for trying to figure out how to help people

who were attempting to castoff this brutal dictatorship of 42- plus years. the distance they have traveled in this relatively short period of time, the fact that for the first time we have a nato-arab alliance taking action. you have arab countries who are countries supporting with advisers the opposition. this is exactly the kind of world i want to see, where it is not just the u.s. and everybody standing on the sidelines while we bear the cost and the sacrifice, while our men and women lay down their lives for universal value, were we are finally beginning to say, we are, by all measurements, the strongest leader in the world. we are leading, but part of leading is making sure that you get other people on the field. that is what i think we are

doing. similarly in syria. it's not going to be new if the u.s. says al-assad needs to go. ok, fine. what's next? if turkey says it, if other people said, there is no way the regime can ignore it. we do not care very much going on with syria because of a long -- we don't have very much going on with syria because of long history. this is smart power. it is being smart enough to say, we want a bunch of people singing out of the same hymn book. a song of universal human rights, democracy, everything we stood for and pioneered over 200 years,. >> before a close, i want ask you specifically about the kind

of coordinated assistance and that your two gigantic departments -- >> he's gigantic. [laughter] >> what you see depends on where you stand. >> we may be small, but some love us. >> i'm talking about somalia. horrible famine, images and suffering brought to americans every night. some say this should be a model for how these departments respond. how much is humanitarian and military, what the integration and coordination is? >> it is a good example of the kind of close coordination between the departments in dealing with the real crisis in that area. the reality is that it's a very difficult situation in somalia. we've got al-shabbad, a real

threat. we've got thousands upon thousands that are starting as well. what we have been doing on the military side as we have been working very closely with the state department, with diplomatic sources, with ngo's, to make sure we are providing whatever assistance we can provide to help in that region. >> which is technical assistance. >> that is correct. we are doing that on a daily basis. any additional assistance we are prepared to provide. it is a very good team approach. >> i would add a few points. the u.s. was the principal founder of the famine early warning system network. when we began seeing signs of a potential famine, we began to pre-position food and materiel.

that gave us the chance to be able to get our equipment and food into these areas quickly. we are talking about 12 million people in the horn of africa, in an area twice the size of texas. ethiopia and kenya have been responding generously, given their own situation. we have made progress. i remember the last time ethiopia have a famine. that affected 12 million people. now it is down to 5 million, which is still unacceptable, but shows we are trending in the right direction. so the u.s. has spent $580 million in helping these people that are starving and trying to help women and children who are the most at risk. at the same time, the united states has supported the african union mission in somalia. making have been

progress in that driving? back al-shabbad out of mogudishu. they are working with the transitional government. as you know, he left. they are still posing a real threat an obstacle in south- central somalia to getting food into that area. i say all that, because as you look at the horn of africa, you can see the complexity. and to try to sort out what is the defense role, the diplomatic role, the development role, how we work with the un and work with ngo's, and government? what i have said is that stability in somalia is so much in the interests of first and foremost of the somali people's and in the region and beyond. yet, the u.s. will not put boots

on the ground. we remember what happened with the humanitarian mission that morphed into a military mission that resulted in a loss of american lives. but what we are going to do is empower africans themselves, provide all kinds of support to them, and enabled them to stand up for themselves. and this is the kind of multi- layered approach we are taking and a lot of complex situations now. >> we are virtually out of time. i know that each of you would like to pool your thoughts together. perhaps secretary panetta, talking to those in uniform.foso american diplomats and the public through c-span. >> these are challenging times

as we have just seen to this discussion. we are involved in two wars and a nato mission in libya. we are confronted threats from iran and north korea. we are in a war on terrorism. we are fighting concerns about cyber tax, increasing cyber attacks. and we have rising powers, nations like china and india, brazil, not to mention russia, that we have to continue to look at in terms of their role in providing stability in the world. and we are facing resources and budget constrictions now. i don't think we have to choose between our national security and fiscal responsibility, but we are a nation that has a special role in the world. a special role because of our military power, a special role because of our diplomatic power, but more importantly because of our values and our freedoms.

the key thing that goes to the heart of our strength is the willingness of men and women to put their lives on the line to help defend this country. and i think we need to learn a lesson from what they do. the leadership of this country needs to be inspired by the sacrifice being made by men and women on the front lines and exercise the kind of leadership that will ensure that this country remains free and strong. >> i think leon and i carry that responsibility very seriously, because we understand what this country means. we are both beneficiaries of the generations that came before, they gave us our freedoms, that gave us the opportunity is that we have been able to enjoy. and i want to see that continue. i am very proud to be the secretary of state of the united states of america, even during a period that is quite challenging. and there is no guidebook

written for it. in looking back at history, i have tried to take some lessons from other points when these challenges also presented themselves. one of my favorite predecessors is george marshall, who held leon's position and my position. at the end of world war ii, president truman and george marshall looked around the world and said, you know what is in america's long-term interest? rebuilding our enemies. creating stable democracies, creating a free-market economies. and what did they do? they said to people like my father, who had spent five years in the navy, they said all that you want to do is go home and raise a family and start your business and make money and have a normal life. we will continue to tax you to rebuild places like germany. and it was a hard sell. it didn't happen automatically.

we invested in those dollars. it should be about $150 billion and our own currency. we helped to make the world stable and safe and open for all of the post-war decades. we have an opportunity right now in the middle east and north africa that i'm not sure we're going to be able to meet. we do not have the resources to invest in the new democracies. the problems that they mentioned, the rising powers, we have to be competitive. we cannot just hope. we have to 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 that we do not know the cost of everything in value of nothing. documents are valued statements. we are at a people. what we stand for. it is up for grabs. a guinness helped to liberate -- i guess it helps to liberate millions of people around the world.

it will find a ready audience as these negotiations resume. >> they need to understand what is the situation and get straight answers from you and others. as this unfolds, it is of immense importance. thank you of mary much. thank you for a fascinating conversation. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> coming up, at the brookings institution host a discussion on how domestic politics affects a standard. >> track the latest contributions with c-span's webb said. plus links to the c-span media partners. it is all at c-span.org/campaig

n2012. visit college classrooms across the country during lectures and history. go behind the scenes on what american artifacts and the presidents and policies and legacies of past american presidents. the the complete schedule at c- span.org/history. >> the brookings institution examine its foreign-policy. martin at brookings 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 pledged 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. first of all, tom mann, who is 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. "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. foreign policy. bob is the author of another -- a number of best-selling and profound books. including a book about u.s.- european relations. his major work on american foreign policy called "dangerous nation" america's place in the nation from its gone to the 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.

for asia on the national security council in the clinton administration and has written a huge number of books on 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 served as colombia's minister of transportation and minister of economic development. he has published several books and academic papers in his

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 polls and rick 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 partisanship --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 system, 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

growth in germany and france. he alluded to the idea that growth could solve a lot of these problems. 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 not 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 economies with fiscal policies like they did in 2009 and 2010. the levels of public that are still low.

they can expand government 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. it is limited in its capacity steer the entire global 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. 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 the commentary that we have analysts have said that it is not so bad. dysfunctional europe and equally dysfunctional japan.

tarnishing ourselves. not just the united states. the fears in europe is that this is not just the 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 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? >> i think the chinese and people throughout asia, i consider the u.s. to be by far the most powerful, dynamic country in the world.

written off the u.s. by any means. and we garner a lot of respect. having said that, we are known in the region, rightly, as 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 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 to step up whether it is a global stimulus plan. we will not be there to be the leader. we will encourage others to put up the resources. that 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 with the trigger mechanism. that has as drawing nearly half 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 are not going to do that we otherwise would have done. related forces in asia. there is a real question as to what is going to be coming. 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 region wants to benefit from china'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 to diplomatic and military advantage.

are turning to the u.s. to say, protect us from that. chinese diplomatically and on the security side so that we can benefit from the economic growth in china. to diplomatic and security side, in the direction of china. within china, there are ardent nationalists that have access to the web that would argue that the u.s. is clearly in decline and will not recover. therefore, it is time for china to press its longstanding positions on issues of long standing problems with the u.s. whether it is weapon sales to taiwan or whatever it will be. chinese leadership does not believe that.

very serious in the short run. they may need us in the long run. we are not short. we will have to hold back and watch what happens before we make 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. going to continue to 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 long 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. this 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. we are 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 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 keep our eyes on the ball. 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 getting something constructive done, which is the expiration of the bush tax cuts at the end of 2012. that is the one thing that makes 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. 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. what 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 happened 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 powerful economy and 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 control 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 is not 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. 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 crops up. in 1987, paul kennedy wrote a very smart book about america declined and america being overstretched.

it s and history. what happened? it was not that american changed, it was that the soviet union unexpectedly collapsed. it was not that the united thought it would be, it was that the soviet union to collapse. is the united states is in terminal decline or that china 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 function. 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. 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. 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 same position. overextended militarily, massively in debt, allies in tatters, nato is looking tarnished, unsuccessful wars, and we are 20 years from the soviet withdrawal from afghanistan. where is the united states? talking about withdrawal from afghanistan.

we have got very limited options. even if it is the shifting, we . did we have to make this exciting. it is a great reflection away from this. it if you can blame other people from economic issues. there will not be able to withstand a double-dip recession. if the united states polls it goes wherehere come , it hurts the most. is still by quayle -- oil and gas revenues.

transition. russia has these deficits. the want this, look at this dysfunction. the diminishing of the obama presidency has a sensible negotiation of multilateralism. the weekends to some degree like president medvedev o. there's a need for a more assertive leadership. that plays very well. there is this political this function that we do not want a reputation about.

policy does not help russia economically. >> can i come back to china? >> is the chinese leadership changeover going to be affected in the same way? will they be able to make the same arguments fax will they be able to justify our system? they said effectively lifted the chaos of of there.

if you want to change our system, and that is what it will become. that is what the future of books like. we will offer gradual economic growth.

they have set up the wrong model. how can you cut $500 billion out of the fans without knowing what you are cutting, what you are defending? if we are wasting $500 billion on defense, let's go ahead and cut it out. but i am going to threaten you by threatening all of america? this is a total disaster, a disaster in process, and constitutional means, in in

solving our problems. and by the way, that starts with economy and jobs. you do not start with the deficit. that is a function of the economy. 16% is unemployed, underemployed, and dropped out not looking. they are not paying taxes. you will not get to a balanced budget. we had the employment rate down to 4.2% when we balance the budget. that is the strategy in the reagan tradition. they are asking the wrong questions and coming up with the wrong answers and telling us to choose which wrong answer we want. let me start with a core of the critique. this goes back to that escalation of that dependence. we hold these truths to be self- evident that all men are created equal, that they are endowed

with their creator -- by daring quaker -- by their creator with certain unalienable rights. this is the document it shows you got personally gives you sovereignty. you never a subject which is why the current bureaucracy has to be thoroughly overhauled, because it is a european-style bureaucracy that treats americans as if they were subject. does not treat them with the dignity of being a citizen. it goes on to say that to secure these rights, governments are instituted among men, a riding their power from the consent of the governed. no one believes that the majority of the american people would have voted for obamacare. now believes they would have voted for the stimulus. nobody believes that what they voted for the debt ceiling. 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 abolish it and to institute new government, laying its foundation on such principles and organizing in such form has shelled affect their safety and happiness. our constitution gives us the right to alter rather than abolish the government. and the american people trying to exercise their right. 2006-2008, they tried one direction. 2010, the with the other direction. but they are not getting the fundamental changes that they deserve. a lot of talk about the super committee from three levels, the constitutional nature of it, the intellectual problems, and the legislative process. constitutionally, this is a truly bad idea. the constitution provides for a legislative process. a legislative process should be out in the open. i would give you two sets of

numbers to illustrate this. by 35-12, and the other is 117- 1. the first is obvious. 535-12. it is the congress vs. the super committee. the first question is, what the other 523 going to do? the washington press corps will focus on the super committee and the lobbyists will focus all the attention on the super committee. it is truly a bad idea. it means the other 523 can say to their members, what are you doing? where is my representation? why did they get extraordinary powers and the rest of you are in the chorus?

117-1 is the number of standing committees and subcommittees. one under 17 already existing. says 117 are not doing their jobs, now that week -- now we have one that will do the job of the 117. 12 doing the job of 535, and one select super committee doing the job of 117. and is intellectually wrong. a major problem in american governance today, and i know this is a hard thing to cover, but the fact is a major problem is intellectual. it is not money or willpower. it is knowledge. i've been fascinated in aisle with a group called strong america now. he is a creator of a manage a system called lean 6 sigma. many political writersrsrsrsrsrs

strange. it is a management system that ibm uses. it is one of the largest logistics supply in the world. boeing uses it as the largest exporter in the united states. motorola actually pioneered it and it recently brought 1500 jobs back from china to arizona and using a lean 6 sigma with higher pay american workers than there were in china. michael jordan believes that if you apply the concepts of lean 6 sigma to the federal government, you save $500 billion a year. over 10 years, that is $5 trillion. all over three times the goal of the super committee. you think this super committee will have enough time and energy to learn what this it? do you think the staff will learn what this is? no, it will be an ideological fight. tax increase, no tax increase.

and yet on the table, ibm and dell and a group of high-tech companies issued a report last week saying we just ran the federal government like a standard multinational high-tech company, $125 billion sitting on the table. we did of booklet called "stopped paying the crux." -- the crooks." some stolen, supplemental security income, $10 billion a year. it u.s. super committee -- if you just said to their regular authorizing subcommittees, bring in experts to know how to do this and find that have to change the federal government so it moves at the pace of this,apd bureaucrat from 9-5, and they

cannot keep up with someone with an ipad. we have a dentist in new york state to filed 992 procedures a day. he got paid. ibm pays -- american express has a very sophisticated system. how many have been contacted to make sure that you are using your credit card? virtually real time. in your state medicaid is about 10% fraud. they are more likely to pay a crook then american express cardholder.

an intelligent congress in a city they wanted to be intelligent would hold hearings, bring in the experts, figure out how fundamentally change the government. you can apply ileana 6 sigma which is continuous improvement, and what you do is in doubt having a fundamentally replace the current system because you cannot have permanent -- you can hold your job forever even if you do not do it and add a group come here. we visited the boeing plant in charleston where they are making the streamliner. look at this in the terms of the federal government and go and look at these high rise building sitting in them. massaging paper. the 787 plan, they have four

that every built to look like dummies. they fly and entire segments of the 787 dreamliner. they are manufactured in italy, kan., at japan. they are then assembled. this is the first composite- based commercial air steiner. it is stronger than aluminum. a fascinating design. extraordinarily sophisticated feared being built all across the planet. been built so accurately that it fits together. they were showing me the eye opener. we were 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 said to myself, can you imagining going to the federal procuracy? our legal visa system is a disgrace. it is cumbersome, expensive, takes an enormous time, and basically says, if you want to buy it law-abiding, it will be expensive and time-consuming. it is the exact opposite of good government. can you imagine taking the boeing model through our new visa process, eliminating all the waste and unnecessary functionality? of course you cannot. you cannot imagine real change. this city says we would like to do better but we cannot do better so we stay with what we do. we can i interrupt we're currently doing so will have to

raise taxes. so we expect you to change. but you cannot expect the government to change. you cannot get this kind of thinking would tell people. the whole congress, every subcommittee should be assigned, learning lean six sigma in the first weeks of december, reviewing everything that they supervise, and i just got a study from the gulf of mexico that if we simply went back to the pre-obama system, we would add 230,000 jobs in louisiana and texas. that's a record. we've been trying to build a pipeline from canada to houston to export to china. u.s. government has spent three years stopping the project. the chinese are talking about paying for the pipeline to go

from central canada to, skippind states totally. dodd-frank has so much red tape, it will kill many international banks. one is thinking about pulling all of its operations out of the united states because we are too hard to deal with. they do not make enough money to be hassled by bureaucrats. this stuff is going on every single day. boeing is the largest exporter in the united states, and the neighborhood national labor boards attacks it. if you're serious about creating jobs, if you would have to be for real change. my first challenge for the congress is, a slowdown and think through how you are going to learn enough to fundamentally change the government. it does not mean a sweeping bill. between now and face given, we might need 200 small bills, each

one getting something good done in u.s. that the savings and read and understand those bills. it turns out -- maybe you only say half the amount that the lean six sigma people think he could say. $2.5 trillion, substantially more than the super committee. what does that imply? why is it super other than they have abrogated power to the 12 people who will spend the next few months fighting. the number one challenge is job creation. i personally believe you cannot create jobs with class warfare and bureaucratic socialism. it says you can keep your company, you just cannot run it. everywhere i go, every level business says the level of

aggressive bureaucracy is now a major problem. if you really were serious about job creation, you would repeal dodd-frank and sarbanes- oxley and dramatically replace the epa with a environmental solutions agency. you would create a new 21st century food and drug administration which would use lean six sigma, know about science in the lab and move it to the market place as rapidly as possible. that would have two effects. it would dramatically accelerate health solutions for americans and improve american lives. in the largest market in the world, which is what health will be, it would make america the dominant provider of health services and create millions of new jobs that are very high value. but that is literally the opposite of the current fda model. we are talking about changing the culture, getting up and saying how can i help get these

things to the american people, not how can i stop them. there was a great book on polio. you will discover that salk this covers the vaccine and gives it to his own family to make sure it is safe. the following year, many americans are volunteered in the year after the whole country is facts and they did. take the current fda model and laid over the 1950's. you realize that he would never had the money to go through the process. people would still be an iron lungs. -- in iraq months. -- in iron lungs. but these people fought world war ii. there used to the idea of doing things fast. we beat japan in 44 months, from

pearl harbor to the victory over japan, 44 months. we mobilized, the nazi germany and fascist italy and japan. it really took 23 years to play another runway at an atlanta airport. this is defining what you are trying to accomplish and maximizing the rate of getting it done. it actually adds that you. what do i save by reforming the food and drug administration? is not just internal taxpayer savings. what if you quadruple the number of american jobs in health care by making us the dominant exporter worldwide? how you quantify the advantage to the united states as a country as a pro-progress fda? this is where reagan's emphasis on growth was all about. what would you achieve for the whole society?

let me suggest a grand package, if you will, a grant agreement. i am for more revenue. i'm against tax increases. get americans back to work, which is increasing revenues dramatically. identifying federal assets and using them and i am for more revenue by developing american energy. let me take the second and third for a second. if we had is a gold producing all of our own energy, keeping $400 billion at home, the economic side effect of $400 billion that went to the united states, not to saudi arabia or venezuela or iran or iraq, lowering prices, it would be extraordinary. from a national security standpoint, it would be a terrific thing for us if we had

iran getting a lot less money. but from an american economic standpoint, it would be important. if you are drilling offshore or on federal land, they pay royalties. it is a major source of additional revenue. a bipartisan proposal by senators web and warner that will allow for a genuine to develop offshore -- virginia to develop offshore and give 50% of the royalties to virginia, 30.5% directly to the federal government, and the rest for infrastructure. you could literally refinanced the rebuilding of norfolk from offshore drilling. this is an old american adage, with more economic activity, you get more revenue. more revenue through more economic activity and jobs.

i am for more revenue for the development of american energy. in hydrocarbons, coal, gas, and oil, we have more total energy than any other country in the world, much more than saudi arabia, much more than russia. we happen to be geologically very fortunate. there's an anti-energy government and these are important jobs. in pennsylvania, where they have developed new technology for shale and gas on a level no one thought possible. today there will tell you that there are technological developments and we can use shale gas at 8,000 feet in below. we probably have a 120-year supply of gas. we can ship it out of the country to china. this is why you have to think

dynamically, i ecstatically. this is why bureaucracies are all wrong. their models are always static. this is a fact, not a theory. in western pennsylvania, you have 72,000 new jobs since the last quarter of 2009, and the average salary is $73,000. in north dakota, one development is 25 times bigger than expected. the half 3% unemployment. you think people would say, that would be good. what is the secret? partly energy and partly technology. but they have a 3%. when i was speaker, we cut the capital gains tax and with

uncluttered years, we had 75% more revenue from capital gains than at the higher rate, because lower tax led to people being more active and lead to people investing. everyone agrees that the current corporate tax rate that we get. this is the latter curve applied in a practical way. if we went to 12% corporate tax rate, we would get money out ofy because they hire tax lawyers, the largest tax firm in the world is the general electric tax department, to avoid 35% taxes. at 12.5%, that wouldirgogogogog. no one disputes this. this city cannot do it. it all gets locked up in

politics and ideology. in fact, about $1 triio a35%. at 12.5% probably $6 billion of it would come home. with a holiday, almost all of it would come home. i am for more revenue. how would you a set of examples for assets. someone should inventory everything o o o o o ourban andk why. we should privatize and get rid of myoyoyoyoyoyoyoyoyou'll findr foreclosures, there are huge volumes of property held by the federal government. many of it is deteriorating because we're not a good landlord. we the american on 69% of alaska. alaska is twice the size of

texas. we currently ontexas is a huge . if we have 1.5 of them, what if we took half of it and said, that is the national park, that is the wildernessd lee you an ae of texas you could develop. all of the value of mineral, oil, gas, the largest coal reserves in alaska, some people propose that you could use that cold to create gasification and to take the carbon recapture and use it to enhance the north slope, which would then extend the life of the current pipeline. it requires creativity. you can i get creativity at a 12 people fighting politically. imagine you said to the interior committee, in both the house and

the senate, review all american properties and decide which ones we could allow people to develop. we own 80% of nevada. some of his military reservations, some of it is seen it, but 89% of the state? surly 30% of it could actually be opened up for development. the chinese have a major effort worldwide to give rare earths and we have huge deposits in california currently off-limits. and for more revenue for using american assets and from american energy and from getting people back to work. if you did those three things come into it for anything from tax rates. i'm for a fundamental rethinking this. i think they have been going bad -- at exactly backwards.

i say this is for someone was chief of the housing data fair amount of things past. when you centralize in the grand bargain, you maximize the ideological conflict. when the most import lessons i learned was to train people to say yes, if rather than no, because. with a newsletter coming out tomorrow with a proposal that the house republicans take up --one of the proposals that i had is a proposal that the house republicans take up the webb-warner bill and pass it. they could do it 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 endorsed by tim kaine. endorsed by governor o'donnell.

it could be a model for the country. if the house republicans passed it, harry reid 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 passing? 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 come off 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 one point, that we adopt the principle that in the first three days of the week, you only bring up bills people agree on. just to force people into the habit to look for things to agree on. there is a way to do that. it is so dramatically different than, no, we cannot do that. it also lets you sidestep the tax frame. the lesson i learned from grand deals was from reagan, cutting $3 for every $1 of tax revenues, as reagan wrote in his diary, they get that tax increases which were permanent and then you get a spending increase. he never again agreed to that deal. it did not work.

in 1990 we had the same thing. you saw the same thing happened the other week. these are grand compromises 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 get, derived from new 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, scoredover 10 years. but it 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 has 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 come up with a super-duper 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? >> fairly substantial. they are actors in the drama and they have some impact on how to define and shape the drama. 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 c-span here today and youtube and the internet and twitter, we have a total range of communication. we have been doing some google + hangouts. 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, a remarkable book, "lincoln at cooper union." it was written by two press secretaries, but it is 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 gives 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 in springfield was the following year. when people try to get him to comment, he says read the speech. if i give you any other answer, you will distorted. -- distort it. 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 as a campaign document.

[echoing] that is 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 looking at it 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? he 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 way. on the 25th anniversary in march 2008 of two of his great speeches, evil empire and defense ministers, i've been -- strategic defense initiative speech, i have 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 -- in a 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. the lean six sigma. --we're doing aconferenc 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, they 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. losing my second race in 1976. 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. [laughter] >> a very provocative speech. the concentration of the power and individuals will heighten the ideological differences and by extension, high and the --- heighten 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 -- if it gets to the point?

or will they let those cuts go and play? -- into place? >> nobody knows what they would do. they are caught in a genuine-- . 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 -- think 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. part of the reason is that we are in such a deep hole, but part of the reason is 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 -- if you look at 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. citizenship requires the ability to take care of yourself.

i think you get to a balanced budget in five years if you -- if the american people came with the. -- came with you. you'll never get a balanced budget if you try to do it inside washington. >> thank you for the commons. -- mr. speaker, thank you for your comments. 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 -- we had 293 people whom 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. the implementation was seven years. 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. -- uproar. 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 -- very serious fights and do it in a way that does not the only people -- in no way that -- 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.

-- top. -- tough. 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 -- i would 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. -- not extend it. 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 -- i do not think you want a federal program. say to all 50 states, you may now set up training programs for

everyone who is unemployed said -- so 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 -- a cyclical economy on where a steel 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 -- learn serious things to become employable. that makes sense.

it ought to be modified to achieve that. on the infrastructure bank, i a -- i have 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? >> i am extraordinarily concerned 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. our strategic deficit is larger than our fiscal deficit. 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 -- i would look at that very seriously. but if you ran the pentagon go way you run a modern high-tech company, he would have dramatic -- you 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 -- to find -- designed your defense system, but as an afterthought of a political negotiation, and you're putting your country at risk of a catastrophic event. -- catastrophic defeat. 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] "washingtons journal," michael tanner on ways to reduce the federal deficit. david shepardson talks about new fuel economy standards for cars

and trucks. a look that 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. >> watch more video of the candidates. see what political reporters are saying. try to let as campaign contributions with our website for campaign 2012. easy to use, it helps you navigate the political landscape with twitter feed and facebook updates from the campaigns, candidate clios, plus links to media partners in the early primary and caucus states. all at c-span.org/campaign2012. >> if leon panetta and hillary clinton spoke earlier about the federal budget and how it affects foreign-policy and national-security. they the defense and state

departments on u.s. policy in countries like iraq and somalia. from the national defense university in washington, this is just over an hour. >> good morning. a live audience today. welcome to ndu. this is education, knowledge, conversation, dialogue, and discussion. we are extraordinarily privilege and honor to have the inaugural distinguished leader program speakers be our secretaries of defense and state, and a very statefrank sesno. 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 secretaries of state and defense. i cannot think of a more propitious time for this conversation with the world watching this country going through the budget gyrations, i think is the right word, with a world so uneasy and wars ongoing. some of what we can talk about today and we will incorporate your questions into this conversation will be, is america wounded colossus? are these war is winnable? where and how do these two big departments work together? i want to thank national defense university and the admiral for your gracious welcome today. welcome to both of you. >> thank you, frank. thanks for doing this. >> let's start with the budget. your idea of a good time. [laughter] the world has watched with bated breath as to whether we would default, whether american

troops would not get their paychecks, which is an incredible thing. as you face the prospect of budget cuts and the reality of this, secretary panetta, what's at stake for you? >> i think this is about the national security of the country. our national security is our military power, our defense department but it is also our diplomatic power in the state department. both of us, i think, are concerned that as we go through these budget tests we will go through that the country recognizes how important it is that we maintain our national security and we be strong. we recognize that we are in a resource limitation and we have

to deal with those challenges. i don't think you have to choose between our national security and fiscal responsibility. i want the country to know that we can get this done but we have to do it in a way that protects our national defense and our national security. >> you will have three other $50 billion or so. >> that's right and if the trigger takes place, if there is an ability for the congress to decide where to go from here, it could be $500 billion more. then what? >> with the numbers we're dealing with now, the president and bob gates before me decided pretty much the parameters that we would have to be looking at and we are within the ballpark with what the congress just did. if they go beyond that, if they do the sequester, this kind of massive cut across the board which would literally double the number of cuts we are confronting, that would have

devastating effects on national defense and the state department but more importantly, when we think about national security, i think we also have to think about the domestic discretionary budget as well. education plays a role other elements of the discretionary budget in terms of the quality of life in this country play a role in terms of our national security. more importantly, based in my own boss experience, if you are serious with dealing with budget deficits, you cannot just keep going back to the discretionary part of the budget. >> what would be the most damaging part to the department of defense and to the national security if you had to face hundreds of billions or more of the $350 billion? >> very simply, it would result in hollowing out the force. it would terribly weaken our