patenting goes back. you probably have heard of the burbank potato. he complains that you could patent a mousetrap, but a reader could spend his life developing new kinds of food and anybody could steal it. the patent protection act goes back to the 1930's. it is not new. it is a protection for the person or company that developed the genetic materials that allows that company to commercialize the material that they have developed. now, is this good? if we did not have a patent protection system, we could not come at this point, with the

cost of bringing developing new crops trains, we could not afford to bring the new ones to market. it cost at this point about $100 million to bring one crop to market, which is pretty expensive. that is why we only have big crops, not many genetically modified for its and vegetables because only the big crops have enough profit margin in them to support the genetic modification. let me underscore the bottom line that a farmer can plant anything he/she wants to plant. the reason they migrate to gm crops is that their profits go up and costs go down. a previous caller asked if they were originally promoted as increasing yield? the increase yield because they

decrease loss. again, the bottom line is that a farmer can plant anything he/she wants. they buy the scenes -- seeds because they yield better. if you buy patented seeds, you do not keep it and replanted. that is not done so much in corn because it is a hybrid but with canola, and the case the caller was referring to. monsanto and other companies do not have the time more money to go after every farmer and has a few genetically modified seeds. these are real people who tried to go into business for themselves by replanting and repackaging. host: what impact does gmo food

have on dna? guest: no more impact than any other food you eat. if we turn into plants, we would have long since turned into plants. host: nina federoff, former secretary in -- science and technology officer to president clinton. you can follow us on twitter -- @cspannow. twitter.com/cspannow, hit "follow" and get all of our updates including those for "washington journal." elliott ackerman from elect 2012 will talk about the new group hoping to secure ballot access for all of the states with a third-party candidate. stella dawson will talk about

the european fiscal trouble and its impact on the american economy. and rick rodgers, a retirement counselor, we will talk about the fifth anniversary of the pension protection act. all of that plus your calls and a look at the news. "washington journal" starts at 7:00 a.m.. we will see you then. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> coming up, former senators

byron dorgan and trent lott on deficit reduction and raising taxes. economic coverage continues with a look at the current economic situation globally with robert zoellick and christine lagarde. >> sunday on c-span's "newsmakers" -- lamar alexander and his decision to step down, and how congress has changed operations over his four years in leadership. >> the c-span networks -- we provide coverage of politics, public affairs, nonfiction books, and american history. this month, a book for congress to continue federal spending into november, including four recent natural disasters, keep tabs on the deficit committee, and follow presidential candidates as they continue to campaign. it is all available on

television, radio, online, and on social media sites. surge, to watch, and share our programs anytime. we are on the road, bring resources to local communities, in showing events around the country. it is washington, you're white, the c-span networks, created by cable, provided as a public service. >> former senators byron dorgan and trent lott on deficit reduction and raising taxes. they also talk about job losses, immigration, and the republican presidential it -- race. this is an hour and 25 minutes .

>> then ask the secretary of commerce in the clinton administration, and subsequently as the secretary of transportation in the bush administration. they met during world war two when simpson's boys got troop visited in wyoming, where the secretary was concerned with other japanese-americans. despite their political differences, their friendship and commitment to public service and toward. here, at the washington center, the series aims to create form from -- for which students can engage with extraordinary leaders and explore issues of contemporary public concern. we hope it will be a meaningful supplement to the civic engagement and leadership development efforts of the

students in the academic entrance a program here at the washington center this semester. to introduce today's event, it is my pleasure to welcome one other leader, our president, michael smith. [applause] >> thank you. it is a pleasure to welcome senators byron dorgan and trent lott. both senators, while partisan, had reputations for reaching across the aisle, working with the other party, and effecting constructive legislation to help the american people. we are fortunate that steven scully will moderate the discussion. he is a senior executive producer and political editor for the c-span networks. since 1990, he is been

responsible for the planning and editing of all campaign programming, including presidential and congressional elections. he also serves as one of the regular host of "washington journal" -- a daily, live, public affairs program. he is also a member of the esso shift factory here in washington -- associate faculty here at the washington chapter where he teaches a course about the comprehensive study of american presidential politics in the age of television and new digital media. without further ado, steven scully. [applause] >> thank you. thank you for being with us. let's get into this. in terms of bipartisanship and compromise. we are hearing this today. the line has been drawn in the sand. when it comes to the big issues, medicare, medicaid,

social security, trent lott, a will start with you, candy bar partisanship, and if not, why? >> bipartisanship is very hard to achieve, the mother what the issue might be. -- no matter what the issue might be. it seems like it is no difficult now than it has ever been. we all account on a revisionist history. it was tough in the 1980's and 1990's. i first came here as a congressman when i was 31 in 1973. those were tough times, too, particularly in the house of representatives, where the majority has all the power. that is one thing that happened to buy partisanship in the senate over the years. at some point, the majority of the senate had served in the house. the house turns you into a partisan warrior, and when you get to the senate, it is hard to get over it. it can be achieved, but you have to work at it. a lot of the students, first of

all, congratulations to all of you. this is a great opportunity. this is a great program. i am sure when you leave here you will not be the same again. i hope that is all in a positive way. right now, it is particularly tough, but you have to work at it. it is called leadership. you have to have men and women of good will that are willing to run across the aisle, which should only be an imaginary aisle, and it -- andthis should not be a blockade between the parties. i have found that if he really wants to get something done you have to be prepared to be flexible. you can get into trouble with either party if you are too flexible. i became known by such terms as a dealmaker, pragmatist, but i did, -- not give up much of my philosophy. we're on the commerce committee

together. a lot of what happens in the transportation committee should not be partisan. transportation, roads, highways, i never thought of it as being partisan. we worked on a newspaper issue that we agreed with but a majority of our parties did not agree with. we give people heartburn when we got together. there were a couple of issues like the importation of prescription drugs. we worked on that together. it is not an easy thing to achieve with 24/7 news media. but it can be achieved if people make up their mind they're going to get its debt. >> on the issues today, how can it be achieved suspects when adolescence? -- achieved? what are the lessons?

>> compromise. if trent lott runs from -- runs for the senate and i'm a candidate from north dakota, we come here with different constituencies. my constituents may feel differently than his. we come here with our own notions about things. how things should work and what we believe. when we get here, let's assume we feel differently about key issues. taxes, for example. the only way to resolve that -- you can decide we're going to sit on our positions and we will never reach accord. or you can decided is important for us to reach a compromise and you come to the middle to do that. the tax issue right now is a very important issue.

we are deep in debt. we can talk about the reasons for that. but we are. we have been fighting to give you a worse for tenures and have not paid for a penny of it. -- two wars for ten years and have not paid a penny of it. if you are going to send people to risk their lives halfway around the world, shouldn't we pay the bill so that when they come back you do not have to? that is my feeling about it. there are others who feel absolutely not. never. we do not intend to support additional taxes jury there is a difference of opinion. you resolve it by figuring out, where is there some room? some give and take? >> on the plan today -- >> let me jump in. i never met a tax i like.

they agitate me from beginning to end. one of the things you need to do as a leader in congress and life is listen a little bit. right now you're hearing the president saying we have to have more taxes. democrats want more taxes on everybody but the middle class. you have republican saying no taxes. if you listen carefully some are saying, some of these loopholes which to probably take a look at closing those. some democrats say we're not going to get all of these proposals setter being made now by the president this very day. are there some areas where there could be tax reform that might make a fair tax code which would help our creation of jobs and competition around the world?

if you listen to what " sides are saying, there is some common ground. the way it works in washington, everybody says i am for this and nothing else. they're positioning is then to get the job done. that is my hope and my prayer that they will find a way to stop sticking out of the positions and to see where there is common ground. >> the differences, that is not what is happening today. it happened traditionally away trent describe it when we spent several decades -- that is the way it did work. in recent work -- years it has not worked like that. instead you reach an impasse

and nothing happens. it is in need of help and good decisions. both sides are saying we do not intend to compromise. the one thing that has bothered me is, in their country there is a political dialogue that suggest there are two choices -- you stand by your principles and fight or you compromise. if you compromise, that means you have caved in on your principles. that should not be the case. the only way democracy works is compromise. we have a bleacher section. they'll have microphones and radios on both sides. they say, how dare you compromise? you did not come here to stand for your principles? the result is an impasse at a time when the country can least afford to have one. this country needs good decisions to put back on track and put people back to work and invest in education. nobody likes to pay taxes.

when i see a good school that my kids attend i am happy to pay taxes for that school. when i see a good road, i am happy to pay taxes to have the infrastructure they do not have. i understand nobody wants to pay more taxes than we need to invest. on the other hand, whinnied spending restraint and new revenues. -- we need spending restraint and new revenues. >> i want to frame this question in terms of the comments made by your successor. his job was to see barack obama as a one-term president. john boehner said he is calling on class warfare when it comes to taxes. you have to work with this president. you worked with bill clinton and you had to work with george

bush despite public posturing toward the administration. how do you do that's? how do you sit down and work out a deal? >> sometimes it is unseemly. this is the one thing that is missing. i used to urge president bush to invite harry reid over. just the two of them to set up there looking at the washington monument, that beautiful view. i even said it would be nice if you could have a glass of something to drink other than coke. since neither one of them are drinkers, i knew that was hopeless. i do think the personal relationship is part of it. one of the reasons we did work together -- i was not sure about him but he has a beautiful, brilliant wife.

i enjoy her company. seriously, that is part of what is missing. the senators and the house members and the ministrations, they do not pursue personal relationships. they do not pursue an opportunity beyond the headlines and the limelight. the president has to talk to his base. mitch mcconnell wants to see president obama defeated. the president wants to see the senate remain a democrat. that is their ultimate goal. somewhere somebody has to say, in the meantime we're going to do things for our country. he and i went back and forth. i was the majority leader and then we switched at least a couple of times. on occasion we would say, look, if we get this done there will be enough for both of us and our parties. one time we pushed an issue

together when our conferences or against it. >> the patriot act. >> you read the article in the "a washington post." they thought it was going too far. tom was getting into resistance in his caucus. we had a conversation and agreed we would meet on the floor of the senate in calling on the floor and get a gun. we did and it wound up passing 98-2. the important thing was we needed to get it done. it was the aftermath of 9/11. you could argue about the details but it is important to get things done so are intelligence community can get things done. >> when mitch mcconnell said that i was gritting my teeth. that is politics. the leader of the senate would want to seek the democratic

leader replaced. that is not news. it was a bit of news when he said it was his highest priority when we have such problems. such high unemployment. a sick economy and a lot of issues. there are a lot of in temperate things said. we should evaluate what people do rather than what they say. the question for this congress, are they going to do the things necessary to put this country on track to become the country that we word? a jobs machine it gives middle- income people a place to go to work and have a job security and take care of their family? will this expand the country that provides opportunity? that is the key issue. >> one of my favorite quotes is from margaret thatcher. she was speaking to the republican congress a senator talking about how she did things with parliament and a

republican senator from a state that will remain nameless said, lady thatcher that is well and good but united states senate has to pursue a consensus. we have to come to an agreement that a majority of the senators agreed to. >> she paused and said, the pursuit of consensus is the abdication of leadership. leadership is a position that your principles support and lead to a consensus. i thought an awful lot about that. that is what byron talked about. you do not given up on your principles. you fight hard. but you allow that to help shape the debate and it can develop into a consensus. >> thank you for being with us on behalf of the students. we will begin with questions. if you could introduce your name and where you go to school.

>> my question is, what you think that radical groups like the tea party due to the idea of compromise? >> i do not agree with your description as a radical group. you know, who are they? if you look at it, the democratic candidate for governor in louisiana is a key party member. he is a democrat. it is not a radical group of republicans. it is men and women. where i am from they are people who are concerned about the deficit and debt. they do not given to other issues. they will hammer you on that. they varied. this is a loose knit group. i cannot figure out who runs the show.

somebody said all of the candidates in my state lost last year. in the primary. somebody said, why is that? the tea party is us. it is the republican party. it is not some separate group. they ran and lost. candidates had to work it out. you do have groups on both sides of the party line and philosophical lines that take extreme positions. they make governing difficult. that is what our democracy is all about. it is messy. i think anytime you have a debate, if you listen you learn. i am all for it. i do not take offense. dial is made a point to go to union halls. -- i always made it a point to go to union halls.

so, i would go into the union halls. the leaders did not like to see me. the members would listen to me. i'm not -- philosophically they were not where i was on most issues. >> the origin of the question is the tea party and its representation that you normally see and hear, the tea party is an important part of the political process. it is way off from where i am in terms of its positions. they have a right to get involved. they have every right to do that. i think what originates your question is michele bachman says she is the leader of the tea party here in washington and has had a leadership positions and then a lot of things for

them. her positions on a range of issues are off the chart. she would like to get rid of minimum wage. she would like to get rid of medicare. she believes we should have defaulted on our debt. she said i do not want any compromise. i want the country to default. that is radical. her presentation as being the head of the tea party is described as radical. having said that, the republican party has a t party influence in all of the important states. all of those or running for president have to find a way to get during kravis -- crevice. it will have to move a little bit more to the center. i do not know if trent will agree to that. >> it may not be the candidate i prefer who wins but that is where my pragmatism kicks in.

you have to look over the horizon and look beyond your personal preferences and think about who would be a better president. sometimes it is a more conservative candidate. sometimes it is a more moderate candidate. i do not have a problem with those shades. that is why i got in trouble sometimes. >> who is the candidate? >> i am supporting iran in. my state would vote for. . -- supporting the mitt romney. my state would vote for rick perry. i want somebody who is going to focus on the economy and understands how to do that. our best candidate is mitt romney. that is who i am supporting. >> my name is trevor and i am from oklahoma.

my question is for senator lott, what exists in the world today that is the greatest threat to liberty and freedom? >> let me take a 30,000 foot level. we have 30,000 nuclear weapons on this planet. the explosion of one of which would change the life forever on the planet. a bout -- about a month after 9/11 there was a caa agent nicknamed dragon fire who reported there was a piece of intelligence that suggested a nuclear weapon, a 15 tillich ton russian nuclear weapon had been stolen from the russian arsenal and had been smuggled into new york city or washington, d.c. by terrorists

and would be detonated. for the next month there was a seizure in this town. you did not read about this. they did not tell people about the threat. there was a seizure. what if one nuclear weapon had been stolen and trucked into n.y.? and it exploded and two injured thousand, four hundred thousand people killed? -- 200,000 or 400,000 people killed? if we do not reduce the number of nuclear weapons on this planet and take new steps to keep them forever out of the hands of rogue nations and terrorist groups, you will live at a time when a nuclear weapon is exploded. that is the alternate loss of

freedom. it will change everything on the planet. >> i am glad we have representation from oklahoma. rogers state university. did you play oklahoma? >> i played football from third grade to my senior year in high school. >> client to have you. it is hard to disagree with what byron says. i do not want to go too far on this. i think the strength of the american people could withstand any kind of attack like that. i am pleased that both administrations have done things to prevent that thing from happening. it is a serious threat. when i think about my grandchildren, that is the most important thing in my life. i get mad when i see things happening in government or

around the world or anywhere that i think will be -- what it will mean for them. we see too many of our responsibilities to government to do everything for us, with us, anything that is reasonable. my predecessor in congress, a democrat but work for in the late 1960's used to say the greatest threat is not from within for -- but from without our borders. within our own ranks. we need to think about the freedoms and the responsibilities we have as americans to protect those first, last, and always. >> my name is maria and i am a student from national university. once -- to be think congress will resolve this issue?

>> we have come close a couple of times. >> that was the moment when i decided to retire from congress. the last time we tried it. i was so ashamed of the conduct of the senate. we need immigration reform. it is not just about illegal immigrants. it is also about legal immigrants. i have tried to get people into this country. one of them was a lady from sweden who was a physicist to work on a program at the space center, a nasa program. you would have thought we were trying to still the treasury to get her into the country. it is hard to get a person without background from that country into the united states. i would try to get canadian doctors into mississippi. it was a war. we need immigration reform.

when you think about how we kingdom more people into this country that want to come at have something to offer, that want to work, they have everything you're looking for. they cannot get in here. we seem to be unwilling to police our borders and control illegal immigration. then you get into the terrible problem of what you do with those that are here already? i do not think you can build a fence to keep people out. i do not think that you should run them up and throw them out. threats three death because i have said some things like that. i was trying to get a bill through that i thought would be good. i would not have voted for it in the form it was in. that is what the legislative processes. if you decide how you're going to vote based on what is in the package. we let it die on a technical

ground. an eclectic group in both parties and yet we went down in defeat. when i look back on it, i didn't after action review. that is in military terms. what happened? we were doing ok on the process. we messed up on the communications. the minute our position had to be described in three paragraphs, the opposition was, it is amnesty. we were dead. we could not overcome that one word. we were going into details and parliamentary and details. we got killed. we needed. it is going to take a bipartisan effort.

we need a president who will get down under the hood and get his hands dirty. we need a congress that will try to deal with it responsibly. there will be a window of opportunity in the early spring of 2013. i hope the next president and congress will confront this issue. it is difficult. we did not get center to play checkers. >> go ahead with your question. >> i am from emerson college in boston. i wanted to talk about how the media frames the debate. we see that it is framed in a win-lose scenario. i'm wondering if you could speak to that. is it worse now or the same song and dance? >> i think the media reports almost everything that is in

the news as a course trade. who is ahead, they continue to report which side is going to win rather than the real substance of the issues. c-span is extraordinary. i think c-span is one of the great places where the american people get an unvarnished view of what both sides believe and how they feel about issues. " to headline news or fox business or whatever you want to watch and what you see are these snapshots. most of it is about who is winning. that is not thoughtful. it has changed dramatically. we do not know what journalism is anymore. anybody can call themselves a journalist as they have a microphone and a note pad. but does not make you a journalist. who is fact checking all of that?

nobody. with the internet and the 24-7 news hour and things going viral, massive amounts of misinformation can move instantly to everyone. it is much harder to have a thoughtful debate that -- on complicated issues. let me come back to the last question. how many of you have traveled to another country? how many of you have trouble to another country? if you have left this country, if you're an american and you have gone to another country, and you look back in the rearview mirror, you understand what this country is and why in a planet or there's about 7 billion people, why there are a lot of people who aspire to come to the united states of

america? they see it as a beacon of hope. they want to go there. we cannot accommodate everybody. if we had no immigration laws at all and said come here, join us, live with us, we would be overrun by people on the planet who want to come and be a part of the american experience. we are not able to police our borders. immigration is a very important issue. we need to get it done right and we need to enforce our borders, but we especially need to resolve the status of those who are here. a lot of young kids out there, some of whom are fighting for this country, whose status is not resolved. it has not been done because it is very hard and very controversial, but it ranks among the five or six issues that have to be tackled by this country.

>> the 24/7 news media, the coverage that we get now, particularly in the electronic media, is a big part of the problem why our leaders in congress are having such a difficult time coming together in a bipartisan way and producing results on almost anything. but since you are students and you are studying political science and history, go back and study the history and see what john adams and alexander hamilton and thomas jefferson had to say about the media. the media just rake them over the coals. the case of thomas jefferson, a lot of it up was malicious and untrue. the media has always been part of the problem of politics and part of why america is as great as it is. freedom of the press -- i hate it and i loved it. >> i am a stint at the university of tampa, florida. some people think the institution of the united

states senate has become a problem, there are too many obstructionist tactics and procedural delays and it needs to be reformed. do you agree or disagree with that? >> i think reform or ways to improve an institution should always be on the table. with cooperation from harry reid and mitch mcconnell, senator schumer and center lamar alexander did come up with some reforms this year, and you can always find ways to do that. the problem is not the rules, not the institution, it is the people. i had that conversation and not standing in from the chamber where we were having one of these embarrassing roll call votes. we were voting on about 70 amendments, one after the other. it was just part of the process

and it was embarrassing. we are talking about why are we here and looking so bad tonight? it was probably 8:00 or 9:00 at night. joe lieberman, chris dodd, lindsey graham, john, from arizona and myself. kent conrad was there. we were discussing what the problem was and how we should change this to stop it. i said the problem is us, because we put up with so much stuff. we tolerate some of these things and don't really try to find a way to get something done. i take advantage of the rules. i used to do what harry reid does now and mitch mcconnell has done, you fill up the tree. when you fill up the tree, you block amendments from all other senators. it is being used more than it was in the past.

i do think it is a problem when you get into a filibuster it halt the proceedings of even taking up a bill. maybe some of should be evaluated, but it depends on your perspective. i used to think seniority was a bad idea, until i woke up and i was close to being no. 2 in the house. well rose a freshman ricky on the back row, i would get so mad i could not restrain myself. when i was standing at the leaders chair, i saw a little different. the senate is a unique place. it is hard to get anything done, but if you have true leadership and true commitment, you find ways. i would urge harry reid to stop finding things to fight over. find things that you can move along. if you look under the covers,

there have been a few things they have done just in the last week where you see cooperation between harry reid and mitch mcconnell. i keep pushing them to try to actually do a highway bill. it is something we need in this country. it would create jobs. it is not partisan, so stop trying to look at where you know you will have a bite and cannot get it done. just like the president's saying past my jobs bill like it is. that is not going to happen, and he knows it. say to the congress, this is what i would like to have, but let's see if we can do the payroll tax issue, maybe the highway bill. what are the things we can do together, and then see if we can get those done. >> the senate was designed

deliberately to slow things down and has been spectacularly successful. >> my question is an addition to his question. last week oxon hill and i send it -- i attended a subcommittee that seemed very bipartisan and they seem to get through a lot of shippers -- lot of issues. the next that went to the full committee, and there were so many split right down the middle. i was wondering why you would think in this subcommittee there is more bipartisanship and when you go up the ladder. it was the commerce and science committee. >> what was the controversy? >> it was not a controversy. that passed the bill through, but then it was all these amendments.

>> i was on appropriations for many years, and normally they try to say if you have a controversial amendment, don't bring it to the committee, save it for the floor of the senate and we will have a debate on the floor of the senate, and of course the bill never gets to the floor of the senate. for the last two years, we made spending choices, established what the priorities were -- none of them got to the floor of the senate. that is one area where the senate is broken. we cannot continue that way. there are a lot of reasons for it, and i won't take the bait on trent of the notion about the president offering his jobs proposal, take-it-or-leave-it. the problem is, neither side offers the american people something to be proud of these days. i was giving a speech by wild back and said both sides

reminded me of the:about a man who drinks too much and his spouse scolds him. he drinks because she scolds, he thinks. she scolds because she he drinks, she thinks. neither will it is true, he's a drunk and she's a shrew. neither side really is offering the american people very much. the congress needs to get its work done. these to compromise on the tough issues. >> i am from the university of new hampshire. i would like to hear from both sides of the aisle on this question. what do you think is a major step that needs to be taken to truly reform our current convoluted tax code?

>> i think we do need broad group -- broad tax reform. we have not had a major tax reform bill since 1986 or 1987. we do need fundamental tax reform. every congress adds a few more additions to the tax code. it has become a mishmash and is confusing and overwhelming. in many respects, it is unfair. you don't support this group or that group. i have a lot of faith in the leadership of the ways and means committee and house, you have all of members on both sides of the aisle. the same thing in the senate. you have max baucus and john grassley and john kerry. the philosophical balance is are there. they have had a lot of hearings. when i was on the finance

committee in 2007, we were derrek -- we were having hearings then in a run of of what should be tax reform. broadbased, fundamental tax reform takes at least three years to lay the groundwork, have the hearing, the site where you can lose the loopholes. -- close the loopholes. if they would look at this across the board and try to make a more fair tax code and take away some of the incentives, but then tried to lower the rates with individuals and corporate tax rate, i think it would be very good for the country and for job creation. one of the things i say to paul ryan, chairman of the budget committee, remember as jack kemp is to say, never say the word cuts are balanced budget without saying growth. what is if you are going to do

to have responsible budgets, but do it in such a way in terms of tax code and where you spend or don't spend that will provide growth to the economy? i think we have lost that second word. i think it can be done and could be done right now. i would like to see the committee -- the super committee say we will give the tax-writing committees eight months with a hammer at the end. you have to do it or else, to sit down and have final across- the-board tax reform. as republican, i would prefer it would be revenue neutral, but if they would get up and say we want a fairer tax code and it has to apply some revenue, i think even that would work. but give them time to do it sensibly, but it needs to be done now. if we don't get it done in the next eight months, then we are looking at 2013 or 2014.

>> this town is full of lobbyists trying to make sure that individual companies or industries get those tax breaks and loopholes. what would change? what would cause change? >> it is hard to do. i was on the ways and means committee and helped write the 1986 act. ronald reagan pushed for it. we lowered the rate and broadened the base. it was the right thing to do. over all these years, i agree with trent. let's do tax reform, lower the base, broaden the base, get rid of a lot of the deductions. it also indicates that we tackle this question, let's understand there is a disgrace in this tax code, notwithstanding all the other things. warren buffett wrote a piece for the new york times. he is a good guy, the second richest man in the world. in his law office in omaha

where they have 30 employees, they all volunteered to rate what rate of tax they pay. the second richest man in the world had the lowest rate of tax than his receptionist. that is just disgraceful. what is your name, young lady? allie makes $3.6 billion a year. that is $300 million a month. is that $10 million a day? allie makes $10 million a day seven days a week, all year long. the know what her tax rate is? she pays an income tax rate of 15%. why? because her income is described as carried interest. that is disgraceful that someone at the top of the food

chain making the highest incomes in the world, running a hedge fund, pays a 15% rate and all your parents are paying 25%, 30%, 35% tax rate. that is disgraceful. i would be willing to get rid of the corporate income tax and replace it with a value added tax if necessary. general electric makes billions and pays zero. let's not pretend anymore. let's move to a buy you added tax, which we should do anyway. we are non-competitive when it comes to the tax code. >> i was talking to one of those groups that you think would be opposed to losing tax credits. this group gets the benefit of

some of them. they will tell you, we might not want to resist if we thought at the other end of this exercise we would get a lower corporate tax rate. we think it might actually be better for us with this tax credit we are now getting. there is some of that talk going on in corporate america's mind. >> i am from the american university of central asia. my question is far from politics. what it buys can you give us a young and smart professionals and future leaders who will be changing the world and a couple of years to tell the u.s. about the whole world. >> i think you should run for office. we need young people like you with that line to get out there and take on the verge of being a candidate and providing leadership. that is what we need.

you need to get involved. when i look back on my own life, and look at the blessings and opportunities it i had -- my dad was a shipyard worker and my mother was an elementary school teacher in mississippi, and yet i lived the american dream. what is the american dream? it was the opportunity to go up there and take a chance, to put your name on the line and try to make a difference. that is what we need. we need young people like you that are educated, that are sensitive to international considerations, and try to make a difference. learn all you can. i talked to a lot of young people, and when you see the opportunity, sees it, because it may not come again. --seize it.

i had my good times and my bad times. i made mistakes. i got in serious trouble. i was high on a mountain top and way down in the valley. i managed to climb back up with the help of a lot of good people. through it all, it was an incredible opportunity and an incredible system in america. we don't take an oath to the people of this country. we take an oath to the idea inculcated in the constitution. the only thing we need to preserve that constitution is young people like you that are prepared to get involved and try to make a difference. >> j. paul getty once said that his the advice for young people was, go to the best school you can find and excel, then get the best job you can find an did your best to the workplace,

and then strike oil. the key issue is, don't ever limit yourself. the only limits you are ever going to have are the ones you put on yourself. i come from a high school class of ninth in a town of 300 people, and went from that desk in that small school to a desk in the united states senate. that is pretty improbable. when you see daylight, run for it. don't ever limit yourself. >> when you first ran for office, senator dorgan, how old were you? >> i have a very unusual story. i have been a state what elected officer since 1926. i story was in some ways worn from tragedy. an incumbent officeholder, a young, brilliant man had just been elected. he grew up in the town of eight

people and went to harvard law school. he came back and ran for office in north dakota and one. i was not living in north dakota. he asked me to come back, and i did. about a year-and-a-half later, he took his own life, a tragic situation. six weeks after that, the governor called me down to his office and i was 26 years old. he said i would like you to fill the unexpired term. i ran, i ran, and i ran again. i ran for reelection, ran for the house, ran for the senate. i ran 12 times statewide and after a 30 year career, i decided to do some other things. i would not trade the experience. has been a wonderful privilege. >> i came to the city at 26 to be administrative assistant to

my democratic predecessor in the house of representatives. he retired four years later and i ran at age 31 and served 35 years in congress. >> in puerto rico, we were allowed to vote in the democratic party primaries. considering this that, do you think we should be allowed to vote for presidency also? >> or should it be a state? >> i think that should be up to the people of puerto rico. the people there have decided in the past and i guess it will in the future whether you want to be a commonwealth or a state. >> that has always been my view

as well. we have had these issues presented to congress. whatew is, let's evaluate the people of puerto rico want. the you have an opinion? >> i just wanted to get your point of view, because i have seen my people but the point of view, and we are kind of undecided -- i have seen my people's point of view. some of us want to vote and some of us don't want to vote. i just wanted to see what >> hello. my question is about the presidential election. do you think the views of popular republican candidates, governor rick perry and former governor romney come up overall matches up with the american public? if they do win the presidential election, what issues could they face as some of their views are

not compromising the views of our country? >> are those the only two candidates? is the race set, or do you think another republican could potentially challenger mitt romney or rick perry? >> i have no idea. i enjoy speaking on those two because i heard him say he was voting for mitt romney. >> i will give you one example. when i was in the house of representatives, i represented the mississippi gulf coast, the southeastern corner of the state and it was a very easy population to represent because, frankly, i was we fraud. -- i was reflecting them. when i got to the senate, it was completely different. their wants and desires were different.

i spent time going around talking to people and listening and trying to decide what i can do to be helpful. i think when you become president, in a primary you tend to identify your philosophy, that is where you stand, that is where you want to be. is to go forward, you learn. sometimes you do have to modulate your positions because some things you were so sure about, you figure on maybe that is not exactly the way that it is with the greater populist. you learn, become a greater candidate, and then one day you are president. some of your preferred position scummy may not be able to work

on that and you can downplay some of the other things when you become president. every president thought he was going to be a domestic president and wound up with an international disaster that changed. i thought president bush was going to be able to make more of a difference in mexico and south america. there are lot of common values that we could take advantage of. we thought that he is going to do a lot more of that and then 9/11 happened. . look at jimmy carter. the governor of georgia. he had no idea and never would have dreamed about what happened in iran. in your primary come you define yourself, go forward, learne. when you become president, i fink you have to reach for a

higher star and try to think about the greater legacy of your country. now,i'm saying is right you're going to see candidates in both parties began to take positions that may make you uncomfortable. that is the politics of it. in the end, you also have to govern. that forces you sometimes to take positions that are different than what you would have thought it would have been in the beginning. i apologize for the length, but i thought it necessary based on your question. >> i think it is largely at this moment romney versus perry. that is my think it will be. as has been the case on the democratic side from time to time, it is now the case when they have these primaries that they put up on a sale and sail further to the right to navigate

through those primaries. that is what they want to win. when the primary is over, they will move a little back to the center because this country has a very strong center. i do think in this case, speaking for myself, the sailboat on the right has gone toward the edge of the map this year in order to please some people in certain areas to be successful in the primary. it will come back some more towards the center because the last thing they want to do is scare the rest of the american people. they want to appeal to that small part of their party that will determine the candidate, but after that, they want to appeal to the voters. i have always said that the republican party will nominate the most conservative candidate think they can get away with it. if they go too far they lose. the democrat will go with the for this candidate to the left they think they can get away with.

the american people have a tendency of adjusting things and sometimes i feel like they overreact. subconsciously, they will switch it back some to try and keep more checks and balances in place. i really feel like the best government is usually when we have the white house of one party in the congress of the other. when i was majority leader, bill clinton was president. go back and look at the legacy of achievements in the late 1990's and i think you will be shocked at the variety in the legislation is that we passed. >> like welfare reform. >> we did a balanced budget and a surplus. >> we rebuild our defense. >> some people may think the senate may go republican. if that happens, you want obama to win a second term. [laughter]

>> we have about 10 minutes left. go ahead. >> my question would be about bill 2899 about the chinese media advantage that was introduced this year. there are 650 chinese journalists working for the broadcasting board of governors while there are only two american journalists granted permission in china's other is an alarming disparity. what do you think of this alarming disparity? >> are either of you following this issue? >> no, not this one. i've written a book that has a lot about china in this called, "take this job and ship it." it talks about a lot of the imbalances. china will have a significant influence on our future.

what will that influence be? our approach to china has been engaging truitt trade and travel, but there's a lot that concerns me about things in china and the lack of human rights, so we keep working on it as a country. i'm not familiar with this in balance of journalists that you described. >> one of the hot ticket items right now is the israeli- palestinian conflict. which stand should be taken and why? >> i think the united states has a critical and sensitive role to play. it has been very difficult for us to take the position and is

expected in the arab world as it has been with israel. i do think the solution now, as i said, is really between the palestinians and israel. the administration, this one in the previous, have taken a difficult stance to try and push that negotiation. it would be difficult and we should continue to look for a solution that will lead to peace and stability. this is a horrible way to have to live. there needs to be security for everyone involved. >> over here, next question. >> good afternoon. i'm from the university of

washington. i was just wondering what bipartisan steps need to be taken in pursuit of israel- palestine peace? >> peace and bipartisanship. >> i do not think there's great disagreement about our relationship about our determination and desire for there to be negotiated settlement. i wish both sides would knock it off, stop the pre-conditions, get to the table, and negotiate. our country should aggressively push that position. the only way you will ever get an agreement is to sit and negotiate one. it is a very important issue for the world. we just desperately need to see this resolved.

president carter thought he had pushed through the basis for an agreement and bill clinton and george bush certainly worked on it. i do think it is very important for peace in that part of the world. again, it is something we need to always try to be listening and learning. i do not represent this country, but i will be leading with leave -- i will be meeting with the hiring ambassador for morocco. i want to get his perspective on what is happening in that area of the world. he is muslim and he as a diplomat with a unique perspective on that region of the world. where you find leaders, countries like morocco or jordan, i think we should listen to their perspective as well as

the other perspectives. >> good afternoon. go aztecs. in 2008, one of the voting groups to help president obama elected was college students. do you think he has done enough to deserve our vote again in 2012? >> we have heard of the enthusiasm gap. in 2012, what does the president need to do to have their support again next year? >> it is not just an enthusiasm gap about politics, obama on, but this country has lost some of the spring in its step, some confidence. we have been three very difficult time. we have been to the deepest recession since the great depression. the day that barack obama crossed the white house doran became president, we lost

675,000 jobs alone not want. he was handed a very difficult can it -- very difficult economy and set of circumstances. i like barack obama i think he has done as much as he can to get some bipartisan help and has been blocked in every respect. has he made all the right decisions? i do not think so. this country and the minority party in the senate zero him more than they have given him to try and help the mark to these problems. coming back to mitch mcconnell is statement, his highest objective is to see barack obama defeated. my greatest objective is to try and put this country back on track and tried to put people back to work and love american experience brought opportunity again. there is plenty to be concerned about with the politics on both

sides. barack obama will want for a second term of president. either romney or perry will be the republican nominee. over the next six-eight months, we will have a robust discussion about who we are and where we want to go and who is best to take us there. i hope we will not be discouraged as this president tried very hard encouraging the worst economy we have seen since the 1930's. i hope we will not be discouraged about not having instant progress. i'm convinced we will finally be on the road to better times. >> have we lost the spring in our step? >> the american people are worried about a variety of things now. when i go home and talk to people, small business people, people come community bankers, they are all worried. they are worried about their own

economic situation and they are worried about the future of our country. i do know from past experiences that when we are challenged the most we will rise to the occasion. there are a lot of unique things about this country and everyone in it. with the mix that we have, we are unique and facing a challenge that is more difficult because of the enemy is not so obvious. it is a sinister economic entity, but with regard to young people in particular, i think this will be an interesting campaign for the young people. one of the things i have noticed over the years is that every four years, the students are very different. the generation that came along right after mean in the aftermath of watergate, vietnam, and everything, they became more

liberal in their views. i never knew and did an about the drug culture when i was in school. there was an era of young people with very different perspectives than when i was in school. but the next thing i know, my son and daughter are in school and their generation look a lot like my generation. there is an ebb and flow within these young people, and i think it will be very different this time. most of you will probably be waiting to see what the republicans nominate. let's see what he or she really talks about, what they are saying that will be different. one of the things that worries me, with the the previous administration and this one, is a worry about how much they control the administration. one of the great disappointments i had with president bush is i

did not feel he was being in control over what was happening in the transportation department. the same thing now. alphabet soup in the senate the agencies, departments, these bureaus, they are all out of control. i think they have their own agenda and many times even the white house has things happen that shocks them because a lot of these career bureaucrats, they will be there when the next president comes. one of the many reasons why i hope we will change presidents, i hope we will get a president that says they will get this government and administration under control and stop some of the out of control runaway regulatory problems. >> how many cast their first ballot in 2008? how many of you will be voting for the first time in 2012? how many will be voting?

>> good. that is the best question of all. >> two more questions over here. >> time from the university of brussels in belgium. how is it possible that a social plan that helps a lot of people has so much opposition here in the united states from both parties, democratic and republican. >> the social programs? like health care? >> yes. >> are you saying there are lessons from europe or -- >> why is not so difficult to have something in the u.s. something that seems to help people and there is so much opposition against it. >> let's take health care as one tangible example. a lot of people point to canada, sweden, and other countries. what is the difference? why is everything different here

compared to the makeup of the europeans? >> because we are so different. americans are very individualistic, very independent. we still believe, i think, the best government is the least government, the government closest to the people. i really think the most important elected official in this country is the local supervisor that represents one county, like a commissioner. i do not want us to be like europe. i do not want to be a social welfare country. that is not who we have been and i hope we do not become that. i still have faith in the individual, but i still have minimal faith in the government to decide where money should be spent. like on education, a lot of

people want to spend more government -- more money at the federal level. i still believe the best education is determined at the local and state level. i get very nervous. i ended up voting for no child left behind. i was hesitant. i listened to the establishment and i went along with it. it needs reforming very badly. it has created some competition for good schools that do not meet certain bogus criteria and they end up being downgraded. i want to education to be very important. i just have a problem when it is dictated from washington, d.c. >> i voted for the health care bill. it is good that 32 million americans now have health insurance. i do not think health care

should be a function of your bank account. i listened to a debate recently when it was asked what should happen if someone has no health care. people from the audience were shouting, "death, death." we cannot do everything for everybody, but i cannot in the million years decide to get rid of medicare. that is a social program but is very important we need to address the financing, but prior to medicare being enacted, would happen to senior citizens. you look young and healthy, like you will not need health care for a long time. they would like to move up your premiums because they know you will not show up in a doctor's office. all people cannot get affordable health care.

is this a time when illness will strike? how will i deal with this? we put in place medicare. is an important program. people are living longer with healthier lives and we need to make some adjustments, but this issue of social programs and what we can do it the city, state, national level, there are some who now want to take it apart that do not like medicare or social security. this country will have a very healthy debate about that next year. who are we and what do we aspire for our future? >> have been in this town dating back to richard nixon and you have worked with a lot of presidents. can discussg if you when experience for you worked on a personal level. give the students a sense of a president that you worked with.

>> i am from the university of central florida. i wouldn't like to ask if you think our foreign military engagements effect our democratic process. in a post-war time, do you think we will see you a curtailing of such civil liberties impending act like the patriot act? >> it cannot go back and redo history. we needed to take the fight to the terrorists aggressively. had we known what we knew later, we would not have attacked because most of the intel turned out not to be accurate. nonetheless, we did. there were very courageous and brave. we did go and afghanistan because that is where bin laden

was. 10 years later, we are still there. we need to withdraw. we will never control that and it is not where they are. we ought to fight them where they are in this country is spending $100 plus billion per year nation-building. if we want to nation building, let's build in this country. i feel very strongly about that. you get involved in these and you can never withdraw because then you have to explain why. it is time for us to get out of afghanistan. >> i do not think i agree, however i think it will sound a lot like him. i do think that we're trying to police too much of the world. we are still in germany. we are still in south korea.

we are all over the world. it is time to do a re-evaluation of what our international roles and responsibilities are. i do think we need to pull back on some of our advanced capabilities. i think we should be advanced an international sees in dealing with where they pop up. the american people think it is time that we begin to withdraw in a lot of places, not that we will become protectionist, but just to rethink what our role was. i remember getting in arguments with some of our european allies when we were going into sarajevo. why do we have to take care of this? i remember talking to the president, which was an honorific position, and he said,

"because that is your role. america is supposed to be back -- to do that.." as a member of congress, i always tried to be supportive of the president. whether it was reagan, clinton, or a bush committed to have to make a lot of decisions. i got into a lot of arguments with president clinton but the rules required about leadership. i was very jumpy about that. wanted proof about why we were bombing a particular area. he provided proof and i went along. the intelligence may not have been on that good, but i do think it is time that we evaluate what our role will be in the future. lewis also make sure that our

men and women have the technological capability to prevent the loss of lives. youn your 30 + years, dealt with a lot of presidents. one president, one moment. >> it is hard. i think about moment with ronald reagan or with either of the two bushes, it is hard to pick a moment. i knew bill clinton when he was attorney general for the state of arkansas and later became governor and then president, so i had known him a long time. in order to assure that politics is personal, republicans and democrats care about each other and our friends. i have lost a daughter and it

was a devastating time in my life. bill clinton called and spoke to me for an hour one night, about 10:30 p.m. and sometime after that, there is a flood in north dakota when an entire city was evacuated, 45,000 people. bill clinton came out there with us and we flew out in air force one, landed, and at this air force base there was an empty and they have been sleeping on these costs and have been waiting to hear what this president would say. we want you to know something. you're not alone.

i've never forgotten the impact on those people and what it meant for the leader of this country to come and say that this person is behind you. >> after hurricane camille, he came into my area and seeing her for swann pull in that night when that area was decimated, you never forget that. i've a lot of memorable experiences. the most memorable when he would call at 2:00 a.m. and i would ask, "what do you want?" and he'd say, "i don't know." i was the minority whip and i reformd the tax

bill in the form it was in. not only will i not do the whip againstm voting it. jim baker is on the other side of the descants his chief of staff and he is pressing me to support this bill. half "mr. president, that is not what i came here to do. i do not think that is what you came here to do and i do not think i can support it. and he said, "if i cannot count on a whip, who can i count on?" i'm telling the greatest leader in the world that i cannot help him? the gall. i did the work.

we passed it and it was one of the two worst votes i cast in my 35 years. >> but it is memorable as the president says, "but i cannot count on you, how can i count on?" when the president of united states puts it to you like that, you have to help. >> 3 and 50 students from run the country and around the world in washington, d.c., and on behalf of the by policy center, thank you senator lott and dorgan. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> sunday, on "newsmakers,"

lamar alexander on his decision to step down as chairman of the republican conference and how congress is changing over his four years in leadership. at 10:00 and 6:00 tomorrow on c- span. >> in my opinion, i think the downs of academic freedom have been pushed too far. >> naomi schafer riley thingks it needs to go. >> there are professional studies professors thathave tenure. they say they need someone that tenure in security studies so they can talk about immigration even though it is controversial. and someone needs to be able to

say something controversial about obesity. >> that and other reasons why you want at the college education you paid for sunday night on c-span's "q&a." >> next from a discussion on the current economic situation with imf -- with world bank president robert zoellick. this is part of the annual meeting. this is a little over one hour. >> this is the press conference for the world bank and imf meeting. today we have president zoellick from the world bank will open with a statement and then we will move to questions. i will reiterate that it ever want to make sure their cell phones are off and when we turn to questions, if you could please identify yourself and your organization. with that? >> can warning to all of you. thank you -- good morning to all of you.

thank you for coming to this meeting of the world bank and the imf. i would like to take this opportunity to say how delighted i am to work with christine lagard as the new head of the imf. we have had a chance to cooperate sense her first appointment as the trade minister of france. over and sat in leadership lawmaker and in valuable partner -- her leadership will make her a valuable partner. these meetings offer an opportunity for our senior officers to take a pulse of the countries and to listen to their concerns and ensure we are offering them the best support we possibly can.

while the generations of financial markets will grab your headlines, it is the structural issues that will lay the foundation for sustainable growth. we just released a world development report on gender that proves getting to equality for women is not just the right thing to do but also smart economics. as one of your colleagues point that to me, women are the next big emerging market. how can the world reach its full growth potential but fails to realize the contributions and energies of half of the world's population? nearly four million girls and women in developing countries " go missing" each year when compared female counterparts in developed countries. that is like losing a los angeles, a johannes bird, a yokohama.

removing barriers to jobs, investment in health, water, education, and powering the voice of women, even just removing barriers can make a big difference. at these meetings, we will also be starting the process for our next world element report which follows another important aspect, jobs. but the last time the world bank did such a report was 16 years ago and much has changed. back then the issue was globalization the effect on jobs and today we live in a vastly different economy. the top of that i suspect will dominate discussions this week with our shareholders is the darkening outlook for the world bank's clients, developing countries. up until maris become a developing countries have been the bright spot in the global

economy providing about 50% of global growth. europe japan and united states have struggled with high debt and high employment. while developed countries stumbled, the situation for emerging markets may be changing for the worst reverse since august, and we have seen bond spreads for emerging-market to decrease, equity markets declining like the developed markets, and capital flow declining sharply. falling exports were already a worry. now falling markets and declining confidence could prompt slippage in improving investment, it's possible pullback by the consumers. a fall in the developing countries' domestic demand would mean we would lose their economic engines as a driver for global recovery. developing countries are not as well placed as the war in 2007- 2008 to withstand another shock.

their budgets are not so robust that they can simply spend their way out of trouble. some are walking and monetary policy tight rope balancing these new dangers. add in volatile and high food prices, a particular burden on the poor, and the threat of rising protectionism, and you can see the developing countries facing increasing headwinds. if the situation deteriorates further, then developing countries growth could turn down, asset prices could drop, and then the not-performing loans could increase. with these prospects, we will have to anticipate possible protectionist pressures. the world is in a danger zone. in 2008, many people said they did not see the turbulence coming. leaders have no such excuse now.

dangerous times will call for courageous people. some developed officials sound like their woes are just their business, not so. i still think that a double-dip recession for the major economies is unlikely, but my confidence in that belief is being eroded daily by the steady drift of difficult economic news. a crisis made in the developed world to be a crisis for developing countries. europe, japan, and the united states must act to address their big economic problems before they become bigger problems for the rest of the world. not to do so is irresponsible. i know well that acting on them means honest and above discussion with parliament and public. delay will narrow choices and make them harder and more costly. all of us across developing and developed economies have a stake in how they handle this.

to close come i want to know to that the bank will be using these meetings as a complement to the meetings going on in new york at the u.n. for example, a focus on countries in the horn of africa, sudan, ivory coast, afghanistan, and libya. in addition to meeting with the arab governors, ministers from tunisia and egypt, we will have the opportunity to meet with the new minister of libyan stabilization. i will be pleased to take your questions. >> yes, danny. >> thank you. chinese news agency. i like your speech yesterday ala about commerce.

it seems like the world has not given an equal amount of detention bridget of attention to the developing countries amid the high economic uncertainties. what economic and financial buffers should the countries have to be prepared the world economy further deteriorated into a world scenario? how could we turn this into long-term drivers? thank you. >> my remarks this morning and over the past couple of days are designed to try to emphasize the explicit linkage between the developed country in the developing country. in particular, i have tried to specify a particular change to have already seen, for example bond and equity markets, and i have tried exercise our responsibility by anticipating some of the areas that we could

see. for example, in terms of developing country domestic demand, the statistics, which lagged, do not show us yet but we look at purchasing indices. while these are somewhat difficult to monitor across the developing world, they're showing some deterioration. these are some of the issues i want to highlight and focus attention on. your question focuses on the developing country response. what i've tried to mention is that it obviously depends on the region and the country, but in general, the space to respond on the fiscal response is limited compared to where it was in 2007-2008. in the area of monetary policy, we have this very sensitive line to walk where a number of countries were worried about overheating. they still face the dangers of food-price inflation and now

they have to manage the risk of possible broader downturn in demand. part of these sessions will try to highlight these issues, but i think whether it is developing or developed countries, i would conclude my answer by saying there are two general policies. one is not to do dumb things. do not let the world slip into protectionism. secondly, or in the case of agriculture when prices start to go up, avoided hording and export bans. whether it is a developing more developed country, my repeated device has been to keep your eyes on the driver's a long-term growth. these vary by country. one of the reasons the gender

report is a powerful example is when you can see striking productivity gains by including girls and women more effectively, that is a driver of long-term growth. in the u.s., it means in addition of trying to deal with the long-term spending and debt issues, the political shape your starting to see across the spectrum for a broad based bank reform, that would be a very important step. opening up the markets is one of the best drivers of structural reform. in china, for example, one key topic is the one i was discussing in beijing which is the strong growth over some 30 years. it is wise china starts to look at the structure of a different growth model and move away from export and investment-led growth to create better context for balancing the chinese economy in the global economy. those are the goals of the five-

year plan and our project is designed to work closely with chinese colleagues to specify the how this can be done. this is obviously going to be a challenge primarily for the next generation of chinese leaders, but we hope we can contribute to that. >> thank you. i'm with the the russian news agency. i want to ask you about the meeting in a few hours. everybody assumes that aid to the eurozone is on the agenda. i know you believe the europeans need to help themselves mostly, but still my question to you is what is the best raw you can see these economies in the current situation? >> the best role for the bric

countries is the best for the other countries, focus on what you can do at home to get through the current financial dangers and move on to long-term growth. the fact emerging markets have provided about half of all the global growth has been a very important contributor to the nation of -- to the nature of recovery. to the chinese question, i said it would be greater to move toward greater domestic demand, balancing the economy, appreciating the currency. in the case of india, india's inflation has been related to some supply-side factors, so the ongoing effort to try and reduce structural barriers to growth would be important. the agricultural sector in india was known for the green revolution and there is probably two potential gains there in terms of productivity side.

russia obviously has relied very heavily on energy and the direction the government in terms of trying to have a broader base of reform and structural changes. something that we are involved in through the ifc to put together an investment fund outside the st. petersburg- moscow area could be very important. in the case of brazil, you have an agricultural power, a country that has a new potential energy resources, and it is trying to deal with competition in its manufacturing sector given all of these gyrations of currency and other issues. the bottom line for this is economic cooperation will be vital going forward. there will be temptations to

encage in verbal jousting that would impede the overall economic success. i hope coming out of these meetings that the discussions will highlight more effectively that they can all hang together or hang separately. >> yes, right over there. >> china business news. i wonder if you can elaborate on china. based on what you observed in china, avoided a so-called middle income tracp, what is your long-term and short-term issue that china needs to address? thank you. >> short term, the predominant concern has been the one about avoiding overheating. some of this has been driven by food price inflation.

the actions that the chinese are taking to the banking system and also on monetary policy, including appreciation of currency, are heading in the right direction. as the comments by premier wen have said, they have not yet slayed the dragon of inflation. in the long term, i can reference the report that you are probably familiar with. i am very pleased with this report because it goes to this critical issue of avoiding the middle-income trap. better pricing for natural resources. our chief economist just had a call with the chief economist of a number of the multi-lateral institutions yesterday and got a report this morning. one issue that they all emphasize as a sleeper issue is

the huge energy subsidies that are available in developing and developed countries that lead to or use of the restores and efficiency in production. here is another example of the structural change you get if you move toward reducing the subsidy and a stock-market pricing for energy. that is nothing to say of the market effects it might have on carbon. this will be an important issue for china. the financial model for a lot of these enterprises has been based on a restrictive of financial system, low interest rates to consumers or to the sabres which allows some miss pricing on the capital side. china needs to move up the value added chain. within five years, we estimate there will be more people leaving the labor force than coming in. the talks about education to an open innovation system.

the good news is that the types of changes we have outlined in this report which you to have a broad base discussion in the chinese policy community as well as academic community are the types of things that can be good for the international system as well. >> right over there in the back, please. >> mexican news agency. in the case of latin america,

[unintelligible] president chavez seems to be losing appeal with people and political leaders. >> populism takes different forms in different countries? -- countries. that restart with protectionism. so far, the good news is that while there has been an increase in various trade barriers, formal and informal, in the 2008-2009 years, these would include permitted actions. they actually came down a little bit over the past year.

we need to be alert to some of the dangers about a drop-off in demand. it will be tempting for some countries to protect their manufacturing sector. in that environment, you could get a cycle of policy that would become destructive as they were in the 1930's. we are working with the world trade organization. we have worked with some outside parties to, as we did before, monitor these to get the information out there. if they take these actions, they would have to explain them to their counterparts. the good news in latin america is that there has been a silent revolution over the past decade. latin america is known for some

activist revolutions. there's been a change, so the latin american countries came in with a better ability to deal with fiscal problems, monitoring, and adjusting to some of these changes. in a number of countries, there has been an ongoing effort to engage the benefits of the international system. much of this has come from east asia. part of this has been driven by commodities, agricultural and mineral. i believe the agricultural demand will remain high over time. i think this will be a function of increasing income. on the mineral and commodity side, like to see with copper prices, a little one certain. one challenge we're discussing

what to make sure they further diversify their economy. you can increase productivity, increased jobs, increase resilience in your economy. this to be excellent for the international trading system to try and foster this. i will just said that latin america is a very diverse region so essential america faces different problems linked with the narcotics, and security, and trying to work hard on those issues. there depending upon tourism, the repatriation, and there are things we can do to try to be of support, but i come back to the core message that not everyone will be immune to the types of tribulation that i outlined here.

we want to work with our latin american partners. i think they are also concerned about these concerns and east asian growth. >> with the german press agency. >> what repercussions do anticipate with regards to the poorer countries and you expect a further setback of goals? the milennium goals. >> it makes all but harder. the fragile states have not reached 1 millennium development goal, so you're getting set back from a negative position.

for most of those countries, the first concern is food prices. for many of them come up or with social instability, food being a large percentage of consumption, so this could have a very dangerous to fact. when i met with the heads of the arab funds, it is something we need to watch. secondly, it depends on the country, but a number of them depend on the repatriation of earnings. those sources of revenue can be left. they're dependent on assistance from the bank and others in that will be harder to come by. for sustainable growth, we have to build sustainable private sectors. that is likely to come from the

outside marketplace. if i could summarize, i hear some voices out of the eurozone to say that it is an issue that affects all of us. >> i think we have time for one question. >> thank you. we have seen this take place at the imf. we have seen that the succession process at the imf run its course. your term comes out next summer and i wonder if i can get your view on the global perspective. >> for my personal and professional perspective, i

tried to do the best that i can to advance emerging market officials and to senior roles in the bank. he was obviously such a star player that they brought her back from nigeria as a draft choice. they have applied a role in the indonesian context. i think that is one of the best things i can do as an executive and it makes us a better institution as well since we're focusing on the gender topic this week, the fact that we now have half of our officers or above who are women which is also something i think that sends a good signal to all institutions. i think the responsible thing to do would to determine early next

year what i want to do. as for these institutions in general that you mentioned, i guess that depends on your definition. it is a good it is a good thing. they are from emerging markets. it shows the cooperation we can build. my only slightly set of non- conventional wisdom. his bed -- poit is there a i have spent the last 30 years of my professional life asking the united states to play a larger role i think it is a good thing for the united states in some of these institutions to have leadership roles because, i will just tell you, even in the midst of these annual meetings, i have been working with the u.s. congress to build the financial support, and it helps to be able

to communicate the perspective of a multi-lateral institution. so, again, this i actually think is a good sign. with the super committee, i have a chance to talk with some of the senators privately, and emphasize how the fundamental issues they're dealing with relate to america's position in the world, and they have used those points. so, it might or might not be the world bank, but there are politics involved with these choices, and you have not seen a u.s. head of the u.n., wto, imf, and others, but i think it is important the u.s. engage in a multilateral institutions as well. >> thank you very much. thank you. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute]

>> is ok. thank you, and good morning, everyone. welcome to this imf press conference on the 2011 annual meetings. it is my pleasure to introduce this morning the managing director of the imf, christine lagarde. we also have with us this morning mr. david lipton, the first deputy managing director of the imf. before i turn to the managing director for some opening remarks, let me just remind that we do have a simultaneous translation on channel one for anguish, to four french, 34 spanish, and channel 6 is in arabic. could i ask that you keep the

questions as succinctly as you can? that will allow as much opportunity as possible to get as many questions as possible, and, of course, to identify yourselves. so, managing director? >> well, thank you very much, and good morning to all of you. welcome to the annual meeting. i hope it was not too difficult for you to access, and that you were able to channel through the security gates and all the appropriate devices that we put in place at the time of the annual meeting. it is a big event, and it is one that both david and i are very pleased to actually chair, organize, and develop for the first time. i have attended previous annual meetings of the imf, indeed, but in other capacities as a beneficiary, so to speak, as a shareholder of an institution, it is certainly my great pleasure to have my first annual

meeting as a managing director. is your translation device working? it is? good. now, it is an important moment in the year because our 187 members get together. when some of them have on their mind particular issues related to advanced economies, and i will get to that in a moment, but you have to appreciate that it is important to the entire constituency of the imf gets together. it is 187 members. there are some advanced economies, emerging markets, low-income countries, and each and any one of them is a member entitled to the same attention, to the same level of service from the institution, and we value them all, and we regard them all as extremely important. so, i am saying that because of two reasons. one, there is a huge focus on

what is happening in the advanced economies, and it is perfectly legitimate, but we have to appreciate that we are an institution that is available for 187 members, and, once more, is particularly based on the findings from recent work that has been conducted by the imf, and i am thinking in particular of the spillover reports, of the multi surveillance work that has been done. we are all extremely into- connected, and inter-connected via the financial systems and the financial structures. so, with that in mind, i would like to take you through three specific themes. one is the general outlook, the second one is what we see as possible policies going forward, and 3 -- what degree and kind of leadership is actually required, and in that

context, what can the fund do? concerning the outlook, some of you may have attended the world economic council conference that took place a couple of days ago, and you would have certainly understood and concluded that our view is that the current economic situation is entering a dangerous phase. i have said that. we repeated it. clearly, there is a situation where the growth has slowed down. you will have seen that we have reduced our forecast on a global basis by regions as well. we see downside risk on the horizon. the recoveries that one was expecting has weakened, and it is clearly a risk that we see from a economic perspective and social perspective as well because with less growth, we see

also less jobs. if we turn to the various categories of economies, and if we look, first of all, at the advanced economies, we know that there is this heavy debt of sovereigns, households, and bank risks that could actually suffocate the recovery, and this could have serious repercussions from an economic perspective and a social perspective as well. if we turn now to the emerging markets, they are still not doing enough to boost their domestic markets with a view to rebalancing as was advocated and has been advocated by the fund for a long senator we expect a dual rebalancing to take place, one that goes from public to private demand, and one that goes from the deficit countries

to the surplus countries, or the other way around. that is not moving fast enough in the emerging markets. now, if we turn now to what can be done in terms of policies, because you have been writing a lot about the state of the world. we have presented our world economic outlook about the state of the world, and it is not good enough to only comment about the downside risks that we see, and the difficulties in the various categories of countries with the degree of inter-connected this that i mentioned right from the start. in other words, it is not just a problem that concerns the advanced economies, or the emerging markets to a lower degree, but it is a problem that concerns just each and every country, each and every member of our institutions. we are in this together, and we can pull out of this together because from the fund's perspective, our analysis says there is a path for recovery. there is a path for recovery.

it is narrower than it was three years ago when we first were hit by the financial crisis, but there is a path for recovery. i would like to go into the policies as we see them, and i see them around four different categories of actions. they all start with an "our." make it easier. the first thing in needs to happen is repair. the advanced countries need fiscal consolidation, and that is a matter of priority. fiscal consolidation is a matter of priority. equally, consolidating too fast, too heavy for some countries, is going to be harmful for the potential growth that we seek. so, what is the option? it is not the dilemma. it is a question of timing, it

is a question of confidence. what needs to happen is that medium-term, long-term, solid measures that aim at restoring good public finances by reducing deficits, stabilizing debt, and gradually reducing it, has to be first and at the forefront of any agenda in those economies. but, having said that, as long as in the medium term and long term this is well anchored, some countries can accommodate growth in the short term. if you are asking me which country, clearly the united states is one that comes to mind right away, but it is a balancing act once again. there has to be a parallel track of what can accommodate growth in the short term by slowing down the pace of consolidation, and how strongly and definitely, and well-anchored other measures that will deliver deficit reduction in the longer term.

repair, again, is not just about the sovereign debt and the public finance tuition, although first republic finance situation, but first that comes. -- although that is first, the public finances situation, not all of them, but quite a few of them. in the u.s., it is mainly about household debt issues, and in europe is the twin problem of sovereign debt and the need to strengthen bank capital buffers. why do i say that? not just because of this loop- to-loop of the sovereign debt, but it is critical that to fuel growth banks be in a position to finance the economy, to finance enterprises, to finance households, to finance local governments, and to do that they

need to have the balance sheet that will actually support credit to the economy, and that is really with a view to stimulating, encouraging, comforting, financing growth that we recommend there be capital buffers in quite a few of the banks, notably some of the european banks. my second "r." reform. the priority is reform of the financial sector. three years down the road we are still not as advanced as we should be in financial reform, and it is that degree of uncertainty and work in progress that is fueling this anxiety and lack of confidence of some of the investors. so, the financial reform has to be pursued to its term. there has been huge progress. no doubt about it, but more needs to be done.

the second area where progress is to be made is in relation to the social dimension, other words finding the source of growth that would be sufficiently inclusive to actually address social issues that are right below the surface, and that applies not only to be advanced economies. "r" after repair and reform is rebalancing. it is the rebalancing from the public sector to the private sector. it has begun to happen, it has stalled a bit, and that has to clearly be pursued and continued, and the other rebalancing is the rebalancing from the deficit account countries to the surplus account countries, the latter having to expand the domestic markets in order to fuel growth, not just by an export-driven economy, but

by a strong domestic base at home. and my final "r" is about rebuilding. it applies more specifically to the low-income countries because of low-income countries traveled through the last three years, ever since the financial crisis, and despite the high commodity and high oil prices they have navigated the crisis rather well, and better than other economies, but in doing so they have a sword, and they have used, and extinguished, for some of them, the buffers that have developed. so, those low-income countries need to rebuild their buffers, and they need to strengthen again, and we need to help them in helping themselves, and that is a matter for the international institutions, and the imf is ready to do that. final issue is an issue of

leadership. many of you have written it -- the technical solutions, the economic, comprehensive approach exists. it has been identified. there are disagreements as to whether the deficit should be reduced by more spending cuts, or more revenue-generating, but the set of solutions and methods to address the situation is quite well-known. what is needed, and what certainly we hope to be able to help in generating on the occasion of the annual meeting is the political leadership, and the degree of synchronization that needs to happen for that path to recovery to be made possible. so, collective leadership is definitely needed. it is not going to be a matter for one or two countries to lead

the show. as i said, each and every country is engaged in that process and is at risk in the current situation, but can also participate in the solution, so i think it is for that reason that an institution like the international monetary fund actually makes sense, not just because we provide very good analysis, very good surveillance work, and we will continue doing that, continue refining, 5-2 in our analysis and our reports. we'll be happy to take any questions you have, david eni. not yet, i am almost finished. yes, just one more minute. so, we provide that. we obviously provide technical assistance, and we have been receiving more and more requests for technical assistance lately, in particular, for instance, from the middle east and north african countries that are going through this unbelievable historic transformation of their economies. so, we will continue doing that,

and we will shortly be opening the fifth technical assistance center in africa. we obviously participate in the process with our lending policies, and in that regard we will also continue working on the facilities that are available, to make sure that they are actually adequate for the needs of our constituencies, for the needs of groups of countries that are different. our instruments have evolved over time. the flexible credit lines, the precautionary credit lines, the less strings attached -- we will continue in that regard. what i think the fund can also do and help with is try to facilitate comprehensive solutions that are so much needed care as i said, it is going to require -- needed. as i said, it will require political determination, will --

the ability to look at the longer term, and an institution like the international monetary fund can help in that regard. not with a view to having the spotlight on us. not with a view to claiming credit, but with a view to encouraging the leaders to actually take action, and take bold action now. was that, i see many hands being raised here and there, so i will leave it to gerry to take questions, and we will try to give you the answers. thank you. >> thank you, managing director. i again ask everyone will identify themselves, and we can keep the questions very short, but could have more questions and we'll try to go around the room. but we begin with the front here. thank you. -- let me begin with the front here. >> "i am with "wall street journal." there is clearly a sense of panic around the world. do you think markets are wrong in that sense, and can you give

us a sense of how you think the situation is different from the crisis of 2008? >> well, number one, our actions, our analysis, our proposed policy is not dictated by the day-to-day variation of the dow jones, the nasdaq, the dax.q, thcac and the we have tried to look at the policies that have been decided, and implementation. i will give you an example. there are european countries, for instance in the euro zone, that have taken already come a very bold measures to address their -- have taken already very bold measures. that goes very much below the radar screen.

we at the fund have the duty to our members, and to our honest analysis of the situation to he does with those measures. there are several european countries, for instance, that is taken those very necessary measures, and are in the process of implementing them. so, there is, obviously, a gap between the sort of day-to-day anxiety and trepidation of markets, which of their own modus up around it, and what we at the fund do in terms of what is the commitment, implementation, and is it probably adjusted to the country? we are seeing very good things coming out of that zone in the world that are not necessarily recognized by the markets. if i look at the comparison between 2008 and now, in 2008, there was a much wider path for recovery because the sovereigns

had more room to maneuver. they could engage more in supporting the financial system, and they did at the time. they incredibly ably managed to avoid protectionism to kick start growth, to make sure the financial pipes that fuel the economy were working again. they do not have as much maneuvering room now. they do not have as much ammunition. i do not think that is the most important part, because if they pull their strengths together, they have enough. i think what is lacking today, and i hope will be rejuvenated is the collective momentum and the speed to that i see, that i saw, for instance, at the london g-20 meeting. that was a moment when all leaders came together, and i hope that can happen again. >> thank you.

>> there is a lady right here. thank you. >> recently, we have heard a lot of negative news about the job crisis, debt crisis, confidence crisis couple and political -- crisis, and political crisis. you once said you are good at managing the evils. i wonder at this moment, what bright spot do you see, and how will you manage the evils compared with the chairman of the law form? thank you. >> as i tried to say, i can assure you that all of us will be able to set our egos aside, because they are vastly irrelevant compared with the challenge ahead of us.

you know, when we go to work every day of the moment we think of the 40 million people that could be put back into poverty if we do not succeed, or the 20 million jobs that could be created if we do succeed. those are the challenges that we have a moment. reasons for hope? i was at the g-8 meeting in marseilles about 10 days ago, and i tell you, to see the donors around the table, putting together $38 billion to actually support what is happening in the middle east and north africa -- 19 see us being able to put together -- when i see us being able to put together a package of loans in the region of $35 billion for the same purpose -- when i see countries in the vicinity saying "look, we have gone through that. which can provide the technical assistance to our neighbors, and

will be happy to do that, and to join hands, and to join efforts to recall those of the signs of hope. -- efforts. -- efforts." those of the signs of hope. when i see european partners at the july 21 meeting being prepared to improve the governance, put in place a crisis mechanism, strengthen the discipline within the group, and significantly change the architecture of the euro zone, there is a sign of hope. now, i know it comes with a timing tag attached to it. that is very annoying for the markets -- to have to wait for parliament approval, to have to wait for yet another round of discussions, but, our job here, as i said earlier, is to evaluate the policies, the implementation, their relevance relative to the certain economics of the countries concerned, and we have to take

the medium and long-term view. i think there are signs of hope. it is just a question of being prepared to see them, and having a little bit of patience while pushing the leaders into the direction where they have to take much needed action -- more action than what has already been done. >> thank you. there is a gentleman just a back here. yes, sir? then, we will swing to this part of the room. >> mali television -- i would like to ask the following -- we learned the euro is down to $1.35. we know that the countries in africa that are pegged to the euro are going to be effected. how will all of this be mitigated in terms of the

impact on african countries? the answer, my demo guard? well, the influences are deep, and i think, long lasting. we know that the ministers of ofance and the governor's west africa and central africa got together, and we know that that connection, that debate, and the measures taken at that conference have led to, i believe, and greater stability, anchoring between those two zones. if we look at the trend of the euro over time, it has, of course, varied when the hero was launched. it was at 1.16 to the dollar.

it was at 1.45. these are variations that could be explained by a number of reasons -- attitude, there is different factors, probably not so much the fundamentals, but the fact is these are variations that have happened, and will certainly, of course, reflect situations of the local economy. but, certainly, i think the west african and central african countries getting together has created stability, and positive results. thank you. >> yes, sir? no. behind you. sorry. with the glasses. you have been waiting. thank you. >> my name is martin. i'm from the urgent time newspaper. thank you for law and me to make

this question. -- for allowing me to make this question. a couple of weeks ago, joseph stieglitz mentioned the example of argentina, that they should follow the example of making a default, and then they would have a strong recovery. i would like to know if you share that view. regarding what you said about an increasing technical assistance with countries, now the country has a technical assistance for the official data. i would like to know the status of the relationship between the country and the imf, given what you have said a couple of months ago about the quality of the gdp and the cpi figures. thank you. >> thank you very much for your question. there is one area which i will

not compromise on, and david and i are exactly on the same page on that. it is the quality of our work product, and the quality of our work product is obviously based on the quality of the data that we canvass from all over the world. so, it might be sometimes regarded as a constraint. it might be slightly demanding. but, it is critical that we can rely on solid, consistent data from across the world, and that is helping us provide quality work. otherwise, it is very difficult to reconcile, or to make assumptions. so, that is an area we will not compromise. equally, it is an area where i want to engage in a constructive dialogue with argentina. i do not see any reason why we could not have that dialogue. the president has assured me that we should continue to have that dialogue, and i look forward to it.

now, on your question about joseph stiglitz's comments, joe is a good friend, and he has very thought-provoking analysis, and i always value his thinking. but, i think comparisons are odious, and you cannot necessarily compare what happened in one country with what is happening in another one. the pegging to the dollar is vastly different from being in a serious, integrated monetary zone, and more importantly, the latest we have heard is the very solid commitment of the euro partners to stand by any member of the zone. i think that is a critical point, both in terms of collective destiny, but also in terms of economic analysis as far as financing is concerned.

>> i am looking to this side of the room, please. yes, sir. no. alan. ellen. -- alan. >> thank you. you mentioned the resolution of the european countries on july 21. given what we have seen then, not just debates in politics, but continued discord between countries and within countries, do you not think the year-old is flawed to be running a country, and is it not possible that if you look at the italian bond yields of the country's -- the markets will drive these countries into default by the time the governments have made up their mind? >> i think it will be in the best interest of all if we were to look at the positive side of things rather than the negative side of things. and, there is, obviously, a gap

between very solid, very strong governmental commitments of the highest levels of those states, and the implementation time. that is inherent to parliamentary life. as i said a couple of days ago, at the woodrow wilson center, we are no longer in the napoleonic times, when a leader could just snap his fingers, and make it happen. we are in democracies. it takes time. i would like to observe that in the july 21 agreement, there was, indeed ally financial commitment -- indeed, financial commitment. there was determination to be in it together, and an open-and financial support provided that countries were delivering under

their commitment for those countries that are under program. there was also a collective drive to bring forth the government's and the discipline into the governance and the discipline amongst the group. -- the governance and the discipline among dog groups. if you wait for it to happen overnight, of course it is not going to happen. he quit, i think it we must collectively insist on -- equally, i think we must collectively insist on implementation. i think the measures -- the message is getting through. i think it will be critical in the case of greece but there is implementation by the greek authorities, and implementation by the euro area partners. you have to also appreciate, and i know you do, alan, because you're familiar with those issues, that is not only about economics. it is not only about finance. it is also about a political, collective destiny amongst

countries that have spent centuries fighting with each other, and which are determined to stay together. now, it may have been flawed. it might have included deficiency in the architecture, but the governors are saying we are addressing that, strengthening the governance rules, strengthening the discipline, putting in place the right majority will set will actually keep everybody on track, as was predicated in the growth and stability pact, which has not delivered what it should have delivered because it was not associated with the proper degree of discipline and rules. >> i am looking for -- in the frontier. >> will come to you, i promise. >> thank you. >> where are you? >> i am right here.

i'm sorry. [unintelligible] i wanted to ask you a question. i'm from russia, but in the spirit of the inter- connectedness that you described, and need for their ship, i wanted to ask about the united states. i mostly cover political life here, and when i look at the political life here and see how the white house and the congress are debating all of these issues, i have a feeling that they want to turn this debate about deficits, and debts, and taxes into a political debate rather than an economic debate, and my question to you is can they really afford this? how dangerous is this? what happens if they do not agree, say, until the next election? do they have the time? thank you. >> you know, it sounds like legalese, but time is of the essence.

in our mind, there is no doubt, and it is not just for the united states. it is for all advanced economies, and i would say, more generally, all of our members, and i would really like to impress on the 187 members of the imf that we need to address the current crisis together, and, you know, to a point, it is taking politics to its highest level. if politics, if you look at the etymology of the world is about organizing the life and well- being of the citizens in the city. that is what it is about. and, you know, when i was a member of government, i was often told i was not enough of a politician. well, i regard politics as being exactly that -- tried to work in the best interest of the citizens in the city. the greeks used to say that, and we take it from there.

it will probably require that partisan. to, short-term personal agendas be -- partisan spirit, short- term personal agendas be put aside. by not addressing a specific country. >> i think we have time for two more very short questions, and the gentleman here, yes, sir with the glasses. >> thank you, madam minister. i'm with a japanese newspaper. yesterday, the imf issued a global financial stability report, and identified 200 bureaus for a potential loss. it is not in number for required

recapitalization, but you touched on the importance of having a capital buffers to lend money to private sectors. are you calling for a significant amount of recapitalization? what is your recommendation to contain the crisis in europe? >> first of all, i would like to compliment you. you really picked up the message that i wanted to convey. it is not a stress test analysis that we conducted. it is not the identification of the volume and number of capital-letter we would recommend. we of not conducted those -- capital that we would recommend. we are not conducted those studies. equally, and again, you really have picked a my message, it is about making sure that banks can actually finance the economy, and therefore have the balance

sheet that can afford it, and therefore bad balance sheet needs to be improved by -- deere for that balance sheet needs to be improved by capital structures we would amend -- demand, and banks are doing exactly that. that is very commendable, and that will enable them to continue financing the economy. so, there is no, you know, christ i, or number attached to this -- price tag, or number attached to this, but the principle is balance sheets must be strengthened, and capital buffers must be increased, and asil 3 bee 3 -- bezel put into effect. >> she promised me.

>> i will go to the gentleman here in the beer here, and we will have the last question. >> you spoke before about hope. to you see any sign of hope for greece, and you really believe greece can make it? [unintelligible] >> the few components that are necessary for things to work -- one is this collective destiny that was reaffirmed by the euro area members. as a result, their determination to stand by each other, and to make those open-ended commitments if the country performs. that is one. two -- there is implementation,

implementation, implementation, and that goes as far as the greek authorities are concerned, and it goes for the euro area members as well. the program is difficult. it was negotiated with the greek authorities. it requires efforts, sacrifices. i think it is tailored to try to avoid that the less-privileged suffer less, and we will continue to build a work on those programs with that approach. then, the third thing which will be needed and is a result of the first two, is obviously the appropriate financing of the program so that the debt is sustainable. ok. you have the concluding word, madam. >> a cake.

ok. [ speaking french] the question that have it is with the haves having to pay for the have nots, is there any chance that some of the have members are going to leave the european union, and perhaps the euro? >> thank you very much. i think i have addressed part of your questions in previous answers, the digitally in relation to the fact that the programs have to be designed -- particularly in relation to the fact that the programs have to be designed in a wave of the less privileged are not hurt as a result of the implementation.

more generally, what we are seeing, more and more, not just from the middle east and north african countries, but and also if -- but also in quite a few emerging markets and advanced economies is the expectation of an inclusive growth, and that is a direction we need to work on and focus on when not only we decide our programs, but when we recommend policies. i think it has to do with the comprehensive approach to we want to take. thank you very much. >> thank you, everyone. tomorrow on "washington journal," a discussion on securing ballot access and third-party candidates with elliott ackerman. after that, a look at europe's fiscal troubles with stella dawson and the discussion on what employees can do to

restore their pensions. that is with rogers. -- rick rodgers turned >> you do not play politics at a time of the natural crisis, not with the economy, and never ever with people's jobs. >> with the british house of commons in recess, annual party conference is are underway. watched the keynote from the liberal democrats conference. in the weeks ahead, conferences with the labor party leader and conservative prime minister david cameron. >> the senate banking housing and urban affairs committee held a nomination committee. alan krueger was nominated to be chairman of the president's council of economic advisers last month. the other two nominations are david montoya for hud inspector general and the treasury

assistant secretary. no date has been set for confirmation votes for these three nominees turn this is an hour and 20 minutes. >> the council of economic advisers is an agency within the executive branch charged with offering the president objected economic advice, and the formulation of both domestic and international policy. at this point, in the economic recovery, the administration's economic team must have all hands on deck. so, it is important that the committee will in a timely manner under the consideration

-- in the consideration of dr. alan krueger for this post. david montoya was nominated to serve as hud inspector general and fulfill the mission of providing independent and objective reporting to the secretary and the congress on hud operations. as with all executive agencies, a confirmed inspector general is crucial for the integrity, efficiency, and effectiveness of hud. the office of financial institutions within the -- i hopeepartment's that the committee can proceed in the consideration as assistant secretary, said his office can function at full

capacity. i now turn to senator richard shelby for any opening remarks he may have. >> thank you. i think this is an important hearing. these are crucial nominees. dr. alan krueger has been nominated to be chair of the council of economic advisers. the caa is an agency charged with providing the present economic advice, and there is no more crucial time. dr. alan krueger is an accomplished labor economist. given his expertise in the labor market dynamics, i would be interested in hearing what policies he will advocate at the white house. after more than two years of failed keynesian programs, i believe the president needs to be provided with better advice that will help grow our economy, not the size and scope of

government. the committee will also be considering today the nomination of mr. david montoya. to be the inspector general of hud.director -- of t he has spent many years in law enforcement. i would be interested in hearing how you would apply your skills and background in the investigative and legal activities required of the office. the inspector general's are tasked with rooting out fraud and abuse, as well as promoting transparency and protecting the taxpayers. for example, hud's office of inspector general most recent semiannual report highlighted 500 convictions and 767 arrests related to fraud.

that is a lot of stuff. in addition, the office of inspector general determined that 7 ended $68 million, -- $768 million of taxpayer funds should of been put to better use at hud. i believe you have your work cut out for you, but we want you to do a super, super job. also here before us today, and i might struggle with the name is cyrus amir-mokri -- did i get it right? good thank you. he has been nominated to serve as both the assistant secretary at the treasury department, and as a member of the board of directors of the national consumer cooperative. he is recently served as senior counsel to the chairman of where he also serves as deputy representation to the overset

council. if confirmed, he will be responsible for coordinating treasury efforts regarding regulation and legislation affecting financial as it is. he will also be responsible for coordinating treasury efforts on financial education policy, as well as overseeing the terrorism risks, insurance program, and the community development financial institutions fund. thank you to of the nominees for their willingness to serve and to appear before the committee, and a look forward to your testimony. thank you, mr. chairman. >> with any other senators like to make a statement? if not, i will not give brief introductions to our three nominees. -- now is to read brief introductions. the first nominee is the honorable alan krueger, who has been nominated as the chairman of the council of economic advisers. he is an eminent economist who is currently a professor of

economics and public policy at princeton university, and has published extensively. dr. alan krueger also has a great record of public service. he served as assistant secretary for economic policy in the treasury department from 2009 to 2010, and as the chief economist of the department of labor from 1994, to 1995. mr. david montoya has been nominated to serve as the inspector general for the department of housing and urban development. for the past six years, mr. david montoya has served as the executive special agent in charge of the u.s. postal service inspector general's western area field office. he has over 24 years of great public service with the dee and

the department of interior. mr. cyrus amir-mokri has been nominated to serve as assistant secretary for financial institutions in the treasury department. he most recently served as senior counsel to the chairman of the cftc, and in this role he also served as the cftc's deputy representative to the financial stability over said council. prior to joining the cftc, mr. cyrus amir-mokri was a partner at the law firm where he focused on a complex securities and antitrust litigation. i look forward to hearing the testimony. will the nominees please rise and raise your right hand? do you swear or affirm that the

testimony that you are about to give is the truth, the whole truth, and nothing but the truth, so help you god? do you agree to testify before any committee of the senate? please be seated. please be assured that your written statements will be part of the record. please also note that members of this committee may submit written questions to you for the record, and you should respond to these questions promptly in order for the committee to proceed on your nomination. i invite all of the witnesses to introduce your family and friends in attendance before beginning your statement. dr. alan krueger, please proceed. >> thank you very much. i would like to introduce my wife lisa, my parents, and i see

my sister in law, and my niece. i am confused on my knees because they are identical twins. i see my niece and me. y are here.ed their hair car would you like me to proceed with my statement? chairman johnson, ranking member richard shelby, and other distinguished members, i am honored to have my nomination come before you today. i am grateful to president obama for asking me to serve as a member and chairman of the council of economic advisers at this critical time for our nation's economy. i am also deeply grateful to my wife lisa, and to our children for their support and willingness to allow me to return to public service, and i am grateful my parents and wife could attend this hearing today. let me tell you a little more about them. my mother worked as an elementary school teacher in east orange, new jersey, and my father, an army veteran, had a

long career as a certified public accountant and small businessman. from my father i learned at an early age to respect the entrepreneurs and small-business owners that were his clients. the government can only set the conditions for private employers to prosper and grow. my father also encourage me to work as soon as i was legally able to do so in order to save for my college education. my first job when i was in middle school was working in a medical laboratory. a high school, i worked at baskin-robbins, and later as an assistant electrician, which taught me the importance of teamwork and that the actual labor market does not always function the way economic theory says it should. my wife is a math teacher at our local public high school which will allow students attend -- children attended. i learned how it quality

education to provide children with greater opportunities and a brighter future. i've been fortunate in my own education. i granted -- i graduated from a local public high school one year ahead of new jersey governor christie. i attended the cornell school of industrial and labor relations. i subsequently had had the privilege of working as a professor of economics and public policy at princeton university for the last 24 years, teaching and conducting research. i conducted research on a range of topics from job growth and social insurance, to terrorism from bond markets, to labor markets, from the economics of education, to the economics of super bowl tickets. i've tried not to be tied to a particular doctrine in my work, and instead have sought to develop the best evidence possible to test economic theories and estimate key parameters. this approach has often led me

to collect original data and used metrics to steady policy changes. sometimes, my findings have been contrary to what i expected into the conventional wisdom among economists. in every instance, i have tried to win here to a standard of reporting my findings objectively, regardless of what school of thought they support. i also recognize that the data and evidence that economists and policy makers rely upon are not perfect. as a result, i strive to improve our debt and infrastructure. princeton briefly served as the capital of the united states, and the university is true to its motto -- princeton in the nation's service. as a part of this service, i was for the opportunity to take a public service lead to serve as chief economist of the u.s. department of labor, and as the chief economist of the labor

.epartment after returning after returning to principle, -- princeton, i taught a new course. the course is still a work in progress. the u.s. is still struggling to recover from the effects of the financial crisis that erupted in 2008. while time will heal many of the woods in the economy, applying the proper medicine will help those wounds to heal more quickly. i take solace in the fact that the u.s. is a resilient nation with great resources, including our fiscal and human capital, our constitutional government, and a common-sense approach to solving problems. i am convinced we can meet the serious challenges we face with the right mix of economic policies and faith in american workers and businesses to adapt the change and emerge as a stronger country. the council of economic advisers is a unique and poured an institution within the government. the president relies on the council to provide the best

available objective analysis of the economy. i think an important role is to present to the president a range of views from leading schools of economic thought, indicating the uncertainties surrounding the issue, and highlighting where others hold different views from the chairman. my background helps to prepare me to take on these duties if i am confirmed. i am humbled and honored to have the possibility of serving the nation should be confirmed. thank you again for the time and opportunity to appear before you today, and i look forward to answering your questions. >> thank you, dr. alan krueger. >> chairman johnson, senator shelby, and members of the committee, thank you for the privilege to discuss my nomination. it is an honor to appear before you.

if you will permit me, i would like to indulge my wife and children -- i would like to introduce my wife and children. i want to take a moment to publicly thank them all for all of their support, thoughts, and prayers. i would also like to recognize my brother daniel and my sister. i went to pick knowledge my parents who have truly been an inspiration to me. they raised me and my siblings with a strong work ethic. not but not least, i would like to recognize mr. david williams inspector general of the u.s. postal service for integrity and efficiency for staying with me through this nomination process. i am honored that president obama has nominated me to the position of inspector general for the department of housing and urban development. i believe that owning your own

home is truly a fundamental american dream. the inspector general promotes the integrity, efficiency, and effectivenesso f hud's programs and operations. my career has prepared me for the challenges of this position. i have spent the majority of my life dedicated to public service and federal law-enforcement. 16 of those years have been in supervisory and leadership positions. as an executive special agent in charge for the office of inspector general with the u.s. postal service, i directed the largest field office and postal area with just under $1 billion in contract obligations. as assistant inspector general for investigations with the office of inspector general at the department of the interior, i redirected a law enforcement

program which helps to protect america's natural resources and heritage. as deputy director of the epa criminal investigation division, i provided leadership and direction to a law enforcement program that investigated and helped prosecute criminal conduct that threatened the health of our citizens and our environment. finally, with the dna, i conducted criminal investigations of individuals and organizations who threaten our nation's security with the importation of illicit drugs. my professional career has been characterized by increasing leadership roles and responsibilities with a commitment towards accountability and ethical standards. it has always troubled me that these crimes and violations occur in the first place. if confirmed as inspector general, i will stress the need

for collaboration with secretary donovan and staff to ensure that resources are being effectively and efficiently implemented. i will work to ensure early detection of warning signs of fraud and abuse through audits, reviews, and investigations. every employee will focus on prevention while insuring that all funds lost are fully recovered. a key priority if i am confirmed will be to maintain a strong partnership with this committee and the congress. the law must be implemented in a manner that fulfills your intent and the very real needs for the people of whom they were written. with the state of our economy and limited resources, it is never been more important to ensure that every dollar spent is spent well. given my background, i understand the responsibilities that the position will require. i believe the knowledge i have

gained of public service in investigative and oversight rules makes me uniquely qualified and prepared for the new challenges that i will face should be confirmed. i would look forward to the opportunity to work with this committee and other members of congress, secretary donovan, and our state and local partners to be accountable and transparent with the oversight of the program responsibilities bank chairman johnson, senator shelby, members of the committee, thank you for allowing me the distinct privilege to testify here today. i would be pleased to answer any questions you might have. >> thank you, mr. montoya. mr. cyrus amir-mokri, please proceed. >> thank you, mr. chairman. with me or my parents sitting behind me and my sister. chairman johnson, senator shelby, and distinguished members of the committee, i am

honored to appear before you today for the position of the secretary of treasury for financial institutions. i introduced my family. i just wanted to say that i would not be here today without their loved, support, and a sacrifice. i want to take a moment right now to give special recognition to my parents sacrifice. they send their two children abroad. physical separation between parents and children is difficult under any circumstance, but this difficulty was even more pronounced in those days because of the tension of the relations between united states and iran. to give me and my sister the support that we needed to go through school and young

adulthood, my parents left behind everything that they worked for and more and joins us in the u.s. to start a new life. so we came to america in search of truth. that we are in doubt by our creator with unalienable rights of life, liberty, and the pursuit of happiness. america has meant the realization of that promise to our family. to all those around the world who wonder what america represents, i asked that they consider my story. from the moment i arrived, i have known nothing but kindness, warns, respect, and encouragement whether it be in wisconsin where i spend a year finishing high school or in the cosmopolitan metropolis of new york city which is now my permanent home. in america, i have not been judged, but my dedication,

loyalty, and hard work. the fact that the first- generation immigrant finds himself standing before this committee today proves that america is a very special place. i am truly humbled that president obama has nominated me to this charge for financial institutions and to serve as the director. i am extremely grateful to secretary geithner for his confidence and support and for recommending me for consideration. in these challenging times, it is my privilege to enter the call to public service. as a first-generation immigrant, i believe that i have a duty to give back to the country that has given so much to me. i also believe that we are all custodians of the idea of america and we carried a solemn responsibility of safeguarding this idea so it may continue to

inspire people around the globe to see a better life and build a better world. today, we continued to recover from the most profound financial crisis since the great depression. landmark legislation was enacted to remove flaw s of our financial system. our approach should strive to achieve an appropriate balances so we establish and maintain a healthy financial system while also considering to encourage innovation. we must continue to build the institutions designed for protecting risks so we do not experience a recurrence of the financial crisis of 2008. we must also work with regulators around the globe to ensure that financial regulatory regimes are consistent so the

playing field is not tilted to anyone's unfair advantage. much of america is served by community banks, and small businesses are the job-creating engines. we must also work to ensure that americans have access to housing, and our financial system provides financing in a responsible manner. i believe my professional background has prepared me to accept this responsibility. i served as the deputy representative to the financial stability oversight council. after passage of the dodd-frank act, i participated in the implementation effort and coordination with implementation by other financial regulatory agencies. and supervised the cftc's efforts to harmonize with the

fcc. i was general commission litigation partner where i practiced law for more than a dozen years. my principal focus was on securities litigation. if confirmed, i look forward to working closely with you to take the necessary steps for building and maintaining a financial system that can reliably sustain a growing, prosperous economy over the long term for all americans. thank you. >> thank you. dr. krueger, i want to follow up on something we talked about when we met last week. the current, rate is currently 9.1%. do you think most of the rise in unemployment has been structural or cyclical? >> thank you, chairman johnson.

since 2007, most of the rise in unemployment has been cyclical. a concern i have with the sharp rise in long-term unemployment is that some of the cyclical unemployment may become structural. i would also mention that even before the recession, the u.s. was having difficulty with job growth. a fraction of the population employed never recovered between 2000 and 2007 to its previous peak, so there are trends underlying the economy which are slowing down a job growth which may indeed be related to some structural forces. >> dr. krueger, you supported a new job tax credit for employers when we had slow growth back in the early 2000's. now that the president has

proposed a measure along these lines, how do you think this policy will work now? >> well, i think the president's proposal and the americans job eliminate the payroll tax on additional payroll that employers add is a measure that will have a lot of bang for the buck. the cdo found the tax credit has a very high bang for the buck. i think it is focused on a dimension that is particularly weak which is hiring. i think it is also important to note that eliminating the payroll tax for additions to payroll and cutting it in half for other employees in the proposal is focused on small employers because of the caps on

the amount that employers can receive in this tax credit. i think that is timely because small employers have been struggling in the recovery, and this will help their cash flow, and small employers depend a lot on their cash flow for certain investments and hiring. >> dr. krueger, the economic performance of the small business sector is a continuing concern. i think you have had a hand in proving the statistical data to track performance to help inform our policy-making. what can you tell us about how small business is fairing now? >> yes, that is right. one of the problems with tracking the performance of small businesses is that the data that we get our only available with a lag. the bureau of labor statistics had a survey that began about 10

years ago. this survey has information on establishment size, but they were not being produced on a regular basis. so, i talked to the bureau of labor statistics and asked if it might be possible to produce a new series. this shows the most current, authoritative data that we have on small business job growth. small employers have been having much more difficulty than large employers. there are several research studies that find that is not so unusual in the aftermath of a financial crisis because small businesses are more dependent on bank financing than large companies. that has been hurting small businesses which is one of the reasons why i think helping their cash flow will also help to support additional hiring.

>> mr. montoya, as you know, mr. montoya, this is a difficult time for too many americans in need for affordable housing. what steps will you take to ensure that your office examines and works with hud to improve the administration, their programs that millions of americans count on? >> thank you. clearly, through our audit, evaluations, and review process, and working with the department program managers as well as our state and local partners to figure out exactly what it is working well with in these programs and what is not. clearly, those have to take a priority. much like senator shelby to mention, the arrests in the last couple of years have been high. that tells me there is a problem. something is broken if that many

arrests can happen. clearly, an oversight role, making recommendations to this committee on concerns that we have in areas of weakness we up.k wecan be tightened >> mr. amir-mokri, if confirmed, what role do you think the office of financial institutions can play to aid in the nation's economic recovery? what would be your approach? >> thank you, mr. chairman. financial institutions, other areas including housing focusing on small business issues -- it cuts across a number of very

important and central matters that we are concerned with in the economy. i would certainly feel that that office would play an integral in supporting the efforts to better our economy. in terms of the approach that i would take, i would kind of go back to the experiences of my life and how i served in my various professional capacities. i have been an adviser in the private practice of law whether it be serving as an adviser to regulatory agencies -- what i would do is try to look at every side of an issue cannot be inclusive of all viewpoints. i am a firm believer in the idea of a marketplace of ideas. you look for the best ideas. consultation, working with the members of congress.

i would also, in my approach, i believe in the coordination of many different interests and interested stakeholders and agencies, whether it was in private litigation working with complex cases or in my role as my coordinating role that the ftc. i would certainly bring that approach. finally, i think what i would try to do is given by private sector background to be sensitive to issues that are of concern of the private-sector. for years, i advised companies on the impact of government action and have worked with them on their compliance with government regulations. i would certainly like to bring that to the agency as well. i am mindful of the deep financial crisis that we have

and threw in the important reforms that congress has enacted. >> senator shelby. >> thank you, mr. chairman. i do not speak farsi so i can probably not enough to name correctly. you have a beautiful name and a beautiful story, and your family. amir-mokri? >> that is very close. >> doctor. he has a ph.d. and a j.d. according to a piece in the financial times that you may have read, spain into economic problems are likely to spark a spanish banking crisis which nobody wants. it is very possible that a banking crisis in spain could quickly spread to other european countries. we are still worried about greece and portugal.

ireland is not out of the woods yet. italy has been in the news. what is your assessment of the impact that a european financial crisis would have on our banking system? chairman bernanke has already said and we know there are some into related deals here candidate for this committee. >> thank you, senator shelby. i think that is obviously a very important subject. i have not seen that particular financial times -- >> could you bring your microphone up a little bit? understand the problem. >> absolutely. europe has been an issue of concern for a long time. >> it is an issue that is not going away it looks like.

>> in response to your question, specifically what impact is it is going to have -- just to be clear, i have been away from the federal regulatory agencies since early march -- >> but you bring a lot of experience and knowledge to this table. >> that is absolutely right. here is how i would think about it. we have to make sure that we understand what our exposures are. we have to make sure that we are prepared in terms of -- in light of what exposures -- >> what do you mean by being prepared? being prepared for the inevitable? prepared for some bad news? what? >> i think any circumstance that might come up. sitting here today, i do not

want to pre-judge anything. i do not want to suggest that anything is going to happen or not going to happen. so i just think we should be prepared for any eventuality. finally, the one principle that i think should always drive how we think about this is the protection of the u.s. taxpayer. so that is how i would -- >> can we disengage our cells from europe or are we so intertwined in the financial area that there is no way to do it short of a financial catastrophe? >> that is going to be a very important question, senator. again, it is such a moment and circumstance -- having all the

information at your fingertips -- what i would do is -- i am very mindful of that question. there is information gathering and consultation and all that that has to occur between agencies and foreign authorities -- >> would you agree that it is going to be hard to paint over the deep financial problems that europe has that we know about? that they are not just going to go away? >> well, senator, again, i do not want to pre-judge anything. i think the europeans are trying to deal with their issues. you know, we certainly have to give them a chance to resolve their own issues. you know?

>> dr. krueger, you want to comment on this? what is your assessment of europe right now? you are going to be at the white house and giving advice to the president. you are going to be interacting with treasury and everything else. we have the problems. europe probably has deeper problems. what is your observations there? candy? >> thank you for the question -- candidly? >> thank you for the question. first of all, much of europe is in strong fiscal health. then there are some countries -- >> what did you say? >> much of europe is in strong fiscal health. >> you are saying france is in strong fiscal -- >> fiscal health, the fiscal positions of their government.

>> i know germany is. >> and germany for example. there are differences across europe as you certainly understand. when problems arise in europe, as you mentioned, we are not insulated from them. and enter markets are integrated and our exports are affected. one of the drags that has occurred on that our recovery is volatility in financial markets is higher, our exports are being held back because of weaknesses in europe. one way of insulating against that is to try to increase demand for our products domestically. components of the american jobs act will do that. for example, the payroll tax cut for employees -- >> the president's proposal that he has made a leap. -- he has made lately.

do you think is any legs or life to it? somet this proposal -- people would say a son of the stimulus bill? you indicated that to me and my conversations. maybe not those words. >> i think it is focused on the problems and the weakness that we have in our economy. i would also add as you alluded our banking system is a lot stronger today than it was a few years ago. the capital helps provide a buffer against those shocks. >> thank you, mr. chairman. will we have another round? >> yes. >> senator akaka. >> thank you very much, mr. chairman. let me add my welcome to the

witnesses who are here today and also your families who are here to support you and even friends. dr. krueger, we are in the middle of a new president to battle over our budget and deficits -- an unpreside presidd -- unprecedented battle over our budget and deficit it. you will have a critical role in providing recommendations on economic policy based on objective economic research and data. how do you view your role in providing advice to the president?

hearing your economic background and the background that you have had, it brings with you an interesting wealth of knowledge that you can apply. so my question is is there an intersection between political considerations and factual data- based considerations that you would use? >> [inaudible] -- the president said when he announced my nomination that he relies on the council of economic advisers to provide an objective analysis, and that is what i intend to do if i am confirmed for the position. how would i go by that? the council has an excellent staff. i see both of the members here who the committee knows.

both are outstanding economists that i have worked with for over 20 years. together with our staff, we will gather evidence, look at the relevant. , search the literature, talk to people involved in the policy, people in business to learn more about what is going on on the ground, we monitor trends, trends in europe for example, and then wading through the information, present it to the president, the pros and cons, the risks that we face, and as i said tried to do this and let others make the political judgment. we provide the best economic input that we can. >> thank you. we are in the middle of this crisis. you were the chief economist at

the national council of economic education for several years, atd a senior official treasury. based upon these experiences, do you see a value in investing in financial literacy initiatives during these difficult economic times? >> thank you for asking about that and for noticing my work. i believe that economic and financial literacy is critical. i think a better informed population makes better economic decisions which strengthens our society and our economy. i have devoted several years to riding a high school economics textbook. 2 million students take economics and high school and

more take in college. i think it is critical to reach them at an early age to teach them about personal finance decisions. i worked together with michael barr who has financial literacy workshops. the same position as cyrus amir- mokri has been nominated for. we work very well together. i think there are many opportunities to try to further economic literacy. >> thank you. dr. krueger, the census report that was released last week showed an increase in poverty in 2010. this includes an increase in children living in poverty. the report also showed that the level of hardship would have been much worse without unemployment insurance and food stamps and medicaid. some experts claim that we can

reduce the deficit without sacrificing these low income programs. what do you think? what are the key programs to levels from rising even higher? what data can you point to to convince our colleagues to preserve these programs? >> thank you for the question. i think you highlighted a key programs in your question. of those are key. -- all of those are key. with long-term unemployment, unemployment insurance is now more of a board against property. the programs that you mentioned function as automatic stabilizers and provides support for families to pay for their mortgage and so on when the

economy is weak. that helps the macro economy. then the last thing i would mention is the best anti-poverty program would be sustaining the recovery, strengthening job growth. i think ways that we have seen poverty decline in the past in addition to the government programs is a stronger economy, and a stronger job growth. >> thank you very much for -- >> center r -- senator reed. >> thank you very much, gentlemen, for your support and willing to serve. you are not only a noted economist but you have also served previously. one program that we had a chance to speak about in my office is

the work sharing program which is part of the president's proposal. is working very well in rhode island. essentially, it allows an employer to basically furlough a worker for today's. they can collect unemployment benefits -- a worker for two days. they can collect unemployment benefits. it has worked extremely well in rhode island. i wanted to know if you might comment on that, dr. krueger, how important it is. >> thanks very much for raising that issue it. i think work sharing has been an important component in softening the effects of the recession in other countries and speeding up

the recovery. some states have had an effective work share programs as part of their insurance programs. in the president's proposals, the president has several ways of reforming the unemployment insurance. i think we may be at a unique moment where we can take a 75- year-old program and allow the states to do more experimentation with work sharing or weight loss insurance for older workers. i think we are in a situation where we might be able to learn from those -- i hesitate to use the word "experiments, " but learned from this new programs and strengthen unemployment insurance going forward. if i am confirmed, i will welcome the opportunity to work with you on those issues. >> thank you. i have noticed that there was an

op ed piece in the new york times that referred to a new book by the head of the gallup polling organization, and his conclusion looking at data worldwide is the next 30 years is going to be dominated by trying to create jobs everywhere. one comment was that there might be at least temporary finite limits so we are in a rough race against tough competitors. but job creation -- that seems to be or should be central to our policies because in your view it looks like it is central to other major economies at this time. if we neglect it, we will be poorer for it. is that fair? >> it is interesting that you raise that because i just received a copy of that book from the author. i have been a senior scientist for the gallup organization.

one of the findings i found a striking was the role of of entrepreneurial ship. the countries that have larger formal employment sectors are the ones that have stronger gdp. and i think of this very much as how do we strengthen entrepreneurship, how we maintain a stronger formal sector. digestingt finished dead the book, but i think he raises a number of important issues in the book. >> thank you very much. mr. montoya, good luck with your important work. -- usually come in after the explosion and try to sift

through the rubble. are you going to try to take the view that you can be helpful before these problems by looking generally at the department and offering advice to the secretary? >> thank you for the question, senator reed. absolutely. i am coming in with the frame of mind that it is probably more important for me to look at preventative measures, measures that will measure the of effectiveness of these programs will before we get into any investigative work. as i said earlier, once we get to the investigative stage, it is too late. we are chasing after people we do not know and looking for money that we will probably not get back. i will be working with our partners to make sure these programs are running the way they are supposed to serve these moneys get to the people who need them most. >> good luck with your efforts.

my time has expired. we had an opportunity to talk frankly about important issues. i appreciate your commitment. i look forward to supporting you as you go forward. >> thank you. >> congratulations to all of your nominations. iced as of likely want to recognize dr. krueger who is a ew upersey native who grep u livingston. the president's nomination of you is a very strong statements. job creation is number one in his economic priorities. i appreciate that, and i appreciate your service. i want to start off by asking you -- i know there are voices who believe that maybe we should do nothing, and that nothing

will somehow create jobs in america. can you give me a sense of if we do nothing from a governmental macro sense, what would we expect on the job market? >> thank you, senator, and thank you for mentioning my past service. let me just say that having worked at the treasury, having had the opportunity to go to some meetings together with the president, i do not think the president is satisfied with the pace of the recovery. i have seen him try to lead every meeting i have gone to looking for ideas to strengthen the economy. the reason why when he asked me to come back i agreed is because i think there are more things we can do to strengthen the economy. the risks that we face of doing nothing or that the economy is

facing several headwinds. one of those headwinds is the aftermath of the financial crisis. families are reducing the debt, cutting back on consumption -- >> the financial crisis that came to a peak in 2008. >> that is correct. but the problems that caused the crisis took a long time to build up including excess debt. the financial crisis itself as a lingering effect because the appetite for risk has been reduced. investors tend to swing after an event like we saw in 2000 it. on top of that, the support that has been provided for the economy is facing down. the recovery act for the most part was temporary. that has been a drag on the economy. i think you can see that effect in state and local governments.

as that support has been cut back, we are seeing a lot more layoffs on the state and local level. as senator shelby mentioned, we have volatility and uncertainty with what is going on in europe. i do not think now is the time to say we want to do more to try to strengthen the economy or speed up the rate of job growth. for me, if i am confirmed, a tremendous opportunity to go back with people that i worked with. secretary geithner, the rest of the economics team, and under the leadership of the president who has been encouraged me and the whole team to look for new solutions that have very high bang for the buck that put us in a better position in the long

run by investing in the future by trying -- >> unfortunately, i do not have the same time that you have in your classroom at princeton, so let me try to get you to be a little more sustained. i appreciate answer. what did you believe r -- there are many elements of job creation, but what do you think are the most important ones? i read the ge ceo talking about the fundamentals of the economy are stronger than you would think compared to the negative outlooks that many people have. how do we change that dynamic? >> well, as i alluded to in my opening statement, there are some strengths and our economy. corporate balance sheets are much stronger. so when they do see a pickup in things, it is possible and

likely that we will see a more rapid turnaround. i think the fundamental problem and that the u.s. economy is facing right now is weak aggregate demand, a result of the excess borrowing that took place. the savings rate has been rising. increase in aggregate demand such as by cutting the payroll tax or supporting the unemployed who have a very high marginal propensity to consume. i would lastly add working on the hiring margin, making it less expensive for employers to hire t hrough cutting the payroll tax. >> mr. montoya, you and i had a good discussion in my office. i do not have any questions. i look forward to working with you in that regard. i look forward to supporting

your nomination. finally, mr. cyrus amir-mokri, your role is a very important one in the treasury. i would like to get a sense of your statement and how you are going to approach, you know, the treasury department's interaction with financial institutions that we dealt with in 2008 as a result of the crisis that chairman bernanke outlined would create a systemic risk to the entire country and referred to it as the new depression. how are you going to deal with the implementation of dodd-frank in your role? how are you going to balance that implementation in a way that we get the right messages on responsible lending to take place? we see this incredible phrase that has taken place in terms of access to capital that is a part of growth at the end of the day.

>> absolutely, senator. thank you. those are extremely important issues. starting with -- i will probably take the first two together. the dodd-frank implementation and a large financial institutions. as you know, treasury is part of the financial stability oversight council. many other regulations that were enacted in dodd-frank -- the responsibility for drafting them is with independent regulatory agencies. in some instances, the treasury does play a coordinating role. as a member of the oversight council, the treasury does have a role in the consultation and some of the decisions that are specific to the financial stability oversight council

which relate to the large institutions that you were referring to. taking the structure of the dodd-frank legislation into account, there is certainly going to be a role from my office in advising -- if confirmed bj i would be advising the secretary on these issues -- if confirmed -- i would be advising the secretary on these issues. just to add a couple of points to that -- i think the intent of the dodd-frank legislation was to make sure that these large institutions do not any longer pose the same risks that they did that led to the 2008 and enter crisis. we have to be very mindful of that. we have to make sure that the potential reforms and heightened standard are implemented sensibly but consistent with the intent of congress.

so, overall, with respect to your first two points, i would just say implementing the dodd- frank legislation to make sure that we address the large tonnage institutions' issues that the legislation addresses and playing the role that has been outlined for treasury in the legislation. morse as a decree on that, having -- more specifically on that, having had experience coordinating activities between the cftc and the ftc, i would bring those skills to bear to make sure regulations are consistent, that they are sensible as much as i can. with respect to the impact on jobs, i think the reason for the legislation was to build a

financial system on which you can have job growth. when you have a stable financial system, when people are not worried about their sources of funding, then you can have more confidence with the banks to go ahead and lend and get the economy going. we have to work toward implementing the reforms to bring back the confidence of the financial system so that normal activity can resume. be under your jurisdiction as well. we think that is a great economic driver as well and we look forward working with you. thank you, mr. chairman. >> senator shelby. >> thank you, mr. chairman. for the past two years, you have worked with chairman ginsler. during that time, ginsler has

sought to impose a record number of new legislation. there has been widespread criticism. and lot of those rules on grounds that they will undermine the competitiveness of the u.s. financial system without making it any safer. do you disagree with this assessment? if so, why? i would like to have your view. >> thank you, senator. i am aware -- >> excuse me just a minute. or do you disagree with any of those proposals? i know you work with him and you have to do that. you are going to be a free man. i am sure you are being confirmed at the treasury. there is widespread criticism there of a lot of those rules.

not all, but a lot. >> senator, what i can say is i was there until march 4. that was at or about the time when we had gotten substantially all of the proposed rules out. you know, in any regulatory effort, as you well know, there is going to be folks who disagree with what you do and some who agree with what you do. more specifically, with respect to how i saw it, and i am commenting on the proposed rules, what we tried to do -- this is a very challenging area, the derivatives title -- >> very complex. >> very complex. it is the first time that this

area from the direction of congress is being regulated. what we tried to do when i was there -- this was, i believe, reflected in the proposed rules -- was to make a proposal which was subject to commission review and asked robust questions in the proposals subjected to the administrative process which depends on commentary from all interested stakeholders to hopefully get the best answer and to come up with their right result. in that connection, i felt that we had a very robust outreach process to all interested stakeholders and consultation with other regulatory agencies. as you know, title 7 has provisions on coordination and consultation with not only the

sec but the federal reserve. we went above and beyond that to consult with any regulatory agency that had a stake in the rules that we were working on. >> but you are planning new ground in a sense, trying to regulate or hopefully regulate them without taking a risk out of the market? i think the derivatives, myself, play an important role in the international economy. do you agree with that? >> in terms of plowing new ground with the legislation, and -- you remember the financial crisis. you were seeing a very up close. the derivatives certainly played a role in that, so i think congress was right -- >> do you believe as we speak

the derivatives play a positive role in the international economy? >> senator, risk management is critical. >> critical to a market economy, isn't it? >> whether it is trading futures or entering into derivatives contracts, businesses run on contracts.ivatives >> could you possibly over- regulate and economy or the derivatives market? a lot of people think you have. do you consider that when you are making regulations? >> senator shelby -- >> possibility to over-regulate the market. >> senator shelby, that is absolutely always a concern. i think the issues that i alluded to before -- i advised private clients on complying with regulations. i fully understand what it

ofans, the impact o government action on businesses. you always have to find the right balance. when we put the rules together, we were mindful of asking robust questions so that we would at the end of the day find the right balance. we also have to remember we are emerging from a significant financial crisis. congress's reforms are very helpful. you are absolutely right to be confirmed with issues of over- regulation. i think it is always the matter of finding the right calibration. >> dr. krueger, the stimulus programs. a recent academic paper by two economists found that the so-

called cash for clunkers stimulus program had no longer run up effect on auto purchases and found no evidence that it positively affected employment, house prices, or household default rates in cities with high exposure to the program. to use to believe that these stimulus programs -- do you still believe that the stimulus programs work? if you do, why? >> thank you for the question. yes, i do believe that the recovery act did work. i will explain why. >> you are talking about this big stimulus program. >> i am talking about both. >> you think they both worked? he would be in the minority in this country. -- you would be in the minority in this country. >> one of the things that we have learned recently is the economy was contracting much

more rapidly than anyone had appreciated back into the us and it. -- back in 2000 it. we seem to have broken the back of the recession. i think the recovery act needs to be compared to the world without it. there is no question that there was a lot of damage inflicted by the recession and we are still digging our way past that damage. i can also respond to the cash for clunkers question. the study that you mentioned which i think is a nice attempt to address the question divide'' areas out by looking at those where there were more klunkers or where there were more cars eligible for the program. i am not convinced that that is the best methodology for this instance because even in an area where there were relatively low

clunkers, the program was pretty well subscribed. this was a program -- i asked my father if he cashed in one of his cars -- that it went so quickly that i do not think we were bobbing up against the constraints that they were using in their analysis. there is one other piece of evidence that i think is relevant. the goal of the program was to move up consumption. a survey that the department of transportation has done found that the average person who traded in a car under the program said they were not planning to buy another car for 2.5 plus years. i think this sends -- i think this is an area of active research. >> did you factor in the cost of this program? >> i think one has to look at the cost. no question. i think one also has to look at

the benefits. there was a boost in consumer confidence and a lot of advertising that took place. >> the chairman has been generous with his time here with me. i would like to ask you one more question. you are going to be advising the president on economic. we know the chances, there is a conventional wisdom out there that the unemployment is probably going to pick up some. some economists testified that the real unemployment, which is people who have given up getting jobs, is around 15% in this country. do you see, dr. krueger, a real turnaround in this economy without us, one,