the constitution guarantees as an equal voice in oliver representative bodies. that is why we go to the process every 10 years. thank you very much for inviting me to be on the show, and i hope this was helpful. host: tim storey. do you have this information on your web site? guest: yes, if you look through you will find the redistricting information. thank you. host: that is it for us today. another show comes your way tomorrow at 7:00. see you then. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

2, gete on c-span china's status -- a look at the globaltus on economy. you can follow all day on c- span2. our political coverage continues with remarks from a senior campaign strategist, david axelrod. he is speaking today in manchester. we'll be live at the ronald reagan library to hear an address from chris christie, who was invited by nancy reagan to

speak at the library. he is the first republican to win statewide election in new jersey in 12 years. the u.s. senate has approved a short-term spending plan that could avoid a government shut down if the house goes along with it. that measure includes -- this measure keeps the government open for a week. congress needs to work on it longer plan when they return. because of the senate faction yesterday, house leaders need to consider the short-term spending plan by a voice vote. we will of life covers when the

house meets for that pro forma session here on c-span. >> he founded several labor unions and represented the socialist party of america as candidate for president, running five times, the last time from prison. eugene debs lost, but he changed political history. he's one of the 14 men featured in c-span's new weekly series "the contenders," live from the debs' home in terre haute, indiana, friday at 8:00 p.m. eastern. get a preview about debs and watch some of our other videos about him at our special website for the series, c- span.org/thecontenders. >> sarah raskin spoke about job creation at the university of maryland's business school. she noted that further monetary easing is needed. her remarks are part of the school's distinguished lecture series.

>> good morning. the center came into existence as a result of recent events in the global economy. the main goal is to promote research and education that reforms policy. today's talks as part of an ongoing series by the senate. we do a variety of things towards the end of the speech and would like to make an announcement about an upcoming conference. but today we're privileged to have governor sarah raskin to

speak to us on a very timely topic, monetary policy and job creation. the subject of job creation has been in the news almost every minute now. is very timely -- it is very timely. there'll be time for questions. you have to write them on index cards and they have to be legible. if they're not legible, they will not be read. and introduce our distinguished speaker. gov. raskin took office last year. she was a commissioner of

financial regulation for the state of maryland. she was responsible for regulating all types of financial institutions including banks, credit yields, mortgage lenders, and servicers, and trust companies among others. under her leadership, they play an early role in response to the financial crisis, including reforming the foreclosure process. loan modification and elevating licensing and lending standards. prior to serving as commissioner, she has a wealth of experience. she was the managing director of a financial group and served as a banking counsel for the u.s. senate.

the governor worked in new york. and privilegeased to bet your joining us today. i am happy that you're from the state of maryland. thank you very much. [applause] >> thank you for that lovely introduction. good morning to everybody. it's a great pleasure to be with center for financial policy at the robert h. smith school of business for inviting me to participate in this forum. i'm delighted to see the center for financial policy is already thriving. in 2008, when i was a commissioner for the state of maryland, two of the founders of the center came to my office

in baltimore and talked to me about starting up the center and asked center might accomplish. despite the challenges facing these projects that the center is encased in addressing policy issues that are important to our country. today, i want to talk about how monetary policy can promote the objective of maximum employment to set the stage by reviewing current labor market conditions and then i will talk about the tools the federal reserve has been deployed into foster job creation and promote a stronger economic recovery. i will do my best to make these points in plain english rather than in economic jargon. but feel free to correct me if i lapse into it. my children have no hesitation

in doing that. it goes without saying these remarks are intended to express my views only and not necessarily the opinions of my colleagues on the federal reserve board or the federal open market committee. the global economy began slowing in late 2007 and early 2008. it turned downward sharply in the autumn of 2008 when the financial crisis intensified. resulting in the worst recession in many decades. by the end of 2009, the unemployment rate had reached a horrifying 10% cut corresponding to 15 million americans being out of work with all the attendant social consequences, including lost income and wealth, mortgage foreclosures, family strain, health problems and so on. officially, the recovery from the recession began in the third quarter of 2009.

but the pace of recovery has been modest. we have learned from recent comprehensive revisions of government economic data that the recession was deeper and the recovery weaker than had previously been thought. he indeed, the most recent reading on real gross domestic product in the united states, the one from the second quarter of this year, still has not returned to the level had attained before the crisis. the increases in economic activity over the past two years have been their rate in sufficient to achieve any sustained reduction in the unemployment rate. the latest employment report issued by the bureau of labor statistics was bleak. private sector employers added only 17,000 non-farm jobs in august, far fewer than the already weak average monthly gain of about 110,000 recorded over the previous three

was 9.1%, representing about 14 august. million americans out of work in nonetheless, as many families know, the headline on employment numbers don't fully capture the conditions. weakness in labor market beyond the headline number, an additional 8.8 million workers were classified as what is called part-time for economic reasons in august because their hours had been cut back or they were unable to find a full-time job. about 2.5 million americans were classified as what is called marginally attached to the labor force. even though they wanted to get a job, they had not searched for one in the past four weeks. almost half of that group, nearly 1 million individuals, have given up searching for employment altogether because they don't believe any jobs are available for them. so it's not just those

currently classified as unemployed who are excluded from mark. -- work. the underemployed, the marginally attached, and be -- are concerned about the discouraged, all of whom artists security of their livelihood, housing, and the rising cost of living can speak powerfully to the weaknesses of the the economic data in this regard corresponds to what i've seen firsthand of the past several years. i have travelled to once robust manufacturing cities in the midwest and have observed vacant lots, burned down factories, metal scrap heaps and foreclosed homes. i have visited unemployment insurance offices and job- training centers and i have met lots of people have been out of two. -- who have been out of work for a year or two.

employers. forceful policy measures. conventional and unconventional at chin's the federal reserve for its part has taken to foster economic recovery and job creation. first, the conventional tools. the conventional tools of monetary policy works to modify rates. reduction in current short- term interest rates and a corresponding downward shift in private sector expectations about the future path of such rates will tend to reduce borrowing rates for households and businesses, including car loan rates, mortgage rates, and other long-term interest rates. this policy accommodation tends to raise household wealth by boosting the stock market and prices of other financial assets. with greater household wealth and cheaper borrowing rates,

consumers tend to increase their purchases of houses, cars andvarious other goods and in response, businesses ramp up production to meet the increased level of sales. moreover, with lower costs of financing new equipment and structures, businesses may be inclined to increase their own spending on investment projects they might previously have seen as only marginally -- marginally profitable. in the near term, firms can increase demand by resorting to but over time, there are strong incentives to increase the employees. number of regular, full-time consequently, conventional monetary accommodation is expected to lead to greater job creation, though some time with substantial time lags. the federal reserve has used this policy tool aggressively crisis. since the onset of the financial in particular, the

federal funds rate target which stood at 5.25 %, which was subsequently deuced 20 by the end of 2008. that target range has been maintained since then. the fomc has been applying it smacks -- a policy tool to the maximum possible since 2008. there is a vast economic literature regarding the effect of conventional monetary policy and i'm not going to review it, but simply pose a counterfactual question, which is what would have happened to u.s. employment this monetary policy had failed to respond forcefully to the financial crisis and economic downturn? economic models, and there are the fed models as well as others, suggest that if the

federal funds rate target had been held at a fixed level of 5% from the fourth quarter of 2007, and -- rather than having been reduced to its actual target range of zero to .25%, the unemployment rate would be several percentage points higher than today. in other words, by following our actual policy of keeping the target funds rate at its effective lower bound, since late 2008, the federal reserve save millions of jobs that wouldn't otherwise been lost. of course, substantial uncertainties around various specific testaments, but there should be no doubt the federal open market committee's forceful actions helped mitigate the consequences of the crisis and thereby sparing american families and businesses from even greater pain. given the magnitude of the

global financial crisis and its aftermath, the federal reserve clearly needed to provide additional monetary accommodation beyond simply keeping short-term interest rates close to zero. consequently, like a number of other major central banks around the world, the federal open market committee has been applying conventional policy recovery. tools to promote the economic the economic recovery. there are two types of tools that have been used. we have provided the conditional for guidance about the likely future path of the federal funds rate. that is one area of an unconventional tool, and the second we have engaged in balance sheet operations that involve changes in the size and composition of our security holdings. broadly speaking, these two types of tools affect the

economy through channels that are similar to those of conventional monetary policy. how can each of these forms of unconventional policy be helpful in promoting a stronger economic recovery? first, let me say something about the additional forward guidance. -- conditional forward guidance. and the central element of good communication. monetary policy is effective any democratic society, central banks have the responsibility to clearly and fully explain their policy decisions. good communication is also essentials for strengthening the effectiveness of monetary policy. expectations about the future played a key role in the decisionmaking of households and firms, for example, how much to higher. spend, save, work, invest, or moreover, when financial market participants understand how the central bank is likely to react

to incoming information, asset prices can adjust in ways that reenforce banks' expected policy actions and support the central bank's objectives. clear cut vacation can help anchor the expectations and enhance the extent to which the central bank can take forceful action to promote job creation in the context of price stability. with the federal rate constrained by its effective floor bout, effective to meet cases with the public had become more important than ever. since 2009, the federal reserve has published the committee's participants longer run projections of the inflation rate, unemployment rate, and economic growth, four times a year in contrast with the minutes of the meetings. based on their long run

projections for inflation, committee participants judge an inflation rate of 2% or a bit less, as measured by the price index of the personal consumption expenditures, is most consistent with ash that for a mandate of maximum employment and price stability. the committee currently strive for as low and unemployment rate as possible, consistent with price stability. their most recent projection, committee participants predicted that the longer sustainable rate 5% or 6%, which is well below the current rate of 9.1%. since december, 2008, the fomc has provided guidance for the federal funds rate. from march 2009 through june 2011, the committee's guidance indicated that exceptionally

low level of the federal funds rate or likely to be rewarded for an extended period of time. in august, we decided to be more specific about the timing, and our two most recent meeting statements have indicated that economic conditions, including low rates of resource utilization in a said shsu bdued -- for guidance provide monetary accommodation by leading investors to expect a longer period of time of low interest rates. as i noted earlier, a downward shift in the expected path of the federal funds rate is associated with reduced longer term interest rates and generate as said it boost to consumer and business spending. simulations of the model that the federal reserve uses, the

frb u.s. model suggests for guidance can be a potent tool of monetary policy. -- forward guidance. now, let's talk about the second unconventional tool. since may 2008, the fomc engaged in two rounds of all large-scale asset purchases. first round of all purchases of trillion in agency mortgage- backed securities and agency debt securities and about 300 and dollars in longer- term treasury securities. -- $300 billion. those purchases were executed during 2009 and the first quarter of 2010. the second round of lsaps, involve an additional $600 billion in purchases of longer- term treasury securities, and that was completed at the end of

june of this year. by purchasing a longer-term securities in the open market, the federal reserve can exert downward pressure on longer- term yields, thereby reducing private borrowing rates and raising household wealth. consequently, just as with conventional monetary policy, lsaps helped boost consumer exports. spending, conbusiness, and it helps generates a stronger pace of job creation. last week's fomc meeting, the committee established -- by selling $400 billion of securities and purchasing an equivalent amount of long-term treasury securities. this maturity extension program, which is referred by some as operation twist, should

exert downward pressure on longer term interest rates and help make broader financial conditions more accommodative, thereby, recovery. supporting a stronger economic recent work by an economist at federal reserve bank of san francisco suggests a similar costly put in place in 1961 had effects of long-term interest rates that were roughly comparable to those of qe2. another significant policy action taken at last week's that the principal payments from our holdings of agency securities will now be reinvested in agency mortgage- backed securities, rather than in treasury securities. our assessment appears to have been successful in narrowing the spread between rates on agency mortgage-backed securities and treasury securities of comparable maturity.

substantially since earlier this year, and the continuation of such a trend could have pushed up mortgage rates and continued sector. in my judgment, the federal reserve's employment of our policy tools has been completely a corporate income of pricepromoting maximum employment and ideally, such policy decisions would be informed by precise quantitative information about the facts of each tool, but in reality, the estimated effects of the fomc's policy actions are subject to considerable uncertainty, which is intrinsic to real world monetary policy making at any time, particularly relevant under circumstances where the scope for conventional minister policy is constrained by the zero lower bound by the federal funds rate. that leads and conventional tools the only way of providing a further monetary

accommodation. although these monetary policy tools have been successful in pushing down interest rates across the maturity spectrum, the magnitude of the transmission to economic growth and employment has been somewhat expected. more muted than i might have indeed, it seems plausible that the effectiveness of our policy tools is been attenuated by a number of unusual persisting factors, including an excess housing, and impaired access to credit for many households and small businesses. under normal circumstances, in a typical recovery, residential construction is an interest- sensitive sector of the country that has played an importantthe previous economic recovery, especially the brisk recovery 1981 and 1982.

that followed the downturn in in the wake of the bursting of the housing problem, the sector has remained exceedingly weak. in the fact, there is an excess of supply of housing that seems likely to decline only gradually in spite of a record low level of mortgage rates. thus, in this crucial sector, one can argue lower interest rates have not shown through to higher activity in the same way that would be expected under more usual recoveries. consumer spending is also being restrained by the excess supply of housing, which has put downward pressure on home equity values and household wealth. a substantial portion of home owners now have negative home equity and are unable to mortgage rates. refinance at historically low many more have seen a drastic decline in the value of their homes, which would typically

affect collateral for second mortgages. slow progress in repairing balance sheets may also be lowering the lower responsiveness of consumer interest rates. in particular, the lenders continued to maintain relatively tight terms and standards on credit cards and to a lesser extent other consumer loans. consequently, many households may be unable to take advantage of the lower borrowing rates that are available to those who christine credit record. -- christine credit records -- pristine credit records. obtaining credit. if this recovery or like others, we would expect a smoother transition in which lower interest rates would fuel credit expansion that would be

used to finance expanding payrolls, capital investment, inventories, and other short- term operating expenses. nonetheless, the latest federal reserve senior loan officer opinion survey on bank lending practices, taken in july, indicated that although domestic banks continued to ease standards on their commercial and industrial loans, the net fraction reporting easing on such loans to small firms remained low and was well belowto large and in its august survey, the national federation of independent businesses reported a noticeable increase in the proportion of smaller -- that credit has become more difficult to obtain. these businesses not only expect credit to become tighter in coming months, but like other businesses, have turned

more pessimistic about the comprehensively, it is worth observing that the financial crisis has undermined the wealth of many americans. low and moderate income families entered the recession with little financial buffer against the adverse effects of wage cuts, job loss, and drops in home values. according to the 2007 survey of consumer finances, home equity accounted for about half of the total net worth for low and moderate income families, which them extremely vulnerable to the eventual markham -- housing market collapsed. families at the lower end of the income distribution sought a substantial drop in their network between 2007 and 2009, and families in the middle of the income distribution fa red worse. -- fared even worse.

unemployment, housing and stock price declines, and increasing rates of mortgage defaults, foreclosures, bankruptcies, the assets of many american families have been significantly eroded. the effect of these developments may be to attenuate the revival of normal consumption patterns that would otherwise be dictating increases in consumer demand and growth. even if the usual effectiveness of monetary policy is being attenuated by factors that i have mentioned, that conclusion should not be taken as implying that additional monetary accommodation would be unhelpful. be the case, -- the opposite conclusion, i might be the case, that additional combination might be warranted. my colleagues and i have

under extraordinary economic and financial conditions. and while we may not all agree with every decision, i believe that the public can have a very high degree of confidence in the fundamental integrity and soundness of our decision making process. indeed, some commentators have signed a label of hawk or dove to the participants in the attack is to prioritize price stability. in my view, such labels are ill- conceived and misleading because really everyone and the committee is fully committed to promoting both these goals. incidentally, since my kids now love describing everyone as a hawk or eight of, or some other kind of bird, i have taken to reminding them of this conviction that i have -- when my colleagues and i are doing our jobs correctly, where neither hawks nor doves, but

owls, meaning we are trying to be as wise as possible and employing all the tools we have to fulfil our legal mandate. in summary, the economic conditions to historically of restoring labor market typical levels. given the elevated rate of unemployment and a large number of individuals who are experiencing long spells of unemployment, both fiscal and monetary policy makers should be considering a wide array of approaches for promoting job creation. in my view, the deployment of our monetary policy tools needs corporate lead time, and clearly communicated to the public. moreover, to the extent that some factors may accentuate the usual effectiveness of monetary policy, there is a compelling case to identify and implement policy measures to mitigate

those factors and thereby strengthen the fact of the monetary accommodation that we have already put in place. finally, in light of the economic hardships that are facing our nation, i want to underscore that the federal reserve is fully committed to doing everything we can to promote maximum employment in the context of price stability. thank you again for the opportunity to speak with you today, and i look forward to hearing your questions and comments. >> thank you. we have been allowed for questions and comments -- we have a moment for questions and comments. ok. i think this is legible. what are your views on the pros and cons of expanding the refinance program?

>> ok. so the question for everybody has to do with the harp program, which as many of you know is one of the programs that the administration put in place to help deal with the issue of people who are under water and need to refinance to lower rates. it is interesting. it is a good question. as i talk about my remarks, it is one thing for the federal reserve to put in place of lower interest rates. it is another thing to see those interest rates translated into real activity in the economy. if you think that one significant obstacle to having those lower in just rates translate into real activity, then you'll pay attention to

programs that are developed like the harp program. i have watched the evolution of the program. my personal sense is that it is well conceived. it is intended to help people take advantage of the lower interest rates that are currently in place. but there are obstacles to it. there have been a number of issues that kept it from being used in a greater extent than having more of fact. one such obstacle has to do with the fact that it is very hard for people who are under water in the mortgages to access qualify. these features of the program have to be looked at very carefully with an eye to see whether those impediments can be

impediments that can be addressed and removed in the program so that there can be a greater uptick and a greater use of the lower term interest rates that have been put in place. >> this question is about foreclosures. a traditional area of exclusive state control action. do we know how national foreclosure laws -- >> this is a question about foreclosure laws which are in the province of state legislatures and typically for closure has been a question of local control and local determination. u.s. a question of a former local commissioner of financial regulation for a state. i am of the view that the foreclosure laws need to stay in local control.

they are clearly our big -- there are big delays going through foreclosure right now. these delays have very little to do with the fact that state laws are somehow contributing to the backlog. i think we have a number of factors that have been -- that have made the foreclosure process exceedingly difficult now. many of these factors have to do with some of the practices that have gone on the in mortgage servicing. in my view, and my opinion is shaped by having worked locally on foreclosure laws, i think that foreclosure laws and foreclosure reform at the state level is very important. i would not maintain that we need one set of foreclosure laws

that would apply to all 50 states, however. >> what effect if any does political pressure from the administration or congress have on policies of the fed? >> this is a question about political pressure on the federal reserve. as we all know, the federal reserve is a creature of congress. it was created and that is something that congress chose to create. the federal reserve is accountable to congress. in the actions of that we take, it is critical that we always do remember that. i think we do. one aspect that we want to keep in mind in that regard is that

when congress created the federal reserve, it created an independent separate bank. -- an independent central bank. from that perspective, i think congress was pretty smart. will we see in other countries where there are central banks is that if you have the central bank that is not insulated from political pressure, you do fight high degrees of correlation with inflation. for people who believe in price stability and want to maintain price stability, i think you also tend to be of the view that you what you're independent banks to be insulated from short-term political pressure, and that is my view. >> comments about potential consequences of operation twist

for corporate pension. corporate earnings and life insurance. >> this is a question about operation twist. this is the balance sheet operation that the federal open market committee recently took added september meeting. in that operation, the federal reserve will be selling $400 billion worth of short-term securities and will beari buying back some, hence the twist. by virtue of these steps, to keep the balance sheet size

constant. this is not growing. for many people, this is something that could have implications for inflation expectations. operations was keeps the balance sheet at roughly the same size and from that perspective is considered a good thing. the market has responded positively to it thus far. how effective it will be -- the question raises the issue of lower interest rates and the questions regarding solvency of pension funds and other investor groups. that is something that we would need to monitor very carefully.

the overall effect here is one that is intended to stimulate economic activity. >> it seems like a lot of questions. could we now be facing a new normal so that unemployment remains higher for a long time? >> this is a question about whether we're in a new normal, whether the rates that we're seeing are going to be the rates that we're going to be living with for ever. this is something that you would get different views based on you asked. i tend to think not. i think that we're in a recovery that is moving forward and moving forward slowly. i see an upward

trajectory. i don't see this as a permanent state that is going to go for decades and decades. >> ok, so low interest rates -- do some parts of the economy -- a variation of low-interest rates on parts of sectors in the economy. >> if i understand the question correctly, it has to do with the affect of interest rates on different sectors of the economy. that is an issue in question. there are parts of the coming that are more interest-rate sensitive than others. housing has been very -- you

would seek a higher rate of home creation with lower interest rates. home sales, those kinds of activities. other sectors are clearly less interest rate-sensitive. i have to confess to not being an expert in every industry in knowing what the sensitivity is. it is very important that broadly speaking we say a translation between lower interest rates and higher rates of growth. that piece of the transmission is what is important in having resumed economic activity. >> what is the right solution for qrm regulation? which a down payment requirements bae?

>> this is the qualified residential mortgage standard that is set out in the dodd- frank legislation. it is a piece of legislation requires the federal reserve as well as other banking regulators to come out with regulation that does what congress intended in the dodd-frank act. it is currently out for public comment. so there is a chance for the questioner as well as others to throw and the views regarding an initial attempts to define qrm and to implement what is in dodd-frank. there are vast views on this and there been a lot of comments on this proposal. that's a question generates a lot of interest.

i'm guessing the questioner is concerned about the 20% down payment notion in the qrm standard. that is generated quite a bit of comment for the reason that the 20% itself is not specifically described in the statute. the statute leaves the regulators with the discretion to determine what will be the gold standard of a mortgage. so the question is whether the regulators have done that correctly. whether there has been the right articulation of what qrm should mean. and obviously this does have a significance for what bank

regulations in the area of housing is going to look like. this is an important thing to keep an eye on. >> there will be two more questions and they are related. what has to do with the policy. what ramifications does the fed see a two-interest rates that might arise from the current monetary policy? >> so, this notion of negative interest rates -- of-real rates comes from the idea -- of a negative real rates comes from the idea that there is a component that could be altered increasing a lower interest

rate that decision makers would based their decisions off and generate growth. i think the questioner is asking whether the federal reserve would be comfortable moving into an arena where religious rates which get flattened by virtue of raising inflationary expectations. that is something we would be quite leery of, but i am speaking for myself. one of the explicit mandates is price stability and keeping expectations anchored is in my mind extremely important as we resume growth for this recovery.

>> which you addressed to what extent the effect of monetary policy is attenuated by certain expectations on fiscal policy? >> this is an important question. it is not easily quantifiable. there is a sense that enhanced uncertainty and reduced confidence are what is driving a lot of the slower rebound that we are seeing. if you look at different surveys of confidence and the ones that i tend to follow most frequently is the michigan survey. the michigan survey has gone down in terms of showing consumer confidence and keeps going down. it correlates a little bit with some of the actions in congress. there was a sense maybe that one of the dip in consumer

confidence had to do with the impasse over the debt ceiling and some of the wrangling in congress. you would maybe think that effect would be diminished now in people's minds. we have not seen a big resurgence of confidence. confidence is important because monetary policy works through the development and setting of expectations. if you have a sense that things are going to be bad and are going to stay bad and are never going to return to the way of life that you have come to expect, you will engage in denver kinds of behaviors. you may not spend if you have a sense that you're going to lose your jobs or your income is not going to go up. it may affect how you make your

spending decisions. you can see in that scenario that confidence could be at such a low that they could overwhelm people's sense of consumption, which could feed into the sense that businesses themselves do not want to expand because the do not see a resumption in consumer demand. they themselves do not want to hire. and you move in this vicious downward cycle. this has not been highly quantified. it is one that clearly we are thinking about and figuring out its impact. so i think the questioner. >> i know that -- somebody is going to ask a question to capitalize on your experience. what is your view on appropriate -- ratio and the

role of continued capital- lette? >> excellent regulatory question. i had been a regulator at the state level and engaged in bank examination, bank regulation from the height of the crisis till i came into this current role. the question has to do with capital ratios. they are very important. they are a significant buffer to institutions that are facing loss. what examiners will tell you and i am completely of the view, capital is but one aspect of a bank's safety and soundness. we look at a whole host of other

factors, including the bank's management, the bank's earnings, the banks' liquidity, the banks sensitivity to interest rates, its portfolio, its book of business. those of all critical factors as well in assessing the health of a bank. capital is most easily quantifiable. i want to under score at the importance of capital and clearly _ that is necessary and clearly underscore that is necessary to a bank's health. i do my best to remind examiners at least of the federal reserve that we're looking at the entire health of an institution that is judged by more than just

capital. we tried to maintain a holistic approach regarding the health of a bank. the role of contingent capital. this is a proposal that has come out a lot in the set of hearings and negotiations regarding a kind of capital that would be triggered. it would be triggered into capital upon certain occurrences regarding the bank's health. it is a concept that has a certain amount of intellectual appeal, and local appeal to it. it has an operational issues that also need to be addressed. and it a full discussion

will be interesting to watch how what develops. >> thank you. i will turn over to courtney. i wanted to recognize the person responsible for a full range of logistics' that made this possible. >> good morning. on behalf of my colleagues at the university of maryland, is my great honor to thank decoder for being here today. these are among the most crucial issues that the country faces and the world faces and it is refreshing to have an open session with some like governor raskin.

we appreciate you being here. [applause] >> we have a small token for appreciation for you being here today. thank you. i want to spend 30 seconds giving you all the commercial for the next event. it will be here october 5 and 6 at the ronald reagan campus of the business school. a confidante systemic risk and data issues. this is one you did not want to mess. we're excited about this lineup -- this is what you do not want to miss. it has tremendous panels of regulators from just about

everybody in washington. some of the leading lights in academics on systemic risk issues. this is sponsored here at smith in contention with reporters at nyu. the school of business at uc berkeley. this is a tremendous joint effort and hope you conterminous here october 5 and sixth. let's give one last round of applause for governor raskin. [applause] thank you, all.

>> campaign 20 drop coverage coming up tonight on c-span -- campaigned 2012 coverage coming up tonight. david axelrod will be speaking. you'll get to hear and see all those comments tonight on c-span at 8:00 p.m. eastern chris christie has been invited by nancy reagan to speak at the ronald reagan presidential library and museum. we'll have as comments -- we will have his comments live on

c-span. >> you should always start with the assumption that when a politician or a ceo is saying somthing, they're not telling you the truth. now, they may be telling you the truth, but the burden should be on them to prove it. >> he's an eagle scout, held a brief stint as editor of "mother jones" magazine, directed and produced three of the top-10- grossing documentaries of all time. and also a best-selling author. his latest, a memoir, is "here comes trouble." and sunday on "in depth," your chance to call, e-mail, and tweet michael moore, live at noon eastern on "book tv" on c- span2. >> with part of the u.s. constitution is important to you? that's the question in this year's studentcam competition. tell us apart and that's important to you and why. include more than one point of view and video of c-span programs. these are dubai generate 20, 2012. $50,000 in total prizes.

-- these are due by january 20. >> according to the nonpartisan campaign finance institute, corporations, nonprofit, and other groups spend $564 million of the 2010 congressional elections. the number is 90% higher than the federal election commission told. those figures were in a report by the committee for economic development, criticizing the lack of transparency with campaign contributions. this is an hour-and-a-half. >> once again, i ask for your attention, please. i have the pleasure of introducing two boxcars at the committee for economic development. -- two rock stars.

ed, we were trying to put together a subcommittee on campaign finance reform. i went to new york and met twist ed kangas and the cool head of deloitte touche tohmatsu. uck.i met with george ro i was trying to persuade them to be the cochairs of our first effort in campaign finance reform. they both said something similar, " we know it's an important issue for the country, but we have not thought it's all true, but this is important, so we would like to accept the offer as cochairs." ed kangas has now been on this issue nearly 15 years. having chaired our cochaired -- or code shared in at least 3

iterations. he has become the poster child for cd's campaign finance reform work. he introduced the term "" pure our efforts some years ago. -- the term "shakedown." landon rowland, who for many years has served as the chairman, now chairman emeritus , of janus capital group, he spent all longtime as trustee and became involved in our work on judicial selection reform,, particularly focusing on his own state's misery, but also flying around the country with sandra day o'connor and others really trying to explain what is going on in the 40 states that elect

judges and allowing those campaigns contributions to come from people who have interests before those judges. landon rowland has been a poster boy for our work on judicial selection reform crown the country. as i said before, when we decided to respond to citizens united by combining our work in campaign finance reform and judicial reform, it made natural ed and landon to bring these two schemes worked. -- two streams of work. in october in new york we will present both of them with the ced trust budish aboard. it is well earned and well deserved, gentlemen. please join me in welcoming ed

kangas and landon rowland. >> delaware i tried again? is it on now? by told a story about my aunt viola. when i was 14 i was in ohio near lake erie. my cousin bill and i got arrested flushing cherry bombs down the toilet at the swimming pool.

my aunt viola had to come down and his father was the fire chief. she looked at us and said you little, you'll never amount to anything. i was arrested could ever heard my friend talking does now. i will tell you that i am worried and disgusted. our nation's political decision making capacity is broken. if you want to write a great spellbinding novel that was a recipe for national disaster, some of the major plot teams would be as follows. you would want to create a plot theme around the encouragement of political extremism on the left and the rights. you want to instill a goal of re-election and staying in power

at all cost. you would want to create an environment where the legislators paid off today's voters for their votes at the cost of the voters 20 years from now who they don't care about, because the goal would be to stay in power at all cost. on top of that he would take the cost of campaigning and have it grow by 250% in a little more than a decade, making politicians do whatever they have to do to get money. and then finally, the final plot line, you would then create a supreme court that would strike down campaign finance rules like in athey did, which resulted legal invasion of facilitating payments, legalized bribery, pay

to play, pay to avoid negative consequences. and you would do it with an amount of secrets money that dwarfs what was spent during the watergate era. you end up with a nation in despair. the political system would be broken and corrupt. the nation would be at the brink. sound familiar? the system that we now have six good men and women that run for congress and corrupt them. it is bad for the nation and bad for business. most of you know that ced is made up of 100 trustees that are current or former ceo's or major economist business leaders and its and university presidents. we are probably some of us we're

not political enlightened group, but we have a business perspective. today the ced landon and i are calling on business to play a leading tyrol in starting to bring the system back from the brink. i will tell you that we as business leaders do know how to do this. in my time at deloitte and since then i've come to the coconcluded that american companies offer a level of financial disclosure found nowhere else in the world. publicly held companies abide by stringent financial reporting, subject to audit. disclosure and transparency are essential to our financial markets. the same is true for our political system. it was required for us as

business leaders -- what is required for us as business leaders should be required for the political process as well. effective disclosure and transparency of corporate finance starts with good policy- setting and good board oversight. in the best companies today they also use that same process of approval, policy, and oversight for their political activities and political contributions. today we are urging all company's boards and directors to set policies, approvals, and oversights of political activities and budgets with the same rigor and they do over their financial affairs. through our business leadership i believe we might have an opportunity to also encourage the same action on trade associations, labor unions, and not-for-profit organizations.

if at the same time we could also eliminate the election of state judges who also need this stopy to win, we might turning these elected politicians into rogues. we could be on the way to ending an era that is marked by secret political money, pay to play, pay or suffer the consequences, legalized extortion and bribery, political and judicial shakedowns, and putting the power in the hands of only the very rich. my goal for a long time has been that if we, along with all that, with good governance, and

transparency, and disclosure, if we could also reduce the need for mega donors to a public financing system characterized by multiple match of small individual people donations, we just might stop corrupting the good men and women in our congress. we might start rebuilding the fate of the average american -- faith of the average american in our political system. this is what our nation needs and what is good for business. and is a marked that business can lead. march. thank you. [applause] >> thank you, ed. it is a great pleasure to endorse everything the previous speaker has said. and to carry it a little further, citizens united

represents, as most of you have heard, a substitution of the rule of cash for the rule of law. it is a devastating consequence for a nation that has led the rest of the world in developing the standards, the criteria, the practices for the free market, the open markets, the market that is lost in its laws biden -- that is bought by the people with the deepest pockets and the most cash. they cannot continue to have the role in establishing free markets, guaranteeing the markets, and pointing the finger at other countries where free markets do not exist or that they exist in some tattered or compromised form. increasingly, all of you folks

work with part of enterprises that are transnational in scope. when they go offshore we are all based wickes confrontations in public sectors that have been corrupted by the kind of thing that we are slipping toward as a nation. bought judges and what legislators and bought executives -- bought legislators. the public servant without self- interest, an ideal of the early republic, is always challenged by the private and selfish interests that each of us sadly must learn to discipline. and this is this public service

that the role of law celebrates, but the rule of law makes effective in business start-ups, in business expansion, in economic development at every level. we have seen over and over again outside the united states -- russia is the only one example -- mexico is another, sadly, where business people, business enterprises in this room and in this country are frustrated by the power of cash and oligarchic influence in economic development and activities. all of these things ed has talked about are magnified the in their effects in the election of the judges. ced has for decades sponsored, stood behind, advocated the

appointment of judges to the best as we can do, with panels of un-self seeking panels. they have to have some expertise in the law and some concern on what is going on in the public. these panels ultimately get the approval of some overriding body, is an aura of a governor. they have to appoint judges that are free from the influence of campaign finance. sadly, we have too many judges, and too many campaigns that are influenced by such springs, and increasingly so because of citizens united. it is hard for some of us to believe that this was not even the intended consequences of this decision. and so, it is up to us to find ways to work around that, those

consequences, with the emphasis on transparency, accountability. and before closing with a thought about the kleptocracy, i want to speak on something regarding transparency and accountability. we have focused on public companies because they are more nearly accountable in our system of enterprise. they are nearly accountable. the myriad of private companies, the myriad of private initiatives in the business sector, but all those look to the public sector for example. they look to the public sector for what is the right way, ultimately to do things. and so, the points that ed mad

advocates, this is intended to set the bar for performance not only in this country but worldwide. standards setates' a standard for the world wide free market. nobody else does that. if you fail by letting money call the tune, you give up the free enterprise destiny that we all think we set in motion when this country was founded in 1786, 1781. cash undermines citizens united. it undermines the constitutional guarantees we have up a free enterprise. we can talk about that at length. those guarantees are protected by an independent judiciary at

the state and federal level. when they become elected and they become compromised in ensuring the guarantee of this free enterprise system that our constitution provides, we are in deep trouble. what i want to linger on for a moment in wanting this up, you may think we have gone too or not far enough, but the idea of transparency in many ways fall directly on every board of directors and its accountants, whether or not public or private. we are responsible for assessing the risks to the enterprise, as officers and as directors and as lawyers and accountants. what are the risks to the enterprise? the risks to the enterprise of this cash for influence, those

risks are enormous. wikileaks was only a precursor of the transparency that will exist in in the years to come. there's almost no way to conceal ultimately what these contributions are, who they go to, or the money comes from. it may take awhile, but it is inevitable. we have too many folks around us that want to expose these contributions. where those with deep pockets are spending their money. so it is sensible for boards and their advisers and sensible for legislators to worry about these disclosures. so it is better not to be involved in them. that is a highly nightie

assessment at -- highly naiive. because the cash is so tempting. after in half to have the gatekeepers that's why they're trying to be so aggressive in trying to identify and put in place for the reasons we spoke about earlier. after come out of this whole thing, setting standards for a worldwide marketplace, a worldwide free enterprise system. if what we are seeing at citizens united in its wake is the ultimate corruption of those ideals and those standards that reset for this country many, many decades ago. so we leave this room, each of us, pledged to undo the evils of citizens united. we may have difficulty doing

so, but we can, using the techniques talked-about, but it requires discipline and ingenuity on your part. since all of you came in here having signed the pledge cards that charlie gave you to identify yourself with this effort, i look forward to working with every single one of you in this great nation. that's it, ed. [applause] craig stammen, if you will remain here, i am going to ask our panelists and moderator mr. cummings to join us. if you please come up now. as they are joining us, i would like to ask bruce fried if he

would like to comment for about two minutes. and then mr. brandenburg from at stake, if you would share your thoughts and your activities. you want to come up here? >> thank you. charlie, thanks very much. and thanks to mike. i have been working with both of them and with the money and politics subcommittee. it's been a pleasure to work with them on the issue of

corporate political exposure, how to deal with the issue of money and politics. i want to thank charlie and ced for incorporating the center for political upheaval accountability as part of the reform agenda. i think it's extremely important, because the approach they are taking of using the corporate governance group and risk to address this real problem of hidden money hand to bring transparency and accountability to political spending is extremely important. with the gridlock we have seen today, with the problems you have had with the regulatory agencies, the enforcement agencies, with the hostility of the courts toward placing limits on political spending, the corporate governance group and the issue of risk have been the areas where the most progress has been made and where the issue can be addressed and where tremendous progress is being made. today 88 companies, over half of

the s&p 100, have adopted political disclosure and accountability. that is extremely important as companies begin to set standards, began to set best practices for how political spending will be handled. i just want to mention that the center will be releasing x monconnah its new season index peer this will be on october 28 at the wharton school of business and it will be the first portrait of how companies engage in, manage, and over ssee their political spending. it will lay out the policies and practices of the s&p 500 and will focus on those companies that are the most influential, that are the trendsetting companies. going forward into 2012, the center is going to be engaging with more companies. we look at a very active proxy season. i think what we will see in this season is political disclosure and accountability moving

towards becoming the norm. that is critical to be able to make progress where progress has been very difficult. so thank you very much. >> bruce, thank you. i would like to introduce the president and ceo of justice at stake, mr. brandenburg. >> thank you, charlie, and afternoon everyone derickson we are non partisan partnership of more than 50 organizations working to help courts stay fair and impartial and these are very much issues we deal with every day. if we have been ced as one of our partners for more than a decade -- we have been thrilled to work with ced as one of our partners for more than a decade. i have a question that i hope some of the panelists may discuss as well. we are getting ready in a number of weeks to release the latest

in a periodic series of reports on spending and interest group money in judicial elections. it is safe to say the headline continues since about a decade ago. we have seen this explosion in interest group money pouring into judicial elections. more and more judges now are in a $2 $4. -- into dollars for dollars. if you look back about four years ago to the last relevant non-presidential cycle, we noted about four years ago that in 2005 through 2006, outside groups represented 18% of political spending. in the past cycle that percentage jumped almost 30%. we are seeing increasingly interest groups almost quirky to

take over elections. in michigan in the last cycle you had an election where the amount of money spent and raised by the candidates themselves exceeded by a factor of 200 times by interest groups and political parties to the point where judicial elections complicated to begin with and then when you add this formula you have increasing fear on the part of the public that justice is for sale and all the money could be affecting decisions and really hurt confidence in the courts. i would like to parse the discussion, in particular if we are going to see more outside money coming in, in addition to the money that the justices are raising themselves. wachtmann about this in terms of trying to protect the corkscrew. how do we make sure the courts are different. particularly the rise of interest group money is making disclosure a profound issue for the courts in ways that add to the way they are profound issue,

for the system. just past there are legislative and executive branch solutions to do things around disclosure, there could be solutions where a court is asked to step up and change its own rules. perhaps you would have the parties needing to disclose particular information as part of their own filing. with that said, i will hang up and listen and i really appreciate being invited here today. >> thank you very much. it's my pleasure to turn the program over to our moderator this afternoon, jeanne cummings , the deputy executive director of bloomberg news. before then he was the assistant managing editor at a political. you will note that she had a major coup in 2008 where she broke the story about the republican national committee pose unusual sartorial spending on behalf of one candidate.

well done on that. she has also reported for the wall street journal and the atlanta journal constitution. she has won countless awards formw her work. it's always been a pleasure to get a call from you during the years to answer questions. you are committed as a journalist. we are pleased to have jeanne cummings with us this afternoon. the floor is yours. thank you. [applause] >> well, mike and i were joking that we all got to know which other when i was a the wall street journal. was the topicleingold and now we get to start all over again. when you talk about disclosure, in terms of its importance, the

story that i did about rnc purchasing sarah palin's outfits was just that. late october i was there on october 20 clipping through these reports and i was looking at obama's television spending and john mccain's television spending and i thought, that's not fair, john mccain is broke, and then i got to look at rnc joint spending. when i opened that report, i said, oh my gosh. wardrobe.rah palin's there was at macy's and saks fifth avenue and all the rest of them. but it was a matter of disclosure. the only reason i got that story is i was one of the last standing money and politics reporters who will still look at 11:00 at night reading reports.

so disclosure is terribly important for everyone involved. today i will moderate a panel. we are going to have four distinguished guests and we are very lucky mr. rowland is joining us. >> ed kangas is still subject to call. >> do you want to join us? they will have a few opening remarks and i will open with a question. we are open to questions from you all, which are probably the most important questions as we are here to address whatever you all are interested in. we will allow time for that. if if you want to throw up your hands through the process or come to the microphone, feel free to engage in conversation. first, i will do introductions. barbara bonfiglio is a senior corporate counsel at pfizer. she specializes in compliance in federal state and election

law and provides counsel on matters involving the house and senate ethics rules, which could be really interesting subject to get into at another time. on compliance and lobbying disclosure act, she is the author of "tau to cross the potomac without falling in." we also have a down second from the end on the right, charles grezlak, vice president of state government affairs that and policy at merck and company. he has managed responsibility for state government affairs and works on federal health care policy. he's a member of of mariposa corporate responsibility council passed and a leader of its activities in the area of public policy advocacy. and on the far end, the senior vice president of governmental affairs at american electric power. he works with senior executives

and the operating companies president to formulate, coordinates, and implemented the country's legislative and regulatory agenda at the federal and state level -- the company's. he's been active in the electric utility industry since 1983. in the center, a familiar face. the founder and president of democracy 21. it's an organization, nonpartisan organization that works to step in our democracy and promoting government integrity, accountability, and transplanted measures. he spent four decades working on democracy in government and is recognized as the national leader and spokesman on money and politics, including campaign finance, epics, lobbying, and transplanted. fred has turned up in many a story written by me and the new york times, the "washington

post, the boston globe, and you name it. brad knows every reporter in covers money and politics in this town. just a brief understanding of who you have before you, i will start with barbara so she can make a few remarks and we will just go down the line. >> thank you. i want to thank charles and ced for inviting me to participate today on behalf of pfizer. the topic of political and contributions is important to our company, to our board, and shareholders. we are highly engaged in discussions on the topic and am happy to share in sites without you about our involvement in public policy, shareholder engagement on the issue of, and committed to transparency. first, our philosophy. as a company in a highly regulated industry at all levels of government, it is essential that we engaged on public policy issues that affect our ability to meet patients' needs and provide shareholder value. if the essential aspects of our

business are being challenged by barriers to access, counterfeits, illegal importation, and of telling this to intellectual property protection. for these reasons be actively participate in public policy dialogs so decision makers have the information they need to make the best decisions. we are happy to provide that information, much of which comes from our annual investment in research and development and industry expertise. we have knowledge about health care and many ideas about improving its efficiency as well as a global perspective on public health, disease prevention, and tell education as we feel it's critical that we have a opportunity to educate lawmakers whose decisions will ultimately affect not only our patience but all of our stakeholders as well. we believe that public policy engagement is an important and appropriate role for companies and corporate societies and that it must be conducted in a transparent and legal manner.

pfizer makes contributions to candidates for state and federal office. pfizer contributes directly to state and local candidates in those states where corporate contributions are permitted and federal candidates through the political action committee, an organization with a board and steering committee made up of colleagues from across divisions within pfizer. the steering committee reviews and improves we approves all political contribution requests on a monthly basis. second is our engagement with the owners of our public and traded companies, our shareholders. shareholder engagement is an essential component of our corporate governance philosophy. my role adviser, i work closely with corporate governance and have been involved in numerous discussions for shareholders about discussions. i can assure you that we have always had an open-door policy to shareholders and shareholder advocates -- open policy. we meet with our investors throughout the year to discuss any concerns they may have regarding our involvement in the political process, and other government matters.

as far as the evolution of disclosures in policy, it has happened over time from a reactive and proactive standpoint. pfizer continues the real value its of its reporting practices to ensure that its disclosure meet the changing needs of all our stakeholders. if over the years shareholder engagement has helped to expand our level of disclosure and we have created or modified our policies on expenditures when deemed appropriate. for example, in 2004 we received a shareholder resolution asking for greater disclosure of corporate political contributions. and our animals shareholders meeting that year we announced that pfizer would take steps to increase disclosure, including publishing its annual report on the company's external website. we began the practice in 2005 and our shareholders were very pleased with i suppose responsiveness to the issue. if it's a practice that we continue today. we also remain engaged on the issue with the government's canada. our corporate secretary is a member of the conference board committee on political spending.

the kinetic was formed earlier this year to advance issues related to disclosure and accountability of corporate political spending. calling the citizens united decision, the need for a model framework for disclosure and accountability of corporate the local spending has increased. the report will be released in mid to late october. finally, our commitment to transparency. pfizer is committed to being transparent about its corporate and political contributions. we fully comply with all federal, state, and local laws and recording requirements governing our contributions. we compile and publish all of our lopolitical contributions to the board and posted on our website every six months. and trade associations that receive $100,000 or more, the portion used for political activity, so we can disclose that amount on our website as well. we have been providing are

reports that our annual meeting since 1997 and began posting our ports on our external web site in 2005. shareholders have many different views about what companies should and should not disclose. while we realize that we cannot please everyone, a majority of our shareholders are satisfied with our current level of exposure if. the index released on september 15 bankruptcy our political disclosure as one of the most transparent among the s&p 500 companies. pfizer and six other companies that its highest marks. pfizer is committed to a dancing public policies that ensure patients have access to the medicines they need. by engaging with our shareholders, implementing clear policies and procedures for around political contributions, and providing intimation to predict providing information to the public, we have addressed

many of the concerns raised since the citizens united gift to. we will continue to have the right processes in place to minimize shareholder risk. thank you. >> let me start by congratulating ced for again taking on the campaign finance issue. as many of you know, ced played a pivotal role in the last major campaign finance dialogue in congress to end the soft money system. ced brings critical business leadership to very tough battles. on behalf of many of behalfwho work for reform -- on behalf of many of us who work for reform, we greatly appreciate ced.

this country has long recognized the importance of transparency. if you go back to 1974, the supreme court put it simply when they upheld a disclosure requirement of the 1974 campaign act. they simply said, "disclosure requirements deter actual corruption and avoid the appearance of corruption by exposing large contributions and expenditures to the likes of --." we had a consensus on disclosure in this country for decades and a consensus on the political level for decades until last year. that's when it broke down over efforts to pass new disclosure legislation. in the 2010 elections, tax- exempt groups spent $135 million in secret contributions to

influence the 2010 congressional races. that is going to dramatically increase in 2012 in the presidential and congressional races. ironically, the supreme court in the citizens united decision, which opens the door to widespread corruption, in my opinion it, through the use of unlimited expenditures by corporations and groups accepting corporate contributions, also, reaffirms by an eight to one vote to the value and importance of disclosure. while this court is hostile to other campaign finance laws, they firmly support disclosure. in that decision, justice kennedy wrote, "and campaign

finances and that there is corporate independent expenditures with effective disclosure has not existed before today." he got that wrong. it did not exist and and does not exist now. obviously, the court did not have any notion of how this disclosure law was working in this country. through a combination of citizens united and a dysfunctional federal election committee, we end up with a return of secret money in our level that will far exceed watergate and has not really existed since the watergate scandal. it is dangerous and is corrupting, it destroys public confidence, and it is with us until we change it. there are multiple efforts going

on to address these problems. democracy 21 and the campaign legal center have turned to litigation and legal efforts. we are representing - representative van hollen in a lawsuit challenges contribution disclosure regulations that would have required disclosure of onmuch of the secret disclosures that took place in 2010, if properly followed. and we are bringing complaints to the irs, where the irs regulations improperly have interpreted the campaign finance laws to allow tax-exempt organizations to spend far more than the irs and court

decisions allowed. our organizations will be filing a new complaint at the irs this week listing several c4 organizations as not entitled to tax exemption for their campaign activities. one of the things that we face even in the context of what the court has authorized is a failure of administrative agencies to properly enforce laws that are on the books. there are also efforts -- bruce's efforts were described, ced, and others are pursuing the best practices approach and trying to convince corporations on their own if they are going to participate in this activity, to disclose the information. there is a campaign going on

soordinated by public citizen' that is dealing with corporate approval being required for political expenditures and, also, is approaching the securities and exchange commission, asking for the adoption of rules to require public companies to disclose their campaign activities. and then the group's democracy 21, campaign legal center, ced, a number of other groups, common cause, public citizen are again working to pass legislation to end this problem. we came very close in 2010, passed legislation in the house that would have required the disclosure that is necessary. got within one vote of 60 votes

necessary for the filibuster. but the legislation failed. failed for various reasons. one of which is the consensus broke down for disclosure. republicans almost unanimously opposed the legislation for various reasons. as you can see on any issue today in the u.s. congress, it is hard to get bipartisan support for anything. i will give you an example. in 2001 and disclosure lettuce -- laws were needed to deal with a new problem with 527 groups, congress passed it with overwhelming bipartisan support. that included 48 out of 54 republican senators voting for disclosure. 10 years later we got no republican senators voting for disclosure. part of this was a very strong

campaign led by the chamber of commerce to make sure that there was not new disclosure law, but we are going back to congress with two goals. first, to narrow the legislation, to focus it just on disclosure. second, to overcome the gridlock and the polarization, to try to build bipartisan support for disclosure legislation. this battle is ultimately going to be won. it may take some time, but it will be in won. i will give you a reason. last october the new york times and cbs did a poll on outside spending groups and their expenditures. 92% of americans said it is important for the law to require a campaigns and outside spending

groups to disclose how much they raised, where the money came from, and how it's used. if any of you know of a poll that had 92% on any public policy issue, please let me know. the american people will not stand for secret money controlling their lives. they are overwhelmingly opposed to its, republicans, democrats, independents, conservatives, and liberals. and this fight will be one -- won. when it is, ced will again play a pivotal role. we love working with you folks at ced and we are glad to be back in battle with you. thank you. >> i also want to stand ced --

to thank ced for the invitation to speak today. as barbara mentioned, a local contributions are only one element of any public policy advocacy program. we are very aggressive at communicating our positions, developing our positions, communicating them with legislators, and we also put try to pride ourselves on major public policy issues, developing innovative solutions that creates a win-win situations for all stakeholders. in this area are committed to transparency and political spending began about its five or six years ago. i really have to credit bruce fried, who was an excellent lobbyist. [laughter] -- on this issue. we had a couple years with shareholder resolutions being debated about transparency. we opposed the first one.

the second one -- we opposed it on the basis of dust and the administrative costs of publicizing it as well as the fact that virtually all of our contributions that i'm aware of for already disclosed to the state authorities or the sec. we were convinced that it's a pretty lame argument for not disclosing, plus the fact that these expenditures are not disclosed on-site does not really mean that you are not spending elsewhere in terms of spending that is not required to be disclosed. so we agreed that we would disclose our political spending. again, contributions through merck political action committee as well as give corporate political contributions at the state level where that is required.

since then on our website on an annual basis we have disclosed those contributions to candidates, to groups like the republican or democratic governors' association, to any ballot initiatives that we may be involved in. i view our program as a work in progress. we are always learning and try to improve what we do. since that time, we have extended that on a global basis. we report any political contributions made in non-u.s. countries. we have also agreed to disclose on a semiannual basis, because one criticism was that if you are disclosing, which we had been doing for the calendar year in the first quarter, a lot of time has gone by and folks were not able to see what your pattern of giving was. so we are doing it now on a

semiannual basis. we have agreed to archive the data where we have it, so that someone could go back in time and look at the contributions. of course, transparency is only part of the process of trying to create accountability. we have a fairly rigorous process by which we go about making decisions on political contributions that involv. it involves a cross -- committee and we have outside legal counsel look at contributions to ensure their appropriateness. another area that recently made a decision after the tapeton decision, we made a commitment not to contribute to any do hysteria election at the state level, if either state supreme

court level or races under that. that's on the basis we may have court cases coming up before those courts and it would not be prepared for us to have contributed to judges, at least as far as the goal of having the courts remain impartial. on citizens united, we don't think that citizens united for us will have an impact. even before mccain-feingold, we did not give soft money. the only thing we did do was concluded to the republican and democratic governors' association and earmarked that spending court minister if purposes, but we did not give traditional democratic and republican party. so the fact that restraints were removed will not really affect

our decision. we have a statement on our website whereby we say that if we ever do give corporate contributions to 501c4 or 527'sa or disclosure is not required, we made a commitment that we would disclose that contribution, whether or not those committees disclose those contributions or not. we have tried -- we have evolved the process and tried as much as possible to impart our experience to other companies while recognizing that it's up to every company to decide what makes sense for them. i do co-chair with dan for microsoft and conference board committee on political spending disclosure and accountability. with that i welcome any questions. >> thank you. >> my colleague used the word

"lobbyists." i am a lobbyist. we are a utility company based in ohio. we have operations in 11 states. i tell you that because as a holding company if we are regulated under the public utility holding company act of 1935. that was the result of a scandal in 1930 opposing puck under the roosevelt administration a public utility holding act was passed. as a corporation we were riveted from spending any corporate money on political activism piccoloist change in 1992. we did not realize how lucky we were between 1935 and 1992. aep has adopted the reforms in how we operate our pac. i was the last year was a lobbyist or corporate officer.

i missed the airplane and the car, but it's probably a better system today in that it's more rigorous in actually asking people throughout the system to operate and make the judgments in regard to where we make political contributions. it also helps relieve build support for the pac because they become more knowledgeable about how government works and they see thewe good and see have seven operating companies and judiciaries ined to seriou two other states. we grappled over a time with how to approach those issues. we operate in west virginia, so we've certainly watched kapeton. there was a significant effort in ohio to change the makeup of the supreme court.

we have evolved in that we certainly agree that transparency is very important. i am based in washington and i spent a lot of time with members of congress. i spend a lot of time with members of congress. one thing i have picked up recently in regard to the citizens united decision is that members are more concerned about the amount of money they are going to have to raise to protect themselves against outside groups. so you had an instance where there are probably streams on either side of the party that are bracing -- embracing these committees and embracing the fact that you don't necessarily have to determine who has contributed. but frankly it is causing greater fracturing in how members operate and, they

dedicated fund raising. i think it undermines the progress we need to make in washington and it's very clear we have a lot of progress to make in washington. why don't i stop here. >> that's a great place. i want to start with a question. i wonder if i can get a watch or something? i depend on my blackberry. i want to put this to the three practitioners. how has life changed? how much pressure are you all under from outside groups to give money? educate the rest of us on how, after citizens united, how was your life different? >> mine has not changed. i run hour operation at the state level, state government

relations. and i have not had any requests. >> do you think that is because your company has a policy? >> it is probably that. to the extent we have not done that in the past, that is probably true. i cannot comment for our washington office, because i did not pose that question to them before coming here. but i think that probably the fact that they know we are generally opposed to corporate funding -- using corporate funds for federal political offices, they're probably not besieging us with requests. >> all right. barbara, how about you? >> we also have a policy, which i did not mention. we put in case a policy against making direct independent expenditures. and we have not been inundated

with requests that i know of, and i would hope i would know of them because they would come and ask me if it it was something we could or could not do. so the landscape really has not changed for us. >> i think it is occurring in states where you have had the battle of the budget, and the battle of the budget between municipal unions or state unions. there was an awful lot of money that went in from organized labor, and there is now a counter push back. we work very closely with organized labor, so it has kind of complicated life for us for a while. but that is where we're seeing the benefit. >> so you all are under pressure in a high note to give -- most

of you know, but this is a fight over state law that was passed that curtails collective bargaining rights for state employees, and they are trying not to put it on the ballot to have it overturned. so there is money on both sides. were you under pressure from both sides? >> we were contacted by both sides, yes. i do not think we have made a decision yet. >> how much did it become an education for publicly-owned companies? >> i think the target experience was a major eye-opener for a lot of companies. i think it is a big risk for companies to be so public with an independent expenditure. that has been our decision to put in the policy, the policy we put in place. i mean, you're going to have your ceo stan up and say a vote

for or against x-a candidate. i do not think too many companies are going to feel comfortable doing that. personally, i do not think you're going to see a lot of companies playing in the independent expenditure space. >> what little clams we have of the companies engaged, they are mostly privately-held. but we do not know a lot about the amount of money that is out there either and who the donors are. the ced report that was distributed today is one of the most illuminating numbers -- the top 10 spenders over the last cycle, and only three exposed to their donors work. it will take a real scandal for all of this to change. >> well, we're going to get scandal, and we are eventually going to get huge scandals. but i would point out a couple

of things. i think what barbara just said is correct. i think the stakes on this are worthwhile for major companies to go out and make independent expenditures. there are too many other factors involved. but the problem is if you can do this indirectly and secretly, the stakes start to disappear. disclosure is simply about letting people know what is going on. and as long as we have the avenues for secret money, we're going to have problems, and companies, sooner or later, are going to face real pressures. one of the biggest things that happened with the old soft money system was that, among other things, companies and

individuals got tired of being shaken down. it became an entire shake down system. the players are there. the competitors are there. it is a vicious, not a virtuous, cycle. >> it was mentioned earlier that this very secrecy that might give some comfort to corporations that he speaks of now, that is a false promise. you do not think it will hold. >> well, i think that you have to be guarded in making any prediction. but the spread of the web-based community, the hacker community, no one is safe. and if there is an eruption of the kind of resentment of the

malefactors of great wealth -- i think that was the term last used in the 19th century, malefactors of great wealth, as it has been apparent in the riots in the u.k., or maybe even in the arab spring. we're very insulated for most of that here. everybody in this room is insulated from those things. we may be surprised. it is one of the reasons it is so troubling to see the growth of enterprises going private. these enterprises insulate themselves from all kinds of accountability, and they have willing partners in this exit from the public sector and the public view. and the investment bankers -- fred, i take it this is another target for you to get at, the investment bankers. this is another challenge for fred. bruce, you already have yours. but the idea here is that this

going private is really a serious challenge to the disclosure regime we badly need. you know, one of the things that fred touched on, at least he made a small gesture toward this, is the role that this has in a kind of high class black male -- blackmail of less well- to-do enterprises. once you are the dominant player in your industry, once the dominant player by the political playing field, you're at a huge disadvantage to provide the kind of start of competition, the kind of new ideas in an enterprise that this country has long depended on. i said i was a naive idealist about much of this. i am still am. i think this is one of the reasons why it is very important to take up the offensive against all these contributions,

because they emphasize the power of money and not a productivity. and this whole focus on giving, and you listen to these numbers that have been used, that ed used in his presentation, that fred is very familiar with, and that bruce talked about, it is going to grow. you do not even know the half of it. i want to finish this sentence. it is this issue with, how do you find out what is really going on, that baffles me, and i defer to everybody here, especially to fred and bruce, to help us figure out how much money is actually being spent on campaign contributions that might legitimately go to creating productive enterprise in this country and keeping it here for jobs and well-being of families and neighborhoods. sorry i went over. >> no problem but you triggered a question for me.

first, he raised the point about how there is some level of false hope here, that eventually the donations may ultimately become public. that was a factor that you all considered as you made your own decisions -- i want to know if that was a factor that you will consider? and then with the idea of corporate competition, west virginia, there are active coal companies -- a very active. i wonder if you have seen this with some of the internal corporate stress with this kind of opening up of new political landscape -- have you all felt that at all? >> in regard to whether or not something remains confidential, one of the first things i found in washington and in dealing with other folks, i can keep a secret, but i am not sure about the people i tell.

so you need to go into it knowing that it will be discovered sooner or later. it is a fact of life. in regard to west virginia, obviously, he i am not an attorney, but in reading the case there, it was a commercial issue. one company wanted to control another or take over another, and that is what happened in that circumstance. companies certainly will try to use the political process to their commercial advantage. it happens all the time here. and when you try to disguise that, ultimately you're going to be found. honesty is the best policy. another thing that i was told when i first started lobbying is tell the upsides of your argument, but also explain what

the other side is going to say with the downside of your argument, and that is an effective way of gaining trust. i think the whole idea of embracing transparency is important. >> on the first point, that is an excellent point. you have to assume the information, at some point, is going to come out. if you're planning on staying in your job for a long while, you might as well assume it is coming out. it is certainly a factor. another advantage of transparency is the discipline it creates when you are making the decision. when you know is going to see the light of day on your web site, it certainly adds some discipline to the process. we have not really done contributions in terms of competition with other members of the industry. it really has not impacted us.

>> i think tony and chuck still my notes. i do not have much to add. i would be reiterated exactly what they said. in terms of our decision making, the fact that things may come to light, i mean, we're not saying let's go this way because it may be disclosed over it may come out. it is not a mind set up the hours. so i guess the answer to your question is, no, transparency is part of our culture now. it works into everything, all of our decision making, generally. >> we have about 10 minutes left. i want to open it up to the audience. there is a new rookie here. >> [inaudible]

-- referred to independent expenditure policies for that. i assume almost all corporations are also members of trade associations, regular contributors, and one of the features of the current lack of disclosure and political spending is that you have c6's andc4's taking money spending it on political activity, even though that is another major purpose. i am curious if you include in your disclosure policies and your policies concerning political spending contributions and if so, hows, that fits in? >> part of our disclosure is the

trade associations that we participate in. we request from them information to post on our website every year in the amount of our dues spent on political activity. we ask that they give us that information. some do. unfortunately, some do not. the ones that do, we opposed that on our web site along with the other information. -- we post them on our website. that is the extent of our exposure. we have not extended that policy to the other organizations. we have just done that with our membership organization so far. >> we have done the same. we posed for trade associations $25,000 dues and that portion that is used for political expenditures. however, i must admit that data does not break it down.

it is an aggregate number. so it does not break it down what is actually used for. we do not have access to that data. i would say the whole issue of a trade association is something with respect to our transparency policy that is constantly under review. >> we're in the same situation. we report what we receive from the trade association. >> former congressman jim moody is with us this afternoon. you have been inside the belly of this beast. would you like to add anything? >> go ahead and join us in that chair. >> i have a couple of points. first, i was on the ways and means committee for a number of terms. we received a lot of what we're talking about, obviously. so i saw a lot of it first hand. some of the things you have to

take into account is that some of your rivals that you'll be running against, either for the house or when the state loses a district or for the senate, is that private money is a huge element. one person and that's right when he was going to put $3 million on the table to run. another person never spent more than $400,000 for that seat. another person never spent more than $2,000 for that seat and he shook every hand in wisconsin. there is tremendous pressure to take outside money. that is a point to remember. also, the fact that the most precious commodity a member has is time. you are running on schedule all the time. you can go home and shake hands or you can accept money. there's some tradeoff there. you can never shaken up hands to

overcome a millionaire that has his own personal money. if you have your usual group of supporters, that will not be enough if you want to run a tough race. personal wealth and the time issue is very much on the mind of a member. i want that to be clear. i co-authored public financing for state legislative races in wisconsin. when i ran for congress, i was very lucky. i only had to do the primary. it was an open seat. it was a retirement. eight people jump in. i knocked on thousands of stores and won the primary. i was an economics professor and part-time legislature. each district is different. money is a huge role in some districts. in that primary, it was not an

important role. it is very much personalized to the member. but the points are the personal wealth and throw everything off, and time constraints put tremendous pressure on it taking money. >> you try to accommodate other legislation, and the court has been hostile to that sort of thing. are there ways that the issues that congress man races could be incorporated in a package? >> the only way to deal with that is through some form of public financing, matching funds, small contributions. i believe the internet has enormous potential problems for bringing vast numbers of citizens into financing elections and providing some balance to all of the big money or the will the money --

wealthy money. the reach of the internet is almost infinite. if we can figure out how to use that to involve lots of citizens, you can balance of, to some degree, the interest in money or the wealthy money. i want to mention that i neglected to mention my colleague from americans for campaign reform when i was listing groups working on disclosure. there were also very involved in this issue. i appreciate and think it may be at least partially right that sooner or later information will come out. but we cannot count on that. you cannot depend on it, and you certainly cannot be sure that everything is going to come out. so with all due respect to the future of a world of wikipedia, we will continue to press until we get legislation that requires any entity that wants to make

independent expenditures to disclose who is putting up the money. that is a cardinal rule. it is the basic rule when you start looking at the role of money and politics. citizens have a right to know. and the extremely conservative on finance campaign issues from the supreme court recognized that without any problem at all. >> about the international, i am on the board of something called the global organization of parliamentarians against corruption, an organization in canada, but a number of countries now have chapters. it is taking a steam. people realize this is an issue. you think we have problems, you should look at parliaments in other countries. >> that was a point that landon was making earlier.

unless there is another question, i will allow him to close with some observations on that point. >> it is hard to talk about being a world leader if you're concerned about making payroll in producing shareholder value. and so, while i acknowledge fred's point about wikipedia, and it is wonderful that we got to mention this three times in the same talk, fred, the it is clear that that disclosure is not timely. what all of us are talking about is the timely transparency, something that makes it possible for decision makers of every sort, shareholders, government leaders, to have information on a timely basis as to the origin and amount of contributions. ed summarized the ideas that came from the ced's work.

they are included in the brochures you have at your table. it is important that those be given attention. it is important that they be given feedback, that they generate feedback to the ced, because this is a work in progress, not only for disclosure but meaningful disclosure. and there are so many distinctions here between private and not private, between monopoly or oligarchic industries were the whole issue for the corporation, even if publicly-held, is so different. it is differed because of the point that has been addressed here to some extent and the difference between public and non-public enterprises. my own view is this is hugely important to those of us who believe that what made this country great was the system of enterprise generation,

enterprise regeneration, all kinds of innovations that come from such a turbulent, even a chaotic, a ground for business and enterprise formation and activity. and money corrupts that creativity. it corrupts that fertility. and we have to find a way to either stop it, get a handle on it, or make sure that its disclosure disables its harmful effects. and in that respect, i am respectful of everything all of you are doing to include greater disclosure, but also, we have to continue to collaborate, whether it is with our is sayingn who something important coming from offshore. people see this as important. i do not know whether there is any such group in russia or in

the arab states, but it is that kind of thing that we can all encourage together to build a global commitment to disclosure and transparency, and it will all work to the global marketplace we live in. thank you very much. >> and the last word. >> thank you. in case you get discouraged, remember, the public is very angry at the current situation. the public is ferias, and they are open to changes. -- the public is furious. and remember the thing about term limits from a few years ago. we are at a key moment to push forward on this and really publicize what we're doing. >> thank you. thank you all. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> before we adjourn, i would

like to thank our moderator and panelists. ed kangas and landon rowland. i would like to salute the companies that are here with us today. i would like to salute what you're doing in your commitment to transparency and disclosure. [applause] i also want to point out that ced has been fortunate to have excellent leadership for each of your companies. i think pfizer would thank you, and merck would thank you. we have been a longtime friend. part of the reforms center. finally, the ceo of american electric power will be co- leading our work on energy policy, along with fred smith from a fedex. so thank you to each of you and

your leadership. second point, this issue came up a couple times in the conversation. if members of congress feel that they have now to raise more money to protect themselves from outside groups at the same time that they say they do not like the system, why do they not fix it? they can do it immediately. their point, ced is back -- a third point, ced is back in the game. we look forward to continuing in deepening the relationship with each of the partners we have had for many years. and what are we going to do about it? first, we're going to continue a campaign around the country. we want more companies to do exactly what these three leading companies are doing. and i would point up that the statement that charles made from merck about no money going to state courts, that is extremely important. if more companies in this country would just say no to

putting money into state judicial elections, we would be much better off and safer as a country. my final point, and this is a message to journalists, we heard a lot about money coming into the system, about it doubling and increasing. well, the journalist and political scientists who follow this issue can do is all a favor. they consider to ask the question, where is this money going? fortunately, fred, it is not going directly to the politicians. but it is going to a cottage industry that has grown up around a system which, frankly, stands in the way of reform. these are good people. they raise money. they do all sorts of things. but i suspect that by the time we get through the 2012 election and the billion or more dollars being spent on this, i think the american people are going to be fed up with the amount of money that is basically buying ads and

boring them. so to the journalist and political scientists, start asking the question now, where's the money going? help identify this cottage industry, which is one of the impediments to reform. on behalf of ced, i would like to thank all of you for joining us, and we are adjourned. [applause]

>> the house and senate out this week, in recess. but the house will return on thursday to wrap up work on the continuing resolution. here is an update. for the moment, the debate over short-term spending measures has been resolved on capitol hill. the staff writer at congressional quarterly has been covering that debate. what broke the impasse between senate democrats and republicans on disaster aid and spending offsets? >> basically, i think it was the

deadline. without further action by congress, the house still needs to act. but without further action by congress, the government would run out of money this coming friday, and it was time to make a deal. and the senate leaders, bipartisan leaders, senator harry reid for democrats and mitch mcconnell for republicans, they reached an agreement to continue funding for the government for another seven weeks, and then the senate quickly approved it last night. now it will go to the house, which is expected to approve it, although there might be some complications in the next few days. >> the house is supposed to come in and approve a short-term measure. when will that happen? >> we're talking about two separate bills. one, the short-term bill,

extended four days, from october 1, the start of the fiscal year, this saturday, until the following tuesday. the second bill would extend for another seven weeks, until november 18, just before thanksgiving. in erie, the house could pass the seven-week bill and the four-day bill would become a moot point -- in a theory. the plan is that the house would take the four-day bill when it meets this thursday, the day after tomorrow, in what had been scheduled to be a pro forma session. in theory, it will remain a pro forma session, in that the four- day continuing resolution to keep the government operating for four days, that bill is expected to pass by unanimous consent, meaning that there will be no objection. there will be perhaps a brief statement, but there certainly will not be roll-call votes.

we should point out that when a bill comes up by unanimous consent, as is the plan for the four-day bill this thursday, under those circumstances, any member of the house, any one member on monday 435 can object, and that -- among the 435 an object, and that would be the end. since the government is about to run out of money, the house leaders, republican leaders, would have to come up with a new plant. the house would probably come into session on friday or over the weekend to pass this four- day bills and keep the government operating. while there is an expectation that all this will be taken care of quickly, expediently, on thursday, there is no guarantee. >> and fema will not run out of money? >> assuming the four-day cr is past, there will be the money for fema, and the seven-week

bill will have additional money for fema and the rest of the federal government. >> what is the debate over the continuing resolution say about the ability of congress to come to an agreement on $1.20 trillion in cuts by the debt reduction committee by the end of the year? >> they are reminded that nothing is easy in this congress. as you and your viewers know, we have a democratic-controlled senate and a republican- controlled house. each of them assert their prerogatives. we have a president at the white house with his own interests. and the republicans were elected last year and took control of the house. they wanted to make change, and they take every opportunity to deliver on their promises. and the democrats often object. we have seen on this debate on

the continuing resolution, including the money for disaster assistance, that it is often a problem to move anything. therefore, the $1.20 trillion deficit reduction bill is going to be tough. >> covering congress and the spending debate for congressional quarterly view can read his work at cq.com. thank you for that update. a reminder, you can watch that house pro-forma session this thursday at 11:00 eastern here on c-span. tonight, our road to the white house coverage continues as we bring you remarks from david axelrod. he spoke today in manchester, new hampshire at a politics and eggs breakfast. we will have his comments at 8:00 p.m. eastern. that is followed by new jersey governor chris christie, speaking in california. he was invited by nancy reagan. that is at 9:00.

>> he founded several labor unions and represented the socialist party of america as candidate for president, running five times. the last time from prison. eugene debs lost, but he changed political history. he is one of the 14 men featured in c-span's new weekly series. is life from the debs , in indiana. friday at 8:00 p.m. eastern. get a preview and watch other videos about him at our special website for the serious. next, former secretary of defense robert gates on the future of the military. he spoke last week with the president of the constitution center. later, he was awarded the 2011 liberty medal in honor of his military service. he talked about his legacy, the middle east, and the repeal of don't ask, don't tell. this is just over an hour. [applause]

>> thank you. it is such an honor to have you with us. you're such a great recipient. we have a great group of folks here. a lot of people in this room are some of our strongest supporters, and there are some board members here as well. i know that we have some great young folks from local and regional rotc programs. before i get to some of the questions that i have been given, i was thinking -- i loved touring you aroung the constitution center -- a around the constitution center. you mentioned that you have taken the oath to protect the constitution about seven times. i can tell you feel at home about trying to make the constitution more accessible to people. is that true? >> absolutely.

what of my concerns, frankly, is the relatively poor quality of teaching the history in civics, to the degree they are taught at all in public schools. and if there is any area where our students are more efficient than in -- more efficient than in math and science, it is history. anything that brings schoolchildren here or gives them greater insight into what this piece of parchment means to them in 2011 is an incredibly worthwhile activity. >> thank you. we know that the military is such an important piece of the united states, such an important piece of the constitution. and you have watched a change for several decades.

in what ways do you think we will see it continue to change over the next decade, the next 30 years? >> partly that will depend on the decisions that are made on the budget. they may not have the money to change anything. but i think that if the cuts that have been proposed by the president are at the level that, over the next 10 years, if it is ultimately agreed to, then i think we can manage to modernize, although the force will inevitably be smaller. but i think that the key thing about our military going forward is in the greater range of challenges that they will face in the years ahead. our forces are basically -- when we went into iraq and afghanistan, our forces,

fundamentally, were those that had been designed to deal with the soviet union. large land formations, a large armored formations, various sophisticated fighters and bombers. and we found ourselves in a very different kind of conflict. the truth of the matter is, ever since the beginning of vietnam, we have found ourselves in a very desperate kind of conflict than the one our forces were designed for. what we learned about counterinsurgency, for example, in vietnam was lost after vietnam was over, because our services wanted to revert back to the comfort zone of these big formations and the idea of planning for a large-scale conventional conflict. but what we now know is that we're going to face a range of conflicts against a range of different kinds of enemies, our adversaries, that have different

kinds of capabilities. so my mantra as secretary was to have the most flexible and versatile possible military to address the broadest possible range of conflict. and particularly during the period of budget constraints, to be extraordinarily careful about the capabilities, about buying an extremely expensive weapons system that can only be used in one scenario and against one adversary. we need things that can be used across the board. this flexibility and versatility needs to be, i think, the underpinning of our military as we look ahead 10 or 20 years. because we will have something like china -- china is not going to try to match us tank-for- tank, like the soviet union did.

they're smart and saw what it did to the soviet union. instead, they're picking capabilities that come at our vulnerabilities. cyber, highly prized -- highly precise ballistic missiles, anti-satellite capabilities because they know of our dependence on satellites, and so on. here is a very sophisticated and well the -- wealthy peer that will come at us. then there is a group like hezbollah that has more rockets than most governments. here is an outfit that is not even the country or a state that has some fairly sophisticated capabilities. they, too, will have cyber capabilities. we need to be ready for this range of conflict as we look ahead. i would make one final point on this, our record since vietnam of predicting where we would use

military force six months or 12 months from now is perfect. we have never ever gotten it right ones -- once. [laughter] we live in that kind of unpredictable world. therefore, to structure our forces against one or another potential adversary, i think would be a great mistake. >> how far along our way toward getting to that level of beck -- how far along as the evolution of getting for that flexibility? is this a full-on 100% change or is it incremental? >> i think the biggest change that needs to take place is in the minds of our military leaders. i think that changes very far along. i am an old kremlinologist, so i believe by placing people to do things. a big institution can always

defeat one leader, but it can never defeat five or six. for example, we now have general dempsey as chief of staff of the army. we have general kwadir no -- odierno from iraq as chief of staff of the army. we have the vice chief of staff of the army. he was corps commander in iraq. what i have tried to do is feed throughout the army leadership people with iraqi and afghan experience, who know the war s we have been in, who have been in combat. a lot of people say, you just want to fight today's wars, and you're not giving enough attention to future war. my argument with that is that i have every confidence that the defense industries, the congress, and the services

themselves will protect the high end capabilities, because that is where the dollars are. the f-35 will be funded. the aircraft carriers will be funded. a new bomber will be funded. what i want to make sure of is we do not forget what we have learned in iraq and afghanistan, and that while you're protecting those high end capabilities, you do not neglect the other capabilities, which in fact, were neglected after vietnam. >> you implemented several important changes in fed the military during your service. one of the ones that a lot of us paid attention to was vetting journalists. what are the upside or downside of the changes you have made? >> i will not take credit or blame for that. actually, the first time we try to deal with that was in the first goal for -- gulf war.

i will point out one good thing and one not so good thing resulting from embedded reporters. the good thing is a wide array of journalists have had firsthand exposure to the incredible young men than women in our military. and i have yet to find a reporter who has been in bed did he did not come away absolutely awe-struck by the quality of the young people in our military and by how smart and how versatile they are, how adaptable, and how you can have a young captain who is a warrior in the morning leading a village in the afternoon, during development projects at lunch, and just a whole array of activities. the reporters really come away with a very positive attitude toward our military, those who

have been embedded. the problem with an embedded reporter is it is like watching the war through a soda straw. they have a very limited perspective. so when you read an article on the front page, if the platoon they were with that day had a good day, the war is going well. and it the platoon had a terrible day, we were losing. so the problem is a lack of perspective and a lack of a broader view of what is going on on the battlefield. >> looking back across nearly five decades of public service, is there anything that you are particularly trapped -- proud of? what comes first into your mind? >> well, i was often asked when

i was on my farewell tour what i wanted for my legacy, what i thought was most important. and i said, you know, the thing that matters the most to me is that those young men and women on the battlefield knew that they had a secretary of defense who would do anything and spend any thing to give them what they needed to be successful on the battlefield and to come home safe. and if not safe, to give them the best medical care in the world. if those troops out there felt that way, that is all i wanted. >> it sounds like a terrific segue to letting some of our rotc folks from the area ask questions. >> this is a bald from pennsylvania. >> thank you. -- this is bob from

pennsylvania. >> i was in 1968 vietnam. in recent interviews, you said we got it wrong in vietnam and iran in iraq before we got it right in vietnam and iraq. i would like your perspective on what we got wrong and what we got right in those countries. -- is that we got it wrong in vietnam and we got it wrong in iraq before we got it right. >> i am less an bert on vietnam, and my memory is not that good -- i am less an expert on vietnam. but what i will say is in afghanistan, for example, and in iraq -- in iraq, we tried to -- leaving aside how we got there and so on, but in iraq, we tried to shift the responsibility for security in iraq to the iraqi

forces before they were ready, before they were ready to handle it. and the level of domestic violence spun out of control, and we still thought that we could turn it over to them. this was what the surge reversed. in terms of having enough and boots on the ground that we were able to provide security, and under the umbrella of security, then political reconciliation could begin. still got a long way to go. but in the year that it took to form an iraqi government, the key thing that i did not see commented on very much was that they were talking in arguing with each other. they were not shooting each other, in contrast to 2005 and 2006. in afghanistan, i think that we, again, tried to much in the way of conventional forces, in terms of the other part of the baghdad

strategy that made a huge difference was getting our troops out of big encampments and living among the people. i think this was one of the elements in vietnam. living among the people, giving them the confidence we were there, and providing the security for their own forces. they had a 911 they could call if they got into trouble. this is what happened in baghdad in terms of getting out into the joint center's alter baghdad. and it is what happened in afghanistan. the downside of this in afghanistan is that as we have increased the foot patrols and put the troops out among the populace, it has made them more vulnerable to the ied's. the heavily armored vehicles that we started in 2007 protect them while they're on the road and while they're on the way to their patrol. but once you're on flood, at -- on foot, the eu are much more

vulnerable. the key in all the situations was ultimately understanding that you had to provide security for the populist, and that men getting out and among the populace. >> we have some questions from twitter. >> the first question asks -- obama urged the palestinians to abandon a statehood vote. should the u.s. take a leadership role in multinationals like the u.n. and nato? >> first, i think we certainly have a leadership role in nato. and i think we have one of the leadership roles in the united nations. i would say, on the palestinian vote, yes was sort of the ultimate realist, if you will. -- i am sort of the ultimate realist, if you will. the question i ask is, does unilateral action with respect to a state hit advance the cause

of peace or deter it? my judgment would be that it deters it. we could spend the whole afternoon on the israeli- palestinian conflict. i was the first secretary of defense to visit ramallah last year and meet with the palestinian prime minister. i have known netanyahu since he was deputy foreign minister in 1990. and i have known the minister of defense in israel since he was chief of staff back when i was director of cia. so i have known these players in this game awhile. i was with president carter when he finished the camp david talks. the one thing that i have noted is that the big step towards peace between israel and the arabs, in both cases were there have been major steps forward,

it has been under very conservative israeli prime ministers. i believe progress was actually being made under prime minister assure rhone -- prime minister sharon before his stroke. i think the hard question israelis are facing and that we all have to think about is when you think about a palestinian state, are you talking about the west bank, where the palestinian authority actually has some authority, where the security services have been trained by the united states and others and actually work closely with the israelis? and there's really a pretty good relationship. or are you talking about the gazan palestinians control by hamas that have declared that they want the destruction of israel? which set of palestinians but

the resolution represent? i think that is the challenge. i think there has been a bandwagon effect in the u.n. of everybody wanting to sign up for this resolution without really thinking through the implications of it. that said, the reality is we need to be very aggressive in this peace process between the palestinians and the israelis. every president that i have worked for has been angry at israel over the settlements and has tried to get the israelis to stop the settlements. because with each new settlement, getting an agreement on borders and everything else becomes more difficult. so this is a tough situation. israel is essentially alone in the region. they look at egypt, which was a

staunch partner in peace, at least. not an ally, but a partner in peace. but since last spring, they have seen their embassy attacks in cairo and so on. but israel was not too smart either. they alienated the turks, who were a strong ally. they foolishly assassinated a hamas leader in the uae. and the uae was one of their friends in the region. they have made the tactical moves that was not -- that were not in their interest. there needs to be a frank conversation about this process and how we move it forward. but there's no doubt in my mind, because i look back to camp david and even back to the peace talks after the yom kippur war, and there has never been forward progress on middle east peace without the united states being

at the center of it. and we have to figure out our role in that going forward. >> this is from cadet third class david miller from west chester university. >> you took over in 2005 and in the middle of a decidedly unpopular war. what did you first set out doing when you took over that position? what did they one and weak one look like for you? >> well, it was 2006. -- what did day one and week one look like for you? >> well, it was 2006. first, my agenda is iraq, iraq, and iraq. getting iraq in a better place was the highest priority. that involved appointing general petraeus, read it --

recommending him to the president to be the new commander, and then implementing the surge of decision and getting the troops into -- and the surge decision in getting the troops into baghdad as quickly as possible. the second was improving the civilian military relationship, which by all accounts, and i was not in washington, happily, so i did not know firsthand, but it had become quite afraid -- frayed. so i started, again, based on my experience in kremlinology, i realized that symbols matter. so when it came to meeting the commanders, i went to their headquarters. i did not have them come to the pentagon. i traveled to their headquarters, met their staffs. i got to meet more people that way, but it was also a gesture of respect. i started meeting with the

chiefs in the tank, on their turf, rather than having them in my conference room. i made sure i listened. i did not always agree, and i sometimes overruled them, and i sometimes fired them. but i always treated them with respect. but again, early on my agenda was repairing the civilian military relationship. third was repairing the relationship with congress. to say that that was frayed would be an understatement in the extreme. so i set out to be even-handed in dealing with the leadership in the congress and both parties. and i would do things like i would go to the republican caucus in the house. i would do the democratic caucus in the senate. and i would do allf