>> the cochairs of the joint deficit-reduction committee said today pick, they will not be able to reach agreement before the wednesday deadline. republicans and democrats continue to have differences over taxes and spending. >> next, on c-span. and later, president of candidate newt gingrich weighs in the deficit reduction committee and his campaign. and then secretary geithner and hillary clinton on sanctions against iran. >> in the name of the greatest people that have ever called of this earth, i draw the line in the dust and cost a, before the seed of tyranny. segregation now, segregation tomorrow, and segregation

forever. >> of george wallace was an ardent supporter of segregation, outspoken against the civil rights movement. he ran for president four times and lost. one of those efforts cut short by an assassination attempt. george wallace, from the governor's mansion, friday at 8:00 p.m. eastern on c-span. >> remarks from president obama on the failure of the that committee to reach an agreement. ps of from the briefing room. >> last summer, i signed a law that will cut nearly $1 trillion of spending over the next 10 years. part of the law also where required congress to reduce the deficit by an additional $1.20 trillion by the end of this year. in september, i sent them a detailed plan that would have gone above and beyond the goal.

the plan that would reduce the deficit by an additional $3 trillion by cutting spending, slowing the growth of medicare and medicaid, and asking the wealthiest americans to pay their fair share. in addition to my plan, there were a number of other bipartisan plans to consider from both democrats and republicans, all of which promoted a balanced approach. this kind of a balanced approach, a place where everybody gives a little bit and everyone does their fair share, is supported by an overwhelming majority of americans. democrats, independents, and republicans. supported by experts and economists from all across the political spectrum. many democrats, were able to put politics aside and combat to reasonable adjustments that would have reduced the cost of medicare as long as they were part of a balanced approach. but despite the broad agreement that existed for such an

approach, there are still human republicans that refuse to listen to the voices of reason and compromise coming from outside of washington. they insist on protecting $100 billion worth of tax cuts for the wealthiest 2% of americans at any cost even if it means reducing the deficit for the deep cuts like medical research and the cuts in medicare. at this point, they simply will not budge from that negotiating position. so far, that refusal has prevented congress from reaching an agreement to further reduce the deficit. we are not in the same situation where we were in in august. there is no imminent threat for us defaulting on debt that we ago and there are already $1 trillion worth of spending cuts that we have locked in. part of a lot designed says that

if congress cannot reach an agreement on the deficit, there would be another $1.20 trillion in 2013 of cuts divided equally between domestic spending in defense spending. one way or another, we will be trimming the deficit by a total of their least $2.20 trillion over the next 10 years. that is going to happen one way or the other. and either congress comes up with $1.20 trillion that they have failed to do, or the sequester kicks in and these automatic spending cuts will occur that bring in an additional $1.20 trillion in deficit reduction. the question right now is if we can reduce the deficit in a way that helps the economy grow, that operates with a scalpel and not with a hatchet. and if not, if congress is willing to stick to the painful deal we made in august for the automatic cuts. some in congress are trying to

undo these automatic spending cuts. the message to them is simple. no. i will veto any effort to get rid of those automatic spending cuts for domestic and defense spending. there will be no easy off-ramps on this one. we need to keep the pressure up to a compromise, not turn off the pressure. the only way these spending cuts will not take place in is if congress and get it back to work in degrees of a balanced plan to reduce the deficit by at least $1.20 trillion. that is exactly what they need to do. that is the job they promised to do. they still have a year to figure it out. although congress has not cunha into an agreement yet, nothing prevents them from coming to agreement in the days ahead. they can still come together around a balanced plan. democrats are prepared to do so.

my expectation is that there will be some republicans still interested in preventing the automatic cuts from taking place. can i stand ready and willing to work with anybody that is ready to engage in that ever to create a balanced plan for deficit reduction. in the meantime, we have a lot of work to do this year. we have to work together to cut taxes for workers and small business owners across america. if we don't act, taxes will go up for every single american starting next year. middle-class americans can't afford to lose $1,000 next year because congress won't act. i can only hope that members of congress that have been fighting to protect tax rates for the wealthy will fight just as hard to protect tax breaks for small business owners and middle-class families. we need to put construction workers on the job with roads

and bridges and we need to put our teachers back in the classroom educating our kids. when everybody gets back from thanksgiving, it is time to get work done for the american people. all around the country, americans are working hard to live within their means and to meet their responsibility. i of they expect washington to do the same. thanks. >> that was president obama commenting on the failure of the joint deficit-reduction committee to reach an agreement. the co-chairs of the deficit reduction committee released the statement.

after months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the deadline. nerse speaker john boehen said, while i am disappointed, we will move forward to remove barriers standing in the way of private sector job creation. this process did not and in the desired outcome, but it did bring our enormous physical challenges into greater focus. i am confident the work done by this committee will play a role in the solution we must eventually find as a nation. that was house speaker john boehner. go to c-span.org for more. more now on the failure of the joint deficit reduction committee to reach an agreement.

we will hear from former congressional budget office director and white house budget director. the brookings institution -- institution hosted this discussion. >> in the morning, everyone. i am pleased to be joined by alison anders today talking about the nation's fiscal future. when i last saw love you, it was probably august. it was a happier day and we had dreams of the redskins in the super bowl and we had dreams of a balanced federal budget and a super committee that might come to the rescue and bring the holiday cheer. at a for christmas when congress would hopefully pass a

physical renewal bill. it doesn't appear that any of that is happening. i am sure that the prospect for any small sliver of hope that the super committee may be grasping onto may come up in conversation. we may also be talking about what happens next, assuming a failure to have something that congress can pass. that is the contact. the way that we would like to proceed, i will first asked alice, who as we all know is one of the country's great economists and budget experts to talk about where we stand. it was about a year ago as we had a deficit reduction conditions laid out and proposals about where the country might go that have been central to the debate and have not yet produced the major

changes in the deficit picture that was 04. after alice speaks for a bit, and bruce will speak. and one of the things that we need to keep in mind is where we need to invest, even as we are cutting. that is what bruce works on any metropolitan studies program, looking at areas of infrastructure, science research, education, and so forth that are crucial to economic recovery. we have to be very careful how we cut. then i will speak, speaking briefly as a panelist about the defense budget. after a little bit of exchange, we will go to you. i will thank most -- of alice and bruce for being here, and you, of course. give us the sense of where

things stand on this monday morning and generally where we need to go next. >> i feel worse about the super committee that i do about the redskins. one cannot argue that they've played well at almost one, one cannot argue that about the super committee. i feel very badly. this was a huge opportunity missed, and i believe that it has been missed, and that it will be announced later today. let me say a word about what they should have said and why they didn't say it. and a bit about where we go from here. what they should have done, and have the power to do, was get the federal budget back on a sustainable track. that would have taken going well beyond the minimum requirement of $1.20 trillion. going big as many of us were

saying how. had actually solving the problem. the $1.20 trillion does not stabilize the that. the debt will still be growing faster than the economy can grow and that is the definition of a bad problem. what we have to do is get the situation back on the track where the that is not growing as fast as the economy. we did that for decades after world war two and we never paid off the debt, we just threw the economy faster. it was basically the objective of the commission's i served on. and the arithmetic of this problem drives the answer. if you're going to get to a sustainable that, you have to do too big things at the same time.

the curbing of the growth of entitlement programs, especially medicare and medicaid. it would nice to -- it would be nice to put social security back on a firm footing. raise more revenue in effect the tax cut. those have to be part of the solution. the numbers were not $1.20 trillion. it was a combination of those things to get to $4 trillion or $5 trillion over the next 10 years. of a lot of us thought that the big scenario was easier than the small one. it certainly got a lot of attention, we testified before the super committee a couple weeks ago. but there was an enormous group, that may be too strong a word. there was a big group and the

congress are run the centers warner and chambliss that included senators from both sides, quite a number of them that wasn't a gang of six anymore. it was more like the gang of 36 that wanted this kind of a solution. there was also a large group in the house, about 100 house members signed a letter to say to go big. why didn't it happen? there are a lot of culprits here. it was the basic problem of the polarization of the parties, in particular the extremes of the parties with much of the republican contingent saying no revenues no way, even with reform of the tax code. a very small crack in that was the proposal a weaker so ago, but not a big crack.

and on the other side, a lot of democrats and no changes that would affect medicare beneficiaries or social security recipients ever. those are very difficult positions since actually we have to do both. i think there was a failure of leadership. if the leadership, including the president, had really wanted this to happen, a thing they could have made it happen. but they couldn't sell it to their caucuses. he went back and tried to, and the answer was no. republicans were not voting for tax increase, and from the democrats, we are not voting for entitlements. we are where we are.

the business community could have done a better job, maybe the community while represented -- but we failed. the consequences are pretty serious, i think. we may not have a market meltdown because we are the only game in town, the europeans are doing worse. i would have expected the equity market reaction, but not much bond market reaction. the really important thing is that we missed the big opportunity to fix not only the long run problem, but some short-run problems. we need to extend the payroll tax. we need to extend the unemployment benefits. those would have been easy to fold into a bigger deal.

now those need to be done separately and may not be done at all. i am not an optimist today, i think it is a very serious defeat. >> some people say that sequestration is really not the worst scenario and we shouldn't sweat if so much because -- and obviously i don't agree with this, but some people will say, listen, this sets the stage for may be that tax cuts of the bush era to expire at the end of next year which might be better for the deficit situation. to protect some of our entitlements, most of them, and things could be worse. >> things can always be worse. the scenario that you suggest, which is that the sequestration

cuts go into effect as enacted, which means a count by count of mindless way to cut anything, whether defense or domestic, and heavy on discretionary spending. the annual appropriations which have already been capped. i don't think that as a good idea. there will be other chances because of the bush tax cuts expiring at the end of 2012, not 2013. and that will be another moment in which maybe people get together and say, do we really want this to happen? there is no indication at the moment of a consensus of what to do in the face of any of those things. >> you have watched a number of programs already take a hit.

>> i think my perspective partly washington-based. and partly from someone that spends most of their time outside of washington. they started off this morning say, how do you feel? physically exhausted. i was on the west coast twice last week, the back-and-forth, and somewhere in between landing of in lansing. as i talk with political corporates, university environmental leaders as the normal course of my job, i would say that they have several views about the process under way here. there are concerns about the impasse. a thing they are even more frustrated with washington because they don't see the conversation about debt and

deficits aligning with what they know needs to be achieved here. we just have to remember a few salient facts. when we lost 9 million jobs during the recession. at a live verily regain the 25% of them. the hamilton project is put out a statistic that says we need 12.3 million jobs. to regain the jobs we lost and to keep pace for population growth, we do a monitor of the economic performance of each of the top 100 cities and metropolitan areas in the united states every quarter. only 16 of these metropolitan areas, only 16 have regained half the jobs we lost during the downturn. when i am out a route of the country, people are focused on

growth as well as deficit reduction. the fundamentally believe that the federal government has to get its fiscal house in order. at the same time, we have to set a platform for the next generation of growth that, frankly, is not like the growth that we had a pre-recession that was characterized by consumption and over leveraging. the perspective is three-fold. and we have got to cut to invest. we have to begin to invest in those things that are going to set our economy on a different path forward. substantial sustained investment in advanced research and development, basic science. you do it to some extent in health, obviously. we have not invested in clean energy r&d that we need to crack

the code on clean energy and low carbon. we need to invest in advanced manufacturing. we also need to be much better about commercializing innovation and doing transfers so we don't just have the ideas of the united states, which began to prototype products and began to produce and deploy and manufacture what we need to invest. finally, we need to invest in next-generation infrastructure. and what we need to set off this new generation of growth. i was on a panel the other day with former secretary of state george shultz. his recommendation, which sounded eminently feasible or intelligent, maybe not politically feasible, would end all of the tax subsidies for every kind of energy source that we have. whether it is cold or more, we

would shift a good portion of the funding to advanced r&d. we thought about cutting and investing, such as we begin to scale back the federal government, we still retain these core investments. those, the second is cut and reform. i was chief of staff of the department of housing and urban development, i spent time there at the beginning of the obama administration. it was cut by $900 million. this package, the commerce was cut, the home program was cut, the public housing program was cut $750 million.

the cuts are already happening. what is not happening is the reforms that need to occur in these highly prescriptive and highly bureaucratic ramps so that you can do more with less. just think that it is all going to be fine. these are legacy programs that haven't been reformed for quite some time, having them talk about 44 job training programs across multiple agencies. the federal government needs to radically get its act together on the fiscal side or the programmatic side. what i think the states and local want to hear, i have a record -- recommendation of how to do this. there is a book 20 years ago about reviving the american dream. if anyone does anything, go to

the brookings bookstore and buy the votes. it is as relevant today, it is more relevant today in some respects the net was 20 years ago. what it basically says is that we need a new division of responsibility between the national government and the state and local governments for the twenty first century. that the federal government needs to do less and means to do it well. the states and their cities' need to take on the productivity agenda. and really have prime responsibility for some of the economic growth that needs to happen because it is different across the country. i was in rio on monday at a lansing on wednesday and palo alto on friday. these are three radically different economies. it is hard to imagine the federal government to be smart or strategic enough to deal with those differentiated economies.

but the metropolitan areas have prime responsibility for the part of the domestic agenda. let the government scaled back literally what it does, and do it well. there is an enormous amount of concern out get an enormous amount of frustration out there. these folks are just very pragmatic about how their fangs. what have you done for me lately? i think as we go forward out of this wreckage, i hope that we begin to set up in some different vehicles, not just for deficit reduction but for growth strategies where the congressional class and the federal political class begins to go federalist. and bring in the mayor's, let them sit on some of these committees and tell everyone at

this level of what they have done in their states to balance the budget and get the economies moving together. i think it would be realism and pragmatism to have chris christie and kantor, sit in on some of these sessions and began to hell what is a hyper divided the governing class in this town. >> 1 follow up before i speak on the fence. you're saying that localities and states can do more, the fed can do less, that raises the obvious question, how much can federal spending on domestic discretionary be reduced? i know you may not have a detailed file answer for us across the entire government, but the question is to remain with the sequestration kicking in. you feel that it is going to go too far? or do you feel like it is compatible with what he laid

out? is it ok for the hot% or the 20% cut occurring? >> remaking federalism i am describing also requires you to remake the tax cut. i think that has to be sorted, it is not just about the cuts, the revenue remains the same and they begin to sort this out. you can cut them, you can cut smart. sequestration sounds to me across the board as a cut down a strategy. everything must be working the same, the same effectiveness, same efficiency, cut across the board. when you think about what the federal government does, both in the near term to create jobs and the long haul to structure the economy, there are certain programs that are absolutely

fundamental to that, they should not only be ring fenced and protected from cuts, but frankly should be put on steroids. i will come back to clean energy r&d. it gets about $30 billion now, the national science foundation getting 7 billion. dark of probably gets $3 billion hot an annual basis. the r&d shot its $180 million a year. we still have the national labs, and we should be at $15 billion a year or $25 billion a year and clean energy r&d if we're going to crack the code of low carbon and be the vanguard of a clean energy revolution. if we don't do it, china will or

germany will or they will do a in some combination. sequestration to me, when you are really focusing on the growth, it needs to be put back on and makes no sense. it doesn't distinguish between apples, oranges, and bananas. >> i agree with that, and thanks for the plug. there is one thing that many people, including many of the ones they were talking to, how they think there is some conflict between jobs, growth, and deficit reduction. they are wrong about that. that has been one of the impediments of getting the agreement. and even the president has talked about. he is going to lose, unfortunately, the opportunity for some of the job growth that

could have been folded into a larger deficit reduction deal. we will not grow in the long run as long as the debt is rising. >> while you are buying books, i will ask that if you're getting to for the holidays, get alices but and get my new book, it is called the wounded giant about america's armed forces in this age of austerity. to relate it to today and the likelihood of sequestration, let me summarize and begin by saying i think sequestration would be a nightmare for the national security. i hope that if it kicks in, it will be quickly superseded by subsequent action in 2012 so that we don't start to see the kinds of cuts that will otherwise not be necessary. there is talk out there by one of the republican presidential candidates about the kind of things already happening not real cuts, that is wrong.

it is a consequence of the august deal and the first tranche of reductions mandated by the august provisions of the debt deal. that will result in about for a hundred billion dollars in 10- year savings. or the steady state if you stay with inflation. in other words, $350 billion hollow would be needed to keep up with inflation already. you out of the cuts of sequestration, roughly another $1 trillion for the military. it is actually more of the reduction because i haven't included war costs. they are coming down anyway. but they are not savings that the pentagon can claim to justify or satisfy its requirement for deficit targets.

we should be making our decisions based on the merits of the case. that is another $100 billion that will be each year by the time we are facing our way out of afghanistan by 2014. you will see total defense spending in the range of $700 billion a year to somewhere in the range of $500 billion a year. the war cost can and should come down. i think we're going to need a couple more years in afghanistan. the president has a doubt the 68,000 u.s. troops from our current level of 100,000. i think that is okay. we will have this data the following year, then we can celebrate -- accelerating cut a little further. i think that is doable. and the good news is we will see additional reductions in war spending each year, and by 2015,

hopefully, we're down to a very modest level. maybe even $150 billion. that is as it should be. on top of that, the base defense budget, the peacetime military establishment can get smaller, smarter, and more efficient. therein lie the constraints under which this has to happen. president obama, secretary clinton and secretary of the data have been in east asia. we're there to stay more than people appreciated the for their trip and we are not going to cut military presence. we are aware that north korea is a very severe threatened china is a rising power. rising powers are dangerous whether they want to be or not. bob would make this point very eloquently. in history, any country that

rises the way china has, it is sent to use its new resources to push others around and assert itself. favor aanticipate or conflict with china, but it is important that we stay mostly engaged in the region to sort of constraints china's growth in a constructive direction. lee would be foolish to pull back now because our problems have led us to not be able to sustain it. we need to be active, but in a more economic and brutally efficient way. there are ideas are out there to do this. i will give you one very quickly that i wrote about last week. the idea that today's navy needs to do something that most sailors don't like, which would be challenging. some of my colleagues have told me it is harder than i want to believe. but i think is global, the idea of having crews share ships.

today, a ship is prepared in american waters for deployment, the troops trained and sell across the ocean, takes a month to do that. they go on station, they spent four months there, the turnaround and come back includes another month in transit. because we always want to have one ship of a given type in either the persian gulf or the western pacific, we have to send another ship out, and there is an overlap and deployment because the one sailing out because the other one comes back to maintain continuous presence. you need to sustain one on station the way that we do things today. i would submit that the navy needs to do what it has proven to be feasible in experiments, what it already does with minesweepers, leaving a ship fully deployed for one to two years and fly the crew to replace each other.

in a share a shift back home to train. you get a lot of savings and the number of ships needed. i don't want to push the idea too far, because they are -- but there are other reasons you want a good size navy. i reserve is necessary if you do this rotation policy or not, but the navy is saying that we have to add 30 or 40 ships to the fleet relative to the current size of 284 major shift in order to sustain a global presence. that is not going to happen. we need to find ways to be more innovative and creative. with this kind of approach, you can go below 284 ships to sustain the kind of presence that we have. ida said that to be harsh on the navy, i admire them as we all do. even to get these $400 billion or the $350 billion, you have to do the kind of thing that i just mentioned which will be

uncomfortable, difficult, and challenging. but it go into detail, will mention one more in passing. for the last 20 years, we have a basic strategy in size and constructs, we need to be ready for major regional wars at once. we did not always satisfy that requirement. in the last few years, we did fight in those wars at once. we had to make the army and marine corps larger to do that. the troops even had to go the extra mile and then some. they had to scale back in a major way from that kind of requirement. in this new world with the dawn of the same god and no longer a living threat the way it once was, i think it is time, as a matter of fiscal necessity to go to a one-war requirement for the

ground forces. i will say it is one more + 2 substantial stabilization missions or the united states is one of many participating countries, but with the mission can last a long time. it can be afghanistan, it could be syria or libya or yemen depending on how things go. if kashmir becomes another flash point, we could wind up with a stabilization and trust the mission there to prevent nuclear war in south asia. we have to have the ability to respond because these kinds of missions are potentially important and potentially beyond our ability to prevent, whether we like to do them or not. my approach is a pretty brutal change in what has been seen as conservative force planning. instead of two major regional wars, one war and to stabilization read -- stabilization missions. even if you do that, you can't

treat them to a small level because the world is still dangerous and some of these countries still have a nuclear weapons or the potential for nuclear weapons. we can't just wish these problems away because we are tired of being engaged overseas. we have got to be brutally efficient and creative in how we challenge traditional ways of operating could be able to protect our core interest at less cost. let's not pretend we can wish away those entrusts or wish away those missions. at the persian gulf that received most of our military attention still requires one small note of this agreement. hoyle gets a huge subsidy because of the military protect the persian gulf. whether it is a form of subsidy in the tax cut, it is a huge benefit which is one reason why i agree that we should be increasing r&d in clean energy.

there is a subsidy in effect of $50 billion a year because of the military protection for the location where 2/3 of the world's oil reserves are located. the clean energy is not yet quite ready for prime time across the board. we can try to be more efficient and how we protect them. there are ways to do that and save $400 billion over the next 10 years. i see no way to do that if you have to double the savings. adamantly opposed to sequestration and i open doesn't happen somehow or that it is quickly superseded by 2012 congressional action. with that i will turn to my fellow panelists and see if they want to add anything at this juncture. >> let me ask you a question, a factual question.

about the effect of the end of the wars. some military folks i talked to say that we lost all this equipment, we need to rebuild and modernize. others said that we have done a pretty good job of modernizing as we went. and using the war funding to do that. what is right? >> the equipment stocks have not been pummeled by the war, because were there have been specific needs identified, we try to address them through supplemental appropriations. in broader terms, the of the war story, the reagan buildup of the '90s provided a lot of new equipment. you reduced defense spending into disproportionately reduce procurement spending because he

realized we had stocks of new equipment that we could live off of for a while and spend less on acquisition for the 1990's. war supplementals have done nothing to change the fact that the reagan era and equipment is wearing out and we can't take the 1990's solution. those same f-15s and f-six teams are in the fleet. now they are 25 years old. we have got to replace them. the war supplemental did not replace that stock of current military equipment. >> it really gets to the point of what differentiates the defense establishment from a non-defense establishment and how it operates at a national scale. as a level of strategic scenario planning that is going on, there is the use of metrics that are continuously updated to inform that kind of strategic

-- that does not happen with regard to what i consider to be next generation of economic growth models. right? we still don't quite measure things in the way that we need to. and we clearly don't have -- this is something that many of the president's private councils have called for. we have no long-term strategic plan to think about growth policy, particularly given the fact that china, india, brazil are totally on line. someone said something to me the other day, how many people have seen the movie "moneyball." the book makes the point, it talks about oakland and how we used to measure things in baseball the wrong way. then we had this very interesting character that found a new way to measure her

baseball performance and applied it to oakland a's. we need to think post-recession the same way about the economy. pre-recession, we focused on consumption. how many different ways can we measure housing? how many different ways can we measure retail? when he tried to measure exports at the local level, foreign direct investment, manufacturing and all of the complex complicated ways, trade and logistics', we don't have this kind of statistical base that we have with regard to consumption of the economy. to your military conversation, it is not surprising in some respects, but the way in which we perfected a set of matter, a set of performance measures, and the ethic of planning that we do

not have on the domestic side and which we fundamentally nihon. >> i will ask you one question as to get ready to go to the audience. to give you credit in your program, your colleagues in the country, you have come up with specific recommendations and numbers. you ought to mention were you think clinton energy research can go. can you give us another example in terms of infrastructure investment or some sort of encouragement for economic renewal in cities, some area where you have done the analysis and can highlight an example of what it allows us to do? >> this is what makes it such an intriguing time. if you think about the shift to a different kind of economy, has an enormous affect on infrastructure building. you have to have more advanced manufacturing, more advanced industry, and more modern ports.

if you're going to shift to a low-carbon economy, you have to think about the distribution and transmission of energy. i think what michael bloomberg is doing in new york by trying to attract stanford or a company out of israel, it shows that he is thinking very carefully about behalf density of innovation and so forth. we need a different scale of investment in infrastructure in the united states. but it can't be the old style, we are going to wait for the feds to rain down your favorite number. it is done in a public-private way. what we have been working on with the states in the metropolitan areas, it is a new

style infrastructure bank where there is a certain scale of public resources. but the goal is to leverage the private sector capital expertise to deliver the next generation infrastructure. it is both the size of the resources and the manner in which the resources are deployed that has to change. it has to be more distributed and diffuse. we may be entering a century, as alice's but clearly telegraphed 20 years ago, the national scale has to scale back in its ambition and the state and local scale has to scale up. >> relates -- and this relates to the failure of the super committee, will at fundamentally get in the way of a lot of what you're talking about? to what extent is it one more

confirmation for you and mayors and governors have you just shouldn't look to washington and they will get on with their collaborations at a low-level war less unimpeded by this break out in washington. >> of the same way the market's already assume function. i'm not just talking about governors or mayors. at the state local level, it is governance as opposed to government. they have only presume dysfunction in washington. and they already are changing how the function. that could be one example that will sweep across many areas. if you want to be a twenty first century mitropoulos, you need a twenty first century transit system. commuter rail, light rail, social -- and so on to connect to the hubs and the corridors.

in denver, they are building the largest light rail system in the united states, primarily funded with local money. in los angeles, they are dramatically expanding land use and zoning, primarily financed by local revenue sources. they moved on. they are not expecting washington to go to bat for them. they know that to compete globally, they will have to make the kind of investments with their private sector, to do so. they want a level of reform at this level so that their presence and prominence in the local economy can be recognized. >> none of this great stuff that i totally agree with is going to

happen if we have another recession. they should be keeping in mind that if we don't get on top of the debt problem, we will be precipitated into a new recession. we don't know exactly when, but instead of gradually calling out of this one, we could be in a decade-long slump that will be much worse. it will preclude just about everything. >> how was it is absolutely right. that is why it is so critical to make the connection between the macro at the metro functions. i think the metro areas, you have a pulse of the united states of in the public, private, and the city sectors. the platform doesn't exist to get this done. >> please wait for the

microphone and identify yourself. we will start here in the fifth row and if you ask your question, directed to one of us if it is clearly for one of us. retired submarine officer. i had agreed in principle with your comment of one forward deployed ship. however, as we may attend controls with to complete cruise per-share, i see a problem in the surface navy. a lot of the ports don't let nuclear ships him, and in each of the areas, you need to have a port for refueling, bringing aboard new chow. and shift in crews. i like it in principle, and we have done it with the minesweepers have the storm class pcs, but i don't think it will work at the aircraft carrier level.

>> i agree that the aircraft carrier case is a different one, and i should have clarified the mine are to start with a major surface combatants. so those of you that are not naval officers and downfall of this stuff as much, there are about 300 people typically of the major surface combat, a destroyer or cruiser. that class of ship where i think this idea is challenging and difficult, my navy and coast guard colleagues have been reminding me of this in recent weeks. i accept very much their contention. it will -- you have to find the courts where they have been doing maintenance so far. and i concede that a smaller fraction will be done -- therefore, we are going to depend more on foreign partners.

some people are not going to like that in a time of economic downturn. it will take three, five, seven years to get to a situation where you can do this even for the surface combatants because of the kind of issues you're getting at, and some people challenge me and say that even that as an optimistic timeline. even if you're looking for big new ways to achieve cutbacks, it is going to take a while. if you rush to much, you run the rest in some programs of contributing to the danger because your pulling back on spending more quickly in some areas then you should. also bear in mind that the ground forces can't be cut down too fast because they are heavily engaged in afghanistan. this is going to take a while and it is going to be hard. you can't just snap your

fingers and make it happen overnight. >> i want to make an observation that leads to a question. the observation is a comment about the light rail system. a situation with which i have some familiarity. the relevance here to the question, he was elected governor in 1974 and talking about these kinds of things to make them happen. it has taken 35 years to get there. so here is the question. my take away from this conversation this morning is if used at your fingers and have a couple things happen, you would have the capacity to cut smart and engaging in devolution

programs moving away from the states. it strikes me that an order for each of those things to happen, you would have to have a radically different kind of political atmosphere and environment than we do today. because what is engaged, it seems to me frames the stark differences in perspectives. i am interested to know, what steps, what sequencing if you can look at it that way, do you see as possibilities? and is it correct to assume that it has to be like the light rail system, something that is decades insteads a decad of years.

>> those are very helpful and insightful comments. this is why i think maybe we can accelerate some of that. it took a lot of time for american cities to understand the need to make these kind of infrastructure investments. it is sort of a sign of how long these shifts make whether it is regarded transit or advanced manufacturing, or something else. i think the conversation coming out of the business community is quite different today that was five years or 10 years ago. when you read the recent but by the head of dow chemical or you listen to what others say, or listening to the community out of silicon valley, there seems to be a common prescription for growth coming from these

production-oriented leaders, innovation oriented leaders. it gets to the kind of makes i was describing before. invest in what matters, investors today to grow for the next 30 or 50 years. that tends to be around innovation, r&d, infrastructure, human capital. when it is all said and done, it is those three things. major business people share the same perspective about what it will take to move forward, it is a platform for a shift. the second piece is the stated at the local level. there are many partisan divides at the station and the local level. i do believe that the governors and mayors took place over party and collaboration over conflict.

and when push comes to shove, they strengthen their stay, which comes back to innovation, infrastructure, and human capital tailored to the economy of denver vs. detroit or denver vs. colorado. there is a pragmatic caucus of there. this country is rich in partisan leadership, and what has to happen is this infection. i think structurally to things have to happen, and this is in the history of what happens in the united states. the states are laboratories.

the metros are the center for innovation. the more we can get them to show the way forward across party lines, the more likely we can repair damage here. the second is something i talked about before. this is a federal republic. we are like a series of other countries around the world. let's begin as we move toward a round of deficit reduction and gross threw cold in the real -- and growth to throw in the real innovators, and that might begin to heal and move us forward.

these are simple. they really do require a profound shift. >> yes, and the green shirt. >> is there a smart way to cut defense? i know a ccalls for cuts but would be passed, so i am curious. >> it is the mindlessness of the

process, which i would hope they would begin thinking about some of those things might have talked about as more sensible ways of cutting, her when i will leave it there -- and i will leave it there. >> to me it is the man answered -- of magnitude. you do not have an opportunity to phase things in. the man answered of 20% annual reduction in the budget, so

hopefully it would only be 80% by the end of the day gave, and that is too much. they include health care of approaches, not any thing that would take money away from workers. the earning potential is great, and they are still getting a generous pension. meanwhile, they did no attention whatsoever -- no attention whatsoever. is it really right to be asking anyone in uniform tricks of the reductions when we are so feverishly protecting every other entitlements.

you do better in the budget reduction when you have a sense of shared sacrifice. this leaves essentially untouched entitlements and tax policy. that is not fair. >> after we have reformed and personnel, the real question is what role do we want to play in the world, and are you correct that we should be prepared to have won a regional war and to other things of the same time?

that is of a question we ought to be talking about superior -- talking about. >> a lot of people say we are wasting money in europe now. we are not wasting money in europe. most of the places the european have filled the infrastructure of over the years and the costs are not notably greater than being here, so you have savings by cutting back on the cost of the military. i did not see any way to responsibly reduce our commitment to these regions, so we have cut back on the mediterranean. we might be able to cut back a little more, although we have all watched the libyan operation, where it was not a

trivial. there is plenty of room for debate, but i tend to think interest and we are defending who justify who continued mfn, and they are inherent to our global economic system and security interests, so i would stand by that and look for how to be more economical. you have to have a more fundamental look at which interested you would gamble with. >> i want to stay on that point for another second. there is an argument we are still business as usual carrier -- as usual. the last chairman said that he

would not have done it that way if he was in charge, but it was his last days, so he was missing when -- he was moving on. commissaries, everyone that has done a study from the beginning said that was always full entitlement program. -- that was a wasteful entitlement program. i want to take your thoughts on, are we still in business as usual? i do not see the will to tackle these issues. >> i am surprised nobody has

thrown anything at me. to get to the level of savings you have to do the things you mentioned. there is not $400 billion in waste who scalpels of the defense budget. who is going to take a lot of effort to get it out, so you are going to have to make some tough decisions about programs and ways to do business. >> you are absolutely right. there are a lot of things we

have talked about for a long time. i have a sense of deja vu. we did report on a lot of these same things, and they have not have spent, and it is frustrating. >> if you go to any state, particularly in the northwest, and you have thousands of municipalities. the fiscal situation is so dire the initial phase is let's consolidate services. people like municipalities, but have ans a way to rui enormous of efficiency, and i

believe that is going to be a legacy of this prolonged recession. it is just kicking in right now because of the property taxes and the depressed demand, but i think we are going to see a level of reform outside of this, which is quite remarkable, and it is finally allowing for politics to catch up with any evidence. >> there are elements of hopefulness even though it is a tough subjects. >> i have one question for michael and alex. for michael, i am interested in this formula.

my question is how are you going to define the position. are there differences in terms sending troops or not? i have seen some reports about millionaires going to congress, asking them to tax more and earlier, warren buffett, i think it was him who said rich pianalto have been cobbled -- rich people have been cottled. is it going to have any influence on budget cuts.

>> i think you raise some quandary. garrett it is absolutely true -- it is absolutely true the income distribution has gotten much more unequal over the last couple of decades, but particularly low income people have been falling behind for quite a long term, and the top 1% have been making out like bandits, so it is hard to say, let's ask the top 1%. the question is how to do that. warren buffett's idea was to

make sure that people in the highest income pay the average tax, because much of his income is capital gains dividend. that seems outrageous. all that is true. the best way to solve the budget problem on the revenue side is thorough reform of income tax, which would allow actual lowering of thrace -- of rates and raise more revenue in a progressive way, because what progressives fail to recognize is set loopholes and -- is loopholes go deferentially to the upper income, so i favor a

drastic reform of both income types. the idea is to get rid of almost all of the exclusions and deductions, and lower the rates, and you will have more progress of revenue. >> let me emphasize this is primarily for ground forces, because they need to think about taiwan, currier, and maritime contingencies as well, and they could have operations separate from what i am talking about with ground forces.

it is not unlike operation desert storm or operation iraqi freedom. one thing we have to bear in mind is we cannot be too precise about what future demands we are going to place, so when i talk about those stabilization missions, i am thinking about the mission in which the international community collectively get involved as part of a large multinational operation, and perhaps led by nato, perhaps not, where the u.s. role is not unlike what we did in the balkans, and i am separating buy from a place like in afghanistan, where even though there is stabilization, it is largely an offensive

military campaign, and the u.s. is predominant, so the most likely candidate is north korea. there are other possible cases as well, but that is most likely. stabilization might be, let's say for example the looming syrian civil war becomes that and gets much worse. finally, he leaves the place in chaos. we authorized an international mission and noise -- with the cooperation of some syrians to go in and stabilize the place, and that is going to be much more than a classic peacekeeping

operation. planning house to allow for the reasonable worst-case -- has to allow for the reasonable worst- case. >> i am wondering what the next steps are superior -- next steps are. is this reflected in the budget proposal? is this something for november 2012, and they are saying, we are not illustrating on this. good what is next? >> remember sequestration does not kick in until 2013, and i do

not know what the answer to your question is. i think it is going to be very difficult for the administration to put forward a 2013 budget in the face of this. i would expect they would say, here is a better thing to do it in 2013, but the next moment i think there will be two. one is there is a lot of unfinished business. that includes the alternative minimum tax as well as expansion of the payroll tax and other expansion and superior -- other

extensions. it is expensive. it will add to the budget. i did not know what they will do during your region what they will do. i think some things will move forward, and others will not. the big thing willoughby are the bush tax cuts and expanded, and if so, on what conditions? >> the lame duck is going to be tough. >> you may or may not have a lame duck president, so it is very uncertain curiosa -- it is very uncertain.

>> from our perspective, it is time to enter the conversation, and it is time to your put forward what are cross-section from both sides of the aisle a federalist compound. we see where it is going. ?hat is the new compact whether it is is at least if you are going to start cutting across the board, let's we imagine away a host of federal programs are designed and executed by the folks who actually have to execute them.

my boss would say every week is all delivered through private sector developers zero years -- developers. we should be flipping the pyramid and having all policies be in the service of the folks who deliver all blacthat. that is the progressive stance and increasing and number of leaders are going to have to take, because they are pragmatist, and that kind of stands actually will begin to inform the presidential debates.

>> the book which i agree is more relevant than 20 years ago. bill clinton loved it, but he is governor of arkansas. the first conversation we had was about how great he thought my book was. his interest faded as he became president of the united states. residents are generally leery of turning things over to some of the national governments. -- over to sub-national governments. >> the government are hopefully

in virginia and maryland, but it seems to me governments are always in favor of federalism until there is our hurricane, too much crime. everyone is in favor of small government, but last i checked the federal government was keeping the states in business. i am confused about this sorting out. i do not see any of this solving things in the long term. law. ought to be alon

>> i disagree with your premise. i think there already is a sorting out in the united states. it is a work around. what is going on, and it is not across the board. there is not one plays doing all these things, but they understand they have to make some tough decisions, and they understand their economies are deciding. some are essentially consumption economies that need to diversify.

i think what you are going to is making targeted investments in infrastructure or higher ed areas that really relate to what they do next. they are also cutting other things, so this is never perfect, but i do see a level of focus and discipline with regard to a certain segment happening across the state, and most of it is a work around. that is a radical thought, and if literally says expansion

needs to be radically rethought. i think that will happen. i think that is going to happen, and a minimum of what you will see is a return to what nixon did in the early 1970's costs. -- in the early 1970's. you need to be a rocket scientist to make any sense of this of a local or state level. it may shift to a much more dramatic realignment. it may move to that, because people are frustrated. >> i hope you are right, but

remember it is not discretionary spending driving this. it is the entitlement superior -- the entitlements. i believe they are going to require both reductions and new revenues. until we get on top of that, we have this thing that is going to damage the economy sooner or later a. >> over here on the side. >> it seems to me there are two big problems you have not mentioned equivalent to the tax

issues at the federal level. can you address those? but we have 50 states, and the how bad are the bad habits? i was in california. real bad. no one is really in charge any more in california, so everyone should read this piece from vanity fair recently about overextension and crazy liabilities they've phase. -- they face. what you are seeing is governors beginning to try to get ahold of major cost and drivers.

gov. schneider was able to push through the emergency financing. he is now pointing of emergency financing managers -- appointing an emergency financing managers, and they are going to have to reorder. is the mix forue decision the need for investment or radical reform, and what we have had is the expansion of responsibility. it has been a really interesting. we have not had it with a great

deal of other policies. i do think what is happening at the state level is how competitive we should make schooling. how much should we open up the system to really allow for dramatic distribution? the one thing about states and cities in the metropolitan areas, someone is doing something to deal with systemic issues we have. if you want a state of the art innovation, you can find it to.

what we have is a society where innovations prensa viral a -- innovations spread virally. i believe we have them understand what systemic challenges are. there are a bunch of vanguard imitators out there. forward,howing the way and the viral cycle where innovation is identified and replicated at almost work speed is beginning to kick in. that is a much more optimistic view than the washington environment, which is more emblematic , so i may be

delusional, but i hope i am not. >> we will take those questions together. >> can you talk about assuming the failure avaya super committee -- of the super committee and payroll tax cuts and? >> route is up. wrap it up.no >> my question is how much will disfunction lead to credit downgrading, and how you see the market reaction?

will the be strong enough? what would be the best timing? >> i do not know what will happen on the payroll tax extension and unemployment. there may be a limit to extending though superior -- those. it is certainly harder to do now but we have the failure of the committee downgrade. i do not think washington would take it seriously, and rightly

so. standard and poor's and the rest of them do not know more about the federal budget than we do. the main reason being the world still believes u.s. treasuries are the safest investment there is, and i think we have to be even more dysfunctional than we are, and we are pretty dysfunctional at the moment to dissuade investors from that view, and europe looks worse, so what do you do with your money? >> there was a question about the failure to move forward, because that is going to have an

effect on growth. it goes back to the growth conversation. i think we are in the middle of a lost decade, where recovery is going to be anemic. whatever happens will be counterbalanced by what happens on the public side, and this kind of crisis is going to actually generate more innovative responses of the states and local level, vicos the more the citizenry expresses in security, the more local and state class has to respond.

they also have to respond with a clear vision for growth going forward. in some respects, this constant disfunction of washington is going to get the juices flowing elsewhere in washington, but you cannot dismiss the cat as women -- cataclysmic effects of this, but it does send a message that we are on our own. we ought to get control of our own destinies. >> it is a silver lining to a very dark cloud.

i do not think there is anything could about the prospect it could be worse. >> some of you may say we all know it is not going to cut more spending. that is treated separately, but sequestration is going to have to look for defense cuts across the board, and lots of people say that has tune apply to ground forces. it is a messy place, but i am going to leave you with words of hopefulness about afghanistan if we stay patient. one is that in the last year violence initiated by the enemy has declined 25%. the country as of whole has not

internalize or believe life is getting more say for stable, and other types of violence may still be going up a little bit. the afghan army and police are getting better, but they are not a big enough yet. they have a lot of problems, but they do fight, and they stand up for their country, but they are not ready yet. we are going to need a couple of more years of sustained effort. it is probably not a great place or a terrible and now plays. -- or a terrible place.

sequestration cut everything, so that is one more way to take a shot at sequestration. thank you for being here, and happy thanksgiving. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> tomorrow, we will give you an update on what is ahead now that the joint deficit reduction committee has failed to reach a deal before its deadline. we will talk to david walker. after that, melanie sloan on

congress and the influence of money. later, a number of conservative organizations will come together to talk about their support for not raising taxes to reduce the deficit. live coverage at 10:00 eastern. up next, a presidential candidate newt gingrich in new hampshire weighs in on deficit reduction committee and his campaign. then sanctions against iran, and after that the u.s. postmaster general talks about the future of the postal service zeroth.

>> the name of the greatest people that have ever trendless earth, i draw bowline -- i draw the line and i say segregation now, segregation tomorrow, and segregation forever. >> for most of his life, george wallace was a supporter of segregation, outspoken against the civil rights movement. he ran for office and lost, one of those cut short by an assassination attempt. live friday at 8:00 p.m. eastern on c-span. >> now the republican presidential candidate in newt gingrich talks to the newspaper later. he is asked about fees he received from organizations. this is about an hour.

country. it's joe and gary and the chief editorial writer, and gary's taken on 6,000 new >> he has taken on six assignments. here. we said, gary, come down here to do this one. we got some good in-depth interviews with the candidates in the last few weeks, and right off the bat, i want to ask you about what is in the news overse, which is the report that perhaps a dozen cia informants have been captured and maybe killed in both iran and lebanon. which leads me to ask you what's your reaction to that, and if you were president of the united states, what more would you need before you sanctioned or

participated in or helped somebody take out the iran nuclear plants? >> well, i think that our goal should be to replace the regime. i think if you take out the plants, the dictorship stays there, the plants come back. i would adopt the reagan, pope john paul ii strategy by maximizing every pressure on the regime, ask congress to repeal most of the restrictions on the cia so we can go back to the real spying. i would have a fund set up to support anybody who was -- thank you -- but i would support any group in the country, as much as we did in poland, elsewhere, and in the cold war. i would be prepared at a point

where if we get to a point where the military believes that they are uly on the verge, and i'd be prepared to use military force, but i'd try before that to do everything i could to disrupt and wake the regime, including, you know, maximizing covert operations inside the countr and i would also be prepared to cut off their gasoline supply. they are unique about lots of crude oil. they only have one major refinery that makes 60% of their gas gasoline, and i would look at finding ways to impede their refineries, to basically wage economic warfare against them until the regime broke. >> you don't think we're doing that now? >> no, not very effectively. >> what about the internet warfare? >> my guess either we did or the israelis did, and that's good. i mean, i think the next thing yo want to see is an israeli

effort to break up the whole thing, not just the nuclear part, but for example, go into the bank system, a variety of other places, and break them up electronically to cause division, d we could wage real cyberwarfare against iran and be remarkably effective at closing it down. >> you would argue -- >> i would do everything we could short of war to replace the regime, and if that failed, i'd sadly agree to military action to stop them from getting nuclear weapons. >> you also said, and you said it to me bfore, that you think we need to reassess our entire foreign policy miliry situation as it applies to afghanistan, and elsewhere, which sounds a ltle like hillary with a reset button. what exactly do you mean by reassess? specifically with regard to afghanistan? >> the strategy for afghanistan does include a strategy for

pakistan, and we look at pakistan and realize they were sustaining for the last decade, at least six or seven years, he was in one of the major military cities. you have to assume large elements of pakistan are active, and i thin you got to back up and say this is part of why i'm for an american energy strategy. you have to be able to take risks in the region that the world's oil supply don't currently allow you to take because the disallocation would be so extraordinary. look at the iranians, the saw -- saudis. we tolerate it because we're afraid to make them mad at us because of energy. >> how do you go after that? first build up -- >> [inaudible] i would say we're going to keep them not gist to be indepdent, but have a surplus of energy to sell into the world market so

you're not frightened so there's two problems. you got, you know, the iranians on one side, the saudis on the other. >> don't like each other? >> that makes it to our advantage, but the threat of the saudis is the spike in price and crippling the world economy, and the iranians close the straits and block the persian gulf. that's why the people surround us. when you face the people who are clearly actively hostile to your civilization, you have to think seriously about how much pressure you're prepared to bear, and the saudi regime is not a strong gime. i will be clear to the saudis that they have to get control over the money spent on this. they have to change the nature of what they are doing. ey are exporting which is thee most extreme form all across the world, and we, in effect, are

paying for saudi wealth to be used to undermind our own civilization. >> they export it elsewhere hoping to keep the lid on it at home; right? >> right. >> and if you disrupt the saudi kingdom as it now stands, aren't you going to have a huge arab revolt? >> you see the tunisians now talking aut becong more islamist. you see the libyans now probably being led by people from n gay cy who are -- ben ghazi, and even a place where we supposedly won, it should disturb every americanin iraq after the american victory, quote, unquote, why do 700,000

christians leave a country we win? i think that's why we have to reassess the whole thing. i don't see any great result out of the last decade to lead us to believe we're winning. >> drew, any thoughts on that? do you want to jump into domestic? >> domestic's good. >> domestic's good? okay. in with domestic, harry. >> well, this morning, we're hearing there's not any agreement at all, the supercommittee. number one, did you think that was a good idea in the first place, and number two, what can be done at this point? >> well, first of all, i said early on, it was the dumbest idea i'd heard of. i mean, to take 535 people who are supposed to represent us declined to 12 so over 90% have no representation, and have them hand picked by political leaders and think they are going to accomplish something? i'm this was an act of

desperation by people who couldn't fix anything. i said it up front. i mean, if i were in boehner's shoes, i don't know if i would do any better than boehner because the difference is obama. bill clinton was from arkansas, tried to build a moderate wiping in the democratic party and leadership counsel, spent 12 ars negotiating with the conservative legislature, and we could talk, and we understood you got to get something done meaning i got to schedule it, and he's got to sign it. if i won't scheduling it, he's not signing it, and if he's not signing, we're not getting it. there's not a lot done inhe three year period. i don't see any of that happening here. part of it is frankly, being clever. i tried for two or three months now to convince the house republicans to pass the web warner bill to allow for development of oil and gas off

virginia. these are two democratic senators, it fits the bill that republicans say they believe in. it provides for 50% of the feds, 37% to the common wealth of virginia, 12.5% to land conservation infrastructure. if they passed with no amendment, send it to the senate, and reid has to decide whether to bottle up two former democrats, and one running for the senate is for the bill. or do we pass it? if they pass it, goes to the white house, and in this economy, does the president veto a bill that creates american jobs and american energy and revenue for the federal government? that would be an act of suicide. he might, but it would be pretty amazing. >> what's wrong with the sequester that now looms as a result of the super committee? >> well, the idea of cutting $500 billion out of defense is a political exercise.

strikes me as crazy. i mean, you ought to design the national security policy around simple things -- what threatens you, what are the goa, and what do you do to achieve the goals, okay? i'm for reforming the pentagon. iean, i'd apply that, find the military caucus in 1981. i think there is waste in the pentagon, but you don't start with a politically defined, this is what the british did in the 1920s, and it came back to haunt them because, you know, you start politically defining it, and you say to the military, well, tough break, you know, start taking risks. fine, what risks do the president and the congress want us to take? >> philramm wrote last week about sequestering, that most of this from the domestic side, all of it is just cutting back on the increases that we've had in the past fewears, and that befo 2013 rolls around, a republican congress would repeal

the defense cutting, is that not something to campaign on? >> well, i would campaign on the approval o the defense cutting, but i also say what strikes me is tre's three paths. there is the faasy path that obama's on that leads to greece, and he's been wandering around the country like a 16-year-old with his first credit card. i'm sure he'll bring money in some form, okay. he says to students, you don't have to pay back the loans, here's an extra billion, and it's all fantasy. the second pats that washington -- path thatashington loaves is painting prosperity. i think there's the third path whichs innovation and growth. it's the path that reagan was on, the path we did in the 1990s. strong america now believes if you apply modern management to the federal government, you'd save $500 billion a year.

.. >> they can save 95% of that money. >> you can go down case by case, and it is designed to change

trillions of dollars in spending. if you had a capital-based system, the impact on the economy will substantially increase growth over the next 20 or 30 years. peter has done a great job of putting this together. nts to could choose a personal system in the savings account. you would build it up over your working lifetime for 14 or 16 and basically the easiest model is you are allowed to put your half of the social security tax and to your own savings account the over half goes to sustain the current system. you look at that and it turns

out half the amount of the social security built up over your lifetime comes to to three times. the record of broken galveston and chile. there's no question historic we that over time you do that. we would also keep the guarantee because we woud never fall below the social security minimum level. so if you had terrible investment you would still get the tax paid karen t. in 40 ars they never paid a penny. >> the part time hours would start with cleaning the schools. >> explain this. >> i actually do believe those

places we are endowed by our creator in the pursuit of happiness in the generation bringing it to the very poor so you are in a very poor neighborhood and you have no money and no work habit. so, you're trapped. the first simple thing you can do is redesign the school system so kids can in fact take care of the school. part of the place the got this from as college of the ozarks which is a terrific work study program and college of the ozarks says you cannot apply unless you need financial aid. they are the fifth most selected right after colombia. the total number they get the account for a very small number. they have no student aid. you work 15 hours a week to

-hour weeks during the school year and that pays tuition and books. 40 hours a week in the summer but that pays room and board. 92% of the courage of its own. there's an alternate. 8% on average $05,000 because they bought a car the same year and i went around the campus in the brand new library they have a general contractor. all of his workers were students everywhere you went in the school you had people working most of the clerical work was the students. you now public universities which cost more than private universities and you wonder why the price goes up. what if 80% more students per student loans and student work? my life as a part of her

financial package in college topped out she had 20 students a week she taught and went to part of her tuition. we have to rethink the roundup. the poorest neighborhoods in america and that means the most important because we think e work ethic. when i talk to the first generation successful people all of them started working they got to have their work, have their money come have savings. a much longer time horizon toe successful because they started much earlier. we see people in poor neighborhoods don't work, drop out of school, have no habit of showing up or staying all day. it's not really your money. it's tragic what we've done to the poorest people.

>> you mentioned the center on health studies there was a report out on a lot of money that the senator has made over the years or a lot of it dealing with is not the government then big business and pharmaceuticals which are dealing with the government and last week i think on one of the six brazillian the dates you were asked about your fee for helping if kody and your initial response was i may historian and it was 300,000 bucks and then eight got up to one point -- >> how much was it in total? >> i think it was 1.6 million. it wasn't paid to me personally the adoptions in three cities and did a lot of different things. i think we had over the course of the years involved to think they had 300 pounds of the

various places. >> what i am getting it isn't going to be viewed especially if he were to get the nomination as same old same old washington insider gets the money based on his name. you went before the house republican group to argue in favor of, which amazed me, the medicare part b which was the death knell for a lot of republicans winning again. and you said that ws because you wanted to bring them up into the modern age, but there were no cutbacks with that bill, right? there was more spending. >> created medicare advantage. >> get paid for rich people to have their drugs paid for. >> at a time when didn't have the money. >> first of all i think to have a medicare program that says we

will give you open heart surgery but not lipitor is very destructive. >> understood. i think you have to modernize the system. i offered you but not paying the crux, okay? i'm a cheerful of the dating and the only one has done that for four straight years so i would be happy to walk you through how to balance the budget, but in the case of health care to take the example,i've been a very clear in my positions. i wrote a book called saving lives and saing money as a moral issue. first you save the life than you save the money. if you can take 40% of the cost of health care. we did a study with the gallup poll and jackson health two years ago and they went out and asked doctors if we came back with ts $800 billion a year defensive medicine see you want

to talk about saving money i the health care you lk about payment reforms you talk about tom pryce bill to successful people to contract out i would take part of paul ryan's bill and i would do it next year. i would say we are going to have a premium support model has an option you want it you can take and if you combine that with tom pryce, some people can come along with really good insurance packages and they are going to opt out so you can create a medicare plan that has a variety of traces which begins to be i think expensive. >> when you et to the site of paul rollin and's plan that it was too radical. >> i was asked should we impose on the country something the country thinks this deeply unpopular. and didn't referen ryan. >> we are talking about the rye

in plan? the question i asked i said there's a lot of pieces i don't like. the fundamental principle which is when you do something which large, what we are doomed to do with social security, you have to have a conversation with the country where the country decides that in fact they will accept the change. i am against imposing radical change in e country d i think the've fired you when you do that and they should. europeans don't want to have any popular vote on any of these reforms because t eletes in node they will be repudiated. paul, i like going into a country can be repeated so when we did welfare reform, 92% of the country favored it and we carried have the democrats. one of the reasons obamacare s repealed laws because they get no rublican support that matter, they were not capable of

getting get back to the senate and they ran it through any way. >> does it make any difference whether the supreme court opposed or rejects obamacare? >> my contract for repealing obamacare line for repealing obamacare no matter what the supreme court does. >> pretty analytical prolifically does it help or hurt the republican nominee, say you -- >> helps repealed, repudiated. it's one more blow at how unconstitutional obama is. >> on the obamacare mandate, the heritage foundation he said responsibility as mitt romney and you reform that. you see since then you come to different conclusions. i'm curious between then and now at what point do you realize an individual mandate at that level wasn't constitutional? >> i never focused on the

federal level. i talked about it at the center of the state level and what we are trying to sole, and i finally come would you couldn't do it, it is too hard because what it does is it politicizes what do you mean by health care. once you run into mandates you start getting is this an or is that in and what is required you rapidly politicize the system from being the doctor patient relationship. what we are trying to get there is the challenge of the fact that in the very significant number of people who are over $75,000 a year in coming and they are basically taking the position that they are repared to be a free rider on their neighborsf something haens to them and we have hd a psychology of health care frequently people won't pay their hospital bills. so, as we work with hospitals and the challenge of collecting, people who show up through any

other business because they bought a car or bought a house they went on vation they would just expect to pay it and if for some reason you create this mind set in health care it's a very real problem for hospitals and that is what we are trying to get at is how do you encourage responsibility for people who otherwise -- john goodman has had a model of that under the inpatient power you get a tax credit if you don't want to take it you don't have to buy insurance you share the tax credit then sent to the high-risk pool. and if something does happen you are taking care of by the high-risk pool and that means you have to have a double room you don't get a single room and it means a variety of steps. it's a half step towards saying if y don't take care of yourself we will get you basic services but you don't have the right to demand what everybody

else has erred because they have been responsible and they ave done the right thing. >> a mandate that the federal level in your view is unconstitutional. why? >> this is something again where the heritage found themselves as you work through it at the time it was designed the more you thought about it the more you alized the congress which can compel you to do something like that can compel you to do anything. what is the limit to the congress power to dictate your life and there will be a hard argument about the supreme court. >> the known mandate [inaudible] the problem you were raising before is the social security also the program and health care, obamacare and medicare and

medicaid [inaudible] >> there are two pieces. part of - education as we went through this. in 85 the federal means tested programs the amount spent on them is enough if we spent directly on the poor there would be no poor left. what he's calling them now the empire in the welfare state which is all the bureaucrats are living, managing all the regulations and all the structures for 185 federal programs. so when you start block granting at the savings are extraordinary. second, there is no evidence washington knows how to solve any of these poblems. when we do health care reform we are driving and the only speaker

who's actually brought in state governors and state technical people and put them in the draft room so the federal drafters actually involves the people who actually implement the bill. the whole federal attitude of why are these guys here. >> you mentioned before clinton dealt with the legislature. you were also a historian whether you like it or not and history tells me the people who get to be president are desned for most governors senator very rarely if ver a member of the house of representative so what is it in your background that is going to convince the american people that on like all of these governors who got

caught there with real experience dealing with these problems that you can do it? >> you can probably argue james capel is the only speaker of the house to get there. and he had actually been the governor of tennessee. i think if you look at the scale of what did in the90's, you look at the size of the contract with america campaign in the 360 districts you look at actually getting the balanced budgets and will form enacted. i have a fair amount of management experience when i step down i had to enforce my companies and some business experience much smaller nonetheless the business experience and frankly people who felt i was did in june and july would have to confess we are voting in t previous campaign and we now have the five offices in new hampshire and five to seven in south carolina and so in terms of

management skills i have a reasonable track record of having done that. i also think that if you want to change washington what you need is a leader who can attract managers. it's different from bei a manager. the job of a president is to the head of the american government in that order. and the biggest job actually is to communicate with and educate and set standards for the american people. >> whether that means herman can deal with the complexity of congress and federal budget i was very fortunate to step down first because clinton appointed me to the commission she and i had created together so i spent three years of the national security act of 2005 and then when bush became a in with friends like tommy thompson and

human services, rumsfeld, georgia the cia got me deeply involved in the executive branch so i actually spent six years on a pro bono basis inside the executive brch and the strategy and rethinking the system so i have had more insight experience trying to understand how problems are solved and what works and what doesn't work and any one of the legislative branch of the same time 20 years in the legislative branch saw a pretty good understanding of that branch and the question we have to ask is look at the available candidates. who has anything like this in the national experience and second, the backgrou of the national security to work with 79 and work for the defense department in general since the early 80's and the foreign policies. >> when the third countries

looking you mentioned insider, e inside experience the involvement of these government agencies and people are fed up with anything from washington and looking for something else. >> the reason is they are mature enough to say okay i want somebody whose values are a outside washington who actually knows about washington to be effective and the just tried three years of amateurs and i think you can make a pretty good case that hiring somebody that doesn't know what he's doing this hasn't been a big win. >> the editorial for welcoming the president. >> so to make a good case on the one hand had the experience, on the other hand quickly my values, my positions, if you look at the contract with

america.org it is clearly an outsider document it is an outsider attitude >> it's rather unusual it seems and that you have become your own worst critic on your web site by bringing out charges of both personal and professional attempting to answer them. were they going to come out anyways? >> we are having a national conversation which i think is e biggest waste since 1860. i think this is an extraordinary mome in american history. and you either believe in the american people which i d, or you don't. you believe in the american people then you have to say anybody can ask anything they want because i am asking them to lend m the power to be president of the united states

and therefore they have every right to say tell me about this, tell me about that. rather than half msnbc distort something with no answei would say if you have any questions, right here on move toward and here are the answers and make of lowercase this, you know because you guys reported a ob in number of them are just plain false. here are the facts. i have tremendous faith from the american people sorting through this coming up with a reasonable conclusion. >> the facts are too short changed positions. drew mentioned the health care option making people buy the insurance even though we was at the state level and you were famously on the couch with

somebody talking about climate change and there have been others over a long career. the big charge against mitt romney is he is a flip-flopper. if he is, isn't new gingrich a flip-flopper? >> i don't think so. my career rating is 90%. >> i think that is relatively high. my record of balancing the budget is the only person to have done it in your lifetime, my position on the national security back in 1979 my record of wanting to cut taxes and working goes back to the mid 70's. now i would say two things. one is sometimes things change. i voted for the department of education in 1979. i wouldn't vote for it today. gist i've looked at how it's evolved. life looked at the national education establishment, and my

conclusion is you need a very, very dramatic changes. plus the 32 years ago. on other things i've been relatively stable and a couple things i just made a mistake. it is truly thedumbest thing i've done in the four or five years because she is so radioactive just literally you can't explain that. second, i'm probably not going to meet your standards but i don't know about the climate change. there are a lot of grit to double standards, there are a number of standards to say that it's not real speech tuesday night to the truth is the climate change the fact is 1978

indicating become an ice age i was recently at the field museum in chicago looking at dinosaurs in the antarctic. if there are dinosaurs in the antarctic there is no -- >> they wouldn't call you a dinosaur though. >> the campaign f newt and proud to be here. >> [inaudible] >> how was your help? >> i work seven days a week working for president i probably put in 100 hours -- >> how was your blood pressure, how is everything? okay this is the strangest thing you nt only decided to be a catholic but a golfer, but are

you, nuts? >> i've tertian to catholicism with my golfing. no, my wife's golf since she was lying and the only person i gulf with and if there was a way to go out and be away from telephones it is a nice walk in the woods and i may trulyad golfer. i have no investment in my golf psychologically committed >> good otherwise it will eat you up. who is the president who golfed the most? >> by reputation, eisenhower. >> willson. he did the game and his dr. mix prescribed it after his first initial mild stroke and he played every morning, naim holes, he did it. >> eisenhower was one of the better ones but the best one was kennedy.

i never thought of kennedy as a golfer. >> nobody confused my game for serious golf. >> the mengin your answers on the website one of the points you bring out in the ethanol mandate it's for all of the above energy policy that's part of it and you would ratr have energy from on the above than from the persian gulf, but then why does it follow that the federal governme has to subsidize it? can the government just get out of the way -- >> the government retains saying most people in the business now don't think the t subsidy is going to survive. there are two questions.

everybody get a big oil will give you this. if obama comes and says let's get rid of the ten to 14 billion in the oil exemptions would you let anybody jump up in the business? annuity tt has tried to kill ethanol on behalf of the world probably jumped up and said -- and half right by the way and i am against n fact apply overwhelmingly to the small independents who knew all the exploration in the field. on the one hand they understand exactly why they want the subsidy for oil so this isn't a purity this is a practicality. you have two sources of energy fighting each other to keep the small independents to find oil

and gas in fact i want to open federal land to be able to find oil and gas. north dakota all of the development on private land and the reason north dakota has 92 per cent unemployment is the bolten field formation has tried 25 times bigger, 2500 per cent figure in e u.s. geological survey thought it was. >> [inaudible] >> i voted for ethanol and gas in 1984 when ronald reagan signed it and in 86 when he signed it and in 1998 and helped it survive. my record on this the position let me be very clear about this i had a very successful speech business. i had a very successful general

business. there isn't a single position taken that involves bnp i'm happy if people who like my positions and no cases on know of where i say please, don't pay me, but in fact these are all positions i have had over a long public career. so in that sense they said we are concerned would you give us advice and i said sure. >> what exactly where your company speed for to do by freddie mac? >> largely strategic advice and i think in one article 1 of them says that. the lobby for the strategic advice. i read a book called the art of transformation which is a pretty good introduction to how you get very large scale change, and our specialty was talking to people,

listening to people tell what their problems were and then trying to help them think through how they could solve what they are up against. in the case of housing tenth and starting in the mid 80's on how do you help your people get into housing and there is a conservative way to do with which is to teach them budgeting and how to take care of their house, there is a kind which allows relatively poor people to own homes and be successful at it. you don't just hand them money to buy a house that they don't understand, etc. triet suppor if it is how would you think seriously about meeting these goals, how would you try to do it? >> one of the directors quote to the story recently saying we were hoping he would write something in support of the model and get conservatives and republicans on board but i don't think that ever happened.

was that communicated to you? >> again, the government sponsored enterprise goes all the way back to the founding of america. they have not necessarily -- they can be useful. noeth rational person is going to advocate creating abubble. that is to each economic history i know the book miniet crashes pretty well and the fact something is good if you do that after this point but in sing and if you commit to this point doesn't mean suggesting you do that to this point puts you over here. dividing we ought to try to find ways to halt the relatively poor people in the united states? of course. does that mean we ought to create a bubble and have people trapped in poverty? no. so i think that there is a big difference. >> were you in a position to see the bubble comng? did you write about it? >> i think if you go back and

look at my speeches it wasn't obvious at the starting and initially it wasn't fannie mae and freddie mac. it was things like countrywide but the minute he started getting people with no credit, no money down, these things are in same. i would say that consistently because again, people would come to say -- first of all i had no access to the internal information. i wasn't on the board of directors, i wasn't brought in with the general votes. anybody who had said to me do you think we should be giving the following five things i would say no. these are all the things in fact dodd and frank wanted done and the other difference which doesn't seem as i wasn't in congress. i was a private citizen.

private citizens are allowed to be in business, a totally different operation. i checked with for a sample rosio and the reform bill passed against the opposition levels and said they always supported these reform efforts and never mentioned fanny or freddie to him and so in my public role i think i was very clear about where i was going and what i was doing and it's very important to understand that. as a private adviser, had they come to me and, again, every time somebody says to me here's what's happening which will be occurring pretty late i would have said this is unsustainable because iyou state economic history is just clearly not possible to do this. so, to examples a good friend of

mine who's a very successful investor in the early 1989 we worked on all and the ground of the japanese had approximately the same value as the state of florida and said in a passing that is a bubble. he sold everything that he had in japan just before the u.k. crash and its a random conversation. it doesn't take much to figure out they are not going to be sustainable. >> they are going to be getting out of whack on the education part which you mentioned. you have sort of a long list of education ideas, reform ideas, one of the pell grantsfor the k-12 and the charter ideas and then on your web site at the end you say that you are going to shrink the education department to as small as you can get to

read the pell grant for k-12 doesn't that further the federal government? all of those are -- >> i want to draw a distinction on the president's role as the leader of the american people and say here are 12 things i hope the state government does and the leader of the president's manager of the federal government and different rules ronald reagaunderstood this thoroughly as the leader of the country i can advocate a series of things for it satellite think every state should adopt a law that says states will encounter the declaration of independence every year that they are in school. i don't think the federal government should but i would actively advocate that in every single state because the declaration of independence is central to who we are as a people. speaking would be data collecting analysis and -- spec

all of the federal dollars, you've got lunch programs and subsidies. >> school lunches and used part but if agriculture. you would have to make a separate distinction about whether in fact -- remember we went to school with a world war ii because of the malnutrition. originally sponsored by richard russell who was pretty conservative because so many young men were incapable of serving in world war ii because of basic health problems and the was the original theory behind date and i haven't taken the position on school lunch and something i don't think about but i think you'd be cautious before you automatically jump off the cliff and sage we are going to disband its. is that a problem do we need to take a look at? >> amall percentage is growing but i would argue that if you're to go to the average school if

you would take from new hampshire how much the federal regulation costs you how much time do you spend filling out forms it's like when you talk to doctors about the number they now hire to fill out the forms federal aid also meant federal regulations you might find it was me of a break even than you think. >> in manchester we can't -- some 70 languages almost a spoken in the school system that want to take the state's and not test them for federal testing for a year or two but we can't. >> that is inaccessible something that is just crazy. if you have someone that shows up from ethiopia or somalia or cambodia and say i'm glad you've been here six months let's test you and they get average into

the schools -- the second part of that is i'm adamantly in favor of english being the official language of the vernment and in favor of all people 60 or 70 languages. i think in nursing in english is the first step towards prosperity. >> in the gingrich administration we have now currently every now and then they will pop up because there's some government documents in miami and some printed in spanish or california and texas. >> you have the department to print the voting cuments in every language in the country. theoretically in california i forget the total number of languages to print the voting ballot in but it is an absurd. >> what we have the evan patrician -- >> english. >> mr. speaker, in that cabinet of yours you've been talking

about good when and the rivals so where would you put their rival mitt romney in the team? >> governor mitt romney is an extraordinarily competent manager with an immense amount about business and finance and has a wide range of possibilities. >> when i suggested that to him -- the part about him serving in the team of rifles. >> that might have just about the serving his team of rifles. none of us want to. we got into this because somebody said the other day what do unequivocally say no tohe vice president and following ronald reagan in 1976 he said he was really glad that ford didn't offer it because he wasn't sure how you would turn on the president. i said to clarify gingrich must

think that -- this is back when i was like eight per cent he must think he's not going to et the nomination. so, he is the front runner or should we think anything less than winning the nomination. >> i guess no good reason have you got a campaign now you said you have eight staffers here and eight in iowa. he's got a great future in this business. he's a very good natural political leaer. >> so you dot have to pay him. to complement him nicely. do you have a campaign to sustain yourself with? that historians have to finish in new ampshire to go on with

any hope of winning the mination. >> we got to be the top three in iowa and new hampshire. i would like to be first in online and in new hampshire and we will see, but i think if we go south and i'ma viable candidate i would win the south carolina, and i think that changes for florida. so, t me these are important building blocks. what we don't know yet is whether one of us can run the table, you know, in which case it gets over early or better because of proportional representation of what happen to hillary and obama and still struggling with that in may and june and i think you have to prepare for both u.s. to say it's true i like to be the best i can in all the early primaries but i have to have the bility to assist in the campaign all

the way. >> when you say top three in this team states and my lai and new hampshire ron paul seems like of a wild card in this film. is wrong paul -- should he be viewed as one of the regular republicans? i mean he has his followings in his positions. >> he may do surprisingly well. >> certainly as we learn more about how bad the federal reserve is and how mch money if it is thrown around the plan that he has a better case in the foreign policy it's a little bit harder for people to accept but i think that ron paul is going to depending on th turnout and i applaud it could be significant the bigger the primary. i think that he will be reported as a factor. >> he's also said he won't rule

out the third party. >> i saw him on tvd of the morning he said flat he would not run. he said he wouldn't aumatically guarantee the republicans so he might be passing that he said what he wouldn't run as a candidate. >> you caught up with this on the internet where the former bush campaign official claims to have $24 million to get on the ballot in 50 states and the you're going to have the process of the six most likely candidates with internet voting and then put one on the? >> if we nominate somebody that is reasonably articulate and clearly conservative no third-party ticket will because people will walk in and say let me get this straight i can beat obama or vote to re-elect obama and if i don't vote for the only major candate against obama i

just voted to re-elect him and will be the tendency this year in a modern times because the desperate desire to beat obama is great. that is the biggest that i have because if you say to people who would you like to see beat obama overwhelmingly they would say the. i was leaving des moines in the other day and of a woman that was checking said we are so excited about your idea. my husband and i are already planning the debate parties i thought that was an encouraging sign. >> do you have any follow-up or are we all set? then it is who had the best third party and it didn't do the republicans any good. >> he was a unique figure.

>> woodrow wilson to the system again this year give us obama. >> i found out with a son-in-law wa i didn't know that. the provision series which was great. thank you for coming. we will no doubt be covered in your social security. come back when you get a chance. >> thank you. will that make c-span happy. one of my major goals in life [inaudible] in alba conversations [inaudible conversations]

>> seymour at c-span's website. from recent events, read the latest comments from political reporters from social media sites and links to our media partners. all at c-span.org. >> president obama travels to new hampshire tomorrow to talk about his jobs bill. new hampshire will hold the first presidential primary on january 10, 2012. the president will visit a high school.

we will have coverage at 12:15 eastern. secretary of state hillary clinton and treasury secretary tim geithner announced a new sanctions against iran today. the u.s. postmaster general talks about the future of the postal service. reaction from president obama on the failure of the deficit reduction committee to reach an agreement. >> from the miami book fair, -- >> miami was center stage in the bay of pigs. they recruited the cuban exiles who participated in the invasion of cuba. after castro came into power, many of the people who did not like him fled to cuba, right here in miami.

>> of course the election of the first black president was a landmark. it shows there has been tremendous change in american racial attitudes. if not, he would have had no hope of prevailing. >> it is critical that -- it is hard to relax in the situation but you have to be calm enough or you can make a split-second decision. what to do i do now? >> coverage from miami on line at the c-span video library. watch what you want, when you want. >> hillary clinton and tim geithner outline new financial sanctions against iran. these sanctions follow a recent report on their development of

nuclear weapons. the remarks are about 10 minutes. >> good afternoon, everyone. thank you to my team for the work they have doing with respect to iran. recent days have brought evidence that iran continues to defy the international obligations and violate international norms including the plot to assassinate the saudi ambassador and, as verified by the energy agency, further documents conduct of activities related to the development of nuclear weapons. this report is not the united states or our european partners.

this is the result of an independent review of that reflects the judgment of the international community. there has to be consequences for such behavior. on friday, iran was condemned in vienna. earlier today, the general assembly strongly represented them for continuing human-rights abuses, persecution of minorities and forcible restrictions on political freedom. if the in transience continues it will face isolation. today we're taking a series of steps to sharpen the stories. first, president obama signed an executive order that specifically targets the petrochemical industry, a significant source of export revenue and a cover for import

sanctioned activity. this will allow us to sanction the provision of technology to the federal chemical sector. to accompany this measure, we will launch a diplomatic campaign to encourage other countries to shift any purchases of iranian petrochemical products. in the same executive order we are expanding sanctions on the oil and gas business. u.s. law already sanctions large-scale investments in up- stream exploration and development of oil and gas, and now it will also be sanctionable to provide goods, services, and technology for those activities as well. this will make it more difficult for iran to work around the sanctions and will further impede efforts to maintain and modernize its oil and gas sector. third, under an existing executive order, we are designating a number of individuals and entities for their roles in assisting

iran's prohibited nuclear programs, including its enrichment and heavy water programs. their assets subject to u.s. jurisdiction will be frozen and american individuals and entities will be prohibited from engaging in any transactions with them. and finally, as secretary geithner will discuss in more detail, the treasury department is formally identifying iran as a jurisdiction of primary money laundering concern. this is the strongest official warning we can give that any transaction with iran poses serious risks of deception or diversion. these steps were accompanied today by complementary measures by the uk and canada, and we expect additional sanctions by other international partners in the days ahead. together, these measures represent a significant ratcheting up of pressure on iran, its sources of income, and its illegal activities.

they build on an extensive existing sanctions regime put into place by the un security council and a large number of countries, including our own, acting nationally and multilaterally to implement the council's measures. and these sanctions are already having a dramatic effect. they have almost completely isolated iran from the international financial sector and have made it very risky and costly a place to do business. most of the world's major energy companies have left, undermining iran's efforts to boost its declining oil production, its main source of revenues. iran has found it much more difficult to operate its national airline and shipping companies, and to procure equipment and technology for its prohibited weapons programs. and those individuals and organizations responsible for terrorism and human rights abuses, including the revolutionary guard corps and its qods force, have been

specifically targeted. the impact will only grow unless iran's leaders decide to change course and meet their international obligations. and let me be clear -- today's actions do not exhaust our opportunities to sanction iran. we continue actively to consider a range of increasingly aggressive measures. we have worked closely with congress and have put to effective use the legislative tools they have provided. we are committed to continuing our collaboration to develop additional sanctions that will have the effect we all want -- putting strong pressure on iran. now, the administration's dual- track strategy is not only about pressure. it is also about engaging iran, engagement that would be aimed at resolving the international community's serious and growing concerns about iran's nuclear program. and the united states is committed to engagement, but only -- and i say only -- if

iran is prepared to engage seriously and concretely without preconditions. so far, we have seen little indication that iran is serious about negotiations on its nuclear program. and until we do, and until iran's leaders live up to their international obligations, they will face increasing consequences. now i would like to invite secretary geithner to explain in more depth how some of these sanctions will be working. tim. >> thank you, secretary clinton, and my compliments also to your colleagues and to ours -- to mine, led by david cohen and danny glaser, for doing such a great job today on these very significant financial actions. since the president came into office, this administration has executed a very aggressive strategy to stop iran's illicit activities. a key part of this strategy has been to impose overwhelming financial pressure on iran, and because of this strategy, iran

has been subjected to new and damaging levels of financial and commercial isolation. first, we have dramatically reduced iran's access to the international financial system. iranian banks are losing the ability to do business around the world, which in turn has reduced the ability of the government to finance activities opposed by the international community. second, iran's national shipping line, which has transported material in support of iran's missile program, is now shut off from many of the world's major ports and routinely finds its ships seized or turned away. and third, iran's primary source of revenue, its oil sector, is in decline because it cannot attract the foreign investment that it desperately needs to maintain levels of production. together, the intensification of sanctions by this administration, alongside our

partners around the world, has inflicted substantial damage to the iranian economy. to continue these efforts, the treasury department today is designating additional entities for their support of iran's nuclear and proliferation- related activities. today, we are taking the very significant step of acting under section 311 of the patriot act. for the first time, we are identifying the entire iranian banking sector, including the central bank of iran, as a threat to governments or financial institutions that do business with iranian banks. if you are a financial institutions anywhere in the world and you engage in any transaction involving iran's central bank or any other iranian bank operating inside or outside iran, then you are at risk of supporting iran's illicit activities -- its support -- its pursuit of nuclear weapons, its support for terrorism, and its efforts

to deceive responsible financial institutions and to evade sanctions. any and every financial transaction with iran poses grave risk of supporting those activities, so financial institutions around the world should think hard about the risks of doing business with iran. we are taking this action, as the secretary said, alongside our partners in the united kingdom and canada, who announced earlier today that they were implementing similar measures to insulate their banks from iran. and as a result of this coordinated effort, iran is now cut off from three of the world's largest financial sectors. we encourage other leaders around the world to take forceful steps like these actions to prevent iran from simply shifting financial activity to banks within their nations. as we put these new measures in place and as we continue to work to expand their reach around the world, we will continue to explore other measures. no option is off the table,

including the possibility of imposing additional sanctions on the central bank of iran. the policies iran is pursuing are unacceptable, and until iran's leadership agrees to abandon this dangerous course, we will continue to use tough and innovative means to impose severe economic and financial consequences on iran's leadership. thank you. >> thank you all very much. >> britain and canada have put together new sanctions against iran. today we get a closer look at the nuclear program including remarks from national security advisor, john allen. live coverage -- tom donalen.

we will get an update from major and general daniel allen. coverage begins at 10:30 on c- span 3. >> to the u.s. postmaster said that a requirement has bankrupted the postal service and asks congress to make changes. a group " bipartisan senators proposed legislation that would create savings for the postal service. patrick donahue spoke at the press club for about an hour. >> good afternoon and welcome to the national press club. i'm a journalist with the associated press. it is good to have you here

today. we are the leading professional organization for journalists, committed to our programming events such as this while working to foster a free press worldwide. for more information you can visit our web site, press.org. to donate, you can check the web site. on behalf of our members, i would like to welcome our speaker today as well as those attending today. our head table includes guests of the speaker and working journalists. if you hear applause, this is something i am reminding people throughout the political season, if you hear applause members of the general public are attending. it is not necessarily evidence of a lack of a journalistic objectivity. [laughter] laughter is encouraged. our luncheons are also featured

on a podcast with the national press club available for free download on itunes. you can also fat -- follow us on twitter. we'll have q&a and i will ask as many questions as time permits. now it is time to introduce our guests. it does not imply or signify an endorsement of the speaker. i would ask you to stand up as your name is announced. matt small, a veteran radio producer. he is so confident we call him the beast. also joining us, the club member vice president of the global development for the business coalition. good to have you here. drew is among several former president at our table today. he is the retired public relations director with the

national association of letter carriers. also joining us is john cosgrove, our senior surviving president, organizer of the first postal forum. for those who do not know his story, he was inaugurated 51 years ago. when jfk came over and offered him congratulation. i am happy he could join us today. iran is the deputy postmaster general. thank you for being here. i will skip over the podium. angela is a reporter for bloomberg news and she is the new chair of the committee and our membership secretary. amy morris is the organizer. this is her first and she has done a fabulous job. she is an anchor for federal news radio. thurgood marshall jr. is vice- chairman of the board of governors for the postal

service. he is the incoming chair as well. nice to have you here. the list of former presidents goes on and on, he is also the chief of the buffalo news. sean reilly is a reporter for the federal times. now please give them your round of applause. [applause] >> popular board tells us of the -- lore tells us of being u.s. postal service. neither snow nor rain nor heat nor night keeps them from their completed rounds. but what might not prevent, a financial storm board. -- a financial storm could. the postal service has been woven through the tapestry of this country's life. since the birth of this country, the postal service has

been part of our community and our communication. that tradition, that service is very much at risk. if the postal service is an organization in need of a new business model, it seems. as it stands, it cannot simply fold. it is under a legal mandate to serve all americans, no matter where they live. the letter carrier deco's door -- who goes door-to-door to door in downtown washington has the same responsibilities that goes by boat in a remote alaska. is one of the few government agencies authorized by nothing less than the united states constitution, article one, to be precise. the workers, businesses, and communities that rely on the postal service, its deliveries, and frankly, it's contracts, see it as a linchpin for their survival. it is more than a trillion dollar industry that employs a upwards of 8 million people. while it might be regarded as too big to fail, it begins -- it continues to hemorrhage money and failure begins to look like an option. convenient blame is often placed on technology.

e-mail and a text messaging is making the handwritten letter seem obsolete. the more complicated aspects perhaps lies with its own retiree health care plan. the postal service is legally mandated to pay $5.5 billion in prepayments toward retiree health benefits. it is a bill that has come due and the postal service cannot pay. the man who has been tasked with fixing all of this is the postmaster general. patrick donahoe has been with the postal service for 35 years. he began as a clerk. he was formerly named postmaster general less than one year ago and he has his work cut out for him. in early september, the postal service was operating with just one week's worth of cash. the weekly costs for the postal service at up to about a billion dollars. now congress is involved. the 21st century postal service

act of 2011 has passed the senate committee on homeland security and government affairs. it awaits action in the senate. seemingly, like a lot of things. [laughter] this bill would preserve it 6- day mail delivery for the next two years and it would renegotiate existing union contracts to offer buyouts to its employees, and recalibrate pre-funding requirements for retiree health benefits. how can the postal service be saved? will the legislation be the trick or will it be something that just buys a little time? that is why we are here today to find out. please give a warm welcome to the postmaster general himself, patrick donahoe. [applause] >> thank you for that introduction. it is a pleasure to be here with

all of you. how like to thank the national press club for the invitation and organizing the event. i have the privilege of leaving -- leading one of america's greatest institutions. it is an organization that serves literally 150 million american households and businesses on a typical day. it facilitates trillions of dollars in commerce. it supports the $900 billion mailing industry that employs 8 million people. the postal service is part of the bedrock infrastructure of the u.s. economy and our society. throughout our rich history, we found the nation together, and we do so today even in this digital age. we connect every senator to every receiver and provide regular delivery to the most remote locations in this country. americans today view the postal service very favorably, as a

familiar institution and a trusted, a viable part of -- trusted, reliable part of american life. but for the institution to thrive, it requires irrational -- a rational business model. the postal service is fundamentally a business. yes, it is a government institution, but it operates as a business. we charge for the delivery of products and services. our revenues go up and down depending on mailing trends in the economy. we report profits and losses. we issued quarterly financial statements. we are even sarbanes oxley compliant. [laughter] and contrary to the understanding of most americans, the postal service is not supported at all through taxpayer dollars. we generate all of our revenue from the sale of postage products and services. that means the postal service must compete for customers. we must sell, actively sell and persuade people to buy our products in a very competitive

marketplace. unfortunately, while we have a mandate to operate like a business, the reality is we do not have the flexibility under current law to function like a business. america needs a postal service that can operate like -- more like a business. consider the example of a post office. most retail companies would close retail stores that fail to turn a profit. roughly 25,000 out of our 32,000 post offices operate at a loss. we have thousands of post offices that bring in life and -- bring in less than $20,000 in revenue in the year that cost more than $60,000 to operate. and many of these are within a few miles of a neighboring post office. and yet, the reaction from attempting to close one of these low activity post offices and provide another option is something to behold. people rallied around their post office and they do so because

it is a cherished institution. it is a part of their town. on the one hand, that demonstrates the power of our brand and the extent to which customers feel connected to the postal service. but on the other hand, it makes no business sense. there are better and more efficient ways to serve our customers. here is an interesting statistic. purchasing stance accounts for 40% of all of the retail transactions that have been at -- 48% of all of the veto -- retail transactions that happen at the post office. people go out of their way to buy stamps, and they do not have to do that. today, there are 71000 retail locations that provide a variety of postal services. such as buying stamps', dropping off packages, depending on location. these retail partners aren't restored, gas stations, pharmacies, and -- are in grocery stores, gas stations, pharmacies, and they are convenient.

they are open for longer hours. a lot of them are open seven days a week. in the coming years, we want to dramatically increase the number of retail partnerships that we offer. we think there is a huge opportunity for small businesses to operate these or some other type of postal unit. by the way, everything you can do at the post office you can also do at usps.com. will there always be a role for a traditional post office? absolutely, but they're also be a range of opinion options for -- but there are other, creative options to provide our products and services. but we need flexibility to provide them. we are in a deep financial crisis today because we are in a business model that is tied to the past. we are expected to operate like a business, but do not have the flexibility to do so. our business model is fundamentally in flexible.

it prevents the postal service from solving problems and being effective in a way of business would. delivery companies facing a significant downturn in revenue would consider adjusting delivery frequency, just as our competitors did when they saw the economy slowing in 2008 and 2009. and looking ahead and sing -- facing another 28% volume decline on top of the 23% we have seen already, the postal service should be able to do the same, i just delivery frequency. -- but just delivery frequency. -- adjust delivery frequency. most businesses make product and pricing decisions quickly. we have to go through a cumbersome process to price our products. our competitors can make these changes on a moment's notice. most companies do not offer pre-retiree health benefits. we are required by law to fund an entire 40-obligation in 10 years. -- an entire 40-year obligation in 10 years. the practical result is that we

have had to borrow money from the treasury to give it back to the treasury. that has effectively bankrupted us. the postal service has also been obliged to overpay in to the federal employee retirement system. not civil service, but federal employee retirement system, by $11.4 billion over the course of the last 20 years. not only are we -- >> [unintelligible] we are the 99%. do not close the post office. [unintelligible] they are public servants. return the overpaid pension funds. stop using the post office to

make a profit. stop stealing postal resources. stop closing off postal offices. stop ripping off the postal workers. the post office should not be based on human greed. hey, hey! ho, ho! [boos] >> the good thing is that they have definitely been paying attention to this situation. [laughter] [applause]

at any rate, -- [laughter] if we could only get that $11.4 billion back we could keep a couple of post office. -- post offices. these mandated obligations, this has been an enormous drop on our financials -- a financial stability. it is something we have had no control over. consider the worst volume of delivery was in 2008-09. our billion dollar losses were due to raise $7 billion mandated retiree health benefit payment that no other business would have made. given the volume of declines we have experience, that statistics says to me that we do a very good job of controlling costs, but we are working with insurmountable constraint. over the past four years, we have reduced the size of the work force by over 128,000 employees and reduce annual operating costs by $12.4

billion. and we did so while providing record service. that is a tremendous testament to the work our employees do on a daily basis. looking ahead, we are accelerating the pace of cost reductions. we have announced plans to reduce the number of mail processing facilities from 460 today to less than to wonder by the year 2013. we have announced plans to study -- 230 by the end of 2013. we are streamline our operations with the goal of reducing another 120,000 in delivery round. -- another 20,000 delivery routes. these things are good, but they do not bring us back to profitability. to turn a profit and bring us back to a sustainable financial track, we have advanced a plan to achieve a $20 billion cost reduction by 2015. unfortunately, as things currently stand, we do not have

the flexibility in our business model to achieve this goal. for this reason, we propose important changes to the laws that govern the postal service. we propose gaining delivery flexibility, which we have used to transition it -- transition to a five day delivery schedule. most other post offices have done this years ago and there has been very little cost from a financial standpoint. -- very little customer impact. we have proposed a restoration of the $11.4 billion and a more rational retiree health benefit schedule. we have proposed taking over our federal health employee insurance and that would mean to shifting probiotic -- shifting to private providers. we would reduce total cost to employees of providing a better product.

we are also seeking the ability to manage our work force more effectively and with greater flexibility. these and other proposals would enable the postal service to operate more as a business does, to provide better service and better compete for our customers. i'm grateful that congress is now working on postal reform legislation. the stake holders should be grateful as well we have seen a strong commitment to our issues from congress and the administration. however, there is a big question that needs to be answered about what the final package will look like. how we treat the -- how it treats the model as a business and gives us the standards we need. -- and gives us the flexibility that we need. it has to do with the concept of speed. the postal service is contending with a steady decline, 7% per year, in the use of first-class mail. this is due to the rise of electronic communications. people are paying bills online.

the decline puts us in a race to get ahead of the cost curve. to become profitable, we must cut costs faster than the rate of decline with first-class mail. speed is the answer. speed is also the it -- the way to judge whether congress is truly interested in enabling the postal service to operate more like a business. for business to delay our ability to cut costs, it will result in sizable financial losses. for example, if we are unable to implement a five-day delivery schedule now, we will needlessly carry a $3 billion operating costs. multiplied up by several years and you have a pretty big number. if you consolidate to a hundred 60 mail processing delivers -- 260 mail processing delivery plants in the next year, it will -- we might needlessly carry another $3 billion and operating costs. it would impact our ability to

modernize our retail networks and manage our work force and our health care costs more effectively. if congress does not pass legislation that allows for more effective cost control and does not make more fundamental changes to our business model, the postal service could be running deficits in the range of $10 billion to $15 billion annually. in the that phrase, speed kills? lack of speed could killed of postal service. -- killed the postal service. these losses will ultimately burden the american taxpayer. well first class mail volume level off? we will see. volume will decline quickly for the rest of this decade. and we simply do not have the ability to cut our costs quickly enough. those are the facts. with the rights legislation that enable swift action, the postal service can quickly return to profitability and stay profitable, and continue to fund the universal service that we provide today.

we need provisions of the final legislation that provide us with the speed to reduce our costs by $20 billion by 2015. businesses do not solve issues for years on end. they do not create impediments to solving problems. they make decisions quickly and act quickly. off off unfortunately, the legislation -- unfortunately, the legislation does not provide us with the speed we need. those elements have impose greater constraints on our business model. taken as they are, they do not come close to unraveling the cost reductions of $20 billion by 2015, which they must do in order for us to return to profitability. if passed today, either bill would provide at best a couple of years of profitability and at least many decades of state losses. however, taking the best of the house, the senate, and the administration approaches, congress can provide the postal orders with the legal framework

and business model that it needs. it all comes back to the notion of speed. will the postal service be able to get ahead of the cost curve? or would be doomed for perpetual losses? -- will we be doomed for perpetual losses? congress needs to give us a business model that allows us to act quickly to lower our costs. today, we operate in a very dynamic environment. people and businesses have many ways to communicate and we have responded with in the current constraints of our business model. we compete for customers and are more efficient than we have ever been. we deliver nearly half of the world's mail and do that with record high level service. we use the most advanced mail sorting technology for sorting in the world. 95% of the letter-sized mail is never really touched by human hands until a letter carrier puts it in the mailbox. our productivity has increased dramatically since 2000. we have roughly delivered the

same amount of volume that we delivered in 1992 with about 170,000 fewer employees. the postal service operates efficiently like a business and compete for customers. we have got to go further down that path. if we do so, i am convinced that the postal service will have a bright future. we can continue to provide the nation with secure, reliable, affordable delivery platform. we can be profitable and self sustaining. we can continue to innovate and change to meet the mailing and shipping need of the american public for generations to come. we can also be thought of different as a successful business enterprise that performs a vital national function. it will only happen if congress develops a symbol -- single, straight forward copies of legislation. the ability to control and take

care of our health care costs, the ability to quickly realign our networks, to streamline governance and to provide more flexibility in the way we leverage our work force. all of this needs to be done right now. the postal service is far too integral to the economic health of this nation to be handcuffed to the past and into an inflexible business model. america needs a postal service that can evolve and operate with fewer constraints. i have no doubt that the postal service will remain the great american institution. but in order to do so, we need a great business model. thank you very much. [applause] >> thank you very much for your poise and your speech.

appreciate that very much. talking about congress and the news today for other reasons and the so-called super committee, and you are talking about congress needing to get the job done for you, let's break this down in two steps. first, where is the legislation that you are talking about in terms of moving forward, and how do you look at those prospects at this point? the other piece would be, what does the apparent breakdown in the super committee's work, or the inability to come up with the $1.2 trillion, how does that affect your operations? two pieces there. >> first, i think is important to keep in mind that we talk about legislation, we are pushing for legislation that will help you what -- the united states of america, that will help the ailing industry be strong and our board for the future. -- the mailing industry be strong and vibrant for the future. that is the focus -- the entire

industry and the people that we serve in this country. as far as the bill, there are a couple of things going on. number one, the administration has weighed in with a letter sent to the deficit commission. i will talk more about that in a second. they agree that we should move from six days to five days. they also make some changes in product offering. they agreed to give us our overpayment back and a couple of other small things. you got that on the table. there are two bills, one in the house and one in the senate, and both have gone through a markup. they're very good points in each one of them. in the house, they're talking about delivering with flexibility. there are other opportunities for us to control costs, and also some flexibility for pricing going forward. in the senate, we have some good opportunities there from the standpoint of new products development. they have the ability to move from the six days to five days, but the problem is that there is a bit of a delay in time in that. over the course of the next

couple of months we would like to get everyone on the same page to work through the legislative process. to come up with will be outlined here today as we talked about this. from a super committee standpoint, what we do not know what is going to happen. we have heard that we are in the bill. there is no one who has come forth and said we are definitely in there. we will have to hear that tonight like the rest of the public. >> in terms for the prospects of the passage of legislation in the house and senate, how confident are you? >> there are a lot of people that will say that is going to be a tough year and if you do not get it done, it is not going to happen with elections next year. i will say this. i think the administration and the congress, both the house and the senate, understand the importance of a vital and help the postal service. -- by dole and held the pose full-service -- vital and health y postal service.

we have spent a lot of time and these guys have done a lot of good work. if you have seen the work that has already been done with this administration and with the senate, they have gone a lot of things done. over on the house side, they have done a lot. there is a lot of interest. it is just a matter of trying to get what is out there right now thought through and pushed through so we can get things done quickly. >> one of our listeners sent a big question. what is the intent of the bill -- issa-ross bill if it would not actually saved the postal service? >> from their perspective, it is the best way to approach the issue. there are a couple of things there. they do allow us to quickly move from a six-day to a five-day environment. they are going to give us the overpayment back from the purse system. -- first system. however, there are constraints around the network changes. we would have a little more government oversight with network changes, post offices. i think we can do these things

much quicker if we act on them now. it would almost step in like washington d.c. and take over the world for our postal service. if we get to that point, we have failed. we are saying to give us the freedom to act like a business now and we will make sure we have a much stronger postal service going forward. we do not really need another body to be telling us what to do. >> the postal service was extended contract negotiations with the two unions. are you on your way to arbitration and a deal that "favors union? -- "favors unions?" >> when you see the reductions we have done from a cost standpoint and the productivity that is in there, we have done an excellent job. we have an excellent working relationship with our unions. they understand the issues that are facing the postal service. when we got to the point last

night where we needed an extension, i think it is well worth sitting down to continue the talks. there may be a solution in there. from the postal service standpoint, we are looking to resolve this health care issue, and at the same time, more flexibility with our labor. >> what happens if you do not reach an agreement? >> then we go to arbitration. i am a glasses much more than half full person. but i make a loss is much more than half full person. i'm hoping we can get something done. >> the $1.5 billion retiree health payment has come and gone. did you default? and if so, what is the consequence? >> we did not the fault. -- we did not default. the continuing resolution with the postal service has been exempted from making a payment until the 18th of december. our proposals on health care would basically eliminates the need to pre-fund. we have laid out a plan and are working with the unions as a potential provider in there.

we can eliminate substantial requirements that are now in existence on this organization. this prepayment is different -- is a sword of damocles that is different from the entire industry. it needs to be resolved. >> does it change the benefits of the people who are covered? >> i do not think so. there are people that i've spoken to in two big companies that have recently renegotiated their health plans with the picbig providers -- it is not le we would be getting health care from someone on a street corner. these providers, one of them has reduced costs by 14%, the other by 12%. this year will pay $7 billion in health care without a pre funding. if we are able to strike a deal with the health-care provider to take & cost reductions, the cost-reduction the $720 million. that gives you big

opportunities to cut costs going forward. the other big push with health care is been -- has been to work with our retirees to move them to medicare. right now, we are overpaying for retiree health benefits for retirees since they are not required to go on medicare. we think we can get a better deal for them, better cross -- cost coverage, and a better proposal going forward. >> here is something from a postal employee in lansing, michigan. how do you plan to ratify two contracts currently in the negotiations when you have not honored the uaw -- the apwu contract that you just signed? >> i think we have done a lot of work to honor the apwu contract. we continue to honor it. we have done a lot of work with our employees. we have to work to get more

flexibility. and we achieved that the large extent with the>> are you making any changes in your position on post office closings? senator collins said you endorsed the language that would create a new office standard. >> the one thing we do not want to do is close to a post office and walked away. many of these towns, depends on where you are in the u.s. the further west you get, they are further apart. we are looking at a consolidation to a nearby post office, providing additional rural service. in our rural service, their carriers are a post office on wheels. in many cases we are open for eight hours and we have less than two hours of work, less than one hour in some cases. >> that is a good job to have. >> i know. it would be boring. think how boring it would be. >> [unintelligible] >> oh, i'm sorry.

we have those things, but we are looking at things like a village post office that gives those things going. it keeps the store and open and gives us the ability to provide that service. >> do you still have only one week's worth of operating cash? >> i will have to ask the cfo. he is here. here is where we are in the cash. we have a ruling that came out that says we will have to be -- pay back the first money that we set aside. we are doing that. we will still have a couple of weeks of operating cash. that is why it is so important to get this resolved because like any other business, we'd want to get off the debt paid down so we have -- get the debt paid down so we have a stronger future. >> does the postal service kila can use and other countries model to fix its -- feel it can use another country's model to fix its current situation? >> i have spoken to many around

the world and there are different models. a lot of it comes back to public expectations. and what you do. but we have almost 50% of the world's mail because we have a very different postal service. bills come through the mail, payments come through the mail, magazines, catalogs. many of these others are much lighter post. they also charge a lot more. the germany charges 75 cents a letter. how about if we moved the price of 2 75 cents and everybody will be happy? i do not think so. those are some of the suggestions that we get in. we think from a business model perspective, looking forward to my first class mail is going to drop off. -- going forward, first-class mail is going to drop off. we know that and that is where we need to make some changes. there is definitely an opportunity for us and the digital world, and we want to go that direction. >> besides the five-day week

delivery schedule, what other best practices can you adopt? it is a variation on the same question. >> we adopt things based on what we see that our industry best. -- are industry bests. we use the fedex and ups for the transportation services as well. -- delivering their packages and we use them for transportation purposes, too. and we have learned a lot from them. we have learned a lot from retailers about how to best serve customers, looking at different options on self- service and so on. from the standard of best practices, we are open to any business in the u.s. to see how best to do it >> what do you do with respect to measuring customer satisfaction, and where are you with that? >> we have a saying that what gets measured gets done. we are measuring everything.

we are measuring point to point service. we measure all the commercial mail that comes through. on a monthly basis we have a delivery score for about 8 billion pieces of mail. we measure that against time and delivery service. we have a customer experience measurement. we are constantly looking at what the customer is saying in order to improve our performance. >> how are you doing, generally speaking? >> our overnight mail service is about 96.5% on time. two and 3 day is in the mid 90's. we only measure very satisfied or mostly satisfied. we do not even want to deal with satisfied. onare all on the high 80's those scores. we're trying to get up to 100%. >> how about the treatment at the counter? all of us have had different experiences with that over time. some people are better than

others. how do you work on that kind of situation? >> you have to work on it every day because, if you make changes, the of work our -- what happens with the work reductions that you make, you have to work with the employees to talk about how important it is for good customer service. do we have to do more work? absolutely. we have a lot of great people out there that provide great service every day. >> how many post offices have you closed, if any, under the latest closing initiative? how many processing plants? is there a delay in the process of closing? >> we have closed about 500 post offices in the last year. that was in the first run through. 3700 are still in the evaluation process. we have closed about 50 processing facilities in the past year-and-a-half and will continue to do that. as the volume has dropped, we have to make these changes. you cannot wait until the bitter end. and then try to close. we have to do that now. >> is their right appeals process where a community says,

hey, we are special? >> yes, here is what happens. if you close a post office you have to have a public meeting and explain why you are doing it. one thing we have learned is it is better to go in and give people options. that is an area where we have not done as well going in. we have not articulated the options. we will go in, a town has the opportunity to go back to us with an objection or to the regulatory commission. we are doing those kinds of things now. the same thing with the processing area. it is the same kind of public hearing and we go through that same process, too. the most important thing for us as we shrink this network down, the most important thing for people to know from a customer's perspective is, we do not want to make it any more difficult to get mail into our system. we want to make it easy. when we retain facilities so

people do not go out of their way -- in fact, for a lot of the small businesses, we want the mail to come in the front door rather than the back door. it will only make it easier for people. as we make these changes, we will use technology to make a much friendlier process for the company. >> is there a political process involved? when you are asking congress to give you legislation to make corporations fiscally sustainable, what kind if involvement politically do members of congress have on this decision making process as it relates to closing post offices? >> you get opinions from many different people. and it is interesting -- there are 535 members of congress and if you give them a list of issues for us, you have 535 different scores at the end of that. there are members of congress that would not want to close a post office for any reason. there are some that want us to close. some of them want us to move from six days to five days.

a lot of it is our responsibility to educate and put all the options and five people. our opinion is to put all the options and for the people. the more we can communicate and help people understand where we want to get to and how we are going to get there, i think we will be able to move both the public and congress in that direction. 80% of americans are saying to move from six days to five days. do not become a burden on the american taxpayers. we do not want to become a burden on the american taxpayers. >> back to the union question, there is a lot of animosity between management and unions. do you have any hopes or plans to try to change that? >> i do not think that there is that much of animosity between management and unions. you have that through the organization at any point in time. you can find that in any industry. i think our union leaders are responsible people. the three people at the head of our management, they are responsible people. they have their opinions. i respect those opinions and i

know that they have listened to a lot of our suggestions. the bottom line, we have got to coalesce, give some things up in some cases. anytime you come up with a good win/win situation, everybody has got to give a little bit. >> a knowledgeable person in our audience says 80% of americans may want six-day to five-day delivery, but senator collins does not. how will you deal with that? [laughter] >> her biggest concern is about rural america. what about people getting their medicines? that is her issue. and we have talked through some of those concerns. you -- do you have a saturday delivery? that has been a proposal. the bottom line, we have lost 24% of the male and we are

losing another 20%. -- lost 24% of the mail and will lose another 20%. the shift from first class which pays the bill, we have to get our finances in to good order. we will keep working with senator collins and everyone else to get to these issues. >> speaking of getting politically correct answers, one says, assess your regulator. do they do a good job in helping the pipe -- the post office a solvent? for its i think we have an excellent regulator. we tried -- >> i think we have an excellent regulator. ruth is here and i think she would tell us that. we tried to reach out many times over the past few years, whether this price or service standards, and we have worked with these guys. to a large extent, it is legislation issues. the regulator does what you have told them to do. if you give them a list of 10 things to do, they have to do those 10 things. if the list is only three things, they do those three things. i did we have a good

relationship with the regulator. -- i think we have a good working relationship with the regulator precaution -- the regulator. to have a good interest in the american people. >> someone asks, is it time to start charging the congress for the postal service? >> we do charge to the congress. they pay. the one thing about the postal service, and people say this,many people say you cannot say you do not take any taxpayer money. we don't. even things for the blind and so on, that is just recouping postage because of laws that have been passed. as for congress, they have to pay. -- have to pay for drinking purposes. -- franking purposes. >> another person mentioned, how do you get past each member

of congress not accepting post office closings? did they see the big picture with jobs in their district? >> congress dealing with the postal service is not a lot different than dealing with any other issue in the federal government. >> we are a microcosm of what is happening now. there is a $7 income and $10 spent and you have to figure out what the fairest way to shrink that down. as we sit down with people and you walk through and explain things, they understand. there are very few people i have run into over there who are adamant and would not list them on any point. -- listen on any point. if you share the ideas, and we listen trying to understand both pointed views. that is the approach we will have to take in order to get this resolved. >> what would ben franklin, our nation's first postmaster general, due to postal service operations -- do to postal service operations? >> i'm not sure. [laughter]

i think the thing that is important about the postal service is that you've got to keep the basic tenets of customer service and you're also a sore wrist at the forefront -- and the universal service at the forefront. we have these issues that we have to figure out from a financial standpoint. i think we can do that without hurting our customers. >> someone asks, if post offices to close, what happens to the release day? -- real-estate. >> we are selling real-estate and eliminating leases as we speak. last year we sold something like to one or $50 million, to $300 million worth of businesses. 7% on our floor space is el onta, -- 70% of our floor space is owned, but we only own 30% of our buildings. we own the big ones, we lease the small ones. if someone out there has a lease for a post office, that is considered a municipal bond.

do not get rid of that. [laughter] >> what happens to the employees once a facility closes? >> we are working toward that. from an employee's standpoint, we produce the career headcount -- we have reduced the career and non-career headcount by 250,000 people since the year 2000. we have never laid anyone off. a couple of people have chosen to leave based on moving somewhere. we are proud of that. i come from pittsburgh, a steel town. i watched 50,000 people get laid off in one fell swoop. you read our model in the beginning, even though it is unofficial. people feel that way. trying to work things out with the local unions, that is what we are trying to do. one thing we have in our advantage is there are 150,000 people right now who are eligible to retire. if they retire, then they are not employed. we are trying to work through

those, too. >> what about selling these facilities that are not great mistake? >> we have had a couple on the market. -- not great real estate? >> we have had a couple on the market. we thought about a woman on to them, but it is not getting any better. -- we thought about holding onto them, but it is not getting any better. you hear this talk about the bubble and the pricing issues still being there for the next 10 years. our feeling is to cut operating costs. >> how much impact are the current campaigns 4 priority mail and smaller pieces -- for priority mail and smaller pieces having on your shipping cost experts priority is great. -- your shipping cost? >> priority is great. if that fits, it ships. that has been great. the other thing we have done is we have our advertising right now for first-class mail. it is the first time we have done it in years, and the whole

message is the upper class mail is important and we think customers need to think about it that way. we will also have some advertisers coming up for standard mail, and we think it will go a long way, too. >> for today's business owners, what are some of the most cost- effective ways for customers to use the products and services? >> every door direct. if you are a realtor, and i'm trying to sell people on every door direct appeared -- is a very good way to reach your customers. you can go online and a lot of the charges that you have, once we get more sophisticated, once you go online, it is the most direct way and it is the best return on investment. >> one of the postal service

unions has hired ron bluhm to create a growth plan. that was a union higher. did they talk to about his strategies for his role? >> we have talked to ron bluhm. i think it is a good move on the part of nelc. any organization he has been involved with, the focus has been on how to continue to make the organization dry. -- tribes. -- thrives. >> you talk about germany and the 75 cent stamp. how do you know what the right price point is, particularly if you are trying to stanch the flow of red ink? why not have a substantial postal rate increase? >> that has been an issue for us. we are very careful of doing is pricing ourselves out of business. if you take a look, whether it is catalogs or advertising mail or first-class mail or periodicals, each of those

provides a way to communicate with a segment of the american public. our big fear is if you put too much of a price on standard meal, they will chase -- on standard mail, they will chase people to the internet. even though they will make it the same kind of return. we are being careful like any other business would. >> you will stop delivering the mail if congress does not pass a bill to help you. if congress does pass a bill -- a bill to help you, how quickly do you see pulling out of the red? >> i see getting out of the red by the end of 2013. we would have a positive 2014 and a positive 2015. getting that money back on the first overpayment, it would substantially shrink our debt. we would be in excellent shape from a debt to revenue perspective, and we would be running with profits. >> someone makes note of the

fact that you have prepared to distribute antibiotics in case of another bioterrorism attack. if, god forbid, an attack did come, how ready you feel you are? >> we have worked with the department of human health services in three or four major cities where we have letter carriers for volunteers and have been to people's houses and have delivered antibiotics or whatever people need. we are work carefully with the unions. -- we have worked carefully with the unions. based on what we have done, we would be ready if called upon. >> i think your web site says you have some 216,000 vehicles that you use. what have you learned about alternative energy to fuel them? >> we run a number of small fleets with alternative energy. we have had the largest natural gas fleet going. we have a number of electric vehicles across the country. we run the hydrogen vehicles out on the west coast, and even

have experimented with the hybrids. you have got to make very good decisions with vehicles. people pitch out of a time, to buy a new fleet. if we replace our fleet, it will cost $7 billion. we will keep our fleet for 25 years. if you have a $7 billion investment and you are stuck with it for 25 years, you have to make a good decision. if we had to do today, i would go with the four-cylinder gas engine because it is by far the cheapest to operate. >> is the fleet being reduced inside because -- in size because of the other changes? >> yes, i know we are under 216,000 now. we are probably down to about 211,000. we have been providing vehicles to our rural carriers because it is easier to deliver on of and it is safer.

we have reduced by 12,000 to 14,000 vehicles in the last few years. >> there are 200 lots of undeliverable mail that are sold at a profit each month. are you considering internet based auction methods like gsa? >> i'm not so sure that we should be doing that on something like e-bay or something. i do not know. but we can look at that. >> a member of audience says who will be the first living person on [unintelligible] -- on a u.s. stamp. perhaps lady gaga? [laughter] >> you have to wait until the citizens stamp advisory committee figures that out. did and what is the timeline on that? >> probably next year. they have some excellent ideas. >> can you share? >> no, i cannot. [laughter] he is a good reporter.

>> we are just about out of time. before we ask the very last question, we have a couple of, dare i say, routine housekeeping matters to take care of. i would like to remind our audience of one upcoming speaker, jim cantori will be here on december 14. that will be the next opportunity to see a journalist here at the national press club at the podium, aside for myself perhaps. but the other thing we do for each and every speaker, including other postmasters general over time is to present you with our national press club coffee mug. >> thank you very much. [applause] >> here is our last question. the holidays are approaching, a busy time for shippers all over, including the postal service. when you have to mail something, do you have to stand in line? [laughter] >> i go to the south park pennsylvania office and i'd do

it just like all of our customers do. i buy my stance there. it works out great. -- my stamps there. it works out great. they do a great job. thank you. >> thank you. [applause] >> thank you to all of you for coming today and i like to thank our national press club staff, including the national press club journal institute at our broadcast center for helping to organize today's event. that includes our executive director and the assistant to the president. without her, i would be dead. finally, here is a reminder that you can find out more about the national press club on our website, and if you want a copy of today's program, check that out at www.press.org. thank you, and we are adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

>> the code -- to show cares of -- that cochairs of the joint deficit committee said today that they were failing to reach that deadline. we will hear committee hearing on this next on c-span. then a discussion on the federal debt. later, newt gingrich in new hampshire. on tomorrow's "washington journal," an update on what is ahead now that the joint deficit committee failed to reach a deal before deadline. humberto sanchez of "roll call," and then the former comptroller general david walker. and then melanie sloan of citizens for responsibility and

ethics in washington on the influence of money. "washington journal" each morning at 7:00 a.m. eastern here on c-span. a number of conservative birds will come together to talk about their support for not raising taxes. we'll hear from americans for prosperity, that tea party patriots, the family research council, and citizens united. live coverage at 10:00 a.m. eastern. >> from the miami book fair international last weekend -- >> miami was the center stage where they came to recruit cuban exiles -- the cia came to recruit for the invasion of cuba. many of the people who did not like him very much, they fled right here in miami. >> race riots are still the devil of american life.

the election of the first black president is a tremendous landmark that shows tremendous change in racial attitudes. if there had not been that change, he would of had no hope of prevailing. >> in a presidential debate, it is critical -- it is hard to relax in that situation. you have to be, not where you can listen and make a split- second decision. do i move on? to my follow-up? what do i do now? >> watch our coverage from miami on line at the c-span video library. archived and searchable. watch what you want when you want. >> now remarks from president obama on the failure of that debt committee to reach an agreement before this week's deadline for the president spoke from the white house briefing room. >> as you all know last summer, i signed a law that will cut nearly $1 trillion spending of the next 10 years. it also required congress to

reduce the deficit by an additional $1.2 trillion by the end of this year. in september, i said that a detailed plan that would have gone above and beyond that goal. a plan that would reduce the deficit by an additional $3 trillion by cutting spending, slowing the growth in medicare and medicaid, and asking the wealthiest americans to pay their fair share. in addition to my plane, there were a number of other bipartisan plans for them to consider from both democrats and republicans. all of which promoted a balanced approach. this kind of balanced approach to reducing our deficit, an approach where everyone gives a little bit and everyone does their fair share, is supported by an overwhelming majority of americans, democrats, independents, and republicans. it is supported by experts and economists from all across the political spectrum. and to their credit, many

democrats in congress were willing to put politics aside and submit to reasonable adjustments that would have reduced the cost of medicare as long as they were part of a balanced approach. but despite the broad agreement that exist for such an approach, there is still too many republicans in congress who have refused to listen to the voices of reason and compromise coming from outside of washington. they continue to insist on protecting $100 billion of tax cuts for the wealthiest americans at any cost, even if it means reducing the deficit cuts to education and medical research, deep cuts in medicare. so at this point, at least, they simply will not budge from that negotiating position. so far their refusal continues to be the main stumbling block preventing congress from reaching an agreement to further reduce our deficit. now we are not in the same situation that we were in

office. there is no imminent threat to us defaulting on the debt that we go. there are already $1 trillion worth of spending cuts locked in. part of the law that i signed this summer stated that if congress could not reach an agreement on the deficit, there would be another $one point to a jury in of automatic cuts in 2013, divided equally between domestic spending and defense spending. one way or another, we will be trimming the deficit by total of at least $2.2 trillion of the next 10 years. that will happen one way or the other. we have $1 trillion locked in a and either congress comes up with $one. to treen, which they have so far failed to do, or the sequestration will occur that brings in an additional $1.2 trillion in deficit reduction predict question is whether we can right now reduce the deficit

in a way that helps the economy grow, that operates with a scalpel, not with a hatchet, and if not, whether congress is willing to stick to the painful deal we met in august for the automatic cuts. already some in congress are trying to undo these automatic spending cuts. my message to them is simple -- note. no. i will veto any attempt. they will know -- there will be no easy of france on this one. we need to keep the pressure up to compromise. not turn off the pressure. the only way the spending cuts will not take place is if congress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion dollars. that is exactly what they need to do. that is the job that they promise to do. and they still have one year to figure out.

although congress has not come to an agreement yet, nothing prevents them from coming up with an agreement in the days ahead. >> middle-class americans cannot afford to lose $1,000 because

congress won't act. i can only hope members of congress who have been fighting so hard to protect tax breaks for the wealthy will fight to protect tax breaks for small business owners and middle-class families. we need ó+ put construction workers back on the job rebuilding roads and bridges. we need to put our teachers back in the classroom educating kids. whenever i get back from thanksgiving, it is time to get some work done for the american people. all around the country, americans are working hard to live within their means and meet their responsibilities. i know they expect washington to do the same. thanks.

>> that was president obama commenting on the failure of the joint deficit-reduction committee to region agree. the cochairs of the deficit reduction committee, congressman jeb hensarling and senator patty murray, released this statement. after months of hard work and intense deliberations, have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline. house speaker john boehner said in a statement, while i am disappointed, the house will forge ahead with the commitments we have made to reduce government spending and remove barriers standing in the way a private sector job creation. doing otherwise is not an option. this process did not end in the desired outcome, but it should bring our enormous fiscal challenges into greater focus. i am confident the work done by this committee will play a role in the solution we must eventually find as a nation. that was house speaker john painter.

for more information and to watch videos from the point deficit committee hearing, go to c-span.org. >> more now on the failure of the joint deficit-reduction committee to reach an agreement. we will hear from former congressional budget office director alice rivlin. the brookings institution hosts this 90 minute discussion. >> we are talking today about the nation's fiscal future and when i last saw a lot of you in this room, it was probably august. it was a happier day. we had dreams of the redskins in the superbowl and we had dreams

in washington and the country of a balanced federal budget and the super committee that might come to the rescue and give us great holiday cheer, before christmas when the congress would pass at the school renewal bill. it doesn't appear that any of that is happening, so we are here to talk about what happens next. i am sure the prospects for any small sliver of hope that the super committee may still be grasping onto may come up in conversation, but i suspect we may be talking more about what happens next, assuming the failure of this group to produce a bill that the congress can pass. therefore, the likelihood of a sequestration and all that follows there after at the automatic spending cuts kick in and we think of what to do next. i think you all knew the context when you came. we are grateful to have you here. the way we want to proceed is that i will first asked alice rivlin, who we know is one of the country's great economists and budget expert, to talk about

where we stand. it was about a year ago that alice laid out some proposals for the country might go that have been central to the debate we have had ever sent but of course have not yet produced the major changes in our deficit picture that were hoped for. then bruce will speak, and one of the things we need to keep in mind in this whole conversation is where do we need to invest, even as we are cutting in general. it is crucial to economic recovery, where more spending may actually be needed or where we have to be careful about where we cut if we are watching out for our country's long-term economic interests. that i will speak as a panelist about the defense budget and then after an exchange with each

other, we will go to you. without further ado, i am going to thank both alessandra's for being here. alice, i will ask you to give us a sense of where things stand, i you feel on this monday morning but more generally, where we need to go next. >> i feel worse about the super committee than it i do even about the redskins. one can argue that they played well and almost one. one cannot argue that about the super committee. i feel very badly. this was a huge opportunity missed, and i believe that it has been missed, and that it will be announced later today. let me say a word about what

they should have said and why they didn't say it. and a bit about where we go from here. what they should have done, and have the power to do, was get the federal budget back on a sustainable track. that would have taken going well beyond the minimum requirement of $1.20 trillion. going big as many of us were saying how. had actually solving the problem. the $1.20 trillion does not stabilize the that. the debt will still be growing faster than the economy can grow and that is the definition of a bad problem. what we have to do is get the situation back on the track where the that is not growing as fast as the economy. we did that for decades after world war two and we never paid off the debt, we just threw the economy faster. it was basically the objective of the commission's i served on. and the arithmetic of this problem drives the answer.

if you're going to get to a sustainable that, you have to do too big things at the same time. the curbing of the growth of entitlement programs, especially medicare and medicaid. it would nice to -- it would be nice to put social security back on a firm footing. raise more revenue in effect the tax cut. those have to be part of the solution. the numbers were not $1.20 trillion. it was a combination of those things to get to $4 trillion or $5 trillion over the next 10 years. of a lot of us thought that the big scenario was easier than the small one.

it certainly got a lot of attention, we testified before the super committee a couple weeks ago. but there was an enormous group, that may be too strong a word. there was a big group and the congress are run the centers warner and chambliss that included senators from both sides, quite a number of them that wasn't a gang of six anymore. it was more like the gang of 36 that wanted this kind of a solution. there was also a large group in the house, about 100 house members signed a letter to say to go big. why didn't it happen? there are a lot of culprits here. it was the basic problem of the polarization of the parties, in particular the extremes of the parties with much of the republican contingent saying no

revenues no way, even with reform of the tax code. a very small crack in that was the proposal a weaker so ago, but not a big crack. and on the other side, a lot of democrats and no changes that would affect medicare beneficiaries or social security recipients ever. those are very difficult positions since actually we have to do both. i think there was a failure of leadership. if the leadership, including the president, had really wanted this to happen, a thing they could have made it happen. but they couldn't sell it to their caucuses. he went back and tried to, and the answer was no. republicans were not voting for

tax increase, and from the democrats, we are not voting for entitlements. we are where we are. the business community could have done a better job, maybe the community while represented -- but we failed. the consequences are pretty serious, i think. we may not have a market meltdown because we are the only game in town, the europeans are doing worse. i would have expected the equity market reaction, but not much bond market reaction. the really important thing is that we missed the big opportunity to fix not only the long run problem, but some short-run problems. we need to extend the payroll tax. we need to extend the unemployment benefits.

those would have been easy to fold into a bigger deal. now those need to be done separately and may not be done at all. i am not an optimist today, i think it is a very serious defeat. >> some people say that sequestration is really not the worst scenario and we shouldn't sweat if so much because -- and obviously i don't agree with this, but some people will say, listen, this sets the stage for may be that tax cuts of the bush era to expire at the end of next year which might be better for the deficit situation. to protect some of our entitlements, most of them, and things could be worse. >> things can always be worse.

the scenario that you suggest, which is that the sequestration cuts go into effect as enacted, which means a count by count of mindless way to cut anything, whether defense or domestic, and heavy on discretionary spending. the annual appropriations which have already been capped. i don't think that as a good idea. there will be other chances because of the bush tax cuts expiring at the end of 2012, not 2013. and that will be another moment in which maybe people get together and say, do we really want this to happen? there is no indication at the moment of a consensus of what to do in the face of any of

those things. >> you have watched a number of programs already take a hit. >> i think my perspective partly washington-based. and partly from someone that spends most of their time outside of washington. they started off this morning say, how do you feel? physically exhausted. i was on the west coast twice last week, the back-and-forth, and somewhere in between landing of in lansing. as i talk with political corporates, university environmental leaders as the normal course of my job, i would say that they have several views about the process under way here. there are concerns about the

impasse. a thing they are even more frustrated with washington because they don't see the conversation about debt and deficits aligning with what they know needs to be achieved here. we just have to remember a few salient facts. when we lost 9 million jobs during the recession. at a live verily regain the 25% of them. the hamilton project is put out a statistic that says we need 12.3 million jobs. to regain the jobs we lost and to keep pace for population growth, we do a monitor of the economic performance of each of the top 100 cities and metropolitan areas in the united states every quarter. only 16 of these metropolitan areas, only 16 have regained

half the jobs we lost during the downturn. when i am out a route of the country, people are focused on growth as well as deficit reduction. the fundamentally believe that the federal government has to get its fiscal house in order. at the same time, we have to set a platform for the next generation of growth that, frankly, is not like the growth that we had a pre-recession that was characterized by consumption and over leveraging. the perspective is three-fold. and we have got to cut to invest. we have to begin to invest in those things that are going to set our economy on a different path forward. substantial sustained investment in advanced research and development, basic science.

you do it to some extent in health, obviously. we have not invested in clean energy r&d that we need to crack the code on clean energy and low carbon. we need to invest in advanced manufacturing. we also need to be much better about commercializing innovation and doing transfers so we don't just have the ideas of the united states, which began to prototype products and began to produce and deploy and manufacture what we need to invest. finally, we need to invest in next-generation infrastructure. and what we need to set off this new generation of growth. i was on a panel the other day with former secretary of state george shultz. his recommendation, which sounded eminently feasible or intelligent, maybe not

politically feasible, would end all of the tax subsidies for every kind of energy source that we have. whether it is cold or more, we would shift a good portion of the funding to advanced r&d. we thought about cutting and investing, such as we begin to scale back the federal government, we still retain these core investments. those, the second is cut and reform. i was chief of staff of the department of housing and urban development, i spent time there at the beginning of the obama administration. it was cut by $900 million. this package, the commerce was

cut, the home program was cut, the public housing program was cut $750 million. the cuts are already happening. what is not happening is the reforms that need to occur in these highly prescriptive and highly bureaucratic ramps so that you can do more with less. you can't just think that it is all going to be fine. these are legacy programs that haven't been reformed for quite some time, having them talk about 44 job training programs across multiple agencies. the federal government needs to radically get its act together on the fiscal side or the programmatic side. what i think the states and local want to hear, i have a

record -- recommendation of how to do this. there is a book 20 years ago about reviving the american dream. if anyone does anything, go to the brookings bookstore and buy the votes. it is as relevant today, it is more relevant today in some respects the net was 20 years ago. what it basically says is that we need a new division of responsibility between the national government and the state and local governments for the twenty first century. that the federal government needs to do less and means to do it well. the states and their cities' need to take on the productivity agenda. and really have prime responsibility for some of the economic growth that needs to happen because it is different across the country. i was in rio on monday at a lansing on wednesday and palo alto on friday.

these are three radically different economies. it is hard to imagine the federal government to be smart or strategic enough to deal with those differentiated economies. but the metropolitan areas have prime responsibility for the part of the domestic agenda. let the government scaled back literally what it does, and do it well. there is an enormous amount of concern out get an enormous amount of frustration out there. these folks are just very pragmatic about how their fangs. what have you done for me lately? i think as we go forward out of this wreckage, i hope that we begin to set up in some different vehicles, not just for deficit reduction but for growth strategies where the congressional class and the

federal political class begins to go federalist. and bring in the mayor's, let them sit on some of these committees and tell everyone at this level of what they have done in their states to balance the budget and get the economies moving together. i think it would be realism and pragmatism to have chris christie and kantor, sit in on some of these sessions and began to hell what is a hyper divided the governing class in this town. >> 1 follow up before i speak on the fence. you're saying that localities and states can do more, the fed can do less, that raises the obvious question, how much can federal spending on domestic discretionary be reduced? i know you may not have a detailed file answer for us across the entire government,

but the question is to remain with the sequestration kicking in. you feel that it is going to go too far? or do you feel like it is compatible with what he laid out? is it ok for the hot% or the 20% cut occurring? >> remaking federalism i am describing also requires you to remake the tax cut. i think that has to be sorted, it is not just about the cuts, the revenue remains the same and they begin to sort this out. you can cut them, you can cut smart. sequestration sounds to me across the board as a cut down a strategy. everything must be working the same, the same effectiveness, same efficiency, cut across the board.

when you think about what the federal government does, both in the near term to create jobs and the long haul to structure the economy, there are certain programs that are absolutely fundamental to that, they should not only be ring fenced and protected from cuts, but frankly should be put on steroids. i will come back to clean energy r&d. it gets about $30 billion now, the national science foundation getting 7 billion. dark of probably gets $3 billion hot an annual basis. the r&d shot its $180 million a year. we still have the national labs, and we should be at $15 billion a year or $25 billion a

year and clean energy r&d if we're going to crack the code of low carbon and be the vanguard of a clean energy revolution. if we don't do it, china will or germany will or they will do a in some combination. sequestration to me, when you are really focusing on the growth, it needs to be put back on and makes no sense. it doesn't distinguish between apples, oranges, and bananas. >> i agree with that, and thanks for the plug. there is one thing that many people, including many of the ones they were talking to, how they think there is some conflict between jobs, growth, and deficit reduction. they are wrong about that. that has been one of the impediments of getting the agreement.

and even the president has talked about. he is going to lose, unfortunately, the opportunity for some of the job growth that could have been folded into a larger deficit reduction deal. we will not grow in the long run as long as the debt is rising. >> while you are buying books, i will ask that if you're getting to for the holidays, get alices but and get my new book, it is called the wounded giant about america's armed forces in this age of austerity. to relate it to today and the likelihood of sequestration, let me summarize and begin by saying i think sequestration would be a nightmare for the national security. i hope that if it kicks in, it will be quickly superseded by subsequent action in 2012 so that we don't start to see the

kinds of cuts that will otherwise not be necessary. there is talk out there by one of the republican presidential candidates about the kind of things already happening not real cuts, that is wrong. it is a consequence of the august deal and the first tranche of reductions mandated by the august provisions of the debt deal. that will result in about for a hundred billion dollars in 10- year savings. or the steady state if you stay with inflation. in other words, $350 billion hollow would be needed to keep up with inflation already. you out of the cuts of sequestration, roughly another $1 trillion for the military. it is actually more of the reduction because i haven't included war costs. they are coming down anyway. but they are not savings that

the pentagon can claim to justify or satisfy its requirement for deficit targets. we should be making our decisions based on the merits of the case. that is another $100 billion that will be each year by the time we are facing our way out of afghanistan by 2014. you will see total defense spending in the range of $700 billion a year to somewhere in the range of $500 billion a year. the war cost can and should come down. i think we're going to need a couple more years in afghanistan. the president has a doubt the 68,000 u.s. troops from our current level of 100,000. i think that is okay. we will have this data the following year, then we can celebrate -- accelerating cut a little further.

i think that is doable. and the good news is we will see additional reductions in war spending each year, and by 2015, hopefully, we're down to a very modest level. maybe even $150 billion. that is as it should be. on top of that, the base defense budget, the peacetime military establishment can get smaller, smarter, and more efficient. therein lie the constraints under which this has to happen. president obama, secretary clinton and secretary of the data have been in east asia. we're there to stay more than people appreciated the for their trip and we are not going to cut military presence. we are aware that north korea is a very severe threatened china

is a rising power. rising powers are dangerous whether they want to be or not. bob would make this point very eloquently. in history, any country that rises the way china has, it is sent to use its new resources to push others around and assert itself. i don't anticipate or favor a conflict with china, but it is important that we stay mostly engaged in the region to sort of constraints china's growth in a constructive direction. lee would be foolish to pull back now because our problems have led us to not be able to sustain it. we need to be active, but in a more economic and brutally efficient way. there are ideas are out there to do this. i will give you one very quickly that i wrote about last week. the idea that today's navy needs to do something that most

sailors don't like, which would be challenging. some of my colleagues have told me it is harder than i want to believe. but i think is global, the idea of having crews share ships. today, a ship is prepared in american waters for deployment, the troops trained and sell across the ocean, takes a month to do that. they go on station, they spent four months there, the turnaround and come back includes another month in transit. because we always want to have one ship of a given type in either the persian gulf or the western pacific, we have to send another ship out, and there is an overlap and deployment because the one sailing out because the other one comes back to maintain continuous presence. you need to sustain one on station the way that we do things today. i would submit that the navy

needs to do what it has proven to be feasible in experiments, what it already does with minesweepers, leaving a ship fully deployed for one to two years and fly the crew to replace each other. in a share a shift back home to train. you get a lot of savings and the number of ships needed. i don't want to push the idea too far, because they are -- but there are other reasons you want a good size navy. i reserve is necessary if you do this rotation policy or not, but the navy is saying that we have to add 30 or 40 ships to the fleet relative to the current size of 284 major shift in order to sustain a global presence. that is not going to happen. we need to find ways to be more innovative and creative. with this kind of approach, you can go below 284 ships to sustain the kind of presence that we have. ida said that to be harsh on the navy, i admire them as we

all do. even to get these $400 billion or the $350 billion, you have to do the kind of thing that i just mentioned which will be uncomfortable, difficult, and challenging. i won't go into detail, but i will mention one more in passing. for the last 20 years, we have a basic strategy in size and constructs, we need to be ready for major regional wars at once. we did not always satisfy that requirement. in the last few years, we did fight in those wars at once. we had to make the army and marine corps larger to do that. the troops even had to go the extra mile and then some. they had to scale back in a major way from that kind of requirement. in this new world with the dawn of the same god and no longer a living threat the way it once

was, i think it is time, as a matter of fiscal necessity to go to a one-war requirement for the ground forces. i will say it is one more + 2 substantial stabilization missions or the united states is one of many participating countries, but with the mission can last a long time. it can be afghanistan, it could be syria or libya or yemen depending on how things go. if kashmir becomes another flash point, we could wind up with a stabilization and trust the mission there to prevent nuclear war in south asia. we have to have the ability to respond because these kinds of missions are potentially important and potentially beyond our ability to prevent, whether we like to do them or not. my approach is a pretty brutal change in what has been seen as conservative force planning. instead of two major regional

wars, one war and to stabilization read -- stabilization missions. even if you do that, you can't treat them to a small level because the world is still dangerous and some of these countries still have a nuclear weapons or the potential for nuclear weapons. we can't just wish these problems away because we are tired of being engaged overseas. we have got to be brutally efficient and creative in how we challenge traditional ways of operating could be able to protect our core interest at less cost. let's not pretend we can wish away those entrusts or wish away those missions. at the persian gulf that received most of our military attention still requires one small note of this agreement. hoyle gets a huge subsidy because of the military protect the persian gulf. whether it is a form of subsidy

in the tax cut, it is a huge benefit which is one reason why i agree that we should be increasing r&d in clean energy. there is a subsidy in effect of $50 billion a year because of the military protection for the location where 2/3 of the world's oil reserves are located. the clean energy is not yet quite ready for prime time across the board. we can try to be more efficient and how we protect them. there are ways to do that and save $400 billion over the next 10 years. i see no way to do that if you have to double the savings. adamantly opposed to sequestration and i open doesn't happen somehow or that it is quickly superseded by 2012 congressional action. with that i will turn to my fellow panelists and see if they want to add anything at this juncture.

>> let me ask you a question, a factual question. about the effect of the end of the wars. some military folks i talked to say that we lost all this equipment, we need to rebuild and modernize. others said that we have done a pretty good job of modernizing as we went. and using the war funding to do that. what is right? >> the equipment stocks have not been pummeled by the war, because were there have been specific needs identified, we try to address them through supplemental appropriations. in broader terms, the of the war story, the reagan buildup of

the '90s provided a lot of new equipment. you reduced defense spending into disproportionately reduce procurement spending because he realized we had stocks of new equipment that we could live off of for a while and spend less on acquisition for the 1990's. war supplementals have done nothing to change the fact that the reagan era and equipment is wearing out and we can't take the 1990's solution. those same f-15s and f-six teams are in the fleet. now they are 25 years old. we have got to replace them. the war supplemental did not replace that stock of current military equipment. >> it really gets to the point of what differentiates the defense establishment from a non-defense establishment and

how it operates at a national scale. as a level of strategic scenario planning that is going on, there is the use of metrics that are continuously updated to inform that kind of strategic -- that does not happen with regard to what i consider to be next generation of economic growth models. right? we still don't quite measure things in the way that we need to. and we clearly don't have -- this is something that many of the president's private councils have called for. we have no long-term strategic plan to think about growth policy, particularly given the fact that china, india, brazil are totally on line. someone said something to me the other day, how many people have seen the movie "moneyball." the book makes the point, it talks about oakland and how we

used to measure things in baseball the wrong way. then we had this very interesting character that found a new way to measure her baseball performance and applied it to oakland a's. we need to think post-recession the same way about the economy. pre-recession, we focused on consumption. how many different ways can we measure housing? how many different ways can we measure retail? when he tried to measure exports at the local level, foreign direct investment, manufacturing and all of the

complex complicated ways, trade and logistics', we don't have this kind of statistical base that we have with regard to consumption of the economy. to your military conversation, it is not surprising in some respects, but the way in which we perfected a set of matter, a set of performance measures, and the ethic of planning that we do not have on the domestic side and which we fundamentally nihon. >> i will ask you one question as to get ready to go to the audience. to give you credit in your program, your colleagues in the country, you have come up with specific recommendations and numbers. you ought to mention were you think clinton energy research can go. can you give us another example in terms of infrastructure investment or some sort of encouragement for economic renewal in cities, some area where you have done the analysis and can highlight an example of what it allows us to do? >> this is what makes it such an intriguing time. if you think about the shift to a different kind of economy, has an enormous affect on infrastructure building.

you have to have more advanced manufacturing, more advanced industry, and more modern ports. if you're going to shift to a low-carbon economy, you have to think about the distribution and transmission of energy. i think what michael bloomberg is doing in new york by trying to attract stanford or a company out of israel, it shows that he is thinking very carefully about behalf density of innovation and so forth. we need a different scale of investment in infrastructure in the united states. but it can't be the old style, we are going to wait for the feds to rain down your favorite

number. it is done in a public-private way. what we have been working on with the states in the metropolitan areas, it is a new style infrastructure bank where there is a certain scale of public resources. but the goal is to leverage the private sector capital expertise to deliver the next generation infrastructure. it is both the size of the resources and the manner in which the resources are deployed that has to change. it has to be more distributed and diffuse. we may be entering a century, as alice's but clearly telegraphed 20 years ago, the national scale has to scale back in its ambition and the state and local scale has to scale up. >> relates -- and this relates to the failure of the super

committee, will at fundamentally get in the way of a lot of what you're talking about? to what extent is it one more confirmation for you and mayors and governors have you just shouldn't look to washington and they will get on with their collaborations at a low-level war less unimpeded by this break out in washington. >> of the same way the market's already assume function. i'm not just talking about governors or mayors. at the state local level, it is governance as opposed to government. they have only presume dysfunction in washington. and they already are changing how the function. that could be one example that will sweep across many areas. if you want to be a twenty

first century mitropoulos, you need a twenty first century transit system. commuter rail, light rail, social -- and so on to connect to the hubs and the corridors. in denver, they are building the largest light rail system in the united states, primarily funded with local money. in los angeles, they are dramatically expanding land use and zoning, primarily financed by local revenue sources. they moved on. they are not expecting washington to go to bat for them. they know that to compete globally, they will have to make the kind of investments with their private sector, to do so. they want a level of reform at this level so that their

presence and prominence in the local economy can be recognized. >> none of this great stuff that i totally agree with is going to happen if we have another recession. they should be keeping in mind that if we don't get on top of the debt problem, we will be precipitated into a new recession. we don't know exactly when, but instead of gradually calling out of this one, we could be in a decade-long slump that will be much worse. it will preclude just about everything. >> how was it is absolutely right. that is why it is so critical to make the connection between the macro at the metro functions. i think the metro areas, you have a pulse of the united states of in the public, private, and the city sectors.

the platform doesn't exist to get this done. >> please wait for the microphone and identify yourself. we will start here in the fifth row and if you ask your question, directed to one of us if it is clearly for one of us. >> i'm a retired submarine officer. i had agreed in principle with your comment of one forward deployed ship. however, as we may attend controls with to complete cruise per-share, i see a problem in the surface navy. a lot of the ports don't let nuclear ships him, and in each of the areas, you need to have a port for refueling, bringing aboard new chow. and shift in crews.

i like it in principle, and we have done it with the minesweepers have the storm class pcs, but i don't think it will work at the aircraft carrier level. >> i agree that the aircraft carrier case is a different one, and i should have clarified the mine are to start with a major surface combatants. so those of you that are not naval officers and downfall of this stuff as much, there are about 300 people typically of the major surface combat, a destroyer or cruiser. that class of ship where i think this idea is challenging and difficult, my navy and coast guard colleagues have been reminding me of this in recent weeks. i accept very much their contention. it will -- you have to find the

courts where they have been doing maintenance so far. and i concede that a smaller fraction will be done -- therefore, we are going to depend more on foreign partners. some people are not going to like that in a time of economic downturn. it will take three, five, seven years to get to a situation where you can do this even for the surface combatants because of the kind of issues you're getting at, and some people challenge me and say that even that as an optimistic timeline. even if you're looking for big new ways to achieve cutbacks, it is going to take a while. if you rush to much, you run the rest in some programs of contributing to the danger because your pulling back on spending more quickly in some areas then you should.

also bear in mind that the ground forces can't be cut down too fast because they are heavily engaged in afghanistan. this is going to take a while and it is going to be hard. you can't just snap your fingers and make it happen overnight. >> i want to make an observation that leads to a question. the observation is a comment about the light rail system. a situation with which i have some familiarity. the relevance here to the question, he was elected governor in 1974 and talking about these kinds of things to make them happen. it has taken 35 years to get there. so here is the question. my take away from this conversation this morning is if used at your fingers and have a couple things happen, you would

have the capacity to cut smart and engaging in devolution programs moving away from the states. it strikes me that an order for each of those things to happen, you would have to have a radically different kind of political atmosphere and environment than we do today. because what is engaged, it seems to me frames the stark differences in perspectives. i am interested to know, what steps, what sequencing if you can look at it that way, do you see as possibilities? and is it correct to assume that it has to be like the light rail system, something that is

going to take us decades instead of years. >> those are very helpful and insightful comments. this is why i think maybe we can accelerate some of that. it took a lot of time for american cities to understand the need to make these kind of infrastructure investments. it is sort of a sign of how long these shifts make whether it is regarded transit or advanced manufacturing, or something else. i think the conversation coming out of the business community is quite different today that was five years or 10 years ago. when you read the recent but by the head of dow chemical or you

listen to what others say, or listening to the community out of silicon valley, there seems to be a common prescription for growth coming from these production-oriented leaders, innovation oriented leaders. it gets to the kind of makes i was describing before. invest in what matters, investors today to grow for the next 30 or 50 years. that tends to be around innovation, r&d, infrastructure, human capital. when it is all said and done, it is those three things. major business people share the same perspective about what it will take to move forward, it is a platform for a shift. the second piece is the stated at the local level. there are many partisan divides at the station and the local level.

i do believe that the governors and mayors took place over party and collaboration over conflict. and when push comes to shove, they strengthen their stay, which comes back to innovation, infrastructure, and human capital tailored to the economy of denver vs. detroit or denver vs. colorado. there is a pragmatic caucus of there. this country is rich in leadership in pragmatic non- partisan and bipartisan leadership. what has to happen is this inspecting of the federal class, which has become hyperpolarized and divided. i think structurally, i think

two things have to happen, and i think it gets to the history of out innovation happens in the united states in the public realm. the state are the laboratories, the back rows of the centers of innovation. whatever they do today, the federal government will be doing tomorrow. the more we can get them to show the way forward across party lines, the more likely that we can repair the damage here. the second pieces what i talked about before. let's begin to have federalist super committees. this is a federal republic. we are like germany. we are like a whole series of other countries around the world. we act as if these levels of government, even though that fundamentally overlay, or completely separate and distinct. let's begin as we move forward around deficit reduction and road to pull in the real

pragmatic innovators, from not just the political realm, but corporate, civic, and others. that might sort of begin to heal, not just feel but move us forward. again, you know, cut smart, cut and evolve, these are simple phrases that really do require a kind of profound shift in this ossified, polarized realm. >> yes ma'am, in the green shirt. >> sequestration may be a dumb way to cut defense. is there a smart way to do it? i know the -- i am curious if it is a top line #or the process itself that is so damaging for

defense under sequestration. >> i rather think it is the mindlessness of the sequestration process which, even at the top line #holds, i would hope that the details don't and that they begin thinking about some of the things that mike has talked about as more sensible ways of cutting. i will leave it there. >> to me, ed it is the magnitude as well at the way in which it would happen. i should have linked this to the earlier discussion on swapping cruise on the navy. one of the problems with sequestration is it has to be so steeped in 2013. you don't have an opportunity to face things then. you have to do things abruptly, which means probably laying

people off and other things. more broadly with more defense planning. the magnitude of 20% reduction in the annual budgets, whatever is today, it would only be 8% as great by the end of the decade. that is too much, as far as i can tell. i have other ideas in the book that include reform to military pension and health care approaches. not in anything that would take money away from our winded lawyers, and i am sure we all agree if anything, we need to do even more for them, but for the middle-aged retiree who has served our nation really well, but they are off to a new career. their earnings potential is great and they are getting a generous military pension. meanwhile, the private first- class who did one or two tours in iraq and afghanistan and leave the military and it's no military pension whatsoever. i don't like that system. i don't like that system.