>> ladies and gentlemen, the president of the united states. [applause] >> thank you. thank you, everybody. please have a seat. good afternoon. merry christmas, happy holidays. we have been doing everything we can over the last few weeks to make sure 160 million working americans are not hit with a holiday tax increase on january

1. we have been doing everything we can to make sure millions of people out there looking for work in a very tough environment to not start losing their unemployment insurance on january 1. on saturday, we reached a bipartisan compromise that would do just that, make sure that cut ataren't seeiare seeing a x the end of the year. nearly every democrat in the senate voted for that compromise. nearly every republican in the senate voted for that compromise. democrats and even some republicans in the house voted for that compromise. i am ready to sign the compromise into law the second it lands on my desk. so far, the only reason it it does not landed on my desk, the only reason, is because a

faction of house republicans have refused to support this compromise. now, if you are a family making about $50,000 a year, this is a tax cut that amounts to about $1,000 a year. that is about $40 out of every paycheck. it may be that there are some folks in the house that refused to vote for this compromise because they did not think $40 is a lot of money. anyone who knows what it is like to stretch a budget knows that at the end of the week or the end of the month, $40 can make all the difference in the world. that is why we thought we would bring your voices into this debate. so many of these debates in washington end up being portrayed as which party is winning, which party is losing.

but what we have to remind ourselves of it is this is about people. this is about the american people. and whether they win. it is not about a contest between politicians. on tuesday, we asked folks to tell us what it would be like to lose $40 out of your paycheck every week. i have to tell you that the response has been overwhelming. we have never seen anything like this before. over 40,000 people have written in so far, as many as 2000 every hour. i want to encourage everyone who has been paying attention to this to keep sending your stories to whitehouse.gov. the responses thus far have come from americans of all ages and

backgrounds, from every corner of the country. some of the folks are on the stage with me today. they should remind every single member of our congress of what is at stake in this debate. let me give you a few samples. joseph from new jersey talk about how he would have to sacrifice the occasional pizza night with his daughters. he says his 6-year-old twins -- 16-year-old twins will be out of the house soon. richard from rhode island's had an extra $40 buys in of heating oil to keep his family warm for three nights. in his words, "if someone does not think that 12 gallons of heating oil is important, i invite them to spend three nights in an unheated home."

pete from wisconsin told us about driving 200 miles each week to keep his father in law company at a nursing home. $40 out of his paycheck would mean he would only be able to make three trips instead of four. we heard from a teacher in d.c. who goes to the thrift store every week to buy pencils and books for her fourth grade class. once in awhile, she splurges on art supplies. losing $40 means she could not do that anymore. for others, it means dinner out with a child home for christmas, a new pair of shoes, a tank of gas, a charitable donation. these are the things that are at stake for millions of americans. the matter to people a lot. -- they matter to people a lot.

keep in mind, that does not account for the overall impact that a failure to extend the payroll tax cut and a failure to extend unemployment insurance would have on the economy as a whole. we have seen the economy do better over the last couple of months, but there is still a lot of sources of uncertainty out there. what is going on in europe, what is going on around the world. so this is insurance to make sure that our recovery continues. so it is time for the house to listen to the voices who are up here, the voices all across the country. we consider -- reconsider. what is happening right now is why people get so frustrated with washington. this is it. this is exactly what people get

so frustrated with washington. this is an issue where an overwhelming number of people in both parties agree. how can we not get that done? has this place becomes so dysfunctional that even when people agree to things, we cannot do it? [applause] it does not make any sense. enough is enough. the people standing with me today cannot afford any more of this. they cannot afford to lose $1,000 because of some ridiculous washington's standpoint. the house needs to pass a short- term version of this compromise and then we should negotiate an agreement as quickly as possible. it is the right thing to do for

the economy and the right thing to do for american families across the country. this is not just my view. just a few hours ago, this is exactly what the republican leader of the senate said we should do. democrats agree with the republican leader of the senate. we should go ahead and get this done. it should not be hard. we all agree it should happen. i believe it is going to happen sooner or later. why not make it sooner rather than later? ,et's give the american people the people who sent us here, the kind of leadership they deserve. thank you, everybody. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011]

[applause] >> this after this morning, we heard from speaker john boehner and republicans and steny hoyer and other democrats. of the house earlier this week rejecting the senate bill to extend the payroll tax cut two months. we are going to open up our phone lines for a few minutes and get your thoughts on the debate. the numbers are --

make sure if you have gone through on in the c-span program in the last 30 days, give others a chance to call in this afternoon. we are going to show you all of the events from today so far. one quick reminder, too, you can continue to post your comments on line on our facebook page. should the speaker excepts the senate bill? so far, the count is 440 votes for yes. we have jim calling us on our independent line. :. >> first off, i don't understand why the payroll tax is being taken out of social security.

the figure he uses this for money in the pocket should be based on a closer to $30,000 which would be a lot less than $40 a paycheck than the $50,000 to $70,000 he is using. the general public does not know all of the bills that the republicans are being accused of acting on to hold this bill up. i think we need more explanation on the exact add-ons or deletions the two sides are different on. i want to say why are we taking it out of social security instead of the federal income tax? >> this is sean on the democrats' line. >> this is clearly an up and

down passage of the bill itself without any riders. we are tired of the republicans holding this nation and its people hostage. enough is enough. >> mitch mcconnell, the republican leader of the senate, made a statement earlier, calling for the house to pass the short-term senate bill. nancy pelosi street "house republicans now stand alone." a few more minutes with your phone calls. we are keeping our eyes on the comments on twitter. lauren writes -- marshall, kentucky, is next, go ahead.

>> i agree with jim. this whole tax reduction is not a tax reduction. it is my ability not to take into my own social security retirement. they are telling me to deduct one third what i would normally put into it, and then i will not get that benefit again. all last year, i put in two- thirds what i normally put in. i would get a reduction in my benefits when i begin to retire. how long are we going to keep this up? plus, they are going to be increasing taxes to pay for me not paying into my own social security. >> so your view is to raise a backup to 6.1%. >> that is correct.

why should i take a reduction in my benefit? now i am working. when i am 65, i will lose out on everything that i could put into it now. they will drop my benefits for a third for those years i am not paying into it. >> how long will it be until you turn 65? >> 13 or 14 years. >> laura is on our independence t line. >> hi. i am sorry. i am tired of watching the democrats and obama accuse the republicans and the tea party of doing things, holding things up and doing all this other crap when they are doing the exact same thing. obama and reid and pelosi are

being just like they were during the health care thing. they just want everything their way. when the republicans are trying to pay for what they are taking out, the democrats are not going to go for that. it is getting really disgusting, the way one side is calling the other side obstructionists. the other side knows they screwed up and are trying to fix. yet, all this bickering. if they would look in the mirror and tell themselves the same lies they are telling us, i think they would stop looking in the mirror. >> a few more of your phone calls. the senate last weekend past a short-term extension by a wide

majority vote, 89-10. the house this week refused to take up the senate legislation, virtually blocking that. after that, the speaker appointed conferees to meet with the senate. this morning, the republican leader in the senate mitch mcconnell calling on the house to take up that short-term legislation that would extend the payroll tax cut for another two months, calling on the house to pass it. the expiration on that and other measures of the provision is december 31. a tweet here from daniel, saying -- that is regarding the mitch mcconnell statement. you can follow capitol hill reporters and members of congress. next, skip from illinois, he is

a republican there. >> i think these guys are ignorant. take all of the ad age out that republicans are trying to put in. >> one more call from bakersfield, calif. >> good morning. i am one of these poor people whose unemployment ran out this week. merry christmas. i am counting on an extension because of what congress is doing right now. >> let me ask you. if they pass a short-term extension, does that mean you will be able to apply for benefits again? >> right now, what i am hearing is the state of california is waiting for congress to approve anything which means i can not

get an extension. that means i am dead broke. mary christmas. i will work through that. i am 65 years old so trying to find a job in a 17% unemployment rate is not easy. >> how long have you been unemployed? >> since may. so about six or seven months. i must have put in 100 applications and lots of interviews, but what i see every time is somebody 10 or 15 years younger getting the job. >> best of luck to you. we appreciate all the calls. the discussion continues on line on our facebook page. you can go to facebook.com/scpan to vote and weigh in on your thoughts. we are going to give you a look of today's activities.

the morning started shortly after 10:00. >> good morning, everyone. yesterday i spoke with president obama. i urged him to call on senator reid to work with us to finish this bill that will provide for one a year of tax relief for american workers. i told the president there is one big reason why we need to do a full year.

that's jobs. a one-year bill, like the president requested and like the house produced, is better for jobs and our economy. a one-year bill provides on average about $1,000 for american workers, as opposed to the senate go, which would provide a measly $166. a one-year bill would provide certainty for american employers as they began to plan for next year. a two-month extension only perpetuates the uncertainty that too many employers already have in dealing with the economy and what is coming out of washington. listen, i used to run a small business. i can tell you that the language in the senate bill will hurt small businesses. the senate only goes for two months, businesses send their taxes in -- i used to write the check to the irs -- but it is done on a quarterly basis.

a couple months of this, another month of this, trying to figure out what your obligation is is going to be difficult. secondly, the paper work requirements in the -- and of the programming requirements contained in the senate bill will make it virtually impossible for those who provide payroll services to do the job that employers hired them to do. the fact is we can do better. americans are still asking the question, where are the jobs? it is time for us to sit down and have a serious negotiation and solve this problem so that american workers don't see their taxes go up in january. >> good morning. as the speaker said, it is our position that we want to make sure we provide some certainty to the working people of this country that taxes are not going to go up for an entire year. unfortunately, that view, although it is shared, is not being implemented or proposed

to be implemented by the senate proposal. we are here and we want to solve the problem. frankly, given where the parties are, there is not a big difference between our positions. it all comes down to the budgetary impact of the extension of the tax holiday. i saw the president out yesterday during his christmas shopping. he brought his dog with him. you know, we are here. he can bring his dog up here. we are pet-friendly. we can probably resolve the differences within an hour. that is why we are here to say let's do this, as the speaker said. let's avoid any uncertainty. let's avoid another one of these difficult moments within 60 days so we can get on with the business of putting in place a better economy and job creation. >> good morning. dave camp. employers are telling us that

the convoluted mechanism descended cooked up in a rush to get out of town and doesn't work. we think we should listen to our employers. the democrats failed to do that in the health-care bill and that is how we ended up with their burdens in provision in the bill that we had to rebuild. people in my district are working this week, working next week. we think we should be doing that in congress. of our economy -- let's get this right for the sake of our economy, traders, and the american worker. >> hello. renee ellmers, north carolina, district 2. you know, these are the differences. there are a lot of yeses for our bill, a lot of nos for the senate bill. we keep hearing about the democrats in the house and how they were four dead year extension of the pet -- they were for that year extension of

the payroll tax holiday, and yet all but 10 of voted no on this bill. how can you explain that? how can you before the american people and yet -- be for the american people and yet vote no. we all agree on a year payroll tax extension holiday. yet they sent back to us a two- month extension, which numbers of groups have said is not good policy and it will not work for our employers or employees. national payroll reporting consortium, a nonpartisan group, has said this is going to be more difficult to implement for employers and a very difficult for employees. that is not the way to go. what about our seniors? we passed in our bill two years worth of a doc fix so that physicians would not have cut

medicare reimbursements cut. our seniors need to know that they can receive that good health care and continue to do so. we get back two months. not only is that an issue, it is an issue because what happens with that, as the medicare reimbursement payments to come in, there has to be a resetting its face. there will be a couple of months, a couple of weeks at least, where physicians will not be reimbursed. it is very difficult as employers, as small business owners, to deal with. we cannot in the house of representatives cause more problems for the american people in this obama economy. this is his economy, and we are trying hard here to fix it. it is time to come to the table and sit down. i want to ask those senators why you would vote for such a short-term lack of resolution to go into the new year so that you can go home for the holidays.

thank you. >> good morning, everyone. kevin brady from texas. one of the questions we get in washington these days is why haven't you gone home by now? these are principles worth fighting for. they had a real attack on real people, and especially on our economy -- real impact on real people, and especially on our economy. i spoke to local small business people. one told me that these short- term extensions are so hard on the patients, heart on the doctors, they are hard on his small business. he says there are fewer and fewer doctors to see medicare patients these days, and this only makes it worse. for him and other local doctors, the house bill, which extends these payments for two years, is world better than the senate bill and the uncertainty for two months. i talk to a family-own business

owner. they built this small business from seven workers to 46. he says a two-month extension creates real peril problems for his small business -- real payroll problems for his small business and no incentives to hire. he says he wants to hire one or two new plumbers. he said they were frustrated. they told him two months, that is no help. if congress is truly thinking about the people and workers, they would stay and get this done for the full year. i spoke to someone on his fifth tour of duty in afghanistan. they have three girls. she works full time did she said, "are you kidding me? might i spent up for afghanistan. he is not going on vacation --

my husband and left for afghanistan. he is not going on vacation." whydoesn't understand senate democrats want comeback and work with republicans to solve this problem now. i don't know where the political winds are blowing. what republicans are worried about our where the economic winds are blowing along main street. this uncertainty from the senate bill causes real problems. until we create certainty for small business owners to hire, invest in new buildings, equipment, and software, we will not see this economy moving forward. that is why republicans are here in washington, willing to sit down at table to solve this problem now, because it is critical to our economy. >> i am greg walden from oregon. i chair the communications and technology subcommittee. we are not doing this for the politics. you pointed that out to us

pretty clearly not go there is a reason we are here fighting this fight, and it is over the policies in a vault. you heard from my colleagues about the effect it will have on small business. i was a small business owner with my wife for 20 years. i know what it is like to do it quarterly. i know about the uncertainty and frustration when government acts on a short-term political bases. we want long-term solutions. in this legislation, which the house passed in a bipartisan manner, it includes a an enormous buildup in spectrum. high-tech innovators could acquire it and create literally hundreds of thousands of new jobs. we would pay for the buildout with a broadband interoperable public safety network that the 9/11 commission says is long overdue. that is in the bill that the house passed that the senate has stripped the provisions out of. there are important to job creation opportunities in the house-passed bill.

there are important public safety provisions in the house- passed bill. our job is to work out differences with the house and the senate. we should sit down with negotiators of both sides and do just that. >> good morning. nan hayworth from new york's 19th district, beautiful hudson valley. the reason i am not in the hudson valley today is i am here with colleagues, all of home care very much about the american people. we are the immediate voice of the american people. we have received word from organizations representing small businesses, representing america's job creators across the country. i am going to point out the national federation of independent businesses, which, as you know, represents -- is representative and a voice for thousands and thousands of small businesses across the country. they say at two-month tax holiday presents publications and costs that would

disproportionately affect small business. two months versus one year. common sense tells you that want year is far better. the president himself has been a strong advocate for a year- long table packs holiday extension bid -- the year-long payroll tax holiday extension. seniors are facing devastating cuts in medicare reimbursements that will make access extremely difficult. health-care providers have begged us not to keep kicking the can down the road, to use a familiar cliches. we are tired of hearing that cliche and tired of seeing that done. millions of americans are working through the holiday to put food on the table and take care of their families. we care about them, we are with them, and that is why we are here. we want to work over the remaining days of the year to get the best possible

arrangement that we can for the american people to grow jobs, to lift it burdens, to provide them with assurance as we move forward. >> i am tom price. i represent the sixth district of georgia and am a privilege to chair the republican policy committee. everyone knows that jobs in the economy is the number-one issue across this great land. if you talk to job creators, small and large businesses, they said in a one reason is they are unable to hire is because of the uncertainty in the market. as a physician, i can tell you that the uncertainty in doctors' offices and hospitals across the country is great. the house bill attempts to provide certainty. a two-year fixed to the component, the reimbursement mechanism for physicians, for caring for a senior patients. the senate bill, the other side, says two months is ok. i can tell you that as a physician, we scheduled procedures out months in advance, 3, four, five, six

months in advance. seniors will not have the kind of access to care that they so desperately need. what is often times missed in this argument, or this discussion, is that hospitals and physicians' offices are often at the no. 1 or no. 2 employer in counties in this land. when physicians don't have that kind of certainty, they will of necessity have to lay people off. this is a job-destructive the measure as it relates to physician reimbursement. for a certainty for seniors, for a certainty for families, for certainty for job creators, a year for the payroll tax extension holiday and the federal unemployment benefits, two years for the sgr fix, is absolutely vital. we urge our senate colleagues to come back. let's get this done before the end of the year. >> tom reed, new york. over the last 24 hours, i have

been asked to the question, "what are you fighting for?" my response is twofold. one, we are fighting to change the way washington operates. the senate package, and what the president is advocating for us to accept as good policy for america, is adopted to the lens of washington, d.c. -- doing what is politically convenient, and in order to comply with vacation plans these. it is time that we lead in the house, time that we lead in washington, d.c., and look at it from the point of view of people back home who have to live with these policies. you have heard from my colleagues. they have heard from some many people who say that this proposal is just not workable. there are major substantive differences between the senate and house bill that are common sense provisions that all

americans will agree with. take on the planet, for example. we proposed in that house -- take unemployment, for example we proposed in the house that employers drug-screen people for employment. in my district, one tells me, but we spend thousands of dollars to reemploy people to get back to work, and then when they go in and take the drug screening test, they fail. what a waste." a simple proposal is that people have to get a ged. we care about americans and want them to get back to work and want to give them the tools to do so. that is what the bill is all about. i asked that we get it done. we have plenty of time. join us to do the work for the american people. they deserve it. >> fred upton from michigan. there is no reason why we

cannot get this thing done right. yes, there are a lot of similarities in the bill. we know we have to resolve the doctor fix, we have teeth down in both bills. it -- we have keystone in both bills. there is no reason we cannot sit down together and negotiate a settlement that makes sense so we don't have to address it again in the manner of a couple more weeks. that is an important thing for all of us here. we have seen these sparring press conferences. it seems that democrats are trailing us wherever we go. i understand the minority leader will be here within the hour speaking maybe from the same podium. ask him the question -- why aren't you appointing conferees rather than spending time talking past each other on areas where you agree or disagree? why can we sit down together and negotiate these differences -- why can't we sit down together and negotiate these

differences and get a solution that works for american families, working families, all across the country as they get ready for the christmas holiday? we can do this. i am sure we can come to an agreement, rather than simply punting the ball into the next year. let's get it done and eight get it done right. >> would you acknowledge, sir, that the outside criticism from conservatives is growing louder, and regardless of policy, the political brand of your party is being hurt? >> politics will be politics. our team believes it is always right to do the best thing. and the fact is, as i have told my colleagues, what my parents taught me and what i talked to my kids about one at they were growing up -- if you do the right things for the right reasons, the right things will happen.

all we are fighting for is what everybody has already agreed to. let's sit down and resolve the differences. >> you say you are doing this because the american people need a certainty. aren't you worried that it is creating more uncertainty here? >> we are ready to work, we need somebody to work with. >> are republicans getting killed in public opinion? "there is no question." john mccain -- "is bad for the republican party." "-- wall street " -- "wall street journal" -- "might wind up reelecting a president." karl rove -- "' wall street journal' editorial hit the nail on the head office are they all wrong?

>> we are fighting to do the right thing. leader pelosi, mr. hoyer, senator reid, senator schumer -- we needed to extend these policies for a year. we agree with them. to just kick the can down the road because, oh, my goodness, we're getting close to christmas, is not the right thing for the american people. >> if there was some sort of compromise, do you think you could move this bill with a minority of your conference -- let me restate that, not a minority of your conference -- would you have more democratic votes? the senate bill would pass without some republicans and a lot of democrats. would you be willing -- with some republicans and a lot of democrats.

would you be willing -- >> i don't believe that to be the case. nothing will happen until we have somebody to sit down with and negotiate. this is why i told president obama yesterday to call senator reid to appoint conferees. one more. >> many of you mentioned to the quarterly reporting. would you be willing to have a three-month extension? >> we need people to sit down and work with. we are not willing to sit down and negotiate with ourselves. i ask sen. reid to appoint conferees from the senate side said that we can resolve our differences quickly. thank you, everybody. >> will you be here for christmas?

>> speaker john boehner and republican conferees from this morning. if you want to follow what some capital reporters are covering on the payroll tax cut, go to twitter.com/cspan. a couple of tweets we wanted to show you. also a producer from fox writes -- again, twitter.com/cspan. next up, we will show you the comments from steny hoyer and other democrats as they followed the republicans this morning at the capital.

>> merry christmas. we are here to talk about a happy new year for 160 million americans. is now been two days since house republicans sent a note to the compromise and walked away from america's working people. if we don't get this done before january 1, a very short time, taxes will go up for 160 million middle-class working americans. the unemployment benefits will expire over the next 60 days for 2.3 million americans. and 48 million americans, seniors on medicare, will have the security of having their

doctors available put at risk. we ought not to be creating that kind of uncertainty and anxiety among the american people. the stakes are too high to be arguing about politics and process. republicans' contention that the two-month compromise is somehow unworkable is simply untrue. if it were, we would not see a desperate proposal today to settle on a three-month extension. speaker boehner says he and his members want a one-year extension. we want that, to. the house passed a bill but he talks about regular order. that bill adds no hearings in the ways and means committee, it had no markups in the ways and means committee, and was past three days after it was introduced, in the middle of december, just days ago. but he expected, i suppose, the

senate to take it home. they didn't. what did the senate do? they did what americans are asking us to do. they came together, reason to together, and voted together. 89 senators came together and said we ought to pass a compromise to give us time to work out any differences that remain. a free -- every family in america understands that. take a breath, stand back, let's see where we can get to where we want to be. let's enact a bipartisan compromise, however, to eliminate uncertainty for american families and then get right to work. -- and then get right to work on a one-year version. not wait until february, not walk away, at not hold off until the last minute. let us not have a conference while we hold hostage 160

million americans with fear that their taxes will go up on january 1. let us not hold hostage 48 million seniors who will fear that their doctors will not be available to them. let us not hold hostage 2.3 million americans who don't have a job, are looking for a job, what to work, and have the fear that they will have the resources to support themselves and their families. the american people are waiting. they are watching closely and intensely. -- intently. there was a cartoon in "the washington post" today -- speaker boehner said "you didn't get 12 presents under the tree, so i will take away the two presents you've got." let's give them the two prisons, and let's work on giving -- let's give them the

two presents, and let's work on giving in on the other 10 presence. that is what everybody in this country, including "the wall street journal" think we ought to do. perhaps that is not what wash limbaugh -- rush limbaugh and grover norquist think we ought to do, but that is what the american people want us to do. sometimes you make an agreement on what you can agree on and continue to work on that on which you cannot. chris van hollen of maryland. >> thank you, mr. hoyer, and thank you all for joining us today. like you, i listened to the speaker of the house, who was just at this podium a short time ago. as i heard his remarks, it was very clear that he is not listen to the american people. just like the house republicans did not listen to the american

people when they threatened to have the united states default on its debts for the first time in its history, just like they have not listened to the american people when it comes to taking up the jobs bill that the president sent to the congress many, many months ago and they have refused to act on a. that is not really surprising anymore. but you would have thought maybe, just maybe, they would listen to some of the senate republican colleagues. 80% of whom voted for a bipartisan compromise to make sure that 160 million americans didn't see a tax increase come january, who worked together on a bipartisan basis to make sure that 2.2 million americans will lose unemployment benefits because they cannot find a job through no fault of their own, and making should the millions on medicare will have a doctor. senate republican colleagues worked together to do that. we have heard from the editorial page of "the wall street journal," we have heard from karl rove.

in fact, virtually the entire country, with the exception of the speaker of house and individuals at this podium a few minutes ago, recognize that the right thing to do is to provide certainty and make sure that the payroll taxes don't go to january 1. the way to do that is to take up the bipartisan senate bill. in fact, they should not have been at this podium. we should all be upstairs in the chamber of the house of representatives. that is where the people's house transacts its business. if you go up there right now, you find the main doors are locked. there is no speaker in the chair. there is nobody presiding. yesterday, mr. hoyer and i went to the floor of the house, we asked for unanimous consent to bring out the bipartisan senate bill. we could have had this bill to the president's desk last night. if we open up the house chamber and take up the bill, the

bipartisan bill, we can have the bill to the president's desk tonight. the keys to the stores are in their hands, and the keys to this problem are in hands, and it is very simple. everybody in the country knows this is not democrats and versus republicans. this is senate democrats, senate republicans, the president, and the american people saying to the house republicans, "what are you doing here, letting the clock run down and raising taxes on 160 million americans?" test and last word about his comments of the president's -- just a last word about his comments of the president of the united states. it is the last refuge of a party that cannot get its work done to start pointing fingers at other people. the bipartisan bill is not at the white house. the president is not sitting on a bipartisan bill. the bipartisan senate bill is right here in the united states congress.

the speaker of the house and the republican majority have the power to bring that bill up. let's get the work done. the president is waiting. he has made it very clear he will sign it. we could put this whole issue to rest by this evening, if the house republican leadership would move out of the press room and move upstairs to the floor of a house and into the american people's business. that is what we should do it then of course we should get on to extend the tax cut for the full year. the president came to the house of representatives in september and asked for a year-long extension of the tax cut. the speaker of the house and republican leadership said no, they thought it was a bad idea. interesting to hear them say today that is so important to the economy. that is what the president and house democrats were saying for months. go check the record. they be little to the idea of the payroll tax cut. -- belittled the idea of the

cold-year payroll tax cut. they have a whole different story. they recognize the american people knew that he raised payroll taxes right now, it would hurt the american economy. people got tired of hearing them protect tax breaks for the wealthiest americans while refusing to pass a tax break for 160 million americans. that is why they changed their tune. now they come here and say, boy, you should do what we said we shouldn't do. we also know that if you don't get this done now, you will see taxes go up on 160 million americans in just a very few days. let's not let that happen. speaker boehner and the house republicans have it within their power to go up and open those doors, past the bipartisan bill, and get the job done. now it is a privilege to

introduce my colleague, xavier the democratic caucus. >> this latest republican overreach is so hard to comprehend that it is breathtaking. just three days short of christmas, nine days short of watching 160 million americans see their taxes increase, i think the citizens of this country are listening, and they are watching. i am going to choose my words very carefully. the house republican plan to scuttle the deal to help middle-class families is irresponsible and wrong. what is playing out in washington, d.c. this week is about political leverage, not about what is good for the american people. there is no reason to hold up the short-term extension while a more comprehensive deal. -- while a more comprehensive

deal is being worked out. the refusal to compromise threatens benefits for those out of work. it angers me that house republicans would rather continue playing politics than find solutions. their actions will hurt american families and be detrimental to our fragile economy. speaker boehner is under enormous pressure. he has gotten a lot of feedback from many republicans who say we just don't want the payroll tax cut. as a matter fact, many republicans would say we really don't want the extension of the unemployment compensation for the rest of -- anyway, congress can work out a solution without extending the payroll tax extension for the middle class, without jeopardize in seniors'

access to health care or threatening unemployment insurance. i want to choose my words carefully, so instead of using my own words, i was just using the words of senator richard lugar, senator dean heller, and senator scott brown. let me use the words of ordinary americans. $40 per paycheck is the difference between my family finding a way to pay my mortgage payment each month and losing our home. that is from a citizen in youngstown, ohio. $40 means the difference to me in buying gas or paying my electric bill. i am disabled, so i am on a very tight monthly income -- an american from forest grove, oregon. $40 a paycheck allows my son to have hot lunch at school -- a

citizen in honolulu, hawaii. and from a citizen in alaska -- it means a home cooked meal for my family of five, it means new shoes for two of my kids. i think americans are listening, and americans are speaking, including republicans, who say it is time for us to get this done, to move forward. we believe that every member of congress in the house and senate can deal with a two-month extension. everyone should know how to walk and chew gum, including those who have to process these payroll tax cut claims. let's get on with this. we are three days from christmas, nine days from seeing one of the largest tax increases on americans who work in our history. it is time to get this done bit with that, let me yield to the ranking democrat on the ways and means committee, sander levin. >> i am fourth, because i am supposed to do cleanup.

our message is clear. republicans should come back to washington and clean up the mess it they are creating for millions and millions of people. these numbers are so stark -- these are the magic numbers -- 160, 2.2, and 48 million. let me quote -- we have quoted senators. let me quote republicans in the house. tim johnson -- "my republican colleagues are flat out wrong." rep gibson -- "i plan to support the two-month stopgap to make sure our constituents do not face a tax increase." the republican house leadership will not let people vote on that they should come back and let us do so.

we have introduced a bill -- it has now, i think, 178 sponsors on it -- >> 180. >> 180. now the republicans needed to join in and not give a holiday gift to millions and millions of americans of an empty box. essentially, they are saying to taxpayers, it is an empty box. work and cannot find it, and are threatened with the cut off of their unemployment insurance, a is an empty box. and for seniors who want a doctor to see, it is an empty box. i went home yesterday, and i was doing an interview. an anchor at one of the stations -- he should remain nameless, because i was somewhat

surprised -- essentially yelled out in front of the entire group of their, "what do the house republicans in the world think they are doing?" what they are doing is shorting the needs of millions of people. we are here to say to the speaker, let us vote. you know why he does not want us to vote? because it would pass. >> thank you very much, mr. >> thank you very much, mr. van hollen, mr. becerra, and mr. levin. this is not about politics. it is not even about policy. it is about trying to make sure that bad things don't happen to good people tend days from now. the senate has agreed overwhelmingly. the democrats in the house of

representatives to a person support this extension, unanimously support this extension. and the president of the united states supports this extension. which means that if you try to make percentages of it, 4/5 of the decisionmakers agreed to moving this forward now to prevent the bad things happening to good people. yes, we could deal with the policy differences, yes, we could deal with the politics, but let us not hold hostage these 160 million, those 2.2 million, those 48 million people over the next nine days until one side is bludgeoned, which is what is being attempted, to agreeing on that which four fifths of the decisionmakers have said we did not have agreement on. we do have agreement on this, let's move forward. questions. >> senate minority leader mitch mcconnell came out this morning

in what he called a compromise moving forward. he said if harry reid would appoint conferees -- republicans would agree -- [inaudible] what is your reaction? the you think you could support that as a compromise? >> from what you just told me -- and chris has a blackberry trying to show me what senator mitch mcconnell said. what what you told me is if senator reid appointed conferees, they would agree to a two-month extension. >> appointing conferees to negotiate the 1-year -- then the house will agree to the two-month extension. >> ok. [laughter] >> say that again. >> sandy levin raises a good question. there is little doubt -- and a republican staffer in the senate said clearly senator mcconnell would not have made this agreement if speaker boehner had told him he would be opposed to it.

clearly that would have happened. so, i think mr. levin might be right. i do not know if senator mcconnell has -- on behalf of speaker boehner. i don't think speaker -- speaker boehner has said that yet. but certainly i am sure he may respond to that question. let us see what he has to say. >> house republicans just stood here and told us the democrats would just come back -- that you could work out your differences in an hour and get a year-long tax cut. why not do that? >> if we could just work out our differences. they passed a bill. how did they try to work out their differences? no hearings, no markups, and just passed it, and jammed it through. knowing full well it was designed to fail. and what happened when it went to the senate? harry reid tried to put it on the floor and say, okay, here is their bill.

who objected to putting it on the floor? the republicans. they did not want it voted on. and then what happened when the senate bill came to the house? they precluded a vote on the senate bill. so that when speaker boehner says, you know, just come together, very frankly, his bill did not attempt to do that. and he knew it was not acceptable to the senate or to the president. so, they passed a bill which they knew was not going to pass. >> that small? -- of the difference is really that small? >> i do not think our differences are that small. they are very substantial, which i think all three of the members of the ways and means committee -- >> can i give one example -- >> i knew he would. but, no, the differences are not that small, which is why the senate, trying to get an agreement between senator mcconnell and senator reid with

speaker boehner's participation, discussion both of them, could not come to agreement, which is why they said we are not going to hold hostage to these folks until we come to agreement. >> there wasn't one word passed between mr. -- and myself, never said a word. they brought this up and take eliminate 40 weeks of unemployment insurance, federal unemployment insurance. a small difference? it would have reduced the maximum weeks in michigan for the unemployed looking for work to 46 weeks. now, let's pass this bill and then sit down, have a conference, and work out the differences that are significant. >> on that point -- because i heard the republican majority leader say the differences were very small in these negotiations. just not true.

the reality is there were some big differences. and let's remember, again, that the house republicans were opposed to a one-year payroll tax cut. but they realize politically they had to do it, so they decided to use the opportunity to try to get some of the extraneous and related provisions through. even today they do not support the payroll tax cut for itself. they continue to want to use these negotiations to further other objectives, just like they used -- tried to use the debt ceiling for other objectives. so, there is one of agreement, and the argument was started by the president in the sense he said let's do one-year tax extension. republicans have said, no, and that it is why they never got

to months for sure and let's work out the rest. it is clear from -- that senator mcconnell has put the blame by calling on the speaker to pass it. that is the bottom line. >> i hope you all would do something for us because they are not giving us the information. s the question, how does this plan is different in substance from the plan that got 89 votes. how does it differ in the lives of people who are about to have their taxes increased? if this process -- you have to jump over three groups, go through three channels -- i don't think the american people care. what they want to know is what substantively on this thing is different from what they are proposing now than what got a bipartisan group of senators to pass this by 89 votes. we are ready to do something.

we saw the negotiations occur. so, time is running out, the clock is ticking. before christmas, before january 1, by god, let us get this done. >> if i can, senator reid said he would do exactly what senator mcconnell said, pass it, we will appoint conferees and work it out. >> on saturday you released a statement saying "a two-month extension of unemployment insurance and payroll tax cut is fully inadequate, and the american people -- there is much more certainty and passion about economic distress." that was saturday. now we are here on thursday and this is the right way to go now? >> we want a two-month extension so we can work out provisions, including unemployment insurance. what is in the two-months, i

think, needs some further review. but it has to pass for us to have that. >> you were wrong on saturday? >> no, i was right. i want the unemployment insurance further reviewed. during these two months we will do exactly that. >> them all of you folks have covered congress. the american people operate on this. every day. they can't reach agreement right now, and they make some interim agreement for the next day or day after and say we will solve the problem. we do that all the time. frankly, we have done it 22 times keeping the faa operating. we did an interview because we can't reach agreement. unfortunately, a lot of politics there that has to do with frankly holding workers hostage to a labor provision that the republicans don't like. but when you cannot come to

agreement on a full year appropriations bill, what do you do? pass a short-term one. this is not an unusual procedure. like sandy levin, everybody says what you all to do is pass a full year. if you can pass the full year, -- if you can't pass the full year, make sure the 160 million americans, 2.2 million americans, 48 million americans, are not hurt and the process. that is what he is saying. it is not like we have fallen in love of the two-month extension. we have not. but what we said, however, we are not want to be party to hurting those people in the interim while trying to reach agreement on what we think is the correct objective. >> the bill that passed the senate will reduce unemployment benefits in 11 states within the two months -- the democrats support reducing unemployment? >> look, there are things in this bill, as we pointed out, that we had to make concessions

on. that is the process. we understand that. unfortunately, an awful lot of tea party activists who were elected to congress that cannot understand compromise. that provision is one of the provisions that mr. levin has concerns about. we have concerns about the pipeline division. frankly we understand that in order to protect the 160 million, the 40 million, and the 2 million, we have to make compromise and what are prepared to do so in the short term. so, yes, we're prepared to work out a long-term solution to do what -- >> coming back to the pro forma session tomorrow? >> you never can tell. [laughter] >> democratic whip steny hoyer

asked at the end about tomorrow's pro forma session. there is a session scheduled at 10:00 eastern. what will happen, we will have to wait and see. we will see it at c-span at 10:00. we will show you the president's comments momentarily. our poll continues with you think john boehner, the speaker, should accept the senate bill. you can take part and also add your comments to a conversation that got under way in "washington journal. here is a look at the poll numbers so far. a lot of comments coming in from the first question. next, president obama came out just about over an hour ago or so urging the house to take up

the senate bill and he was backed by a number of folks who will be affected by the payroll tax cut extension. the president's comments from just a short while ago. >> ladies and gentlemen, the president of the united states. [applause] >> thank you. thank you, everybody. please, have a seat.

good afternoon to all of you. merry christmas, happy holidays. we have been doing everything we can over the last few weeks to make sure that 160 million working americans are not hit with a holiday tax increase on january 1. we also have been doing everything we can to make sure the millions of people who are out here looking for work in this very tough environment, don't start losing their unemployment insurance on january 1. on saturday, we reach a bipartisan compromise that would do just that, make sure that people are not seeing a tax cut the first of the year, making sure they still have an unemployment insurance. nearly every democrat in the senate voted for that compromise. nearly every republican in the senate voted for that compromise. democrats, and even some

republicans in the house voted for that compromise. i am ready to sign that compromise into law the sec and it lands on my desk. -- the second of land of my desk. so far the only reason why it has not landed on my desk, the only reason, is because of a faction of house republicans have refused to support this compromise. now, if you are a family making about $50,000 a year, this is a tax cut that amounts to about $1,000 a year. it is about $43 and out of every paycheck. it may be that there are some folks in the house who refuse to vote for this compromise because they don't think that 40 bucks is a lot of money. one who knows what it is like to stretch a budget, nose at the end of the week or at the end of

the month, $40 could make all of the difference in the world. that is why we thought we would bring your voices into this debate. so many of these debates in washington and -- and of the beaver trade as which party is winning, which -- end up being portrayed as which party is winning and which is losing. but this is about people. this is about the american people and whether they win. it is not about a contest between politicians. so, on tuesday, we asked folks to tell us what it would be like to lose $40 out of their paycheck every week. i have to tell you that the response has been overwhelming. we had not seen anything like this before. over 30,000 people have written in so far. as many as 2000 every hour.

we are still hearing bomb folks. i want to encourage everybody who has been paying attention to this to keep sending this to the whitehouse.gov and send it on twitter and facebook. the responses so far have come from americans of all ages, all backgrounds, every corner of the country. some of the folks who responded are on stage with me today. and they should remind every single member of congress what is at stake in this debate. let me just give you a few samples. joseph from new jersey talked about how he would have to sacrifice the occasional pizza night with his daughters. he said, and i am quoting -- my 16-year old twins will be out of the house soon. i will miss this. richard from rhode island vote to tell us that having an extra

$40 in his check buys and of heating oil to keep his family warm for three nights. in his words, and i am quoting, if someone does not think that 12 gallons of heating oil is important i invite them to spend three nights in an unheated home. or you can believe me when i say it makes a difference. pete from wisconsin told us about driving more than 200 miles each week to keep his father in law company in a nursing home. $40 out of his paycheck means he would only be able to make three trips instead of four. we heard from a teacher named claire here in d.c. who goes to the thrift store every week and uses her own money to buy pencils and books for work before fourth grade class and sometimes she splurges on science and art classes. losing $40 means she would not be able to do that anymore. for others, $40 means dinner out with a child who is home for

christmas, a new pair of shoes, a tank of gas, a charitable donation. these are the things at stake for millions of americans. they matter to people a lot. and keep in mind that those are just the individual stories. it does not account for the overall impact that a failure to extend the payroll tax cut, a failure to extend unemployment insurance, would have on the economy as a whole. we have seen in the economy do better over the last couple of months. but there's still a lot of sources of uncertainty out there -- what is going on in europe, what is going on around the world. and so, this is to make sure our recovery continues. so, it is time for the house to listen to the voices who are up

here, the voices all across the country, and reconsider. what is happening right now is exactly why people get so frustrated with washington. this is it, this is exactly why people get so frustrated with washington. this is not a typical democrat versus republican issue. this is an issue where an overwhelming number of people in both parties agreed. how can we not get that done? as this place becomes so dysfunctional that even when people agree to things, we can't do it? [applause] .t doesn't make any sense so, enough is enough. people standing with me today can't afford any more games.

they can't afford to lose $1,000 because of some ridiculous washington standoff. the house needs to pass a short- term version of this compromise and then we should negotiate an agreement as quickly as possible to extend the payroll tax cut and unemployment insurance for the next of 2012. it is the right thing to do for the economy, and it is the most in portland, the right thing to do for american families across the country. this is not just my view. just a few hours ago this its exactly what the republican leader of the senate said we should do. democrats agree with the republican leader of the senate. we should go ahead and get this done. this should not be hard. we all agree this should happen. i believe it is going to happen sooner or bank later. why not make it sooner? rather than later.

let's give it the american people, the people who send us here, the kind of leadership they deserve. thank you, everybody. [applause] >> president obama's comments from earlier on the payroll tax cuts. if you missed any of today's event, by the way, we will we hear them in their entirety starting a 8:00 p.m. eastern on c-span and you can watch them any time on the video library. more, including statements as well as the one from today from

senator mitch mcconnell. all of that at c-span.org. >> with the iowa caucuses and new hampshire primary next month, "the contenders" looks back at 14 men who ran for president and laws but had a long-lasting impact on politics. tonight, five-time socialist party candidate eugene debs, friday, charles evans hughes, chief justice, then three-time governor of new york, al smith, followed by wendell willkie. "the contenders," every night at 10:00 p.m. eastern on c-span. >> have you tried the free c- span radio app? >> it is fast, easy-to-use, and visually appealing and the audio quality is convincingly clear. great, insanely great deal considering it is also free. it took me about 10 seconds to learn how to use it. >> anytime, anywhere, get

streaming audio of c-span radio and all three networks, including live congress, and listen to the interview programs including "q&a" and "the communicators." find out more at c-span.org /radioapp >> former russian president vladimir putin will once again run for president in 2012. he served as president between 2000 and 2008 and is, the prime minister and his party recently won a majority in elections that were alleged to be fraudulent and led to protest. in washington, russia specialist dimitri simes talk about the significance of the protest and what it means for the russian relations. from yesterday, this is just under 90 minutes. >> to moderate this afternoon's

session. i called dimitri only about a week ago after, of course, observing the event under way in the russian federation in moscow and other cities. what some have described as perhaps the beginning of the breakup of the ice that forms during a russian winter. to discuss the political changes under way in russia. and i suggested, of course, that dimitri should join us to provide his views on not only what happened but what could occur in the future. surprisingly, he sort of resisted me.

but i was quickly able to twist his arm and get him to agree to the meeting. i think dimitri now looking at the very good turnout we have today, the level of interest. a lot of familiar faces around the table. i think we have the opportunity to not only listen to dimitri's views but also, i hope, engage in a good back and forth discussion amongst all of us. dimitri truly is the guy who needs no introduction. let me just remind you, he came to the united states from the soviet union in 1973. he developed close relations with current and past policy leaders, most notably with president nixon. he came the obvious choice to lead the van and nixon center

and now the center for national interest. he is one of those runners on people who is able, i think, to combine both topicality and following daily event. not only in the russia, but globally with a deep academic and theoretical perspective. we titled this session "the end of the putin era?" and i think the question mark is appropriate. something is going on in russia but we are not quite sure at this stage what it is. but, dimitri, i will give you the floor so you can help us understand. >> thank you for the overgenerous introduction and in full disclosure -- nixon did not twist my arm, but he just raised

-- to board of directors. the chairman of our program committee, when he makes a suggestion -- but, thank you for the opportunity. the end of the putin era with a question mark. i think anyone who claims that the putin era is coming to an end needs to define what does it mean. we can tell you about an article recently published about the end of the american arab and global politics. -- american in global politics. it frames the issue not in terms of black and white -- a super

power of losing global influence, but with much greater new wants of the question, would the united states play the same dominant role in international affairs. that we were able to play up until the end of the cold war. using this article as an example, i would say you cannot predict with certainty whether putin himself will depart from power any time soon. but i think we can predict with certainty that he will not be able to rule the way he was ruling russia during the last 11 years. and it is his ability to understand that, that will ultimately determine whether he is able to be elected and then to stay as the russian

president. it is quite clear that important things are happening in russia, and this potential was for very meaningful reform and very dangerous destabilization. 6000 people have demonstrated in moscow on december 10. 60,000 but not look like a large number when you look at egypt and other demonstrations in europe, when you remember the anti-nuclear demonstrations in new york and central park with almost a million people. so, it does not sound like a huge number. but in terms of previous russian practices, 50,000 people at a position meeting in moscow, particularly a meeting not

organized and an established process -- primarily by internet under very short notice, this was quite dramatic. and thousands of thousands of other russian is demonstrating all over the country -- smaller meetings and many other cities but you can say with a considerable degree of certainty in that this was the best time russian middle-class decided that they wanted to be taken seriously. we still do not know to what extent people who came to this meeting had the political platform, to what extent they will receive the political demands. but it is very clear they wanted to deliver at least one simple message -- and enough is enough. and we are not going to tolerate this nonsense any

longer. this was a very important and a very powerful message. only a couple of years ago when we were observing russian public opinion, we could say with a concern verbal degree of certainty that the russian middle-class was not necessarily enthusiastic about the government's, but they did not want to become involved in politics. they believe in putin's grand bargain -- namely, usually people cannot question who runs the government and we make sure that your life styles, your living standards consistently improved, and we will not interfere in your personal freedoms. you don't tell us, the government, what official policies will be and we will not tell you where you should live, where you should travel, where you should work, and even what you should think. and if you want to criticize the

government, please do it, all long -- as long as you did not do it on three national tv channels which were considered by the government as important. that grand bargain was rejected on december 10 in moscow and in many other russian cities. why it happened, i don't think we will ever know. like when we look at the revolution in tunisia and other arabs revolutions, you can see a relatively small event that triggered public indignation, but clearly major parts of the public already felt quite effective and ready to engage in protest. 50,000 people, again, is not a huge number of people. but revolutions in russia traditionally start by small,

middle-class minorities, particularly in moscow and st. petersburg. so, for the government to ignore these people, i think the government will do it only at its peril. if these people, if they would be ignored, if an attempt were to be made to ostracize them, to present them as foreign agents, i think that will make them only increasingly angry and they may become revolutionaries, contrary to their own initial inclinations. we were talking for some time about two realities in russia. i was talking about that several months ago with a leader of the liberal party, one party was a part of official loyal opposition and was allowed to take part in the last parliamentary elections, but at

the same time, and genuinely in very critical of the government. he said to me at the time that in russia, people existed in two parallel realities. one was the reality of the tv universe -- what people who watch tv, who are influenced by what they think is an approach suggested by the government, and at that time acceptable to the vast majority of the russian citizens. and then there was a growing internet space, people who were very cynical about the government, people will realize -- relied primarily on internet use, people who were spending a growing amount of time on the internet. but he said at the time, these people were not -- the internet reality was not something that

required any the seat filler action, that required them to do anything specific. what has happened on december 10, the internet reality moved. the reality of russian political life. and that, i think, you can see -- what has provoked these people who went to demonstrate? it started probably on september 24 when putin and medvedev announced that they would change jobs and now putin and again would run for presidency and medvedev would become prime minister. people assumed by that time that putin probably would run for presidency. and most people, i thought, were prepared to accept that.

but the way it was done, just kind and of an announcement, without any preparation, without any discussion, really offended a lot of people, particularly educated people who felt that once again they were taken for granted. even people who were supportive of putin were quite upset on the way it was done. at that time, the minister of finance, came to washington to take part in the imf meetings. she left moscow on the eve of the ruling united russia party meeting with the announcement about putin and that of switching jobs was made. putin consistently -- including three days ago -- was describing putin as one of his

closest political associates and one of his closest friends. when putin came to washington she learned for the first time medvedev would be the new prime minister. he had differences with medvedev and he made an announcement in washington -- which was provocative and unusual -- saying he would not serve in the russian government under medvedev. for an active minister of finance to make an announcement like that on foreign soil, i thought it was not something that was conventionally done. but also not conventionally done for the foreign minister to come to another country and learn from foreign tv what was being arranged in his own government -- you would understand the reaction.

the vice minister it said publicly he learned of this arrangement would listen to it at the meeting of the ninth of russia. i talked to senior kremlin officials involved in organizing that united russia meeting. they told me that, yes, they were informed in advance -- like about 24 hours in advance -- because they had to arrange the meeting and they were in charge -- they had to be told. but otherwise, no one. prime minister putin still around russia as if he was a senior kgb officer, as if it was a secret operation. where the more you share, the more you can get into trouble and you did not really share information with anyone and don't take anybody's advice.

prime minister putin was once asked about his advisers, whose advice does he take on foreign policy issues? putin fought in little bit and said, henry kissinger. now, henry kissinger is honorary chairman of the center and i have great esteem for him. and i think putin is doing well listening to henry kissinger. but what was remarkable is he could not think about anyone in his own country, in his own government's, who he would want to call in advisor because members cannot really have advisers -- they have lieutenants, assistance, but they did not have advisers. thus created a situation, even inside the russian elite, even inside the russian government, that announcement about putin and medvedev switching jobs was taken very poorly.

keeping medvedev as prime minister is, medvedev was considered more liberal and he would bring with him his liberal constituency to support the ruling party during elections. but the opposite has happened, because medvedev -- the of the campaign, exactly like putin and most of his constituency felt betrayed. bringing medvedev back as prime minister really did not serve putin well. i also think that there was considerable fraud during last elections. i actually did not believe that it was as widespread as some critics have suggested. i think there was considerable inconsistency between the results of public opinion polls, including public opinion polls

conducted by independent organizations, and the way the vote count was announced. but there were a couple of very laudable and exceptions. and the primary exception was moscow. we're clearly there was considerable disconnect between the way the votes were "counted" and what i dependent polls come exit polls, suggested. there was a considerable disconnect. and people in moscow, they knew how they had voted, they knew how their friends and neighbors had voted, and when they looked -- they clearly felt betrayed. a judgment not just on moscow but the way the elections were conducted. i think that is what triggered

the public damnation, particularly in moscow, and the question is, can the russian government still hold ground and get putin reelected as president in march? in my view, it is still doable. it is not assured. but it is still doable. it is doable but it is not assured, and the government will have to be very careful not to provoke the people even more than they are already provoked. and also the question is, at what cost would putin be reelected? because if putin is reelected with a perception of widespread fraud, that could cause a crisis in russia right away. even if the government could

handle the crisis, the question is, what is next? i talked to a very knowledgeable russians about russian economy. they believe they are likely to be serious difficulties in russia next fall. the reason for this is that putin and medvedev have run a very populist campaign and continue to allow a very populist campaign to elect putin as president. they are promising a great deal to everyone who depend on government budget, particularly military and security services, on whose loyalties they want to count. and there is a great challenge to be able to balance the budget and nd -- and any kind of fiscal prudence.

was so critical with negatives as president and now showing disagreement with putin. the government was able to survive -- but major confrontation, and then the question is what will be if there are serious economic difficulties next fall? not just internet generation but ordinary russians from cities who will go to the streets. so, this is a very challenging time for russia. so far i think russia's government response was not good. putin talking about all of these being the product of a spot -- foreign conspiracies. i think was very unpersuasive for the people he needed to try to persuade -- mainly -- namely, middle-class russians.

when russians here allegations like that coming from putin,-on russian tv, -- i do not think literally -- i think it is a question of dignity and respect. i think a lot of russians want the government to recognize that if they are -- they want change. for the government to say that all of this is being directed by hillary clinton, this is not the right way to proceed. if the government wants to maintain its support and maintain its with it -- legitimacy inside russia itself. the trouble with analyzing the russian situation and and many arab countries -- we obviously like to believe the government is inept and corrupt. we like to assume that the

riding on white horses. unfortunately, it is not the case. putin was right, in my view, his long interview on russian channel -- and the bureau chief in washington is here -- putin said a lot of things about the former prime minister being widely perceived as being very, very corrupt, about some russian opposition leaders coming back from the 1990's. and there is a real danger that what is being criticized on the the crooks,ment' -- 21st century. they may be replaced by the gangsters and rubber barons from the 1990's. that would not be a good scenario. and we also do know that during

last parliamentary elections, as unfair as this election could be, there was a set message from this election that the populist parties, nationalist parties, they have done much better than the liberals. yablaka, this general liberal russian party, they were not subjected to any greater discrimination and harassment then the communist party, the nationalist party. i have seen it mr. du -- him on the channels, the bureau chief for channel number one -- i thought he was betrayed quite positively. and you know on tv, when they

picked segments from somebody's presentation they know well how to to select what to select. i thought they were getting pretty favorable publicity, courtesy of the russian government. yet, they did not get into the duma. they got 3.3% of the vote. the communists got double the vote. other prominent opposition parties also increased their share of the vote. altogether, russian liberals got about 4% of the vote during the last duma elections. so what worries me, that we may confuse -- like we already confused in egypt, composition of protesters at the government's square with an overall movement in the country. then we are insist -- surprise

in egypt when the muslim brothers and people more conservative redwing very well. we may be quite surprised what would happen when they -- when there and it's genuinely free elections in russia and we may see many people in russian government will maybe critics of the west, and particularly of the united states. incidently, all the parties who have entered the government, they denounced secretary clinton for her criticism of the russian elections and all of them have criticized one -- russian non-profit groups who received support from u.s. foundations, and particularly from the u.s. government. let me finish on a note about u.s. state and u.s. interest. russia today does not look like a very important country, except

in terms of nuclear weapons. produced aently report on u.s. policy toward russia, where we made the point that russia is important for many reasons, but particularly because russia -- hard to imagine a scenario where russia would want to do something like that, but they have the capability. there are several people in this room who were at a meeting with putin in november, where putin took issue with our report, saying russia, of course, can destroy the ninth states, and you actually said it takes 30 minutes and we could do it even faster. but putin said there were also other reasons russia could be important to the united states. i think many americans do not

think that you take that russian importance very seriously. but according to a recent forecast by goldman sachs -- and we know goldman sachs was mistaken on a number of occasions, including their own profit -- but this forecast prepared by knowledgeable people. and they believe that by the year 2015, russia will be no. 6 in terms of global gnp product, no. 6. being ahead of most american european allies, and perhaps even japan. now, i would not take it too literally but i would simply say the russian economic potential is serious, real, and particularly if russia and reduces its necessary reforms.

it may be a major international player, not only because of its nuclear potential. russia is also, of course, a member of the european security council and russia, of course, is a country which can quickly change the dynamics of international politics if it chooses to ally itself with china. in china for many years -- where competitors, they look at others with suspicion. they have different economic interests. their negotiations particular in economic issues are very difficult indeed. having said that, if we manage to create major issues -- relations with both china and russia, at least on the tactical level, some kind of alliance or at least an agreement between these two powers is quite possible. and then it into national

politics would not be quite the same. let me end on a very simple note. we have choices to make in the u.s. policy toward russia. secretary clinton was very critical of russian elections, and probably with some reason. at the same time, it is really foreign minister lieberman was in moscow meeting with prime and esther putin -- prime minister putin, and in front of the tv cameras mr. lieberman said he talked to is really observers of russian elections and they all told him that there were no serious issues. i can assure you that mr. lieberman, whose family came from the soviet union, and who is a very conservative is really leader, to the right of netanyahu, that he is not naive

about russia and about russian politics. i know he was not -- by the russian government. he had very difficult with -- negotiations with putin and others because israel had serious disagreements with russia over russian militant support of syria, iran, hamas. and lieberman came to moscow to try to persuade russia to change seriously question positions of all of these issues of great importance to israel. lieberman made a calculation that as he was negotiating with russia on matters of great importance to israel, that would not be the best time for him to criticize russian government domestic policies. during last 20 years, we came to a very different conclusion. we came to a conclusion at the

end of the cold war, we should tell how everybody -- how they can conduct their affairs and we can do it without negative impact on u.s. interests and u.s. ability to do things that are very important to us, like russian support of iran, like continued supplies across russia. afghanistan could really does affect american security and lives. whether it we should be able to have our cake and eat it too, it is very difficult to make a decision. but they do believe -- when american interests and values are in conflict, and it also believe that doing is what is in the u.s. national interest that saved american lives and protect american security, it also reflects american fundamental values and we should remember about that. tv.

>> thank you, dimitri. you have given us a lot to think about and i hope to talk about. i think i will exercise the moderator's right and maybe ask you the first question or make the first comment. i will give some fair warning to my good friend, general scowcroft, i will give the floor to you after i ask my question and dmitri have answered so you get a little time to prepare. dimitri, i found a part of your presentation a little bit -- you have given us a kind of paradox, if you will. i think you quite correctly pointed out that if you survey the whole political scene in russia, you don't find it a united russia on one hand and a group of western liberal

weiser's on the other -- liberalizers on the other. the second-largest party is the communists. you have a gaggle of other extremist parties. and as you pointed out, but would best be liberals, scoring only, at most, 3.5% to 4%. at the same time, however, as i watched those protests on the news, i saw, what you again correctly pointed out, what we used to call in the 1980's, mainly yuppies -- young, urban professionals, who if they did not get this straight news from television, they were in touch on the internet. they probably all followed this iconic figure, this famous

blogger. there does seem to me -- be, at least among protesters from a group of people i would classify as modernizers. i would not necessarily call the liberals, but they clearly are people who are not extremists, not alter-nationalists, necessarily, and did not strike me as conventional communists, either. and i wrong about this discrepancy? i did it get this sense -- just as you saw at least in the early demonstrations in the arab spring that you did have people who wanted more openness, more transparency, at least, and wanted a government that they could influence. >> there is a paradox between two of our objective.

on one level, with no this young yuppies, as a call them. clearly interested in modernization. clearly out rage by pervasive corruption in russia -- clearly outraged. it is difficult not to relate to them -- people we see on our own tv, and "time" magazine. we have seen this in egypt several months ago. and to support these people, to support the reform, the very nature of americans. but we also want to support something else called free elections. and then you discover in egypt, and then you may discover in russia, that there is a certain disconnect between this round -- these young urbanites who sound like us, and many speak good english, and some of the best

spokesman spent time in the united states, being associated with western american universities. then we discovered that once you allow free elections, and other groups, other social -- are more numerous and come to the top. and what they want to do, you may find it very problematic. in the case of egypt, of course, one of our challenges is the islamic majority in the new parliament, given they are allowed to keep an islamic majority. what they would do in in the case of russia, i would want to know if we had a nationalist majority, how would that effect policy with the united states? you mentioned navalny. he was almost a cult.

-- euro. he is a former leader. he was asked to leave because he was becoming [unintelligible] only recently, he took part in any event that was called rush up march, which included ultranationalists, and he himself was talking about russia for the russians, meaning russia for people for ethnic russians, and was talking about stopping to subsidize where they already have strong separatist movements. he was also talking about not russians, but people from moscow. it was this kind of policies, coming from the new russian

political majority, we may discover that this is not the outcome would be fully comfortable with. >> you are suggesting the real relationship is between putin and the ultra-nationalists? >> what i'm suggesting is there is a none for -- unfolding drama and a variety of outcomes are possible. the governments do have some cards to play, but i do not see evidence that they can play them well. let me mention to you a conversation which was very revealing which i had last february in moscow. we, the center for the national

interest, have a joint event with another group in moscow led by a russian television commentator who was just elected s new chairman -- as new chairman. that was just at the beginning of the arab spring. there were people in the room who thought the arab spring could not come to moscow anytime soon, maybe two, three years from now. they said let's assume you are wrong. let's assume there would be major disruptions in russia, but it really moscow in the next several months, particularly in the elections. can the russian government rely on military and security services? every person in the room said no.

they were a little more specific, saying that it would be one demonstration, one act of violence, the russian government could use the security division, and it probably would be able to handle it. but if it were like in egypt, a protracted violence, day after day, with a growing number of casualties, there was a sense in the room that the minimum the government could not be certain that the military and security services, where a as enlisted men happen to be regular recruits -- [unintelligible] of course, one conversation over dinner in a moscow restaurant, why is this so important? it was important because participants included two former

prime ministers, one who used to be director of the federal security service, and another the foreign intelligence service, a former chief of the general staff was now an adviser to president medvedev, and several leaders and pollsters. the fact that not a single person in the room had any confidence in russian security services being able to handle violence on any protracted basis, for me, it suggested that mr. clinton has to be very careful in how he -- mr. putin has to be very careful in how it manages this process, because if there were internal rebellion we might have a totally unpredictable situation. >> general scowcroft. >> thank you, dmitri. that was a fascinating analysis.

just a couple of points -- first, you hearken to egypt many different times. it seems to me that there is one thing you did not focus on, and that is at the heart of both of them two things -- first, the ease with which demonstrations can be organized now. you said there was no party behind it. if you do not have to have a party. all u.s. to do is push a button and say turn out -- you -- all you have to do is push a button. the other thing we are seen in egypt back -- seeing in egypt and other places, which take demonstration as a cry for democracy.

to me it seems more basic, for dignity. what happened with the switch between clinton and medvedev was an affront -- putin and medvedev was an affront to dignity, unacceptable. do you think the primary motivation was what happened in september that opened switch back again, or in elections that were considered to be corrupt? it makes a difference which way you go. the last point, you ignored the last six years when putin was still obviously running the shop, but there was a difference in the air over it. when i am wondering -- different thin near over it. when i am wondering is how much

of that was real influence of medvedev, how much was putin, and as putin learned that you get more -- has putin learned you get more flies with honey than vinegar, or what ever the same is? has that last six years merely gone, or will we in fact -- he is not a dummy. has kucan learned something from the style of medvedev -- has he learned something from the style of medvedev and how he has dealt with the world that might promise a different operation? >> general scowcroft, first about putin, i think on many levels he is one of the most intelligent world leaders today. i have met some, and it seems that putin is one of the most impressive in terms of its overall intellect, his knowledge of history, his being able to

think strategically. my concern is that while he is clearly not a communist anymore, and while i do not believe that he has any serious intent to recreate the soviet union or the russian empire, i think there is a lot of security agent in his inner-persona. i mean a person who thinks trusting others is a weakness. a person who thinks that if you share information, it is likely to be used against you. a person who came from the military background, and who thinks that your subordinates should of day you on questionably, and express their -- o de you unquestionably, and

express their opinions when they are expressed. it is the exact opposite of what putin expected from his own security council. i spoke to two secretaries. it was clear but one top experts would be able to express opinions, that is not what putin expected. yesterday, mr. putin talked about the situation of russian energy and apparently he discovered that 50% of officials in russian government control energy companies and simultaneously are engaged in businesses of their own apparent cracks he just discovered it? >> -- of their own.

>> he just discovered it? >> it sounded like it. my impression is there are a lot of things in russia they very well-educated man does not know and understand about his country. medvedev in this sense looked much more modern or appealing to this urbanite, yuppie generation. the way medvedev was reduced to being putin's loyal lieutenant after the announcement was made may have eliminated medvedev's credibility with this yuppie generation, and in this sense he stopped being terribly useful to clinton. >> i did not mean that medvedev was not useful. putin is smart. has he not learned anything?

he deeply resented the united states and the way we treated russia at the end of the cold war. medvedev has gone much further by having a different approach. now, if putin is so intelligent, and i agree with you that he is, all he has to do is change his visceral attitude. it is not intellectual. >> if he is capable of that, he has not demonstrated it yet. i can only tell you two things. his television performance on the russian channel -- i thought that in many respects it was a masterful performance. he was on top of his facts. he clearly could be very spontaneous. it was a little orchestrated,

but, well, it is russia. but, when i was seen -- thinking about putin's effectiveness not with his traditional electorate, but what is new yuppie generation i thought that he was out right counterproductive. he looked at these people and they had white ribbons, and he said it looked like they were wearing some kind of condoms. you just said dignity. people found this very offensive. for them going to the demonstration it was a big deal. this was the first time of them by announcing they were becoming citizens. today, in moscow, another scandal aired -- another scandal. the former vice prime minister, one of yeltsin's favorites, and

now he is a champion of democracy, but he is one of the people dead is appealing to this yuppie generation. -- that is appealing to this yet be generation. he accuses putin and it is difficult for clinton not to take it personally. -- clinton to take it personally. they just released -- putin to take it to her personally. -- take it personally. they just released a tape where he is using vulgar language and he is criticizing, putting down colleagues in the radical movement. clearly, his idea was that to his reputation would be destroyed, but the yuppies, the urbanites, feel this is another offense to their dignity.

if they want to run the government and complain like that, but they will foster endured in a lot of people. so, it is not all over yet for putin to demonstrate his potential to become different, caucus taking. >> i am going to open this up because we have our friends from c-span here. please identify yourself. >> arnold, carnegie. dmitri, you have posed the issue for the united states and what is by now -- in what is by now a traditional and familiar way. really is, should we support a stability that is fairly predictable, not entirely satisfactory, and the post to which there are possible alternatives that are better, and some that are worse, and the

ones you spend most of your time on are the ones that are worse. we have been there. we have done this before. the answer certainly is not to make a premature choice, when white or the other, but to be as rich in one way or the other, but to be as smart -- one way or the other, but to be as smart, and attentive as we can become a to see which way the movement is going internally, depending partly on how putin and his government are responding to the challenge, and how the challenges are organizing themselves and preparing and behaving. the second big question has to do with the opposition. that is equally difficult. the liberal opposition in which we are most interested in has a very, very poor track record, is very long marble, but it is also

clear that the opposition -- former beau, but it is also clear that the opposition that the people out in the square demonstrating and have been active on the internet, they are not interested in the official opposition. the official opposition is no opposition at all. the parties had gained most in this election, whether by hook or crook, are not parties in our judgment of american interests that would serve our interests if they gained in strength. so, the struggle, the internal, as i see it, is between those forces that are trying to advance did the legitimization of a system which has failed them and their country in their view, and opposite forces, in this case headed by putin himself, who are trying to reassert the legitimacy of the system.

i think the u.s. response so far has sort of a threaded the needle, and has been quite skillful. i think the administration was right to put the secretary of state out front very quickly, and right not to follow the device of some, a few, not including the republican candidates, which was interesting, to have the president immediately come out with a strong position on the elections themselves. so, my reply to you is not so fast. i am not so persuaded yet any defeat of putin will lead to a political change in russia that will necessarily be to our disadvantage, and i see extraordinary benefits both for russia and for mankind, indeed,

if, in fact, contrary to past performance, the opposition now, with a new input of vitality, energy, and a different population could succeed in putting together something the country could get behind. i think putin's initial response to it in the interviews was very bad. i do not think he advanced his cause, but on the other hand the opposition has not shown as they're capable of organizing a successful movement. >> the first thing is what they should stop doing, and that is what general scowcroft mentioned, attending the dignity of those who disagree with the russian government, and except what they should know themselves -- the reason for opposition are serious and real. is putin and medvedev talk about corruption all the time,

bureaucracy ignoring interests of the people, and dignity in foreign investors as well, which leads to outflow of capital from russia. when you need to see is for mr. putin to stop talking in a way that would indicate at least two moderates among the protesters that putin is getting their message, and that we may see a new reincarnation of putin. we've seen a new incarnation of nixon and many other political leaders. we do know it is possible, not always successful, but possible. but, there needs to be a conscious decision made that something has changed in his country andy has to change some of his ways. without that, i do not think

putin will be able to be successful. the second thing, more specifically, i think they have to accept that clinton cannot win the elections -- putin can not win elections. without a second round, he needs to get an absolute majority of the vote. according to every opinion poll i have seen, this is simply not doable without massive fraud, and let me emphasize massive fraud. the kind of massive fraud which would make elections illegitimate in the minds of millions and millions of russians. putin would have to except that he should be prepared to go to a second round of elections, and a fear, of course, is that the

second round of elections all opposition can unite against putin, even to support some of the communist leader to get rid of clinton. putin would have -- get rid of putin. putin would have to except from the ability and unpredictability, something he hates, and if i was in his shoes i would hate to accept this, too. they are not ran against putin's political program or the way he can run the country. they are saying he is a thief, a crook. they do not just want to change a government, they want to put putin and company in jail. they want an arab-style revolution. they observed what happened to

gaddafi. they take threats like that personally. putin has to except that level of uncertainty. i am convinced that if putin would play his cards right, he can win in the second round. today, i believe he can win in the second round. he remains, by far, the most popular politician in the country, and that is not just the position polls. i am talking about the independent polls that are really respected. 77% of the russian television audience watched clinton for 4.5 hours, and that is the information from -- putin for 4.5 hours.

he still has the charisma and legitimacy that would make him a strong candidate, but he would have to accept a level of uncertainty. he has to stop demonizing opponents, the killing when he is talking about not just radical leaders, but people that demonstrate against them. he will have to start talking seriously about what he is willing to do for the country. so far, putin has offered a lot of populism and how he is going to pay this group, that group, retired people, military security the russian budget has its limits, and i think it is important for putin to go to the polls, presenting his positive program, and what it is he intends to do, and that would

require a thoughtful program prepared by thoughtful people, and i do not see something like that happen in so far. the clock is ticking, but it is not too late yet. >> madame ambassador. >> thank you. the embassy of bulgaria. thank you, mr. dimitri simes. i was going to escape further about reflection on your description of the relative support for syria and iran, but you gave that much of unanswered explaining that it could go much farther than what it is today. i think we are having the discussion on two planes. when it is the domestic scene in the aftermath of the elections, and the behavior and the emergence of an opposition group, and the other plane is politics, and what are the implications for the effected?

i would really appreciate it comment from you of how you would describe what can be an rational argument in favor of more engagement with the west, whenever it might be, and more specifically with the united states of america, and a gut feeling, which i think is slightly different, that has been there for generations on end, i think, correct me if i'm wrong, but ever since the time of peter the great -- a defensive attitude against the west. how would you compare the policy of appeasement with some european countries with pressure, and the reset of the administration. would there be some likely comes, and what up --

likelihoods, and would one be a better attitude than the other? another one -- how would you describe -- what is it patriotic platform, attitude, nationalistic, or however you turn it in russia? what would it come down to? how would you describe a patriotic political platform? >> well, let me start with your last wish first, because it is an important one. i know some people that demonstrated at the square on december 10. some of the mine know very well. some come in this bid to of full disclosure are close, -- in the speak to her of the oldest -- in the spirit of full disclosure are close, personal friends.

i would not want to describe with any certainty their convictions at this point, but i think they had two conflicting impulses. one impulse is enough is enough. these people in power were denying our dignity, and our rights for too long. now, we want to be taken seriously. because they do not have a well- formulated political platform, there is a certain flexibility in terms of their demands, but what they want from government is not another monologue, but a genuine dialogue. at the same time, these people support navalny and his nationalist rhetoric. some of these people speak english, unlike me, without an accent. some of them went to the best american universities, and are very successful in their

professions, but no, they do not want a secretary of state providing them with indispensable guidance on how they should conduct elections. distilled to not quite like it. -- they still do not quite like it. there are conflicting emotions. they want to be made -- to make their own choices. >> that is not conflicting. >> they do not want to be told from anyone from the outside -- they do not want their own government to say they are acting on anyone's orders, but they also do not want anyone from outside the country to become too involved in their internal affairs. i think that we have to try to develop policy which would not

look, and which would not be an appeasement policy, but which would allow was to have real dialogue with these people. i would spend about three specific things we can seriously considered. first, i think that since russia is joining, we need to get rid of the jackson commandment, because if it is on the books, it would really discriminate against u.s. business and u.s. investors in russia. --ever, in the government's [unintelligible] toft without replacing it with some other legislation, i think it would be sending the wrong signal, and that would be creating an pressure and -- an

impression that we do not care about corruption. importantly, i think we should proceed with a bill named after a russian who died in the russian in jail. that is a long story, but i would say but we should have carefully thought out a piece of legislation that would give the administration of corporate prerogative and appropriate procedures, making sure the bid is sufficiently focused with sufficient safeguards, and very important with the president obviously been able to make an appropriate national security exemption when necessary. i do think that some version of the bill is important. the second thing that i would do is -- well, i do not think we need to attempt [unintelligible]

if i were is a member of congress, i would think seriously about engaging in exchanges. if we believe russian duma is significant, it is our prerogative to what extent we want to live conversations with these people. i have been instructed to proceed with this event, and we discussed our center taking foreign money, and both of us have decided that we will not, and we did not take in the past foreign government money, or foreign money connected with the government. i think it is important for groups like others and other american public policy and nonprofit organizations to become quite careful about

taking money from groups connected to the russian government, which engage in the russian propaganda campaign. we, some time ago, at the center for national interest, were questioned whether we were taken russian money. we never did. then, "the washington post" proceed with a whole section once a week which is a propaganda advertisement produced by the russian government. so, i want to suggest a certain degree of consistency, and a higher level of integrity in how we deal with those in russia who we, ourselves, accused of corruption. let's look at the mirror, and let's be prepared to put our money where our mouth is and if

certain money is bad, let's not pay it. >> barbara. >> i am curious about the latest addition to the presidential campaign, the owner of the new jersey nets. the sea have a shot? also, there are rumors that putin has had plastic surgery. >> i looked at mr. putin during his last performance on television, and he looked a little different. i am not an expert on plastic surgery. i cannot give you an informed answer, but i also have to say if i was putin, i would have a lot of sleepless nights, and that could also change your appearance. mikhail prokhorov is a very successful businessman. he made the bulk of his fortune in the 1990's, when his partner

who just gave $5 million to the kennedy center, went into the government, became vice prime minister, and was very active in privatizing russian government property on behalf of mr. prokhorov himself. that was the origin of mr. prokhorov's enormous wealth. over time, as you know, some russian businessmen proved to be unable to grow from their previous unsavory routes, and some prove they are capable of much more. [unintelligible] i think it has been demonstrated that he is a successful business leader, and he established himself as a formidable presence in russian politics. so far, he had an uneasy relationship with russian

government was but region but was considered basically on a very short leash -- but was considered basically on a very short leash. the chances that he would be elected are zero, because the russians are in a populist mode. they do not like oligarchs who made their money in the 1990's, and who by teams in the united states, instead of contributing to russian causes. also, you know, there was a scandal were prokhorov was arrested in france for importing call girls. he was found innocent because they were not professional prostitutes. they came to entertain him and his friends. how to put it delicately, this is not a lifestyle most russians would identify with. >> they might approve of it. [laughter]

>> they might dream about it. the bottom line is the suspicion is his candidacy is to appeal to some liberal, yet the vote, without being a credible threat. this is my view. these things happen in that electoral politics, but this putin relies on things like that, then i think he will be disillusioned. >> back here? >> we take no for an money either. dmitri, earlier this year, -- soaring money either. dmitri, earlier this year, there was a great deal of expectation that putin and medvedev would delay announcing their presidential and re-election scheme until after the parliamentary election. by doing it in reverse order they have provoked the kinds of problems we've seen. why do you think they chose to

exercise this slap in the face of announcing their castling scheme, so close before an election where people could come to some extent, actually register their disapproval? >> you are asking a good question and i two answers. first, clearly they were becoming nervous about their declining polling numbers, and if united russia and would go down in the election, as it actually did, it would provide less justification for putin as the leader of united russia to announce his return to the presidency. the second fanning it is i think they clearly miscalculated, -- thing is i think they clearly miscalculated, and to the best of my knowledge there was never any serious discussion inside of the russian government of what

they were doing, and of the consequences. it apparently was mr. clinton who made his own calculations -- mr. putin who made his own calculations and led medvedev to the conclusions that he was not going to run for president, and they negotiated a deal. that was clearly a very serious miscalculation, and that is a reflection on putin's decision making style. >> short question -- following up on what was s, do you expect to see the putin try to stage manager who gets to run in the march 4 election in a way that either produces a choice that is unacceptable to a majority of russians, or one that it least

would not be? which way do you think they will try to manipulate it? >> they are going to stage manage it. there is no question about that, if for no other reason in order for an individual candidate to be registered they have to get two million signatures. january 20, by then, right, something like that. there is no way anyone can collect in russia two million signatures that can be easily verified a must the government allows you to do it, and then if the government is very broad- minded in verifying the signatures. so, the decisions would be made by the government, but the question is how the government is going to handle it.

they might decide to be very strict and prohibitive, and allow only those parties that are already in the parliament, and most of them have strong government connections -- to allow me them to present candidates. or, they might lean toward gregory, who is not a hero of the radicals, and this little old-fashioned for the internet generation, but it is and non- corrupt, generally a little, and quite thoughtful. he might become a serious challenger. god forbid he gets more votes, and he would go into the second round with putin, and who knows what is going to happen. if the government would listen to these voices, i think there would be a widespread public

indignation, real outrage, and all hell might break loose if they're allowed prokhorov to run. at least there would be a tiny modicum of legitimacy. >> we are really running out of time here. i think there are three journalists here in our role. i will elect them all ask their questions. you could answer as you see fit. i will begin with you. >> andrea, channel one russia. he already mentioned the economical factor, and the possibility of an arab spring scenario for russia. we of seeing that those regions economically are doing -- in the regions that were doing economically well, the arab spring did not happen. in russia, how significant is

the economic factor, and furthermore, the price of oil -- what kind of impact will it have in the future on the stability of the country in order for the government to do business as usual? thank you. >> going back a little bit, what would the consequences be if, indeed, russia went through with an anti-misfiled deal with iran? -- misfiled deal with iran? >> -- misile but deal with iran? what would it do to the world situation. >> if the russians sold their air defense missiles to iran? >> right. >> i just wanted to clarify. >> i am carriers if the events -- curious if the events in the

elections in russia could have an impact in the elections in the united states? could it be a big deal for republicans in debates and for who takes on obama? >> but me start with the question in terms of missiles. some in russia are talking about supplying a more modern system that has 400,000. in terms of this system delivered to the iranians, of course israel will have something to say about that. the israelis might have had thought at first but it would be more difficult to constrain the use. i will simply say that their action would clearly indicate that iran got a powerful protector. it might trigger a crisis, and

it also would erase submissions about what would happen in the aftermath of this crisis. it is one thing to try to destroy their nuclear missile problem, which will not be easy, but let them know that from now on there are not alone, and they can count on russian assistance in rebuilding whenever was destroyed. i think it would change the security situation in the middle east profound a, -- profound way. in terms of the arab spring and economic factors, while it is quite clear you cannot establish percentages, the one thing the russians value in addition to dignity is pocketbooks. it is clear because of both the world economic crisis, and

corruption, as a result of the living standards in russia stopped improving -- result of that, if living standards in russia stopped improving, and in some areas began to go down. that creates an explosive potential. it is not likely to contribute dramatically to what is galling to happen now between now and presidential elections. -- between now and what is quite to happen between presidential elections. what to consider in addition to a presidential election, you have to get forcible economic problems and how a weekend russian government would be able to handle it. finally, i think you invest a very good question, and a lot of people in russia do not understand the dynamics in washington.

you would know much better than me that even from the time of soviet union, american policy was often over-sold and over- bought. i think the same has happened to the policy that the obama administration, in my view, are allowed to look -- allowed to look as more involved than it really was. the more president obama talk about the certain policy, -- talked about a certain policy, the more he seemed to count on president medvedev as is strategic partner, the more he talked about his place among the more he was encouraging republicans to say wait a minute, what is going on in that country? i do think there is a crisis in russia it would become a foreign policy challenge for the obama

administration, and an inevitable topic of presidential debates. >> i am sorry. i've not been able to call on everybody, but i am sure you will all agree with me this has been a tour de force. we have not gotten, of course, all the questions answered. i think dmitry has helped us think about how to answer those questions, what the context should be, and what the crucial issues are going forward. if so, join me in thanking dmitri. [applause] >> we are adjourned. [captions copyright national cable satellite corp. 2011] [captioning performed by national captioning institute] >> thank you so much for your leadership.

>> booking live the the u.s. capitol where the house and senate remain in recess, but were continuing off the floor and to resolve differences over extending the payroll tax cut and other provisions that expire at the end of the year. the list today, house republicans briefed reporters, namely that they want -- earlier today, house republicans briefed reporters, meaning that they want a year-long settlement. the potential -- if the potential peril plan goes forward, the question is when does this hit the house and senate floor?

the house will be on c-span, and the senate, of course, on c-span to. senate republican leader mitch mcconnell said he is calling the house colleagues to approve the senate bill said the negotiations could start on a longer extension. also, president obama appealed to house republicans as well. continue to monitor the situation. throughout the day we have been asking your thoughts on what speaker john boehner should do. we have they pull up at facebook. so far, 692 a voting that house speaker john better off to except the bill. cast your vote if you would like to do that. we have much more online -- the briefings from today, and the statement from mitch mcconnell

et c-span.org. >> with the iowa caucuses and the new hampshire primary next month, the c-span series "the contenders" look at the 14 man that ran for u.s. president and lost but a lasting impact. if tonight, eugene debs, friday, charles evans hughes, then three-time governor of new york, else meant, then when the willkie. -- l. smith, then when the whiskey. -- wendell willkie. >> with a european debt crisis and a shaky recovery in the u.s., analysts assessed the global economic outlook for next year and 2013, as well as the compact ford china, the economy. this is one hour and 45 minutes .

>> good morning, ladies and gentlemen, and thank you for joining us at carnegie today to discuss the global economic outlook. because emerging markets have accounted for the bulk of global economic growth over the last five years, we will have this session a little differently. we will be putting me emerging markets, beginning with china, in the spotlight. so, our expert panel today includes world-renowned experts on emerging markets and on china, beginning with my friend, and former world bank

colic. . he is the head of global economic analysis at the world bank. then, to my right, the senior associate in the asia program at the carnegie endowment, and was for many years the country director in beijing for the world bank. he was also county -- country director for russia, another important world bank client. then, to my left, yet another world bank veteran, who is a professor and an associate of the carnegie endowment, and also ran the beijing office of the world bank awhile ago.

let me tick the session of what some brief remarks on the 2011 record, and particularly the crisis of the eurozone, which is so central to the outlook. 2011 was a disappointment because of the slowing from the fast pace of 2010, and because it leaves the advanced countries well below pre-and great recession trends. 2011 was not a disaster either. growth was in line with the 10- year pre-crisis average, largely because emerging markets continued to power ahead, though they slowed around mid- year. moreover, although the u.s. economy grew at half of the

rate of 2010, in 2011, it has recovered. we gathered some steam after the summer lull. the u.s. corporate sector is in good financial shape, and judging by the events of the last 24 hours, in much better shape than the u.s. political system. however, 2011 is also the year the the euro crisis became deeper and deeper. with italy now engulfed, it represents a qualitatively different level of risk. greece, ireland, portugal, and spain saw gdp decline in the third quarter. their combined debt, government

debt that is, is $4.60 trillion. that is three times the entire sub-prime mortgage market in the united states at the peak. the italian bond yield is at 6.8%, and entirely on sustainable level. most economists agree that the crisis will be with us -- most economists agree that the crisis will be with us for many years and also agree on the shape of the long term solutions that we must have. these include a fiscal union which should include jointly issued bonds, eurobonds, it must include tight fiscal discipline and austerity and structural reforms that make the periphery more competitive.

most economists also agreed that these reforms will take years. you need a bazooka to help the periphery defend itself from markets in the meanwhile. this bazooka can take the form of a combination of a bigger european financial stability fund, imf and large and, and the ecb support for the banks which it is now doing big time and to sovereign's in trouble when necessary. the essence of the current stalemate in europe and its inadequate policy response is that there is no agreement either on how the burden of adjustment will be shared in the short term nor is there trust that in the long term, a fiscal union will not turn into a transfer union from the north

to the south. on the other hand, everyone is aware that we all lose a lot if no solution is found. the big losers will include of course the periphery of europe but also germany, the u.k., which is in the eu but not in the euro zone, including the united states which is europe's biggest external creditor and with home europe is the largest export market and for similar reasons it will include china. even in good circumstances, europe is likely to see a shallow recession, indeed one that has probably already begun. this is in fact the baseline

that most people are working off of. however, in the worst circumstances, a breakup of the euro will slow the continent and possibly the whole world into a multi-year depression. i personally am not at all sure that the europeans can handle the problem on their own not just because of their political divisions but because economically the problem has become too big for the healthy core of europe to handle. for that reason, i have argued for imf enlargement supported by all its members beginning with the united states and china has a badly needed insurance policy. that is my introduction on the 2011 and euro crisis. now would like to kick off a conversation in the panel and i have encouraged them to disagree with each other, disagree with

ourselves, among ourselves. and to comment as we go along. i will direct the firsti will dt question hans stimmer and ask him how he sees the outlook for the advanced countries in 2012 and how what might affect emerging markets. i will then move on to talk more specifically about china. hans -- >> first of all, thank you for inviting me. it is always nice to have the opportunity to exchange views and i hope we can disagree. you said that 2011 was not a disaster but indeed it was very disappointing. we are preparing at the moment our global economic prospects that we will publish four weeks from now. almost without exception, the

growth rate this year are lower for countries. it will be a lower growth into 2013. it has a lot to do with what happened in europe and the crisis which i see as the second phase of the financial crisis of 2008. many european countries have entered recession. that is spreading to other countries but also there are other disappointments. first of all, the disruption of the global production network after the tsunami and earthquake in japan was much better than earlier anticipated. -- bigger than earlier anticipated. you see that very much in japan but also in the united states. secondly, in some of the emerging economies you see the impact of the tightening of the policy that was necessary because several of those

countries were close to overheating and the tightening has slowed those economies like brazil, india, and turkey to some extent and perhaps china in the coming months more than earlier anticipated. it is very difficult to interpret the short term dynamics. you mentioned good news but i would not be too optimistic about that sometimes you see the rebound from a disappointment earlier. you had the sharp decline in production in japan and the united states in the spring after the tsunami and earthquake, disruption in the car industry and you saw a rebound and in august, the rebound stopped because of the downgrade of the u.s. and now it is coming back again a little bit. if you take the year as a whole, it is not that good and not as good as we anticipated.

if you look at the forecast, that has really deteriorated given what is happening in europe at the moment. >> do you want to say something, hans, about emerging markets, defects in particular about the european and american uncertain says on the emerging markets? -- uncertainties on the emerging markets? >> there are three defects already observable, i would argue, coming out of europe. first of all, the infrastructure in europe has collapsed and that has an impact on exports including china. numerically it is not the most important one anymore. it used to be very important but it is a observable. the second channel that you already can see in the data is that capital flows to developing countries have slowed down and to some extent you see a reversal of capital flows as

a result of deleveraging in the european banking system. especially the eastern european countries are vulnerable to that. you also see an impact of the general spread of uncertainty especially intensified after august across the emerging countries. you see stockmarkets coming down, you see weakness in currencies, and that has an impact on the sentiment in those countries. because of what you said at the beginning, it is the emerging markets that are driving the global economy, we are very much focused on what is happening in the domestic markets of the emerging economies and you see weakness there. >> let me pick that up on the domestic situation let me begin by asking you how you see the challenges in china domestically and how it affects the international situation in

china. >> it is very easy to disagree about china. i find it very easy to disagree with myself at times. i want to begin by giving a couple of quotations because everyone is talking about whether we will hit a soft or hard landing. this is from "a wall street journal." "there is no easy way to avoid the bus that is coming in china. "the new york times" -- the china story sounds too much like the crack of we have seen -- crack up we have already seen elsewhere. here is "bloomberg" two weeks ago surveying its commercial banks -- 60% of them foresee a financial crisis coming in china in the next few years. there is a lot of rebel sources -- reputable sources who believe that china is in for a hard landing. look at the statistics which

have come out in the last week or two. industrial production grew at 12.4% in november. that was pretty good but then that was 1% below october. invest and grow by 21% in november but that is the lowest rate since january. -- fixed investment grew by 21% in november, but that is a lowest rate since january. exports grew at 13.8% in november and that was 2% lower than last month. the china trade surplus was $14.5 billion in november, a very large amount but that was only half of what it was in july. depending upon whether you read the positive or negative number, you would think the chinese are doing pretty well are pretty -- or doing pretty poorly. most estimates are that the chinese court this year will be somewhere between 9.1% and 9.3% and next year it will gravitate

to something like 8.5%. that is a common projection. what is 8.5%? that is a soft landing. it is actually a good growth rate which is more sustainable and a rate that china should gravitate towards over the next few years. they are actually above their potential in the past. it declined at 1.5% in chinese -- a decline of 1.5% in chinese gross of that is a good thing -- growth rate is a good thing, although many people write about it as a bad thing. that is a soft landing. what is a hard landing? that might be a growth rate that goes to 5% or 6%. what is a collapse? a collapse is not a negative rate. might be 2-3%. what is the potential for a collapse or a hard landing? most people see it in the

property market. i know that peter might talk about it. he is much more of an expert in this area. let me talk about why there is a huge variation in terms of how people look at the property market in china. investment in property have soared to 12% of gdp. the presumption is that this must be a sign of a bubble or collapse. it is comparable to the fact that the chinese investment rate went from 30% to 45% over 10 years. people think this is not sustainable, evidence of a collapse. the number of units which are vacant in china, 16-64 million vacant units in china, makes people think there is a bubble out there. if you look at those numbers, you think there is a bubble. there is a problem in evaluating the demand in china.

it is 50% urban, 50% rural in china but is much less urbanized than you would expect. there is a potential of 200 million families moving to the urban areas in the next 5-10 years. there is a huge pent-up demand. 60% of the chinese housing stock is sub standard, too small. there is also a huge lake and -- lee tent -- latent potential demand coming up. they want to build 800,000 affordable housing units over the next three years. it has the financing and will go ahead. we don't know how much of this is affordable housing in how that will compensate for the potential reduction in commercial housing. what is the likely property bubble in china? the property bubble in china is not the normal property bubble we see elsewhere.

it will be a property bubble with chinese characteristics. [laughter] this is not a sector that is highly leveraged. households have strong balance sheet. property investments and all the associated investment is very expensive. there's construction, decoration, insurance and all sorts of activity associated with the 12% property development. a slowdown and the property sector will lead to a slowdown in a growth rate in china and that will have an impact next year of going to 8%. how will it go lower? supposed trade in the eurozone really collapses? it could fall by 1% by itself because of a deterioration in the european situation and that would bring it down to 7%. if the property bubble got more expensive and pervasive in the economy and affordable housing dries up, maybe down to 6%.

the elements of a hard landing are possible in the coming years but probably unlikely. the collapse scenario i would say is highly unlikely that is because you have very strong balance sheets and the fact that you have low performing loan ratios. the government stepped in with state bank city will not see the -- the government will step in. the banks are all state-backed, so you will not see the kind of financial collapse you might see elsewhere. reserve levels are very high. the budget is running a significant amount of surplus with revenues pouring into china. all this means that the government has flexibility in dealing with a potential downhill slide. >> thanks a lot. that is a fairly reassuring picture.

do you agree about the domestic challenges of china? >> the most important domestic challenges i see and i agree with most of what was said, are to deal with the fairly drastic slowdown in overall economic growth. the different perspective on the chinese situation -- one camp interprets this slowdown as the beginning of the end. china will now run out of rope and unavoidably run into a hard landing. that is the view expressed by "the wall street journal." another view which is more my view is that it is a challenging and difficult situation. you have a fairly competent group managing the situation in beijing that are not panicking. they feel they can keep this monster under control.

they can use it to their advantage to promote these economic changes that are at the center of their current five-year development plan. the economic rebalancing has moved more sensibly on the policy agenda because they have no choice. the slowdown which is a broad based slowdown is hardly in -- -- slowdown is partly domestically engineer. the government was concerned about the property baubles in 2009-2010 and set out to deliberately killed up bubble by -- kill the bubble by managing it. they try to do what alan greenspan said. you cannot control a bubble but the chinese have a completely different perspective. since they began to introduce

all sorts of administrative restrictions on the ability of households and companies to buy apartments since april of last year, this is showing off the property market. it has cooled down. the difficulty is to know by how much and what prices are really doing. the worst that could happen is a precipitous price climb across -- price decline across the board in our urban china. if that happens, over a relatively short period, you will see a lot of bankruptcy's with developers and they will pull the bankruptcy is in the construction industry and the thousands of supplier industries of the construction materials. that has not happened so far. it could happen and if that happens it will be bad because that would be hard to stop. my sense is that beijing feels comfortable that they can keep this under control.

their first line of defense would not be to be open the monetary spigots as they did in 2009. their first line of defense, if they fear a precipitous price decline in the property sector would be to undo some of the administrative restrictions on how purchasing was introduced. the two largest cities have decided that they will not do that, they will keep these administrative restrictions in place. that suggests that they are not worried about a price decline. , at least not yet. since that is the most important domestically- engineered source of the slowdown, i feel that china going into a hard landing is -- has a limited chance.

look at the external side, mostly european and american demand for chinese exports. european demand has dropped sharply but exports are still growing on the whole. they still have a large trade surplus, smaller than a few months ago, but still large. for 2011, they expect a trade surplus of $150 billion compared to $185 billion last year. they will have deferred a much stronger export picture than they are confronting now but, again, i don't see any panic. they allow companies that are affected by the slowdown in exports to go bankrupt. there are hundreds of bankruptcies and beijing has allowed that to happen.

there is a strong sense that there's an opportunity to push industrial restructuring to higher value added production which is in the long term interest. they are allowing this to happen and allowing the growth to come down and the economic committee in beijing concluded that the main priority remains domestic stability and that can be achieved by a proven monetary policy and a corrective fiscal policy. if they are going to prevent the growth rate from falling too far, they will use fiscal means which is a very important policy difference from what they did in 2009 when the emphasis was strongly on monetary expansion. on that score, without being

totally confident in my own predictions, i am inclined to think that those who feel beijing will be able to keep this under control and present a hard landing, they are likely to be right. >> hans, you obviously followed china among others. i am interested in your reactions to this but also your quantitative idea -- how serious would a big slowdown in china before asia and the rest of the world -- a domestically induced slowdown? >> the question is not so much whether china will collapse. for me the more important question is whether the situation and the world economy deteriorates, china can play the same positive role as it did after 2008.

you have to think through a more negative scenario. you cannot exclude a deeper crisis. then we are empty-handed many countries. in rich countries, you don't have fiscal space anymore and you hardly have monetary space. many of the other developing countries, the fiscal situation has deteriorated. after 2008, china put a floor in the free fall of the of world production by stimulating their economy. they cannot do that in the same way they did in 2000 a precise the because of what peter said. -- in 2008, precisely because of what peter said. at that time it was done through the banking sector by creating a lot of credit and liquidity. you cannot replicate that.

that is very dangerous because it creates a lot of liquidity in chattel banking. they don't want to do that. the alternative is that you have real fiscal stimulus which is indeed a better way to do it. can that be as effective and as large as what we are seeing in 2008. that is where i am not completely sure. i see china as more like other countries, reaching some of the limits of counter acting possible downside scenarios that you have to think through. the issue is not so much that china will likely achieve negative growth rates because you can have a real crisis in china with small positive growth rates. it is quite possible that a lot of the financial stability would be based on growth rates of 9% and if you create non- performing loans and inadequacy in the capital base of banks, then you are right -- the

government can step down. -- step in. you can have financial tensions in china with low growth rate. >> just like everywhere else, the message is that the safety net, so to speak, of policy in china has also eroded. that makes containing the euro crisis even more important. my question may be -- how does china of view the european crisis now? should china help europe? will it help europe? >> let me make one comment first. if you look at china, suppose

its growth goes from 8% and goes down to five or six or seven. in some ways, it is a big domestic economy. it is not trade depended as -- dependent as other countries are. people think it is an export- driven economy but it is not. similar countries like south korea and taiwan and the philippines and malaysia and singapore have been expecting to get 40% increases in exports to china in the last few years. they are quite trade and export dependant, more than people realize. if there is a dramatic decline in china and growth slows down to 6 or 7% and they have these financial problems, it can properly manage it. there is a ripple effect on other neighboring countries in east asia.

that as a secondary a fact. totalityknow with the of the effect will be on the world. that is worth pondering. in the euro is done, europe is -- in the euro zone, europe is extremely important to china. europe is china's largest trading partner, $480 billion in trade last year. europe is china's largest export debt nation, more than the united states. china gets a tremendous a priority in europe because it sees it as a hedge. a hedge against excessive dependence on the united states. the success cannot just depend on the united states of china is interested in a strong europe and will try to help, in my view. the statements coming out of- region, china or negative or

tentative. the average person in beijing, if you ask them what they think about the problems in europe, one guy said he does not understand. why should china use its hard- earned savings to help lazy people in europe whose incomes are 10 times mine. that is the dominant view in china. the government is hard pressed to explain to people what it means to help europe and why it is in china's interest to help. under the right conditions, like a friend or where the europeans are taking the bulk of the responsibility and helping themselves, a framework which is globally agreed upon, a framework in which the u.s. is involved either an explicitly or implicitly which is not discussed too much publicly today -- china will participate.

the imf vehicle is the most logical one for them. it gives a greater assurance and spread the burden around. it gives you a multilateral voice which is what they want. under the right circumstances, china will help out and cannot afford not to. europe is too big to fail. >> peter, what do you think? >> i agree with much of that. i think china would wish to assist in the rescue for the euro situation if they knew how. after the last summit in brussels, mr. klaus regling was sent to asia to explore the potential relationship of beijing and tokyo in particular and explore how they might

support it. the first port of call was basing any was received very -- was beijing, and it was not received very well by the minister of finance. he left for tokyo without a press release. evidently, the objective of these discussions was to see how willing the chinese would be to support the leveraging of the european stability fund from 440 billion euro to 1 trillion euro. the answer evidently was not now. the chinese or realized that bureau problem is not a -- the chinese realized that the european problem is not a financial problem. it is a political problem between north and south.

by making available hundreds of billions of dollars, china cannot solve the political dimensions of these problems. nonetheless, my sense is that under the right circumstances, the chinese would race to support your because europe is important to china. in our u.s.-centered world, we don't realize. europe is a more important trading partner than the u.s. and is an important source for technical assistance which almost all the member countries in the european union have technical assistance programs in china, which is not possible on the congressional side of the u.s. at the present time. it is very limited. europe is also the most important source for new technologies to china. that may surprise many in the audience. you may believe that, from the u.s. perspective,all that matters to china is the u.s. relationship. that is not true. ultimately they realize it is a regional political problem.

they have the financial means to come in in a big way. if there were to come in which is highly uncertain, most probably they would do it through the imf. i think everybody is encouraging the chinese to think in those terms. if in addition the chinese would wish to purchase equity and european banks or direct investment in european companies, they would do get directly. -- do that directly. they could use a two-pronged approach. go through the imf, and directly. >> when your found itself in -- when europe found itself in terrible trouble after the summit of october 27, president sarkozy of france picked up the phone to president hu jintao of china to ask for financial support. he did not call president obama.

he called president hu jintao. and my reading too much into this? does this marked a change in global international relations? is this the beginning of a new era? would any of you want to pick this up? hans? >> i think we are already in a new era. to go back to the slowdown in china, you should not think lightly about the impact of a slowdown in china. it is not so much because of the domestic health of countries but -- domestic consequences, but because of the effect on the rest of the world. the role depends on the chinese investor. when gdp slows down a couple

percentage points, that investment will slow down more. it has enormous consequences for the rest of the world and a high income countries. economic importance of china is already very significant. to your question on china and europe, there are three reasons for china to support europe. first of all, they are a big economic player. they will help to prevent a collapse of the rule of the -- of the world economy. if that is needed to prevent the collapse of europe, that is one reason for them to help. the second reason isthey want a broader international financial system and one that is just based on -- than one that is just based on the dollar. over the last five years, they have diversified away from the dollar into the bureau.

-- the euro. it makes a lot of sense to support the euro but have a more balanced system in the international financial markets. thirdly, it is a way to get a seat at the table for them. that is indeed what i agree about. they want to see something back for playing this through the imf. i think that is very helpful that this enormous economic power will have a bigger seats. as for the progress is slow. -- that is where the progress is slow. the established high-income countries are not bad willing to -- not that willing to give them a little more space. >> good. >> i think china is in an awkward position. the sarkozy phone call recognizes that china is becoming a global financial power and should be involved in these financial issues. from the chinese perspective, it is kind of embarrassing that they are being placed in such a focal point and do not like to

be drawn into a role where they are playing a role. -- playing a leadership role. they really want to be part of the group. there would like to play a more -- they would like to pay a more active role they have not sorted out the way to do that and the way the system would support their political philosophies. i think the sarkozy appealed generated negative feelings across europe. it gave a sense that china might want conditionality and what the form of condition would be? the form of this would not be in the same form as we know. they feel when they provide assistance is between friends and friends basically help friends. they are looking for something from europe in a way that would help them in terms of their standing in the global community.

in ways that are not explicitly tied to something like a european bailout package. >> zpeter? -- peter? >> the global shift is happening in as a result of the current situation. china is at the center of the east. it is by far the largest economy that will become increasingly prominent in the global economy. this is a painful shift for the western countries because it is happening today. i think mr. sarkozy's legendary phone call is an illustration of the reality of the power shifts of the financials. if you look at it from a global perspective, you might call the current situation the first crisis of globalization. in terms of production, there

has been a significant shift from the west to the east. the east now accounts for 55% of cost total global output which is still not accounted for more than 44% of global consumption. most of the consumption is still in the west and the production has shifted to the east. that is according to gordon brown. sorting out these production- consumption imbalances globally is the challenge facing the global economy. >> before i open it up for questions from the audience, i have one last question. it is about china-u.s. relations. we have this turning of europe to what is china, we also have the pivot of the united states announcing that theapec meeting in hawaii.

-- and announced at the apex meeting in hawaii towards asia. it seems like everybody is pivoting. [laughter] towards china to a degree. how do you read the state of u.s.-china relations? there is a tired dispute and a debate about automotive imports. what are the risks for china coming from the u.s.-china international political and economic aspects. >> let me start with your pettitte. -- pivots.

the european pet is a broadly -- pat is broadly -- psct theransr in china to the next generation of leadership next year. these political events will complicate what i would call the financial-economic discussion. it starts with the anti- currency bills which china feels negative about it and it shows up in trade protectionist action on both sides. the terrace on thev-8 engines -- tariffs on the v-8 engines going into china is being looked at negatively on the chicken feed to account for $300 million of exports to china. they are useless in the united states. china is trying to restrict those. china is looking for things to

hi cant at but not big issues. they are concerned that many -- china is looking for things that they can have it at, but are not necessarily a big issues. they are concerned that many negative things which emerged during this heated political process in china and the united states will cloud what i would call the natural trade relations between the two countries. where trade is a big issue today, the technology transfer, the tensions which are showing up in that area are more important in the future. the solyndra solar panel case and to what extent is being --

to what extent the u.s. should be promoting the development of corrine technology here, to what extent it is being subsidized and what extent is china subsidizing the development of green technology in china? the fall out i think will be a big issue. not only are many u.s. companies suffering but you will probably see 60% of the capacity of charm -- of china of being wiped out this coming year. it is a problem that aggravates producers and governments of both sides. they will say is a problem shared rather than one side or the other. >> china-u.s. relations? >> i think both sides realize how incredibly important this financial relationship is. it is not a subject on which a claim to have a lot of expertise. it is obvious that the

relationship is not only extremely important but extremely stressful. it is stressful because there is a basic lack of trust between the two giants. one of the biggest victims of the 2008 financial crisis i fear, is chinese respect for the american economic system and in particular the financial system. that is hard to measure. it is important because there has been a subtle shift in chinese perceptions of the united states prior to the crisis. that was never explosively -- explicitly expressed. the american economic model was the chinese model. china feels their model is not so bad after all. maybe they have already done

enough in terms of economic reforms. that is a very dangerous conclusion if it persists and takes hold of the decision- making process of the top leadership. i am still hopeful that is not the case. during my recent visit to beijing last week, i was actually a pleasantly surprised by how many people kept stressing the need for further financial sector reforms. that was a surprise to me. another encouraging element is that prior to my visit, you have fairly high level discussions in beijing. add to the american announcement that they would go forward with arms deliveries to tie one in -- taiwan in the beginning of the year, the chinese reaction was to let's cool it on the relationship. i believe that has to be a physical part of the -- pivotal

part of the relationship. fortunately, for reasons i don't understand, the situation moves in a positive direction and were -- and fairly serious discussions were helpful in beijing prior to my -- held in beijing prior to mind visit last week. >> i don't have anything to add? >> the trade frictions with disgust and the discussion on -- were discussed, and the discussion on the currency illustrate that the rise of china is not smooth. the fact that the united states has to give up some of its dominance is not the smoothest of processes. looking forward, that can become worse. it can go into more areas with more and more chinese companies wanting to invest in the united states which would be very natural process. there are other potential sources for disputes. if the chinese are competing more directly with u.s.

companies, you have more friction. if china becomes more dominant in the financial markets, you have more conflict. at the same time, we should not overemphasize the importance of the bilateral relationship between china and u.s.. sometimes we think that is the only thing that matters. how we have only two countries that are dominant. that is not true. we're moving towards a multi- country level. the importance of developing countries outside china is more important than all -- and -- all high-income countries together. it is important for china not to kids into focus on only as

relations with the united states. they have to think about the relation with the other emerging countries. >> excellent, i would like to open it up to the audience, please. introduce yourselves, affiliation, name, before you ask the question. the gentleman there in the middle. - >> thank you. >> please stand up and tell us who you are. >> thank you for organizing this time the event. i am with the chinese news agency. my question is related to the additional resources for imf. recently, if britain is reluctant to give its share to the 200 bureaus, european -- its share of two hundred billion euros.

european countries have not got the $200 billion euros for that prized. -- price. in china, a step in our step out for this particular time -- as for the united states, due to the strong opposition from republican senators, the have not given the 108 billion euros. bilateral loan promised. for countries like mexico and china, they have their cost and benefit analysis. is not related to the voting share. this is my first question and secondly, there are differences among the important players for countries like germany going to to the general resources. for countries like the united states, they want money going to special accounts to reduce the contagion across the imf

membership. how should countries seldom given problems. -- solve their differences? >> good questions. let me take a couple more and we will come back. after that, the gentleman who just stood up. >> thank you, with the the world affairs council. the panel basically things that a hard landing is unlikely in china but if there is a hard landing what would be the political impact on china? you already talked a bit about a lot of bankruptcies and with bankers is would come a lot of -- with bankruptcies would come a lot of unemployed people, this is a time about heavy-handed activities in china of various

kinds. would we see some political ferment in china? >> and then the gentleman who had stood up before? >> i am retired. when i see the topic you have chosen, global economic outlook, a wonder whether you can really? -- i wonder whether you can really excludeclued countries like brazil and india. you mentioned the multi-global development. i am wondering whether you can ignore them. i was also surprised that you did not at all, not once, mention employment. in the united states, there is no doubt that the next election will be heavily influenced by the quite significant unemployment. the shift in consumption and production, how come you did not also mention employment

patterns and changes, because they're so important? >> ok, let's take these three questions in reverse order. i will ask cons to answer the gentleman. -- hans to answer the gentleman. please. >> i could not agree more with the last question. indeed, a lot more aspects in the world economy than we were able to discuss here are important. i briefly mentioned the slowdown in brazil and india, but it is an important phenomenon in both countries, and increasingly important for the global economy. we have seen a sharper slowdown in the last four months, to a

large extent due to domestic policies and to a large extent due to a sharp increase in domestic mdemand in the time before. those are independent of the elements that interact with the world economy but that should be considered when we are doing our global economic prospects. the unemployment issue is also incredibly important. i think, even broader, when we're talking about high-income countries, we have to realize that we're not just talking about a normal recession or a normal downturn. there is a fundamental structural problem in the high- income countries of lack of growth. you need fundamental changes to come out of this situation. already four years we're talking about that it will take many years before you undo the damage that was done in 2008, which by

itself is a problem, but it takes not only many years, but also structural reforms, and the political system is not ready to take those steps. that is important and a very difficult problem. if you're looking at the middle east and what is happening there, of course, you have a link with unemployment, but you have a link with structural changes also. i agree, there is a lot that should be thought about. >> the link between economics and politics in china? >> well, the papers are full of the discussion of this issue. in one village, 13,000 residents are protesting in the top leader is trying to negotiate a fair outcome. this is indicative of what i call a very large increase in social unrest in china.

if you have a hard landing, obviously it would make things worse. if you try to ask what are the political economic factors which are likely to impinge upon politically related sensitivities or social unrest, i would probably cite a couple. if you look at [unintelligible] it is an example of the battle over land rights and how they are used, how they can be taxed, who owns them. it is a major issue in urban areas and china has not been able to deal with this. this is a source of many political disputes in china. the second issue is, what would happen -- there is concern over what i call disparities. there spacial in nature. the inequality that matters in

china is the urban-rural one. it is the highest in the world. that is a source of tension. i would say the third issue has to do with what i would call the social protection programs in china. they are not as strong as they should be for a country that has a communist-socialist ideals. if they have a collapse, you have to ask what will the tension be over access to resources? you're going to have a problem with localities for everyone. will inequality increase or not? it depends on who is hit. the social programs are in a state of development, and there

is some vulnerability there. >> specifically on the question of social unrest becoming more political in nature, in response to a hard landing -- i think that was your question. it is important to realize that there is a lot of social unrest in china today. how much of the social unrest is political in nature is hard to ascertain. my sense is that most social unrest in china is addressed -- is focused on local grievances, and fair compensation for land, local pollution, things like that. if the growth rate were to drop to a hard landing situation, 5% or so, it is very likely that social unrest would intensify in china and that it would assume a more political nature.

i cannot say what will happen after that. this government for 30 years has been able to maintain high costs, and social unrest is still on the rise. the micro blogging, which has become so prevalent in china in the last 18 months, on one hand has been a way to voice grievances, but on the other hand, it is also a safety valve on the system. people can express their fears more safely through the internet. it is very hard to say. my overall sense is that china is politically stable, much more stable than most people realize. >> let me take a stab at the euro question. the first point i want to make is that i think it is good news

that the eurozone has committed $200 million, if i remember correctly, just in the last few days to increase imf general resources. i think that is good news. the u.k. has not said that they will not contribute. they have said that they will consider the contribution early in the new year and they would prefer to do it in the context of a broader g-20 initiative. here again, the u.k. is a little bit the odd man out at the moment in europe, for all the reasons that you have been falling. -- following. indeed, the u.s. congress is undergoing difficult debates on the previous agreed expansion of

imf resources. i am, with one or two others, among a very small number of people who are actually daring to propose that in the event of an escalation of the european crisis that would threaten the stability of the global financial system, in that event , increased imf resources should be directed to europe, and that requires the u.s. contribution as well as a chinese contribution. there are very few takers on this view, but i guess that is why i work in a think tank. [laughter] i am paid to think, and i think that if italy cannot repay its debts, that is the united states

problem as well as germany's problem. therefore, that is a view i maintain, and i think the chinese to be following the same logic. there is a big coronation problem -- coordination problem, but in the end, you cannot say you will not rescue italy. it does not make any sense. sir. >> i work for the state department. i would like to ask a geopolitical question that i think next with everything you have been talking about. china, historic plea, has looked -- historically, has looked internally for domestic

problems. with the death of kim jong il and other pressures on the government, how is china going to react? obviously, they have huge domestic problems. they have money, but they spend a lot of money domestically. we are shaking them with what they see as an encirclement. how do you think the chinese leadership -- because they sit there and deal with these domestic issues, and then americans come in to redesign the architecture in the region, how are they going to deal with that? the chinese leadership is going to change too in the middle of all of this stuff going on globally. >> thank you.

we will come back to that. take a couple more. let's have the lady there at the back. 21st century's harold, of business newspaper. you said that china should provide assistance to help the european countries if conditions are right. you have said that one of the conditions ought to be that the u.s. contribute. so far, the u.s. government is reluctant to even talk about the possibility of providing resources, not to mention that already in the congress, already a few members raise their eyebrows even before this issue became a fully engaged issue. by question is, do you think now is the time for the u.s. to seriously consider providing

financial assistance to the european countries? >> the answer is yes. the lady here. >> american academy of diplomacy. first, thank you for this very valuable presentation. valuable presentation.