mr. secretary, if you would lead. thank you. >> your full testimony will be placed on the record. >> . -- thank i appeared to discuss the crisis in syria. and since that time our european friends have joined us impeding the financing of the regime's brutal crackdown. the e.u. has completed its implementation of its embargo on oil purchases from syria, halting a third of the government revenues. the arab league suspended syria's membership with many arab states downgrading diplomatic relations and freezing syrian bank accounts. the arab league put forth a political transition plan for syria. over 137 countries supported

the u.n. general assembly resolution condemning the syrian regime's violence in supporting the arab league's transition plan. more than 60 countries and institutions met in tunis as friends of the syrian people to endorse the arab transition plan, to demand an immediate end to the violence, and to commit to practical steps to address the syrian crisis. the syrian opposition articulated a clear, credible transition plan and addressed minority fears directly and convincingly. we announced $10 million in immediate humanitarian assistance with millions more from other countries. the u.n., the arab league have appointed a joint high-profile envoy, kofi annan, with a mandate from the arab league initiative and the u.n. general assembly resolution. and just this morning, the u.n. hue map rights council in geneva passed a strong resolution, the counsel still's fourth, essentially describe be the situation in syria as a

manmade humanitarian disaster. and we all know the identity of the man responsible for that disaster. these are just some of the examples of regional and international resolve. but nevertheless, as both of you have described, we've also seen the regime has intensified its vicious campaign of attacks against the syrian people. the situation is, frankly, hor rick. dari: horrific. including artillery fire against entire neighborhoods. and today's reports from homes are truly alarming. large numbers of syrians are living every day under siege, deprived of basic necessities, including food, clean water, and medical supplies. women and children are wounded and dying for lack of treatment. innocent people are detained and tortured, and their families left to fear the worst. yet, despite the regime's brutality, the people of syria

demonstrate enormous courage. their determination to continue protesting for their rights. mostly still peaceful protests is an inspiration and a testimony to the human spirit. now, the assistant secretary of state for middle eastern affairs watching the upheavals in the arab world, i'm humble enough to say that we don't know for sure when the tipping point, the breaking point, will come in syria. but it will come. the demise of the outside regime is inevitable. it's important that the tipping point for the regime be reached quickly because the longer the regime assaults the syrian people, the greater the chances of all-out war and a failed state. all of the elements of u.s. policy towards syria are channeled toward accelerating the arrival of that tipping point. as i refer to at the start,

through the friends of the syrian people group, we are translating international consensus into action. we are galvanizing international partners to implement more effective sanctions and to deepen the regime's isolation. we're supporting the arab league's and now the u.n. general assembly's call for an immediate transition in syria. we're moving ahead with humanitarian assistance for the syrian people, demanding that attacks cease, and access be granted. and we're engaging with the syrian opposition on their vision for syria's future. a proud and democratic syria that upholds the rights and responsibilities of all of its citizens, regardless of their religion, their gender, or their ethnicity. now, together we're working to persuade frightened communities inside syria that their interests are best served by helping to build that better syria. not by casting their lot with the losing regime, a corrupt

and abusive regime, which has been a malignant blight in the middle east for far too long. the goal of the opposition and the friends of the syrian people alike is as follows -- a syrian-lead political transition to democratic government based on the rule of law and the will of the people with protection of minority rights. i would like to close my opening statement by echoing this committee's raise of my fellow witness and friend, ambassador robert ford. ambassador ford's courageous actions on the ground in syria these past months have been a great credit to him, to the foreign service, and to the united states. he repeatedly put himself in harm's way to make it clear that the united states stands with the people of syria and their dream of a better future. and i want to thank this committee for its leadership in supporting his confirmation. >> thank you very much. mr. secretary, we appreciate that. ambassador ford?

maybe you shouldn't say anything. just stop. >> senator, mr. chairman, and ranking member lugar, senators casey and carden, corker, thank you very much for this invitation. to come and speak to the committee about syria today. i don't want to do a long opening statement because i'm hoping we can open discussion about syria, but i would just like to say how much i appreciate this committee's support during my time in damascus. several times we got messages from members of the committee's staff asking how we were doing, how my team was doing. i would just like to say that the team really appreciated those messages, especially during some of the tenser moments. it meant a great deal. i had a terrific team in damascus, and i really would like just to thank this committee for your support for

our efforts. beyond that, i think the statement that ambassador feltman made is quite good and i'll stop there. thank you. >> you can watch that hearing and lots more from this week from capitol hill in our video library at cspan.org. c-span's road to the white house coverage continues later today with a pair of events. here on c-span, we'll show you rick santorum speaking in ohio. that's live at 7:00 p.m. eastern. meanwhile, mitt romney is also in ohio speaking at a rally in cleveland. he'll be joined by his wife ann romney. that's live also at 7:00 on c-span ii. this with super tuesday right around the corner on march 6. seven states go to the polls, oklahoma, tennessee, georgia, ohio, virginia, vermont and massachusetts. while three states host caucuses, alaska, idaho and north dakota. so make cspan.org your

clearinghouse for panel discussions and social media comments. the candidates on the issue section, you can compare the candidates' pogs in their own words. >> louisiana governor is scheduled to reveal his proposal for balancing the state budget for the next fiscal year to date, a budget $900 million in the red. it's mostly cloudy now and 37 degrees at the airport. 38 at barksdale and 38 in menden. you're listening to news and weather station. >> this weekend, book tv and american history tv explore the history and literary culture of shreveport, louisiana. saturday on book tv on c-span ii, author gary joiner. the red river campaign of 1864. then a look at the over 200,000

books of the james smith collection housed at the l.s.u. archives. then a walking tour of shreveport and bossier city with neal johnson. and on c-span iii, sunday at 5:00 p.m. eastern, from barksdale air force base, a look at the base's role on 9/11, plus a history of the b-52 bomber. also the louisiana state exhibit museum. and from the pioneer heritage center, medical treatment and medicine during the civil war. shreveport, louisiana, next weekend on c-span ii and c-span iii. >> federal reserve chairman ben bernanke yesterday called on congress to avoid tax increases and spending cuts set to take effect in 2013 under current law. he testified before the senate banking committee reiterating his view that while economic growth and unemployment have improved faster than expected in recent month, a number of

factors such as the housing market continue to lower prospects for fast recovery. this is about an hour and 40 minutes. >> i call this hearing to order. today, i welcome chairman bernanke back to this committee to deliver the federal reserve's semiannual monetary report to congress. there are reasons to be optimistic about our nation's economic recovery. the u.s. economy has expanded for 10 straight quarters and private sector employment has increased for 23 straight months. employers added 2.1 million last year, the most since 2005. but there are also reasons to be concerned. such as a european debt crisis and the continued drag of the housing market on the broader economy. this committee has paid close

attention to these two issues and held numerous hearings. while i remain hopeful that we are moving in the right direction, we must continue to monitor the situation closely. on housing, there are a variety of policy proposals, some that do not require an act of congress that should be considered to improve the housing market. i want to thank governor duke for his thoughtful testimony on tuesday before this committee and the federal reserve's white paper on options to improve the housing market. an additional challenge, the sharp increase in oil prices has the potential to impede the economic recovery. americans continue to grapple with higher fuel costs when they fill up their cars or heat their homes. it is important that all markets are closely monitored,

and i look forward to hearing the views and how rising oil prices may affect consumer spending and economic growth. i appreciate all the fed has done to insure continued economic recovery. chairman bernanke, i look forward to hearing more from you on the fed's recent actions and possible future actions to protect our economy. congress also has an important role in making sure the economy continues to grow. and more americans continue to find the jobs they need. this week, the full senate continues to consider the transportation bill. this bill includes the bipartisan effort of this committee to update the nation's public infrastructure and create jobs.

i am also hopeful that the senate can find consensus in capital formation initiatives, the topic of another hearing next week before this committee, to promote job creation while protecting investors. with so many americans in search of work, it's not too late for bipartisan action to create jobs and promote sustainable growth. i look forward to your views, chairman bernanke, on these and other steps congress can take to improve our nation's economy. to preserve time for questions, opening statements will be limited to the chief chair and ranking member. however, i would like to remind my colleagues that the record will be open for the next seven days for additional statements and other materials. i now turn to ranking member shelby. >> thank you, mr. chairman. welcome again, mr. chairman.

since the federal reserve took unprecedented actions in response to the financial crisis, there's been a growing recognition that the fed needs to become more transparent. there was a time when central bankers met behind closed doors and stubbornly refused to inform the public of that -- of their decisions. those days are clearly over. the public now rightly demands that policymakers not only explain their decisions but also be accountable for their actions. this is especially true of the federal reserve, which thanks to that, now exercises even greater authority over the american economy and the lives of every american. to his credit, chairman bernanke has long recollect fiesed the need to modernize the fed. in his first confirmation hearing before this committee, he stated that he believed making the fed more transparent would, and i quote his words,

"increase democratic accountability, promote constructive dialogue between policymakers and informed outsiders and reduce uncertainty in financial markets and help anchor the public's expectations of long-run inflation." during chairman bernanke's last humphrey hawkins appearance, i noted that he has taken some important steps to improve the transparency of the fomc, including holding press conferences to discuss monetary policy. since then, the fomc has taken another step to improve transparency by adopting an explicit inflation goal of 2%. this is a significant event in the history of the federal reserve. as chairman bernanke himself has stated, an explicit inflation target could reduce the public's uncertainty about monetary policy and more effectively anchor inflation expectations. yet, it remains uncertain if

the fed's recently announced inflation goal will achieve these objectives. while the fed -- while the fed was establishing its inflation goal, it was at the same time communicating contradictory signals about its commitment to that inflation target. the fomc minutes reveal that chairman bernanke indicated that he believed the inflation goal would not represent a change in the fomc's policy. in addition, the fomc has stated that it believes economic conditions are, "likely to warrant exceptionally low levels for the federal funds rate at least through 2014." late 2014. in other words, the fed is signaling to market participants that it expects to continue its near zero interest rate policy for at least three more years.

i believe that begs the question, is the fomc focused on targeting low interest rates or its new inflation goal? if the inflation goal conflicts would keep interest rates near zero, which target will prevail? in other words y. should market participants have confidence that the fed is actually committed to achieving its inflation goal? and if the fed is not serious about achieving its inflation goal, how will the fed's credibility suffer when inflation rises above 2%? accordingly today, i hope that chairman bernanke can give the committee more insight into how the fomc's inflation goal will work in practice. i would also like to hear whether he believes congress should hold the fomc accountable for meeting its inflation goal. and while the chairman has taken steps to improve the transparency of fomc, the transparency of the board of governors appears to be getting worse.

a recent "wall street journal" article noted that the board has held 47 -- yes, 47 -- separate votes on financial regulations, yet they've held only two public meetings, mr. chairman. the article noted that there's been a steady reduction in the number of open meetings by the board since the early 1980's when the board had more than 30 open meetings. as a result, the fed is making sweeping financial regulatory policy decisions behind closed doors. this is inconsistent with, mr. chairman, your professed goal of making the fed more transparent. in another troubling new development, the fed recently decided to enter into the debate on housing policy. on january 4, the fed issued a white paper entitled "the u.s. housing market, current conditions and policy consideration." the stated goal of the paper was not to provide a blueprint,

but rather to outline issues and tradeoffs that policymakers might consider. however, subsequent actions by fed officials suggest that the fed has views about the policies congress should enact. just two days after the white paper was released, the fed governor gave a speak in which she advocated for specific housing policies and effectively asked the g.s.e. conservator to ignore his statutory mandate to conserve and preserve assets to the g.s.e.'s. that same day, mr. chairman, new york fed president gave a speech in which he argued that it would, his words, "to routinely reduce principal on delinquent mortgages using taxpayer dollars." these statements suggest to many that -- that the fed does not, in fact -- that the fed

did, in fact, have a blueprint there for housing market policy. that blueprint appears to involve using the taxpayer-supported g.s.e.'s as a piggy bank. in weighing in on housing policy, certain fed governors have begun to take sides in which should be a congressional policy debate, i believe. the fed's independence for monetary policy has always been premised on its remaining, nonpartisan and not advocating for specific legislative measures. the fed has been and should, i believe, continue to be a useful resource for information and analysis on the housing market. i believe it should not become an active participant in the legislative debate over the future of housing finance. i hope that the fed's recent for yeah into the housing policy will not become common practice. mr. chairman, i believe when you say that you believe the fed is most effective when it

is nonpartisan, transparent and accountable, i believe that's right. i'm interested in hearing from you today, mr. chairman, on how you intend to continue to improve the fed's performance on all three objectives. thank you. >> thank you, senator shelby. welcome, chairman bernanke. dr. ben bernanke is currently serving his second term as chairman of the board of governors of the federal reserve system. his first term began under president bush in 2006. dr. bernanke was chairman of the council of economic advisors during the bush administration from june 2005 to january 2006. dr. bernanke served as a member of the board of governors of the federal reserve system from 2002-2005. chairman bernanke, please begin your testimony. >> thank you.

chairman johnson, ranking member shelby and other members of the committee, i'm pleased to present the monetary policy report to the congress. i'll giving with the discussion of current economic conditions and the outlook and then turn to monetary policy. the recovery of the u.s. economy continues, but the pace of the expansion has been uneven and modest by historical standards. after minimal gains in the first half of last year, real g.d.p. increased at 2 1/3% annual rate in the second half. the limited information available for 2012 is consistent with growth in coming quarters at a pace close to or somewhat above the pace registered during the second half of last year. we've seen some possibility developments in the labor market. private payroll employment has increased by 165,000 jobs per month on average since the middle of last year, and nearly 260,000 new private sector jobs were added in january. the job gains in recent months have been relatively widespread

across industries. in the public sector by contrast, layoffs by state and local govements have continued. the unemployment rate hovered around 9% for much of last year but has moved down since september, reaching 8.3% in january. new claims for unemployment insurance benefits have also moderated. the decline in the unemployment rate over the past year has been somewhat more rapid than might have been expected given that the economy appears to have been growing during that timeframe at or below its longer-term trends. continued improvement in the job market is likely to require stronger growth and final demand in production. notwithstanding the better recent data, the job market remains far from normal. the unemployment rate remains elevated. long-term unemployment is still near record level, and the number of persons working part time for economic reasons is very high. household spending advanced moderately in the second half of last year, boosted by a fourth quarter surge in motor

vehicles purchases that was facilitated by an easing of constraints on supply related to the earthquake in japan. spending continue to be weak. real household income and wrelteds were flat in 2011, and access to credit remained restricted for many potential borrowers. consumer sentiment which dropped sharply has since rebounded but remains relatively low. in the housing sector, affordability has increased as the result of decline in house prices and low interest rates on mortgages. unfortunately, many potential buyers lack down payment and credit history required to qualify for loans. others are reluctant to buy a house now because of concerns about their income, employment prospects, and the future path of home prices. on the supply side of the market b. 30% of recent home sales have consisted of foreclosed and distressed properties and there's downward pressure on home prices.

more positive signs include a pickup in construction in the multi-family sector and recent increases in home builder sentiment. manufacturing production has increased 15% since the troth of the recession and has posted solid gains, supported by motor vehicle supply chains and ongoing increases in business investment and exports. real business spending for equipment and software rose at an annual rate of about 12% over the second half of 2011, a bit faster than in the first half of the year. growth, while remaining solid, slowed somewhat over the same period as foreign economic activity decelerated, particularly in europe. the members of the board and the presidents of the federal reserve banks recently projected that economic activity in 2012 will expand at or somewhat above the pace registered in the second half of last year. specifically, their projections for growth in real g.d.p. this year, provided in conjunction

with the january meeting of the fomc, have a central tendency of 2.2% to 2.7%. these forecasts were considerably lower than the projections they made last june. a number of factors have played a role in this reassessment. first, the annual revisions to the national income accounts released last summer indicated that the recovery had been somewhat slower than previously estimated. in addition, fiscal and financial strains in europe have weighed on financial conditions and global economic growth and problems in u.s. housing and mortgage markets have continued to hold down not only construction and related industries, but also household wealth and confidence. looking beyond 2012, fomc participants expect that economic activity will pick up gradually as these headwinds fade. supported by a continuation of the highly stance for policy. with growth projected to remain close to the trend, participants do not anticipate

further declines in the unemployment rate over the course of this year. looking beyond this year, fomc participants expect the unemployment rate to continue to edge down only lowly towards levels consistent with the committee's statutory mandate. in light of the somewhat different signals received recently from the labor market, and from indicators in final demand and production, it will, however, be especially important to evaluate incoming information to assess the underlying pace of the economic recovery. at our january meeting, participants agreed that strains in global financial markets posed significant downside risk to the economic outlook. investors' concerns about fiscal deficits and the levels of government debt in a number of european countries have led to substantial increeze in sovereign borrowing costs, stresses to the european banking system and associated reductions in the availability of credit and economic activity in the euro area. to help prevent strains in

europe from spilling to the u.s. economy, the federal reserve agreed to modify the terms of its lines with other major central banks and it continues to monitor the european exposures of u.s. financial intutionz. a number of constructive policy actions have been taken of late in europe, including the european central bank's program to extend three-year loans to european financial institutions. most recently, european policymakers agreed that a new package of measures for greece, which combines loans for greek debt held by the private sector. however, critical fiscal and financial challenges remain, the resolution of which will require concerted action on the part of the european authorities. further steps will also be required to boost growth and competitiveness in a number of countries. we are in frequent contact with our counterparts in europe and will continue to follow the situation closely. as i discussed in my july

testimony, inflation picked up during the early part of 2011. a surge in the prices of oil and other commodities, along with supply disruptions associated with the disaster in japan that put upward pressure on motor vehicle prices, pushed overall inflation to an annual rate of more than 3% over the first half of last year. as we had expected, however, these factors moved transitory and inflation moderated to an annual rate of 1.5% during the second half of the year, close to its average pace in the preceding two years. in the projections made in january, the committee anticipated that overcoming quarters inflation will run at or below the 2% level we judge most consistent with our statutory mandate. specifically, the central tendency of participants' forecasts for inflation in 2012 range from 1.4% to 1.8%, about unchanged from the projections made last june. looking farther ahead, participants expected the subdued level of inflation to persist beyond this year. since these projections were

made, gasoline prices have moved up primarily reflecting higher global oil prices, a development that is likely to push up inflation temporarily while reducing consumers' purchasing power. we will continue to monitor energy markets carefully. longer term inflation expectations as measured by surveys and financial market inkators appear consistent with the view that inflation will remain subdued. against this back drop of restrained growth, persistent downside risk for real activity and moderating inflation, the committee took several steps to provide additional monetary accommodation during the second half of 2011 and early 2012.thes to the guidance including in the post meeting statements and adjustments to the holdings of treasury securities. the target range for the federal funds rate remainsm and afford guidance language in the statement provide an indication

of how long the committee expects that range to be appropriate. in august the committee clarified the language, noting conditions including low rates and subdued outlook for inflation, were likely to work exceptionally low levels for the federal funds rate through 2013. providing a longer time horizon, the statement tended to put downward pressure on longer term interest rates. at the january meeting, the committee commended the guidons further, extending the horizon over which expects conditions to board exceptionally low levels of the rate through 2014. the committee modify its policies regarding the holdings of securities.

program that combines purchases of longer term treasury securities with sales of shorter-term treasury securities. the objective is to lengthen the average maturity of holdings without generating significant change in the size of the balance sheet. removing securities from the market will put downward pressure on rates and a conditions were supportive of economic growth than they otherwise would have been. to help support conditions in mortgage markets, the committee decided in september to reinvest principle it received rather than continuing to invest those securities as had been the practice since august, 2010. the committee reviews the size of its holdings regularly and is prepared to adjust those holdings to promote a stronger economic recovery in the context of price stability. before concluding i would like to say a few words about the stigma of longer run goals and strategy fomc issued in january.

the statement reaffirms our commitment to our objectives stability and maximum employment. its purpose is to provide additional transparency and increase the effectiveness of monetary policy. the statement does not imply a change in how the committee conducts policy. transparency is enhanced by providing more specificity our objectives. focmc judges that the rate is most consistent over the long run with its statutory mandate. while maximum employment stands at an equal footing with price stability as an objective, the maximum level of employment in the economy is determined by non monetary factors that affect the structure of labour market.

it is not feasible for any central bank to specify a fixed goal for the long run level of employment. the committee can estimate the level of maximum employment and use that estimate to informed decisions. fomc participants estimates had a central tennessee up to 6.0%. the level of maximum employment is up to to change. it can be affected by ships in structure of the comic and by a crist by shifts in the structure of the economic policy. the objectives of price stability and the climate are complementary. at present, the committee judges sustaining a stance for monetary policy is consistent with promoting both objectives.

in cases where these objectives are not complementary, the committee falls a balanced approach taking into account the magnitude of deviations and employment for levels judge to be consistent. thank you, and i am pleased to take your questions. >> thank you for your testimony. we will now begin the questioning of our witness. will the clerk put five minutes on the clock for each member. what are the reasons for the current pace of modern expansion? is the recovery happening as you would expect following a major financial crisis, or has the great recession led to any

permanent adjustments in either output or unemployment levels? >> normally when an economy suffers severe recession of the recovery is a comparatively strong prepared a sharp decline tends to have a stronger expansion. our economy has been hit by two unusual shocks. one is the housing boom and bust, and we know from history that housing busts tend to take some time to be offset, in particular since housing is an important part in expenses. we also had a financial crisis, and research has pointed out that historically recoveries

following financial crisis tend to be somewhat slower than they would be. as housing problems are still important financial conditions including stress is coming from europe are still being a drag on economic activity, we have had a slower recovery than we would have anticipated. nevertheless we have had growth since 2009 and unemployment has come down, but not as strong and the improvement is not as much as we would have liked. >> u.s. consumers are deleveraging, and fiscal policy

as we consider economic growth, should congress enact drastic spending cuts this year or would a longer time horizon make more sense economically? could provide sustainable growth long term? >> as the senator pointed at, the reserve does not make recommendations on specific fiscal policy decisions. in the broad context, let me make two points. the first is that as i have said on a number of occasions, united states is on an

unsustainable path. will face fiscal and financial crisis will be bad for stability, and it is important we plan now for a long term improvement in our situation in terms of long-term sustainability. at the same time it is important we keep in mind that the recovery is not yet complete. unemployment remains high. under current law, on january 1, 2013, there will be a major shift in the fiscal position of united states, including the expiration of a number of tax cuts and other tax provisions, together with the sequestration and other provisions that together will create a very sharp shift in the fiscal stance of the federal government. i think that we could achieve

the very desirable long run fiscal consolidation and we definitely need and we need to do soon, but we can do that in a way that does not provide such a major shock to the recovery in the near term. i am sure congress will debate the details of this over the next year, and try to take into account both the need for protecting the recovery at the same time ensuring that we do achieve fiscal sustainability in the long term. the second part of your question, mr. chairman, we are seeing manufacturing and industrial production has been leading the recovery. housing is lagging. generally, it is automobiles being part of manufacturing, but it is hard to predict what sectors will have the greatest growth in the long term.

you asked me earlier about the potential growth. we did not see at this point the very severe recession has permanently affected the growth potential of the u.s. economy, although we continue to monitor productivity gains. one concern we do have is the fact that more than 40% of the unemployed who have been unemployed for six months or more, those folks are leaving the labour force or having their skills erode it, and although we have not seen sign of it yet, that situation persists for much longer, then that will reduce of our great process going forward. >> i have been working with my colleagues in the senate to move forward a set of proposals to update security laws and make it easier for startup and small

businesses to raise capital, while maintaining critical investor protections. do you generally agree that these types of proposals will help create jobs and strengthen our economic recovery? >> i do not know the specific true that start of companies, companies under 5 years old, create a substantial part of the jobs that are added in our economy, and if there is anything that can be done to encourage start-ups, whether it is reducing regulation or providing other kinds of assistance, congress makes all the decisions about the specifics, but again, promoting start-ups is an important direction for job creation.

been quite weak during the expansion is one of the reasons that job creation has lagged behind the usual recovery pattern. >> senator shelby. >> thank you. chairman bernanke, at our last hearing right here on the european debt crisis, i asked the federal reserve witness about the exposure of our largest banks to european financial system. the fed has yet to respond to my request for this information. will you provide the committee with this information regarding the individual exposures of our largest banks to europe? >> of course, supervisory information as legal -- has legal to work with the committee to provide the information.

>> we need to know what is going on regarding the exposure of our banks to the situation. >> we will make sure you have the information you need to make the decisions. the sec has provided guidance to banks to provide public information on a quarterly basis about their exposures. yes, we can work with you to help understand everything you need to know to make good decisions. >> are you concerned with exposures of our largest banks to europe? that we're paying a lot of attention to it. our sense is that -- including asking banks to stress their european positions in their current capital stress tests they are doing now -- our sense is that correct exposures of u.s. banks to sovereign debt in europe, particularly that of the weaker countries, is quite limited, and is well hedged, and those hedges are pretty

good hedges. the counterparties are diversified and strong. our banks are exposed to european banks and they are major trading and financial partners. they have been working hard to provide adequate hedges. it is important note that if there is a major problem in europe, there are so many to your channels where that would affect the stability of the system that i would not want to take too much comfort to that. >> would you explain to the committee and to this member, situation as far as credit defaults swaps and why they are not deemed to certain nations to trigger the action on that. what is going on here? is this a government intervention in the market?

>> no, there is a private body which makes determinations as to whether a credit event, a credit default has occurred. in the case of greece, thus far there has been a private sector involvement, an agreement with private-sector bond holders, and there has also been an exchange of bonds by ecb and other government agencies with greece that is protections to the ecb for its creaky debt holdings. the news this morning was that those two events did not constitute a credit event. however --

dynamics there? why did it not? >> their view is that so far the negotiations have been voluntary. the possibility exists that the greek government has retroactively created a collection active clause which it could use in the future to force other private sector investors to take losses even if they have not agreed to this voluntary deal, and in that case the isda will look at it again. that has not occurred yet. >> i want to go into one other thing. the dodd-frank act created a new position of vice chairman for supervision, which is subject to senate confirmation. almost two years later the president still has not nominated anyone this position. who is currently fulfilling those duties if they're being done?

>> they are being done, and the duties are distributed across the governors, but the point person is the head of the bank's supervision committee and has testified before this committee on regulatory matters. >> do you believe that position should be filled? >> congress created the position and i would like to see if filled out and i would like to see the board filled as well. >> my last question has to do with the balance sheet. how are you going to shrink that? i know you are not look to shrink it now, do you have a plan? we have talked about it and little bit at times, but that is a huge balance sheet to start

shrinking, and now is not the time to shrink it now. how are you going to do that? >> senator, we have provided in the numerous occasions and exit plan. \ in the minutes we provided an agreement about how we would proceed. in the short term, we can both allow securities to run off, which we have been reinvesting at this point, and we can reduce the impact of those securities on the economy through various measures and keeping the reserves locked up. over the long term, we will have to sell those securities. our goal is to get back to a more normal size balance sheet

consisting only of treasury securities. >> thank you very much, and let me add i thought the federal zpdf was veryte paste p analytical. thinking back to such an analytical paper might have been useful to us in 2006, 2006, or 2007 to allow policy makers to work with the housing market. it is consistent with the responsibilities that the federal reserve must display. i think it was appropriate. one of the issues raised which i might elaborate on his there -- is there are short-term programs that might in the long term produce more returns, enhanced

value to the government and taxpayers, but if not pursued, ironically we could have a further deterioration in the profitability aspects of these gse's. can you elaborate? >> i would like to mention that the speeches given by the president do not represent official fed positions, and the fed members often give their individual views. one point we make is that in a typical negotiation between a bar work and a letter under -- and a bar or or a lender - -a borrower or lender taken on a narrow economic basis, which

makes sense. in the current situation it is important to recognize that the problems and housing sector, including massive numbers of foreclosures, whole neighborhoods with many empty houses -- all of those things have implications for the neighborhood, the community, and the national economy, because the weaknesses in the housing market are slowing the pace of recovery and from the reserve's point of view are muting to some extent the impact of our low- interest rate policy, because low rates did not help if people cannot get mortgage credit. the benefits of actions to improve conditions in housing park -- market go beyond those of the lender and the borrower. >> one other point, we have several challenges facing us

economically as you have illustrated. one is the housing market. the other is potential energy spikes. it seems we have much more ability to influence effectively and correctly housing policy than international energy prices, and as a result, i think it would be a good investment of our time and effort to do so. is that a fair comment? >> if there was a goal, it was to encourage congress to look at these issues, which represents one of the directions whereby we could be decent something on a policy basis that might help the recovery be stronger. >> let me turn to the issue of the fall or rule -- the volcker rule. european governments are urging their equities be treated preferentially even though under the basel rules, there is a

risk rating to sovereign debts. so the greek that has no risk? >> the way it has been handled by the authorities is to force the banks to write down their sovereign debt, and that affects the amount of capital they can claim. the levelition, le quippe for capital, liquidity is substantial compared to ours. is that also accurate? >> that is low work? -- lower? at the moment there are several issues. we agree to the same set of rules, the basel iii rules.

there are two questions. one has to do with the fact that the ratio of risk-weighted assets to total assets is lower in europe than in the united states. our european supervisors allowing lower interest weights to be put on comfortable assets? there's a process under way to verify they are operating comparably. the other issue is the basel rules have not been implemented. there is a european union directive in process which we are looking at carefully. it does not completely -- is not completely consistent with the bottle -- basel ii agreements. we want to make sure that the

rules in europe adhere to the agreement we signed on to. >> in the context of the volcker rule, you're looking at differentials between european treatment of sovereign debt and the way the rule was treated. >> the issue that has been raised is because there is exemption for u.s. treasuries but not for foreign sovereigns, they believe they are being discriminated against and that the rule might affect the effectiveness of their sovereign debt market. we take this seriously. barrett in close discussion with those counterparts, and we will look closely to see if changes are needed, and we will do what is necessary. >> thank you. >> chairman bernanke, i read the comments irregulars were not be

ready to issue the rule but the deadline of july. i think this is becoming more and more self-evident. i assume the reason for that is because you have 17,000 comments, you have issues that were raised by senator reed, with regard to action of other markets in the world to what we made do with that rule, and we need to conduct an analysis which is likely not to happen by the time we hit the deadline into line -- in july. is that correct? >> yes, it is a multi-agency rule. we will be working as quickly as we can to get it done. >> i appreciate that. the question i have is as i read the statute, there is a deadline in july for the agencies that act, but if they do not act, the rule, whenever it is, goes into effect. and the market participants are understandably concerned about

what they should do on july 21 if the agencies have not been able to coordinate effectively and promulgate a rule. the question is, would it not be helpful if congress were to correct that aspect of the statute and make it clear that on july 21 we are not the have a volcker rule that goes into effect that does not have the cost-benefit analysis and fine- tuning the agencies are now trying to get it? >> we do not expect people to date -- to look a rule that does not exist. there's a two-year conformance ruled that the last two years from july of this year before they have to conform to the rule, and we will certainly make sure that firms have the time they need to respond. i think two years will be adequate in that respect. >> thank you. i would like to shift during the

remainder of my questions to the topic of a question that the chairman asked about, whether it is time for us to begin more aggressively controlled the spend-out rate and congress' spending habits, or whether we need to hold off. as i understood your response, you indicated in january we are going to see tax cuts expire and we are going to see the sequestration impact, a number of other things that will happen. i believe your answer was that soon we need to take some action, and i want to pursue that with you. we have been having this debate in congress now for a number of years, but i want to go back to the commission that issued its report over two years now. in that report, it was recognized that there needed to be an easing into the aggressive control spending in

washington, and immediately following that, we had the debate over the $800 billion stimulus bill, where the argument was made it is not time to control spending yet. we need another year or two before we get into the control of spending, and between then and now we have put another $5 trillion on the national debt, not to count the trillions that have been used to help sustain economic activity. and whether we agree with them or not, we still see the argument being made? that is not time yet for us to become aggressively engaged in controlling the spending access is in washington, even though we have over 40 cents of every dollar board today. i know you did not engage in policy, i have already tinto into those waters. when will it be time it is not

time now for us to start aggressively dealing with the fiscal structure of our country on the spending side of the equation? >> the fed's purchase of securities reduced the deficit because of the interest. the two things are not incompatible. you can moderate the near-term actions tohyou take put us on a path. you have not taken any actions yet, you have not pass the law that will bring us on a glide path to sustainability. one concern is a 10-year budget window may constrain some of the things that congress should be thinking about because many issues we face are multi-decade

issues. i think he could take strong actions that will be taking place over time. i think about the early 1980's social security reform that face in a bunch of things, including the late retirement age, so you can take those actions, lock them in, but it would not necessarily have quite as big an impact as the big shock that would otherwise occur next january 1. i am not saying you cannot do it and take serious action. i think you should balance those objectives. >> thank you. i take it you are saying we need to adopt a long-term plan to deal with this crisis. >> absolutely. >> i would observe at this point the budget's being proposed simply go the other direction. other than the paulson commission, we have -- the

bowles simpson commission, we have not considered it. >> thank you for your service. i read your statement, and i m obviously creating jobs -- and obviously creating jobs is the single most important issues in this country, for families, and for a large part our economy. without income there is not the opportunity to make that demand. how would you describe how are the latest programs of quantitative easing an operation twist helping us get to a more robust growth? >> it is difficult to figure out exactly how to attribute the progress we have made to monetary policy, to fiscal policy, to other sources of

growth. if you look at the record, if you look back at the quantity the easing in november, 2010, the concerns at the time word that it would be highly inflationary, it would hurt the dollar, it would not have much effect on growth, etc., but since november, 2010, where we have had the qe2 and the so- called operation twist, we have had about 2.5 million jobs created. we have seen big gains in stock prices/ the dollar is about flat. minus oil haves- oi not changed.

i think -- and one other point is that in november, to a dozen 10, which had concerns about deflation and we have conrad of those and brought ourselves back to a more stable inflation environment. the record is positive, acknowledging you cannot untangle the factors, but it is a constructive tool, but monetary policy cannot do it all. we need to have the policies across the board, including housing, fiscal policy and so on. i think looking back those actions played a constructive role. >> let me go to the point you just made on housing. mr. dudley, the president of the federal reserve bank of new york, in a recent speech in new jersey talked-about borrowers

who are under water. he said without a some event turnaround in home prices, a substantial portion of those loans will ultimately default. do you agree with his analysis? >> the federal reserve does not have a position comparable reduction, and it is a complicated issue. in terms of avoiding delinquency, a reasonable debate in the literature about whether reducing principal or reducing payments is more importance. that is one issue. in terms of issues like mobility to sell your home and move elsewhere, there are alternatives of principal reduction included short sales. there are circumstances where principal reduction would be constructive and would reduce --

and be cost effective in terms of reducing default risk and improving the economy, but i do not think there is a blanket statement you can make. >> right now fannie and freddie mac are currently owning or guaranteeing more than 60% of the mortgage market. do you think there regulator at the fha has been aggressive enough in using their market power to stabilize the housing market? >> he estimates judgments about the effect of those policies on the balance sheet of the gse's and whether they meet the requirements, and he has make judgments about that. i would suggest that a variety of different tools can be tried, you can make a mix of different things, and the gse's are looking to do that. we see an experimental program. they have done harp 2.

there is a big element here of trying to figure out what works best, and fha and the gse's may not all agree on their axes, but i think they are trying some things, and we will see what benefits accrue. >> there are two ways of preserving the corpus of your interests. one is through foreclosure. the other is through looking at the whole process of refinancing and where appropriate the private sector has taken about 20% of its portfolio on the banks and said it makes sense to do reductions in principal. i just worry that our whole focus seems to be in those entities, preserving the corpus through foreclosure, which at the end of the day as a whole other destabilizing effect on

the marketplace. >> i agree. foreclosure is costly for the community and the country. what i was discussing is not whether foreclosures are a good thing. i talked about what is the best way to address the foreclosure issue. >> thank you for being here. we alternate between the house and senate going first. we thank you for being here today. hone in on the voclker rule. with the volcker rule, we understand it is passed. why were treasuries and mortgage-backed securities excluded? it is odd those would be the

instruments that it did not apply to. >> congress made that decision. i assume it had to do with desires maintain debt and liquidity of the treasury market. >> by that statement you made, we have taken away the depth of liquidity and we have had an outcry from foreign governments and middle american companies that realize they are not allowed to have that depth of liquidity. you focus on economic issues. you are a renowned economist. it is something that is good for our country to lose liquidity with those of other instruments, or would we be better off putting treasuries and securities on the same basis and moving them into the volcker arrangement? >> there is a trade-off. there is gone to be some marshaling effect from volcker on markest. -- markets.

there is a market making exemption, as you know. >> you think market making is a good thing for our country? >> i do and it is exempted from the rule, but we have to draw that line in a way that does not inhibit good market making. >> i have talked with folks who are advocates for the volcker rule, and we have tried to come up with a solution to allow a print market making to take place by the regulated entities. some people we have talked to actually want to see the volcker rule used as a way to get to class-to go through the back door. would you believe that is not a good thing for our country? >> i have not been an advocate anglass-stegall, because that

was not helpful. investment banks were a big source of the problem by themselves, separately. again, there are trade-offs. the goal of the rule is to reduce risk taking by institutions, and we are trying to do that in a way that would permit -- would prevent hedging. >> when you have a rule -- you know it when you see it, would it be helpful if congress clarified the fact that market making is not intended to be overturned by virtue of the role, that market making is a very valid and a proper process for these regulated entities, and do you think that might help if you have had these comments,

regulators better try to conclude, each with a purse by very constituencies. would it be helpful to you if we clarified that we as a congress believe the market making should not be negatively impacted by the volcker rule? >> fed pushed for the exemptions, and the statute is clear that market-making is exempt and we want to do our best to make them operational. i understand and hear your intent, that market making and packaging should be excluded from proprietary trading. >> i think we are on the same page as it relates to the rule and we did not want it to the damage to the depth of liquidity unnecessarily for lending activities in this country. is that correct? >> yes. >> and we are on the same page is a legitimate concern for other governments like canada,

japan, to say this is an incredibly unfair for the largest economy in the world to place a tremendous bias on the quiddity of treasurys and mortgage-backed -- on the liquidity of treasurys and mortgage-backed securities. >> we are in conversations with our partners there. there's one difference which is the primary markets japanese debt, not broadly affected by the rule, i agree we want to make sure we are not doing unnecessary damage to those markets. >> do you agree that the zero weighting that we place with this rule, and we have not been able to deal with our longer- term issues with the basel

rules in place -- should there be a zero-risk weighting for sovereign debt? we have seen big risk out there. >> none of those securities is riskless. in the case of non-u s west we have approached this in various ways. in the case of non-u.s. sovereign debt, europeans have asked banks to write down the value of the debt, subtracted one for one, and in the united states with been -- we're not just relying on capital ratio. we are looking at their european holdings to make sure they are safe and sound. we're not ignoring that. in the case of u.s. treasurys, our assumption is the biggest source of risk is interest rate

risk. under default a whole system would be in enormous trouble. we ask banks distress' test their interest rate risk, including their risks of holdings of treasurys and municipalities and so on. >> mr. chairman, i think you, and you have received criticism over the paper, and we had a brief conversation about it, and you shared those were not your ideas necessarily. i hope in your core area, since the fed has that act dig -- active in giving advice, i would love to see a white paper on the fact of the financial regulations we just pass on our country, and i do not know if that would be forthcoming, but i would suggest it would be very useful to us as we try to work to these details. thank you for your testimony. >> thank you, mr. chairman.

chairman bernanke, this is a question which is a fallout on it -- a followup with your question from senator crapo. in your testimony you note there has been some modestly encouraging data recently, including slightly better performance of the labour market, improved concern -- consumer sentiment, and some increases in manufacturing. but the signs of economic recovery are not necessarily reflected yet in the experiences of our workers and their families in the communities. putting aside the question of the eurozone, what possible set box -- what possible you the most with respect to

risks in our economic recovery? could thissend the economy back into a slowdown? >> let me just say first that one of the points that i talked about in my remarks was there is still a little bit of a con tradition between the improvement in the labor market and the speed of the overall recovery in terms of growth. i mentioned in come had been flat for consumers in 2011. it was a little bit less than 1%. you have consumption spending growing relatively weekly. you have fiscal issues that are hanging over our heads. in order to make this a sustainable strong recovery, we need to have declines in

unemployment and strong growth and demand and production. i think that is something we have to watch carefully. i do have to mention europe. i think that is important. the other is oil prices. we have seen a number of movements up and down in energy prices. to some extent, a little bit of the movement in commodity prices is essentially inevitable because of the economy is growing, the demand for commodities goes up. when you have shocks to commodity prices are rising from geopolitical events, those are unambiguously negative and are bad for households and the broader economy. housing remains a difficult area. stabilization.

sense that the housing market has stabilized, they will be much more willing to buy. banks will be more willing to lend. right now there is uncertainty about where the housing market is going. i guess, finally i would mention fiscal policy, which both in the short term in terms of where fiscal policy will go over the next year and in the long term in terms of whether congress and the administration will work together to have a sustainable path, i think both of those things are creating uncertainty and concern that will pose some risks to the economy. there are a number of different things. overall, there has been some good news. that is welcome. >> thank you for that response. as you know, i am most concerned with the well-being of consumers. in the current economic

climate, consumers are confronted with difficult financial decisions. many homeowners face possible foreclosure. the average credit card debt of a resident is the second highest in the country. we know that by saving, individuals can protect themselves during an economic downturn. we also know that our slow economic recovery is partially due to low consumption of consumer spending. my question relates to the intersection of these two factors. how can we continue our efforts to promote economic recovery? at the same time, encourage

responsible consumer behavior and financial decision making? >> that is a very good question. part of the problem now is that the total demand in the economy is not adequate to fully utilize the resources of the economy. that is why we talked about the need for greater consumer spending and greater investment and so on. of course, we want consumers to be responsible as well. they have in fact raised spending rates and reduce leverage. all that is positive. demand comes from places other than consumer spending. it can come from exports. those are areas where higher investment creates more capital and potential growth in the future.

it reduces our trade deficit. it makes us more competitive internationally. those are alternative to consumer spending to provide growth. there is also a bit of a paradox that consumer spending collectively if it generates more hiring and wage income can actually in the end lead to sounder consumer finances than the alternative. if the economy is growing strongly and income is being created, consumers will actually be better off. confidence is really important. if people are confident about their income prospects, it can be a self fulfilling prophecy as they go out and become more confident in their purchasing habits. of course, this all relates as you have often mentioned to

financial literacy and the ability to make good decisions. we want people to make decisions appropriate for their own needs and stage and lifestyle, for their retirement and those things. that remains an important goal even as we worry about trying to get the economy back to full employment. >> thank you very much, mr. chairman. >> you mentioned several times the before us to have a plan for sustainable fiscal policy. would a plan that balanced our federal budget within a 10-year window -- would that be what you consider a reasonable transition towards good fiscal policy? >> i would go for -- at a minimum i would aim at the next 10 or 15 years eliminating the imary deficit. that is everything except

interest payments. wants to eliminate the primary deficit so current revenues are equal, that means the ratio of debt to gdp will stabilize. if you go beyond that, you start to bring the debt to gdp ratio down. the other thing i would say as i mentioned earlier, many of the things that are going to be problems are kicking in after 10 years. i hope congress will take a longer-term horizon than that. >> in my conversations with some of your governors and some of the central bankers around the world, there seems to be a broad consensus that there is not the political will, here, europe, or many places to get control of fiscal policy. much of our policy is driven by trying to clean up the miss that policy makers may.

you may not want to comment on that, but quantitative easing, for instance, is dealing with the tremendous debt we have made as policy makers. what we see in europe today dealing with a debt from a monetary policy rather than fiscal policy. my concern now -- i know you meet with central bankers all over the world regularly. as i see what appears to be a coordinated increase in money supply here, europe, and other places. it cannot be formal, but there appears to be an effort to keep relative values of currencies the same as we increase our monetary supply. i would just love to have some insight be on the individual policies here.

is it released within -- is it true a lot of monetary policy is driven by irresponsible fiscal policy from policy makers? is there an effort for central banks around the world to work together to deal with that? >> i would say no to both questions. our monetary policy is aimed at our dual mandate. we're trying to set monetary policy at a setting that will help the economy recover in the context of price stability. i think it is interesting other countries are following our basic approach. it is because they face similar situations. weak recoveries, low inflation, and the fact that interest rates are close to zero. some of these quantitative easing tight policies are the

main alternative wants to get interest rates close to zero. this is not an attempt to cover up or clean up fiscal policy. on the other hand, the concerns that people express spoke about the united states and other countries about the political will and the ability of the political system to deliver better results over long-term, i think that is an issue a lot of people are concerned about. i have noted in previous occasions the reason s&p downgraded the u.s. treasury's last august was not because of the size of the data because they took the view that our political system was not making a long-term fiscal plans. i hope we can prove them wrong. this january 1 event, if so many things left unchanged, i hope that will be a trigger

point to force congress to say, how are we going to solve this problem. >> my concern is, i really do believe we would not have 16 trillion dollars in debt if we had not been irresponsible as policy makers over many years. i am not blaming them on any president or party, but it is clearly a problem. as it has been pointed out by "the wall street journal "today and other magazines, a loose monetary policy is compounding the potential problems in the future. i think as senator shelby talked about, the need for transparency and the need to understand where we are heading

with this is pretty important to us as policy makers. we are on an unsustainable path. it hurts me to hear you say in the 10-20 years we need to bring it under control when the analysis i have seen of worldwide available credit suggests a five-year window may be tough for us on our current pace as far as borrowing the money. we seem to have a compound in growing problem and not a sense of urgency. it seems to be potentially making that much worse. i will let you commented that will yield back. >> i would only say that i do not mean action should not be taken until 10-20 years. the plan should be a long-term plan.

looking at only 2013 will not be helpful. you need to look at the whole horizon. >> thank you, mr. chairman. thank you for being here today. i wanted to focus my questions on the economy since you actually know what you're talking about. before i do that i want to go back to an answer he made earlier on interest rates. you said you thought the risk of default was not a serious one. the risky are worried about is interest-rate risk for our financial institutions and the economy. can you talk a little bit more about that? what the effects would be of a more normalized interest rate than the one we have today. >> both short-term and long-term interest rates are quite low. our current expectation as we said in our state and is the short-term rate will stay low for a good bit more time.

eventually at some point, the economy will strengthen. inflation may begin to rise. the fed will have to begin to raise short-term interest rates. at the same time, stronger economic conditions here and globally will cause longer-term rates to begin to rise. that is a good thing. that is a healthy thing to see as a economy returns to normal. depending on how your portfolio is structured, you could have the risk of losing money on holdings, bonds. we just want to make sure banks understand their risk. we want to make sure they are well protected and hedged against whatever course interest rates might take in the future. eventually they will begin to rise.

we just do not know when. >> the center made the point earlier that we have seen some economic growth, but it has not hit home in many ways. i have a chart -- i will carve it in the air for you. the top line is gdp growth. what we see is that our gdp is higher than it was before we went into the recession. that surprises a lot of people when they hear that. productivity has risen mightily over the same period of time because of our response to competition from abroad and the use of technology. then the recession itself better of the productivity index straight up. firms are trying to get by with your people. we are producing the economic outlook with 24 million people

that are either unemployed or underemployed in the economy. we are stuck with a gap of economic output and productivity here and wages and jobs here. can you help me think about the kinds of things that would begin to lift the medium income curve in the right direction -- the job curve in the right direction? i encourage you to think broadly about that -- education or immigration -- whatever you think will help. >> unlike the political stuff we are all talking about in washington that does not make sense to people at home, that is the issue -- >> let's not belittle the impact of getting back to full employment. that would be very helpful. there is a couple of interesting

things. one is the profit share of gdp is unusually high. it is a bit of a puzzle. it may have to do with globalization or the fact that a lot of profits are earned overseas rather than domestically and so on. i think more generally, there is a whole raft of issues associated with globalization including trade competition and the fact that low-skilled workers are effectively competing around the world. advance in new technology provides a lot of benefits to people with greater education and training. it creates discrepancies between them and people with less training and education. from that, there are not a lot of good answers, but certainly the most basic thing is training and skills.

those are highly rewarded in our society still. the low-skilled workers are effectively competing with low- skilled workers globally. it is very difficult for them to earn high incomes. >> i am out of time. i realize that. the worst that unemployment not for people with a college degree was 4.5%. there is a lot can learn from that. >> thank you, mr. chairman, for being here. i am concerned about some of the negatives that could clearly grow over time about the zero interest-rate policy. what would you consider the list of present or potential negatives? how do you go about monitoring those 2 always determine whether this continues to make sense in your mind?

>> a number of issues have been raised. when that is often raised is the return to savers. a low interest-rate penalizes savers. we take that into account in our discussions. as i mentioned yesterday, of total household wealth, less than 10% is in fixed income instruments like cds or bonds or so on. most wealth is and other forms like equities, small-business ownership, real estate, etc.. our efforts to strengthen the economy will increase the returns and value of those assets. our activities are raising household wealth overall even if they are reducing the interest rates.

of course, keeping inflation low also helps in that respect. the second issue we hear about his pension and insurance. that low interest rates increase contributions that those companies have to make. again, we have had many conversations with those folks about these issues. i would say it is a serious issue and one we would look at. these pension contributions are significant, but not massive. on the other side of the balance sheet, companies have to invest in the economy. once again, a stronger economy produces higher returns. the third issue that is very tricky has to deal with creating a financial bubble. people have different views about that. our view is basically that the first line of defense against bubbles should be what is called

macro potential supervision. there should be supervisory approaches looking at what happens in the system and make sure protections are a strong as possible. we have greatly upgraded our ability to monitor the financial system since the crisis. we're both trying to identify potential problems and making sure the institutions are strong so if there is a problem, they will be able to withstand it. if those things do not seem to be working, we prepare to take that into account in monetary policy. those are the issues, and we are aware of them. >> one thing that might of been first on my list is commodity prices. a weak dollar pushing up commodity prices. of course now, the most obvious example is gasoline prices. briefly, how would you analyze that and what does that start becoming such a negative that you rethink this?

>> i think two was low interest- rate policies realistically would affect commodity prices would be through weakening the dollar. the dollar has been pretty stable. it has not moved much since november 2010 when we introduced qe2. the second is by creating growth here and internationally. it increases demand for commodities and raises prices. if you want to have a growing economy. those two things have not been a big problem. i think particularly, if you look at commodities, the one commodity that has been particularly troublesome has been oil. currently, it is quite obvious there are a number of factors affecting the supply of oil including concerns about iran, supply issues in africa and so on that are contributing to the increase. >> the most of the quantitative

easing announcements have been more or less coincided with increases in oil prices. are you saying that is largely a coincidence or not? >> that is now entirely a coincidence. first of all, if you look over long periods, it is not quite as close a correlation as you might think. i think part of the reason again that there is a coincidence is because of the extent that monetary policy is structured in a way to increase growth expectations. that feeds into commodity prices through the demand channel. that is one like that i do agree exists. >> if i can just wrap up, at what point particularly with regard to oil -- at one point with that factor driving up prices -- at what point is driving up prices that you would pause in terms of this 2014 interest-rate policy?

>> we will always keep looking at it. our analysis suggests there a whole range of asset prices, through increased consumption and investment spending and so on our way is reasonable estimates on the effects of commodity prices. again, i think the reason we have seen the strong movements has more to do with international situations than a u.s. monetary policy. obviously, it is a negative and something we want to keep monitoring. >> thank you, mr. chairman. >> i would like to thank you for your testimony today. there is a vote going on. it requires my attention. i now turn over the gavel to senator schumer.

>> i would like to recognize senator schumer to ask five minutes of questions. thank you, mr. chairman. the first question is about the highway bill -- the transportation bill that is on the floor. it will create according to its sponsors -- 3 or save 2 million jobs. it has broad bipartisan support. they estimate for every billion dollars of federal investment in highways creates 36,000 jobs. what impact would pass in the long term transportation reauthorization legislation have on the pace of economic growth? >> i do not know enough about the details of the bill to give you an estimate. i would like to make one observation. if you think about long-term infrastructure investments, you

have to think about whether these are good investments in terms of the returns. president eisenhower's investment in the interstate system produced tremendous dividends in terms of reduced transportation costs and integration of our economy. i would urge your -- i know you are doing this. as you approve projects, you want to do the ones that will be the most productive. >> that goes to the quality of the project. at this point in time, that kind of stimulus in a sense would serve the economy well and would be needed. >> there are different ways -- >> assuming it would be spent well. >> there are different ways to provide stimulus. infrastructure, if it is well designed and has a good return is often a good approach. you understand that i do not want to endorse -- >> endorse a bill. i did not ask you that. you made the caveat that it might not be a good project.

i am just saying when you said the economy is moving forward at a slow pace, not having the -- taking away infrastructure money might hurt the economy. adding infrastructure money would help the economy. you want to do it as well as possible. is that a fair recapitulation? >> yes. >> say no more. those alternatives are not -- this is a yes or no situation for us now. money market funds. we all know the dark days of the fall of 2008. the panic that ensued when a large money market fund broke the buck. there was a run on the funds. the fec instituted some reforms to address the problems that led to run in 2008. however, they have made it clear they believe more should be done. and recent reports they discussed a few options including a requirement that

would lock up a portion of investors' money and proposal to require funds to abandon the stable $1 a share net asset value. the proposals have the potential to change the nature of the product. some say it would drive it out of existence. obviously, they play an important role in short-term financing of many different types of businesses. what are the risks to the economy and financial system if we were to fundamentally alter the money market funds, what do you think of the two different proposals made? if investors have to keep 3% or a certain percent and cannot let our right away, it is not worth the investment to them anymore. it is not worth investing in a money-market fund for them anymore. >> first as you pointed out, the fec has already done some constructive things in terms of improved liquidity requirements.

i think the federal reserve in general, and i would have to agree, there are still some risks in the money market mutual funds. in particular, they still could be subject to runs. one of the implications of dodd- frank is some of the tools that we use in 2008 to arrest the run on the funds are no longer available. the treasury can no longer provide the insurance they provided. the fed's ability to lead to money market mutual funds is greatly restricted because of the fact that we would have to take a hair cut on their assets. that is not going to work with their economics. we support attempts to look at alternatives.

you mentioned some different things. one would be to go away from the fixed net asset approach. i think he will -- i think the industry will reject that categorically. what approach would be to create some more capital? they have very limited capital at this point and there might be ways to build up a capital base. that is one possible approach. something that involved not allowing the investors to draw out 100% immediately. if you think about that, what that does is makes it unattractive to be the first person to withdraw your money. it reduces the risk of runs considerably.

it has an investor protection benefit. if you are a slope investor and you are the last guy to take your money out, you are still protected because there is this 3% or whatever -- >> i have heard from some investors that given the low margin that money market funds pay, it would into the business. i have heard investors say they would not keep money in if they had to keep 2% or 3%. >> i think you have to have some kind of discussion. part of the reason that investors invest in money- market mutual funds is because they think there are 100% safe. that is not true. >> we learned that the hard way. >> we have to make sure investors are aware and we take

whatever actions are necessary to protect the investments. >> do you think they play a useful role in the economy? >> generally speaking, they do. they are a useful source of short-run money. please do not over read this. europe does not have any and they have a financial system. >> they are in great shape. >> there are many ways to structure your financial system. i envision that money-market mutual funds will be part of the future of the u.s. financial system. >> thank you, mr. chairman. >> there are no more questions. thank you, mr. chairman. i will adjourn the hearing. >> [inaudible] [captioning performed by

national captioning institute] [captions copyright national cable satellite corp. 2012] >> and the road to the white house coverage continues letter tonight with a pair of events. we will still do but santorum -- we will show you but santorum -- rick santorum speaking at the ohio gop dinner.

super tuesday is right around the corner on march 6. seven states will go to the polls, oklahoma, tennessee, georgia, ohio, virginia, and massachusetts. makes c-span.org your clearing house for all campaign coverage. you can compare candidates positions in their own words. all that is at c-span.org/ campaign2012. >> obama just change the entire dynamic. >> look inside the new hbo movie. >> i love those hockey moms.

>> sunday -- >> their expectation was that she was an asset to the campaign. on the democratic side, there was a lot of concern. people on the democratic side were freaking out. >> we will talk about it sunday at 6:30. >> delivered a defense of religion and public life on sunday, appealing to the social conservatives. on the talk shows this weekend, mr. santorum responded to comments made by president john f. kennedy. >> i believe in an america where the separation of church and

state is absolute. were no catholic fellow would tell the president how to act. no protestant minister would tell his parishioners for him to vote. where no church or a church school is granted any public funds or political preferences. where no man is denied public office. >> you can watch more of president kennedy's speech on our website. >> a week ago thursday, 100 german citizens gathered for a town hall meeting with angela merkel. in the first of three scheduled town halls, the chancellor answered questions on germany's economic future, national security, and a growing concerns over a extremist groups. this is about one hour and 45

minutes. >> ladies and gentlemen, welcome to this first meeting with chancellor. i am glad that you came. the chancellor is our guest tonight. [applause] we want to talk today with the people about how we will live together in the future. i know that you always talk to the citizens, but the format is different. >> i would like to thank you for coming.

and for the ones who could not make it. i came to listen to you. i came to hear your ideas. if you ask me questions, i might answer them, but i came here to have information advice. how do you want to live together? what is going to happen to us in five years, 10 years? it is good to see what does not work and how we can change its for the future. the question today is called the we want to live together in the future -- how do we want to live together in the future? on a daily basis, the chancellor has to deal with policy. it is good to think about the future every now and then. what will i do with my children? my grandchildren?

we thought about which cities we would want to visit, where to go. should we go to small villages or big cities? we decided for a mid-sized town. we thought the city should be in a new state. a lot of diversity, and we thought that it could be a good start. it is a good place. the media was enthusiastic, so it was a good choice. you all look good, ladies and gentlemen, really good. the room is empty, nobody can hide. this is written on the carpet.

generations, security and safety, identity. we will start with generation. we are going to start with a small video to start the discussion. here is the video. ♪ >> living together in germany more and more diverse. of course, the family is key to personal luck, but the family is changing. the family is to be together, to support each other in tough times. that is a big part of my family.

i think it is no use having children. you have to work so hard to eke out a living. having children, no way. >> the requirement for modern life are changing. but very often, it is at the expense of the family. very often, even existing families have a hard time. the birthrate is getting lower and lower and we have less children. life is getting faster and faster. there is more and more to do. we have less and less freedom. more and more families are out of breath. now they are in a new state where people establish partnerships, but everything is

difficult. it is difficult to reconcile everything. >> older people have a lot of social skills and would like to -- how can we overcome all these obstacles to family life? how can we bring the young and old together? what structures should be billed for the next generation in the responsible for each other? >> dialogue about germany's future. first, let's see. generations. who is responsible? who commits one? we will start with this gentleman here. the microphone is coming. and then this gentleman with the

red tide. mrs. chancellor. times are hard. there is a lot of conflict. i think there is a lot of unemployment. i think that what we should have is something that is going to make life better and is going to make us safer. what can we do about that? >> thank you. what is your name again? >> wait for the microphone, please. >> i am coming from -- for the last three years, i have been worried about the crisis socially. >> and so you think we should all have, and solutions? >> i have seen on the internet

that your topic, the one you are working on, a basic salary for any citizen, is a topic that is discussed all over society in germany today. it is a theme today. if we were to give a basic salary to everybody, we would have to increase taxes. but it is a question. some people could work on top of that and are and more. others would not go to work because they have a basic income. of course, it would be something for the safety of your life and your living. it is something to be debated. the gentleman with the red tie. who are you, please? introduce yourself. >> did you say we would live

better with a basic income? i am a farmer. i come from the countryside. 70% of the population in this state live in the countryside. we work a lot in agribusiness. i think it is the second largest industry in the land. there is a lot of potential in the countryside. people do not pay attention to it. why? we could extend agriculture. we could use more land. we have the land. we do not have enough cattle, for instance. we could grow the agriculture. we could use the renewable energy that comes from agriculture. we could reform the old firms

and give jobs to the old generations. there is quality of life in a countryside. what is close to my heart is that, in the future, how do we live together in the future? we should not neglect the potential of the countryside. i fear that among all of the big problems in the world, this is not one of the big ones. >> you are right. it is true that at least half of the population of germany less in the countryside. it is a good question. we can see how they can go shopping. what is the quality of their communication network? how can we improve internet coverage for instance? i think we are going to take aboard your proposal.

let's not forget about the countryside. and, of course, if people were to leave the countryside, it would have terrible consequences for the big cities. >> the lady. >> my name is marion. i would like to talk about volunteerism. i am coming from the old tradition of volunteers. it is a commitment of mine. we have problems when we are volunteers, especially when we are talking about generations. i have learned to be a volunteer. often young people are not attracted by volunteers. i think we should have different generations.

we should push people to be volunteers in all different ages. we should create the conditions for that so that young people are more recognized. we should not judge people. we have a lot of volunteers. we even have a foundation for volunteers. the structure is extremely heavy. i used to work for an administration. the laws are so complicated that people are not interested in becoming the volunteers. >> so you would like to make it easier to be a volunteer? >> yes. i do not know if it is possible to change the rules or the law. can we take into account the different skills? for instance, people have

federal jobs for volunteers. that is a great thing. we should have more security if we are volunteering. paragraph 26 is about irresponsibility in germany. i think we would gain if we work to simplify, to streamline the rules so that we would be more protected generally and we could be volunteering without all of this difficulty. you could give us a tax holiday for 100 euros if you were a volunteer. >> the tax code and the rules and the law to protect your responsibility and the fact that we should intervene in the pentagon lost to recognize -- pension laws to recognize your professional career. >> the two young ladies.

you wanted to say something. you have a proposal to make to the chancellor? >> i am a student. i am in 12th grade. i am interested in education. i talked to a lot of people. dialogue and i see that in turn emmy -- germany, a lot of people say we should have a federal education. there would be a huge change in the country if we had a federal education. [applause] since we are talking about the future, i think it is something we should finally come to. what do you expect from that? >> it's the federal government makes a mistake, all of the german students are -- if the federal government makes a mistake, all of the german students are affected. as long as i am chancellor, we

can talk about mistakes of the federal government. i was joking. when we move from one state to the other, there is no equivalency. yes. we do not have equivalency between states. when you have to move from one state to another, you have a totally different school system. >> and the curriculum has changed. when a new party takes party in the state, they change the curriculum completely again. it costs a lot of money. if we had a uniform education system, uniform for the whole of germany with one source of experts that could tell us what to do in the future and would encourage education. >> i am taking your advice. you talk about different states

and equivalency. for a start. ok. next. >> and you complaint that education is changing. there is a new program every day. not every day. it is true that the curriculum is always changing. it is not always useful. what is important is to take care of the local conditions. for instance, they started to keep the same curriculum for 10 years so that one generation is not going through constant changes and it is not a whole new curriculum. if it has to do with living together in the school system -- you live this way. >> in the back.

let's not forget the people in the back. in the front and then we will go to the back. >> i have prepared a little speech. written. britain is not so good. -- writen is not so good. >> talk without your paper. >> i cannot really talk without my paper. on it. i am an architect. i spent the first half of my life in india and the second of my life in europe. how do we want to live together in the future? the family will decide on the future of our society. for 7 million children, there is

a risk to live in an unstable life. there are 4 million out of wedlock children and 3 million illegal children. we are not taking into account the reality. we should have a law that takes into of fact -- into account the quality of parenting. also, we should encourage the parents to be parents. i have a model that i would like to propose to you. number one, the heart of the family in my model is a new law for parents and giving rise to the children and equal rights to the parents. number two, we should have its philosophy that ensures that we

maintain children's writes. the role of the family should be the heart of society. we should give optimum living conditions to the family. the children must be protected within their family. protected 2s only million children. -- laws only protected 2 million children. if we should use my model, we will protect 14 million family communities. that will cover 7 million children who are not covered now. mrs. chancellor, i know a lot of people have thought about that. i would like to send you a whole proposal to the parties of the coalition to help them with the

drafting of laws. i would like for you to support my proposal for this model. for this, i need support from the experts. >> good. send that to me. i think this is a context -- complex thing that takes care of a lot of people. life has changed a lot of situations. it is good to cover the children and the parents. >> we only have 90 minutes. we do not have time for everybody. let's go on. this lady over there.

>> home for several generations to meet. this exists already. is this the most important subject for the future? >> yes. i see often that old people are living alone. they have huge potential. they can communicate so much for the new generation. there are people who are idle. i think, where to go?

where can the young expiries the skills of the old people? this could really change their attitude. old people could be very active. >> i agree with you. we have had good experience with homes for several generations. it is not everywhere in germany. it could take place in town halls. we have thought about it. perhaps it should not be part and parcel of the administration, whether local or regional. we probably need a citizen's home where the citizens could get together. i would be in favor of that. a home to gather several generations. that could be good. we could do something good for the old and the young. i am quite in favor of that.

we have to think about that. >> still on the family. does anyone want to add about the family? yes? >> good evening. greetings from my daughter. you are a strong woman. >> yes, i greet her, too. >> my problem is that we should no longer split families. i am working on a construction job. i have to commute between the east and the west. it takes a huge amount of time. in west germany, our wage is 13 euros. in east germany, it is 10 euros an hour. east and west are not equal. if you are paid only 10 urals'

an hour, this is not a whole lot. you cannot live -- only 10 euros an hour, this is not a whole lot. in the same industry, we should be paid the same so we do not have to commute between east and west all the time. [applause] >> i am here to listen. you are making the proposals. of course, i do not make the policy in terms of wages. it is between the employers and the unions. but it is true. there is pressure now to bring the wages at the same level. it is true. commuting is a big challenge for families. >> how much time do you have left for your family if you keep commuting on the freeway every day? >> i am leaving at 3:00 a.m. on monday. of course, nobody pays my

commuting. i leave the construction site at 7:00 p.m. i have 3 or four hours of commuting. >> your daughter is in bed. >> my daughter is grown up. your day is long. i would like to ask a question about generations. we are saying that people do not have children anymore. i have another problem. it would be good to live in a countryside. it would be better to raise children. children need adults in the countryside to take them everywhere, to sports, to the doctor. old people also need to be taken to the doctor. the road and construction is not there for them. >> yes. the second person was talking

about that and it is an important topic for us. here, we promised to go on this side. >> you almost took the words out of my mouth when you said you were a single father. i am the director of a grandparents service. we have 8000 old people. we have a lot of single mothers also. i see that these people are falling through the safety net after a while. they have to work part time. they work 22 hours a week. the children of single mothers fall under the poverty line. the women cannot make it anymore. we should take care of that aspect of the family. >> what do you propose?

>> i think we should have a social net that is stronger. we are trying to protect single mothers. we guarantee child care with old people. -- with all people. we are trying to find volunteers who can spend 8-10 hours a day with child care. the poverty starts with single mothers. you are saying the children are our future. you should really mean it. >> and it bothers? they are not part? the grandparents? >> we have 44 grandparents who are active. >> how many fathers are helping? >> two. >> perhaps we could make a little bit more publicity for

your volunteer work? >> i just want to learn. it is always the same in these type of meetings. people come to look, to watch. >> this gentleman here. >> wait for the microphone. >> thank you for your invitation. our future is our children. [applause] we have to follow the swedish model. they do a lot more for children in sweden. they have an ombudsman for children. there are so many social services given to families. the children are now living in socially secure conditions. we do not have that. otherwise, we are going to lose

the innovations in the future if we do not take care of our children. >> you think that the children go hand in hand of the restructuring? >> yes. we have to restructure education. the place of parents -- they need socially secure relations. we have to finance more of the parents. especially for single parents. >> we agree that children on the future. we will have less children in the future. it is important to give the right education to children if we want to have them as good in the majors. -- innovators. >> we will have more children. not less children. >> yes. in the future we will have more children. right now, we will have to say there are less and less young people, to be clear.

>> this lady and then the lady next to her. >> you talk about education. i would like to talk about education outside of the school. talk about the continuity of education projects. it is becoming useless. we have a project for one year and then we want to extend the project for another year. either they change the content or the budget is no longer there. there are projects for continuing education and they should be much longer than one year. time? two here's? 3 years? years? >> at least three or four years, especially if we want to be

useful and we want these projects to have any action again. >> i am taking note of that. we have discussed that in the government. we have to see what works and what has not worked. after a year, you cannot see anything. also, we must have the courage to see that what has not worked is stopped, is cancelled. in our society, that is difficult. otherwise, it all ties up. >> you. one of two? >> my name is hannah. i have lived in germany for the past seven years. back to children. we need to have more children. we are scared to have a lot of children.

immediately people think of poverty. they think about small housing and no more freedom. this is because of ideas we have in our mind. we want to have this and that for the state. i think we have to start having another image, starting with the media. having a lot of children is good. >> first, let's look at smoking. during the media and publicity, we managed to cut down a huge number of smokers. smokey is no longer cool. we can do the same thing with having more children. [applause] >> you talk about an important point. how can we change society if we have five, seven children? we should scare society.

and delays and i do not want to live in an apartment next to a family with so many kids. can i keep my career if i have so many children? you are right. myself, i come from a large family. >> we were 10 people in my family. one has left the family. we live in one apartment on two flores. we have tried -- on two floors. we have tried to overcome. it is difficult to find an apartment. there are a lot of difficulties we have as a large family. at home, we did not have any problems. it is nice. you have parties and family gatherings. it is more fun. of course, if people see that

you have so many kids, people are scared, right? >> that is true. >> so you would like society to say, great. large family. congratulations. i think it is too bad that people are saying, no, i would like to have no children and to be single. children are great. what kind of future could we have if we have no more children? >> i do not plan on it right now. >> i am a sportsman. i do handicapped sports. i think we are behind in the handicapped people's freedom.

there are many projects that we do not see them applied. we should go around that another way. we should make more effort about that. we have a lot of money. we are a rich country. we see what is happening in other countries. in germany, it is not done yet. you see older people have limited freedom because of their age. >> what is your problem on a daily basis? >> there are many stores i can i get in. the doors are too narrow. when you want to go to the public toilet, you cannot get in. when there is a sporting events, you cannot go to the toilet. you cannot go through the doors. in germany, we should see what other countries are doing. of course, we have a huge amount of regulations. they are not all applied.

>> i take note of that. it could take another 5-10 years before the law is fully translated and applied. i think we have made progress. we are dealing with a lot of old buildings in germany. i take notes. it is unknown subject. it is not only for the handicapped. it is also for the old people, who have the same problem. when you see how hard it is to cross the street, for instance. >> what kind of sports are you doing? >> i am doing wheelchair basketball. i am in the federal league. [applause] >> the first league. >> i train seven times a week

and i train on the weekends. >> i could talk about other topics, but let's leave it at that. handicapped freedom. >> other advice? >> right now, i am working in a textile factory. my problem is the basis of living together in society. if you say we should have jobs for everybody according to their skills, it is important for us. to talk about "made in germany." my fear for the future -- not

quite there yet -- if you look at our industry, we are going to stick "made in germany" tags on products made abroad. we should start from the bottom up and create new jobs so that we can have more employment. have to payonger unemployment allowances the way we do now. people would are in money again with wages they can live with. we could get rid of this humongous amount of money we paid for unemployment. people have suffered value and have a job. that would be the basis for the next 10 years. i am sure you could have an influence on that. [applause] >> it is a problem we are

talking about a great deal. of course, we are also talking about specialized skills. a lot of people are building machines. you also have people who are not rocket scientists. it is difficult to find a job that we need. i hope true globalization -- if you look at china and other places -- their wages will go up and up. they will come to a better balance. how can we retain jobs? it is the big question for us. your industry is doing well? >> i know we are all going to do well. i know we are doing well. >> i talk with people about all of this. it is possible to recreate jobs.

>> i heard the young lady talking about education. i have been dealing with education since the beginning of my life. i have a wish. barry often, people who are independent do not -- very often, people who are independent and not have the same working conditions as volunteers in the administration. independent people should be encouraged to be independent. continuity is a challenge. look at the cultural theme. you have a lot of people who do as the victor, who do dancing, who do poetry. all of these people are

independent. not all whole lot is invested in these people. this is going to be bad for our descendants, for children, if we neglect culture. there is a great potential for young people. i think we should encourage music, musicians. give more latitude to people who are independent. >> cultures should not be compulsory. everybody can be in the culture. a country that neglects its culture can no longer claim to be cultural. >> the lady in the front.

then we will go on the other side. >> i work in the schools. for education, we should dedicate ourselves on the theory and practice. i think we should send our homeren to an old folks' and places where there are handicapped people so they will get to know the old and the handicapped. people have better values. people would learn to live together with different people instead of being scared or feared them. also, the old should no longer fear the young. >> some people say, i do not

know what to do with the old folks or the handicapped. it should be part and parcel of our education if you want to live together. >> we should send these people for practice instead of spending so much time in theory. >> i am an old guy. i need to sit down. i am sorry. >> i am 12 years old. i go to school. i think we should spend more time with our family. we could also save energy for instance, we should play games with the family instead of watching television. so we do both. [applause] >> good idea. you could decide one day, no

facebook, no twitter. all of that is going to be part and parcel. >> you should spend more time together rather than watching tv and having foreign ideas in your head. >> thank you. i come from next door. seven years ago, i decided to be an entrepreneur. iak. when you see people trying to have an education and when you see the training that we have on the market, you see that it is more and more difficult to hire the right people, people are trained right. people usually are poor in the german language, in math.

this goes back to the roots of education. often, we do not have the basic skills. also, people do not know how to get up early. they do not know how to be disciplined. this does not come from the school. it comes from the family. i have two children myself. my children are active in clubs. of course, they played in school sports clubs. this gentleman mentioned earlier that people who are single the time to take their kids to sports all the time. i think we do otherwise. it is a call. i am calling on the school to go back to school themes so our

children can learn from school again. our children have no more common values. if you are playing a sport, you learn to play common. you learn how to lose and win together. this can prepare you for a professional life. it is the basic training that children will cherish the rest of their lives. >> you are telling us that we should insist more on the practical side of life. this you learn at school. of course, this goes back to independent workers. we germans are a too theoretical. we say we are independent. there could be an infinite number of combinations. of course, who is going to

supervise whom? you are saying that the schools should teach more so that we do not give the entire responsibility to the parents. >> what about the young people? this gentleman looked at his neighbor. his neighbor must be his boss. >> i am 68. i am the head of the savings bank in town. i heard all of the wishes. i think people should think about the state budget. without money, nothing works. everything must be financed. when we talk about politics and society, people should be more realistic. they should be aware of reality. how can we finance all of that?

what i am is saying is that, all together, we should no longer think that the states is all powerful and the person can do anything. all of the generation should think about that. i must tell you, the budgets are tighter than ever. we do not have much money as we used to have. the demographic factor shows that we have less and less income for the government. we should have better communication. we should not hide the reality. we need this and we need that. i think people should see how we can finance it. then we should talk. >> there are a lot of wishes.

it would be good for our children and the future we are going to leave our children. it would not be fair if we did not talk about the possibilities. >> i think we should come to the security. a couple more questions. >> i am a student. my problem is children who have cancer. we are trying to visit them. we would like to read books to children who have cancer. recently, people said we cannot do it anymore. is sad. people built a wall. there is no access for us anymore. they say, teachers should do that or professionals, people who are specialized in children

or children sick with cancer. we students can no longer help, can no longer read books. it is sad because it was important for us. there are normal -- there are no more children like us. they are sick and we can no longer deal with them. my wish is that we should have better access to these children. >> two things. your concrete example is good. secondly, it makes me think about the future. i think we should make it more possible that students do something for other children who are in a more difficult situation. because of their human interest. [applause] >> i have been dealing with this

subject for a long time. how can we have more trust with each other through more participation from citizens? many citizens are unhappy with the decisions that are being taken by different authorities. his turns into citizens' initiative is, undetermined by citizens' initiatives. there have been complaints and losses because of citizens' and dissidents. there is a lot of frustration and a lot of anger. there is a draft law in the federal government to make more transparent government decisions. it was brought by the council of

ministers today. [applause] it is going in the right direction. >> we can be more transparent and the citizens can feel like they are participating. >> we are going to talk about that for the next few years. every big project, from the frankfurt airport, different from wind firms and solar plants. -- farms and solar plants. we are going to have a place where citizens can say what they think, what has worked, what has not worked. in the next five and 10 years, we have to have better dialogue to see what is best. when should we consult the cissus? not too early or too late. this is new terrain for us.

>> right behind you. yes? >> i am one of the older gentleman. you can tell. i have a wish, mrs. chancellor. in the newspaper, we see that your government would like to engines, anaw ofor equalization of all pensions between -east- for pension -- for pensions, an equalization of all pensions between the east and the west. it happened after the unification of east and west germany. the young people of today will

be the retired people of tomorrow. at one point, we should equalize, balance the two pensions. in may, there is going to be .enior's day in hamburg they will present to your government a solution. i will be present during this senior's day. for the young people in the next 5-10 years, is not a problem. they will be having paintings in the next 30 or 40 years. >> we must be careful so that people will not have less pensions than they get today. in the future, people do not get less either. we have to discuss that with the prime ministers of all 10 new -- so that there is no

political controversy. we have to find a solution, but we are not there yet. >> we need more rights, more balanced. chancellor, we will go to the next theme, security safety. we have a small video for you before we go to the subject. ♪ >> the germans live in a safe country. peace inside, peace with european neighbors. no threats of war by any country. >> i think that in germany, we have more security than anywhere else in europe. there are a few incidents in the metro.

otherwise, i feel safe. >> i think we are safe here in germany. there could be a few more cops in the streets. otherwise, we are ok. >> violence that is ideologically motivated against foreigners happens. this has made us more aware. if we do nothing, we are going to have neighborhoods where there is high unemployment, crime, violence. of course, we have to work long years if you let that go. it is another danger. corruption and white-collar criminality. it has huge consequences on our society and the county. the big problem in the future is cyber-criminality.

often, the young are they victims. radicalization and the calls for pilots are more prevalent. how can we present the best prevent radicals from extreme groups? -- prevent radicals from extreme groups? how can we have more security, but keep our individual freedom? security in the future of germany. of course, this is a sign for our intact society. we are going to start with you. yes? think that we must do everything to try to stop

extreme right ideologies. it is present in the schools. we should explain to students what is going on, especially when you have an extreme right radicals who are creating sports groups. they are like the pied piper in the guise of leisure. they are attracting a lot of idle kids and indoctrinating them. we should not have in this country what happened in the past. we should keep our eyes open and do something for the kids so they are not captured by these people. we have to act immediately. >> have you met such groups yourself? >> yes. even in my family, i have had long discussions with my oldest grandchild. of course, he has been

interested in these groups. he has said that words about foreigners and immigrants. he wants them to go back home. i said, what group are you involved with? as people start talking about that, the family should intervene to prevent it. the whole of our society is responsible. not only the school, but the parents should intervene. the grandparents, naturally, especially the grandparents who have gone through world war ii. >> it is your wish everybody takes responsibility and act. it starts with little things. if you are not irresponsible and you did not deal with it, you will have discrimination in the end. thank you. >> i have the following question. for years and years, we wanted to stop the nazi party.

we never managed to forbid them. we have the extreme right radicals who are allowed to do what they want. should we limit their activities so that they cannot spread their ideology? i know we live in a democracy and the extreme right can say what they want. right wing ideology was separate from us for 12 years. i do not want it anymore. if a party supports that, this party must be gotten rid of. [applause] >> of course i take note of what you said. we have talked about that. we forbid the npd party. the supreme court in germany said we cannot do that. what if we made a second try and it was denied?

you can forbid the party, but the people was still there. it is in their heads. >> they should not go out in public as a party and spread their ideology. that should be stopped and limited and restricted. >> if people have these ideas, we should see what is the fine line between freedom and spots. of course, there is the cat and mouse game. the cities have been gatherings of right wing people. the state allows it, so they go from one to the other. >> i take note of your proposals. where i can do something, i will do it. the supreme court is independent. it is a good thing. it has to deal with justice.

>> yes. but we have to prevent them from having the possibility of spreading their ideas. not only using the possibilities that we have, but what is legal. >> a lot of hands. security. the lady? >> my name is suzannah. i am a principal in a small school. i wanted to talk about generations. i know we are talking about security and then we will talk about identity. all discussions go back to school. what can be school do? i would ask for you to invest more into the schools. we need much more investment in

the children. of course, this will be more security for the parents, more security for the children. our young people need to know where to go safely. anybody is entitled to live in a safe area. tell the children so that later on we do not have these huge costs to try to get back our security and our safety. my wish is that in the federal government, we should give schools and two children. in terms of education policy, federalism should be absolutely a must. it should be binding. [applause] >> you save more investment. you mean more teachers, better equipment?

but especially more possibilities for the children. it is a big question of inclusion. in many states, there are problems with the inclusion. it starts at school. the schools do what they can. without new teachers, without new help and new equipment, it is going to be difficult. >> you want to add something? are you ok with that? >> inclusion is a big topic. >> yes, quickly. >> of course, people have an image in their head. we should attack that early on. it is not only in the school, but also this image of foreigners and the family. i would not say it is inherited. often, it is the parents who transmit this wrong idea about foreigners.

we should be able to talk about that. perhaps we should talk what did this idea is right or not. >> parents have a responsibility. they have to transmit values. the schools have to transmit certain values. what is your experience in your life? what is happening in your school? >> we left in a peaceful school. >> what did you say? >> we live in a peaceful school. i am in high school. it is a peaceful school. >> your neighbor? >> i am in the 10th grade. it is forbidden to wear a scarf. this is my religion. if my religion tells me i need to cover myself, why isn't

forbidden? is this for the teachers or the students? >> or the teachers, yes. my cousin works in a department store. she is not allowed to wear a scarf be there. she had to take it off. she put it back on when she goes out in the streets. >> or it has been decided legally by the courts, but we need to have neutrality between religion, and your scarf has a religious to the vacation, and therefore, for teachers, teachers should not wear it. for the students, it depends. let's say your wish is we should be allowed to wear scarves. there are many students who wish that including secretaries, but every time we tried to wear it, people take off.

>> now that she has talked to the chancellor, maybe she will do something about it. >> no, we're talking about the future. you say that is your wish. you. >> i have come here from and and security, extreme right wing -- this is a big problem for us. we have an lot of work for young people. we're trying to prevent infection by these people. and i think prevention is more effective than waiting bad stuff happens. i think our programs should be strengthened against an extreme right-wing ideology. it is important if you're talking about security to see what is happening in neighborhoods, even if there has

been bad things happening and people have paid with their life, as we know. we should be more aware, and we also should all stick together against these trends and ideology. we could work at together against them, and this would give more security to this country. >> he said the state must but the state cannot do everything, and the citizens must do something together. we are not going to make it in the future if citizens are not doing their job. what is important, what is interesting, is you could do it with the administration, but also you can do it by yourself. you wanted the floor? >> thank you.

you decided to give the floor to people -- >> i am very happy to be here. i am joseph parker. i come from angola. in ehrlive here now furt. i feel good living here. when you talk about security and safety, i will tell you our society lives under a problem of judgment, of value judgments. it is a problem. i think we should no longer use of value judgment against people wherever they come from or the color of their skin. to have ao, we need

simple procedure when discrimination happens, or disadvantaging people. we have an anti-discrimination law, but it is not really apply the way it should. it is difficult. you, ms. to apply laud chancellor. you need full support for this. >> the one hand you are saying we should not have thought you judgments on people. have you been discriminated against yourself? it's sad. so you come from angola and people are looking at you like you're somebody weird? it is bad. ec also value judgments -- you

see the value judgments? >> i was born in germany, but i knew people from the beginning that people would look at me twice, wondering where i came from. you must be strong. there are good people and bad people, and sometimes you are to take the bad like the good. >> you must be strong, yes. >> but life goes on, and that is the way god created me. so why should i be ashamed for what i am? [applause] >> i do not have any problem with that. so we have to see around when you look at germany today and we have to see what we are going to look like in 10, 20 years. there could be a lot less people, a lot older, and we are

going to be a lot more diverse, because it is people from many more nations. so we are not going to look like we look today. i am glad that you talked to us, and we should have the right to live together. >> i come from -- we have three children. security? we have a very safe -- i feel very safe. we have no fear, but look at 10 years from now. i'm still safe, but i have a little bit of a fear of the internet. the whole world now is connected to the internet, and i think that concerns me for the future. my i.d. card is safe, but 10

years from now? i am scared for the future. >> yes, that is a subject. we're saying of course the internet is useful. of course, it is freedom. we should have more and more freedom. to parents, we're saying to protect my child, and of course we're going to have a big societal discussion on that thing, and we are to find the right measure for this. it is not easy for parents because we did not occur up for the internet. today, kids are born with it. they are like fish in water. facebook -- use it facebook? yes. good. who else? you and then this side?

we have really neglected the other side. the late -- you already had the floor? no second chance. >> the lady -- the man with glasses -- i come from weimar, and i think security is import, but imagine the future of germany. i think we live in peace, not with war, and that is important for me. we should live in harmony with nature. we should live in sabre conditions. we should have a much better living standard. i think it is possible that what i really -- but what i really fear is in this rich country,

2.5 million children live under the poverty level, according to spiegel online. we have 12 million people live under the poverty line, and i think the solution is to have a basic income for every citizen. it is a great solution. is quite easy to finance. we can have a tax on consumption, and a whole new tax code that finances its. but it is very important for me is the government should be governed by social positions. ok? >> i think we need a mixture of politicians. we should have politicians who have -- but we should also have technicians so they know what they are doing and we could sell

and export, perhaps. from business, yes. i mentioned business, actually. with social skills, it is important, and people mentioned the basic income again. >> am 47 years old. i'm a pastor in a free church. what scares us is what is alien, what is for an. i divided -- invited a syrian because he feared the police would show up. what we fear is that we have not met what we did not know. for instance, we say out with the nazis. it is a cake, but these people cannot go out of the country. we have to win them over, talk about the nazis, and bring them

to our side. we have projects where i live which is called inner garden. it is a garden in the center of cities where people of all origins meat, foreigners and older people. they can dance with german girls. it is a project where people can meet each other, so we can bring different generations in this central garden, and i would like these projects to be replicated in different cities. >> if it has to do with these homes were can bring several generations -- in the old days, the whole family live together with different generations. that is over. now when you meet all people or the old meet the and, it is no longer normal, and it should become normal again. we do not have this opening anymore.

yes, in the back. >> i live in ehrfurt, i live in security and safety, but the problem is courage. a lot of people have not had the courage, and a lot of people have left the state. it is too bad. all the relations you keep is to facebook. that is its. i wish that enterprises and the authorities would reward people who have decided or had the courage to stay in east germany , and this courage should be honored, and we should not only concentrate on what is wrong, but we should perhaps emphasize what works, what is ok. which should not say this does not work, you cannot do that, but encourage.

>> and what is your experience? >> my experience is very bad, and i keep beating closed doors, and i keep going, hoping i am going to bring people with me and there is a lot to do in the tourism industry and in other industries, and i hope people will come back or will be attracted. >> another plea for opening. yes, you look so nice. you were hoping that i would give you the floor by smiling, right? >> my name is siegfried. i am the mayor of a very small town. mrs. merkel, thank you for

having an idea of a dialogue with your citizens, not only courage, but is an example. our prime minister does the same, but it would be nice if people were doing that at every level, so we could talk about all these problems. it is not always easy, because often our problems are -- have deep roots. and very often when people are committed, there is obstacle after obstacle that does not work. in the countryside we do not have the same rights to develop as the big cities, and that is not right. >> do you also talked to your citizens? >> yes, we have a constant dialogue, and we put projects together. unfortunately, of course, we have no money, so we would like

to have some money just like people did in bavaria. we're not giving up. back to safety and security. it is true we heard about corruption and white-collar crime. the corruption it does not start at the bottom. it starts somewhere else. you know that better than i did. and look at this financial crisis. remember that he said that the time that i have enough, we are going to go off, and the people have not seen any punishment, not a single one of these people has been sued, and the population sees that, they see that liberty has gone seriously after them, and we should have measures to prevent that it happens again. i think our prosecutors should

go after them, but the prosecutors are under the influence of these people. it is the same feeling as in all other states. and my wish is that there should be a commission that works on suing these people. this is my wish. you yourself should be involved. you should put in the intelligence services, the equivalent to our federal police, the criminal police, the federal criminal guys -- they should go after all these financiers. you should encourage that, and i know it is in good hands with you. >> quickly, so we are seeing to it that this work is sufficient. >> we have to make sure everybody will be punished if they have committed a crime.

>> yes. relatively quickly, please. >> will provoke you. and i am going to say to you what happens. 20% of the population tends toward extreme right-wing ideology. 20% of the population, and so what is the population? well, it is common citizens, also it is part of the little bit higher. names, but go even higher. i have this weird idea that the police could not find the extreme right-wing criminals. why not? for some many years, becoming skeptics. are we really going after these

people or are they protecting? this is the problem and the chancellor said it that it is difficult to stop these extreme right-wing people. the supreme court said we could not go after their party. why is something happening there? 20 years later, they are still legal. yes, it goes back to the schools, also. we should train the kids. we should practice as kids. it is difficult. it is difficult. one more thing. the safest state is the one that has the most cctv cameras everywhere. i am not disturbed if i result that you keep my -- for three years, but after three years, you destroy all the data.

how do you protect citizens? >> yes, more video cameras for security, he said. otherwise i will tell you for this racism, we have to do something. of course there needs to be christ they need to be observed. now we have to go further. of course they need to be observed. now identity video. germany, a country with a lot of original diversity. for us, it is normal that when

we go in different regions we see new traditions. how do we see ourselves? we are punctual, we have rules for everything/ we're responsible. we produce quality products. made in germany is well known. where very warm hearted. today, germany is a modern country in a europe that it's ever closer, but how are we going to define ourselves in the future? >> germany has a culture of welcoming people, and yet we are a little bit insecure. we always worry. we think people are going to see us as closed in, posing

problems. germany is a great economic nation, export nation, and our country is always the mediator of political processes. how do other countries see us? >> are two things we can be proud of. on the one hand, we solve problems in the world. we are the persons who put people together, and, number two, we have the great strength of innovation, technology. we find lots of solutions, and people turned to us with solutions. what does it mean to be german? how can we understand the role of germany in europe and in the world? what can we learn from other countries?

the question of identity -- they is and gentlemen, where we are going to be, how do pc each other. we have had democracy for 68 years trip we had a peaceful reunification 20 years ago. >> you look very interested there. >> mrs. merkel, i come from -- and is today i was a big department store. and i heard publicity jingle, and it was called country that i understand, and it said, "a country where people still count." i said i was in the department store, but what i do not wish for germany is that germany is currently a country of consumers

and all we do is buy. i am a citizen and i am not just a consumer without any conscience. that is important to me. and i think what we should do is to have another culture, a culture of giving, a culture of welcoming people, but perhaps we should be less impersonal. we should make less advertising, and we should give ourselves a lot more, so people would learn to know each other, and this would improve the quality, a human quality, and people would know us better as people. >> yes. a good proposal. how can we do that?

of course, it is going to be decided by the state. it is a mentality that needs to change. >> i am a teacher from weimar. 10 years from now i would like to be proud of being a teacher. we know all the tasks given to schools, and i can talk about a lot of teachers. teachers work hard. the, on time, they do not spend their time is on holidays, but they go the extra mile. this contact with young people, with parents -- even if they give their time after hours, and that is the image people should have of teachers. everybody should be proud of their profession, and i am proud of my own. i think perhaps we are hiding too much. >> yes, we heard that.

we should say that 10 years from now we should still say teachers are very important, yes. [applause] >> we have all been to school, and everybody knows the work that is done by teachers. they do a great job and they need our recognition. >> so who do we want to be? how do we see each other? >> i'm a student in erfut. -- erfurt, and i would like add something to what the teacher just said. the speaker -- the picture she paid it looks very exemplary and positive, and it is true. many teachers work hard for their skins and they love this profession and they have a lot

of courage and they have invested a lot of strength. but i have also seen is not always the case and there are many problems very often, especially when we talk about identity. sometimes teachers cannot take it anymore. they are interested in transmitting knowledge. they just go through the motions to get it over with. they are totally uninterested. they call in sick. they come to work in a bad mood. they go, my god, i need to get it over with. >> the proposal about how to train teachers, for the chancellor. should teachers be trained for a more modern type of life?

>> we should cherished the curriculum. i have heard several cases where people are studying trick a law goes rricula that do nowhere. when classes are too large, they have a hard time teaching. this is true. >> good, at least we have heard two different advice is, and we are still going to talk about teachers for the next 10 years. who is next? you? at the end. >> i'm a specialist in immigration problems. we're talking about identity. there is a problem when you are talking about violence against

immigrants, especially immigrants of the third generation. we have learned german fluently, we have learned the german culture, and we still have a problem. it is very important to talk about normalcy. it does not matter what you look like, but you should be considered as a human being in not with all the value judgments and considered as an alien. i had a wish. i am dealing with immigrants, and i depend on project financing. there is no continuity, and we have a project, for instance, where we are putting germans together with immigrants so that, for instance, germans help the children of an immigrant do

homework, especially in math, for instance. this project is very successful, but now it is coming to an end to, and we did not have any budget to extend its. it is a big problem for us. and we see racism on an everyday basis. it is widely spread in this country, and we should not allow it. allow it when it to violence, and we should live together, and the best way to live together is to be together, and this is the best recipe against violence. [applause] >> we talked about projects earlier. it is always a problem. one or two more questions. you? you and you.

>> i have a microphone. i am from erfurt. identity -- i listened to all the wishes that people have from the state's, and my identity is also as a citizen. i am a german citizen, and i am thinking not only in terms of the task up on the states, and there are so many wishes. the family can do better for the children and the state. we should think about what is the state not able to do. when you are talking about basic income for everybody, that is counterproductive. of course, if i tell my children they're going without an income, how am i to motivate them? it will be hard to motivate them

to do anything if they do not have to think about what comes. >> do not forget which should not give the impression that the state can do absolutely anything. the state does not have the money. it is not the money of the state. it is our money. it is good for the citizens to give up and the state does everything for them? it is a question of identity. >> my identity is i am an independent, i can do it myself. of course, everything is linked to cost. this is my wish, my proposal. we talked about families. we talk about protecting the families. we invest about 120,000 euros

per child struck the chocolate and irish citizens. why shouldn't we give it to years of parents-only to the parents for the first two or three years, and it would solve a lot problems. two years, at least, would be better. i think it would be economically a good investment. >> ok. >> young man here. >> mrs. chancellor, i am a student in erfurt. two small points about identity. when i think about the federal republic of germany, we are a democracy. we are lucky that last -- that for the last 60 years in the western part of germany we have lived under a democracy. and we should insist more that we should emphasize that. it goes without saying that

freedom of the press, freedom of association, but we should talk about it. we should talk about it in school. i see we are going to have a new president. there are a lot of hopes, all the discussion about the new president makes us talk about freedom and democracy, but wish to talk about democracy more in the schools. personally speaking, i think the discussions on this subject is very important. but i see that in schools we have a guilt complex, that we transmit to students that still exists. it is very important. what happened in the past, which was terrible, we keep that guilt today. we seek to transmit it to the children, but we are a new generation. this national socialism, the nazis, which it accepted as part

of our history. we should talk about it so it never happens again, but we cannot continue, and putting the guilt on the new generation. and i see that at school and it is still a problem. [applause] >> i think we should not put the guilt on a new generation. that is why we have to work it out to teaching history. and also we should learn about these terrible events. this is important for democracy, the defense of democracy. we should not separate people again and restruggle the whole thing rate last. -- the whole thing.

last. >> thank you, mrs. chancellor. i represent the business people. we have a problem to solve in the future. two points. very brief. we have foreigners who come to work here. we should trained them faster. -- we should train and faster. which should give them all the training necessary. we should qualify them. also, we should qualify and give skills to our skit -- to our kids. we have a lot of immigrants in germany who want to stay here, so either we should keep them and hire them and our companies were left and go home and start companies in their own countries, so wish to train

then. >> the young lady. the last word. >> i am in the 12th grade in erfurt. i would like to talk about identity. there are many projects i am going to mention. one is a scholarship from the state that is given to students and children of immigrants. it allows us to plan our career through our school life, and i think these scholarships should be supported, should be developed, should be widened. it is a very good to develop your own personality thanks to these scholarships. [applause] >> you use that's cost yourself? very good, very good.

-- you use that scholarship yourself? very good, very good. >> now we should close. thank you very much for your very committed discussion. you can applaud yourself. this discussion was very great. a lot of very interesting points. mrs. chancellor, they gave you a lot. basic income, the schools, and immigration, cybersecurity, volunteerism. a lot of people are volunteers. they want to be appreciated. anything that ad? -- anything to add >> is a huge wish for us to live together well together in the future, and we need a good mixture of authorities, governments, and personal

engagement/ -- engagement. every citizen must bring his own. the different activities that deal with our citizens should be more recognized, because the danger is that people stay in their own corner, and i think we should create more enthusiasm for volunteers. and also another conclusion, the fact that whatever the age, what ever the status of handicapped or not handicapped, or origin, we should all have the same values. also, i will conclude that we should do more on the tolerance side. we should not put people in neat little boxes. we're all the same, and i am encouraged by what i heard

today. and we're want to look at every proposal that was mentioned today, and perhaps what you could not say today, you can send it to us, through the internet. what we are interested in is to learn from you and to feel how we can make germany into a beautiful country. [applause] i have heard that today, too. and how this country can be a better country. it can be even better in this country, and everybody can bring his own talent. thank you on my side. thank you warmly that you came here and participated, and i think it was not too boring. thank you again. >> thank you, mrs. chancellor.

it was very interesting. if i could emphasize, of course we have heard a lot of people who wanted to express themselves, they can do it, and no proposal, no expression will be lost. thank you. good evening. [applause] [captions copyright national cable satellite corp. 2012] [captioning performed by national captioning institute] >> mitt romney after winning michigan and arizona and today picking up the endorsement of ted nugent is an ohio speaking in cleveland with his wife. that will be live at 7:00 p.m. eastern on c-span2. >> bobby janell is scheduled to

reveal his proposal for balancing the budget today. it is $900 billion in -- is $900 million in the red. you're listening to the news and weather station. >> this weekend, the literary culture of shreveport, louisiana, saturday starting at noon eastern on but tv -- on "book tv" on c-span2. gary joiner, and then a look at the books housed at the shreveport archives. the need walking tour of shreveport with neil johnson. on c-span3, sunday at 5:00 p.m. eastern, a look at the base's

role in 9/11. also visit the founding fathers autographed collection, and from the planter medical center, medical treatment during the civil war. shreveport, louisiana, next week and on c-span2 and c-span3. -- who have we've added have we vetted? >> look inside the new movie that gave the inside story on what happened in the 2008 presidential campaign. >> i love those hockey moms. >> sunday -- >> their expectation was that she was an asset to the campaign, and for the week or 10 days after that, she was.

on the democratic side there was concern as the mccain-palin ticket came out of that to get ahead of barack obama by as much as five or six points. they were freaking and out. >> we will talk about "game change" sunday at 6:30 pm. >> we will bring you the conversation with the mayors of the three largest cities in united states talking about education initiatives. when it posted a question about your local school district -- what is working or failing? log onto facebook to post your comments. the mayors were at american university this morning. they serve 2.5 million students. this discussion is an hour.

[applause] >> good morning. i'm president of american university. secretary duncan, may years, andrea mitchell, welcome to american university. and to this very important discussion, education now -- cities in the forefront of education reform. i would like to think he picked the right university to host this very important event. american university has to our school of education and teaching and health provided teachers for these great cities, provided professional development in education for the teachers of washington, d.c., in all eight of our wards. these cities represent the education of 2.5 million students. some of them facing some of the

greatest personal challenges one could a match, but they also represent some of our best and our brightest. i wish this morning a fruitful and engaging and stimulating panel, and once again welcome all our distinguished guests to this very special event. [applause] >> thank you very much. thank you very much. i am andrea mitchell, and is great to be here at american university, right across the street from our studios. we feel very much at home. education now -- the theme of today's conference? cities at the forefront of reform. we have the leaders of today's three biggest cities. our largest urban districts are

a mix of both the best and brightest and the most severe problems we face. we have antonia villaraigosa, michael bloomberg, and rahm emanuel. no stranger to washington. and education secretary arne duncan has convened all of us, and we will be joined by the superintendent from all of these school districts to talk about how they are also dealing with the bureaucratic and hierarchical problems that some of them have inherited. education is at the forefront of all the problems we face as a nation. every social and political problem really comes to gather at the crossroads of our school systems. it is the core of the twin crises of and implement and lagging behind in global competitiveness. today's conversation will help each of the neighbors --

the mayors. i hesitate to say failures, but the zebra in project -- and progress, and we're looking forward to a thoughtful conversation to engage you in questions and answers as being with the superintendents. mayor villaraigosa, you have inherited a system where you do not have political control. how do you work around that challenge? >> that me say that i could not be proper to be here with both mayor bloomberg and mayor emanuel. both new york and chicago are doing what we need to do to improve our schools. they are challenged in a broken status quo that does not work for our kids. i would like to say that this is the economic issue of our time. the civil rights issue of our

time, and a democracy issue of our time. when you look at the issue of education at particularly urban schools. the not have control hoover unified school district. i ask for a partnership with our school district. i was given that partnership. the school district sued. i lost in a trial and on appeal, but we had planned be and that was to elect a progressive school board that would support the accountability and the innovation that we need to compete and to improve our schools. in the last six years, although i do not run our schools, the school district has increased, double the numbers of schools at 800. that is the mark for the performance index in california. they have reduced the numbers of

schools that are performing poorly. we doubled the number of charters our district. we have 130 schools on public- school trust, which are schools that are failing that are in a program to improve, and i operate 22 schools, 18,000 kids, and model that we pattered after ausl in chicago. while i did not have full control, i believe that is what we should have, and importantly, that every mayor needs to be involved in our schools, because it is the economic issue of our time. >> secretary duncan, is there anything that the department of education can do to backstop meier villaraigosa? >> i want to thank them for their courage.

this is the toughest issue they have worked on. we have people who get the urgency and nothing is more an important. they are putting their political capital on the line. whenever we can do in the cities, we want to be good partners. you want to listen. want to hear what the challenges are and what ever we can do to help. money for a turnaround school system. my job, whenever i can do, these are our customers. >> meier bloomberg, you have done a lot of controversial things. yet taken on issues, and one of and is creating larger schools. what are the advantages or disadvantages? you have gotten a lot of pushback and also success in treating these smaller environments. >> what is different today than 25, 50 years ago? the difference is we are starting to see their real-world

impact of what we have talked about. we have always said education is the key to participating in the great american dream. now for the first time you see in the marketplace. if the unemployment rate among college graduates is 4%. for those in high school, it is so high we cannot even measure it. we see competition for jobs from around the world, and we have to measure ourselves not against some subjective standard, but against the objective standard of can it be done elsewhere, better, cheaper. all of a sudden everybody says let's have accountability. accountability is what we need to get parents the knowledge they need to know where to send their skid -- their kids come and get to change the system so we have a different alternative street when of the went we have different alternatives, which break big schools up and the

smaller schools. let's principles be much more focused. it lets us have a team -- a theme in our schools. it lets us better measure performance of everybody, students, schools, and the teachers come out and get that information to the parents, because in the end we need accountability for the management system. we really need accountability data for the parents who have to make those decisions, and you can see yelling and screaming. when you get the data to the parents and the arrogance of the bureaucracies that say parents should not have data to know what to do with their kids. it is just astounding. we're just fighting through that, and everybody who talks about accountability and if i wish and systems -- state do not understand. it is not the evaluation system that is so important. it is getting that data to those

who need it to make decisions, and the first group is the parents. >> first ball, i do not know how antonio -- first of all, i do not know how antonio can be held accountable and not have control. he is accountable, but he has no ability to influence. he has had to push a rope. all the pains we have with the authority or the accountability, i would not trade places for a person who is accountable with no ability to influence. very bad for the economic stewardship. you're supposed to improve the economy, and yes you have the biggest piece of your engine, the educational system, you have no ability to influence it. this year, four years in our system, principles for getting an report card -- principals

were getting at report card on their performance that day never shared with their parents. ever since we have done that we have an increasing enrollment in principal in training programs. the immediate impact -- we have had principals improve their skills, because we've looked at the curtain, there's a culture of accountability in the system, and you see its impact behavior by the people who in my view are the most important group we can work with, the principals who are accountable. giving the parents intermission for the results they needed their kid is an essential first that to get the change ripple through the system. >> that we follow up with all of you -- >> the reason for me being here

it is you said something in your introduction. the three districts represented here are bigger than most states. if you took our collective students come i think they are bigger than all the students of some 44 states. yet we cannot compete for raced to the top, so the idea you just said that districts would not be allowed to compete for rest of the top in states like mine, where they have not wanted to have a competitive bid, is really heartening, because there is the bill in the citizen -- in the city of los angeles, cities of chicago and new york, to you the things, to get the flexibility we need to innovate and set the highest standards. >> secondary duncan? >> secretary to duncan just make an announcement that we could

put -- a small concept with raced to the top. so giving a small chance to our three cities -- to get the resources -- and here are our changes, here are the results we won, and not be tied to what goes on in the state level will be a change that as long to and welcome. he deserves applause. me give it back to something that mayor bloomberg said, most in passing, but i wanted to zero in on it. you pointed that the unemployment rate for college graduates is 4%, compared to what we have elsewhere. we know how profoundly the height the unemployment rate is four -- high the end clint rate

is for high-school graduates. -- we know how profoundly how high the unemployment rate is for high school graduates. >> 20 years ago across the country closed the additional schools, and everybody said, what do you mean? maybe, your kid is not going to harvard, and harvard is not for everybody, and that is not the way you make the most money. there was a great piece in the "wall street journal" comparing it going to harvard against going to the corrections department in california. in the corrections department, you almost never catch up. the benefits and vacation and

everything else. the issue is really we need people at all different bubbles -- levels, and when when we say college graduates, that is a very desirable thing, but being a plumber you have pricing power. being a plumber is something that society needs. it is a profession that people will pay for and you can be in charge of your destiny. let's not forget those, and we have started opening and a lot more of what i would call a vocational schools. we call them what? career technical education schools. >> in the speech many of us have been citing that the president gave, he was talking about all of that, community colleges, apprentice shipships. mayor emmanuel, you have a

program that works with the business community. >> we have to be real here. the majority of children in these districts are poor. the majority come from minority communities. these communities where we continue to have high high- school dropout rates, these communities are destined to remain poor. the only way we end the cycle of poverty is to get the truck but -- is get the dropout rate down to zero. a hat to graduate in some form of higher education. -- they have to graduate in some form of higher education. four-year universities, two-year colleges, as the aspiration for every single young person, and we have to challenge the status quo that it is ok to drop out. there's nothing out there in a global economy. >> when i talk to ceo cost about

hiring challenges, the chairman a siemens was working on a plant in north carolina, and he was going to admit -- to military bases because they are so well trained. our veterans have had so much trickier -- mayor emanuel, what are you finding what you talk to employers about what the gap is between the kids graduating from public high schools and the people they need to employ? >> first of all, basic fact, 3/4 of all jobs in the future require a post-high school education, whether it's three-year post-graduate or a two-year community college. in our city, we have instituted a college-to-career program. malcolm x will now only do healthcare.

abbott, rush presbyterian hospital, northwestern, walgreens, coming in, doing the curriculum, doing the training. that school will train you for the healthcare field which we'll have 84 thousands jobs in the next decade in chicago alone. we are a transportation, distribution, logistics center in chicago if it goes on rail, roads or runway, we do it. we have no school that does that. harvey will now be the trade, transportation, distribution center. coyote logistics, u.p.s., canadian national, burlington doing the curriculum, the training, to produce the work force to have a degree in that specific field. we just met in the transportation area out of harvey and each year two schools will do conventions and culinary. we'll do i.t., we'll do professional services and advanced manufacturing. those will be the other things, every two years -- every year we'll do another two schools

until all six are done. in the transportation distribution, they're ecstatic given the shortage of truck drivers who require computer knowledge and technical skills. it's not just driving the way it was before. and logistics and working in the warehouse and the information that comes with working in the computers and we're giving those kids coming out of high school, going to community college, a career, a chance at employment. right now, community college, you get a degree and put it on the resume, it does not have the economic value a four-year institution has. i have to give those kids a shot at a career. number two -- i'll give you a compliment so hold on for a second. this is a good one for you. last year, august, i was reading the "wall street journal" about a high school that mike was setting up with i.b.m., ninth grade to 14 and these kids get tutoring, mentoring and a shot

at a job, if they go all the way. so i went and called sam at i.b.m. and i wanted to give him a shout-out and i said come to chicago and we'll set up those schools and i'll recruit other companies to do it. we announced five high schools in chicago -- microsoft, verizon, motorola solutions have stepped up with i.b.m. taking high school, ninth through 14, to train the kids in stem education. it's a great idea and we'll give these kids not only just high school but they'll go all the way and see a pipeline to be first in line for a job interview to get kids a shot at a career, a shot at a job. >> i stand with the president in what he said and i think most educators in america stand with the president. the fact is, you have to be a career-ready or college-ready in this society. when you said, and you're right,

that a plumber is a good job. i can't tell you the number of kids that come up to me and say they want to go into an apprenticeship program as an electrician and plumber or carpenter but if they haven't taken algebra or geometry, they can't get in. the fact is, 75% of parents,, if you ask them they think college is important, they say yes. and we want our kids in unified to be career ready or college ready. we want them to graduate from high school because as you said, in l.a. today, our unemployment rate is 12.7% and i met with a group of economists this week who told me that one of the reasons why it's continued to remain that high is that we have such a high percentage of our work force that aren't even high school graduates. so they're going to be unemployed for a longer period of time. it's just as simple as that. >> and their kids feel that effect and it becomes a continuing cycle.

mayor bloomberg, we've thrown a lot of money at our schools and one of the things that michelle reed said this morning on msnbc where we've had this continuing focus on education nation and we're now in our third year of this, as many of you know, you've all participated. she said that we have doubled what we spent in the last decade on public school education and that testing shows that the outcomes have not appreciably improved. >> in new york city, we spend double what the national average is, 18-odd thousand dollars a year. >> what do we have to show for it? >> we have made improvements. you have to step back, what is happening in our world today. representative -- repetitive jobs are automated out of existence and jobs where you don't have to be by your supplier or customer move to the lowest priced part of the world so we have to find ways not only to get people to stay in school and get degrees but to make the

degrees and the skills they learn more relevant not to what the jobs used to be but to what the jobs are going to be down the road. that is an enormous challenge and the conventional ways that government works, we throw money at all problems. if you think about it, what legislators do, they vote money. they don't run anything so they go home to their constituents and say i did something, i got a computer for the kid in the class. it's not clear that the computer in the class for the kid is a good idea. there's a lot of evidence that says that's not making a difference, but uses a lot of money. but in the end, education is about a teacher looking at a kid face to face and so if you care about education, you have to care about the quality of the teacher. class size matters. i once said that you -- it doesn't matter as much as the quality of the teacher. it doesn't matter as much as the quality of the teacher. important. it would be nice to have small class sizes but in the end,

spend your money on teachers, the quality of the teachers, and get those who can't do the job out of the system no matter what the economic impact of that is. we worry about what it would cost to remove a teacher from the classroom who's not doing the job but not stopping paying them. that's not the problem. it's having a teacher in front of a kid as that kid spends another day of its life, his or her life, without learning. >> let me ask you about your loan forgiveness program because we have a history in america of not valuing teachers. if great schools begin with great teachers, how do we make teaching a more valued profession as it is in finland and singapore, shanghai, in the places out-distancing us on all of the international testing. you have a program, i believe, that helps recruit -- >> we have to negotiate -- we're trying to negotiate with the teacher's union to pay $20,000 bonus to a teacher ranked in the top of their profession two years in a row to say thank you

and to keep them from being hired away, or going into another profession. most teachers went into teaching in a world when they didn't have alternatives. today, women have a lot more alternatives and it's much more a women's profession than a the number ofgh males is greater than it was but if you look in the classrooms, you'll see women for the on first time having alternatives and we have to retain them. forgiveness of loan is to let them take a profession where they don't have to make more money to pay back their loans. let them go into a profession where the compensation is with recognition and respect and the pleasure of knowing you're making a difference but you still to pay back the loan so we're trying to help them with that but in the end we don't have a problem recruiting teachers. the real reason people want to teach in new york from around the country is that we have a school system that is really changing and making a difference and no matter what some people in the bureaucracy want to say,

we are. are we anywhere where we want to be, no, but we're making a difference and we've got to make sure we keep the best teachers and remove the worst ones from the classroom and that's the battle going forward. in the end, in government, removing those that don't do the job is antithetical to the way government works. it is virtually never done in any part of government that i know and in education, it is really the difference between these kids having a future or not. >> we're going to be introducing the superintendents momentarily, mayor emanuel, i want to give you a chance to wrap up this part of the program. >> i agree with what mike said about the importance of teachers but you also need a principal that's ready to be held accountable, a teacher that's motivated to teach a classroom and involved parent. if you get those three things, the kid will succeed. what we're going on -- to do,

we've raised a fund for principal merit pay so as your school improves on benchmarks, the principal benefits. we have the school, the principals and the c.e.o. on merit pay top to bottom. we've been playing with this, now on, if we get a principal, top of the class, reaching academic standards, we're going to pay him a $25,000 signing bonus to come and be a principal in taking over a school so next year we need 50 new principals of high quality so we're going to do a bonus or signing bonus for the best people coming out of our school systems who are ready to be principals and ready to take over a system and be accountable. and that, to me, is using the bonus system as a merit pay system for our principals. i'm fully supportive of what's going on with the teachers. >> we pay bonuses to principals to go into tough neighborhoods and take over those schools and

make a difference but what people don't understand, in government, management is a bad word and every time there's a budget crisis, there's a demand, cut the managers, you're overpaying your managers. let he tell you, when times get tough and you need to do more with less, you need better managers, you need better paid managers. i know it doesn't sound good. the people being managed say i don't want to lose my job and everybody worries about their own jobs and where you stand depends on where you sit but nevertheless, you need better management and the management in education is called principals and a great principal like a great store manager or office manager makes all the difference in the world. they get people to do amazing things. >> let me just, for a second. >> go ahead. >> i also pay, in my turnaround schools, i pay a signing bonus as they do and i agree with them on that point but in california, we've actually gone from number -- the top five in

per-pupil spending when i was growing up, to 47th in per-pupil spending. that's not the direction we want to go to, either. i do believe money matters. i don't buy the idea that it doesn't but you have to tie money to results and that's what we're trying to do. we want to invest money things that work and innovation and schools that are improving and teacher development, in teacher training and paying teachers more when they're succeeding. that, to me, is the third way, and it's the way we're trying to advocate for in california. >> we're going to engage the superintendents who have been involved. we're going to rearrange our chairs a little bit and bring up our three school superintendents. so let me introduce -- [applause]

>> while we all get set, we're going to introduce, first of all, closest to me is the los angeles superintendent, john deasy. next to mike bloomberg is new york city chancellor dennis walcott and of course next to rahm emanuel, jean-claude brizard from chicago. thank you all so much for joining us. first, superintendent deasy, you're facing a lot of challenges right now so one of the big issues, we want to know how you're dealing with the latest challenge, trying to get the teachers union to abolish the four-year time limit on disciplinary files after everything that you've been experiencing, we all know that there has been charges filed and a whole community terribly involved. bring us the latest on that. >> sure. the thing about los angeles and why i think it's so amazingly important. l.a. is a miracle. what happens in los angeles

matters enormously for this country and the transformation and reforms we're putting in place anchored on these three big bets of human capital, who we fire, who we hire, who repromote, keep, place, retain and compensate. public education choice and the third point is how you run the system and a strong management piece and those were brought to bear in how we dealt with the situation. there are laws in california that make it ridiculously impossible to separate chronically low performer or poor performers and actually cause a problem in retaining your highest performers so we think about the way you respond to situations four ways. youth rights are in the center of a bike and the four sides of that box have been traditionally negotiation. you try to negotiate ways to make things work. but that's also has to include regulation so you work with school boards and state boards

and it also includes legislation, you change laws if they don't work. and then, quite frankly, if those things do not work, you seek redress in the courts and deal with litigation and we will use all four to make sure that the rights of youth and the rights of adults are equally protected and that the voice of youth is heard. >> dennis walcott, let's talk about what's happening in new york city. one of the big issues there has been publicizing the performance records, the mayor alluded to it. there's a lot of push-back. bill gates even took issue with this in a "new york times" editorial saying that microsoft has a rigorous personnel system but he said, "we would never have thought about using employee evaluations to embarrass people." tell us the justification for making these performance ratings public. >> it's all about accountability and as the mayor indicated, parents have a right to this information. what i've been drying is make

sure the entire new york city community understands this is a limited piece of information and they have to view the teachers in a full context. part of our responsibility is to get the information out there and empower principals to explain what's going to so parents have a clearer understanding of what's happening in the classroom, how the teachers are doing. it goes back to what the mayors have talked about, accountability at all levels -- whether the principal, teacher or the students themselves. one of the little things that we've done when we talk about accountability with our high school directory, we put in for the first time, i guess two years ago, the high school graduation rates of those high schools so that way parents when they're trying to find a high school to choose from, they know how well or how well a school has done or not done and part of that is accountability and with the teacher data reports, it's another level of accountability as far as making sure parents have information and understand what that information actually means so whether it's a school grade, a teacher data report, a

high school graduation rate, we want to make sure that the entire school community has information available to them to help them make decisions. >> incidentally, gates does give at microsoft to the people that need it, namely the managers of the people being evaluated. in our case, it's the principals and the parents who need that information. so we're not doing anything differently than what microsoft does. >> good point. >> that's known as the last word. >> that is known as the last word. that's also known as someone out of the business world who understands how these things work. j.c. brizard, you've been facing a lot of challenges in your short tenure taking over this complex school system. i read that you went to the pulpit of a major church last weekend and explained just how passionately you feel about the reforms you're trying to groing

chicago. you're facing opposition from some in the teacher's union, from rainbow push coalition. tell us what you told the kong gants of that church, why it's so important? >> we spent quite a bit of time talking about the work we have to accomplish in chicago. we -- going back to the data and about exactly what has been happening in the city, we have an increasing achievement gap between black and white students. we have a five-year graduation rates of 57%. we have the average student graduating with an a.c.t. score of 17. 21 is the college readiness piece. so simply, a called to action and say, look, we have work to do. there are some calling for moratorium on school reform or calling for nothing when you have these kinds of things happening in our city so i went back to a place i've been to a number of times and said, look, we have work to do, let's stand together. not argue about the what, but talk about how we get there

but we've got work to do, we can't be the place to do nothing and i think pretty well received by all the people. >> and can i add one thing. our first battle as it relates to changing our schools, the chicago public schools have -- our kids, have one of the shortest school days and school years in the country. so you have a comparison. in new york, a child spends about 8,000 more minutes a year in the classroom than a chicago child, about. an l.a. child, every year, about 3,000 -- about 3,000 more minutes in a classroom than a chicago child. now, we're all competing, our children and our cities, shanghai, paris, london, let alone chicago, new york and l.a. that's cumulative so i just gave you a year's status. 8,000 more minutes, new york kid, than chicago.

love mike, great cities. his kids are not more valuable than the kids in chicago. so our first battle was getting a length of day and length of year equal to our aspirations and that was the most important thing we could do. >> superintendent deasy. >> one of the things that's coming across a lot this morning is the issue of accountability and public around accountability and whether it's an individual test score or school's performance, these are systems that all three are publishing report cards and i think the reason for that at the most important level is what you're talking about for a second. i fundamentally believe that information is the underground currency of privilege and has been for a long time and that when every parent regardless of economic means understands what it happening in schools and has the ability to make choices based on that, then you have equalized the playing field that is around the rights of both students and parents. you cannot just hope to know.

you must provide that information. and that entire process of being public around results and growth over time in those results is a rights issue for parents. >> it is. and the school report card that l.a. unified now employs was started in my partnership schools, we took it to scale. it's now throughout the school district and now i'm arguing we should put a letter grade by that report card just like kids get a letter grade to see how they're doing, our schools need to get a letter grade, as well. >> let me ask you, secretary duncan, it was suggested by the governor of connecticut that we should worry as much about early childhood education if not more, that between ages 3 and 5 we are losing kids so that by the time they enter public schools, they can't compete, they keep falling behind and that that, some some quarters, is as important as the high school graduation rate.

i don't know how you -- quantify that. >> everyone in the states would agree with that and we all talk about the career agenda and the last round of topics, $500 million out to states to increase access particularly in disadvantaged communities to make sure it's high quality. if we're serious about closing achievement gaps, we have children entering kindergarten reading fluently and other children who haven't been read to. we have to look at this continuum. early childhood is arguably the best investment we can make. we have to drive k to 12 reform. >> isn't pre-kindergarten really now the privilege of the middle class and upper middle class? >> no, in all these cities have hundreds of thousands of children, not enough, but we have to get poor children and black and brown children into high quality programs where their literacy skills and socialization schools are in tact once they enter

kindergarten. to pick occupy that theme, with common core and implementing common core in pre-k programs, as well. taking it from pre-k through high school and that's extremely important and picking up on the superintendent from los angeles, john deasy, from what we're doing in new york around choice options, to me, is tremendous. under this mayor we've been able to create 500 new small schools of which 139 are charter schools and the ability for parents to choose high quality options to me is one of the great equalizers out there because they know how well a school is doing or they know how well a school is not doing and it is our responsibility to get that information out on a constant basis. >> we have closed the gap between black and latino kids and white and asian kids, we've cut it in half. it's much too great but we're going in the right direction. by giving parents choice, parents can influence whether or not the schools get better.

one of our problems in new york city is that for some parents, private schools have become the schools and the private schools, they're very clever. they give you an option of accepting and putting down a non-refundable deposit or you don't get the place but you haven't found out if your kid will get into the right public school yet so what does a parent do and i get calls. should i send them the deposit or is my child likely to get into the public school of choice. we even had people outside of new york city for the first time lying about where they live so they could send kids into new city to go in the public schools. it used to go the other direction. >> let me bring in a couple of questions from the audience. one is that the more that you concentrate power in the mayors offices, the farther you get from parents on the ground, what you doing to involve parents more in bringing them to the table? >> i totally disagree. >> what we've done in new york

city, 2003, we invested roughly $80 million in creating a position called parent and every school has a parent coordinator and that's something that was done specifically to make sure that parents had a direct vehicle for an individual to talk to and we've made a major investment in that. we have put a lot of information into the hands of parents, have new technology available for the parents, a computer online service for parents. our goal is to make sure parents get information and a variety of different levels. >> actually, i think the opposite happens and i've worked in both systems, in new york and chicago and rochester, new york, where you have that single line of accountability, you know who to call and where to go to get the answer and in chicago we actually now have a parent engagement office at the cabinet level. our third level of reform. it is about empowering parents by providing information to them not just at the k-12 level but

early childhood, as well, publishing scorecards of our pre-k programs around the city so parents know to make a choice so i find the opposite. you look at the net result -- one quick thing -- you look at each of what we're doing, we're driving information to parents. if we didn't have that accountability, there would be no impetus to give parents the information to bring accountability into the system or bring their own voice into the system. >> parents -- professional educators. the parents want you to hire professional educators to run the classrooms. parents have to decide whether the results are good or not and move their children or demand better results but nobody suggests, i don't think, that you should have the parents come and sit at the front of the class and teach the kids. that's why we educate teachers. that's their skill set and they should have that job. >> and every one of my schools, we have a parent center.

we have -- i started off by saying we need to put parents and teachers in front of a movement to hold our schools more accountable. every school, we have a parent center. every one of our schools, we have an administrator whose job that's recruit parents, to involve parents. we help to start the parent union in los angeles and the parent trigger which allows parents, in failing schools, to vote to have a choice whether they want to continue operating under those conditions or have a charter school or some other so the fact is all of us have been committed to the idea that we have to put parents and students, teachers in the equation. >> i think the reason why i disagree with the statement is that i don't believe power has been centralized. i think that responsibility has been centralized. the power rests in the quality of the teacher and the principal and that relationship with parent or guardian and strong centralized responsibility divests that to schools as has happened in every one of these cities in ways that have given

parents more information to be more powerful and have given teachers and principals more information to be more effective. >> another question from the audience is that the who work within the inner-city districts, who are you doing to ensure the safety of your schools in terms of school violence and bullying and especially with the tragedy we saw happening in ohio this week and i think funerals being held this weekend. i interviewed one of the students and it was just breath takingly painful to think of what that young man experienced in escaping the gunfire. we associate that in our minds with urban centers and this was anything but. so bullying and school violence can happen anywhere. j.c.? >> until new york city in the beginning of the administration, we created what was called impact schools and did detailed analysis of the data as far as the number of incidents, types of crimes in our schools and

created a special set of schools where we infused those schools with police and school safety officers and worked with principals as far as what they should be doing from hallway passes to areas that may not have proper coverage and on the other handing how to cover them better and we've been able to reduce the number of incidence in new york city schools by 43% in our schools since the beginning of the administration so we've been clear that schools should not be run by that one individual who may want to commit a crime in the school but for all the students there so we're clear about the roles and policies of both the principals as well as the police and school safety officers in reducing the number of incidents and making safety a factor. the other thing we've done in new york city is be clear in the training with principals around suspensions and making sure they have appropriate policies in place and where appropriate suspending a student with what's called a principal's suspension or superintendent's suspension and making sure people understand that, as well so

we're focused on the importance of safety not just for our students but the entire school community. >> j.c.? >> you'll find a lot of synergy between what you see in new york and chicago. we actually have a system where we have the principals, 38 high schools, with police commanders. look at data both in and out of school and make connections for people. what happened over the weekend in school because we know what happens in the cafeteria may end up outside or vice versa so that dialogue, safe passage, looking at corridors and transportation hubs is one we look at. safe haven. we have a number of sites kids go after school because perhaps mom is not home. so a lot has been put in place to make that happen but in addition the one thing i often push is that safety and security is not just a security piece but also a youth development piece. we often forget about that. so positive behavior systems are critical. youth development is critical. getting ahead of issues,

identifying bullying, identifying perhaps if a child walks in the door and you see something on the face, you know something's going on so who's there to pull that child in to make sure it doesn't translate into an incident down the road. [applause] >> so it's beyond obvious safety matters and one incident of violent is one too many but context is worth pulling into the conversation. in los angeles, incidents of violence in school are very, very small compared to incidents of violence that youth experience outside of school and the fact that this is not about school safety, this really has to be about the community safety issue, and that is why the relationships with community foundations and the relationships with safe passages and the relationship with our police departments are critical. students, unfortunately, live in a violent community where they come to school, which is a far

safer place, and the notion of how to handle and make sure you are not engaged in that outside of school is as important in preparing to make sure the school is safe. >> we're all talking about different investment. there's no greater investment than after-school programs. no greater investment. whether it's all of us, somewhere growing up experienced our own that our parents did for us. whether it's athletic, academic or artistic, whatever that parent or child want, making sure that between the hours of 3:30 or 6:00 or 5:30, there is an after-school program available for children is essential to their safety and personal development and complements everything else that goes on during the day at the school. >> secretary duncan, we're short on time now and getting close to closing comments from everyone. i wanted to ask you about first of all the budget crunch which you're about to face because you have some very exciting programs but you have to go to those

people that mike bloomberg was talking about and rahm was talking about and get the money, legislated. the other piece is, with all of our programs, race to the top and the rest, have we put such a premium on testing that we have the unintended consequence of a rash of cheating scandals? let me take the second one first. we think there has been an overempsois testing under no choice left behind and the big part of the emphasis on the waivers we're working with with states is to broaden out those things so we're looking at increasing graduation rates, reducing dropout rates, making sure more students are going to college, not taking remedial classes, making sure they're persevering, trying to move in a much more comprehensive, holistic way. test scores tell you a piece of something but it's a small piece and we emphasize multiple measures and when congress

reauthorizes no child left behind and fixes it, hopefully leadership will shine through. on the budget side, budgets reflect our values and we're going to invest in education or we're not and it has to be at every level, early childhood, k-12. we're trying to walk the walk. the president is asking for a $1.7 billion increase in our budget. but we can't do it by ourselves. states have to step up. districts have to step up, cities have to step up. we're challenging colleges to keep down costs but as a country we're going to educate our way to a better economy or struggle and we're at a fork in the roads right now. >> if i could ask you to think of, j.c., perhaps starting with you, the single biggest challenge that you face and your greatest hope in terms of being able to surmount that challenge. >> i'll start with the hope. i'll paraphrase a line a

principal said to me a few months ago. he said the railroad is no longer underground. it is public, it is tangible and it is a high performing school. that is a solution for what -- much of what ails us. the challenge, i think, goes back to the power empowerment piece, making sure that our parents are making choices, we're providing them with the data to push the system to do better. as a parent, with three children or two, one on the way very soon. >> congratulations. >> thank you. that school. >> we have family medical leave now in chicago. >> that school is a solution so what i have in terms of knowledge base selecting schools and classrooms, every parent should have. that, i think, is a fundamental solution to our problems. >> mayor emanuel? >> for our school system, i the way i look at it, the system was set up for the any of the kids in mind. you would never, ever start a

system with the shortest school day and shortest school year in the country or one of them. the kids were never in mind when you developed that and it didn't just happen. it was negotiated. that's the sad part. making sure that we have a culture, i want in the end of the day, a principal that is truly accountable to what happens and the results that come out of that building because that you can get your hand around. i want a teacher who is motivated and excited about being this and a parent who doesn't think the system is too powerful but they can be involved in their own school and their own child's education, because all the information to date has been keeping them at a distance but they're the most important thing because the most important door a child walks through for their education is the front door of that house and if they don't know the importance of that education, every other piece we're responsible for doing has the weakest link and will drive down and i have to make sure that

parents know getting a kid to school is not the responsibility of just the education alone, but making sure they understand the value of that education is essential to everything else we do in the school door and pass through the classroom door and if we get those three things with a level of accountability and level of focus on results, everything else will flow from there and all the reforms we're doing are to focus on those three principals. >> chancellor walker? >> how we make sure the students are the people in the front of the discussion. a lot of times when the discussion takes place, when the battle takes place, it's always about the adults and how we define education on how it benefits our students, what's in the best interests of our students, how we put a quality, effective teacher in front of that classroom, how we empower our principals which we've done in new york city to be the true people in charge of their building, deciding on their budget to benefit our students, how we make sure those teachers have both the training, the support and the ability to carry

out their job for the benefit of our students and how we make sure that we wage the battles that we wage on a constant basis for the benefit of our students which includes removing ineffective teachers who are not doing their jobs, removing ineffective principals who are not doing their job and the final piece for me is how we engage our parent to make sure our parents both have the information, know what the information actually means and find a variety of vehicles for parental involvement since parents sometimes can't be at the school on a regular basis so they can able to carry out their role as parents and reinforcing what takes place in the school. it's all about the students. >> mayor bloomberg? >> we have a saying that in god we trust, everybody else has to bring data and i know of no ways for a teacher ton whether they are getting through to the child and whether the child understands and is making progress without testing those children and this business of

we're teaching for the test is exactly what we should do as long as the test reflects what we want them to learn. if the test is, can you read, yes, you should find out whether they read by testing them. and the tests that we do are in the children's interest and in the teachers' interest and we want to walk away from responsibility because sometimes the tests don't show that we're doing a good job, so, oh, i don't want tests. sometimes the tests show we're not devoting enough moneys to the system or too much moneys to the system. i know of nobody in this room that doesn't get tested. you go to american university, you get tested. you get tested, it's called ratings. we get tested at the polls and with the press every day and this argument that we shouldn't find out whether we're doing a good job is ridiculous. there was a pete sieger -- nobody in this room is old enough to remember it. >> we are. >> there was a vietnam -- pete

sieger had a song, knee deep in the big muddy and the big fool said to push on. without testing, that's exactly what you do and we are taking away the birth right of our children. we're turning out -- every time we say, well, we'll test next year or two years from now or three years from now, you're taking kids and sending them out into the real world with lack of skills and they will never catch up. >> i like the pete sieger reference, i'm just glad you didn't try to sing it. john deasy. >> we're all glad. you asked for the greatest hope and greatest challenge. for me, the hope is that progress isn't made in los angeles in the last couple of years continues at a much greater rate. so double in graduation rates, they have to be doubled again. the ability that we watch the highest levels of performance at every grade for every subgroup of students is great. it's not where we want to be but nowhere where we used to be and that all students can graduate,

every single solitary one of them, college work force ready, then i think we've honored the right for which we took the job. the challenge is how to overcome what i think is a systematic disinvestment in our youth and living circumstances, poverty, and youth who do not master english yet in this city and in this country. i do not believe that we fundamentally believe all students can graduate college work force ready or we would act differently, we would construct systems for them not just for the adults that work with them and that is a profound challenge. i think one of the things you see here is the era of superintendents and mayors showing up at a press conference to celebrate a free token on a bus, that's gone. it is one team who are profoundly committed to advance rights and accountability. that's a positive sign, whether it's mayoral influence or mayoral control, this notion that this is two different

teams, that is not the way it is anymore. and mayor villaraigosa? >> one hope is that in addition to districts like ours that are city states, being able to compete for race to the top that we also get waivers from nclb so we can innovate and do the kinds of things that states are allowed to do so on those two points, that's a hope. but the real hope, the macro hope, if you will, i want our schools to be world class schools and when tom friedman says that the world is flat and we're not competing, he's not just talking about the urban schools, he's talking about our kids. my daughter's at s.c., my son was at princeton. he's saying our kids aren't competing in math, science. i want our urban schools to be places of a world class education. i want our kids to be able to compete and challenge, i do believe and one of the reasons why i really wanted to have these two great mayors here with us, superintendents, i do believe mayors have to spearhead the effort to reform our

schools. we have to put parents and teachers first and focus as much on the kids as we do on the adults and that's something you've heard across here. we all know that people work hard and the teachers who get into the profession are people who care about changing the world but we want the best people in the profession and we able to measure who are the most effective and highly effective teachers, hold them accountable, principals, as well, invest, but tie that investment to results and improvement. >> i want to thank everyone here today and thank secretary duncan and your wonderful team for letting me nant this. if there's one clear message from all the mayors and superintendents it's that the children should be at the center of all of this, the children, their parents, that accountability matters, that principals and teachers have to be held accountable and we all have to work together. 2 1/2 million children are led

by the people on this stage and their lives are in their hands so that's the profound message we all take away. thank you all very much. [applause] >> the "washington times" reporter who covered this event earlier today. ben wolfgang is national reporter with the "washington times" covering the education event at american university today. what was the dominant theme of today's discussion? >> i would say the dominant theme was how large cities, new york, l.a. and chicago, are reforms to their public school systems, sort of in spite of the lack of action

we've seen here at the federal level. all three mayors, villaraigosa, bloomberg and rahm emanuel, spoke of the need to reform no-child-left-behind and have direction at the federal level. they spoke of what they're trying to do outside of that in terms of charter schools and a variety of other things but one of the dominant themes was, we need more of a national direction and they're all looking at congress to do that. on a local level, what did you pick up? what district, what city seems be getting it right? >> well, i think the three represented today -- chicago, l.a. and new york -- i think they are in different ways. for example, in chicago, rahm emanuel talked about how his city is putting more of a focus on career training. he's partnering with companies like microsoft and a variety of others to develop certain curricula so students can choose a field they want to go into and get a head start on training for that field. in l.a., the mayor spoke about

how they're trying to expand public school choice to a level it's never been at before in l.a. they doubled the number of charter schools since he came into office in 2005. mayor bloomberg in new york got a lot of publicity for closing down some of the largest public schools and reopening scaled down smaller schools with smaller class sizes and greater interaction between individual students and teachers. so i think each city represented this morning, was getting it right in a couple of different ways. >> you mentioned that the main theme was a demand, a request for more direction from the federal level. that gets back to the reauthorization or the change in no-child-left-behind. where do things stand on that law right now? >> things are pretty dim right now. if you talk to leaders in the house and the senate on the education committees, i think everybody all privately acknowledge it's not going to happen, particularly in 2012,

election year, where congress infamously does very little. i think that's going to be the case this year. the two sides are just too far apart right now and it doesn't look like it's going to happen. the senate and the house are moving forward with their own plans. this week, the house education committee passed the final two pieces of its reform agenda. the senate education committee passed a bill. neither have gotten to the floor yet. one of the reasons, not surprisingly, is politics. in the house education committee, you have a lot of freshman republicans that came in with the tea party wave the last time around and they're pushing for a scaled back level of victim. from the federal government, reining in the department of education, getting rid of mandates and that doesn't jibe with the democrat-led senate so there's a log jam right now. >> you can read ben wolfgang's

reporting at washingtontimes.com. thank you for thank you very much date. >> absolutely. thank you. >> the education discussion here in washington today had the mayors of the three biggest cities in the country but we thought we'd broaden it out and ask your thoughts about how education reform is playing in school districts across the country. we open up our phone lines. you've seen the numbers on the screen -- make sure you mute your television when you call in. we've post the question on facebook, specifically, what's working or not working in your school district. aind a couple of comments before we get to calls --

also look at twitter. let's take some calls. scott from baltimore is first. caller: my opinion is, there's not too much working in baltimore. the superintendent said not too long ago, he's superintendent in name only, but there's a board that actually runs the city school district and they don't seem like they're empowering him to make changes when he came in. he wanted to make. and this mayor that we have here, stephanie rawlins blake, don't really have a clear vision of where she want to take the education system here in baltimore. i kind of like some of the ideas that chicago had, you know, with

the after-school programs, having something for them to do, because the mayor here kind of killed a whole lot of after-school programs and there's really nothing for the kids to do after they get out of school and that seems more what chicago mayor and the c.e.o. over there were kind of thinking of and it was a good idea. >> we have a call from chicago, decloser is on -- delores on our independent line. scott from baltimore has kudos for the chicago system. would you agree? >> i would not agree. >> go ahead with your thoughts. turn down your tv. >> i've turned it down. ok. my thoughts is that i see things that are getting increasingly worse because they're rushing to do things without having anyone's input. there are other people involved besides the mayor and the c.e.o. there are other things that need to be done besides addressing teachers' needs and parents' needs.

like support staff, i have not heard them doing anything for bringing in social workers to address children who have problems like school anxiety, bullying or anything like that. i don't see those programs and you cannot get a child to learn unless you're going to address his emotional or mental needs first. >> and the issue of bullying was raised in the conversation in washington today at american university. just a reminder. we'll show this event later in our schedule and you can also see it in our video library at c-span.org. let's hear from todd in traverse city, michigan, on the democrats line. caller: hi. i couldn't help but notice watching the previous program that once again you have a room full of individuals who are commenting and inputting on reform ideas that are so far removed from the classroom, be it on talk shows, on these forums. you see everybody up at the mic

speaking except the people who are in the trenches day to day working with these kids and i am waiting for someone to get a room full of educators who can actually talk about what it takes for successful public education to be executed and it's no secret. >> it sounds like you're an educator yourself. >> i am an educator. >> if you had to step before that microphone at american university, what's the one big point you would make? caller: i am so glad you asked me that question. the success in the classroom boils down to a handful of things. a reasonable class size, a top-notch curriculum, sufficient resources to execute that curriculum, a well compensated, incentivized, motivated, highly trained classroom teacher and parents who agree to hold up

their end of the bargain. and when you take away one of those things, you will begin to see the dysfunction and the disruption. >> hey, todd, thanks for sharing your view as an educator. here's westport island in maine, richard on the independents line. go ahead. caller: one of the things that i agree with most was michael bloomberg's comment about testing. one of the things that has been very successful up here is to have regular testing that provides immediate information to the teacher as to whether or not she's reaching each individual student and then along with that, a response intervention program that targets problem areas so that we can boot strap bring up all of the students throughout the district in a uniform manner

and, you know, it's got to be testing that has an immediate information back to the teacher so the teacher knows what's working, what's not working, who that teacher has to address. >> richard, how big of a school district, by comparison, is westport or the area around where you live? >> we're in a district that has about 2,000 students. >> 2,000 total? caller: yes, with eight different separate schools. >> thanks for being with us this evening. in stevensville, michigan, republican caller. this is robin. hi, there. caller: hello. >> you're on the air. caller: thank you. look, i feel that there's an old adage, you can always drag a to water but you can't make them drink. people keep beating teachers up. you know, i mean, what can you

do? you teach them the best you can. if they're not willing to absorb the information that you give them. >> going out to california, hemmet, california, on our democrats line. this is eddie. thanks for waiting. caller: ernie. >> my fault. go ahead. caller: no problem. i think the obama administration has the right idea in that they want to help education out whereas the republicans and the g.o.p. currently, we hear their rhetoric, they want to pass it over to the states and in some cases cut all funding to education. that's like -- that's a no-go. of course, the tuition hikes here in california are outrageous and something needs to be done about that. >> you're talking about the in-state college tuition? caller: yes. and you have protesters out in

berkley, here in los angeles and -- i don't see much going on in riverside county where i'm at but there's still -- >> give us an idea, looking at -- this is college education. give us an idea what tuition is for, say, the state university, i don't know, north ridge or where you are near riverside, how much is tuition there? caller: you see our university at southern california riverside, it's over $50,000. >> per year? caller: for a bachelor's in like, each philosophy. >> thanks for being with us. next up, we go to nashville and in nashville on our republican line is albert. is this albert? caller: yes, it is. >> welcome. caller: thank you for taking my call. this is about the elementary education. i'm not blaming the obama administration or the republican administration but they need to

sit down and iron out a few things whether it's federal funding and keeping it up. i really don't think you need to increase it. but what you do need to do like the previous caller said, you do need to reduce class sizes and we had a furm -- forum here in nashville with a number of teachers from in and around the nashville city schools and the main thing they were saying is that the no-child-left-behind is making it so that they're having to teach at a level so that the slowest person in the class or not necessarily slowest but the one having the most difficult time is challenged but none of the other students is challenged and the other problem they had other than class sizes that was they all feel, i think it was close to 80%, feel like they were having to teach to the test, the basic skills test.

we have already lost one generation. we're losing another generation because of critical thinking. there is no critical thinking. >> a couple more calls here. thank you, albert in nashville. want to remind you, the conversation continuing online at facebook.com/cspan. a viewer posted a column that said, if scores go up can the education lobby ask for more money? feel free to go to facebook.com/cspan for your input. synthingia from greenbrier, texas, is on the independents line. am a former public school teacher and i am finishing my ph.d. in educational psychology this semester. i will not go back to teach in the public school system for this reason. the last job i had as a public school teacher, the district tried to tell me what time i was

supposed to teach math, what page i was supposed to be that day, how long i was supposed to spend on that subject that day, what the kids were supposed to do for homework. it was all scripted. you can get a good kid that can read at an eighth grade level to do that. you don't need to pay me $30,000 to read a recipe. and this testinging is what has prompted all this. the districts are nervous because they want to pass the test, they want the kids to pass the test. they want a high rating. and it's ridiculous they're trying to dictate that to teachers. i'm not stupid. i'm a very intelligent lady. i was an excellent teacher. how long did you teach for? caller: 15 years, 15 years. and what the last gentleman said education is so true because we spend so much

money on our special education kids. thousands, hundreds of thousands in dollars. going to let you go there. thanks for that comment and see if we can get one more comment from ann in california on our republican line. hi there. caller: hello. how are you get the last word on education. caller: why do we have three- months of summer vacation? it is not necessary. children had to help out on farms, and worked in the shops and things like that. it is outdated, and children in the lower class is, first grade-third grade, they for get

what they learned. they go over the same things for six-weeks minimum. host: that is and, from california. we are turning our attention to politics ahead of super-tuesday. coming up, we will take you to east like ohio and the annual lincoln dinner. rick santorum is speaking there. coming up, on the c-span 2, mitt romney joined by his wife. earlier today, he an interview was released by the atlantic magazine, it jeffrey goldberg, senior writer for the magazine. he interviewed president obama. the discussion was on the israeli meetings and nuclear ambitions in iran.

here is. it is just over 30 minutes. >> good afternoon. ok. thank you for being here. i will make a quick announcement which is that i have a parent- teacher conference that i am committed to making. i need to keep this at about 35 minutes if i could. have you seen my kid the's report card? it is all good. questions onfew

the u.s.-israel front. i am trying to reconcile a couple points. he said that he would not presume to tell israel how to handle its own security. but also that an attack could be a distraction in a sense, he is trying to tell israel what to do. not to attack. >> what we share in our constant and regular communications with israeli government and military officials, our judgments of the diplomatic situation, the situation regarding iran and their pursuit of nuclear weapons technology, and ideas about what contingencies might read what outcomes, that is quite different from trying to tell a

sovereign nation how to make a decision, and the president would not presume to do that and he will not do that. >> when asked if he plans to read up his rhetoric to the prime minister about the red- line issue, he said "we have options including the military option and i do not bluffs." does the white house feel privately and publicly that it has fallen down this bread line? >> i want to be clear, the president gave this interview and spoke extensively about this issue. he, the secretary of state, the vice president and secretary of defense are in the regular consultations with the israeli counterparts. one of the hallmarks of their relationship is the level of cooperation and consultation. he does not need to communicate

through an interview with israeli leaders because he communicates with them regularly. in fact, he has probably met with the prime minister more than any other leader. that is one thing. and i think, yes, the conversation that he and the prime minister had and the leaders of the administration and other government leaders are fall of the tel and analysis so i do not think there will be -- i think the israelis understand the policy approach our president has taken and what our view is of what the behavior of iran is about. what our view of the time and space that is still there to continue to pursue the diplomatic path, isolating iran,

pressuring them to change their behavior, and obviously we share a lot of information in the intelligence community about what exactly iran is up to with regards to their nuclear programs. >> the prime minister describes his relationship as functional. how the relationship is portrayed. >> i was in the interview that he was giving the question as a dysfunctional it is a full relationship and a candid relationship that they meet and speak regularly during. they have been a very close friends as america is to israel. they do not agree on every single issue in regards to tactics and strategy, but it is productive and candid.

>> the president elaborated on the relationship and said it was very functional. he also described it as more of a business-like relationship with a personal report. they both have a lot on their plates, but does the president feel that it is important to have more of a personal rapport with the prime minister and will that be one of their goals on a the meeting on monday? >> one of their goals is that the issue folks are focused on is one of paramount importance in terms of not just the national security of israel but also the national security of the united states and regionally and globally. his most important is a

communication and cooperation with our counterparts that we do have. what is clear to iran and the world is that our approach and deal is towards the behavior of iran and what they need to do and what their options are. the president said in that interview and other times when he took office, the world was divided about what to do over nuclear ambitions of a iran, and they were unified. the reverse is now true. leading the international community by demonstrating his willingness to negotiate and discuss with iran and to sit down and talk with iran if it were willing to demonstrate its commitment to upholding international obligations. by taking that approach, he has unified the international community in an unprecedented

level of human -- an unprecedented level of action against iran as a result of its behavior. the relationship is sound and the president has pointed out that what is true about the relationship is that israel knows that the power and french of and our support for israel is a bipartisan fact of our life here and americans understand that that relationship is the same regardless of which party is in power in israel. the president looks at this as not a political issue, though some people see it as politicized. it is in -- an issue of national

security. >> will there be a joint press conference? >> i do not know anything beyond what i meeting to talk to you about today. >> president obama called the georgetown university law suit a -- why did he call her and what did he call her? >> it was about 20 minutes ago. i was in the oval office when he did and that was one of the things that delayed the briefing the president called georgetown university law student to offer his support and express his disappointment that she has been a subject of inappropriate personal attacks and to thank her to exercise her rights to speak out on issues of

public policy. it was a very good conversation. is that all you can tell us about the conversation? >> i think so. it was a good conversation. he feels that the kinds of personal attacks that have been directed her way are inappropriate. the fact that our political discourse has become debates in many ways is bad enough. it is worse when it is directed at a private citizen who is simply expressing her views on a matter of public policy. >> is it appropriate for a democratic organization to try to raise money off of this attack on her? >> i will leave it that you would ever organization might agree with her or sympathize with her. the fact of the matter is that

the president was expressing his support for her at his disappointment in the kind of attacks that have then leveled at her. his appreciation for her willingness to stand tall and express her opinions. >> one last question on the same subjects, vice-president joe biden at iowa state university was referring to the contraceptive debate and said it got screwed up. that was a "buy him why did it get screwed up? >> when he made his announcement from the podium of about one approach to take, and direct his administration to take, in colleges and universities and hospitals, the idea from the

beginning which we attempted to make clear was that there would be 8 year-long period where we worked to achieve a resolution to this that would preserve religious liberty and still provide the contraceptive services to women and no matter where they work. what is clear that the president was expose about while he was here is that for what ever reason of the debate was such that it became imperative in his mind that we come up with that resolution in a far quicker period of time and that is what we did. he felt it very important that people understand he took the religious liberty issue very seriously as he expressed here from the podium. his own experience with faith- based organizations when he was a young man it demonstrated the importance that they have in his

life, and he believed very clearly we could extend this important health care coverage to all women and to do it in a way that found that balance and preserve to religious liberty. thank you. >> the last few times the president has met with the prime minister, much of the focus was on the middle east peace process. is the focus on iran pushing that aside, overshadowing that effort at all? >> there is no question that the behavior of iran is front and center right now. for this president, in terms of national security policy, in his discussions with the prime minister. it is not the only topic that they will discuss and not the

only topic of importance between our two countries. he remains committed to doing everything his administration can to encourage both parties, both sides to come to the table and negotiate a two-state solution. that is the only way to achieve a long-term peace in the region. i am sure it will be discussed when the two leaders meet. >> what is the nature of the relationship between the two leaders, is there trust there? >> there is. there is a clear understanding that because of the level of cooperation at the highest levels as well as the variety of levels i discussed, that what we

see in regards the to the issue of iran it is what our policy is and how and why we are pursuing it, why we think the president has said a diplomatic solution where iran announces nuclear weapons ambitions is the best option in terms of resolving this problem through the long- term in stead of temporarily. because there is time and space to pursue that path, to pressure iran, to isolate it, to have an ever-increasing level of sanctions bite in terms of the economy, that that is the right way to go. it is also the case as the president made clear in that interview that he does not take any options off the table, and that everyone should be clear about that. he does not bluff.

no option is off the table in our potential response to iran's this -- pursuits of a nuclear weapon and he means it. >> when the president says he does not bluff does he mean it in terms of them acquiring a capability or acquiring a weapon? >> we had stopped them from acquiring nuclear weapons. there is a staged process here, and we know there is time and space to continue to pursue a diplomatic path of sanctions and pressure. we have the visibility in terms of their nuclear program, we have inspectors on the ground, and we know that they have not made that break out move towards acquiring nuclear weapons.

we will continue to pressure iran and work with our allies to ratchet up sanctions and isolate the regime and the price they are paying for the behavior is already high and will get higher. that is the policy we are pursuing. >> on the call with the georgetown law law student, was the president made aware of rush limbaugh's comments? >> he is aware of them. he thought they were disappointing and reprehensible. it is disappointing that those kinds of personal and crude attacks could be leveled against someone like this young law school student who is simply

expressing her opinion with a matter of poise. >> the president has tried to convince republicans that he is too tough on israel and too soft on iran. there is for some folks an overlay of american domestic politics here as i know for being with him and when he discusses these matters, this is a matter not of domestic politics but of american national security and our closed out -- a close ally of israel. these are extremely serious issues, and he made clear in the interview that he gave it to the atlantic, he is fully focused on

the thread that i ran it represents to israel, the united states, and the world. his policy has been designed from a day-12 to prevent iran from acquiring nuclear weapons. >> is there a line that they cannot cross without the united states doing something in the response? >> he made it very clear that when we talk about the options available to the united states and make clear that he will be ruled out no option and take no options off the table.

that occludes obviously the military option. it is our policy that the best opportunity we and many allies on this issue have and the threat of acquiring a nuclear weapon is to do it diplomatically. iran needs to make the decision and their leaders meet to make a decision to forsake pursuit of nuclear weapons. we have time and space to continue to pursue that policy. the president also made clear that it is not strategically in our interest to drop an explicit red-lined in terms of what

hypothetical action by iran would result in a specific reaction by the united states. he has made clear what our policy is and that we do not rule out any option in responding or dealing with the behavior of iran, and i believe that is the way it will remain a going forward. >> one more political question, the president recently crossed the 100th fund-raiser goal in terms of his campaign which is used to be up on hand in terms of focusing on pre-election rather than of there's of state, -- in terms of focusing on the reelection rather than of the affairs of state.

>> it is hard to know specifically what is a result of, he is engaging in political events because that is what is required of running for president and being elected as president. it is also true as i understand it, there is an enormous amount of support for the president and a desire to participate in these political events in support of his campaign. the fact of the matter is, at it is still a very small portion of his time and he is still enjoying, if you well, the fact that he does not have a primary opponent, the length of which is

yet to be determined. he is able because he does not have an opponent, to spend a relatively and less time than if he had a primary. there is no question that as we get closer to the fall, as every president has who is seeking reelection, he will spend more time focusing on campaigning for it. >> he appears to be starting earlier. >> i do not know if that is the case. in just maybe more successful at it than some of his predecessors.

he appeared on the andrea mitchell show and talk about the message for the leader of the president of the georgetown university. he talked about the need for a more civil discourse. because the comments were disappointing and reprehensible the> let's be clear, president expressed that he was disappointed she was the subject of these crude personal attacks, it is fair to say that reprehensible is my word. it is on fortunate that these attacks were leveled against her and and they were

inappropriate. the president called her to thank her for speaking out on a matter of public policy. he wanted to express his disappointment. >> at one of the fund-raisers in the new york city, the president made a comment that he could just run footage of the

gop debates, and his tone was one of ridicule. he expected a tough and close race in the fall. given the fact that he holds it in regard in terms of how they are conducting themselves -- >> the. as he and i and others have made, but we have seen from the competition on the other side to produce a nominee for the republican party is that no matter who it is, the policies are very much the same. these are the policies that got us into this mess. saying we do not need to

regulate wall street. even though the financial crisis is the worst since the great depression. we do not need to regulate or prevent insurance companies from throwing people off when they get sick. younger americans who have insurance coverage now because of the affordable care act, and the policies put forward that are similar to the ones our republican friends on the hill put forward. we should put bigger tax cuts up for millionaires and billionaires, lawmaking life even harder for the middle class.

between those policy positions on the economy and the ones he has pursued and is presenting. >> the president was repeatedly asked about iran and syria. he said is at certain trigger- happiness in the world.

these are my words. he wants it to be known that these views account for the white house. >> we have to move quickly. of course the the use of russian leaders count. we have an important relationship with russia. we have been in regular relationship with them. we profoundly disagree with the decision by russia to veto the security resolution that supported the arab league proposal. regardstrig toger happines, anyone who is seen the footage of the brutal assault on his own

people, they understand that it is all on one side. the brutality being carried out on the city in the last 24-48 hours is a disgraceful and horrific and should be condemned by every nation of the world we need to take action to prevent further brutality and murder of a syrian people. >> have you seen any sign of government troops doing anything other than trying to slaughter peaceful troops demonstrating democracy? >> [unintelligible]

>> despite my personal interest and history with russia, i know he is fully aware of the upcoming elections and the participants there in the. thank you. host: we will take you live to the republican dinner getting underway shortly. we will get your thoughts on the road to the white house2 2012.

the numbers are on the screen. we expect rick santorum at about 745 eastern. -- 7:45 eastern. the press secretary was asked a number of questions about iran. we have a link to the article on our web site. ahead of the of that tonight, the tw and ie onts. -- keeping

an eye on tweets. the washington the caucuses coming up in a week or so. tennessee, oklahoma, massachusetts and vermont on a super-tuesday. we have a democrat from the fairmont, west virginia. caller: we are a democratic state here in west virginia, and we want to vote for rick santorum or newt gingrich. i did not vote for president obama, that is for sure. i am a conservative democrat but i will not vote for him to.

he has ruined this country. host: as a democrat, can you vote in a republican primary there? caller: i will find out. if i can, i will. host: here is it an independent -- and independent. caller: we had so many serious things going on in the world today, and all we can do is think of the most precious resources we have our human beings. at life. that is the most important thing that is all that is important. next is loved.

we have had major tornadoes across the country in the 19 states across the countries. we need to step back and realize that we are feeling so much hate on this planet that it is ridiculous. who cares about a house or a car or what ever. it is about family. that is all that is important. we have lost sight of that. we have gotten bogged down in stop that does not matter. look at what is happening in the united states today. they do not care about your skin color or political preference, we are all hurting here. we need to stop this and come together as a planet. host: she mentioned to the

weather. it had an impact on the mitt romney event that is happening now in cleveland. the governor of new jersey was supposed to join him, but his security asked him to stay home because of rough weather. --'s go to james in atlanta or jonathan in the illinois. caller: think you for taking my call. i would like to express who i am voting for in the coming election. that will be ron paul. we face overseas wars and higher spending in the country. why do we keep going overseas for another war? we only star wars with countries we have no possibility

of going bankrupt. caller: we also have newt gingrich coming up on sunday for washington the journal. we have jose in the detroit. caller.ratic caller: calle caller: i support the president of 100%. i know that he will be the president again. he does what he has to do, and the republicans do not like it. when someone is in charge it is not like the bush we will have coverage on sunday morning.

the president will meet meeting sunday with the israeli prime minister. we have just cut in the detroit joining us on the line. we do not have jessica. we are waiting for the start of the of that. rick santorum speaking in the east like ohio. it should get underway in just a couple of minutes. just got in the detroit -- just a cut in detroit on the independent line. caller: his president obama really trying to put -- is he trying create a new world order?

host: we will have details on his meeting with the israeli prime minister. mitt romney is speaking in a rally at cleveland. let's go live to the lincoln day dinner as we wait for rick santorum. >> a big round of applause for everyone. please be seated.

we are ready for our guest speaker for tonight. i want to thank you all for being patient tonight. i hope i entertains you. i am going to go to the bar because my duties are done. i turn it over to dale fellows, our chairman. are you guys ready? i get the honor of introducing our attorney general, mike. i remember meeting him when he was a state senator, and the

united states senator for quite a long time. now we have him here to do a very special introduction. i am thrilled to have our special keynote speaker here. and our attorneys generald mikeewin -- our attorney general mike dewine. >> we are so lucky to have the great leadership of this party. we are delighted to be back. in just a moment, we are going to give a great welcome to this guy.

we have known him for almost 20 years puree it he is a true conservative with accomplishments and has done things. he is someone on the senate floor who fought against entitlements, when it was not popular. he took the lead in that. it was rick santorum when we were fighting to change welfare. it was rick santorum who was on the floor day after day and very articulately explaining. it was unfair to keep them down. he believes there should be opportunity for for every american and thus we had welfare

reform. we fought the battle for partial-birth abortion. we finally got george bush to sign the bill. this is and how -- this is a man of solid-core values. there have been with them. done.nform what he's he has a great family. when we select the the president of the nine states, there are a lot of things that go into consideration.

character is most important. whoever is in the oval office will have to do tough things. he will have to talk to entitlements. that person has to be someone who can inspire us. because we know we need to do these things but it is hard to do what i have seen on the campaign a trail all over the state of ohio, this man a connects to people. you will see it tonight.

this is a man who has in my opinion clearly the best chance of winning this election in the fall. is it important that we beat obama in the fall? a man who will appeal because of his values because of his background, he will win ohio on tuesday with your help, my dear friend rick santorum. >> [applause]

>> thank you very much. it is great to be here in ohio. it is great to be here in eastern ohio. thank you for the help and support over many years. every time we go on the road, they always say it less rick santorum. thank you for their help and support across the state.

thank you for all of your help and support. i always talk about the early part of our campaign in 2000 and 11. we were 1% in the polls. i did not put my name on the polls until september. it probably would have discouraged me had he put my name on the polls. we have folks who believe in us across the country. a month or two before iowa, ohio was one of the states, and i want to thank dale for that. and those of you for being with us. iit is great to be here.

the reason we hate each other is because we are so much alike. that is a good thing. to have that rivalry between the siblings. we really do enjoy going after the browns here and you occasionally get the chance to go after the pittsburgh steelers. i know i am trying to get votes and not lose them a. i was a steelers fan before i ran for president. it does feel like home and it is great to be with you. thank you for the outpouring of support. i talk about my roots of a lot,

growing up in western pennsylvania and what it was like growing up in a steel town. cities that were built on the industry and shipping and the industrial revolution that occurred between the these two great cities that helped build america. there is a lot of pride here. folks who stand on the shoulders of ancestors who created and gave so much. their intellect, work in those companies -- ice think -- we were built unlike other countries, built from the bottom up. we were not ruled by a central government or a cane. that was not how we were built.

we believe and a government of a free people and integrity and value. church, the local schools, community organizations to take care of each other. we did not call for washington to help us. we asked our neighbor, we went to the church or the school, to your employer -- we are all in this together. i talk about the declaration of independence, -- the phrase that says we believe that all people have dignity, and the freedom and opportunity for people to pursue their dreams. not to have government dictate to them what their rights are. before we separated from england, we were subjects of the crown.

we served the sovereign. after that signing, our founders wrote that we pledge to each other, it is about more than just yourself, it is a bond here in cleveland. there are many things that bind you to get there. it allows you to go out and live your life without going on in relying on the government to give you things. even people who have to fall and slip and end up getting help from the government, it is the last thing people want. at a time where as many of you know, there is thanks to in that

society in america. not just because of high gas prices, but because of something more fundamental going on. limited government, and free people taking care of ourselves and building great institutions in cleveland. do you think the cleveland clinic would of existed had the government ran a the hospitals? you would not know any better. if the government took over and said that everyone is treated equally, we will make sure that everyone is treated fairly. we will not reward excellence.

we will punish those people, take their money and redistribute it to others. that is the attitude of the president. one of the things we need to do is to redistribute wealth in america. that should have been part of the constitution. this is a president who does not understand that communities like cleveland and northeastern ohio were built by people who were not being told by the government what to do, but had ambition and drive and innovation. they were able to build great and powerful institutions to change the world. that is america. not a government that rules you. one that understands that the greatness of america of lies in its free people.

when you look at this race -- [applause] in this race is about big things. we need a leader who goes out and talk about big things. not just about little changes, a little adjustments. about being a better manager. we do not need a manager in washington. we need someone who has shaken things up. i have gotten some grief and the media because i m to passionate, and say things that sometimes offend people. [applause]

i talk about government dictating to us and suggested that might be snobbish for people to do that. i talk about traditional values in this country and the respect for human life and the freedom of religion. [applause] it is not just that that i talk about. i talked about how important it is that we have a helps -- health care system. it should not be run by a panel of people in washington. there are all sorts of regulations and things to come as you see. 700 times obamacare the words

"of the secretary shall," appear. government will manage you. in that your life and health, the most important area. prime minister margaret thatcher said she was never able to accomplish what ronald reagan said. she was never able to turn them back from the brink of socialism. dependency on the british national health care system. once they have your health they have you. that is why they wanted so badly.

i believe from the very start of my career in politics, back when no one was talking about health care, it was not that big of an issue. i was talking about how the health-care system in this country is not a private system. consumers are insulated from economic decisions. they do not understand the cost or quality of what they are getting. it is managed by employers or the government. i came forward with a conservative idea, along with another guy who was serving with the end congress, we claim him as well. he grew up in pittsburgh. you have good taste and i am not arguing with you.

we introduced this bill called health savings accounts. it is the basis for any reform that is going to happen in america. not some other governor or president, it will put you in charge >> obamacare is public enemy number one against freedom in america. it must be repealed. [applause] but that is not enough. not enough to get this economy growing and to keep our freedom. that is a big step. we have to get government out of regulating every aspect of our lives. i do not know how m