>> earlier in the politico live stream coverage we were talking about the romney strategy on the road ahead, they'rethey areo think rick santorum is on a fault error. 78785 server or more. some need 75% or more. is there still that x factor? >> if rick wins, that would give him something to appeal to keep going. romney can not put enough wins together to make it stop caring about rick santorum. you have to give rick santorum credit. he is unable to hang tough. they traded back -- he was able to hang tough. they have traded back and forth. rick santorum is here for a while. >> craig gordon, tell us

something that is about to pop up on the site that is not on the site yet. >> i am not kidding when i say i am hoping we're going to get results very soon after 8:00. mitt romney has a story teed up. he has the story ready to go. >> you will get your ears on. we're talking to one of our white house reporters. i think you have a question for dodge. i will relay it to him. >> there was a your asking about foreign policy being a bigger issue in the campaign. we were talking about the differences that are indistinguishable with president obama. are there any foreign policy issues that you have been covering where you see differences between the candidates and president obama?

>> we are looking for rhetorical -- substantives differences on foreign policy. they have been talking about how this is not obama versus bush. these have been pretty similar within the republican primary candidates. >> there has been very little daylight. what about with obama? >> obama has taken a forward posture. in afghanistan we saw him go in there with the surge. this is a pretty muscular policy putnam -- on osama bin laden. >> i know you're trying to say something you are not seeing. >> it is a code word for very forward leaning. osama bin laden was taken out of the picture by abc will trade under the cover of darkness. -- a navy seal trade under

cover of darkness. it is hard for a republican -- they criticized obama for being weak. they did not have a lot of stuff left. that is not to say that for policy cannot jump up in a big way. there are many things that could go wrong with afghanistan that we have seen in the last couple of weeks. it could become a nightmare for president obama. it could blow up somewhere. normally, you cover president clinton carrie. in normally benefits a president and the short term. >> if something were to happen in iran, there was some talk about an israeli strike. i think there would be a rally round the president. in afghanistan, i am less sure.

it has the feeling of a situation spiraling out of control that people are tired of. >> thank you. we want to welcome in in the audiences who are just now to name in. polls close four minutes ago in illinois. we want to let you know that we have teams all over the country. we will be talking with these reporters throughout the evening. they are in illinois. rick santorum is in gettysburg. we also have teams with newt gingrich. ron paul is not on the trail tonight. >> we just posted this on

politico. this has been a lifeline for the secret campaign. in february, a billionaire contributed $5.5 million. he raised 5.7 3 million total. we talk about being the sole funding source for the campaign. that put iti in really stark terms. it is coming from one richman. >> a rich man in las vegas. they have been clear. he is an old friend of newt gingrich. he is not interested in seeing mitt romney heavily damaged. he wants to beat obama. he will spend as much as $100 million in the general election to the romney side.

it is not want to see ronnie destroyed. as log is newt gingrich is in this, he can count on help. >> work with us here. help us get inside newt gingrich's head. what is he thinking now? he does not have any present victories as of late. he has no money. he essentially has one donor. he has taken on debt that if it were to continue he either has to pay off himself or pay the donors over time. what is he thinking? why is he still in this? >> he thinks he will be able to hold off mitt romney and keep mitt romney from getting to the magical number. he thinks the bayside support moving forward can keep their.

he could get a lot of delegates here. it seems there reality is not really an option. getting delegates is possibly a reality. >> they were fascinated by newt gingrich and how he campaigns and the changes in how they go about campaigning. what is the new to gingrich like. >> he has not had a press coverage in a long time. he is still laughing and joking. he started to make a schedule

about what he wants to go and where he wants to be. he is going through the north louisiana. he is going to go out there a ports. he is practically in the middle of the gulf of mexico. we're not sure what he is going to do there. we will be able to see them from the shore. a lot of people take boats to get there. it is just one of the many things that does take this. he has a prize for all of us that go the way out there. he will have his first press conference in a week. >> we are going to get back to you throughout the day.

please work the phones. we're going to pop back into the political newsroom. coming are the state's on after tonight? they think about the politics of each state. it would be great for him to get there. >> when have alex right there. the network is not calling it right away. bromley is leading but not enough to make a call. they are just asking about the state ahead. tell us about this. >> santorum has this one more

chance in louisiana on saturday. he is in favor. it is one of those places where there is spending disparity. it is not as dramatic. >> should be merged be in the game? >> he is not in the game. i think we could stick a fork in it. when the move on to places like wisconsin, that is big. it is going to be one of those big states where romney's money counts for a lot. there are a lot of suburban voters. rick santorum has a little more time to make his case there if he is going to be able to do that. >> we have maryland, d.c..

people assume a romney will take it. >> dc is one of those places where santorum is not on the ballot. we had this weird three-way gap before you get to the mid atlantic primary. you have connecticut, delaware. >> this is a big yankee territory. we have seen a peek at santorum's speech. he will say in the republican primary this is a halftime. we asked maggie earlier. is she did not buy it was have time. >> we have been hearing have time for a couple of weeks. the problem they have it is not even a big touchdown.

getting close over and over is not good enough for him. >> thank you very much. upstairs.end it u >> we are we if the romney camp. i know it is out there. i hope you can hear me. these polls are showing mitt romney. no one has declared it. it has been closed for 12 minutes. are you getting any indication that they will be giving a victory speech tonight? >> the town that we're hearing is really cautious optimism. they have a result that they do not have to explain tomorrow. the expectations have been raised. on wednesday morning it is common that they have to explain why the victory was not enough.

part of it was their own fault for raising the expectations. all of the polls are showing him up by almost double digit. of the exit polls showed great things for mitt romney. we are hearing a "slow and steady." they're expecting to win but are not making predictions. what you are going to hear is about how tough it will be for rick santorum to come back. >> if he does come out with a win, does at some point we heard him use the coalesce this week? did we hear mitt romney use those words? .> i don't know that we will we will leave it to the surrogate.

to set aside to coalesce around it candidates. it really hit the vein of the romney campaign. no one had the wherewithal to say out loud and public. it will not come back to bite her. i think it is not the time that we will hear the governor say its. even a 10 or 15. victory, and he is content to leave that. -- even a 10 or 15 point , victory, he is content to leave it. >> and as romney get a raw deal from us? -- does romney get a raw deal from us? win is a win.

>> of the expectation game has not been something romney wants. think about where we were on by saying the bromley campaign feels very good about mississippi. -- romney campaign feels very good about mississippi. >> how did the press said expectations ta? >> mike he is from operatives in boston. they had a lead. it is not just in the exit poll. they have their own numbers. today is that there would have a bit of a margin. there also hearing from supporters like the governor. they are doing well where you need to do well. none of that turned out to be true.

this is why they're saying we're cautiously optimistic. we think this will be a blow out. do not talk publicly about where you think this is going. does he get a bit of a broad deal? i think there's something to that. i think a win is a win. front runners are expected to win basically everywhere. the flip side is your point is that they do not give enough credit. if you're talking about hillary clinton and obama, the expectation was that she was the front-runner. she should win iowa and new hampshire. mitt romney can only go so far. >> we need a momentum detector. this could be one of the interesting stories of this campaign. the cannot even explain it.

small things create massive momentum. we saw it with newt gingrich. he grows from the ashes. we saw it with rick santorum. we saw it with newt. mitt romney does not want to have a debate. santorum does not want a debate. when you have a strong performance, there are huge changes without the press calls on you. things change. >> to your point, we had more debate in this last year than we had to reject i am not sure if it was more. we had more momentum -- we had more debate in this last year. i am not sure it was more. we have more momentum. >> absolutely mitt romney gets a raw deal. you touched on this very

poignantly. because of other people's rises that we seek, especially lazarus, at this is his kryptonite of perception. he is pulling in single figures. then he suddenly went i was. we did not expect that. he is winning other states. he says things like winning illinois is impossible. it is impossible but we're going to do it. we are going to try. he based look like even if he does not win that if he is in the ballpark it is good. they say romney should have knocked him out of the park. it was about the when and loss. really it was about a win. >> that was on a romney's ahead. i do think that rick santorum is

for him. i was negative about how much money they had. rick santorum is doing better than any of us expected. >> everybody watching should assume that. nobody in the press thinks that. we will go to twitter. >> you have heard of him. oure're going to go to twitter lands to talk about what people are saying on twitter. hopefully there are some questions. >> we do not know what is going on. there's a lot of response to the fashion they're saying he is too for the personnel. you'll be glad to know he tweeds that he is sitting down with

some red wine. we have written him to think what he says. we will bring that answer to you shortly. before we come back, i want to reach out to our viewers. what do you think the gap will be between mitt romney and rick santorum? will but romney get that treasured double-digit lead over rick santorum? they have been pulling at around 13%. it is up at politico. we are live at politico.com. i want to bring you guys to the panel. we have john. will the results in illinois be the most representative of the most moderate opinion facts some say why would you care about a stake light -- moderate opinion?

some say why we do care about a state like illinois? >> it is very similar to michigan and other state in the belt. >> the question is why do we pay attention to different states. it their delegates. this is a race. you have to get to a number of delegates. you have to pay attention to each and every state until someone has a majority. as far as protecting what we think the margin will be, there's no reason why we should do it. we are so god awful at it. we did promise a new segment. you can eat your vegetables. if you're going to what us for three hours, we will do three minutes of real substance. we have a health care team. we will pop into the newsroom to talk about the reporters about

the supreme court decision that is coming up on the decision. what will happen next. had at her. >> this is where all the smart kids sit. >> we're going to be looking at how the government answers the question should congress require people to purchase health insurance? if the court said it is unconstitutional, it will be hard for the obama at this region to put it back together and make this law stick. >> when people are not on camera, is there some sort of consensus about what the supreme court is more likely to do?

is there some sort of conventional wisdom? to people think they know? >> i think people are putting their money on the court. no is quick to put a ton of money on it. most people would say they're likely to uphold it. it is a much bigger deal for a court to strike down a law that has been a huge part did this administration. >> this is a pro-business decision. that is why some people think the roberts courts might uphold. why do something this is a pro- business decision? >> they are saying congress can use the solution to solve national problems. if you look at the opposite way is that the state would have to solve this problem on their own. he would have a patchwork. business would not like that.

this has been in place for two years. all this companies have been gearing up and preparing for the implementation. to take it away, there are some businesses do not want the law struck. >> they like certainty. we will be watching this. also, here on politico pro, we have a politico's editor. he wrote a book on health care reform. what are the other basic policy issues that you are watching on health care this year? >> when people hear about the law and the individual mandate, people say that is the whole lot. there are a few things we're watching closely. there are going to be these the market place exchanges where people will go to buy their

health care. states are supposed to set them up. some will not. we are watching how many state do set them up. what happens to the states that don't, and the department of health and human services will set up a backstop. they will be in the red. that is one of the things we will be watching. there will be all these experiments on how to deliver health care more efficiently. >> aco's? >> you got it. they work closely. we are watching how many providers action is set up these organizations. what kind of benefits will be essential?

>> it is hugely controversial. >> it is. if you make it too expensive than people will not be able to afford it. the other side will say it is not worth anything. they have put out some guidelines. there is a benchmark plan. they never actually says he gets to choose that. we are watching that. it is in the weeds. it really matters to the rest of the law. >> the last question. what about if it struck down by the mandate? will this still be a big issue? >> they will make another part.

there'll be these: exchanges. what everyone will remember it is the strike down. this is something everybody hated. >> thank you. i might go for a second helping. >> that was one heck of a transition. >> we do tens of coverage a different issues. we really do try to put a lot of resources into explaining what is going on behind the scenes. it is completely fascinating. we will keep people of today where we are. polls close about half an hour

ago. at the polls show romney is winning but we do not have enough of information to say by what margin. we will continue to look at the polls and talk about what we are hearing from the various campaigns. i want to close a loop on health care. there is no doubt that health care is going to be one of the top two or three issues of this race. it is really undoubtedly one of the must navigate the achievement of the obama administration. secrete a third health-care title meant and has a profound complication for all of us individually and certainly for corporate america. small business, big business are so frustrated. it is so complicated. they would rather not have that mandate it. they would rather have it in place this is a debate you think republicans should win because there is a fascinating poll in the swing state. 38% approval rating for the

health care law. that is low. that is bad. particularly in those states. >> even with the mitt romney as the nominee, republicans are counting on obamacare to take is back to make a politics. republicans are counting on obamacare as a major issue. the concern has been in debt they get taken off the table as a base generator? i think you're still going to see it as a base generator. i think the democrats will tie it around their neck. it is not a popular law. >> this is important. even if they said it is constitutional, it is not a guarantee that this law that goes into effect in 2014 -- there's no guarantee that it happens.

they keep control of this. this is a number one litmus test. not for the full immediately appeal, that you cannot win on primaries. republicans get control in the house and senate. we will talk about that in a little bit. it is a real process. you can see the undoing through the legislative process as opposed to the courts. >> that is right. 13 that all three do, one thing aat we hear is that almosthat e list of what they're going to repeal. mitt romney explains how he cannot per lot. they have a list. they're not shy about harping on what is possible. especially a town hall setting.

they mentioned i'm going to get rid of obamacare. nothing is an applause online as saying we are done with obamacare, even when it comes to mitt romney santorum says it is the worst possible voice on this argument. >> we have john harris on the phone. it is the mobile phone. we do not even know where he is. i know you're touring america. >> i cannot say. i can hear the applause. i can feel the energy. i am somewhere in the mountain time. i cannot be more specific. >> what should we be looking for tonight that's what you see as far as the trajectory of the race? you were saying call it like it is. this is mitt romney's res.

he is going to win. is that still your take on a 8? >> they have raised the foundation of the race. he could lose. he will probably not lose. he is plotting his way toward a nomination. it has been true so far. this race has been momentum. there have been no bounces so far. another victory traits a fire wall. he puts himself in a position to say i am on an inevitable projector. the st. strategist

for rick santorum. how you turn this around? that could ultimately win the nomination. >> i think you can count on chaos. this means looking for places where they can get it. taking advantage of mitt romney 's weaknesses. in saying we are going to have some more debates. as long as gingrich is out there, and they look for every occasion. he says this is a joke. he is trying to hunker down. it is too early i think he really consolidate it.

>> a little birdie tell me you could afford this. this is the most policy heavy political show. >> i can see why you call a politico and not substanceco. >> was being in on the debate we were having early about why for policy has not been a big issue, where do you think republicans are going with their foreign policy theology on how they would argue against obama @? >> i think it is right that it has not mattered in this race. the economy has been the major note. in the first 20 debate are so caught dead there were questions

asked on the economies and jobs. we still have two wars going on here it it has changed to some extent. there is the possibility of an israeli strike against iran. it means it has captured more of the rhetoric. i think the big issue is the general sense that america is in decline. it goes down to the american exceptional as some.

he is unwilling to use this. obama has the national security credentials. he has a 26% approval. this is a formidable task. >> we're going to let me go back to where you are. we are going to bring in wanda summers to give us an idewa of what is going on there. what is the mood?

we do not go by the networks. what does this say? >> i spoke to them a couple of moments. mr. romney is a moderate. he cannot win the areas of the state. he does not win places like kansas and alabama and mississippi. they're looking at the museum as a very big stronghold. they're looking past illinois. i've not heard much about the call. you have the signs behind me. yet people crowding in. -- you have people crowding in. >> are crowds getting bigger as

you travel with santorum? >> the crowded do seem to be swelling some. -- the crowds do seem to be swelling some. after the crowd you get bigger. it is hard to tell while walking through them. there are the santorum die-hards that love him. there are people that are curious. they are curious. there is no doubt he has the ability. >> this is another one of those states, they're not going to

work a lot of their delegates until later in the year. even if you win louisiana, you come out with 20 delegates. you're being able to say i want another states. it will not make a difference. >> that is a really great point. the santorum camp is the starting off earlier. there's a delicate but time and romney. they tallied these things. >> thank you.

we talk about bricks santorum though wouldthem: not happe that help them in the mass category. it is called goliath slayer communications. >> it brings viewers that in syria. we are going to talk mostly about the big race but there are also several very important house races taking place today in illinois, several primary races including a fascinating you have a havwhere

conservative die. hopefully we have the newsroom. they can help bachus through the races. are you with us? >> hey. >> tell us about the house races. >> there is about half a dozen great races to follow. most states have not had the house primaries. there is one great republican primary. anytime you get an incumbent

versus a convent it is a bloody. >> what about on the democratic side? what is the race that matters most in the primary? >> one is jesse jackson jr. who is running. they have been circulating. to have him with a pretty good lead. the most fascinating races are in primaries. this to be the old mark kirk district. they would choose the nominee to face.

it shows people where the real energy is. >> what chance do you have of doing that? >> my guess would be pretty low. i think there has been a lot of attention paid to the idea that they are making a comeback. when you take a look at the size of the majority in the ankle of the incline, i think it will be a really tall order. from what we are seeing, you do not see this tremendous frustration and anger that you might expect from some of the polls out there. when you add in all the factors, i am not sure you get the 25 seats you need especially given there are states where barack obama will not run nearly as well.

i would say it would be very tough. >> what about the senate? things looked pretty good for republicans. then you had olympia snowe step down in maine. now it is a tossup. in massachusetts, scott brown is in a dogfight with elizabeth more. to republicans have a legitimate shot at winning back the senate? >> i think they do. it does not look as good as it did six months ago. the overview is really a numbers game. there are more democratic seats up for election this year. many will be open because the incumbent is leaving the seat. at the beginning of the cycle, things agree for republicans. over time, you start to see some of the top democratic

recruits all of a sudden landscape looks more sudden. democrats are in a much better position now than they were six months ago. >> thank you. we will be back to you throughout the nowt. -- throughout the night. we want to get as much be back as the can on e-mail and twitter to answer any questions you have. -- get as much feedback as we can on e-mail and twitter to answer any questions you have appeared last time we got some great feedback from voters. we read able to help your is it a better understanding of how a voter in a specific state things. if you have something, issued it my way. we are looking at all these e- mails in real time. we're trying to see what comes in. >> we have a new numbers now.

we are up to 20% of votes in. we have just now gotten the position. they are declaring mitt romney the winner. mitt romney is up 55%. >> he is doubling its. >> mahal it is a big victory. let's talk about the object of it. we will not see a speech from newt gingrich tonight. we will not see ron paul. we are going to see rick santorum who is in pennsylvania and gettysburg. he will focus on abraham lincoln. mitt romney will be the soul man standing that can hold up that trophy. this is what everyone says is

his problem. he also needed it in the midwest. the numbers are there. >> this is usually a safe prediction. i think the official one will happen tonight. he will not pay any attention to santorum. he will focus on barack obama. he does not have to worry about santorum. santorum would have to win 75% of the delegates to secure the nomination. that is not happening. he can be much more confident. it has a unifying effect. they hate the fact that they are pounding on each other.

he is beautiful. to get that guy. he is made for television. we haven't digested here. they're talking about delegates. some the move here is pretty serine. they do not have this until 9:00. i will expect that it will be full. did you look over my shoulder, you can see it is only about 1/3 full at the moment. we have a live band plane appeared t -- band playing. >> any prediction on when he is going to take the podium?

do you know when he will make his speech tonight? >> i am sorry i cannot hear anything you're saying. >> you will come back to you. >> we have not been told. we were told somewhere around nine. we have not been told that he is in the building. the assumption is that he is next door. we can expect to hear a similar speech. i do not know we will see it tonight. the campaign has been saying that is not the message tonight.

adobe going forward in gathering more delegates. they have the delegates directly. we have not seen the details of the district said they will win tonight. >> what is up with that music? they are playing the blues, a kicking back. what happened to toby keith? we would get back to a little later. i do want to talk about the rodney strategy going forward. i think he has spent a lot of money. he has spent almost every penny that he has raised. i think a super pak save more than he brays. that is 50 or 60 million bucks. let's just set the stage a little bit here. mails.getting a lot of e- people are seeing all you do is

talk about republicans. that is because it is a republican primary. barack obama is beatable. that is why republicans get so fired up about this. they're focused on him. it is a 50/50 country. they're skeptical of barack obama. the economy seems to be doing better. the poles are still very tight. it should not buy into the convention that he is easy to beat. >> they say who do you think will win? i say look. this looks like it'll be a romney/obama race. if he had to put money on it

today, i think it looks pretty good for obama despite all these hurdles. that would make the bombing campaign happy to hear. their concern -- that will make the obama campaign happy to hear. their concern is the numbers. this is a concern for chicago. obama's own fund-raising is down. there's been a lot of reporting on this. he is finally supporting his donors bundling for the situation. he did not do a direct dollar pitch. he was talking about how scary it is. i think this is the key thing. he is beatable.

romney is not a terrible an election candidates. he is not a bad candidates. >> we will go to donna the martin in the newsroom. he says the remarkable thing is the way it brought me is exceeding expectations. this was supposed to be a stronghold. if this is true, a could be bigger. he might get with the obvious. are you with us? >> i can hear you loud and clear. >> the dress up for us. i am so happy. >> i dressed up for you after all the negative attacks. >> it is called affection. >> it weighed heavy on me. >> what are you hearing from the rabbani folks that we should be aware of? -- mitt romney folks that we

should be aware of? >> they had a 4.5 point lead about 10 days ago. they will win this thing by 10 or more points in part because they spent a lot of money and also because of santorum's limitations as a candidate. we have written stories about what a weak front runner mitt romney is. romney has finally got it locked up. this week has revealed something else. santorum has some real limitations. uerto rico?good p what a blunder that is purity talks about how he does not care about the unemployment rate. that is the step that makes you wonder how ready he is for prime time. most importantly, what we are

going to see is that santorum has a very difficult time competing in states that are o the conservative cradle in this country. there are three middle age industrial states. now it is apparently in illinois. santorum simply cannot brought in his coalition. he has the anti-abortion crowd purity has the evangelicals. he cannot get beyond it. he does not seem to be trying. for a few minutes there, he has this promising manufacturing focus were he was huckabee. he dropped that and went a more pure cultural direction. in doing so, you limit yourself in a place like illinois and the votes you can pull out. there is a limit to what you can

get. that is proven tonight. you not win suburban chicago as a cultural war year. >> brought me will come out at 9:15 eastern time -- mitt romney will come out at 9:15 eastern time. we will be here at to at least 10:00. >> tell us. what do you think? who does romney need to rally his campaign attacks are their endorsements that he is has wanted? >> it to be a considerable feat got the remaining governors who are brand names. i'm thinking about scott walker. i'm thinking about mitch daniels. i think of some of the party elders. he has recently said that he

voted for knew it. jeff will be helpful. congress is not held in high esteem. i think he saw the congressional leadership go on board. that would say a lot. here is the thing about that. after the 2010 expensive with the tea party, i think a lot of the republican elders have learned their lesson. they recognize the risks in doing so. did they do not want to create a backlash or perception that they're trying to end it. of course, and they are. mitt romney has to be careful about that. in past years it would have been easier to say that this thing is done. let's put it to bed and move on. we are in a different place. violates its.by late sund

i am not sure that it becomes increasingly clear that santorum is not going to be near its. if he loses wisconsin, and he could lose pennsylvania, his home state. >> we will write the lead analysis. tonight we will think he will hit deadlines. >> i think we will tease out. he is our money and politics at editor appeared you viewers will get a sneak peek. >> one thing that he said that is very important was the thing that mitt romney does not want to do the song and a victory dance. you have to wrap it up if you do

not want to offend them. you do not want to turn people off. there were 2/3 of the voters. they said they are fine with this race p.m.. . there is this sense that people are enjoying seeing it go on. >> we are enjoying it. voters are enjoying. >> there are some states that are excited to be playing a part of this. my home state,, and will be playing a part. -- >> new york, my home state, will be playing a part. mitt romney could be turning

into a big hole. >> we will kick it over to gavin. me is interacting with our viewers. give us something good that has nothing to my clothes or maggie's al fitts. o my boss is sexy. could we go back to the twitter screen? what do you want to ask him? will you marry him or at least an ice mandate? what is your quick reaction? >> we need to talk to you in the age or department after the show if you can join us over there. he is watching. are people paying a town of attention to illinois, there are moments like super tuesday where there is a huge surge of activity and people are into it? do you get a sense that people

are into illinois? >> no. we are seeing a drop in the twitter reaction. if you look at the network, fox and nbc are not turning in. obviously that is we assume that illinois it would go to romney. that is not quite sure. there is a bit of voter or view were fatigue. you see some people -- let's just get to the nomination. let's get to the convention. you are seeing a bit of that. one thing i want to throw back out. -- getting back to the idea. when you looked at -- listen about how things are looking good tonight and it could look

good next week. rick santorum's chances dwindled. all this whites -- a white knight scenario. there could be someone coming in to get all these discontented republicans to rally behind someone, is that scenario getting less and less? make sure you let us know your thoughts. the question we have for this round, it comes from sara bailey. could you see romney in the know administration? how do you think about how mitt and rick santorum are handling each other. >> rick santorum will be speaking in the next four minutes. i do not think the relationship is terrible between them.

i do think he would like to be part of the fold, he would like to be consulted. he would like a very good spot at the convention and he would like to be considered for some cabinet post. >> to talk about the relation, this is not one that has been developed over the past, this is what we saw in 2008. we want to welcome anyone who is just joining us. we are at the 9:00 hour. with c-span here locally on news channel 8. this is the special coverage of the illinois primary and it was announced half an hour ago that mitt romney has been declared the winner in illinois and will

get the lion's share of the 54 delegates that were up for grabs. as for that back and forth between romney and rick santorum, this is the kind of data that makes rick santorum brand his teeth a little bit harder these days. >> it is not the campaign. this is rick santorum. nobody put some words into my mouth. the words out of my mouth for that if you want a conservative as the nominee, you must vote for mitt romney. >> i am mitt romney, and i approve this message. >> those are words you like to take back. especially using the word conservative. >> in that field, john mccain, mitt romney was the conservative. >> chief sounded very conservative in last campaign.

>> without pandering. he has corrected on that dramatically and it has helped him. in the conservative base, it is not static. this is a different race than we saw before. voters do not care. they just hear your words. that is the problem. >> lee mitchell voted and thinks romney has the better chance of winning. we will go to the newsroom. have james holman. what are the exit numbers tell you? >> for the rest of the contest mitt romney needs less than 50%

of the delegates. rick santorum would need to get 80% of the delegate. newt gingrich would have to get 90%. that is a new way to make the delegate math argument. reporters have a lot of souvenirs' out there. this is one that you could not put in may -- the bay. one of the first things you look at is how the vote came out by regions. >> this is a story of demographics. romney did not do that great downstate. he lost southern illinois. rick santorum did really well and in northern illinois. 60% come from cook county.

that is the numbers and the way they broke. he receive 20% of the non evangelicals vote. >> one of the things that jumps out is not building the base. he is not expanding it. romney did not do great among the evangelicals. he won the catholics by 16 points. what is your headline? >> one of the things that caught my eye, one of the exit poll questions was which would you prefer?

romney will win sooner rather than later. >> you could read that, i read a blog post about it. people were tiring of the race. you could read both ends of the telescope. >> if they can convince people it is hurting the party. romney has a better chance than the states that are coming up. >> send it back upstairs. >> james homeland -- holman, we spend time digging into numbers. i go into or advertisers -- they know so much. james puts out of the mourning scored and you can get it sent to your e-mail every morning.

it comes out when mike allen's play book does. it will tell you everything that is happening and what matters. all these races matter. these primary races in illinois, today for the house. what happened here with romney winning, it all matters. everything is in place. it makes it fascinating. one of the things that is great is this is always in play. >> i want to go back to one thing. your point about rick santorum. mitt romney attended a campaign fund-raiser and donated to him. this does cut both ways. this is one mitt romney was planning to run for president and needed conservative cred. i do think it is worth noting.

in terms of everything being in play, that is true. the reason we're here every week is this has been the no balance primary. someone was arguing i should not have made that point. i would disagree. there is momentum. >> i think the next one would have -- [inaudible] it will be then. when you have multiple votes bringing it down in illinois. you get big states and big stakes. that could be the time when romney cannot put it away mathematically. it is closer in real -- and reality starts to set in. that is when i think body language and rhetoric will change. romney is not comfortable being

the attack dog inside the republican party. he is fine but he is kind of clumsy when he is doing it. it does not work for him whereas it does for newt gingrich. >> that is right. >> if someone -- and many states were looking at including illinois which is a big win. these are live% jump shots. these are not slam dunks. these are not bringing home the point, bringing the audience to its seats, a cheering arenas. >> that is stunning. >> as we wait for santorum that could be the kind of win if mitt romney were to win wisconsin. you see the curtains pulled back and realize that word inevitable is coming to fruition.

it is just so much more and an insurmountable amount of delegates for rick santorum to try to make up at that point and it would be a nice big midwestern victory. >> it would end at a certain point, the body language is one thing. the fact that the campaign is talking about delicate mouth -- math.tegate the question is does the press coverage starts to fall off because he has survived on free media and support from his super pac. it will be interesting to see if he takes in more money. rick santorum might be at a turning point. >> there is a lot of that

conservative activism. they're working to his benefit. the question is we need to see a breakdown of those numbers. do they come in strong for him? what is he saying in early march. it is possible he has enough direct fund-raising to set -- to sustain this. republicans are so nervous that one of these guys, a gingrich or santorum will follow through on this. and take it into august. could you imagine we're sitting here in august? >> maggie talked about the free media. that was a politically romantic story to be covering the guy who is in his pickup truck hitting all 99 counties and that is why you got free media. he showed he could win iowa without the money and without the exposure. >> the super pac did help him out.

>> he had gone up against this are not. it is fastening in a journalistic sense to watch a guy like rick santorum who was polling% come out of nowhere and now to see him in a one-on-one race, it is easy for us to focus on those and give a lot of extra attention. >> the ap projects mitt romney has won the presidential primary with rick santorum coming in second. we will hear from cromie speaking to supporters in illinois -- mitt romney speaking to supporters in illinois. >> wow, thank you, illinois. thank you so much.

tomorrow is our anniversary. we will have been married 43 years so happy anniversary, sweetheart. a very big special for dan who was out here. we appreciate him. we spoke with him and we send our purrs. congressman -- woman biggers. he flew around with dan rutherford. bold.on bo

tom cross, our state of illinois delegates. another thank you. i have to tonight because i did not get the chance to do this properly, i have to think our friends in puerto rico. we were treated so warmly, graciously, so loving. it was a great experience for us. thank you so much. his first lady, we love her. our committee woman and jose fuentes and all elected leaders.

especially the delegates and volunteers for their support. thank you, puerto rico. now i get to see what is in my heart. we have been in a lot of states. we have gone through every part of this country and i am so moved by the people of this country that are counting on someone to go to washington and -- in their hands and fix it. everything that you are experiencing right here tonight, the sense we want to take this

country back, we're feeling the strong strangling arm of government is invading every corner of our life. let me tell you something else. women are coming to me and saying, will you please talk about deficit spending in budgets? i am loving that. how women are angry, they're angry about the legacy we will leave their children and grandchildren and i will tell them something. i have someone here who can fix it. we will turn this over to the guy who can go and fix it. >> thank you. thank you. >> so many great friends at across illinois, what a night. thank you, illinois.

what a night. i would like to congratulate my candidates on a hard-fought contest -- contest. i would like to thank our friends across the state. i appreciate their unwavering support. tonight we think the people of illinois for their vote and for this extraordinary victory. elections are about choices and today, hundreds of thousands of people in illinois have joined millions of people across the country to join our cause. this movement began, small farm in new hampshire on a sunny june day. we were surrounded by a small

group of our friends and supporters and family. we shared a conviction the america we love was in trouble and a trip without strong leadership. three years of barack obama have brought as fewer jobs and shrinking paychecks but many of us believe we were in danger of losing something more than the value of our homes. after years of too many apologies and not enough jobs, historic drops in income and historic highs in gas prices, a president who does not hesitate to use all the means necessary to force through obamacare but leads from behind in the world, it is time to say these words. this word. enough.

we know our future is brighter than these troubled times. we still believe in america. we deserve a president who believes in us and a belief in the american people. in other yesterday i was giving a speech at the university of chicago. not very far from here. not very far from where professor barack obama tot-lot. -- taught law. it was a speech on economic freedom and as i was writing the speech, i thought to my lifetime of experience is. i have had a lot of opportunity to learn about the unique genius of america's freer price system. it started with my dad. he did not graduate from college. he was a contractor and you know

about construction, up and down years. he never gave up and raised great kids. i helped start companies and thus began with an idea and somehow they made it through the difficult times and were able to create a good return for investors and thousands of jobs and those jobs help families buy their first homes. those jobs put kids through school. this jobs help people live better lives. for 25 years, i lived and breathed business and the economy and jobs. i had successes and failures. each step of the way i learned more about what is that makes our american system so powerful. you cannot learn that teaching constitutional law at the university of chicago.

you cannot leave -- this president does not understand the genius of america's economy or the secret of the american economic success story. the american economy is fuelled by freedom. the master of the world has sean that economic freedom is the only force that is consistently lifting people out of poverty. it is the only principle that has been able to sustain prosperity but over the last three years, this administration has been engaged in an all-out assault on our freedom. under this president, bureaucrats prevent drilling rigs from going to work in the

gulf, they keep from the mind. they impede the reliable supply of natural gas. they tell farmers what their kids are able to do on their farms. this demonstrations assault on our freedom has kept this so- called recovery from meeting their projections alone our expectations and now the president is trying to raise his record with new rhetoric. he said we are inventors, we are builders, we're makers of things. we're thomas edison with bill gates, we are steve jobs. he is still barack obama.

you see on your barack obama) years he mentioned would have faced a difficult time trying to innovate and invent and invest and create jobs. under dodd-frank that would have found it impossible to get a loan from their community bank and the regulators would have shut down the right brothers for dust pollution and the government would have banned thomas edison's light bulb. they just did. now i know the real cost of these misguided policies, these attacks on economic freedom, this intrusion of the government into our freedom, the cost of that are the ideas that are not

pursued and the dreams that are not realized. therefore all the businesses that do not get started and the workers who do not get hired. for centuries, the american dream has meant to the opportunity to build something new. some of america's greatest success stories are people live started out with nothing but a good idea in a corner of their garage. too often today, americans who want to start a business, they do not see promise and opportunity, they see government standing in the way and i will change that. we will get government out of the way. what once build an interstate highway system and now we can and build the pipeline. but once led the world in

manufacturing and exports, investment. today we lead the world in lawsuits. do not replace a harvard law professor with of businessman? -- a conservative businessman. i think you know this. every great innovation, every world changing business breakthrough begins with the dream and nothing is more fragile than a dream. the genius of america is that we nurture those dreams and the dreamers. we honor them. and yes, we reward them. that is what is uniquely brilliant. day-by-day, job killing regulation by job killing regulation, bureaucrat by a bureaucrat, this president is crushing the dream and the dreamers and i will make sure that finally ends.

the proof -- of the proo [no audio] because the stimulus was not large enough. the truth is, the government is too big. you and i know something the president still has not learned. after three years and hundreds of billions of dollars. it is not the government that

creates our prosperity. the prosperity of america is the product of free markets and free people and they must be protected. tonight was a primary. face a decision as a people. our choice might be about party or personality. this election will be about principles. economic freedom will be on the ballot. i'm offering you a real choice. i am running for president because i have the experience and the vision to get us out of this mass. [applause]

we know what barack obama's vision is. my vision is different. i see in america [inaudible] will be better than those we enjoyed. the pursuit of success will unite us. not divide us. i see in america where the values we pass on our > the debts will leave them. -- to roar children are -- to our children are greater than the debts we will leave them.

i see an america that is humbled -- humble but it is never hu mbled, that leads but is never led. so unquestionably strong that no one in the world would ever think of testing the might of our military. today we took an important step toward that america. tomorrow we will take another. hd we move closer not just to victory but to a better. join us. together we're going to ensure that america is greatest days are still ahead. thank you.

god bless that -- the united states of america.

♪

>> mitt romney declaring victory in the illinois primary. 54 delegates at stake. getting nearly 50% of the vote. half reported, 174,000 votes. 116,000 for rick santorum. he has an eye on the pennsylvania primary. he is addressing supporters. >> thank you. . it is great to be back in

pennsylvania. i feel so bad, we have 10001500 people who could not -- 1500 people who could not get in. i feel welcomed at, to pennsylvania. thank you. i want to congratulate governor romney. i congratulated him on winning the state of illinois. i want to say i want to thank the folks in illinois. if you look at what will happen tonight, we will win central in all -- illinois and of western illinois. we want the areas that conservatives populate. we're happy about the delegates we will get.

the once-[unintelligible] back to you of favre place of mine. the city and town of gettysburg. obviously, so many memories come to mind when you walk or hear the town across the street where abraham lincoln finished the gettysburg address at the wells house and if you think about the great collections of our past and i have gone around this country over the past year now and said, this is the most important election of our lifetimes. it is the most important election since the election of 1860. that was about whether these united states which is what it was mostly referred to prior to the election of 1860 would become the united states.

if it as a union. a country bound together to build a great and prosperous nation. a nation based on a concept that we were burst -- birthed with. i said throughout the course of this campaign, while other issues are important, the economy, joblessness, national security concerns, the family, the issue of life, all these issues are important. the foundational issue in this race, the one that is the cause of the maladies we are feeling, whether it is in the economy, whether it is in the budget crisis we're dealing with, all boils down to one word. that is what has taken this election and that is behind me and that is the word freedom.

[applause] i was pleased to hear before i came out that governor romney is adopting that theme as his speech tonight. i am glad we're moving the debate in the republican party. i have been focused on this because i have been out talking to krepol across this country, doing over 1000 town hall meetings and i know the anxiety and concerns people have, about an ever-expanding coverage. a government that is trying to dictate how we will live our lives, trying to order surround, trample our freedoms, whether it is our economic freedoms or religious liberty. in addition to trampling that freedom, they're building a dependency. a dependency and government.

as we see government expand and grow. almost half the people in this country depend on some form of federal payment to help them make ends meet in america. after and if obamacare is implemented, every single american will depend upon the federal government for something that is critical, their health and their life. that is why this election is so important. this is about fundamental and foundational things. this is an election about not who is the best person to manage washington or manage the economy. we do not need a manager. we need someone who will pull up government by the roots and throw it out and do something to liberate the private sector in america. that is what we need. [applause]

it is great to have wall street experience. i do not have wall street experience. i have experience growing up in a small town in western pennsylvania, growing up in a steel town, i am public housing and apartments and seeing how men and women of this country scraped and claude because they had the opportunity to climb the ladder of success in america. a lot of those folks out there today feel like nobody in washington and nobody in this debate is talking about them. that is why this is a wonderful [unintelligible] as i travel, i see people in work clothes, folks with children who are maybe not getting the educational opportunity they had hoped for a so they could climb that ladder of success altria people who are looking for someone to voice

their concerns opposite about how this economy is going to turn around for them, not just for those at the top of the income ladder. that is why i talked about a manufacturing plant, an energy plant, but someone who believes that if we not create opportunities by cutting taxes by reducing the oppressive regulatory burden, this administration has put on business people and people who want to drill for energy, you need someone who has got a strong and clear record who can appeal to voters and someone who you can trust. someone that you know when they say they're going to do something, they're not saying it because that happens to be the popular theme of the moment. but someone who has a long track record of deep convictions, someone who will go out and stand and fight because it is not just what the poster tells

them to say or what is on the teleprompter. i did not happen to have one here tonight. they know from their life experiences from living in america that this is what america needs and what america wants. they want someone who will take that power and give it back to the people of this country.

there is one candidate in the race who can go out and make that contrast with the current occupant of the white house. someone who has a tractor repair of being for you. being for limited government. being for solutions that empower people. on the bigger issues of the day whether it is obamacare, or romneycare, they are interchangeable. we need someone who understands the solution to the problem with almost one 17th of the economy is not government control over that economy but your control over that sector of the economy. we need someone who understands when need to grow our energy

supplies in this country and we need someone you can trust when in good times and bad, when times were tough and people thought, all this oil and gas and coal in the ground is all the source of carbon dioxide and we cannot take that out of the ground because there is a finite supply and it could damage to our environment and cause political warming. when the climate -- when those who profess man-made global warming and climate science convinced many republicans including two who are running for president on the republican ticket, mitt romney and newt gingrich, there was one who said i know this is not climate science, this is political science. [applause]

this was another attempt of those who want to take power away from hill and control your access to energy, your utilization whether it is in your car or home of energy because they're better to make these decisions about how you use energy than you do. that is what they believe and unfortunately just like in health care, governor romney and speaker gingrich went along with their right and guess what? when the climate changed, they changed their position and they are now for drilling and oil and gas and coal. i was for at because it was the right thing to do then and i will be for it tomorrow and the next day and the next day. i am not going to change with the climate.

i grew up in this great state and this is the first day to launch our campaign in pennsylvania. we got five weeks to a big win and a big delegate group. [applause] i come as a son of pennsylvania, someone who grew up in western pennsylvania. everyone knows the story. i hope my grandfather and my dad coming to pennsylvania to work in the coal mines in somerset county. i learned everything about freedom and opportunity and hard work. i have grown up with folks who worked in the mills in the minds -- the mines and the

mills. at the back of my mind are pictures of those men and women who worked for their children and grandchildren. to have a better quality of life. maybe even go to college and not have to work in tough, manual labor. but most importantly, they fought for the things the people of this battlefield down the road fought for. they fought for big things, things that america has always stood for. the ronald reagan referred to, that shining city on the hill. is things that i am fighting for here today. the reason we decided in the face of having seven children ages 20 to three, not the best time to run for president. we felt compelled.

because as ronald reagan said in one of his great speeches, we did not want to have to sit down someday and look at the eyes of our children and children's children and describe to them and america will once men were free. we do not want to be that generation that lost the torch of freedom. that is why karen and the kids behind me, all of them born in pennsylvania, all of those folks who understand the greatness of our state and the greatest of the values of the state. all listen, was sacrificed in the mills and on the battlefield. and is why we must go out and fight this fight. that is what we must go out and nominate someone who understands not just because

some pollsters tell them, but because they know in their debt all across this country, you know big things are adrift and at stake in this election. saar ask each and everyone of you to join us, to saddle up like ronald reagan did in his movies. to saddle up, take on the responsibility over the next five weeks, we will head to louisiana from here. we're feeling good about what -- winning louisiana on saturday. we're heading to louisiana for the rest of the week and then we

will be back here in pennsylvania and we will pick up a boatload of delegates and close this gap and thank -- on to victory. nablus you. thank you. [cheers and applause]

>> rick santorum in gettysburg, pa. with an eye on the louisiana primary this saturday and five weeks from now, the pennsylvania primary as we continue to watch the room. a reminder phone lines are open. if you support rep -- mitt romney. for supporters of rick santorum. we have a line set aside for supporters of newt gingrich and ron paul. you can join us online, let's take a look at the results if we

could from illinois. never heard from rick santorum that he was able to do very well. the results were 48% 34% 4 rick santorum if you get to suspend, and we have a map -- we have a map that will help you track results. the so-called counties outside of chicago, that is the area where mitt romney was able to rack up huge double-digit lead as he moved into the western part of illinois and bassem part. these of the moral borough counties that rex stout -- rick santorum did well in. those are the town's mitt romney was able to win. this is the area where a woman had the exact -- the significantly. 60% now, from their for see it -- the associated press.

we will continue to watch the room in gaither, pa. where mitt romney is working the crowd. avian. fifth i have been watching this all night. i have -- the one that we have to get in the lead. i do not believe that mitt romney will be able to be obama because he has had a house here. where's held here at 2 am saying. they actually use the bobbitt -- i am appalled that people, i cannot understand it. it is there is -- it is not

over. thank you musa much. >> thanks for the call. counties still to be determined. the heavy vote coming from springfield, the state capital, and chicago, 60% of the votes coming from the greater chicago area. that is the area where mitt romney did well. this statement from it gingrich, from the gingrich campaign, " republicans cannot nominate on a candidate who relies on outspending his opponent." newt gingrich coming in a distant fourth. he will be spending much of his week. on paul is on abc's -- nbc's

tonight show. good evening. >> thank you. i do not understand why santorum stays in the race. he complains about romney spending so much money. he would spend it if he had it. he does not have it. i did not understand why he stays in the race. >> next is paul from richmond, va. >> high. i have a quick comment. i think santorum is right. it is not going to work in the general election. they need someone who can draw a contrast between republicans and the democratic president. the only person who can do it is santorum. romney is just like obama. what is surprising is the republican establishment does

not catch on that the incumbent will win unless the draw a contrast. it is not happening. >> thank you for the call. 64 delegates at stake in illinois. rick santorum only eligible to get up to 44%. he would get fewer than that. there were in double of congressional districts in which rick santorum did not qualify. here is a look at the latest count. the number you need, 1144. according to the associated press, mitt romney has 522, rick santorum, 252, newt gingrich, 136, ron paul, 50.

>> i believe that what happened to obama is too big for the small brands. romney is the guy for the country. believe me. >> thank you for the call. as we look at the calendar, louisiana is the next major contest. you have heard from santorum, he will spend much of the next week campaigning across louisiana. then on to wisconsin, which is likely to be the next major contest. also, a republican primary here in washington, d.c. and maryland. then april 24, a significant day, rick santorum hoping to win his home state of pennsylvania. primaries in connecticut, delaware, new york, and rhode island. then may 8, indiana, north carolina, and west virginia. in mid-may, nebraska and oregon.

it will wrap up in june with california. david is on the phone, a supporter of newt gingrich. good evening. >> i will vote for which ever republican rises to the top. i would hope it would begin with. i know he is a smart guy. i think we need a smart guy in the white house. he did not become speaker of the house by accident. he is a courageous individual. he is not the prettiest candidate. we need the smartest guy in the white house for our economy and for foreign policy. there is something good to say about all of them. that is my view on pingree. >> thank you. speeches by rick santorum and mitt romney available on our

website. all of our campaign coverage. palm springs, california, a supporter of ron paul. >> i do not understand why people do not vote for ron paul. he has the best thing going on for him right now. >> thank you for the call. next is ricardo from new york city. >> thank you for accepting my call. i want to make sure that people understand that romney is the best candidates for the republican party. the plan fits perfectly into his vision to have the american economy, the american deficit to be cut dramatically and not

harming the poor and middle- class. romney, with this win tonight, will give a huge boost to blow away santorum and the rest of the pack. thank you for the call. >> thank you. next is wayne from pennsylvania. >> thank you for taking my call. i wanted to congratulate rick santorum. i have a question, hopefully you can answer it. if gingrich or paul were to drop out, the delegates they have accumulated, can they tell which remain in canada that they would like them to go to? >> -- which remaining candidate they would like them to go to?

>> you mean can they move? >> yes. would it be up to gingrey or paul? -- gingrich or paul? >> the key role to keep in mind, the party rules did change, it is called unit rule no. 38. are you bound if your candidate drops out? that is one of the issues. there is a story in the new york times. it outlined the different scenarios about what the candidates can and cannot do. that will determine how close this is. the party is bracing for the possibility that this could go to the convention if it is a

contested convention. if that happens, those delegates would have a significant role. under the party rules, if a candidate drops out, he can free those delegates to choose or be bound by whether the candidate endorses -- by whoever the candidate endorses. that complicates the process. next is rebecca parry . >> i think it has been a big win for romney. i think he is a very smart individual who presents a good plan to assist our economy and to put us in the right direction. and i also think he will be one of the best president our country has had. >> thank you.

let's take a look at this map of illinois. this is available on a website, c-span.org. 67% of the vote coming in. mitt romney doing well in springfield, bloomington, chicago, and the key counties around the greater chicago area. rick santorum's strength in the western enand aouthern part of illinois. according to the associated press, mitt romney with 522 delegates. he has increased that to 544. rick santorum will pick up delegates tonight. next is john from connecticut. >> you are going to win.

you are going to pick gingrich as your vice president. three things my dad taught me, honesty, sincerity, respect people. go get them perry >> thank you for the call. next up is -- them. >> next up is jerry. >> i am amazed at the way people pick candidates. i do not have any of the four front-runners. when i look at cambridge i look at somebody who has the intelligence -- look at gingrich a look at somebody who has the intelligence to fix the problems. we are not fixing the problem.

the executive branch, the judicial branch, and the legislative branch, all of those are dysfunctional. i think gingrich understands what the problem is. he is very astute on the constitution and the way the government works. not that the others are not. he is at least addressing the problem, rather than trying to beat up on one particular issue. i would invite people to go back -- whatever the issues are, whatever the personal issues are, try to find someone who has the greatest chance of organizing a way to fix the problem. gingrich has done a good job of

being the speaker of the house. he went across the aisle. he united people. he was a huge success. the power of the democrat party, the legislative branch -- i think he ought to have another chance, this time in the executive branch, and work with those people. let's get this thing fixed. >> newt gingrich campaign in louisiana. you heard from a santorum who was in pennsylvania. he will spend the rest of this week in a louisiana. the next key primary is expected to be april 3 in wisconsin. jesse jackson jr. campaigning for reelection. he has been declared the winner with 75% of the vote.

seconds from illinois' congressional district. we are keeping an eye on the 16th congressional district. two republicans are campaigning. representative adam kinzinger vote.9% of the representative donald manzullo is running for a 14th term. if it looks like republican going to win.ger is good evening. though ahead. >> i have a question for everyone out there. how could you not vote for a successful businessman to run this country and bring us back from the brink of disaster?

mitt romney has all the qualifications needed to lead this country. i feel he is the beckett -- the best candidate. i feel the other three should behind him soand unify it can strengthen our candidate for the election. >> let me ask you a question. as this changes in terms of strategy, we heard some of that as he took greater am at president, who would you like to see him select as a running mate? >> i would like to see paul ryan. i think he would be a wonderful asset in many ways. they are both equally well versed in the political scene and washington.

voting for someone who is a successful businessman, who has brought companies back from the brink, why would you not want that? >> thank you for the call. congressman ryan is the chair of the budget committee. it is expected to get the -- his budget is expected to get the support of house republicans. gen is to win us, another supporter of mitt romney. >> --jen is joining us, another supporter of mitt romney. >> everyone keeps talking about this money. what do they think he has a campaign for? he is not running for junior high president. you get an organization. santorum says, well i do not have this. these guys, gingrich and

santorum, did they not live in virginia? do they even have homes in pennsylvania or georgia? they went to washington and never came home. now they are lobbyists. they say, we do not have the money, we do not have the money. for newt gingrich, what a sourpuss. today, santorum kept going on, all of these things, he does not have a core, what was the thing about the mirror? this is pathetic. romney has had to run against msnbc and politico every morning. i ran a of a yellow pad running down the dirty stuff they say every day. today they were praising santorum.

it gets pretty old. what is the bar going to be tomorrow when i turn on the news? is it going to be, romney did not do that good. now he has to win 20 more states. where is the bar? they keep changing that. >> i will let you raise the bar. we will have more tomorrow morning on the "washington journal." we have our political editor in washington, d.c. thank you for being with us. >> thank you for having me. >> i wanted to begin. jesse jackson jr. winning easily in the second congressional district against his challenger, what does that tell you? >> it tells me that it named jesse jackson still packs a wallop -- that the name jesse

jackson still packs a wallop. if you are the son, it helps overcome charges including trying to purchase barack obama's senate seat. in fairness, chicago still dominated the district. not the county, which is the home base of the former congresswoman. the win is not a surprise. the margin certainly is. >> illinois, the 16th congressional seat. it is one of the republican- republican races. a longtime veteran is being challenged by a freshman member. he looks like he is going to win. >> it is a surprise. more than 47% of the redrawn

districts along to congressman -- belong to congressman manzullo. his birthday is in two days. this is not much of a peasant. it is an upset. a race like this always leave scars. eric cantor endorsed the freshman in a big way. his action fund give $50,000 to help kids in younzinger. this has led to some bad feelings between congressman. has won ar. kantocantor personal victory, he may have to

pay in the long run. >> it was a two-person race. this is available on our web site. mitt romney with a double-digit lead in the greater chicago area. rick santorum doing well in the southern and western part of the state. that is not where the votes are. >> it is not. there are some areas that rick santorum is carrying that alan keyes carried over barack obama back in 2004. this is a big victory for mitt romney. illinois, with one exception, has always given landslide win is to its primary victors. the only close race was in 1936. it was won by frank knox.

this is more like the victories of ronald reagan and it george h. w. bush and george w. bush, for that matter. it puts him over the halfway point towards the magic 100 figure. it starts him on a major track toward the nomination. i think that gingrich is going to have to look seriously about going ahead. >> clearly you did your homework. those are things we did not know about, the races from early in the 20th-century. let's go back to the speech tonight. we are going to show it again. was this a pivot point? he did not even mention that rick santorum's name. he focused on the president and talking about the economy. >> i have watched governor

romney closely. we were together in new hampshire. he made a similar speech that night. then again, i interviewed governor romney after his defeat at the hands of speaker gingrich. he mentioned his opponents than. i think he is on a high tonight. he can afford to be magnanimous and gracious. i did not know if santorum and gingrich will like it. he is enjoying himself. >> john gizzi is on the phone here. let's look ahead to louisiana, a state that santorum said he thinks he could win. >> he thinks he could win. newt gingrich has hinted he will campaign there. ron paul has a following in this state.

my guess is santorum may win the state. what people will watch it is just how close mitt romney comes. we will see if he truly has momentum. the big mo from illinois, it goes south. if he makes it a close race, we get into other states, including pennsylvania. mitt romney made it better than one thinks. well he has momentum -- mitt romney made do better than one thinks. while he has momentum, let's see if it goes over. >> how important is wisconsin going to be? >> it is very important because national eyes are on it. governor scott walker is headed

towards a recall election, one in which his continued tenure in madison will be judged by the people. there will be eyes on wisconsin. that means the presidential primary gets national attention. it is going to be a very important state. remember, wisconsin is truly up for grabs. we will see if mitt romney has the momentum. i know governor walker has stayed neutral. i know mitt romney has a lot of endorsements. a fellow named paul ryan gets a lot of manchin as a vice- presidential candidate. i am going to be interviewing him soon. wisconsin is important for a number of reasons. >> i'm going to conclude with the question about newt gingrich and ron paul. how long do they stay in this race? >> one thing i hate to do is

pass judgment on candidates. quite frankly, a lot of them i pass judgments on demonstrate they have the power earl of resurrection -- power of resurrection. i think ron paul will be of sooner rather than later. i think he will support the republican nominee because he has a son who has a future. by going road, he endangers -- rgoue, he endangers rand paul's future. as for gingrich, i will be hit with him this weekend. he says he will stay on and fight. he makes his living as a talking head. his marketability and election dates are going to be determined by his credibility. he may not be as marketable in

the future. >> thank you for sharing your perspective with our audience. >> thank you for having me. >> let's recap the results from illinois. mitt romney has a double-digit lead over rick santorum in the state that has 54 delegates. mitt romney getting 47% of the votes. ron paul and newt gingrich in the single digits. the delegates are what counts. the new polls, courtesy of the associated press has mitt romney with 541, santorum with 253, ginrich with 136, and 50 delegates for ron paul. tomorrow, we will continue the conversation. the primaries coming up in april including wisconsin. we will also talk about the budget with mike conaway and

ellison schwartz, and our weekly series on a magazine. liza mundy will be joining us. that is all tomorrow morning at 7:00 a.m. eastern time. earlier tonight, the victory speech by mitt romney. he won by 12 percentage points in illinois today. [applause] [applause] >> wow. thank you, at illinois. thank you so much. [applause]

tomorrow is our anniversary. we will have been married 43 years. happy anniversary, sweetheart. [applause] a very big special for the man just out here. we appreciate him. he has been a great chairman for our effort here. he was as well four years ago. we appreciate him. the senate there, he is not doing well. we love him and think about him. we all send our prayers. congressman aron shock, congresswoman judy biggert, the former speaker, we are appreciative. i forgot congressman donald --

bob dole. house speaker tom cross. our entire state of illinois delegates, another thank you. you know what i have to do. i did not get a chance to do this properly. i have to thank our friends in pr. -- puerto rico. [applause] we were treated so warmly, so graciously. it was a great experience. the governor, thank you so much. his first lady, we love her. the committeewoman, jose fuentes, ron kauffman, james garcia, there were some money to

help us there. the people of pr -- now i get to say what's in my heart. you know, mitt and i have been in a lot of states. we've gone through every part of this country. and i am so moved, so moved by the people of this country that are counting on someone to go to washington and to take things in their hands and fix it. [cheers and applause] >> mitt! mitt! mitt! mitt! mitt! mitt! mitt! mitt! mitt! mitt! mitt! mitt! mitt! >> i sense everything that you're experiencing right here tonight. this sense that we want to take this country back.

that we are feeling as though that strong, strangling arm of government is invading every corner of our life. and let me tell you something else that's happening. women are coming to me and saying will you please talk about deficit spending and budgets? i'm loving that. loving that. women are angry. they're angry about the legacy we're going to leave their children and their grandchildren. and i'm going to tell them something. i've got somebody here that can fix it. so we're going to turn the time over to the guy that can go and fix it. >> thank you. >> mitt! mitt! mitt! mitt! mitt! mitt! mitt! mitt! >> thank you, guys. so many great friends in this room and across illinois. what a night. thank you, illinois. what a night.

wow. and of course i would like to con grat rate my fellow candidates and a hard fought contest here. i would like to thank in particular the volunteers and our friends across the state and frankly in other states who have been working hard. i appreciate their unwavering support through good times and bad. and tonight, we thank the people of illinois for their vote and for this extraordinary victory. thank you so much. and you know election rs about choices. -- elections are about choices. hundreds of thousands of people in illinois have joined millions of people across the country to join our cause. and this movement began on a small farm in new hampshire on a sunny june day. we were surrounded by a small

group of our friends and some supporters and family. we shared a conviction that the america we loved was in trouble and adrift without strong leadership. and three years of barack obama have brought us fewer jobs and shrinking paychecks. but many of us believe we were in danger of losing something even more than the value of our homes and our 401-k's. after years of too many apologies and not enough jobs. historic drops in income and historic highs in gas prices. a president who doesn't hesitate to use all the means necessary to force through obamacare on the american public but leads from behind in the world. it's time to say these words. this word. "enough." [cheers] [applause] we know our future.

we know our future is brighter than these troubled times. we still believe in america. and we deserve a president who believes in us. and i believe in the american people. >> mitt! mitt! mitt! mitt! mitt! mitt! mitt! >> now, you know that yesterday i was giving a speech at the university of chicago. not very far from here. not very far from where professor barack obama taught law. it was a speech on economic freedom. and as i was writing the speech, i thought to my lifetime of experiences and learned about the unique genius of america's free enterprise system. and started of course with my dad. he didn't graduate from college. and he would tell me about his dad who was a contractor. and you know about construction.

up and down years. he never quite made it. but he never gave up. and raised great kids. later, i helped start companies. and those began with just an idea and somehow they made it through the difficult times. and were able to create a good return for investors. and thousands of jobs. and those jobs helped families buy their first homes. those jobs put kids through school. those jobs helped people live better lives. dream a little bigger. for 25 years, i lived and breathed business and the economy and jobs. i have successes and failures. but each step of the way i learned a little bit more about what it is that makes our american system so powerful. you can't learn that teaching constitutional law at university of chicago. all right? [cheers]

you can't even learn that as a community organizer. [laughter] the simple truth is that this president doesn't understand the genius of america's economy. or the secret of the american economic success story. the american economy is fueled by freedom. [applause] the history of the world has shown that economic freedom is the only force that has consistently lifted people out of poverty. it's the only principle that has ever been able to sustain prosperity. but over the last three years, this administration has been engaged in an all-out assault on our freedom. under this president, bureaucrats prevent drilling rigs from going to work in the gulf.

they keep coal from being mined. they impede the reliable supply of natural gas. they even tell farmers what their kids are able to do on their farms. this administration's assault on freedom has kept this so-called recovery from meeting their projections. let alone our expectations. and now by the way the president is trying to erase his record. with some new rhetoric. the other day he said this. he said we are inventors. we are builders. we are makers of things. we are thomas edison. we're the wright brothers. we're bill gates. we are still jobs -- wait, i missed that. we have steve jocks. that's true. but -- we have steve jobs. that's true. but he is barack obama. >> mitt! mitt! mitt! mitt! mitt!

mitt! mitt! mitt! mitt! mitt! mitt! mitt! >> and under barack obama, those pioneers he mentioned would have faced a very difficult time trying to innovate and invent and invest and create and build jobs. you see, under dodd frank, they would have found it almost impossible to get a loan from their community bank. and of course the regulators would have shut down the wright brothers for dust pollution. and of course the government would have banned thomas edison's lightbulb. and oh, by the way, they just did, didn't they? [cheers] now, you know that the real cost of these misguided policies, these attacks on that kind of freedom, this intrusion of the government into our freedom, the cost of that are

the ideas that are not pursued. and the dreams that aren't realized. and therefore, all the little businesses that don't get started. and the tens of thousands and hundreds of thousands of workers who don't get hired. for centuries, the american dream has meant the opportunity to build something new. some of america's greatest success stories are people who started out with nothing but a good idea. and a corner in their garage. but too often today, americans who want to start a business or launch a new venture. they don't see promise and opportunity. they see government standing in the way. and i'm going to change that. we're going to get government out of the way. [cheers] [applause] you know, we once built an interstate highway system. and the hoover dam. now we can't even build a pipeline. [laughter] i mean, we once led the world in manufacturing, in exports,

investment, today we lead the world in lawsuits. when we replace a law professor with a conservative businessman as president, that's going to end. [cheers] [applause] i think you know this. every great innovation, every world-changing business breakthrough, begins with a dream. and nothing is more fragile than a dream. the genius of america is that we nurture those dreams. and the dreamers. we honor them. and yes, we reward them. that's part of what's uniquely brilliant about america. but day by day, job-killing regulation by job-killing regulation, bureaucrat by bureaucrat, this president is crushing the dream and the dreamers and i will make sure that finally ends.

[cheers and applause] you know, the proof -- the proof of the president's failure is seeing how tepid this economy -- this economic recovery is. i mean, this administration thinks that the economy is struggling because the stimulus wasn't large enough. the truth is the economy is struggling because the government is too big. [cheers and applause] you and i know something the president still hasn't learned. even after three years and hundreds of billions of dollars of spending and borrowing. it is not the government that creates our prosperity. the prosperity of america is the product of free markets and free people. and they must be protected and nurtured.

so tonight was primary. but november is the general election. and we're going to face a defining decision as a people. our choice will not be about party or even personality. this election will be about principle. our economic freedom will be on the ballot. i'm offering a real choice. and a new beginning. i'm running for president because i have the experience and the vision to get us out of this mess. we don't. [applause] -- look, we know what barack obama's vision is. we have been living it these last three years. my vision is very, very different than what his is. you see, i see an america where

the prospects for our children will be better than even those that we've enjoyed during our lives. where the pursuit of success by all of us will unite us, not divide us. when a government finally understands -- [applause] i see a time where we will finally have a government that understands it's better for more people to pay less in taxes than for a very few to pay a lot more. [applause] i see an america where the values we pass on to our children are greater than the debts we leave them. [cheers] [applause] i see an america where poverty is defeated by opportunity, not enabled by a government check. [applause]

i see an america that is humbled -- excuse me. i see an america that is humble but it is never humbled, that leads, but is never led. i see an america that is so unquestionably strong that no one in the world would ever think of testing the might of our military. [cheers and applause] today we took an important step toward that america. tomorrow we'll take another. each day we move closer, not just to victory, but to a better america. join us. join us. together, we're going to ensure that america's greatest days are still ahead.

thank you, guys. thank you so much. and god bless the united states of america. thank you! ♪ [cheers and applause] ♪

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oh, oh, oh, oh oh, oh, oh, oh born free ♪ ♪

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[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> thank you. it is great to be back in pennsylvania. let me just say thank you for all of you being here.

and they're not going to hear me but i feel so bad. we have 1,000, 1,500 people who couldn't get in here and we were overwhelmed by the response here. i just want to say i feel welcome back home to pennsylvania. so thank you very, very much. i want to congratulate governor romney. i gave him a call earlier. i want to thank all of the folks from illinois. if you look at what does clinton happen tonight, we're going to win central and western illinois. we are happy about the delegates where glenn to get, too. we wanted to come here tonight

back to pennsylvania, back to a favored place of mine. it is the town of gettysburg. there are so many memories that come to mind where abraham lincoln finished to get his address. he think about the elections of our past. i have gone around this country of the basque country. they said this is the most important election since 1816. it is about whether these united states, which was it was mostly referred to, would become the united states. it to be a country balance together to build a great and

powerful nation. it is a concept that we were bred with. i said throughout the course of this campaign that while other issues are important, joblessness, national security concerns, a family, all of these issues are important. the foundation of this place, of what we're feeling in the economy and budget crisis. it all boils down to one world "freedom." [applause]

i was pleased to hear that governor romney is now adopting that the man in his speech tonight. i'm glad we're moving the debate. i have been focused on this. i've been out talking to people. we have been to a thousand town hall meetings. i know this is a concern people have. it is a government that is trying to dictate how we are going to live our lives. trying to order us around, treble our freedoms. whether it is our economic freedom or liberty. it is building the dependency on government. we see government expand and grow. they depend on some form of

federal government. after obamacare is implemented, every single american will depend on the federal government for something that is critical to their health and life. that is why this election is so important. it is about foundational things. this is about an election about not to is the best person to manage washington or the economy. we do not need a manager. we need someone who's going to pull out government and do something to eliminate the private sector. to that is what we need. it is great to have wall street

experience. i had experience growing up in a small town. we see how men and women of this country have the opportunity to climb. it i see people that work close. there are children better maybe not getting the opportunities they hoped for. they can climb that ladder of success. they voiced their concerns about this economy will turn around for them and not just those of

the top of the income ladder. that is why i talked about an energy plan. if we create opportunities by reducing the oppressive regulatory burdens that this administration has put on those who want to drill for energy. they have appealed to voters across the country. someone who you can trust. someone that you know when they say they will do something they are not saying it because it happens to be the popular theme of the moment. someone who has a long track record of convictions, someone who's going to go out and stand and fight because it is not just what they tell us to say or what is on their teleprompter. i do not happen to have one here tonight.

they know in their guts from their life experiences to living in america that this is what america needs and wants. they want someone who is not going to washington d.c. because they want to be the most powerful person in the world. they want someone who's going to take that and bring it back to the country. there is one candidate in this race who can go out and make that contrast with the current options to the white house.

someone who has a track record to empower people. whether it is obamacare, rabbomneycar -- they are interchangeable. we need someone who understands the submission to the problem of 1/17 of the economy is not government economy but your control over that sector of the economy. we need someone who needs to grow our supplies and someone who can trust that in good times and in bad, but when times are

tough, people thought this was a source of carbon dioxide it could damage our environment. when those who profess the man- made global warming, they convinced many republicans including those who are running on the ticket that there was one that says i know this is political science. this is another attempt of

those who want to take power away from new control your access to energy, your utilization. that is what they believe. governor romney and gingrich went along with the right. when the climate change, they change their position. now they're all for drilling. i was for it. this is the first day of the

launch that we wanted to come here. we wanted to come here to launch our campaign. we have five weeks to a big win in pennsylvania. i come as a son of pennsylvania. i learned everything about freedom and opportunity, hard work, crank up with folks who work in the middle of the my in western but albania. the pictures of the men and

women who worked there. it they fought for the the things the people fought for. they fought for things that americans that ronald reagan referred to. it is the face of having seven children ages 20-3. it is not the best time to run for president of the united states. we felt compelled because as ronald reagan said, we did not

want to have to sit down some day and look at the eyes of our children's children and describe to them in america where once men were free. there were all born in pennsylvania. they all understand that has the greatness. all of us understand what was sacrifice. that is why we fight this fight. not because some poster tells us. because they know in their gut

big things are adrift and in state at this election. i ask each and every one of the a to join us, to saddle up like reagan did with cowboy boots, take on that responsibility over the next five weeks. we're going to head to louisiana for here. we're feeling good about winning louisiana on saturday. [applause] we are heading to louisiana for the rest of the week and then we will be back here in pennsylvania. we will pick up a whole boatload of delegates and go on to victory.

thank you very much. god bless you.

>> thank you. thank you.

>> she did a great job for us. >> its is the best. >> it is good to see you.

>> thank you very much. go like to you. thank you. good luck to you. thank you.

>> we did well downstate. quite how about a word for your neighbors and maryland? -- >> how about a word for your neighbors in maryland? >> we will be there next week. >> can i get a picture with you? >> sure. good luck to you.

>> signature, and nice to see you again. -- senator, nice to see you again.

>> we knew that this would help us. it does them pretty overwhelming. >> what does all this 80?

>> we're picking up delegates in a very tough state. we knew what we had to do. .e're feeling good it is a two-person race. thank you for being here. thank you so much for being here. we appreciate you being here.

>> coming get a picture? >> thank you. we really appreciate that. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012]

>> tonight, ben bernanke teaches a college class on the federal reserve. then paul ryan release is the republicans' budget proposal followed by reaction from the senate budget committee chairman kent conrad. on washington journal tomorrow, mike conway talks about the war in i afghanistan. alison shorts -- allyson schwartz discusses the budget plan. why women are overtaking men as the breadwinners. placer e-mails, phone calls and tweet. the "washington journal" every day at 7:00 a.m. eastern on c- span. >> starting april 1, s.c. the winners of this year's student cam competition.

middle and high school students show which part of the constitution is important to them and why. we will meet the students who created them. for a preview of the winning video, at tech studentcam -- see studentcam.org. >> ben bernanke is teaching a class is at the george washington university school of business. the fed chief has taught at stanford, n.y.u. and princeton. this is one hour and 15 minutes. >> good afternoon. for those watching the broadcast, i am president of

george washington university. this is reflections on the federal reserve. iit features ben bernanke. i am pleased to acknowledge that we have these. today is the first series by a sitting chairman. it provides an opportunity for the students who are here in the classroom. we have an opportunity to deal with a wide range of issues. there are microphones available for these students. i encourage yourself -- encourage you to give knowledge yourself. it is my honor to introduce dr.

ben bernanke. he is class of 2006 and now serving second chair. before his appointment he was involved with several roles. involved with several roles. he also served as chairman of the council. he is no stranger to academia. his been a faculty member at princeton and new york university. he is a fellow of the society. he received a bachelor of arts and a ph.d. from mit. please join me in welcoming dr.

ben bernanke. i've always enjoyed engaging in college students. i hope we have a good conversation. conversation. i want to thank george washington university. it these lectures are parts of a real force. after i get off the scene, and there'll be other profs began but other aspects. back to the papers and all sorts of things.

i will be talking from slides for the purpose of making this available to others he might be interested. it will be posted on the federal reserve website as we go through. the need extra copies, do that. at the end i hope we can have some questions and answers. let me get started. what i want to talk about is the federal reserve and the financial crisis. my speaking about this is very much conditioned by my experience as an economic historian. we talk about the issues that just occurred, it makes the most sense to think about it in the broader context of central banking over the centuries.

even though we're going to be focusing on the financial crisis, we need to go back and look at the broader context. we will be talking about the mission of central banks in general. we'll be looking at the financial crises, most notably the great depression. let me give you a road map. it today we will not touch on the crisis at all. how central banking got started. we will talk about how the fed greate gate to the depression of the 1930's. we will preview developments of central banking after world war

ii. there are other developments that occurred after. be will talk about the buildup to the crisis and the factors that led to the crisis of 2008/2009. next week we will get into the other events. there is their response to the crisis by the federal reserve. in the final lecture, we will look at the aftermath. we will look at the session that followed the crisis, the monetary policy. the financial regulation in a little bit of how this experience will change how they

operate and have the federal reserve will operate going forward. our topic today is origins of the federal reserve. let's talk in general about what a central bank is. we have had some background in economics. you will know that it is not a regular bank. it spans the financial system. central banks are very important institutions. the deal with the modern monetary systems. they play a major role in economic policies. we have had various arrangements. the main exception are cases for you have the currency union. a number of countries share a central bank. the most important example of

that is the european central bank which is to the euro. each of them do have their on central system. central banks are now ubiquitous even in the smallest countries. this is a very important theme. what do they do? what is their mission? it is convenient to talk about too broad aspects of what central banks do. the first is try to achieve backer economic stability. by that i generally mean it stable economies and keeping inflation low and stable. that is the economic function of a central bank.

the other function of central banks is the financial stability firms. central banks tried to keep the financial system working normally. in particular, that they try to prevent or mitigate financial panics are crises. i will talk more about what they are. what are the tools that central banks use to achieve these two broad objectives? in simple terms, there are too broad set of tools. in normal times, the fed can raise or lower short-term interest rates by buying and selling securities in the open market. in normal times if it is going

too slowly or inflation is falling too low, the fed can stimulate the economy by lowering interest rates there a broad range of other interest rates. that encourages spending cut acquisition of homes, investment by firms. it generates more demand. it creates more thrust and growth. if the economy is growing too hot, inflation is becoming a problem. the normal tallest to raise interest rates. by raising the interest rates, higher interest rates the to the system and helped to slow the economy by raising the cost of borrowing are investing in

capital goods. it will slow the economy and reduce pressure. this is the basic tool the central banks have used for many years to try to keep the economy on an even keel. a little less familiar is a little tool of central banks in dealing with financial crises. bac tool is a vision -- that tool is a vision of liquidity. one thing that central banks can do is make sure of the loans. it provides short-term credit. it could bring to an end a financial crisis. this activity is known as the

lender of last resort. the financial markets are disrupted and they do not have alternative sources of funding, then the central bank stands ready as a lender of last resort providing liquidity to the system in helping to stabilize it. there is a third tool. that is financial regulation and supervision. they use a pay a role in supervising the banking system, assessing the rescue and making sure their practices are salve. to the extent they can be kept healthy it is risk taking.

this activity is something that is not unique to central banks. in the united states there are a number of agencies like the fdic that work with the fed in supervising the financial system. that is unique. i will be downplaying this for the time being and focusing on the two principal tools and lender of last resort. one thing people do not appreciate is that central banking is not a new element. it has been around for a very long time. the swedes set up a central bank in 1868. the bank of england was founded in 1694. that was the most important.

we have been thinking about these issues collectively. i have exaggerated slightly that the bank of england was not set up from scratch as a full- fledged central bank. it was a private position. over time it acquired some of the functions of the central bank such as issuing money borrowed last resort. over time the center banks became government institutions. one important responsibility was to manage and issued paper

money that was backed by gold. i will talk more about gold in a few moments. the lender of last resort function became important mostly in the 19th century. to the bank of england is doing a lot of this activity. they became very good at it. they became very good at it. the bank of england set the pace. it was the most important central bank. it helped established practices that we still used today. i need to talk a little bit about what a financial panic is. in general, and it has a loss of

confidence in an institution. how many of you have seen "it's a wonderful life"? less people are watching christmas movies than they used to be. one of the problem they ran into it is they threatened a run on the institution. but i imagine a situation before there is any deposit insurance. no fdic. imagine you have a bank on the corner and this bank makes loans to businesses. if finances itself by taking the positives from the public and deposits hours. it means that anybody can pull up any time they want.

people use deposits for ordinary activities like shopping. imagine what would happen if for some reason a rumor goes around that this bank has made some bad loans and is losing money. if i in the last person in line, and may end up with nothing. what are you going to do? you're going to the bank in say i'm not survive this is a true rumor or not. i am going to pull my money out. they line up. the pull of the cash. no bank cold cash equal to the deposits. the only way they can pay off the depositors want to get stirred the minimal cash reserves is to sell the loans.

depositors are at your door and saying where is my money? it can leave the bank to close. the bank will fail. there have to sell up the assets. -- they will have to sell off the assets. a bank panic is a problem which is faced by any institution where they have loans or other type assets. it finances itself by short-term deposits. it can be a serious problem. if one bank is having problems, the bank next door may begin to worry. worry. sometimes banks pre-fdic would

response to a payment by refusing to pay of the deposit. that restriction was another bad outcome. the cause problems for people to buy their groceries. many banks would fail. it often spread into other markets. they were associated with stock market crashes. they were bad for the economy. here is a formal definition. anytime you have a constitution

they are illiquid in the sense that it takes time for several problems and they are financed on the other side of the balance sheet. anytime you have this situation have the possibility that depositors may say i do not want to me my money here. to me my money here. we have plenty of good loans. he cannot change goes into cash. people will be looking for

money. the federal reserve was on the job. jimmy stewart called up to the fed office and said i have a whole bunch of good loans. i can offer them as collateral. the central bank of the lender of last resort. jimmy stewart can take cash from the central bank. they can pay off depositors. as long as the suns are there, it will be quelled -- the loans are there, it will be quelled. they're taking the collateral. the central bank has put money into the system. they're calling the situation. this is something that the bank of england figured out very early.

he thought a lot about central banking policy. he had a system which said during the panic central banks should give them money during the banking panic. there are get assets to make sure you get your money back. you have to have collateral. it has to be good. the can lend half the battle. you can charge a penalty. it is so people do not just take advantage of the situation. they're willing to pay a higher interest rates. if you follow the rule, you can stop financial panics as a bank

or other institution finds it is losing its funding from depositors or other short-term lenders. they borrow from the central bank. they provide loans. the company then pays off depositors. then things calmed down. with out that last resort activity, and the institutions have to close their doors and go bankrupt. there would have to sell their assets at fire sale prices that would also create problems. the panic through fear are finding assets the ideas would go. they provide that short-term liquidity and avoid the serious stress on the system.

the banks borrow. this is a little bit of general theory about central banks. it is macroeconomic stability and financial stability. they have tools on both sides of the situation. let's talk about the united states and the federal reserve. we will find that the federal reserve was founded evangeline in 1914. concerns on both sides of this equation motivated the decision of congress to president wilson secrete the federal reserve appeared less talk about the financial stability of the united states. after the civil war, there was no federal reserve. there was the central bank. financial systeme

had to be done privately. there were some examples. there were some examples. a very interesting example is in your clearing house. it was a private institution. it was a club of ordinary commercial banks in new york city. initially it served as a place for a bank could hear each other. they traded my checks against you and mine against me. you and mine against me. as time evolves, they began to function like the central bank. the other banks might come together.

they served as a lender of last resort. another possibility was that sometimes there would agree that we would have to shut down the baking system for a week. it then they would go look at the bank that was in trouble and evaluate the balance sheets and determine whether it was a good bank. if it was, it would reopen. normally that would calm things down. there would try to stabilize the banking system. in the end, these arrangements were not sufficient. they did not have sufficient resources. they did not have the credibility of an independent central bank. he always wonder whether they were acting in the public interest. it was necessary for the united states to get a lender of last resort.

half this is not a hypothetical issue. financial panics in the united states or a very big problem. from the restoration through the founding of the federal reserve, the graph shows the number of banks closing during each of the major banking panics that occurred. occurred. you in the very severe panic, more than five failed. that is a really big panic. it had significant consequences for the financial system and for the economy. 1907 was also up a pretty sharp financial crisis.

it was after that crisis that congress began to say maybe we ought to do something about this. we need to do something that can address the problem of financial panics. there is a very substantial amount of research done. amount of research done. congress moved toward creating a central bank. before it was established comment there is another panic now and 1914. this really was a very serious problem for the u.s. economy. problem for the u.s. economy. in the period after the civil

war, until world war one, and then into the 30's, led the united states was on the gold standard. as you probably know, it is an alternative to the central bank. what is a gold standard? what is a gold standard? the price of gold was set at $20. $20. there were central banks that

help manage the gold standard. money was tied. i am tired of watching them my problem is that it is wasting resources. there was tons of gold put in the basement of this. it used to emphasize that this

is a cause. that is put back into another hole. there is the cross of a gold standard. there's also some economic concerns that are part of the gold standard. gold standard. one was the effect of the gold standard on the money supply. standard on the money supply. it determines the money supply. there is not much scope for the central bank to use monetary policy. in particular, the gold standard goes up and here it's a strong economic activity. that is the reverse of what the central bank would normally do today. because you had a gold standard

would ties the money supply to gold, it there was no flexibility for the central bank to lower interest rates in the to lower interest rates in the some people view that as a benefit of the gold standard. it did have the implication that there was more volatility year to year in the economy under a gold standard that there has been in modern times. movements in output, very -- year to year movements of inflation of volatility was much better under the gold standard. there were other concerns with the gold standard. one of the things a gold standard does this creates a system of fixed exchange rates between the currencies of countries that are on the gold standard.

for example, in 1900 the value of the dollar was about $20 per ounce of gold. at the same time, the british set their gold standard as saying roughly 4 pounds per ounce of gold. $20 = 4 pounds. what that is saying is basically a pound is $5. essentially of both countries are on the gold standard, the ratios between the exchange rates are fixed. there's no veritable -- variability as we see today. variability as we see today. there is at least one problem that if there are shops are changes in the money supply in one country and perhaps even a bad set of policy, other countries that are tied to the

currency of that country will also experience some of the effects of that. i will give you a modern example. today as you probably know, there has been a close relationship between the chinese currency in the u.s. dollar. if the fed lowers interest rates and stimulates the economy, that means also monetary policy becomes easier in china as well. interest rates have to be the same in other countries with essentially the same country. those low interest rates may not be appropriate for china. china may experience inflation because it is essentially tied to u.s. monetary policy. fixed exchange rates between countries tend to transmit both good and bad policies between the countries and take away the

independence that individual countries have to manage their own monetary policy. another issue with the gold standard has to do with speculative attack. normally a central bank with a gold standard only keeps a fraction of the gold necessary to back the entire money supply. the bank of england was famous for keeping a thin film of a bold. the british central bank on the kept a small amount of gold and they rely on their credibility to stand by the gold standard under their own circumstances so that nobody ever challenge them about that issue. for whatever reason, if markets lose interest and your willingness to maintain that relationship, you can get a speculative attack. this is what happened in 1931 to

the british. in 1931, for a lot of good reasons, speculator is lost confidence that the british pound would stay on gold. just like a run on the bay, they brought their banks -- it would to the bank of england said give us your goal. it was not long before they ran out of gold. then there was essentially -- they had to leave the gold standard. there is a story told that a british official -- treasury official was taking a bath. an aide came in and said "we are off the gold standard." he said, i did that know we could do that. they had to because they had no choice. there was a speculative attack on the pound. and related to this, as we saw in the case of the united

states, the gold standard had financial panics associated with it. financial stability was not always assured by the gold standard. finally, one last word on the gold standard, one of the strengths that people site for the gold standard is it creates a stable valley for the currency. a create stable inflation. that is true over very long periods. over short. , over five or 10 years, you could actually have a lot of inflation, rising prices or deflationary, falling prices, in a gold standard. the amount of money in the economy varies according to things like gold strikes. if gold is discovered in california and the amount of gold and the economy goes up, that will cause an inflation. if the economy is growing faster

and there is a shortage of gold, that will be a deflationary. he frequently had both inflation and deflation. over very long periods of time, decades, prices were stable. this was a very significant concern of the united states. you could see he was a very good public speaker, william james bryant, three-time democratic candidate for president. in the latter part of the 19th century, there was a shortage of gold relative to economic growth. since there was and not enough gold. money supply was shrinking relative to the economy, the u.s. economy was experiencing a deflationary as prices were falling over this. this cause some problems. people who were most concerned about it or farmers and other

agricultural related occupations. think about this for a moment. if you are a farmer in kansas and you have a mortgage with a bang and the mortgage requires a fixed payment of $20 each month, that amount of money you have to pay is fixed. how do you pay that? you pay it by growing their crops and selling it in the market. the prices of your corn or cotton or your grain is falling over time. your payment to the bank stays the same. a deflationary created a grinding pressure on farmers as they saw the prices of their products going down. as their debt payments remained unchanged. farmers were squeezed by the decline in their crop prices. they recognized this deflation

was not an accident. it was being caused by the gold standard. william jennings bryan ran for president with his principal plank in his platform to modify the gold standard. he wanted to add silver so there would be more money in circulation and more inflation. he spoke about this in the usual very eloquent way of 19th century orators. he said, we shall not press down upon the brow of labor this crown of thorns. should not crucify mankind upon a cross of gold. the gold standard is killing the honest hard-working farmers who are trying to make their payments to the banks and find the price of their crops going down over time. the gold standard also created problems and again as a

motivation for the founding of the federal reserve. in 1913, congress passed the federal reserve act which established the federal reserve which opened in 1914. there is a picture of president will put -- woodrow wilson signing the federal reserve act in 1913. president wilson viewed this as his primary most important domestic accomplishment. domestic accomplishment. and again, why did they want a federal bank? it was to serve as a lender of last resort and tried to mitigate the panic that banks are experiencing every few years. secondly, to manage the gold standard, that is to take the sharp edges of the gold standard to avoid sharp swings in

interest rates. that was the objective for the federal reserve. interestingly, the fed was not the first attempt by congress to create a central bank. there had been two previous attempts. in both cases, congress let the central bank die. basically the problem was that there was a lot of disagreement between -- what today would call main street and wall street. the people on main street -- you could include farmers -- feared that the central bank would be mainly an instrument of the muddy the interest in new york in philadelphia and would not represent the entire country. would not be a national central bank.

both the first 27 attempts at creating a central bank failed for that reason. woodrow wilson had a better idea. he tried a different approach. what he did was, he created not just a single central bank in washington, but he created 12 federal reserve banks located in major cities across the country. the picture shares the 12 federal reserve districts that we still have today. each one has a federal reserve bank and it. a board of governors, which oversees the whole system, is in washington, d.c. notice how many of the little black dots to the right. in 1940 most of the economic activity was in the eastern part of the country. now, it is much more even. the reserve banks are in the same locations as 1914. the value of this structure was,

again, creating a central bank where everybody would have a voice and where information about all aspects of our national economy would be heard in washington. that is still the case. when the fed makes monetary policy, it takes into account the views of the reserve banks around the country. we have a national approach to making policy. the fed was established in 1914. for a while life was not too bad. the reagan 1920's. this is called the charleston, i think. -- the roaring 1920's. was a period920's

of great prosperity in the united states. the united states was a dominant economy in the world that time because most of europe was still in ruins from world war i. there are lots of new inventions. people gathered to run the radio. automobiles became much more available. there were as a lot of consumer durables and a lot of economic growth during the 1920's. a period of prosperity, particularly in the united states. the fed had some time to get its feet wet and establishes procedures. unfortunately, in 1929 the world was hit by the first great challenge to the federal reserve, which was the great depression. as i it sure you know, the u.s. stock market crashed.

you may not know that the financial crisis was not just the u.s. phenomenon, it was global. large financial institutions collapsed in europe and other parts of the world. perhaps the most damaging financial collapse was of the large austrian bank that collapsed in 1931 and brought down with it many other banks in europe. the depression lasted for a long time. it only ended when the united states entered the war after pearl harbor in 1941. here are a few facts about the depression. i think it is important to understand how the cans of beer the episode was. here is the stock market. you can see the straight line

showing october 29, a very sharp decline in stock prices. this was the crash made famous by many writers who told colorful stories about brokers jumping out of windows and all of those things. what i want you to take from this picture is the crash of 1929 was only the first that and what was a much more serious decline. you see how stock prices kept falling. by mid 1932, prices have fallen an incredible 85% from their peak. this was much worse than a couple of bad days on the stock market. the real economy -- the non- financial economy also suffered very greatly. the left-hand picture shows growth in real gdp. if it is pointing up it is a

grudge. , if it is growing down it is a contraction period. you can see from 1930-1933, the economy contracted by large amounts every year. it was an enormous contraction of gdp, close to one-third over all between 1929 and 1933. at the same time, the economy was experiencing deflation. deflationary is falling prices. as you can see from the right picture, in 1931 and 1932 prices fell by about 10%. if he were a farmer who had trouble in the late 19th century, imagine what is happening to you in 1932 when crop prices are falling by half or more and do still have the same payment to the bank for your mortgage. as the economy contracted,

unemployment soared. we did not have the same survey of individual households in the 1930's that we have today. these numbers are estimated and are not precise. as best we can tell, at its peak unemployment came close to 25% in the early 1930's. even at the end of the 1930's, before the war changed everything unemployment was still around 13%. unemployment rose tremendously. bank failures as you might guess with all that was going wrong with the economy, a lot of depositors ran on their banks. the graph on the right show the number of bank failures each year. you can see an enormous pike in the 1930's in the number of

failures. what caused this colossal calamity, which i would reiterate was not just a u.s. problem but a global problem. one country that had the worst depression was germany. that led more less directly to the election of hitler in 1933. what caused the great depression? this was a tremendously important suspect that it received a lot of attention from economic historians. as often for the case with very large events, there were many different causes. i mention a few here. the repercussions of world war i, problems with the gold standard that was reconstruct -- reconstructed with a lot of problems and after the world war. and the financial panic that spread to the world. there were a number of factors

that created the depression. the one that i want to focus on the one that i want to focus on here , at the time of the 1930's there was a lot of support for a approach called a liquidation best theory. the idea behind it was the 1920's was too good a time. the economy expanded too fast. there was too much growth in credit extended. stock prices went to high. what you need when you have a period of excess is a period of deflation. there was a point of view that said, the depression is unfortunate but it is necessary. we have to squeeze out all of the excess that accumulated

during the economy in the 1920's. it was the same statement by andrew mellon. liquidate stocks, liquidate the farmers, liquidate real estate. sounds heartless, and i think it was. when he was trying to convey was we have to get rid of all the excesses' of the 1920's and bring the country back to a more fundamental sound economy. what i wanted to get into in the last few minutes is, what was the fed during during this period? period? it failed both on the monetary side and on the financial stability side. on the monetary policy side, the basic bottom line here is that the fed did not ease monetary policy the way you would expected to in a period of deep

recession. for a variety of reasons because it wanted to stop the stock market speculation, because it wanted to maintain the gold standard, because it believes in the -- they did not ease monetary policy or at least not very much. we did not give the offset to we did not give the offset to the decline at the policy could have provided. when you see 10% declines in the price level, monetary policy is much too tight. the deflationary was an important part of the problem because, again, it bankrupting farmers and others who relied on the sale of products to pay fixed debt. to make things even worse, as i mentioned before, if you have a

gold standard you have a fixed exchange rate. the fed's policies were transmitted to other countries which also came under excessively tight monetary policy. that also contributed to the collapse. one reason why the fed kept money tight is because it was worried about a speculative attack on the dollar. remember in 1931 the british had faced the situation. the fed was worried there would be a similar attack that would drive the dollar off of gold. to preserve the gold standard they raise interest rates rather than lower them. they argue by keeping interest rates high, that would make u.s. investments attractive and prevent money from flowing out. and again, that was the wrong thing to do relative to what the economy needed. in 1933, franklin roosevelt abandoned the gold standard and suddenly monetary policy became much less tied. there was a very powerful rebound in the economy in 1933

and 1934. the other part of the fed was a responsibilities, the last resort. the fed did not meet their mandate. they responded inadequately to the bank runs. they allowed a tremendous decline in the banking system, as many banks failed. as a result, bank failure swept the country. as i mentioned before, a very large fraction of the banks fail. almost 10,000 banks failed in the 1930's. that continued until deposit insurance was created in 1934. why did the fed not more aggressively the lender last resort? in some cases the banks are really insolvent. it was not much that could be done. they had made loans and agricultural areas and the lawns were all going bad because of

the crisis in the agricultural sector. part of it was the fed appeared to some extent to agree with the liquidation this theory that said, there is too much credit. we are over bank. let the system contract. that is the healthy thing. that was unfortunately not the right prescription. in 1933, franklin roosevelt came into power. roosevelt had a mandate to do something about the depression. he took a variety of different actions. he was very experimental. some of those actions were very unsuccessful. something called the national recovery act required -- tried to fight inflation by requiring firms to keep prices high. that was not going to help without a bigger money supply. a lot of things roosevelt did not work so well. he did two things that i would

argue did a lot to offset the mistakes, the problems of the fed created. the first was, in 1934 the establishment of deposit insurance. now if you were an ordinary depositor in a bank and the bank failed, you still had your money back. therefore, there was no incentive to run on the banks. we went from literally thousands of bank failures to zero. it was an incredibly affected policy. the other thing that fdr did, he took a lot of smoke when he was doing it, he abandoned the gold standard. by abandoning the gold standard he allowed monetary policy to be released and allowed expansion of the money supply which ended the deflationary and led to a powerful short-term rebound in 1933 and 1934. the two most successful things

that roosevelt did or essentially offsetting the problems that the fed created or at least exasperated by and fulfilling its responsibilities. what are the policy lessons? it was a global depression, it had many causes. the whole story requires you to look at the whole international system. policy did play an important role. as i said, the federal reserve failed in the first challenge above parts of its mission. it did not ease monetary policy aggressively to prevent deflationary in the collapse of the economy. it failed its economic stability function. not adequately perform its function as lender of last resort allowing many banks failures and contraction. in that respect, and again, the

fed did not fulfill its intended mission. these are key lessons. we want to keep these in mind as we consider how the fed responded to the 2008, 2009 financial crisis which will be getting to the beginning of next time and in great detail next week. next time on thursday we will review developments after world war ii. we will spend plenty of time and the lead up to the crisis in 2008, 2009. we will begin to see how the history of central banking explains how the federal reserve responded to the most recent severe crisis. i will be happy to take questions on the lecture. questions on the lecture. >> he mentioned the tightening

of the monetary policy in 1910 -- 1928 and 1929. the thing the federal reserve should have taken a different action? was a wrong for them to take any action at all? >> that is a good question. i think the mistake they made, they were very concerned about the stock market. they believed it was exceptionally price. there was evidence for that. what they did was they attacked it solely by raising interest rates without the attention of the affect on the economy. by raising interest rates, they wanted to bring down the stock market and they succeeded. the side effect of it was also have major impacts on the economy as well. i think, yes, all we have learned about asset price baubles, they are dangerous. we want to address them as possible. the way you can address them is through regulatory approaches,

that is usually a more penpoint approach than just raising interest rates for everything. looking at the variety of practices, there were a lot of risky practices by brokers. it was the equivalent of day traders. there were not many checks and balances on trading and on who can make a trade and with the margin requirements work, etc. that is a good question. i think the first line of attack should have been more focus on bank lending, on financial regulation and on the functioning of the exchanges. functioning of the exchanges. >> i have a question on the gold standard. given everything we know about monetary policy now, why is

there still an argument for returning to the gold standard? is it even possible? >> the argument i think has two parts. one is the desire to maintain the value of the dollar. basically, it is the desire to have a very long run price stability. the argument is the paper money the argument is the paper money is inherently inflationary. if you have the gold standard, he will not have inflation. that is true overlong periods of time. but from a year to year basis, it is not true. the other reason gold standard advocates want to see a return to gold is that it removes discretion.

the advocates of the gold standard say it is better not to give flexibility to the central banks. that is basically the argument. i think that the gold standard would not be feasible for both practical reasons and policy reasons. on the practical side, this is a simple fact that there is not enough gold to meet the needs of a global gold standard. and achieving that much of gold would be very expensive, cost a lot of resources. but more fundamentally than that, is that the world has changed. so the reason the bank of england could maintain the gold standard even though it had a very small amount of gold reserves was that everybody knew they were going to, their first, second, third, and fourth priority was staying on gold. but once there was concern that

the bank of england might not be fully committed then there was a speculative attacks that drove them off gold. historians argue that after world war room 1 a, the labor movement became much stronger, and there was a lot more concern about unemployment. before the 19th century, people did not measure unemployment. after world war i, they began to give much more attention to unemployment and business cycles. in the modern world, the commitment to the gold standard would mean that we are swearing that under no circumstances, no matter how bad unemployment gets, are we going to do anything using monetary policy. if investors had 1% doubt we would follow the promises, then it would have incentives to bring their cash and take out gold and it would be a self- fulfilling prophecy. we see the problem with fixed exchange rates that have come under attack.

if you look at actual history, you'll see the gold standard cannot work that well and it worked particularly poorly after world war i. i will not go into it, but there is a good bit of evidence that the gold standard was one of the main reasons the depression was so deep and long. and a striking fact is that countries that left the gold standard early and gave themselves flexibility on monetary policy recovered much more quickly than the countries that stayed on gold to the bitter end. >> you mentioned that president roosevelt used deposit insurance. and added the gold standard to stop inflation. in 1937 up until 1941 we had a double dip and recession went on.

as you see today, we have a recession. what you think are the things that we need to be careful of that possibly they had done in the great depression? >> right. it isn't generally appreciate it. great depression was to depressions. there was a sharp recession in 1929. from 33 to 37, there was a decent amount of growth, the stock market recovered. in 1937, 1938, there was a second recession that was not as serious as the first one. it would take awhile to go through all of the discussion but there is a lot of controversy. one view that was advanced early on was that the second session came from a premature tightening of monetary fiscal policy. so in 1937-1938, there was

roosevelt under a lot of pressure to reduce budget deficits, tightening fiscal policy. the fed worried about inflation, tight monetary policy. again, i do not want to claim this is all that simple. a lot was happening, but the early interpretations at least were that the reversal in policy too soon prevented the recovery from proceeding faster. i think we will talk about lessons later on, but i think if you accept that traditional interpretation it is that you need to be attentive to where the economy is and not move too quickly to reverse the policies that are helping recovery. >> yes. >> yes. there's a view that -- other

historical trends. it seems that after an economic slump, recover it often takes five or more years. i was wondering, do you think it i was wondering, do you think it is common for unemployment to remain at high levels? after an economic slump? and moreover, how do you address the concerns and a political environment where short-term fixes are the ruling of the day. >> let me comment that the depression was a sort of extraordinary event. there were many serious declines in economic activity in the 19th century but nothing quite as deep or quite as long as the great depression. so the high unemployment that lasted from 1929 until world war ii, that was unusual. that wouldn't conclude

that was a normal state of affairs. more generally, there is some research that suggests that following a financial crisis, it may take longer for the economy to recover because you need to restore the help of the financial system. and that may be one reason, so argued, that the recovery, this most recent recovery is not proceeding faster than it is. but that is still an open question. and there is a lot of discussion about that research as well as discussion about what might underlie that sort of stylize fact that is out there. so it is not always the case. if you look at recessions in the postwar period in the u.s., you see frequently that recovers only take a couple years. but in fact very sharp recessions are typically followed by a faster recovery.

that has been the pattern what may be different about this episode, and once more, this is a subject of debate, is that on light the other recessions of the postwar period, this one was triggered by a global financial crisis. if so it may be that it is going to take longer. it is already taking longer for the economy to recover. but, again, a lot of issues still to be resolved. last question. anyone else? melanie? >> the depression was a global recession -- [inaudible] >> well, you set me up perfectly for my lecture next week, but i will talk about how the fed and the central banks did cooperate and continue to cooperate.

one of the problems in the depression was the bad feelings left over from world war i. in the 19th century, there was a reasonable amount of cooperation among central banks, but in the 1920's, germany was facing having to pay reparations, france and england and the u.s. or bickering about war debts. and so the politics was quite bad internationally. and that impeded some of the cooperation of central banks. the other thing to say is that international central bank cooperation is probably even more important if you have fixed exchange rates. you have fixed exchange rates in the 1920's because of the gold standard. that meant that monetary policy in one country affected everybody. so that was certainly the case for more coordination. did not get it. at least, today, we have subsequent -- flexible exchange

rates which can adjust and insulate other countries from the effects of monetary policy in a given country. so that reduces the need for coordination, but there is still in need for coordination. thanks. this has been great. i will be back on thursday. thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> we are just about out of time at to o'clock. i told my friends at the fed that we thought we might have 10-15 minutes for question and answer after the chairman left. i said, this is an old professor. we'll have "q&a" that will go on for awhile. i'm delighted with that. students, wonderful questions. what i would like to ask you to do, since we did not have a lot of time for additional ones is to send me an email with two additional questions you wanted to follow up in two weeks. we will see you next thursday -- this thursday at 12:45. great. thank you very much. [applause]

>> i think it is safe to move now. >> on c-span-2 night, house budget committee chairman puerto ryan.paul all of the reaction from senate budget committee chairman kent conrad. later, first and second place finishers in today's illinois primary -- mitt romney and rick santorum. >> i mean, they knew america where freedom is made real for all without regard to race or believe our economic condition.

-- or economic condition. [applause] i mean a new america which everlastingly attacks the agent idea that men can solve their differences by killing each other. >> as candid its campaign for president this year, we look back at 14 men who ran for the office and lost. go to our website -- c- span.org/the contenders -- to see video. >> the profits of the radical liberal left continue to offer only one solution to the problems which confront us. they tell us again and again and again, we should spend our way out of trouble.

>> c-span.org/the contenders. >> house but to a committee chairman paul ryan released the republican 2013 budget proposal today. spend $5.30 trillion less than the president's budget plan over the next 10 years. congressman ryan and senate budget committee ranking member jeff sessions spoke to reporters about their proposal for a half- hour at a capitol hill briefing. >> we have worked very hard to produce this document that we are all holding in our hands, the path to prosperity. i am also grateful for senator jeff sessions to is here with us who is the ranking member of the

senate budget committee who gives a prosecutorial zeal to a budget out of control. one year ago, we offered our path to prosperity and this year we are offering again our path to prosperity. this year, we are going to build on the important work we did last year. we are going to take several new and improved strides. first, we propose and we repeal the present disastrous health care law. ops its spending from threatening iour fiscal health. instead, we propose to save and strengthen medicare by taking power away from government bureaucrats. we preserve the guarantee for today's seniors so they can count on the benefits they have organize their retirement around. and we preserve that guarantee for tomorrow seniors by empowering them with choices, including a fee-for-service

traditional option within a premium support system. we believe competition and choice should be the way forward versus price controls that lead to rationing. on the budget, we also propose to strengthen medicate by empowering our states and returning money to them so they can design programs that are unique to their states to tailor this program to meet the needs of their populations. we also reform welfare. in 1996, welfare reform was very successful in getting towards an upward mobile society, in getting people off of dependency and on to self- sufficiency. unfortunately, that was the only program among the entitlement programs that was reformed. we are proposing similar reforms to the states so we can make sure that we are not creating a culture of dependency but a culture of self-sufficiency, of getting people back on their feet. we also propose as one of our hallmark issues to get to job

creation to reform the tax system. specifically we include in here at tax reform proposal to prevent -- provided to us by all the members of the winds and means committee. we propose to collapse the six different tax practice into a 10% bracket and a 25% bracket for individuals and a 25% bracket for corporations which is at the international average and going to a territorial system. all of those details you can get on the website that shows the letter we have been given by the ways and means committee. finally, i would say something about what is coming this next year. the sequester is coming. a lot of people in washington with like to simply ignore this. a lot of people in washington would like to simply think we can spend as we are going and ignore the fact that on january 2, the sequestered kicks in. what we are doing in this budget this year is something we have not done for six years. we are going to propose to go to reconciliation process. you might be thinking, they used

reconciliation a couple years ago. the distorted and reconciling process to jam through and a partisan health care entitlement. we are going to bring reconciliation back to what it was meant to do which is to get spending and deficits under control. we are instructing 6 authorizing committees to bring their spending cuts to the budget committee and therefore to the floor by may so we can show how we would replace next year's sequestered. we think that is extremely important, to show the country exactly how we would prepare for these eventualities. i think it is critical to reiterate the several challenges facing our country. i want to bring your attention to these charts. the thing actually works. now, we have had deficits in the past. we have had for a brief moment surpluses, but we have had this occurred look at where our country is headed. look at where the president and his budget is taking the country. the president's budget is

putting us on a path of the debt crisis, of decline. and these are the deficits that are in store for america if we stay with the status quo. here is what the path to prosperity proposes. we propose to get our budget on a sustainable path. we propose to get our budget not only on a path to balance but on to paying off the debt on a path to prosperity. and if we actually start growing economy faster, which we think our policies will result in, then the budget would balance even faster than shown here. a sub about spending. the president keeps the size of government at historic highs now and well into the future. he never brings spending back down to where it historically has been off. by 2015, we get spending down to 20% of the economy, which is our historic average and below that after that. all in all, what we are proposing here is to cut $5.30 trillion in spending from the president's budget. this results in at least $3.30

trillion in deficit reduction compared to the president's budget. here is really what it is all matters to. and that is, what about the national debt? we know in front of us is one of the most predictable crises we have ever had in this countries history. a mountain of debt that is coming. this is what the congressional budget office is telling us our future is going to look like. this is the future the present plan of debt and decline brings us to. this is what the senate gets you by doing nothing, by not passing a budget for three years in a row. this is a future that gives our children a diminished country. this is a future that ruined our economy. this is a future that we do not want to see happening. and so if we have a difference of opinion with the president and the direction he and the senate leaders have taken the country, which we do, we feel morally bound to offer a choice. and we have a legal obligation in our budget laws to produce the budget. what our budget does is it shows precisely how we will get this

budget under control and get our debt levels under control. at the end of the day, it is all about growth. it is about growing opportunities, growing the economy, uplifting the debt, reforming the tax code so we can help have our economy reach its full potential. it is about turning our system that has become a a dependent culture into an upward mobile society. getting people back on to lives of so sufficiently. if our economy grows faster than what we produce here, the results are all that much better. before i close, i would like to thank my colleagues on the budget committee for all of the hard work we have put together and putting this budget together. i would like to thank senator jeff sessions for his leadership in the senate. i'm hoping to call the chairman next year. and at its core, i want to basically say this -- this plan of action is about putting an end to empty promises from a

bankrupt government and restoring the fundamental promise of america. insuring that our children have more opportunities than we do. that is the american idea. leave your children better off. we know for the first time in the history of this country that legacy will be severed unless we act. if we step and fix this problem now, we can avoid a very painful debt crisis tomorrow. we are here to offer americans the chance to choose which future they want for themselves. the president's package of debt and declined or the path we are proposing -- a path of renewed prosperity. with that, let me turn it over to senator sessions. >> the house republicans were elected to a new majority, and they have courageously, intelligently, and responsibly laid out a new plan for america's future. they've met thieeir duty.

we have never needed a budget more than we need it today. we are facing a systemic threat to america's financial health care the budget they have offered will alter the debt course from unsustainable to sustainable. it will take us off from declined to prosperity. it is the right thing for america. the senate democrats have abandoned their obligations and have refused to offer a budget for three straight years now. they did not bother to write one last year and they are going to miss the april 1 deadline in this year, and they are not going to produce one this year. senator harry reid, the democratic leader, said it would be foolish to have a budget. the senate democratic majority has forfeited their claim to leadership for america. if the voters give the republicans in the senate the honor of having the majority and

the leadership, we will work with the house to pass up congressional budget. it will be an honest budget. it will change that that course of america. thank you, all of you, for the great work and leadership to provide. questions? >> chairman ryan, the democrats are already in full force claiming this is medicare and last year. just a few minutes ago, the chair of the senate democratic caucus said this is deja vu all over again. this conference plan, most people will sit down -- will not sit down and read this. >> go to www.budget.gov and download this yourself. >> but most people will see 32nd ads and say, oh, my gosh. they want to cut medicare. how can you defend against that? >> here is what i would simply say. if we simply operate based on political fear, nothing is ever

going to get done. if we allow entitlement politics, fear that your adversaries will turn your reforms and a political weapon used against you and we cow to that, then america will have a debt crisis. medicare under the present law is going bankrupt. medicare under the present law is next year turning medicare over to a board of 15 unelected, unaccountable bureaucrats whose job is to circumvent congress and put price controls on medicare which will lead to did not care for current seniors. medicare under the president's half a trillion dollars to spend on his health care proposal. we say get rid of the russian board, stop the raid and preserve the system. not change benefits because they have retired or are about to retire and they have organized their lives around this program. we are saying, let people in the future, in order to save the

system, have a list of choices of guaranteed options, including the traditional fee- for-service program from which to choose just like we do as members of congress for our health care choices. saving health care this way, which has a rich tradition of bipartisan support, this kind of medicare reform is the most humane, the most common sense and bipartisan way to save this vital program. let me turn over to dr. price who is an expert and a member of the ways and means committee as well. >> thanks. the american people are smarter than democrats give them credit for. the understand that this program, the current program is broken. they understand that what the president has done with his rarty is remove $500 billion from the current medicare program. they understand that what the president's plan is is to put in place the independent payment advisory board that is a board of 15 on elected bureaucrats who have the power, without appeal, to deny payment for services for seniors carry the american

people understand this. they know that what we have been working on is improving and strengthening the medicare system, which is why the work that was done between last year and is your how allows the seniors, will allow seniors the opportunity to stay on the current medicare program if that is what they desire or to voluntarily move to a different program through a premium support process. so the american people are brighter than democrats give them credit for. >> if i can follow up. there are some of the other side of the aisle, you describe it as a wrenching board. we heard of the trade in worse form as a death panels. are people going to say that this is another shot at political rhetoric? clear.t's be the independent pitted advisory board is a board that will be 15 individuals appointed by the president hu without appeal will be able to deny payment for services that doctors would provide to seniors. as a physician i can tell you that when you talk to the

doctors of this land and say if you do not get paid for something are you able to do it? and the answer is no. so what happens is that care is denied to seniors. does not make any difference what you call it, the board is in place that will deny payment for services to senior secured senior snow that is wrong. that is why we are working to secure and strengthen the program. >> chairman? >> one thing we know of their debts is fired about is a government shutdown. what do you say to democrats who say that budget levels, spending levels -- and with this but did you are picking another government shutdown. >> i would not say that at all. we have to prepare for the fact that on january 2, discretionary spending goes to 950. we have to say we are preparing and we are showing how we would preempt the sequester from hitting next year. we should not go down the path knowing that once we pass a preparations in october that after october, november, december, then the sequestered

kicks in. we need to prepare for that. we're showing how we prepare for that. we are actually going to reconcile six committees. we will make six committees go out and come up with spending cuts to show how we would replace the sequestered we think it is being honest with people, being forthright about how we think we should deal with what is coming instead of ignoring the law and protecting is if nothing is going to happen in january. >> chairman, do you feel this budget -- >> okay, hey, look. >> do you feel that this budget could have a detrimental effect to the gop presidential nominee? >> i do not really. all of our candidates have campaigned on his various ideas. our nominee are sick to the country to give them a choice of two futures -- close it to the country to give them a choice of to future. the president is giving us a path of debt and declined.

he just gave us if the fourth budget with a $4 trillion deficit. with the fourth time of kicking the can and ignoring the drivers of death. it is worse than that because the president is making it worse. if he is putting more taxes on the back of hard-working americans and the back of small businesses. and he is increasing spending. so we owe the country an alternative path. whatever our nominee is going to be owes the country that choice of two futures. we're helping them put this together. and each of these people running for president have all given their various ideas and reforms with perfectly jibe and consistent with what we propose. >> you believe it will accept their budget? >> absolutely. i am, but. >> what is the cost of your tax proposal over the next decade. specifically, how do you pay for them? >> we propose revenue neutral tax reform. how do you do that? we believe there is an emerging bipartisan consensus